Document:

Amended
and Restated

     

    Contribution
Agreement

     

    By
and Among

     

    Sanders
Morris Harris Group Inc.,

     

    SMH
Capital Inc.,

     

    Pan
Asia China Commerce Corp.,

     

    Fletcher
International, Ltd.,

     

    Madison
Williams Capital LLC

     

    and

     

    Madison
Williams and Company LLC

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Table
of Contents

     

    
      
        
          
            	 
      	 
      	 
      	
                    Page

                  
	 	 	 	 
	
                    SECTION
      1.

                  	
                    SUBSCRIPTION
      OF INTEREST AND CONTRIBUTION OF ASSETS

                  	 
      	
                    3

                  
	 
      	 
      	 
      	 
      
	
                    1.1

                  	
                    Purchase
      of Membership Interest

                  	 
      	
                    3

                  
	
                    1.2

                  	
                    Contribution
      of Assets

                  	 
      	
                    3

                  
	
                    1.3

                  	
                    Assumption
      of Liabilities

                  	 
      	
                    4

                  
	
                    1.4

                  	
                    Intentionally
      Omitted

                  	 
      	
                    5

                  
	
                    1.5

                  	
                    Consideration
      for Contributed Assets and Working Capital

                  	 
      	
                    5

                  
	
                    1.6

                  	
                    Deliveries;
      Escrow and Closing

                  	 
      	
                    5

                  
	
                    1.7

                  	
                    Closing
      Deliveries of PAC3

                  	 
      	
                    8

                  
	
                    1.8

                  	
                    Closing
      Deliveries of SMHG and the Company

                  	 
      	
                    8

                  
	
                    1.9

                  	
                    Closing
      Deliveries of Madison Williams and New BD

                  	 
      	
                    9

                  
	
                    1.10

                  	
                    Further
      Assurances

                  	 
      	
                    9

                  
	
                    1.11

                  	
                    Transfer
      Taxes

                  	 
      	
                    9

                  
	
                    1.12

                  	
                    Allocation
      of Contributed Assets

                  	 
      	
                    10

                  
	
                    1.13

                  	
                    Bulk
      Sales

                  	 
      	
                    10

                  
	 
      	 
      	 
      	 
      
	
                    SECTION
      2

                  	
                    REPRESENTATIONS
      AND WARRANTIES OF PAC3

                  	 
      	
                    10

                  
	 
      	 
      	 
      	 
      
	
                    2.1

                  	
                    Organization
      and Corporate Power

                  	 
      	
                    10

                  
	
                    2.2

                  	
                    Authority;
      No Violation

                  	 
      	
                    10

                  
	
                    2.3

                  	
                    Accredited
      Investor

                  	 
      	
                    11

                  
	
                    2.4

                  	
                    Investment

                  	 
      	
                    11

                  
	
                    2.5

                  	
                    Risk
      of Investment

                  	 
      	
                    12

                  
	
                    2.6

                  	
                    No
      Broker

                  	 
      	
                    12

                  
	
                    2.7

                  	
                    Financing

                  	 
      	
                    12

                  
	
                    2.8

                  	
                    Legal
      Proceedings

                  	 
      	
                    12

                  
	
                    2.9

                  	
                    Disclosure

                  	 
      	
                    13

                  
	 
      	 
      	 
      	 
      
	
                    SECTION
      3.

                  	
                    REPRESENTATIONS
      AND WARRANTIES OF SMHG AND THE COMPANY

                  	 
      	
                    15

                  
	 
      	 
      	 
      	 
      
	
                    3.1

                  	
                    Organization
      and Corporate Power

                  	 
      	
                    15

                  
	
                    3.2

                  	
                    Authority;
      No Violation

                  	 
      	
                    16

                  
	
                    3.3

                  	
                    Financing

                  	 
      	
                    16

                  
	
                    3.4

                  	
                    Financial
      Statements

                  	 
      	
                    16

                  
	
                    3.5

                  	
                    Ineligible
      Persons

                  	 
      	
                    17

                  
	
                    3.6

                  	
                    Contributed
      Contracts

                  	 
      	
                    17

                  
	
                    3.7

                  	
                    Clients

                  	 
      	
                    17

                  
	
                    3.8

                  	
                    Employees

                  	 
      	
                    18

                  

          

        

      

    

     

    
      
         

      

      
        -i-

        
          

        

      

      
         

      

    

    

    
      
        	
                3.9

              	
                No
      Broker

              	 
      	
                18

              
	
                3.10

              	
                Legal
      Proceedings

              	 
      	
                18

              
	
                3.11

              	
                Compliance
      with Applicable Law

              	 
      	
                19

              
	
                3.12

              	
                Insurance

              	 
      	
                20

              
	
                3.13

              	
                Intellectual
      Property

              	 
      	
                20

              
	
                3.14

              	
                Real
      Estate

              	 
      	
                22

              
	
                3.15

              	
                Absence
      of Certain Changes

              	 
      	
                22

              
	
                3.16

              	
                Assets

              	 
      	
                23

              
	
                3.17

              	
                Intentionally
      Omitted

              	 
      	
                23

              
	
                3.18

              	
                Accredited
      Investor

              	 
      	
                23

              
	
                3.19

              	
                Investment

              	 
      	
                23

              
	
                3.20

              	
                Risk
      of Investment

              	 
      	
                24

              
	
                3.21

              	
                Intentionally
      Omitted

              	 
      	
                24

              
	
                3.22

              	
                Tax
      Matters

              	 
      	
                24

              
	
                3.23

              	
                Envirnomental
      Matters

              	 
      	
                25

              
	
                3.24

              	
                Intentionally
      Omitted

              	 
      	
                25

              
	
                3.25

              	
                Intentionally
      Omitted

              	 
      	
                25

              
	
                3.26

              	
                Derivative
      Instruments

              	 
      	
                25

              
	
                3.27

              	
                Disclosure

              	 
      	
                25

              
	 
      	 
      	 
      	 
      
	
                SECTION
      4.

              	
                REPRESENTATIONS
      AND WARRANTIES OF MADISON WILLIAMS AND NEW BD

              	 
      	
                26

              
	 
      	 
      	 
      	 
      
	
                4.1

              	
                Organization
      and Corporate Power

              	 
      	
                26

              
	
                4.2

              	
                Authority;
      No Violation

              	 
      	
                26

              
	
                4.3

              	
                Capital
      Structure

              	 
      	
                27

              
	
                4.4

              	
                No
      Subsidiary

              	 
      	
                28

              
	
                4.5

              	
                No
      Broker

              	 
      	
                28

              
	
                4.6

              	
                Legal
      Proceedings

              	 
      	
                28

              
	
                4.7

              	
                Disclosure

              	 
      	
                28

              
	 
      	 
      	 
      	 
      
	
                SECTION
      5.

              	
                COVENANTS

              	 
      	
                28

              
	 
      	 
      	 
      	 
      
	
                5.1

              	
                Making
      of Covenants

              	 
      	
                28

              
	
                5.2

              	
                Regulatory
      Filings

              	 
      	
                28

              
	
                5.3

              	
                Conduct
      of Business

              	 
      	
                29

              
	
                5.4

              	
                Preservation
      of Business

              	 
      	
                29

              
	
                5.5

              	
                Notice
      Rights and Access

              	 
      	
                29

              
	
                5.6

              	
                Notice
      of Default

              	 
      	
                30

              
	
                5.7

              	
                Solicitation
      of Offers

              	 
      	
                30

              
	
                5.8

              	
                Employee
      Matters; Assignment of Contributed Assets

              	 
      	
                30

              
	
                5.9

              	
                Defenses
      and Claims

              	 
      	
                31

              
	
                5.10

              	
                Confidentiality

              	 
      	
                32

              
	
                5.11

              	
                Accounts
      Receivables

              	 
      	
                32

              
	
                5.12

              	
                Regulatory
      Documents and Records

              	 
      	
                32

              
	
                5.13

              	
                Company
      Disclosure Schedules

              	 
      	
                32

              
	
                5.14

              	
                Adjustments
      of Working Capital Amount

              	 
      	
                33

              

      

    

     

    
      
         

      

      
        -ii-

        
          

        

      

      
         

      

    

    

    
      
        	
                5.15

              	
                Name
      Change.

              	 
      	
                33

              
	
                5.16

              	
                Closing
      Unaudited Balance Sheets.

              	 
      	
                34

              
	 
      	 
      	 
      	 
      
	
                SECTION
      6.

              	
                CLOSING
      CONDITIONS

              	 
      	
                34

              
	 
      	 
      	 
      	 
      
	
                6.1

              	
                Conditions
      to the Obligation of Madison Williams and New BD

              	 
      	
                34

              
	
                6.2

              	
                Conditions
      to Obligations of SMHG and the Company

              	 
      	
                35

              
	
                6.3

              	
                Conditions
      to the Obligation of PAC3

              	 
      	
                36

              
	 
      	 
      	 
      	 
      
	
                SECTION
      7.

              	
                TERMINATION
      OF AGREEMENT

              	 
      	
                38

              
	 
      	 
      	 
      	 
      
	
                7.1

              	
                Termination

              	 
      	
                38

              
	 
      	 
      	 
      	 
      
	
                SECTION
      8.

              	
                SURVIVAL
      OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

              	 
      	
                39

              
	 
      	 
      	 
      	 
      
	
                8.1

              	
                Survival

              	 
      	
                39

              
	
                8.2

              	
                Indemnification

              	 
      	
                40

              
	
                8.3

              	
                Notice;
      Payment of Losses; Defense of Claims

              	 
      	
                43

              
	
                8.4

              	
                Exclusive
      Remedy

              	 
      	
                44

              
	 
      	 
      	 
      	 
      
	
                SECTION
      9.

              	
                MISCELLANEOUS

              	 
      	
                44

              
	 
      	 
      	 
      	 
      
	
                9.1

              	
                Construction;
      Absence of Presumption

              	 
      	
                44

              
	
                9.2

              	
                Fees
      and Expenses

              	 
      	
                45

              
	
                9.3

              	
                Governing
      Law; Venue; Waiver of Jury Trial

              	 
      	
                45

              
	
                9.4

              	
                Notices

              	 
      	
                45

              
	
                9.5

              	
                Entire
      Agreement

              	 
      	
                47

              
	
                9.6

              	
                Publicity
      and Disclosures

              	 
      	
                47

              
	
                9.7

              	
                Assignability;
      Binding Effect

              	 
      	
                47

              
	
                9.8

              	
                Execution
      in Counterparts

              	 
      	
                47

              
	
                9.9

              	
                Amendments

              	 
      	
                47

              
	
                9.10

              	
                Captions

              	 
      	
                47

              
	
                9.11

              	
                Waiver,
      etc.

              	 
      	
                47

              
	
                9.12

              	
                Severability

              	 
      	
                48

              
	
                9.13

              	
                Definitions

              	 
      	
                48

              

      

    

     

    
      
         

      

      
        -iii-

        
          

        

      

      
         

      

    

    AMENDED
AND RESTATED CONTRIBUTION AGREEMENT

    

    This
AMENDED AND RESTATED
CONTRIBUTION AGREEMENT (“Agreement”), dated as
of ________, 2009, is entered into by and among Sanders Morris Harris Group
Inc., a Texas corporation (“SMHG”), SMH Capital
Inc., a Texas corporation (the “Company”), and a
wholly-owned subsidiary of SMHG, Pan Asia China Commerce Corp., a Delaware
corporation (“PAC3”), Fletcher
International, Ltd., a company domiciled in Bermuda (“Fletcher”), Madison
Williams Capital LLC, a New York limited liability company formerly known as
Siwanoy Capital, LLC (“Madison Williams”)
and Madison Williams and Company LLC, a New York limited liability company
formerly known as Siwanoy Securities, LLC (“New BD”), and a
wholly-owned subsidiary of Madison Williams.

    

    WITNESSETH

    

    WHEREAS, subject to the terms
and conditions hereof, PAC3 desires to subscribe for and purchase units of Class
A Membership Interest (as defined herein) and units of Class B Membership
Interest (as defined herein) of Madison Williams;

     

    WHEREAS, Fletcher, directly or
through an affiliate, desires to subscribe for and purchase units of Class A
Membership Interest and a warrant to purchase units of Class A Membership
Interest of Madison Williams;

     

    WHEREAS, the Company is
registered as an investment adviser under the Investment Advisers Act of 1940
and as a broker-dealer under the Securities Exchange Act of 1934, as amended
(the “Exchange
Act”) and provides asset management, retail brokerage, investment
banking, institutional trading, prime brokerage and other financial and
investment services;

     

    WHEREAS, subject to the terms
and conditions hereof, the Company desires to contribute to New BD the assets,
properties, working capital and rights related and/ or pertaining to the
Company’s investment banking, institutional trading (including equity sales and
fixed income sales), New York trading and research (excluding Thomas Juda’s
group and the Concept Capital division) business (collectively, the “Business”);

     

    WHEREAS, subject to the terms
and conditions hereof and in exchange for the above assets and working capital,
Madison Williams shall issue to SMHG units of Class A Membership Interest of
Madison Williams; and

     

    WHEREAS, SMHG, the Company,
PAC3, Madison Williams and New BD entered into a Contribution Agreement, dated
as of January 1, 2009, as amended by that certain Amendment No. 1, dated May 6,
2009, Amendment No. 2, dated September 8, 2009, and extension letter dated
October 30, 2009 (collectively, the “Previous Agreement”),
and desire to amend and restate the Previous Agreement in its
entirety.

    

    NOW, THEREFORE, in
consideration of the foregoing premises, which are incorporated into this
Agreement as if fully set forth below, and in consideration of the mutual
agreements set forth herein, and intending to be legally bound, the parties
hereto agree as follows:

    

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    SECTION 1.
SUBSCRIPTION OF INTEREST AND CONTRIBUTION OF ASSETS

     

    1.1   
     Purchase of Membership
Interest

     

    (a)           Subject
to the provisions of this Agreement, PAC3 hereby agrees to purchase (i) Two
Hundred Fifty Thousand (250,000) units of Class A Membership Interest of Madison
Williams, and (ii) Two Million Two Hundred Fifty Thousand (2,250,000) units of
Class B Membership Interest of Madison Williams for an aggregate subscription
price of Three Million Dollars ($3,000,000) consisting of [A] Three Hundred
Thousand Dollars ($300,000) in cash (the “First Cash Payment”),
and [B] Two Million Seven Hundred Thousand Dollars ($2,700,000) in cash (the
“Second Cash
Payment”).  As further consideration for the units of Class A
Membership Interest and Class B Membership Interest of Madison Williams, PAC3
hereby agrees to guarantee the note issued by Madison Williams to SMHG in the
amount of Eight Million Dollars ($8,000,000), substantially in the form set
forth in Exhibit
B (the “SMHG
Note”).  Subject to the provisions of this Agreement and upon
the payment of the First Cash Payment and Second Cash Payment, and upon the
execution by PAC3 of the SMHG Note (as the guarantor), Madison Williams agrees
to issue to PAC3 such units of Class A Membership Interest and Class B
Membership Interest, which shall be validly issued and
non-assessable.

     

    (b)           Subject
to the provisions of this Agreement, Fletcher hereby agrees to purchase,
directly or through an affiliate, Three Million Two Hundred Fifty Thousand
(3,250,000) units of Class A Membership Interest of Madison Williams and a
warrant to purchase an additional Five Hundred Thousand (500,000) units of Class
A Membership Interest of Madison Williams, substantially in the form set forth
in Exhibit A
(the “Warrant”), for an
aggregate subscription price of Five Million Dollars ($5,000,000) in cash (the
“Fletcher Subscription
Price”).  Subject to the provisions of this Agreement and upon
the payment of the Fletcher Subscription Price, Madison Williams agrees to issue
to Fletcher (or its subscribing affiliate) such units of Class A Membership
Interest and such Warrant, which shall be validly issued and
non-assessable.

     

    1.2         Contribution of
Assets.   Subject
to the provisions of this Agreement, the Company agrees to sell, assign,
transfer, convey and contribute to New BD, and New BD agrees to accept, the
Contributed Assets free and clear of any security interests, obligations,
mortgages, pledges, claims, liens, contingencies, restrictions or encumbrances
of any kind (“Liens”).  “Contributed Assets”
means the following assets, properties and rights related and/ or pertaining to
the Company’s Business:

    

    (a)           the
contracts, agreements and legally binding instruments (whether in writing or
oral) set forth in Section 1.2(a)
of the Company Disclosure Schedule (collectively, the “Contributed
Contracts”);

    

    (b)           the
accounts receivable, notes receivable or amounts owing or payable to the Company
set forth in Section 1.2(b)
of the Company Disclosure Schedule (collectively, the “Accounts
Receivable”);

    

    (c)           the
Company Marks, Company Copyrights and other Intellectual Property owned by the
Company or used or held for use by the Company set forth in Section 1.2(c) of the
Company Disclosure Schedule (collectively, the “Company Intellectual
Property”);

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    

    (d)           the
machinery, computers, equipment, supplies, office furniture and all other
tangible or intangible personal property owned by the Company or used by the
Company set forth in Section 1.2(d) of the
Company Disclosure Schedule (collectively, the “Company
Assets”);

    

    (e)           the
machinery, computers, equipment, supplies, office furniture and all other
tangible or intangible personal property owned by the Company or used by the
Company in its Metairie, Louisiana, and Dallas, Texas, offices as set forth in
Section 1.2(e)
of the Company Disclosure Schedule (collectively, the “Coker Palmer
Assets”);

    

    (f)           the
permits, licenses, authorizations, approvals, franchises or rights owned by the
Company or held for use by the Company set forth in Section
1.2(f)  of the Company Disclosure Schedule (collectively, the
“Permits”);

    

    (g)           all
prepayments or advance payments made by clients to the Company under the
Contributed Contracts set forth in Section 1.2(g) of the
Company Disclosure Schedule;

    

    (h)           all
money security deposits and any advance payments made with respect to Assumed
Liabilities;

    

    (i)           all
rights of recovery, defenses, setoffs and counter claims of any kind directly
relating to or directly
affecting  the  Contributed  Assets or Assumed
Liabilities including, but not limited to, claims, causes of action and rights
under, pursuant to or arising from all warranties, representations, guarantees
and agreements made by Persons in connection with the Contributed Assets and
Assumed Liabilities, provided that the Company shall have the right (without in
any way limiting the rights transferred to New BD hereunder) to assert claims,
causes of action and rights against Persons in connection with the Company’s
indemnification obligations hereunder;

    

    (j)           the
securities set forth in Section 1.2(j) of the
Company Disclosure Schedule; and

    

    (k)           the
sum of Two Million Eight Hundred Fifty Thousand Dollars ($2,850,000) to be used
for working capital purposes (the “Working Capital
Amount”), as adjusted pursuant to Section 5.14 herein,
less [A] the
value of the Accounts Receivable set forth in Section 1.2(b), [B]
the value of the Coker Palmer Assets set forth in Section 1.2(e), [C]
the value of money security deposits and any advance payments set forth in Section 1.2(h), and
[D] the value of the securities (to be mutually agreed upon by the parties) set
forth in Section
1.2(j).

    

    1.3         Assumption of
Liabilities.   Subject to the provisions of this
Agreement, New BD shall (i) assume from January 1, 2009 the Company’s
obligations of performance under the Contributed Contracts, and (ii) assume from
Closing, and thereafter shall pay, perform and discharge, as and when due, all
of the Company’s obligations of future performance due after the Closing under
the Contributed Contracts as may exist at Closing (subsections (i) and (ii)
collectively, the “Assumed
Liabilities”).  Except as expressly provided in this Agreement,
New BD shall not assume any debts, duties, obligations, responsibilities or
liabilities of the Company of any kind or nature, contingent or otherwise. In
furtherance and not in limitation of this Section 1.3, it is
expressly agreed that New BD only assumes the Assumed Liabilities and does not
assume, undertake or accept any other debts, duties, obligations,
responsibilities or liabilities of the Company (the "Excluded Liabilities")
including with respect to:

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    (a)           the
conduct of the Business by the Company on and prior to the Closing Date
including, but not limited to, all liabilities,
debts,  duties,  obligations, responsibilities and
contingencies of any kind which arose prior to the Closing Date;

    

    (b)           any
accounts payable or other liabilities of the Company other than Assumed
Liabilities;

    

    (c)           any
liability or obligation of the Company (i) to any Employee (including without
limitation severance pay and accrued vacation) except as set forth in Section 5.8(a) or
(ii) under any employee benefit plan of the Company or any affiliate of the
Company; and

    

    (d)           any
federal, state or local Taxes of any nature whatsoever, or penalties or interest
arising therefrom, incurred by or arising out of the Company’s ownership,
control or operations of the Contributed Assets and/ or the Business on or
before the Closing Date.

    

    1.4         Intentionally
Omitted.

    

    1.5         Consideration for
Contributed Assets and Working Capital.  In consideration of
the contribution of the Contributed Assets and Working Capital Amount by the
Company and SMHG to New BD:

    

    (a)           Madison
Williams shall issue to SMHG One Million Seven Hundred Fifty Thousand
(1,750,000) units of Class A Membership Interest of Madison Williams, which
shall be validly issued and non-assessable;

    

    (b)           Madison
Williams shall pay to SMHG Two Million Seven Hundred Thousand Dollars
($2,700,000) in the form of the Second Cash Payment (less $125,000 previously
deposited by PAC3 with SMHG); and

    

    (c)           Madison
Williams shall execute and deliver the SMHG Note to SMHG.

     

    1.6         Deliverables; Escrow and
Closing.

     

    (a)           PAC3 and Fletcher
Deliverables.  Upon the execution of this Agreement, PAC3 and
Fletcher, as the case may be, shall deliver the following:

     

    (i)           the
First Cash Payment by PAC3 to New BD;

     

    (ii)           the
Second Cash Payment (less $125,000 previously deposited by PAC3 with SMHG) by
PAC3 to SMHG by wire transfer of immediately available funds in U.S. dollars to
a bank account designated by SMHG;

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    (iii)           within
two Business Days following the date of this Agreement, the Fletcher
Subscription Price by Fletcher to Madison Williams by wire transfer of
immediately available funds in U.S. dollars to a bank account designated by
Madison Williams;

     

    (iv)           the
SMHG Note duly executed by PAC3, as guarantor, to Madison Williams and
SMHG;

     

    (v)           the
Amended and Restated Limited Liability Company Agreement of Madison Williams,
substantially in the form of Exhibit C attached
hereto (the “LLC
Agreement”), duly executed by PAC3 and Fletcher, to Madison Williams,
SMHG, William W. Sprague, Michael V. Fitzgerald and Gregg
Mockenhaupt;

     

    (vi)           a
certificate by the Secretary of PAC3 and an authorized person of Fletcher
certifying [A] (1) with respect to PAC3, the resolutions duly adopted by the
board of directors and the shareholders of PAC3 authorizing this Agreement, the
Ancillary Agreements and the other transactions contemplated hereby, in
accordance with the articles of incorporation and by-laws of PAC3 and (2) with
respect to Fletcher, that Fletcher is authorized to enter into this Agreement,
the Ancillary Agreements and the other transactions contemplated hereby, in
accordance with the organizational documents of Fletcher, and [B] the signatures
of the officers and directors of PAC3 and the authorized persons of Fletcher
authorized to execute this Agreement, the Ancillary Agreements and the
incumbency of such officers and directors and authorized persons, to SMHG, the
Company, Madison Williams and New BD;

     

    (vii)           a
certificate by the Secretary of PAC3 certifying [A] the resolutions duly adopted
by the board of directors and the shareholders of PAC3 authorizing this
Agreement, the Ancillary Agreements and the other transactions contemplated
hereby, in accordance with the articles of incorporation and by-laws of PAC3 and
Applicable Law, and [B] the signatures of the officers and directors of PAC3
authorized to execute this Agreement, the Ancillary Agreements and the
incumbency of such officers and directors, to Fletcher; and

     

    (viii)          a
certificate by an authorized person of Fletcher certifying [A] that Fletcher is
authorized to enter into this Agreement, the Ancillary Agreements and the other
transactions contemplated hereby, in accordance with the organizational
documents of Fletcher, and [B] the signatures of the authorized persons of
Fletcher authorized to execute this Agreement, the Ancillary Agreements and the
incumbency of such authorized persons, to PAC3.

     

    (b)           
SMHG and Company
Deliverables.  Upon the execution of this Agreement, SMHG and/
or the Company, as the case may be, shall deliver the following:

     

    (i)           the
Assignment and Assumption Agreement, substantially in the form of Exhibit D attached
hereto (the “Assignment
Agreement”), duly executed by the Company, to New BD;

     

    (ii)           the
Bill of Sale, substantially in the form of Exhibit E attached
hereto (the “Bill of
Sale”), duly executed by the Company, to New BD;

     

    (iii)           the
LLC Agreement, duly executed by SMHG, to PAC3, Fletcher, Madison Williams,
William W. Sprague, Michael V. Fitzgerald and Gregg Mockenhaupt;
and

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

     

    (iv)           a
certificate by the Secretary of each of SMHG and/ or the Company, as the case
may be, certifying [A] the resolutions duly adopted by the board of directors of
SMHG, authorizing this Agreement, the Ancillary Agreements and the other
transactions contemplated hereby, in accordance with the articles of
incorporation and by-laws of SMHG and Applicable Law, [B] the resolutions duly
adopted by the board of directors and the sole shareholder of the Company
authorizing this Agreement, the Ancillary Agreements and the other transactions
contemplated hereby, in accordance with the articles of incorporation and
by-laws of the Company and Applicable Law, and [C] the signatures of the
officers and directors of SMHG and the Company authorized to execute this
Agreement, the Ancillary Agreements and the incumbency of the such officers and
directors, to PAC3, Fletcher, Madison Williams and New BD.

     

    (c)           Madison Williams and New BD
Deliverables.  Upon the execution of this Agreement, Madison
Williams and/ or New BD, as the case may be, shall deliver the
following:

     

    (i)           the
LLC Agreement, duly executed by Madison Williams, to PAC3, Fletcher, SMHG,
William W. Sprague, Michael V. Fitzgerald and Gregg Mockenhaupt;

     

     

    (ii)           the
SMHG Note duly executed by Madison Williams, and guaranteed by PAC3, to
SMHG;

     

    (iii)           the
Assignment Agreement, duly executed by New BD, to the Company; and

     

    (iv)           a
certificate by the Secretary of each of Madison Williams and/ or New BD, as the
case may be,  certifying [A] the resolutions duly adopted by the board
of managers and the members of Madison Williams, authorizing this Agreement, the
Ancillary Agreements and the other transactions contemplated hereby, in
accordance with the articles of organization and limited liability company
agreement of Madison Williams and Applicable Law, [B] the resolutions duly
adopted by the board of managers and the members of New BD, authorizing this
Agreement, the Ancillary Agreements and the other transactions contemplated
hereby, in accordance with the articles of organization and limited liability
company agreement of New BD and Applicable Law, and [C] the signatures of the
officers and managers of Madison Williams and New BD authorized to execute this
Agreement, the Ancillary Agreements and the incumbency of the such officers and
managers, to PAC3, Fletcher and SMHG.

     

    
      
         

      

      
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    (d)           Escrow and
Closing.  The parties acknowledge and agree that the
deliverables set forth in Sections 1.6(a)
through (c)
(the “Deliverables”) shall
not be deemed to be paid, effective and/ or delivered until the satisfaction by
the parties of the conditions set forth in Section 6 of this
Agreement has occurred (the “Closing”).  The
parties shall hold the Deliverables, save and except for the Second Cash
Payment, in trust and escrow on behalf of the party delivering such Deliverables
and shall return the Deliverables to the party delivering such Deliverables
pursuant to this Section in the event Closing does not occur.  The
Closing of the transactions provided for in this Agreement shall be held at the
offices of SMHG, 600 Travis, Suite 5800, Houston, Texas 77002, or at such other
place as shall be agreed upon as may be fixed by mutual agreement of the
parties.  At Closing, the Deliverables shall be deemed paid and/ or
delivered to the appropriate party and effective pursuant to the terms and
conditions of this Agreement.  In the event this Agreement is
terminated by SMHG pursuant to Section 7.1(a)(iii)
due to the breach of PAC3 and/ or Madison Williams of any of their respective
representations, warranties or agreements, or pursuant to Section 7.1 (a)(ii)
due to the failure by any party other than SMHG, or the Company to fulfill its
obligations that are conditions to closing under Section 6, SMHG shall have the
right to retain the Second Cash Payment and PAC3 shall have no recourse to any
other party hereto with respect to such payment.  In the event this
Agreement is terminated pursuant to the preceding sentence, the parties
acknowledge and agree that the Second Cash Payment shall be considered
liquidated damages and not a penalty.  In the event this Agreement is
otherwise terminated pursuant to Sections 7.1(a)(i),
7.1(a)(ii),
7.1(a)(iv) or
7.1(b), SMHG
shall return the Second Cash Payment to PAC3 by wire transfer of immediately
available funds in U.S. dollars to a bank account designated by PAC3 as of the
date of termination.  The parties acknowledge and agree that New BD
shall have the right to retain the First Cash Payment whether or not Closing
occurs and, in the event Closing fails to occur, the First Cash Payment shall be
considered liquidated damages and not a penalty and PAC3 shall have no recourse
to any other party hereto with respect to such payment.

     

    1.7         Closing Deliveries of PAC3
and Fletcher.

     

    (a)           At
the Closing, PAC3 shall deliver or cause to be delivered the
following:

     

    (i)           all
documents and instruments required to be delivered by PAC3 as a condition to
Closing as set forth in Sections 6.1, 6.2 and 6.4, duly executed by
PAC3; and

    

    (ii)           all
such additional instruments, documents and certificates provided for by this
Agreement or as may reasonably be requested by Madison Williams, New BD, SMHG,
the Company or Fletcher in order to consummate the transactions contemplated
hereby, in each case duly executed by PAC3.

    

    (b)           At
the Closing, Fletcher shall deliver or cause to be delivered the
following:

    

    (i)           all
documents and instruments required to be delivered by Fletcher as a condition to
Closing as set forth in Sections 6.1, 6.2 and 6.3, duly executed by
Fletcher; and

    

    (ii)           all
such additional instruments, documents and certificates provided for by this
Agreement or as may reasonably be requested by Madison Williams, New BD, SMHG,
the Company or PAC3 in order to consummate the transactions contemplated hereby,
in each case duly executed by Fletcher.

     

    1.8         Closing Deliveries of SMHG
and the Company.  At the Closing, SMHG and/ or the Company, as
the case may be, shall deliver or caused to be delivered the
following:

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

     

    (a)           all
documents and instruments required to be delivered by SMHG and the Company as a
condition to Closing as set forth in Sections 6.1, 6.3 and 6.4 duly executed by
SMHG and/ or the Company;

     

    (b)           the
Working Capital Amount, as adjusted pursuant to Section 5.14 herein
and less the items set forth in Section
1.2(k);

     

    (c)           the
Contributed Assets to New BD; and

     

    (d)           all
such additional instruments, documents and certificates provided for by this
Agreement or as may reasonably be requested by Madison Williams, New BD, PAC3 or
Fletcher in order to consummate the transactions contemplated hereby, in each
case duly executed by SMHG and/ or the Company.

     

    1.9         Closing Deliveries of
Madison Williams and New BD.  At
the Closing, Madison Williams and/ or New BD, as the case may be, shall deliver
or cause to be delivered the following:

     

    (a)           the
Warrant duly executed by Madison Williams to Fletcher;

     

    (b)           all
documents and instruments required to be delivered by Madison Williams and New
BD as a condition to Closing as set forth in Sections 6.2, 6.3 and 6.4 duly executed by
Madison Williams and/ or New BD; and

     

    (c)           all
such additional instruments, documents and certificates provided for by this
Agreement or as may reasonably be requested by PAC3, Fletcher, SMHG or the
Company in order to consummate the transactions contemplated
hereby.

     

    1.10       Further
Assurances.  From
time to time after the Closing, at the request of any party and without further
consideration, each party shall execute and deliver further instruments of
transfer and assignment and take such other action as the requesting party may
reasonably require to more effectively transfer and assign to, and vest in, the
requesting party the right granted herein this Agreement

     

    1.11       Transfer
Taxes.   Any transfer Tax (such as a sales Tax) imposed
due to the transfer and sale of the Contributed Assets to New BD will be borne
by the Company.  The Company shall pay all transfer, documentary,
sales, use, stamp, registration and other such Taxes and fees (including any
penalties and interest) incurred in connection with this Agreement, when due,
and the Company shall, at its own expense, file all necessary Tax Returns and
other documentation with respect to all such transfer, documentary, sales, use,
stamp, registration and other Taxes and fees.

     

    
      
         

      

      
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    1.12       Allocation of Contributed
Assets.  The consideration received by New BD for the
Contributed Assets will be allocated among the Contributed Assets pursuant to
New BD’s reasonable discretion and all Tax filings made by the parties shall be
consistent with such allocation.

     

    1.13       Bulk
Sales.  New BD hereby waives compliance with applicable bulk
transfer or similar laws, if any, and SMHG and the Company hereby jointly and
severally indemnify and hold harmless New BD from any liabilities and
obligations arising from claims made by Persons under applicable bulk sales or
similar laws, if any, applicable to the transactions contemplated in this
Agreement.

     

    SECTION
2A. REPRESENTATIONS AND WARRANTIES OF PAC3

     

    In order
to induce Madison Williams, New BD, SMHG, the Company and Fletcher to enter into
this Agreement and consummate the transactions contemplated hereby, PAC3 hereby
makes to Madison Williams, New BD, SMHG, the Company and Fletcher, as of the
date of this Agreement and the Closing Date, the representations and warranties
contained in this Section 2A.

     

    2.1         Organization and Corporate
Power.  PAC3
is a corporation duly organized, validly existing and in good standing under the
laws of Delaware.  PAC3 has all requisite corporate power and
authority to carry on its business as presently conducted, to enter into and
perform this Agreement, the LLC Agreement, SMHG Note, the Assignment Agreement,
the Bill of Sale and all other agreements, documents, instruments and
certificates to be executed and delivered by it in connection with the
transactions contemplated hereby (collectively, the “Ancillary
Agreements”) to which it is a party and to carry out the transactions
contemplated hereby and thereby.  Copies of PAC3’s articles of
incorporation, as certified by the Secretary of State of Delaware, and PAC3’s
by-laws, as certified by the Secretary of PAC3, have been made available to
Madison Williams and SMHG and are correct and complete as of the date hereof,
and PAC3 is not in violation of any term of its articles of incorporation or
by-laws.

     

    2.2         Authority; No
Violation.

     

    (a)           PAC3
has all requisite power and authority to execute and deliver this Agreement and
Ancillary Agreements, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby.  The
execution, delivery and performance by PAC3 of each of this Agreement and the
Ancillary Agreements has been, and the consummation by PAC3 of the transactions
contemplated hereby and thereby have been, duly and validly authorized and
approved by all necessary actions of PAC3.  This Agreement has been,
and at the Closing each of the Ancillary Agreements will be, duly and validly
executed and delivered by PAC3 and (assuming due authorization, execution and
delivery by Madison Williams, New BD, SMHG, the Company and Fletcher) this
Agreement constitutes, and upon their execution at Closing, each Ancillary
Agreement will constitute, legal, valid and binding obligations of PAC3
enforceable against it in accordance with its respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors’ rights and remedies generally and except as the
availability of equitable remedies may be limited by equitable principles of
general applicability.

     

    
      
         

      

      
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    (b)           Neither
the execution, delivery or performance of this Agreement and the Ancillary
Agreements by PAC3, nor the consummation by PAC3 of the transactions
contemplated hereby or thereby, nor compliance by PAC3 with any of the terms or
provisions hereof or thereof binding upon it will, with or without the giving of
notice, the termination of any grace period or both: (i) violate, conflict with,
or result in a breach or default under any provision of the organizational
documents of PAC3; (ii) violate any Applicable Law; or (iii) except as set forth
on Section
2.2(b) of the PAC3 Disclosure Schedule, require any filing by PAC3 with,
or require it to obtain any permit, consent or approval of, or require any party
to give any notice to, any Governmental Authority or any other
Person.

     

    2.3         Accredited
Investor.  PAC3 is an “accredited investor” as defined by Rule
501 under the Securities Act of 1933, as amended (the “Act”), and PAC3 is
capable of evaluating the merits and risks of PAC3’s investment in Madison
Williams and has the capacity to protect PAC3’s own interests.

     

    2.4         Investment.    PAC3
acknowledges and understands that the Class A Membership Interest and Class B
Membership Interest are being purchased for investment purposes and not with a
view to distribution or resale, nor with the intention of selling, transferring
or otherwise disposing of all or any part thereof for any particular price, or
at any particular time, or upon the happening of any particular event or
circumstances, except selling, transferring, or disposing the Class A Membership
Interest or Class B Membership Interest made in full compliance with all
applicable provisions of the Act, the rules and regulations promulgated by the
Securities and Exchange Commission (“SEC”) thereunder, and
applicable state securities laws; and that an investment in the Class A
Membership Interest and Class B Membership Interest is not a liquid
investment.  PAC3 understands that the Class A Membership Interest and
Class B Membership Interest are not presently registered and that there is no
public market for the Class A Membership Interest and Class B Membership
Interest.  PAC3 acknowledges that the Class A Membership Interest and
Class B Membership Interest are speculative and involves a high degree of risk
and that PAC3 can bear the economic risk of the purchase of the Class A
Membership Interest and Class B Membership Interest, including a total loss of
its investment.  PAC3 recognizes that no federal, state or foreign
agency has recommended or endorsed the purchase of the Class A Membership
Interest or Class B Membership Interest.  PAC3 represents that PAC3 is
not subscribing for Class A Membership Interest or Class B Membership Interest
as a result of or subsequent to any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or broadcast
over the Internet, television or radio or presented at any seminar or
meeting.

     

    
      
         

      

      
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    2.5         Risk of
Investment.  PAC3 acknowledges that PAC3 has had the
opportunity to perform due diligence and ask questions of, and receive answers
from Madison Williams, New BD, SMHG and the Company, or any Person acting on
their respective behalf concerning Madison Williams, New BD, the Company and
their respective business and to obtain any additional information, to the
extent possessed by Madison Williams, New BD, SMHG or the Company (or to the
extent it could have been acquired by Madison Williams, New BD, SMHG or the
Company without unreasonable effort or expense) necessary to verify the accuracy
of the information received by PAC3.  In connection therewith, PAC3
acknowledges that PAC3 has had the opportunity to discuss Madison Williams’, New
BD’s and the Company’s business, management and financial affairs with Madison
Williams’, New BD’s, SMHG’s and the Company’s management or any Person acting on
their respective behalf.  Without limiting the generality of the
foregoing, PAC3 has been furnished with or has had the opportunity to acquire,
and to review: (i) copies of all of Madison Williams’, New BD’s and the
Company’s available documents, and (ii) all information, both written and oral,
that it desires with respect to Madison Williams’, New BD’s and the Company’s
respective business, management, financial affairs and prospects.  In
determining whether to make this investment, PAC3 has relied solely on PAC3’s
own knowledge and understanding of Madison Williams, New BD, the Company and
their respective businesses based upon PAC3’s own due diligence investigations
and the information furnished pursuant to this Section.  PAC3
understands that no Person has been authorized to give any information or to
make any representations which were not furnished pursuant to this Section and
PAC3 has not relied on any other representations or information.  PAC3
has carefully considered and has discussed with the PAC3’s professional legal,
Tax, accounting and financial advisors, to the extent the PAC3 has deemed
necessary, the suitability of this investment and the transactions contemplated
by this Agreement and the Ancillary Agreements for PAC3’s particular federal,
state, local and foreign Tax and financial situation and has determined that
this investment and the transactions contemplated by this Agreement and the
Ancillary Agreements are a suitable investment for PAC3.  PAC3 relies
solely on such advisors and not on any statements or representations of Madison
Williams, New BD, SMHG, the Company or any of their respective
agents.  PAC3 understands that PAC3 shall be responsible for PAC3’s
own Tax liability that may arise as a result of this investment or the
transactions contemplated by this Agreement and the Ancillary
Agreements.  PAC3 is able to bear the economic risks of an investment
in the Class A Membership Interest and Class B Membership Interest and to afford
the complete loss of the investment and PAC3: (i) could be reasonably assumed to
have the capacity to protect its own interests in connection with the purchase
of Class A Membership Interest and Class B Membership Interest, and/ or (ii)
PAC3 has a pre-existing personal or business relationship with either Madison
Williams, New BD, the Company or any affiliate thereof of such duration and
nature as would enable a reasonably prudent purchaser to be aware of the
character, business acumen and general business and financial circumstances of
Madison Williams, New BD, the Company or such affiliate and is otherwise
personally qualified to evaluate and assess the risks, nature and other aspects
of this subscription.

     

    2.6         No Broker.  No
broker, finder or similar intermediary has acted for or on behalf of, or is
entitled to any broker’s, finder’s or similar fee or other commission from PAC3
in connection with this Agreement or the transactions contemplated
hereby.

     

    2.7         Financing.  PAC3
has (i) sufficient immediately available funds to pay, in cash, the First Cash
Payment and Second Cash Payment and (ii) commercially reasonable expectations to
meet its guarantor obligations under the SMHG Note.

     

    2.8         Legal
Proceedings.  There
are no Proceedings pending or, to the Knowledge of PAC3, threatened against PAC3
that challenge the validity or propriety of the transactions contemplated by
this Agreement or under the Ancillary Agreements, and there is no injunction,
order, judgment or decree imposed upon PAC3.

     

    
      
         

      

      
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    2.9         Disclosure.  The
representations and warranties made or contained in this Agreement, the PAC3
Disclosure Schedule and exhibits hereto and the certificates and statements
executed or delivered in connection herewith and all other information provided
in writing by PAC3 to Madison Williams, New BD, SMHG, the Company and Fletcher
in connection with the transaction contemplated hereby, when taken together: (a)
are consistent with PAC3’s offering and other funding documents provided to
PAC3’s investors and (b) do not and shall not contain any untrue statement of a
fact and do not and shall not omit to state a fact required to be stated herein
or therein or necessary in order to make such representations, warranties or
other material not misleading in the light of the circumstances in which they
were made or delivered.

     

    SECTION
2B. REPRESENTATIONS AND WARRANTIES OF FLETCHER

     

    In order
to induce Madison Williams, New BD, SMHG, the Company and PAC3 to enter into
this Agreement and consummate the transactions contemplated hereby, Fletcher
makes to Madison Williams, New BD, SMHG, the Company and PAC3, as of the date of
this Agreement and the Closing Date, the representations and warranties
contained in this Section 2B.  Because
Fletcher is a corporation and/ or an entity not formed in the United States,
references to (i) “articles of incorporation, by-laws and resolutions” shall
also be deemed to include corresponding organizational documents, (ii)
“director, shareholders and officers” shall also be deemed to include
corresponding positions and capacities, and (iii) “Delaware” and “Secretary of
State of Delaware” shall also be deemed to include the applicable country, state
or province of organization of such affiliate and the corresponding agent or
agency for such country, state or province.

     

    2.1         Organization and Corporate
Power.  Fletcher
has been duly incorporated and is validly existing under the laws of Bermuda as
of the date hereof.  Fletcher has all requisite corporate power and
authority to carry on its business as presently conducted, to enter into and
perform this Agreement and the Ancillary Agreements to which it is a party and
to carry out the transactions contemplated hereby and
thereby.  Fletcher is not in violation of any term of its articles of
incorporation or by-laws.

     

    2.2         Authority; No
Violation.

     

    (a)           Fletcher
has all requisite power and authority to execute and deliver this Agreement and
Ancillary Agreements, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby.  The
execution, delivery and performance by Fletcher of each of this Agreement and
the Ancillary Agreements has been, and the consummation by Fletcher of the
transactions contemplated hereby and thereby have been, duly and validly
authorized and approved by all necessary actions of Fletcher.  This
Agreement has been, and at the Closing each of the Ancillary Agreements will be,
duly and validly executed and delivered by Fletcher and (assuming due
authorization, execution and delivery by Madison Williams, New BD, SMHG, the
Company and PAC3) this Agreement constitutes, and upon their execution at
Closing, each Ancillary Agreement will constitute, legal, valid and binding
obligations of Fletcher enforceable against it in accordance with its respective
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors’ rights and remedies generally and except
as the availability of equitable remedies may be limited by equitable principles
of general applicability.

     

    
      
         

      

      
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    (b)           Neither
the execution, delivery or performance of this Agreement and the Ancillary
Agreements by Fletcher, nor the consummation by Fletcher of the transactions
contemplated hereby or thereby, nor compliance by Fletcher with any of the terms
or provisions hereof or thereof binding upon it will, with or without the giving
of notice, the termination of any grace period or both: (i) violate, conflict
with, or result in a breach or default under any provision of the organizational
documents of Fletcher; (ii) violate any Applicable Law; (iii) except as set
forth on Section
2.2(b) of the Fletcher Disclosure Schedule, require any filing by
Fletcher with, or require it to obtain any permit, consent or approval of, or
require any party to give any notice to, any Governmental Authority or any other
Person; (iv) violate any agreement between Fletcher and Fletcher's
investors.

     

    2.3         Accredited
Investor.  Fletcher is an “accredited investor” as defined by
Rule 501 of the Act, and Fletcher is capable of evaluating the merits and risks
of Fletcher’s investment in Madison Williams and has the capacity to protect
Fletcher’s own interests.

     

    2.4         Investment.    Fletcher
acknowledges and understands that the Class A Membership Interest is being
purchased for investment purposes and not with a view to distribution or resale,
nor with the intention of selling, transferring or otherwise disposing of all or
any part thereof for any particular price, or at any particular time, or upon
the happening of any particular event or circumstances, except selling,
transferring, or disposing the Class A Membership Interest made in full
compliance with all applicable provisions of the Act, the rules and regulations
promulgated by the SEC thereunder, and applicable state securities laws; and
that an investment in the Class A Membership Interest is not a liquid
investment.  Fletcher understands that the Class A Membership Interest
is not presently registered and that there is no public market for the Class A
Membership Interest.  Fletcher recognizes that no federal, state or
foreign agency has recommended or endorsed the purchase of the Class A
Membership Interest.  Fletcher represents that Fletcher is not
subscribing for Class A Membership Interest as a result of or subsequent to any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over the Internet, television
or radio or presented at any seminar or meeting.

     

    2.5         Risk of
Investment.  Fletcher acknowledges that Fletcher has had the
opportunity to perform due diligence and ask questions of, and receive answers
from Madison Williams, New BD, SMHG and the Company, or any Person acting on
their respective behalf concerning Madison Williams, New BD, the Company and
their respective business and to obtain any additional information, to the
extent possessed by Madison Williams, New BD, SMHG or the Company (or to the
extent it could have been acquired by Madison Williams, New BD, SMHG or the
Company without unreasonable effort or expense) necessary to verify the accuracy
of the information received by Fletcher.  In connection therewith,
Fletcher acknowledges that Fletcher has had the opportunity to discuss Madison
Williams’, New BD’s and the Company’s business, management and financial affairs
with Madison Williams’, New BD’s, SMHG’s and the Company’s management or any
Person acting on their respective behalf.  In determining whether to
make this investment, Fletcher has relied solely on the representations and
warranties set forth in this Agreement.  Fletcher understands that no
Person has been authorized to give any information or to make any
representations which were not furnished pursuant to this Agreement and Fletcher
has not relied on any other representations or information other than the
representations and warranties set forth in this Agreement.

     

    
      
         

      

      
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    2.6         No Broker.  No
broker, finder or similar intermediary has acted for or on behalf of, or is
entitled to any broker’s, finder’s or similar fee or other commission from
Fletcher in connection with this Agreement or the transactions contemplated
hereby.

     

    2.7         Financing.  Fletcher
has sufficient immediately available funds to pay, in cash, the Fletcher
Subscription Price.

     

    2.8         Legal
Proceedings.  There
are no Proceedings pending or, to the Knowledge of Fletcher, threatened against
Fletcher that challenge the validity or propriety of the transactions
contemplated by this Agreement or under the Ancillary Agreements, and there is
no injunction, order, judgment or decree imposed upon Fletcher with respect
hereto or thereto.

     

    SECTION
3. REPRESENTATIONS AND WARRANTIES OF SMHG

    AND
THE COMPANY

    

    In order
to induce Madison Williams, New BD, PAC3 and Fletcher to enter into this
Agreement and consummate the transactions contemplated hereby, SMHG and the
Company, jointly and severally, hereby make to Madison Williams, New BD, PAC3
and Fletcher, as of the date of this Agreement and the Closing Date (unless as
explicitly set forth as otherwise), the representations and warranties contained
in this Section 3,
except as set forth in the corresponding Company Disclosure
Schedule.

     

    3.1         Organization and Corporate
Power.  SMHG
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Texas. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Texas.  The Company has all requisite corporate power and authority to
carry on the Business as presently conducted.  Copies of SMHG’s and
the Company’s articles of incorporation, as certified by the Secretary of State
of Texas, and SMHG’s and the Company’s respective by-laws, as certified by the
Secretary of SMHG and the Company respectively, have been made available to
Madison Williams, PAC3 and Fletcher and are correct and complete as of the date
hereof, and SHMG and the Company are not in violation of any term of their
respective articles of incorporation or by-laws.

     

    
      
        
        

      

      
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    3.2         Authority; No
Violation.

    (a)           Each
of SMHG and the Company has all requisite power and authority to execute and
deliver this Agreement and the Ancillary Agreements, to perform their respective
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby.  The execution, delivery and
performance by SMHG and the Company of each of this Agreement and the Ancillary
Agreements has been, and the consummation by SMHG and the Company of the
transactions contemplated hereby and thereby have been, duly and validly
authorized and approved by all necessary actions of SMHG and the
Company.  This Agreement has been, and at the Closing each of the
Ancillary Agreements will be, duly and validly executed and delivered by SMHG
and the Company and (assuming due authorization, execution and delivery by
Madison Williams, New BD, PAC3 and Fletcher) this Agreement constitutes, and
upon their execution at Closing, each Ancillary Agreement will constitute,
legal, valid and binding obligations of SMHG and the Company enforceable against
them in accordance with its respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors’
rights and remedies generally and except as the availability of equitable
remedies may be limited by equitable principles of general
applicability.

     

    (b)           Neither
the execution, delivery or performance of this Agreement and the Ancillary
Agreements by SMHG and the Company, nor the consummation by SMHG and the Company
of the transactions contemplated hereby or thereby, nor compliance by SMHG and
the Company with any of the terms or provisions hereof or thereof binding upon
it will, with or without the giving of notice, the termination of any grace
period or both: (i) violate, conflict with, or result in a breach or default
under any provision of the organizational documents of SMHG or the Company; (ii)
violate any Applicable Law; (iii) except as set forth in Section 3.2(b) of the
Company Disclosure Schedule, require any filing by SMHG or the Company with, or
require it to obtain any permit, consent or approval of, or require any party to
give any notice to, any Governmental Authority or any other Person; or (iv)
result in a violation or breach by SMHG or the Company of, conflict with,
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation, payment or acceleration)
under, or result in the creation of any encumbrance upon any of the Contributed
Assets under, any of the terms, conditions or provisions of any contract or
other instrument or obligation to which the Company is a party, or by which any
of the Company or any of its properties or assets may be bound.

     

    3.3         Financing.  SMHG
has sufficient immediately available funds to pay, in cash, the Working Capital
Amount (as adjusted pursuant to Section 5.14 herein
and less the items set forth in Section
1.2(k))

     

    3.4         Financial
Statements.  Attached
as Section 3.4 of the Company Disclosure Schedule are true and correct copies
of: (a) the audited balance sheets of the Company as of December 31, 2008,
December 31, 2007, December 31, 2006 and December 31, 2005 (collectively, the
“Company Balance Sheet”) and
(b) the unaudited consolidated balance sheets of the Company and of the Business
as of June 30, 2009.  The balance sheets referred to in the previous
sentence and the Closing Unaudited Balance Sheets present fairly in all material
respects the financial position of the Company as of the dates thereof, and the
other financial statements of the Company referred to herein (including the
related notes thereto, where applicable) present fairly in all material respects
the financial position of the Company at the respective dates therein set forth,
in each case in accordance with GAAP, subject, in the case of the unaudited
financial statements, to normal recurring year-end adjustments (which will not
be material) and the absence of notes.

     

    
      
         

      

      
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    3.5         Ineligible
Persons.  To
the Knowledge of SMHG and the Company no Employee is ineligible pursuant to any
section of the Exchange Act, or any rule promulgated thereunder, or any FINRA
rule or regulation to serve as a principal or employee of a registered
broker-dealer, nor is there any action, proceeding or investigation pending or,
to the Knowledge of SMHG and the Company, threatened by any Governmental
Authority that would reasonably be expected to result in any such ineligibility
or that would provide a reasonable basis for such ineligibility.

     

    3.6         Contributed
Contracts.

     

    (a)           SMHG
and the Company have made available or delivered to Madison Williams, PAC3 and
Fletcher correct and complete copies of all written Contributed Contracts and
correct and complete descriptions of all material terms of all oral Contributed
Contracts.  The Contributed Contracts includes all contracts,
agreements and understanding (whether in writing or oral) used in the Business
with annual payments exceeding $25,000.

     

    (b)           Each
Contributed Contract is valid, binding and in full force and effect, and is
enforceable against the Company, and to the Knowledge of SMHG and the Company,
each other party thereto in accordance with its terms.  The Company
has duly performed all of its obligations under each Contributed Contract to the
extent that such obligations have accrued.  There are no existing
defaults (or circumstances, occurrences, events or acts that, with the giving of
notice or lapse of time or both would become defaults) on the part of the
Company, or to the Knowledge of SMHG and the Company, any other party thereto
under any Contributed Contract.  Each Contributed Contract has been
performed by the Company in accordance with its terms and Applicable Law in all
material respects.

     

    (c)           All
of the Contributed Contracts may be transferred, conveyed and assigned to New BD
without obtaining the consent of the other party except for those Contributed
Contracts set forth on Section 3.6(c) of the
Company Disclosure Schedule.

     

    3.7         Clients.

     

    (a)           With
respect to the Business, the Company has complied in all material respects with
all recordkeeping requirements under Applicable Law (including with respect to
records in any written or electronic format).

     

    (b)           With
respect to the Business, the Company has implemented one or more formal codes of
ethics, insider trading policies, personal trading policies and other material
policies as required by Applicable Law, complete and correct copies of which
have been made available to Madison Williams, PAC3, Fletcher and their
respective representatives.  Such codes of ethics, insider trading
polices, personal trading policies and other material policies comply in all
material respects with Applicable Law.  All employees of the Company
have executed acknowledgments that they are bound by the provisions of such
codes of ethics insider trading policies, personal trading policies and other
material policies as required by Applicable Law.  To the Knowledge of
SMHG and the Company, there have been no material violations by any officer or
investment professional of the Company or waivers or amendments by any them of
such codes of ethics, insider trading polices.

     

    
      
         

      

      
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    (c)           There
has not been, and as of the date hereof, to the Knowledge of SMHG or the
Company, there exists no set of facts or circumstances that could reasonably be
expected to result in, any adverse change in the Company’s relations with any of
the current clients of the Business, whether as a result of the transactions
contemplated by this Agreement or otherwise.  No current client of the
Business has advised SMHG or the Company in writing or otherwise that it is
terminating or considering terminating the handling of its business by the
Company or in respect of any particular product, project or service, or is
planning to reduce its future spending with the Company in any
manner.

     

    3.8         Employees.  The
employees employed by the Company in the conduct and operation of the Business
(the “Employees”) are all
employed at will.  Section 3.8 of the
Company Disclosure Schedule accurately sets forth each Employee’s (i) job title,
(ii) date of hire, (iii) base compensation, and (iv) additional compensation (or
the terms thereof, if determined pursuant to a scale or formula).

     

    3.9         No Broker.  No
broker, finder or similar intermediary has acted for or on behalf of, or is
entitled to any broker’s, finder’s or similar fee or other commission from SMHG
or the Company in connection with this Agreement or the transactions
contemplated hereby.

     

    3.10       Legal
Proceedings.  Except
as set forth in Section 3.10 of the
Company Disclosure Schedule, there are no legal, administrative, arbitral or
other proceedings (including disciplinary proceedings), claims, suits, actions
or governmental or regulatory investigations or inquiries of any nature
(collectively, “Proceedings”) pending
or, to SMHG’s or the Company’s Knowledge, threatened, against the SMHG or
Company before any court, Governmental Authority, or arbitrator pertaining to
the Business.  SMHG and the Company are not subject to or in default
with respect to any indictment, order, injunction, decree or award of any court,
arbitrator or Governmental Authority directly relating to the Business, or which
would adversely affect the ability of SMHG or the Company to execute, deliver
and carry out their respective obligations under this Agreement and the
Ancillary Agreements.  There are no Proceedings pending, or, to SMHG’s
and the Company’s Knowledge, threatened against SMHG or the Company before any
court, Governmental Authority, or arbitrator, which question or challenge the
validity of this Agreement or any of the Ancillary Agreements or any action
taken, or to be taken, by SMHG or the Company pursuant to this Agreement or any
of the Ancillary Agreements, or in connection with the transactions contemplated
hereby or thereby, which, if decided adversely against SMHG or the Company would
have an adverse effect upon the ability of SMHG or the Company to carry out
their respective obligations under this Agreement or any of the Ancillary
Agreements.

     

    
      
        
        

      

      
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    3.11       Compliance with Applicable
Law.

    (a)           The
Company has conducted the Business in all material respects in accordance with
all Applicable Laws.  To the Knowledge of SMHG and the Company, no
Employee is in default with respect to any judgment, order, writ, injunction,
decree, demand or assessment issued by any court or any Governmental Authority
relating to the Business or the transactions contemplated hereby or which would
give rise to an affirmative answer to any of the questions in the disclosure
reporting section of Form BD of the Company, any Employee and/ or New BD (after
giving effect to the transaction contemplated by this Agreement).  To
the Knowledge of SMHG and the Company, no Employee has been, is charged with,
threatened with or under investigation with respect to any violation of any
Applicable Law or which could give rise to an affirmative answer to any of the
questions in the disclosure reporting section of Form BD of the Company, any
Employee and/ or New BD (after giving effect to the transaction contemplated by
this Agreement).  Each Employee of the Company who is required to be
registered or licensed with any Governmental Authority with respect to the
Business is duly registered or licensed as such and such registration or license
is in full force and effect.

     

    (b)           No
Employee is subject to any liability or disability by reason of any failure to
be so registered, licensed or qualified if required by Applicable Law except
where the failure to be so registered, licensed or qualified would not be
reasonably likely to have a Material Adverse Effect.  As it relates to
the Business, SMHG and the Company have not received written notice of any
Proceeding concerning any failure to obtain any broker, dealer, commodity pool
operator, futures commission merchant, commodity trading advisor, bank, trust
company, real estate broker, insurance company, insurance broker or transfer
agent registration, license or qualification.

     

    (c)           Intentionally
Omitted.

     

    (d)           Other
than the requirement that New BD be registered as a broker dealer with the SEC,
a member of FINRA, licensed as a broker dealer in every jurisdiction where it
conducts its business and properly licenses each registered representative of
New BD in every jurisdiction he or she conducts New BD’s business, the Permits
are all of the permits, licenses, authorizations, approvals, quality
certifications, franchises or rights necessary for the lawful ownership,
operation and use of the Contributed Assets and the conduct of the
Business.  The Company has materially complied with each Permit and is
not in material default under any Permit and there are no outstanding material
violations of any of the foregoing. SMHG and the Company have not received any
notice asserting any such violation, default or failure to comply with
Applicable Law with respect to the Business.  Each of the Permits is
generally described in Section 1.2(f) of the
Company Disclosure Schedule hereto.  All Permits are in full force and
effect and are not subject to any suspension, cancellation, modification or
revocation or any Proceedings related thereto, and, to the Knowledge of SMHG and
the Company, no such suspension, cancellation, modification or revocation or
Proceeding is threatened.

     

    (e)           Except
as set forth in Section 3.11(e) of
the Company Disclosure Schedule and except for examinations conducted by any
Governmental Authority in the regular course of the business of the Company (a
complete and accurate copy of each correspondence received in connection with
such examinations from or to such Governmental Authority has previously been
provided or made available to Madison Williams, PAC3 and Fletcher), no
Governmental Authority has, to the Knowledge of SMHG and the Company, initiated,
and no Governmental Authority has provided written notice to SMHG or the Company
of any threatened Proceeding or investigation into the business or operations of
the Business or against any of the Employees and, to the Knowledge of SMHG and
the Company, no such Proceeding or investigation is
contemplated.  Except as set forth in Section 3.11(e) of
the Company Disclosure Schedule, there is no deficiency, violation or exception
claimed or asserted in writing by any Governmental Authority with respect to any
examination of the Business that has not been resolved.

     

    
      
         

      

      
        -19-

        
          

        

      

      
         

      

    

     

    (f)           Except
as set forth in Section 3.11(f) of
the Company Disclosure Schedule, to the Knowledge of SMHG and the Company, no
Employee is, or at any time has been: (i) subject to any cease and desist,
censure or other disciplinary or similar order issued by, (ii) a party to any
written agreement, consent agreement, memorandum of understanding or
disciplinary agreement with, (iii) a party to any commitment letter or similar
undertaking to, (iv) subject to any order or directive (other than those of
general applicability) by or (v) a recipient of any supervisory letter from, any
Governmental Authority relating to the Business.

     

    (g)           The
Company has complied in all material respects with all Applicable Laws regarding
the privacy of the Business’ clients in all material respects and has
established policies and procedures in this regard reasonably designed to ensure
compliance in all material respects with Applicable Law.

    

    (h)           To
the Knowledge of SMHG and the Company, no Employee has: (a) used any funds
of the Business for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; (b) made any payment in
violation of Applicable Law to any foreign or domestic government official or
employee or to any foreign or domestic political party or campaign or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended; or
(c) made any other payment in violation of Applicable Law.

    

    (i)           The
operations of the Business are and have been conducted at all times in
compliance with the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA Patriot Act)
and money laundering statutes in all applicable jurisdictions, the rules and
regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any Governmental Authority and
no action involving the Company with respect to the foregoing is pending or, to
the Knowledge of SMHG and the Company, threatened.

     

    3.12       Insurance.   
 Section
3.12 of the Company Disclosure Schedule sets forth an accurate and
complete list of all policies of insurance or bonds owned, held by or covering
the Business, true and complete copies of which have been delivered or made
available to Madison Williams, PAC3 and Fletcher. Each insurance policy and
bond covering the Business is in full force and effect, all premiums due and
payable thereon have been paid and SMHG and the Company have not received
written notice from any insurer or agent of any intent to cancel any such
insurance policy or bond, and no such insurance policy is
occurrence-based.  SMHG and the Company have complied in all material
respects with the terms and provisions of such policies and bonds.

     

    3.13       Intellectual
Property.

     

    (a)           Section 1.2(c) of the
Company Disclosure Schedule contains a complete and accurate list of all: (i)
Marks owned by the Company and used in the Business (“Company Marks”) and
Copyrights owned by the Company and used in the Business (“Company Copyrights”),
(ii) all registered Internet domain names held in the name of the Company and
used in the Business (except for the domain names, “smhgroup.com” and
“smhmls.com”,
which shall remain the property of SMHG), and (iii) material licenses,
sublicenses or other agreements used by the Company in the Business under which
the Company is granted rights by others in Intellectual Property (“Licenses In”) (other
than commercial off the shelf software which is made available for a total cost
of less than $2,000).  SMHG does not own any Intellectual Property
used in the Business.  SMHG does not license or sublicense any
Intellectual Property to the Company that is used in the
Business.  The Company does not own any Patents used in the
Business.  The Company does not own any registered Marks or Copyrights
used in the Business.

     

    
      
         

      

      
        -20-

        
          

        

      

      
         

      

    

     

    (b)           Except
as set forth on Section 3.13(b) of
the Company Disclosure Schedule:

     

    (i)           with
respect to the Company Intellectual Property licensed to the Company by a third
party (other than commercial off the shelf software which is made available for
a total cost of less than $2,000), for use in the Business, the Company
possesses valid, adequate and enforceable rights to such Company Intellectual
Property as reasonably necessary for the operation of the Business;

     

    (ii)           there
are no pending or, to the Knowledge of SMHG and the Company, threatened claims
against the Company alleging that any of the operation of the Business or any
activity relating thereto infringes or violates (or in the past infringed or
violated) the rights of others in or to any Intellectual Property (“Third Party Intellectual
Property”) or constitutes a misappropriation of (or in the past
constituted a misappropriation of) any subject matter of any Intellectual
Property of any Person or entity or that any License In is invalid or
unenforceable; and

     

    (iii)           to
the Knowledge of SMHG and the Company, neither the operation of the Business nor
any activity relating thereto infringes or violates (or in the past infringed or
violated) any Third Party Intellectual Property or constitutes a
misappropriation of (or in the past constituted a misappropriation of) any
subject matter of any Third Party Intellectual Property.

     

    (c)           For
purposes of this Agreement, “Intellectual
Property” means: (A) patents, patent applications of any kind, patent
rights, inventions, discoveries and invention disclosures (whether or not
patented) (collectively, “Patents”);  (B)
rights in registered and unregistered trademarks, service marks, trade names,
trade dress, logos, packaging design, slogans and Internet domain names, and
registrations and applications for registration of any of the foregoing
(collectively, “Marks”); (C)
copyrights in both published and unpublished works, including without limitation
all compilations, databases and computer programs, manuals and other
documentation and all copyright registrations and applications, and all
derivatives, translations, adaptations and combinations of the above
(collectively, “Copyrights”); (D)
rights in know-how, trade secrets, confidential or proprietary information,
research in progress, algorithms, data, designs, processes, formulae, drawings,
schematics, blueprints, flow charts, models, strategies, prototypes, techniques,
Beta testing procedures and Beta testing results; (E) any and all other
intellectual property rights and/or proprietary rights relating to any of the
foregoing; and (F) goodwill, franchises, licenses, permits, consents, approvals,
and claims of infringement and misappropriation against third
parties.

     

    
      
         

      

      
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    3.14       Real
Estate.  The
Company does not own any real property used in the Business.  Section 3.14 of the
Company Disclosure Schedule identifies all of the real estate leases and
subleases to which the Company is a party and which are part of the Contributed
Assets (the “Leases”).  The
Leases are all of the real estate leases and subleases pertaining or relating to
the Business.  Except as set forth in Section 3.14 of the
Company Disclosure Schedule, the Company is in sole possession of the premises
demised under the Leases and has not assigned, sublet, mortgaged or otherwise
conveyed all or any portion of their respective interest in any of the Leases or
the premises demised under any of the Leases.  Each Lease is valid,
binding and in full force and effect, and is enforceable against the Company,
and to the Knowledge of SMHG and the Company, each other party thereto in
accordance with its terms.  The Company has duly performed all of its
obligations under each Lease to the extent that such obligations have
accrued.  There are no existing defaults (or circumstances,
occurrences, events or acts that, with the giving of notice or lapse of time or
both would become defaults) on the part of the Company, or to the Knowledge of
SMHG and the Company, any other party thereto under any Lease.  Each
Lease has been performed by the Company in accordance with its terms and
Applicable Law in all material respects.  SMHG and the Company have
made available or delivered to Madison Williams, PAC3 and Fletcher correct and
complete copies of all written Leases.

     

    3.15       Absence of Certain
Changes.  Except
as set forth in Section 3.15 of the
Company Disclosure Schedule, since the date of the Company Balance Sheet, the
Company has conducted the Business only in the ordinary course consistent with
past practice and there has not been:

     

    (a)           any
change in the condition (financial or otherwise) of the Contributed Assets,
which change by itself or in conjunction with all other such changes, whether or
not arising in the ordinary course of business, could reasonably be expected to
have a Material Adverse Effect on the Business or materially diminish the value
to Madison Williams, New BD, PAC3 or Fletcher of the transactions contemplated
hereby;

     

    (b)           any
encumbrance placed on any of the Contributed Assets;

     

    (c)           any
purchase, sale or other disposition, or any agreement or other arrangement for
the purchase, sale or other disposition of the Contributed Assets or the capital
stock of the Company by SMHG or the Company, including any of the Company
Intellectual Property, in any single transaction or series of related
transactions;

     

    (d)           any
(i) amendment, (ii) termination or, (iii) to the Knowledge of SMHG and the
Company, proposed or threatened amendment or termination, of any Contributed
Contract;

     

    (e)           any
payment or discharge of a material encumbrance or liability of the Business
which was not shown on the Company Balance Sheet;

     

    (f)           as
it relates to the Business, any material contingent liability incurred by the
Company as guarantor or otherwise with respect to the obligations of others or
any cancellation of any material debt or claim owing to, or waiver of any
material right of, the Company including any write-off or compromise of any
Accounts Receivable other than in the ordinary course of business consistent
with past practices;

     

    
      
         

      

      
        -22-

        
          

        

      

      
         

      

    

     

    (g)           any
change in any material financial accounting principle, method or practice
(including any principles, methods or practices relating to the estimation of
reserves or other liabilities) of the Company as it relates to the Business,
other than changes required by GAAP or Applicable Law to be implemented during
such period, or any significant changes in billing or collection policies or any
internal controls of the Company;

     

    (h)           any
damage, destruction or loss, whether or not covered by insurance, materially and
adversely affecting the Contributed Assets;

     

    (i)           any
write-down of the value of any Contributed Asset or any write-off as
uncollectible any Accounts Receivable, except for such write-downs or write-offs
in the ordinary course of business consistent with past practices in all
respects, nor any suffrage of any change or experience of any condition which
would require such write-off or write-down;

     

    (j)           as
it relates to the Business, any other material transaction entered into by the
Company; or

     

    (k)           any
contract, letter of intent or agreement (whether or not binding) with respect
to, or other commitment or agreement, whether or not in writing, to do any of
the foregoing.

     

    3.16       Assets.  Except
as set forth in Section 3.16 of the
Company Disclosure Schedule, the Assets are owned by the Company, free and clear
of any and all liens and encumbrances, or the Company holds a valid leasehold
interest in, or otherwise has a valid and enforceable license or right to use,
all of such Assets which it does not own.  The Assets are all of the
machinery, computers, equipment, supplies, office furniture and all other
tangible or intangible personal property owned by the Company or used by the
Company with respect to the Business.

     

    3.17       Intentionally
Omitted.

     

    3.18       Accredited
Investor.  SMHG is an “accredited investor” as defined by Rule
501 under the Act and SMHG is capable of evaluating the merits and risks of
SMHG’s investment in Madison Williams and has the capacity to protect SMHG’s own
interests.

     

    3.19       Investment.    SMHG
acknowledges and understands that the Class A Membership Interest is being
purchased for investment purposes and not with a view to distribution or resale,
nor with the intention of selling, transferring or otherwise disposing of all or
any part thereof for any particular price, or at any particular time, or upon
the happening of any particular event or circumstances, except selling,
transferring, or disposing the Class A Membership Interest made in full
compliance with all applicable provisions of the Act, the rules and regulations
promulgated by the SEC thereunder, and applicable state securities laws; and
that an investment in the Class A Membership Interest is not a liquid
investment.  SMHG understands that the Class A Membership Interest is
not presently registered and that there is no public market for the Class A
Membership Interest.  SMHG acknowledges that the Class A Membership
Interest is speculative and involves a high degree of risk and that SMHG can
bear the economic risk of the purchase of the Class A Membership Interest,
including a total loss of its investment.  SMHG recognizes that no
federal, state or foreign agency has recommended or endorsed the purchase of the
Class A Membership Interest.  SMHG represents that SMHG is not
subscribing for Class A Membership Interest as a result of or subsequent to any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over the Internet, television
or radio or presented at any seminar or meeting.

     

    
      
         

      

      
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    3.20       Risk of
Investment.  SMHG acknowledges that SMHG has had the
opportunity to perform due diligence and ask questions of, and receive answers
from Madison Williams, New BD or any Person acting on their behalf concerning
Madison Williams, New BD and their business and to obtain any additional
information, to the extent possessed by Madison Williams or New BD (or to the
extent it could have been acquired by Madison Williams or New BD without
unreasonable effort or expense) necessary to verify the accuracy of the
information received by SMHG.  In connection therewith, SMHG
acknowledges that SMHG has had the opportunity to discuss business, management
and financial affairs with Madison Williams’ and New BD’s management or any
Person acting on their behalf.  Without limiting the generality of the
foregoing, SMHG has been furnished with or has had the opportunity to acquire,
and to review: (i) copies of all Madison Williams’ and New BD’s available
documents, and (ii) all information, both written and oral, that it desires with
respect to Madison Williams’ and New BD’s business, management, financial
affairs and prospects.  In determining whether to make this
investment, SMHG has relied solely on SMHG own knowledge and understanding of
Madison Williams, New BD and their business based upon SMHG’s own due diligence
investigations and the information furnished pursuant to this
Section.  SMHG understands that no Person has been authorized to give
any information or to make any representations which were not furnished pursuant
to this Section and SMHG has not relied on any other representations or
information.  SMHG has carefully considered and has discussed with the
SMHG’s professional legal, Tax, accounting and financial advisors, to the extent
the SMHG has deemed necessary, the suitability of this investment and the
transactions contemplated by this Agreement and the Ancillary Agreements for
SMHG’s particular federal, state, local and foreign Tax and financial situation
and has determined that this investment and the transactions contemplated by
this Agreement and the Ancillary Agreements are a suitable investment for
SMHG.  SMHG relies solely on such advisors and not on any statements
or representations of Madison Williams or any of its agents.  SMHG
understands that SMHG shall be responsible for SMHG’s own Tax liability that may
arise as a result of this investment or the transactions contemplated by this
Agreement and the Ancillary Agreements.  SMHG is able to bear the
economic risks of an investment in the Class A Membership Interest and to afford
the complete loss of the investment and SMHG (i) could be reasonably assumed to
have the capacity to protect its own interests in connection with the purchase
of Class A Membership Interest or (ii) SMHG has a pre-existing personal or
business relationship with either Madison Williams or any affiliate thereof of
such duration and nature as would enable a reasonably prudent purchaser to be
aware of the character, business acumen and general business and financial
circumstances of Madison Williams or such affiliate and is otherwise personally
qualified to evaluate and assess the risks, nature and other aspects of this
subscription.

     

    3.21       Intentionally
Omitted.

     

    3.22       Tax
Matters.  There are no liens for Taxes on the Contributed
Assets and no Governmental Authority has the right to (nor to the Knowledge of
SMHG and the Company are there any basis for any such Governmental Authority to)
proceed against, attach or in any other manner encumber or diminish New BD’s use
of the Contributed Assets for Taxes payable with respect to periods ending on or
before the Closing Date.

     

    
      
         

      

      
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    3.23       Environmental
Matters.

    

    (a)           To
the Knowledge of SMHG and the Company, the Company has complied with and is in
compliance in all material respects with all applicable Environmental Laws with
respect to the premises underlying the Leases, except where the failure to
comply would not materially adversely affect the financial condition of the
Business, and no proceeding is pending or, to the Knowledge of SMHG and the
Company, threatened, alleging any failure to so comply.

    

    (b)           The
Company has not received any notice of any pending or, to the Knowledge of SMHG
and the Company, threatened litigation, proceeding or claim with respect to the
premises underlying the Leases to the effect that the tenant under such Leases
may be liable to any Person, or responsible or potentially responsible for the
costs of any remedies or removal action or other cleanup costs, as a result of
non compliance with any Environmental Law.  There is no past or
present action, activity, condition or circumstance to the Knowledge of SMHG and
the Company that could be expected to give rise to any such liability on the
part of such tenant for such cleanup costs.

    

    (c)           As
used herein, the term “Environmental Law”
means any federal, state, local or foreign law, permit or agreement with any
Governmental Authority relating to the environment in effect in any and all
jurisdictions where the premises underlying the Leases are located.

    

    3.24       Intentionally
Omitted.

     

    3.25       Intentionally
Omitted.

     

    3.26       Derivative
Instruments. As of the date of this Agreement, each Contributed Contract
that is a Derivative Instrument, whether entered into for the account of the
Company or on a solicited basis for the account of a customer of the Company,
was entered into in the ordinary course of business and in accordance with
Applicable Laws and accounting standards and, to the Knowledge of SMHG and the
Company, in accordance with prudent business practice and with counterparties
believed to be financially responsible at the time.  The Company has
duly performed all of its obligations under each such Derivative Instrument to
the extent that such obligations to perform have accrued, and there are no
breaches, violations or defaults of such by the Company and, to the Knowledge of
SMHG and the Company, there are no breaches, violations or defaults or
allegations or assertions of such by any other party thereunder, except, in each
case, as would not reasonably be expected to have a Material Adverse
Effect.

     

    3.27       Disclosure.  The
representations and warranties made or contained in this Agreement,
the Company Disclosure Schedule and exhibits hereto and the certificates and
statements executed or delivered in connection herewith and all other
information provided in writing by SMHG and the Company to Madison Williams, New
BD, PAC3 and Fletcher in connection with the transaction contemplated hereby,
when taken together, do not and shall not contain any untrue statement of
a  fact and do not and shall not omit to state a fact required to be
stated herein or therein or necessary in order to make such representations,
warranties or other material not misleading in the light of the circumstances in
which they were made or delivered.

    

    
      
        
        

      

      
        -25-

        
          

        

      

      
        
        

      

    

     

    SECTION
4. REPRESENTATIONS AND WARRANTIES

    OF
MADISON WILLIAMS AND NEW BD

     

    In order
to induce PAC3, Fletcher, SMHG and the Company to enter into this Agreement and
consummate the transactions contemplated hereby, Madison Williams and New BD
hereby make to PAC3, Fletcher, SMHG and the Company, as of the date of this
Agreement and the Closing Date, the representations and warranties contained in
this Section 4.

     

    4.1         Organization and Corporate
Power. Madison
Williams and New BD are each a limited liability company duly organized, validly
existing and in good standing under the laws of New York. The copies of the
Articles of Organization of Madison Williams and New BD, as certified by the
Secretary of State of New York, have been made available to PAC3, Fletcher, SMHG
and the Company, are correct and complete as of the date hereof and Madison
Williams and New BD are not in violation of any term of their respective
Articles of Organization.

     

    4.2         Authority; No
Violation.

     

    (a)           Each
of Madison Williams and New BD has all requisite power and authority to execute
and deliver this Agreement and the Ancillary Agreements to be executed and
delivered by them respectively in connection with the transactions contemplated
hereby, to perform their respective obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby.  The
execution, delivery and performance by Madison Williams and New BD of each of
this Agreement and the Ancillary Agreements to be executed and delivered by them
respectively in connection with the transactions contemplated hereby, has been,
and the consummation by Madison Williams and New BD of the transactions
contemplated hereby and thereby have been, duly and validly authorized and
approved by all necessary actions of Madison Williams and New BD
respectively.  This Agreement has been, and at the Closing each of the
Ancillary Agreements to be executed and delivered by Madison Williams and New BD
in connection with the transactions contemplated hereby will be, duly and
validly executed and delivered by Madison Williams and New BD and (assuming due
authorization, execution and delivery by PAC3, Fletcher, SMHG and the Company),
this Agreement constitutes, and upon its execution at the Closing, each
Ancillary Agreement to be executed and delivered by Madison Williams and New BD
in connection with the transactions contemplated hereby will constitute, legal,
valid and binding obligations of Madison Williams and New BD as applicable
enforceable against them respectively in accordance with its respective terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors’ rights and remedies generally and except as
the availability of equitable remedies may be limited by equitable principles of
general applicability.

     

    
      
         

      

      
        -26-

        
          

        

      

      
         

      

    

    (b)           Neither
the execution, delivery or performance of this Agreement by Madison Williams and
New BD and the Ancillary Agreements to be executed and delivered by Madison
Williams and New BD in connection with the transactions contemplated hereby, nor
the consummation by Madison Williams and New BD of the transactions contemplated
hereby or thereby, nor compliance by Madison Williams and New BD with any of the
terms or provisions hereof or thereof binding upon them respectively will, with
or without the giving of notice, the termination of any grace period or
both:  (i) violate, conflict with, or result in a breach or default
under any provision of the organizational documents of Madison Williams and New
BD; (ii) violate any Applicable Law; (iii) except as set forth in Section 4.2(b) of the
Madison Williams Disclosure Schedule, require any filing by Madison Williams or
New BD with, or require either of them to obtain any permit, consent or approval
of, or require any party to give any notice to, any Governmental Authority or
any other Person; or (iv) result in a violation or breach by Madison Williams or
New BD of, conflict with, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation,
payment or acceleration) under any of the terms, conditions or provisions of any
contract or other instrument or obligation to which Madison Williams or New BD
is a party, or by which Madison Williams, New BD or any of their respective
properties or assets may be bound.

     

    4.3         Capital
Structure.  Immediately
prior to giving effect to the transactions contemplated
hereby, (a) 525,000 units of Class B Membership Interest of Madison Williams are
issued and outstanding to which William W. Sprague, Michael V. Fitzgerald and
Gregg Mockenhaupt own 175,000 each, (b) 1,975,000 units of Class B Membership
Interest of Madison Williams are reserved for issuance to executives and
employees of Madison Williams at the discretion of the board of managers of
Madison Williams, (c) 500,000 units of Class B Membership Interest of Madison
Williams are reserved for future issuance of warrants to the executives of the
Company and its Affiliates, at the discretion of the board of managers of
Madison Williams, at a warrant exercise price of $2.00 per unit, and (d) 500,000
units of Class B Membership Interest of Madison Williams are reserved for future
issuance of warrants to the executives of the Company and its Affiliates, at the
discretion of the board of managers of Madison Williams, at a warrant exercise
price of $3.00 per unit.  After Closing and the issuance and delivery
of the units of Class A Membership Interest, units of Class A Membership
Interest and the Warrant to PAC3, Fletcher and SMHG, as the case may be, (i)
PAC3 shall own 250,000 units of Class A Membership Interest and 2,250,000 units
of Class B Membership Interest, (ii) Fletcher shall own 3,250,000 units of Class
A Membership Interest and the Warrant (to purchase an additional 500,000 units
of Class A Membership Interest) and (iii) SMHG shall own 1,750,000 units of
Class A Membership Interest. Except for the Warrant, there are no outstanding
subscriptions, options, warrants, commitments, preemptive rights, agreements,
arrangements or commitments of any kind relating to the issuance or sale of, or
outstanding securities convertible into or exercisable or exchangeable for, any
capital equity of any class of Madison Williams.  Madison Williams has
no obligation to purchase, redeem, or otherwise acquire any of its capital
equity or any interests therein, and has not redeemed any of its capital
equity.  As of the Closing, and after giving effect to the
transactions contemplated hereby, all of the outstanding Membership Interest of
Madison Williams will have been duly and validly authorized and issued, fully
paid and non-assessable, and will have been offered, issued, sold and delivered
in compliance in all material respects with applicable federal and state
securities laws without giving rise to preemptive rights of any
kind.  There are (x) except for the LLC Agreement, no preemptive
rights, rights of first refusal, put or call rights or obligations or
anti-dilution rights with respect to the issuance, sale or redemption of Madison
Williams’ capital equity or any interests therein, (y) no rights to have the
Madison Williams’ capital equity registered for sale to the public in connection
with the laws of any jurisdiction and (z) except for the LLC Agreement, no
documents, instruments or agreements relating to the voting of Madison Williams’
voting equity or restrictions on the transfer of Madison Williams’ capital
equity.

     

    
      
        
        

      

      
        -27-

        
          

        

      

      
        
        

      

    

    

      4.4           No
Subsidiary.  Except for New BD, Madison Williams does not own
or control, directly or indirectly, any interest in any other
Person.

       

      4.5           No Broker.  Madison
Williams and New BD have not incurred or become liable for any investment
banking fees, brokerage commissions, broker’s or finder’s fees or similar
compensation in connection with the transactions contemplated by this
Agreement.

       

      4.6           Legal
Proceedings.  There
are no Proceedings pending or, to the Knowledge of Madison Williams, threatened
against Madison Williams and New BD that challenge the validity or propriety of
the transactions contemplated by this Agreement or under the Ancillary
Agreements, and there is no injunction, order, judgment or decree imposed upon
Madison Williams or New BD.

       

      4.7           Disclosure.  The
representations and warranties made or contained in this Agreement, the Madison
Williams Disclosure Schedule and exhibits hereto and the certificates and
statements executed or delivered in connection herewith and all other
information provided in writing by Madison Williams and New BD to PAC3,
Fletcher, SMHG and the Company in connection with the transaction contemplated
hereby, when taken together, do not and shall not contain any untrue statement
of a fact and do not and shall not omit to state a fact required to be stated
herein or therein or necessary in order to make such representations, warranties
or other material not misleading in the light of the circumstances in which they
were made or delivered.

       

      SECTION
5. COVENANTS

       

      5.1           Making of
Covenants.  Each
of the parties each hereby agree to comply with the covenants and agreements
made by such party in this Article
5.

       

      5.2           Regulatory
Filings. SMHG
and the Company shall use their commercially reasonable efforts to aid, assist
and cooperate with all reasonable requests of Madison Williams and New BD in
connection with New BD obtaining any Governmental Authority or other third-party
permit, consent or approval required in connection with the execution, delivery
or performance of this Agreement or any Ancillary Agreement including, without
limitation, the registration of New BD with the SEC as a broker-dealer under the
Exchange Act and the obtaining by New BD of membership with
FINRA.  New BD shall use, and Madison Williams shall cause to New BD
to use, commercially reasonable efforts to register New BD with the SEC as a
broker-dealer under the Exchange Act and obtain membership with
FINRA.

      
        
           

        

        
          -28-

          
            

          

        

        
           

        

      

      5.3           Conduct of
Business.  Between
the date of this Agreement and the Closing, except as expressly required or
permitted by other provisions of this Agreement, without the prior written
consent of Madison Williams, PAC3 and Fletcher:

       

       
(a)          SMHG and the
Company will conduct the Business only in the ordinary course of business
consistent with past practices and in compliance in all material respects with
all Applicable Laws and its constituent documents and only take those actions
necessary for the consummation of the transactions contemplated hereby;
and

       

       
(b)          SMHG and the
Company will not knowingly take any action that would if taken before the date
of this Agreement result in a breach of the representations and warranties set
forth in this Agreement without the prior written consent of Madison Williams,
PAC3 and Fletcher.

       

      5.4           Preservation of
Business.  Until
the Closing, SMHG and the Company shall use all reasonable best efforts
to:

       

       
(a)          Preserve the
Business;

       

       
(b)          Preserve and
maintain the Contributed Assets subject to normal wear and tear;

       

       
(c)          Maintain the
present clients of the Business, in each case on terms that are at least as
favorable to the Business or the Company, as the case may be, as the terms of
the Contributed Contracts between the Company and such client as in effect on
the date hereof;

       

       
(d)          Preserve the
goodwill of the Business;

       

       
(e)          Preserve any and
all Permits; and

       

       
(f)           Prevent any
development or combinations of changes, which, individually or in the aggregate,
could be reasonably expected to have a Material Adverse Effect on the
Business.

       

      5.5           Notice Rights and
Access.  Until
the Closing, Madison Williams, PAC3 and Fletcher shall be entitled to receive
all notices and information furnished by the Company to its shareholders,
members of the board of directors (or other governing body or Person) or
committees of the Company relating to operational matters of the Business (but
not to the transactions contemplated by this Agreement), in each case in
connection with meetings thereof, as well as copies of the minutes of any such
meetings or consents of the Company or the shareholders, members of the board of
directors (or other governing body or Person) or committees thereof of the
Company and a description of any actions taken by such Persons at any such
meeting relating to operational matters (but not to the transactions
contemplated by this Agreement).  The Company shall afford to Madison
Williams, PAC3, Fletcher and their respective representatives and agents
reasonable access, during normal business hours and with reasonable notice, to
the Records of the Company in order that Madison Williams, PAC3 and Fletcher may
have full opportunity to make such investigation as it shall reasonably desire
for purposes consistent with this Agreement.

      
        
           

        

        
          -29-

          
            

          

        

        
           

        

      

      5.6           Notice of
Default.  Promptly
upon the occurrence of, or promptly upon a party becoming aware of the
occurrence of, any event which would cause or constitute a breach or default, or
would have caused or constituted a breach or default had such event occurred or
been known to such party prior to the date hereof, of any of the
representations, warranties or covenants of such party contained in or referred
to in this Agreement, such party shall give written notice thereof to the other
parties in reasonable detail.

       

      5.7           Solicitation of
Offers.  From the date hereof until the earlier of November 16,
2009 or the date that FINRA denies New BD’s New Membership Application (the
“Termination
Date”), SMHG and the Company, on behalf of themselves and their
respective affiliates, agree that neither they or their respective affiliates,
directors, officers, shareholders, employees or agents will: (i) discuss or
pursue a possible sale, recapitalization or other transaction of the Company,
any sale of capital stock of the Company or Contributed Assets or any interest
therein, or provide any information to any Person in connection therewith, or
(ii) disclose to any other Person the contents of this
Agreement.  SMHG and the Company shall notify Madison Williams, PAC3
and Fletcher in the event they or their respective affiliates, directors,
officers, shareholders, employees or agents have received any offer relating to
the foregoing and shall provide the material terms of such offer and the
identity of the Person making such offer.

       

      5.8           Employee Matters; Assignment
of Contributed Assets; Collections.

       

       
(a)          Continuing Employee
Coverage.  From the date of this Agreement until the later of
(i) Closing or (ii) November 16, 2009, the parties hereby agree that [A] the
Employees will continue to be covered/ eligible participants for group health,
disability, dental and other insurance that the Company may have in effect from
time to time and other benefits and benefit plans, if any, as are provided to
other full-time employees of the Company, [B] the Employees will continue to be
eligible for benefits and will continue to comply with the eligibility
requirements as well as waiting period under the SMHG benefit contracts, and [C]
the Employees’ portion of premium and contributions will continue to be deducted
through payroll consistent with past practices.  New BD shall
reimburse SMHG for all reasonable costs and expenses incurred by SMHG with
respect to the benefits set forth in Section 5.8(a)[A]
provided by SMHG to the Employees from Closing through November 16,
2009.  From and after Closing, Madison Williams and/ or New BD shall
assume all severance pay and vacation obligations accrued by the Employees while
with the Company.

       

       
(b)          Non-Solicitation.  From
and after Closing, SMHG and the Company agree not to directly or indirectly
solicit any employee of Madison Williams or New BD or their respective
successors and assigns to leave the employ of Madison Williams or New BD or
directly or indirectly hire any such employee, provided, however, that SMHG and
the Company will not be deemed to have violated their respective obligations
under this Section if SMHG or the Company, as the case may be, directly or
indirectly participates in a general solicitation of employment to which
employees of Madison Williams or New BD or their respective successors and
assigns respond.

      
        
           

        

        
          -30-

          
            

          

        

        
           

        

      

       
(c)          Assignment and Assumption of
Contributed Assets.   The
parties other than Fletcher shall use their commercially reasonable best efforts
to obtain, and to cooperate with all reasonable requests of the Company in
connection with it obtaining, any third-party consent or approval required in
connection with the assignment to and assumption by New BD of the Contributed
Assets, Contributed Contracts and Permits, which efforts may involve the posting
of security by New BD or the Company to secure the performance of such
Contributed Contracts or the transfer of such Permits.  The parties acknowledge
and agree that SMHG and/ or the Company have provided a letter or letters of
credit to certain landlords under the Leases.  To the extent any Lease
is not assignable by the Company to New BD, New BD hereby agrees to provide to
SMHG or the Company a letter or letters of credit in an amount proportional to
the space utilized by New BD on the premises underlying such Lease not to exceed
$180,600 in the aggregate.

       

       
(d)          Outstanding Restricted Stock
and Options.  Any and all unvested restricted stock and options
to purchase securities of SMHG held by Employees at the Closing Date pursuant to
SMHG’s stock incentive or option plan or other contracts or agreements shall not
be terminated as a result of the Closing and shall continue to vest pursuant to
their original terms if such Employees remain, throughout such term, employees
of Madison Williams or New BD after Closing.

       

       
(e)          Collection and Guarantee of
Certain Accounts Receivable.   The
parties other than Fletcher shall use commercially reasonable efforts to
collect, and Madison Williams and New BD shall cooperate with all reasonable
requests of the Company, in connection with the collection of accounts
receivable that are not included in the Accounts Receivable pursuant to Section 1.2(b), and
Madison Williams and New BD shall guarantee collection of such accounts
receivable by the Company except for such written-off amounts the parties
mutually agree to in good faith.  To the extent Madison Williams and/
or New BD receives any payment after the Closing from a Person on account of any
account receivable that is not included in the Accounts Receivables, it shall
hold such payment in trust for the benefit of the Company and promptly remit
such funds to the Company.

       

      5.9           Defenses and
Claims.  Upon New BD’s reasonable request, the Company agrees
to cooperate with New BD to maintain, secure, perfect and enforce any defenses,
set-offs or counterclaims which New BD shall have with respect to the
Contributed Assets and Assumed Liabilities, including the execution of any
documents, the giving of any testimony or the taking of any such other action as
is reasonably requested by New BD in connection with such defenses, set-offs or
counterclaims.

      
        
           

        

        
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      5.10         Confidentiality. 
Any information (except publicly available or freely usable material obtained
from another source) regarding this Agreement or the subject matter hereof with
respect to any party to this Agreement or its affiliates will be kept in strict
confidence by all other parties to this Agreement and their agents.  Except
as required by Applicable Law, the parties and their respective affiliates,
directors, officers, managers, shareholders, members, employees or agents, will
not disclose the terms of the transactions contemplated hereunder at any time,
currently, or on or after Closing, regardless of whether Closing takes place,
except as necessary to their attorneys, accountants, professional advisors,
broker or finders, in which instance such persons and any employees or agents of
such party shall be advised of the confidential nature of the terms of the
transaction and shall themselves be required by such party to keep such
information confidential.  Except as required by Applicable Law, each party
shall retain all information obtained from the other and their lawyers regarding
this Agreement or the subject matter hereof on a confidential basis except as
necessary to their attorneys, accountants and professional advisors, in which
instance such persons and any employees or agents of such party shall be advised
of the confidential nature of the terms of the transaction and shall themselves
be required by such party to keep such information
confidential.  Except as required by Applicable Law, each party agrees
not to make any press release or public announcement regarding this Agreement
and the transactions contemplated herein without the prior consent of the other
parties.

       

      5.11         Accounts
Receivable.  To the extent the Company receives any payment
after the Closing from a Person on account of an Account Receivable, the Company
shall hold such payment in trust for the benefit of New BD and promptly remit
such funds to New BD.

       

      5.12         Regulatory Documents and
Records.  After Closing, SMHG and the Company shall provide to
New BD access to all (i) Regulatory Documents that relate to the Business
required to be made or preserved by the SEC, FINRA or any state securities
commission, and (ii) Records of the Business.  SMHG and the Company
agree to preserve the foregoing Regulatory Documents and Records and not to
destroy any such Regulatory Documents and Records without the prior written
consent of New BD.  The parties agree that 600 Travis, Suite 5800,
Houston, Texas 77002 shall be designated as the location at which such
Regulatory Documents and Records will be maintained and preserved and New BD
shall have full and unfettered access to such location after Closing during
normal business hours.  SMHG and the Company shall provide New BD with
all keys, passes, codes, passwords and other security clearances necessary to
allow New BD access to the foregoing location, Regulatory Documents and
Records.  SMHG and the Company further agree to make such Regulatory
Documents and Records available to all appropriate Governmental Authorities and
permit authorized representatives of any Governmental Authority access to such
Regulatory Documents and Records for onsite inspections as requested by New
BD.   

       

      5.13         Company Disclosure
Schedules.  The parties hereto agree that the completed Company
Disclosure Schedules identified in Section 3 have not
been delivered as of the date of this Agreement and shall be delivered to
Madison Williams, PAC3 and Fletcher no later than three (3) Business Days prior
to Closing.  In the event all of such schedules are not delivered by
such date, Madison Williams, PAC3 and/ or Fletcher shall have the right to
terminate this Agreement pursuant to Section 7.1(b)
hereinbelow.

      
        
           

        

        
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      5.14         Adjustment of Working
Capital Amount.  From the date of this Agreement until Closing,
the profits and losses realized and incurred by the Business shall be allocated
pursuant to the allocation schedule set forth in Exhibit F (the “Allocation
Schedule”).  No later than five (5) Business Days prior to the
Closing, SMHG or its accountants shall prepare and deliver to Madison Williams
an estimated balance sheet, prepared in accordance with GAAP and the Allocation
Schedule, that fairly estimates and presents in all material respects the net
profits and losses of the Business (including any tax liability) as of January
1, 2009 through the Closing Date (the “Period”).  The
foregoing estimated balance sheet is referred to hereinafter as the “Estimated Balance
Sheet”).  In the event the Business incurs a net loss at the
end of the Period as set forth in the Estimated Balance Sheet, the Working
Capital Amount to be paid by the Company at Closing shall be decreased by an
amount equal to the net loss set forth in the Estimated Balance
Sheet.   In the event the Business realizes a net profit as set
forth in the Estimated Balance Sheet, the Working Capital Amount to be paid by
the Company at Closing shall be increased by an amount equal the net profit (net
of any tax liability) set forth in the Estimated Balance Sheet.  No
later than forty five (45) days after the Closing, SMHG or its accountants shall
prepare and deliver to Madison Williams a balance sheet, prepared in accordance
with GAAP and the Allocation Schedule, that fairly presents in all material
respects the actual net profits and losses of the Business during the Period
(the “Final Balance
Sheet”), including any losses incurred by SMHG or the Company after
Closing with respect to non-transferable client receivables of the Business that
existed as of the date of Closing.  Unless Madison Williams delivers a
written objection to SMHG by the fifteenth (15th) day
after its receipt of the Final Balance Sheet, the Final Balance Sheet will
become final and binding on the parties.  In the event the parties are
in agreement with the Final Balance Sheet and the Business incurs a net loss
during the Period, New BD shall remit to SMHG from the Working Capital Amount an
amount equal to the net loss within ten (10) days of such
agreement.  In the event the parties are in agreement with the Final
Balance Sheet and the Business realizes a net profit, SMHG shall remit to New BD
an amount equal to the net profit within ten (10) days of such
agreement.  If Madison Williams does object to the Final Balance
Sheet, the written objection must specify the specific items or calculations
with which it takes issue.  If Madison Williams objects in accordance
with the previous sentence, Madison Williams and SMHG shall, during the ten (10)
day period following such objection, negotiate in good faith to reach agreement
on the disputed items or amounts.  If, upon completion of such period,
Madison Williams and SMHG are unable to reach agreement, they shall promptly
thereafter cause a mutually agreed upon independent accountant to conduct an
audit and review the disputed items or calculations and all records used in the
calculation and preparation of the Final Balance Sheet.  Madison
Williams, SMHG and the Company shall, and shall cause their respective
directors, officers, employees and advisors to, cooperate and assist in the
conduct of the audit, including without limitation the making available, to the
extent reasonably necessary, books, records, work papers and
personnel.  Madison Williams and SMHG shall require the independent
accountant to deliver to them a report setting forth its calculations within
thirty (30) days after the engagement of the independent
accountant.  Such report will be final and binding upon the
parties.  Within ten (10) days after the independent accountant has
finished the audit and delivered its report, SMHG or New BD, as the case may be,
shall pay to the other all amounts owed pursuant to the independent accountant
report.  All payments under this Section 5.14 shall
include interest of 1.5% per month (or the maximum rate permitted by Applicable
Law) on the amount owed, with interest accruing from the date payment was due
through the date that payment in full plus the interest accrued is
received.  The expenses of the independent accountant will be shared
equally by Madison Williams and SMHG.

       

      5.15         Name Change; Use of
Name.  The Company shall use, and SMHG shall cause to the
Company to use, commercially reasonable efforts to file an amendment to its
certificate of incorporation with the state of Texas changing the Company’s name
to a name other than “SMH Capital Inc.”  As the sole stockholder of
the Company, SMHG shall consent to the change of the Company’s name pursuant to
the foregoing sentence.  SMHG and/ or the Company hereby grants to
Madison Williams and New BD the right to use the name “SMH” and any deviation
thereof for marketing purposes with respect to the conduct of Madison Williams
and/ or New BD business for a period of one (1) year after the
Closing.

      
        
           

        

        
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      5.16         Closing Unaudited Balance
Sheets.   Prior to the Closing, SMHG shall deliver to
Madison Williams unaudited consolidated balance sheet(s) of the Business for the
quarterly period(s) beginning after December 31, 2008 and ending prior to the
Closing Date (the “Closing Unaudited Balance
Sheets”), which shall not reflect the Contributed Assets, the Assumed
Liabilities or the Adjustment of Working Capital Amount pursuant to Section
5.14.

       

      SECTION
6. CLOSING CONDITIONS

       

      6.1           Conditions to the Obligation
of Madison
Williams and
New BD.  The
obligation of Madison Williams and New BD to consummate the transactions
contemplated by this Agreement is subject to the fulfillment or waiver by
Madison Williams, prior to or at Closing, of the following conditions
precedent:

       

       
(a)          Representations and
Warranties; Covenants.  Each of the representations and
warranties of PAC3, Fletcher, SMHG and the Company contained in this Agreement
and the Ancillary Agreements shall be true and correct as of the date hereof and
as of the Closing as though made on and as of the Closing (except that those
representations and warranties that address matters only as of a particular date
shall be true and correct as of such particular date) and PAC3, Fletcher, SMHG
and the Company shall, on or before the Closing, have performed their respective
obligations hereunder which by the terms hereof are to be performed on or before
Closing.

       

       
(b)          Registration of New
BD.  New BD shall have been registered as a broker-dealer with
the SEC under the Exchange Act and approved as a member of FINRA.

       

       
(c)          Officer’s Certificate; Other
Deliverables.  The Chief Executive Officer of PAC3, Fletcher,
SMHG and the Company each shall have delivered to Madison Williams a certificate
as to the satisfaction of the conditions set forth in Section 6.1(a) by
PAC3, Fletcher, SHMG and the Company, as the case may be.  All
documents, instruments and deliverables set forth in Sections 1.7 and
1.8 to be
delivered to Madison Williams and New BD shall have been duly executed and
delivered.

       

       
(d)          No
Litigation.  There shall have been no determination by Madison
Williams, acting in good faith after consultation with outside counsel, that the
consummation of the transactions contemplated by this Agreement has become
inadvisable or impracticable by reason of the institution or threat by any
Person (not party to this Agreement) or any federal, state or other Governmental
Authority or regulatory agency of litigation, Proceedings or other action
against Madison Williams, New BD, PAC3, Fletcher or any of their respective
equity holders which, whether or not arising in the ordinary course of business,
could reasonably be expected to have a Material Adverse Effect on the
Business.

       

       
(e)          Consents.  The
consents and approvals set forth in Section 5.8(c) shall
have been made and obtained.

      
        
           

        

        
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(f)           No
Injunctions.  No law of any Governmental Authority shall have
been enacted, entered, promulgated, deemed applicable, enforced or otherwise be
in effect that enjoins, restrains, makes illegal or otherwise prohibits the
consummation of this Agreement or any of the Ancillary Agreements and no legal
action or governmental investigation or proceeding which, if adversely
determined, shall be pending to prohibit the consummation of this Agreement or
any of the Ancillary Agreements.

       

        (g)          Balance
Sheets.  Madison Williams shall have received from SMHG and/ or
the Company the Estimated Balance Sheet and the Closing Unaudited Balance Sheets
pursuant to this Agreement.

       

       
(h)          The conditions
set forth in Sections 13 and 14 of the Agreement, dated as of November 8, 2009,
by and between Fletcher and SMHG shall have been satisfied or waived, it being
the understanding and agreement of each of the parties hereto that the
transactions contemplated in the Agreement shall be consummated simultaneously
with the transactions contemplated herein.

       

      6.2           Conditions to Obligations of
SMHG and the
Company.  SMHG’s
and the Company’s obligation to consummate the transactions contemplated by this
Agreement is subject to the fulfillment or waiver by SMHG, prior to or at the
Closing, of the following conditions precedent:

       

       
(a)          Representations and
Warranties; Covenants. Each of the respective representations and
warranties of Madison Williams, New BD, PAC3 and Fletcher contained in this
Agreement and the Ancillary Agreements shall be true and correct as of the date
hereof and as of the Closing as though made on and as of the Closing (except
that those representations and warranties that address matters only as of a
particular date shall be true and correct in all material respects as of such
particular date), and Madison Williams, New BD, PAC3 and Fletcher shall, on or
before the Closing, have performed in all material respects their respective
obligations hereunder which by the terms hereof are to be performed on or before
the Closing.

       

       
(b)          Officer’s Certificate; Other
Deliverables.  The Chief Executive Officer of Madison Williams,
New BD, PAC3 and Fletcher shall each have delivered to SMHG a certificate as to
the satisfaction of the conditions set forth in Section 6.2(a) by
Madison Williams, New BD, PAC3 and Fletcher, as the case may be.  All
documents, instruments and deliverables set forth in Sections 1.7 and
1.9 to be
delivered to SMHG and the Company shall have been duly executed and
delivered.

       

       
(c)          No
Litigation.  There shall have been no determination by SMHG,
acting in good faith after consultation with outside counsel, that the
consummation of the transactions contemplated by this Agreement has become
inadvisable or impracticable by reason of the institution or threat by any
Person (not party to this Agreement) or any federal, state or other Governmental
Authority or regulatory agency of litigation, Proceedings or other action
against SMHG, the Company or any of their respective equity holders which,
whether or not arising in the ordinary course of business, could reasonably be
expected to have a Material Adverse Effect on the Business.

      
        
           

        

        
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(d)          No
Injunctions.  No law of any Governmental Authority shall have
been enacted, entered, promulgated, deemed applicable, enforced or otherwise be
in effect that enjoins, restrains, makes illegal or otherwise prohibits the
consummation of this Agreement or any of the Ancillary Agreements and no legal
action or governmental investigation or proceeding which, if adversely
determined, shall be pending to prohibit the consummation of this Agreement or
any of the Ancillary Agreements.

       

       
(e)          The conditions
set forth in Sections 13 and 14 of the Agreement, dated as of November 8, 2009,
by and between Fletcher and SMHG shall have been satisfied or waived, it being
the understanding and agreement of each of the parties hereto that the
transactions contemplated in the Agreement shall be consummated simultaneously
with the transactions contemplated herein.

       

      6.3           Conditions to the Obligation
of PAC3.  The
obligation of PAC3 to consummate the transactions contemplated by this Agreement
is subject to the fulfillment or waiver by PAC3, prior to or at the Closing, of
the following conditions precedent:

       

       
(a)          Representations and
Warranties; Covenants.  Each of the representations and
warranties of Madison Williams, New BD, SMHG, the Company and Fletcher contained
in this Agreement and the Ancillary Agreements shall be true and correct as of
the date hereof and as of the Closing as though made on and as of the Closing
(except that those representations and warranties that address matters only as
of a particular date shall be true and correct as of such particular date); and
Madison Williams, New BD, SMHG, the Company and Fletcher shall, on or before the
Closing, have performed their respective obligations hereunder which by the
terms hereof are to be performed on or before the Closing.

       

       
(b)          Registration of New
BD.  New BD shall have been registered as a broker-dealer with
the SEC under the Exchange Act and approved as a member of FINRA.

       

       
(c)          Officer’s Certificate; Other
Deliverables.  The Chief Executive Officer of Madison Williams,
New BD, SMHG, the Company and Fletcher shall have delivered to PAC3 a
certificate as to the satisfaction of the conditions set forth in Section 6.3(a) by
Madison Williams, New BD, SMHG, the Company and Fletcher, as the case may
be.  All documents, instruments and deliverables set forth in Sections 1.7(b),
1.8 and 1.9 to be delivered
to PAC3 shall have been duly executed and delivered.

       

       
(d)          No
Litigation.  There shall have been no determination by PAC3,
acting in good faith after consultation with outside counsel, that the
consummation of the transactions contemplated by this Agreement has become
inadvisable or impracticable by reason of the institution or threat by any
Person (not party to this Agreement) or any federal, state or other Governmental
Authority or regulatory agency of litigation, Proceedings or other action
against Madison Williams, New BD, PAC3, Fletcher or any of their respective
equity holders which, whether or not arising in the ordinary course of business,
could reasonably be expected to have a Material Adverse Effect on the
Business.

       

       
(e)          Consents.  The
consents and approvals set forth in Section 5.8(c) shall
have been made and obtained.

      
        
           

        

        
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(f)           No
Injunctions.  No law of any Governmental Authority shall have
been enacted, entered, promulgated, deemed applicable, enforced or otherwise be
in effect that enjoins, restrains, makes illegal or otherwise prohibits the
consummation of this Agreement or any of the Ancillary Agreements and no legal
action or governmental investigation or proceeding which, if adversely
determined, shall be pending to prohibit the consummation of this Agreement or
any of the Ancillary Agreements.

       

       
(g)          The conditions
set forth in Sections 13 and 14 of the Agreement, dated as of November 8, 2009,
by and between Fletcher and SMHG shall have been satisfied or waived, it being
the understanding and agreement of each of the parties hereto that the
transactions contemplated in the Agreement shall be consummated simultaneously
with the transactions contemplated herein.

       

      6.4           Conditions to the Obligation
of Fletcher.  The
obligation of Fletcher to consummate the transactions contemplated by this
Agreement is subject to the fulfillment or waiver by Fletcher, prior to or at
the Closing, of the following conditions precedent:

       

       
(a)          Representations and
Warranties; Covenants.  Each of the representations and
warranties of Madison Williams, New BD, SMHG, the Company and PAC3 contained in
this Agreement and the Ancillary Agreements shall be true and correct as of the
date hereof and as of the Closing as though made on and as of the Closing
(except that those representations and warranties that address matters only as
of a particular date shall be true and correct as of such particular date); and
Madison Williams, New BD, SMHG, the Company and PAC3 shall, on or before the
Closing, have performed their respective obligations hereunder which by the
terms hereof are to be performed on or before the Closing.

       

       
(b)          Registration of New
BD.  New BD shall have been registered as a broker-dealer with
the SEC under the Exchange Act and approved as a member of FINRA.

       

       
(c)          Officer’s Certificate; Other
Deliverables.  The Chief Executive Officer of Madison Williams,
New BD, SMHG, the Company and PAC3 shall have delivered to Fletcher a
certificate as to the satisfaction of the conditions set forth in Section 6.4(a) by
Madison Williams, New BD, SMHG, the Company and PAC3, as the case may
be.  All documents, instruments and deliverables set forth in Sections 1.7(a),
1.8 and 1.9 to be delivered
to Fletcher shall have been duly executed and delivered.

       

       
(d)          No
Litigation.  There shall have been no determination by
Fletcher, acting in good faith after consultation with outside counsel, that the
consummation of the transactions contemplated by this Agreement has become
inadvisable or impracticable by reason of the institution or threat by any
Person (not party to this Agreement) or any federal, state or other Governmental
Authority or regulatory agency of litigation, Proceedings or other action
against Madison Williams, New BD, Fletcher, PAC3 or any of their respective
equity holders which, whether or not arising in the ordinary course of business,
could reasonably be expected to have a Material Adverse Effect on the
Business.

       

       
(e)          Consents.  The
consents and approvals set forth in Section 5.8(c) shall
have been made and obtained.

      
        
           

        

        
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(f)           No
Injunctions.  No law of any Governmental Authority shall have
been enacted, entered, promulgated, deemed applicable, enforced or otherwise be
in effect that enjoins, restrains, makes illegal or otherwise prohibits the
consummation of this Agreement or any of the Ancillary Agreements and no legal
action or governmental investigation or proceeding which, if adversely
determined, shall be pending to prohibit the consummation of this Agreement or
any of the Ancillary Agreements.

       

       
(g)          The completed
Company Disclosure Schedules identified in Section 3 shall have been delivered
to Fletcher no later than three (3) Business Days prior to Closing.

       

       
(h)          The conditions
set forth in Sections 13 and 14 of the Agreement, dated as of November 8, 2009,
by and between Fletcher and SMHG shall have been satisfied or waived, it being
the understanding and agreement of each of the parties hereto that the
transactions contemplated in the Agreement shall be consummated simultaneously
with the transactions contemplated herein.

       

      SECTION
7. TERMINATION OF AGREEMENT

       

      7.1           Termination.

       

       
(a)          General.  This
Agreement may be terminated at any time prior to the Closing only by written
notice and only as follows:

       

       
(i)           by written
agreement of the parties;

       

       
(ii)          by any party at
any time after the Termination Date, if Closing has not theretofore occurred;
provided, that a party may not terminate this Agreement pursuant to this Section 7(a)(ii) if
the failure to close is the result of an act or omission by such party in breach
of this Agreement;

       

       
(iii)         by any party in the
event of the breach by another party of (A) any representation or warranty
contained herein or in any Schedule or document delivered in connection
herewith, or (B) any agreement contained herein, which breach has not been (or
cannot be) cured within 15 days after written notice to the breaching party or
the Closing Date, whichever is earlier and which breach could reasonably be
expected to have a Material Adverse Effect on the Business; provided, however,
that, notwithstanding the foregoing, a party in material breach of any provision
of this Agreement may not terminate this Agreement pursuant to this Section 7.1(a)(iii);
or

       

       
(iv)         by any party if any
permanent injunction or action by any court or other Governmental Body or body
of competent jurisdiction enjoining, denying any required approval of or
otherwise prohibiting consummation of any of the transactions contemplated by
this Agreement becomes final and nonappealable.

      
        
           

        

        
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(b)          Termination by Madison
Williams, PAC3 and Fletcher.  This Agreement may be terminated
upon notice by Madison Williams, PAC3 and/ or Fletcher to SMHG and the Company
in the event (i) the Company Disclosure Schedules have not be delivered to
Madison Williams, PAC3 and Fletcher pursuant to Section 5.13
hereinabove, or (ii) the disclosures set forth in the delivered Company
Disclosure Schedules discloses adverse information, claims, expenses, issues or
liabilities of the Company not acceptable to Madison Williams, PAC3 and Fletcher
in their respective sole discretion; provided, however, that in the case of a
termination pursuant to clause (i), notice shall be delivered to SMHG on or
before November 16, 2009 and, in the case of a termination pursuant to clause
(ii), notice shall be delivered to SMHG within three (3) Business Days after
receipt of such Company Disclosure Schedules or prior to the Closing Date
whichever is earlier.

       

       
(c)          Effect of Termination and
Abandonment.  In the event of termination of this Agreement
hereby pursuant to this Section, this Agreement will become void and have no
effect except that this Section 7 and Sections 5.10 and
9 hereof will
survive any termination of this Agreement, and except that, notwithstanding
anything in this Agreement to the contrary, no party shall be relieved or
released from any liabilities or damages arising out of its fraud or willful
breach of any provision of this Agreement.

       

      SECTION
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

       

      8.1           Survival.

       

       
(a)          All
representations, warranties, covenants, and agreements of the parties made in
this Agreement, in any Disclosure Schedule delivered hereunder or in any
Ancillary Agreement (i) shall be deemed to have been relied upon by the
party or parties to whom they are made, and, subject to Section 8.1(b)
below, shall survive the Closing regardless of any investigation on the part of
such party or its representatives and (ii) shall bind the parties’
successors and assigns, whether so expressed or not, and, except as otherwise
provided in this Agreement, all such representations, warranties, covenants and
agreements shall inure to the benefit of the parties and their respective
successors and assigns and to their transferees of securities, whether so
expressed or not.

       

       
(b)          The
representations and warranties contained in Sections 2, 3 and 4 hereof shall expire
and terminate and be of no further force and effect after the second anniversary
of the Closing, except that any written claim for breach thereof made prior to
such expiration date and delivered to the party against whom such
indemnification is sought shall survive thereafter and, as to any such claim,
such applicable expiration will not effect the rights to indemnification of the
party making such claim; provided, however, that (i) any such written claim by
Madison Williams or New BD with respect to a breach of the representations and
warranties of PAC3, Fletcher, SMHG or the Company with respect to a breach of
the representations or warranties contained in Sections 2.2, 2.3, 2.6 and 2.9 of each of Sections 2A and 2B and Sections 3.2, 3.9, 3.11(d), 3.16, 3.18, 3.22, 3.23 and 3.27 or fraud on the
part of PAC3, Fletcher, SMHG or the Company of any provision of this Agreement
or Ancillary Agreement be given at any time, subject to any applicable statutes
of limitation; (ii) any such written claim by SMHG with respect to a breach of
the representations and warranties of Madison Williams, New BD,  PAC3
or Fletcher with respect to a breach of the representations or warranties
contained in Sections
2.2, 2.3, 2.6 and 2.9 of each of Sections 2A and 2B and Sections 4.2, 4.3, 4.5 and 4.7 or fraud on the
part of PAC3, Fletcher, Madison Williams or New BD of any provision of this
Agreement or Ancillary Agreement be given at any time, subject to any applicable
statutes of limitation; (iii) any such written claim by PAC3 with respect to a
breach of the representations and warranties of Madison Williams, New BD, SMHG,
the Company or Fletcher with respect to a breach of the representations or
warranties contained in Sections 2.2, 2.3, 2.6 and 2.9 of Section 2B and Sections 3.2, 3.11(d), 3.16, 3.18, 3.22, 3.23, 3.27, 4.2, 4.3, 4.5 and 4.7 or fraud on the
part of Madison Williams, New BD, SMHG, the Company or Fletcher of any provision
of this Agreement or Ancillary Agreement be given at any time, subject to any
applicable statutes of limitation be given at any time, subject to any
applicable statute of limitation, and (iv) any such written claim by Fletcher
with respect to a breach of the representations and warranties of Madison
Williams, New BD, SMHG, the Company or PAC3 with respect to a breach of the
representations or warranties contained in Sections 2.2, 2.3, 2.6 and 2.9 of Section 2A and Sections 3.2, 3.11(d), 3.16, 3.18, 3.22, 3.23, 3.27, 4.2, 4.3, 4.5 and 4.7 or fraud on the
part of Madison Williams, New BD, SMHG, the Company or PAC3 of any provision of
this Agreement or Ancillary Agreement be given at any time, subject to any
applicable statutes of limitation.

      
        
           

        

        
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      8.2           Indemnification.

       

       
(a)          Indemnification by SMHG and
the Company.

       

       
(i)           Except as
provided in Sections
1.3 and 5.8(a) hereof, from
and after Closing, SMHG and the Company, jointly and severally, agree to defend,
indemnify and hold Madison Williams, New BD and their respective directors,
managers, members, officers, employees and agents (the “Madison Williams Indemnified
Parties”) harmless from and against any and all damages, liabilities,
losses, claims, obligations, liens, assessments, judgments, Taxes, fines,
penalties, reasonable costs and expenses (including, without limitation,
reasonable fees of counsel and costs), as the same are incurred, of any kind or
nature whatsoever (whether or not arising out of third-party claims and
including all amounts paid in investigation, defense or settlement of the
foregoing) (“Losses”) which may be
sustained or suffered by any Madison Williams Indemnified Party based upon,
arising out of, or by reason of (A) any breach of any representation or
warranty made by SMHG or the Company in this Agreement or any Ancillary
Agreement, (B) any breach of any covenant or agreement made by SMHG or the
Company in this Agreement or any Ancillary Agreement, (C) any and all Losses
resulting from or relating to the Contributed Assets and/ or the operations of
the Business on and prior to the Closing Date (including claims made after
Closing which relate to matters or events in existence or which arose on or
prior to the Closing Date), (D) any and all Losses resulting from the actions of
any Governmental Authority with respect to the operations of the Business prior
to the Closing Date, except if such Loss is the result of the negligence or
willful misconduct of any Madison Williams Indemnified Party or PAC3 Indemnified
Party and (E) any and all Losses arising out of or related to the Excluded
Liabilities.

       

       
(ii)          From and after
Closing, SMHG and the Company, jointly and severally, agree to defend, indemnify
and hold PAC3 and its directors, managers, members, officers, employees and
agents (the “PAC3
Indemnified Parties”) harmless from and against any and all Losses which
may be sustained or suffered by any PAC3 Indemnified Party based upon, arising
out of, or by reason of (A) any breach of any representation or warranty
made by SMHG or the Company in this Agreement or any Ancillary Agreement,
(B) any breach of any covenant or agreement made by SMHG or the Company in
this Agreement or any Ancillary Agreement, (C) any and all Losses resulting from
or relating to the Contributed Assets and/ or the operations of the Business on
and prior to the Closing Date (including claims made after Closing which relate
to matters or events in existence or which arose on or prior to the Closing
Date), and (D) any and all Losses resulting from the actions of any Governmental
Authority with respect to the operations of the Business prior to the Closing
Date, except if such Loss is the result of the negligence or willful misconduct
of any Madison Williams Indemnified Party or PAC3 Indemnified Party and (E) any
and all Losses arising out of or related to the Excluded
Liabilities.

      
        
           

        

        
          -40-

          
            

          

        

        
           

        

      

       
(iii)         From and after
Closing, SMHG and the Company, jointly and severally, agree to defend, indemnify
and hold Fletcher, its subscribing affiliate (if applicable) and their
respective directors, officers, employees and agents (the “Fletcher Indemnified
Parties”) harmless from and against any and all Losses which may be
sustained or suffered by any Fletcher Indemnified Party based upon, arising out
of, or by reason of (A) any breach of any representation or warranty made
by SMHG or the Company in this Agreement or any Ancillary Agreement,
(B) any breach of any covenant or agreement made by SMHG or the Company in
this Agreement or any Ancillary Agreement, (C) any and all Losses resulting from
or relating to the Contributed Assets and/ or the operations of the Business on
and prior to the Closing Date (including claims made after Closing which relate
to matters or events in existence or which arose on or prior to the Closing
Date), and (D) any and all Losses resulting from the actions of any Governmental
Authority with respect to the operations of the Business prior to the Closing
Date, except if such Loss is the result of the negligence or willful misconduct
of any Madison Williams Indemnified Party or PAC3 Indemnified Party and (E) any
and all Losses arising out of or related to the Excluded
Liabilities.

       

       
(iv)         For purposes of this
Section 8.2(a),
Losses incurred by Madison Williams, New BD, PAC3 and Fletcher shall not include
any Losses as the result of their indemnification of any Madison Williams
Indemnified Party, PAC3 Indemnified Party or Fletcher Indemnified Party who is
not entitled to indemnification pursuant to Sections 8.2(a)(i),
8.2(a)(ii) or
8.2(a)(iii)
respectively.

       

       
(b)          Indemnification by Madison
Williams and New BD.  Madison Williams and New BD, jointly and
severally, agree to defend, indemnify and hold SMHG, the Company and their
respective directors, officers, employees and agents (the “SMHG Indemnified
Parties”) harmless from and against any and all Losses which may be
sustained or suffered by any SMHG Indemnified Party based upon, arising out of,
or by reason of (i) any breach of any representation or warranty made by Madison
Williams or New BD in this Agreement or any Ancillary Agreement, (ii) any breach
of any covenant or agreement made by Madison Williams or New BD in this
Agreement or any Ancillary Agreement, and (iii) any and all Losses resulting
from or relating to the Contributed Assets and the Assumed Liabilities after
Closing, except, in the cases of clauses (ii) through (iii) of this sentence, if
such Loss is the result of the negligence or willful misconduct of the SMHG
Indemnified Party seeking indemnification.  Madison Williams and New
BD agree to defend, indemnify and hold the PAC3 Indemnified Parties harmless
from and against any and all Losses which may be sustained or suffered by any
PAC3 Indemnified Party based upon, arising out of, or by reason of (i) any
breach of any representation or warranty made by Madison Williams or New BD in
this Agreement or any Ancillary Agreement, and (ii) any breach of any covenant
or agreement made by Madison Williams or New BD in this Agreement or any
Ancillary Agreement.  Madison Williams and New BD agree to defend,
indemnify and hold the Fletcher Indemnified Parties harmless from and against
any and all Losses which may be sustained or suffered by any Fletcher
Indemnified Party based upon, arising out of, or by reason of (i) any breach of
any representation or warranty made by Madison Williams or New BD in this
Agreement or any Ancillary Agreement, and (ii) any breach of any covenant or
agreement made by Madison Williams or New BD in this Agreement or any Ancillary
Agreement.

      
        
           

        

        
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(c)          Indemnification by
PAC3.  From and after the Closing, PAC3 agrees to defend,
indemnify and hold the SMHG Indemnified Parties harmless from and against any
and all Losses which may be sustained or suffered by any SMHG Indemnified Party
based upon, arising out of, or by reason of (i) any breach of any representation
or warranty made by PAC3 in this Agreement or any Ancillary Agreement, and (ii)
any breach of any covenant or agreement made by PAC3 in this Agreement or any
Ancillary Agreement.  From and after the Closing, PAC3 agrees to
defend, indemnify and hold the Madison Williams Indemnified Parties harmless
from and against any and all Losses which may be sustained or suffered by any
Madison Williams Indemnified Party based upon, arising out of, or by reason of
(i) any breach of any representation or warranty made by PAC3 in this Agreement
or any Ancillary Agreement, and (ii) any breach of any covenant or agreement
made by PAC3 in this Agreement or any Ancillary Agreement.  From and
after the Closing, PAC3 agrees to defend, indemnify and hold the Fletcher
Indemnified Parties harmless from and against any and all Losses which may be
sustained or suffered by any Fletcher Indemnified Party based upon, arising out
of, or by reason of (i) any breach of any representation or warranty made by
PAC3 in this Agreement or any Ancillary Agreement, and (ii) any breach of any
covenant or agreement made by PAC3 in this Agreement or any Ancillary
Agreement.

       

       
(d)          Indemnification by
Fletcher.  From and after the Closing, Fletcher agrees to
defend, indemnify and hold the SMHG Indemnified Parties harmless from and
against any and all Losses which may be sustained or suffered by any SMHG
Indemnified Party based upon, arising out of, or by reason of (i) any breach of
any representation or warranty made by Fletcher (or its subscribing affiliate if
applicable) in this Agreement or any Ancillary Agreement, and (ii) any breach of
any covenant or agreement made by Fletcher (or its subscribing affiliate if
applicable) in this Agreement or any Ancillary Agreement.  From and
after the Closing, Fletcher agrees to defend, indemnify and hold the Madison
Williams Indemnified Parties harmless from and against any and all Losses which
may be sustained or suffered by any Madison Williams Indemnified Party based
upon, arising out of, or by reason of (i) any breach of any representation or
warranty made by Fletcher (or its subscribing affiliate if applicable) in this
Agreement or any Ancillary Agreement, and (ii) any breach of any covenant or
agreement made by Fletcher (or its subscribing affiliate if applicable) in this
Agreement or any Ancillary Agreement.  From and after the Closing,
Fletcher agrees to defend, indemnify and hold the PAC3 Indemnified Parties
harmless from and against any and all Losses which may be sustained or suffered
by any PAC3 Indemnified Party based upon, arising out of, or by reason of (i)
any breach of any representation or warranty made by Fletcher (or its
subscribing affiliate if applicable) in this Agreement or any Ancillary
Agreement, and (ii) any breach of any covenant or agreement made by Fletcher (or
its subscribing affiliate if applicable) in this Agreement or any Ancillary
Agreement. 

      
        
           

        

        
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      8.3           Notice; Payment of Losses;
Defense of Claims.

       

       
(a)          An indemnified
party shall give the indemnifying party notice of any matter which an
indemnified party has determined has given or could give rise to a right of
indemnification under this Agreement within sixty (60) days of such
determination, stating the amount of the Losses, if known, and method of
computation thereof, and containing a reference to the provisions of this
Agreement in respect of which such right of indemnification is claimed or
arises.

       

       
(b)          An indemnified
party shall give written notice of a claim for indemnification under Section 8.2 to
the indemnifying party, promptly after receipt of any written claim by any third
party (each a “Third
Party Claim”) and in any event not later than twenty (20) Business Days
after receipt of any such written claim (or not later than ten (10) Business
Days after the receipt of any such written claim in the event such written claim
is in the form of a formal complaint filed with a court of competent
jurisdiction and served on the indemnified party), specifying in reasonable
detail the amount, nature and source of the claim, and including therewith
copies of any notices or other documents received from third parties with
respect to such claim; provided, however, that failure
to give such notice shall not limit the right of an indemnified party to recover
indemnity or reimbursement except to the extent that the indemnifying party
suffers any material prejudice or material harm with respect to such claim as a
result of such failure.  The indemnified party shall also provide the
indemnifying party, to the extent such Third Party Claim relates to
indemnification under Section 8.2
above, with such further information concerning any such claims as the
indemnifying party may reasonably request by written notice.  If the
indemnifying party (i) gives written notice to the indemnified party
stating that such indemnifying party would be liable under the provisions hereof
for indemnity in the amount of such Third Party Claim if such claim were valid
and that such indemnifying party disputes and intends to defend against such
claim, liability or expense at such indemnifying party’s own cost and expense
and (ii) provides assurance reasonably acceptable to such indemnified party
that such indemnification will be paid fully and promptly if required, then
counsel for the defense shall be selected by such indemnifying party (subject to
the consent of such indemnified party, which consent shall not be unreasonably
withheld) and such indemnifying party shall not be required to make any payment
to the indemnified party with respect to such claim, liability or expense as
long as such indemnifying party is conducting a good faith and diligent defense
at its own expense; provided, however, that the assumption of defense of any
such matters by such indemnifying party shall relate solely to the claim,
liability or expense that is subject or potentially subject to
indemnification.  If the indemnifying party assumes such defense in
accordance with the preceding sentence, it shall have the right, with the
consent of such indemnified party, which consent shall not be unreasonably
withheld, to settle all indemnifiable matters related to Third Party Claims
which are susceptible to being settled provided the settlement includes a
complete release of such indemnified party.  The indemnifying party
shall keep such indemnified party apprised of the status of the claim, liability
or expense and any resulting suit, proceeding or enforcement action, shall
furnish such indemnified party with all documents and information that such
indemnified party shall reasonably request and shall consult with such
indemnified party prior to acting on major matters, including settlement
discussions.  Notwithstanding anything herein stated, such indemnified
party shall at all times have the right to fully participate in such defense at
its own expense directly or through counsel; provided, however, if the named
parties to the action or proceeding include both the indemnifying party and any
indemnified party and representation of such parties by the same counsel would
be inappropriate under applicable standards of professional conduct, the
reasonable expense of separate counsel for such indemnified party shall be paid
by such indemnifying party (but such indemnifying party shall be obligated to
pay for only one counsel for such indemnified party in any
jurisdiction).  If no such notice of intent to dispute and defend is
given by the indemnifying party or if in the reasonable judgment of the
indemnified party such diligent good faith defense is not being or ceases to be
conducted, such indemnified party may undertake the defense of (with counsel
selected by such indemnified party), and shall have the right to compromise or
settle, such Third Party Claim, liability or expense (exercising reasonable
business judgment).  If such Third Party Claim, liability or expense
is one that by its nature cannot be defended solely by the indemnifying party,
then such indemnified party shall make available all information and assistance
that the indemnifying party may reasonably request and shall cooperate with such
indemnifying party in such defense.  For purposes of this Section 8.2,
each party shall provide all reasonable assistance to any indemnifying party and
any indemnified party, as the case may be, necessary to defend against any Third
Party Claim or any liability or expense related to such Third Party
Claim.

      
        
           

        

        
          -43-

          
            

          

        

        
           

        

      

      8.4           Exclusive Remedy.  Except
as otherwise specifically provided herein, the remedies provided in Section 8.2 shall be
the exclusive monetary remedies (including equitable remedies that involve
monetary payment, such as restitution or disgorgement, other than specific
performance to enforce any payment or performance due hereunder or any other
equitable remedies) of the parties from and after the Closing in connection with
any breach of a representation or warranty, or non performance, partial or
total, of any covenant or agreement contained herein or in the Ancillary
Agreements.

       

      SECTION
9. MISCELLANEOUS

       

      9.1           Construction; Absence of
Presumption.

       

       
(a)          For the purposes
of this Agreement: (i) words (including capitalized terms defined herein) in the
singular shall be held to include the plural and vice versa and words (including
capitalized terms defined herein) of one gender shall be held to include the
other gender as the context requires; (ii) the terms “hereof,” “herein” and
“herewith” and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole (including all of the Exhibits)
and not to any particular provision of this Agreement, and Article, Section,
paragraph and Exhibit references are to the Articles, Sections, paragraphs and
Exhibits to this Agreement, unless otherwise specified; (iii) the word
“including” and words of similar import when used in this Agreement means
“including without limitation”; (iv) “commercially reasonable efforts,” and
“reasonable efforts” shall not require a waiver by any party of any material
rights or any action or omission that would be a breach of this Agreement; (v)
all references to any period of days shall be deemed to be to the relevant
number of calendar days unless otherwise specified; and (vi) all references
herein to “$” or dollars shall refer to United States dollars, unless otherwise
specified.

       

       
(b)          The parties
hereby acknowledge that each party and its counsel have reviewed and revised
this Agreement and that no rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall be employed in
the interpretation of this Agreement (including all of the Exhibits and
Schedules) or any amendments hereto or thereto.

      
        
           

        

        
          -44-

          
            

          

        

        
           

        

      

       
(c)          The parties
hereby acknowledge and agree that to the extent that there is a conflict between
any (i) general provision of this Agreement and (ii) provision specifically
relating to Tax matters, the terms of the specific Tax provision shall
control.

       

      9.2           Fees and
Expenses.  Except
as otherwise set forth herein, subject to Section 8, each of
the parties will bear its respective own expenses in connection with the
negotiation, execution, delivery and performance of this Agreement and the
Ancillary Agreements.  Notwithstanding the foregoing and in the event
the Closing does not occur and SMHG is not entitled to the Second Cash Payment
as liquidated damages pursuant to Section 1.6(d), the
reasonable legal, accounting and other professional expenses and fees incurred
by Madison Williams, New BD and their respective principals in connection with
the negotiation, execution, delivery and performance of this Agreement and the
Ancillary Agreements shall be paid by SMHG.

       

      9.3           Governing Law; Venue; Waiver of Jury
Trial.  This
Agreement shall be construed under and governed by the internal laws of the New
York without regard to its conflict of laws provisions.  Each of the
parties hereto irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of any state or Federal court located within either New
York County, New York, or Houston, Harris County, Texas, for all disputes
arising under or based on this Agreement, and each of the parties agrees not to
commence any action, suit or proceeding relating to any dispute except in such
courts.  Each of the parties irrevocably and unconditionally waives
any objection to the laying of venue of any action, suit or proceeding arising
out of any dispute in the state or Federal courts within either New York County,
New York, or Houston, Harris County, Texas, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in such court has been brought in an
inconvenient forum.  For at least 30 days prior to filing any suit to
enforce this Agreement, the parties will attempt in good faith to resolve any
dispute.  EACH OF THE PARTIES HERETO (ON BEHALF OF ITSELF AND, TO THE
FULLEST EXTENT PERMITTED BY LAW, ON BEHALF OF ITS OR HIS EQUITY HOLDERS AND
CREDITORS) HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM
BASED UPON, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.  Each of the parties
hereto agrees that the prevailing party(ies) in any action arising out of this
Agreement and the transactions contemplated thereby shall be entitled to recover
from the other party(ies) all of its reasonable attorneys’ fees and expenses
relating to such action and/or incurred in connection with the preparation
therefor.

       

      9.4           Notices.  Any
notice, request, demand, consent or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been given if
delivered or sent by facsimile transmission, upon receipt, or if sent by
registered, overnight or certified mail, upon the sooner of the date on which
receipt is acknowledged or the expiration of three days after deposit in United
States post office facilities properly addressed with postage
prepaid.  All notices to a party will be sent to the addresses set
forth below or to such other address or person as such party may designate by
notice to each other party hereunder:

      
        
           

        

        
          -45-

          
            

          

        

        
           

        

      

       

      
        
          
            
              
                
                  
                    
                      
                        	
                                To
      Madison Williams or New BD:

                                    

                                Madison
      Williams Capital, LLC

                                527
      Madison Avenue, 14th Floor

                                New
      York, New York 10022

                                Attn:
      William W. Sprague

                                Facsimile:    

                              	
                                With
      a copy to:

                                   

                                Ellenoff
      Grossman & Schole LLP

                                150
      East 42nd
      Street

                                New
      York, New York 10017

                                Attn:
      Douglas S. Ellenoff

                                Facsimile:  (212)
      370-7889

                              
	 	 
	
                                To
      SMHG or the Company:

                                   

                                Sanders
      Morris Harris Group Inc.

                                600
      Travis, Suite 5800

                                Houston,
      Texas 77002

                                Attn:  Chief
      Executive Officer

                                Facsimile:    

                              	
                                With
      a copy to:

                                  

                                General
      Counsel

                                Sanders
      Morris Harris Group Inc.

                                600
      Travis, Suite 5800

                                Houston,
      Texas 77002

                                Facsimile:
      (713) 220-5182

                              
	 	 
	
                                To
      PAC3:

                                  

                                Pan
      Asia China Commerce Corp.

                                527
      Madison Avenue, 14th Floor

                                New
      York, New York 10022

                                Attn:
      Chief Executive Officer

                                Facsimile:   

                              	
                                With
      a copy to:

                                  

                                Ellenoff
      Grossman & Schole LLP

                                150
      East 42nd
      Street

                                New
      York, New York 10017

                                Attn:
      Douglas S. Ellenoff

                                Facsimile:  (212)
      370-7889

                              
	 	 
	
                                To
      Fletcher:

                                    

                                Fletcher
      Asset Management Inc.

                                48
      Wall Street, 5th Floor

                                New
      York, New York 10005

                                Attn:
      Stewart Turner

                                Facsimile:

                              	
                                With
      a copy to:

                                  

                                Skadden,
      Arps, Slate, Meagher & Flom LLP

                                525
      University Avenue, Suite 1100

                                Palo
      Alto, California 94301

                                Attn:
      Leif B. King

                                Facsimile:  (650)
      470-4570

                              

                      

                    

                  

                

              

            

          

        

      

       

      
        
           

        

        
          -46-

          
            

          

        

        
           

        

      

      Any
notice given hereunder may be given on behalf of any party by its counsel or
other authorized representatives.

       

      9.5           Entire
Agreement.  This
Agreement and the Ancillary Agreements, including the Schedules and Exhibits
referred to herein and thereto and the other writings specifically identified
herein or contemplated hereby, is complete, reflects the entire agreement of the
parties with respect to its subject matter, and supersedes all previous written
or oral negotiations, commitments and writings including, without limitation,
the Previous Agreement.  No promises, representations, understandings,
warranties and agreements have been made by any of the parties hereto except as
referred to herein or in such Schedules and Exhibits or in such other writings;
and all inducements to the making of this Agreement relied upon by either party
hereto have been expressed herein or in such Schedules or Exhibits or in such
other writings.

       

      9.6           Publicity and
Disclosures.  No
press releases or public disclosure, either written or oral, of the transactions
contemplated by this Agreement, shall be made by a party to this Agreement or
any representative or agent thereof without the prior written consent of the
other parties, except as is required by Applicable Laws.

       

      9.7           Assignability; Binding
Effect.  This
Agreement may not be assigned by a party without the prior written consent of
the other parties provided that Fletcher may assign all or a portion of its
rights under this Agreement to any of its affiliates.  This Agreement
shall be binding upon and enforceable by, and shall inure to the benefit of, the
parties hereto and their respective successors and permitted
assigns.

       

      9.8           Execution in
Counterparts.  For
the convenience of the parties and to facilitate execution, this Agreement may
be executed in two or more counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same
document.  Facsimile signatures shall have the same legal effect as
manual signatures.

       

      9.9           Amendments.  This
Agreement may not be amended or modified, nor may compliance with any condition
or covenant set forth herein be waived, except by a writing duly and validly
executed by each party hereto, or in the case of a waiver, the party waiving
compliance.

       

      9.10         Captions.  The
captions in this Agreement are for convenience only and shall not affect the
construction or interpretation of any term or provision hereof.

       

      9.11         Waiver,
etc. 
The failure of any of the parties hereto to at any time enforce any of the
provisions of this Agreement shall not be deemed or construed to be a waiver of
any such provision, nor to in any way effect the validity of this Agreement or
any provision hereof or the right of any of the parties hereto to thereafter
enforce each and every provision of this Agreement.  No waiver of any
breach, non-compliance or non-fulfillment of any of the provisions of this
Agreement shall be effective unless set forth in a written instrument executed
by the party or parties against whom or which enforcement of such waiver is
sought; and no waiver of any such breach, non-compliance or non-fulfillment
shall be construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.

      
        
           

        

        
          -47-

          
            

          

        

        
           

        

      

      9.12         Severability.  In
the event that any provision of this Agreement, or the application thereof,
becomes or is declared by a court of competent jurisdiction to be illegal, void
or unenforceable, the remainder of this Agreement will continue in full force
and effect and the application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the intent of the
parties hereto.  The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.

       

      9.13         Definitions.  For
purposes of this Agreement and the Exhibits and Schedules hereto, the following
terms shall have the respective meanings set forth in this Section 9.13:

       

      “Accounts Receivable”
shall have the meaning specified in Section
1.2(b).

       

      “Act” shall have the
meaning specified in Section 2.3 of Section
2A.

       

      “Agreement” means this
Contribution Agreement.

       

      “Allocation Schedule”
shall have the meaning specified in Section
5.14.

       

      “Ancillary Agreements”
shall have the meaning specified in Section 2.1 of Section
2A.

       

      “Applicable Law” means
any domestic or foreign federal, state or local statute, law (whether statutory
or common law), ordinance, rule, administrative interpretation, regulation,
order, writ, injunction, directive, judgment, decree, policy, guideline or other
requirement (including those of the FINRA or any other self regulatory
organization) applicable to and legally binding on the parties or any of their
respective affiliates, equity holders, properties, assets, officers, directors,
employees or agents, as the case may be.

       

      “Assets” means the
Company Assets and Coker Palmer Assets.

       

      “Assignment Agreement”
shall have the meaning specified in Section
1.6(b)(i).

       

      “Assumed Liabilities”
shall have the meaning specified in Section
1.3.

       

      “Bill of Sale” shall
have the meaning specified in Section
1.6(b)(ii).

       

      “Business” shall have
the meaning specified in the recitals hereto.

       

      “Business Day” means
any day other than a Saturday, Sunday or day on which banking institutions in
New York, New York, are authorized or obligated pursuant to Applicable Law or
executive order to be closed.

       

      “Class A Membership
Interest” shall have the meaning ascribed to it in the LLC
Agreement.

      
        
           

        

        
          -48-

          
            

          

        

        
           

        

      

      “Class B Membership
Interest” shall have the meaning ascribed to it in the LLC
Agreement.

       

      “Class C Membership
Interest” shall have the meaning ascribed to it in the LLC
Agreement.

       

      “Closing” shall have
the meaning specified in Section
1.6(d).

       

      “Closing Unaudited Balance
Sheets” shall have the meaning specified in Section
5.16.

       

      “Closing Date” shall
mean the date of the Closing.

       

      “Code” means the
Internal Revenue Code of 1986, as amended.

       

      “Coker Palmer Assets”
shall have the meaning specified in Section
1.2(e).

       

      “Company” shall have
the meaning specified in the preamble hereto.

       

      “Company Assets” shall
have the meaning specified in Section
1.2(d).

       

      “Company Balance
Sheet” shall have the meaning specified in Section
3.4.

       

      “Company Copyrights”
shall have the meaning specified in Section
3.13(a).

       

      “Company Intellectual
Property” shall have the meaning specified in Section
1.2(c).

       

      “Company Marks” shall
have the meaning specified in Section
3.13(a).

       

      “Contributed Assets”
shall have the meaning specified in Section
1.2.

       

      “Contributed
Contracts” shall have the meaning specified in Section
1.2(a).

       

      “Copyrights” shall
have the meaning specified in Section
3.13(c).

       

      “Deliverables” shall
have the meaning specified in Section
1.6(d).

       

      “Derivative
Instrument” means (a) each transaction (i) that is a rate swap
transaction, swap option, basis swap, forward rate transaction, commodity swap,
commodity option, equity or equity index swap, equity or equity index option,
bond option, interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, currency swap transaction,
cross-currency rate swap transaction, currency option, credit protection
transaction, credit swap, credit default swap, credit default option, total
return swap, credit spread transaction, repurchase transaction, reverse
repurchase transaction, buy/ sell-back transaction, securities lending
transaction, weather index transaction or forward purchase or sale of a
security, commodity or other financial instrument or interest (including any
option with respect to any of these transactions) or (ii) that is a type of
transaction that is similar to any transaction referred to in clause (i) above
that is currently entered into in the financial markets and which is a forward,
swap, future, option or other derivative on one or more rates, currencies,
commodities, equity securities or other equity instruments, debt securities or
other debt instruments, economic indices or measures of economic risk or value,
or other benchmarks against which payments or deliveries are to be made, and (b)
any combination of these transactions.

      
        
           

        

        
          -49-

          
            

          

        

        
           

        

      

      “Employees” shall have
the meaning specified in Section
3.8.

       

      “Estimated Balance
Sheet” shall have the meaning specified in Section
5.14.

       

      “Exchange Act” shall
have the meaning specified in the recitals.

       

      “Final Balance Sheet”
shall have the meaning specified in Section
5.14.

       

      “FINRA” means the
Financial Industry Regulatory Authority Inc.

       

      “First Cash Payment”
shall have the meaning specified in Section
1.1(a).

       

      “Fletcher” shall have
the meaning specified in the preamble hereto.

       

      “Fletcher Indemnified
Party” shall have the meaning specified in Section
8.2(a)(iii).

       

      “Fletcher Subscription
Price” shall have the meaning specified in Section
1.1(b).

       

      “GAAP” means generally
accepted accounting principles of the United States, consistently applied for
the periods referenced.

       

      “Governmental
Authority” means any United States or foreign government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including the SEC, or any other authority, agency, department,
board, commission or instrumentality of the United States, any State of the
United States or any political subdivision thereof or any foreign jurisdiction,
and any court, tribunal or arbitrator(s) of competent jurisdiction, and any
United States or foreign governmental or non-governmental self-regulatory
organization, agency or authority, including without limitation FINRA and any
securities exchanges (to include the Nasdaq Stock Market).

       

      “Intellectual
Property” shall have the meaning specified in Section
3.13(c).

       

      “Knowledge” means
actual knowledge of such Person, with the assumption that such Person shall have
made reasonable and diligent inquiry of the matters presented; provided,
however, that the Knowledge of any business entity shall include the Knowledge
of such entities officers and directors.

       

      “Leases” shall have
the meaning specified in Section
3.14.

       

      “Licenses In” shall
have the meaning specified in Section
3.13(a).

       

      “Liens” shall have the
meaning specified in Section
1.2.

       

      “LLC Agreement” shall
have the meaning specified in Section
1.6(a)(v).

       

      “Losses” shall have
the meaning specified in Section
8.2(a).

      
        
           

        

        
          -50-

          
            

          

        

        
           

        

      

      “Madison Williams”
shall have the meaning specified in the preamble hereto.

       

      “Madison Williams Indemnified
Parties” shall have the meaning specified in Section
8.2(a)(i).

       

      “Marks” shall have the
meaning specified in Section
3.13(c).

       

      “Material Adverse
Effect” means, with respect to a Person or business, a material adverse
effect on the financial condition, properties, assets, liabilities, business,
prospects, operations or results of operations of such Person (and its
subsidiaries) or business, taken as a whole, provided, however, that
“Material Adverse Effect” shall not be deemed to include the impact of (a)
changes, after the date hereof, in laws and regulations or interpretations
thereof by Governmental Authorities generally applicable to financial services
businesses but not uniquely relating to SMHG or the Business, (b) changes, after
the date hereof, in GAAP, but not uniquely relating to SMHG or the Business, (c)
actions or omissions of one party taken with the prior written consent of the
other party, (d) changes, after the date hereof, in general economic or market
conditions affecting financial services businesses generally in the United
States, and (e) changes resulting from the announcement of this Agreement and
the transactions contemplated hereby..

       

      “Membership Interest”
shall have the meaning ascribed to it in the LLC Agreement.

       

      “New BD” shall have
the meaning specified in the preamble hereto.

       

      “PAC3” shall have the
meaning specified in the recitals hereto.

       

      “PAC3 Indemnified
Parties” shall have the meaning specified in Section
8.2(a)(ii).

       

      “Patents” shall have
the meaning specified in Section
3.13(c).

       

      “Period” shall have
the meaning specified in Section
5.14.

       

      “Permits” shall have
the meaning specified in Section
1.2(f).

       

      “Person” means any
individual, partnership (general or limited), corporation, limited liability
company, limited liability partnership, association, trust, joint venture,
unincorporated organization, and any government, governmental department or
agency or political subdivision thereof.

       

      “Previous Agreement”
shall have the meaning specified in the recitals hereto.

       

      “Proceedings” shall
have the meaning specified in Section
3.10.

       

      “Records” means all
corporate, business and operating records, Tax Returns, books and other data
relating to the Business (except for Regulatory Documents), including without
limitation Records of the Business prior to Closing.

       

      “Regulatory Documents”
means all forms, reports, registration statements, schedules and other documents
filed, and all amendments thereto and documents incorporated by reference
therein, or required to be filed, by such Person pursuant to Applicable Laws of
any United States or foreign Governmental Authority.

       

      
        
           

        

        
          -51-

          
            

          

        

        
           

        

      

      “SEC” shall have the
meaning specified in Section 2.4 of Section
2A.

       

      “Second Cash Payment”
shall have the meaning specified in Section
1.1(a).

       

      “SMHG” shall have the
meaning specified in the recitals hereto.

       

      “SMHG Indemnified
Parties” shall have the meaning specified in Section
8.2(b).

       

      “SMHG Note” shall have
the meaning specified in Section
1.1(a).

       

      “Tax” means any
federal, state, county, local, foreign and other taxes, assessments, charges,
duties, fees, levies, imposts or other similar charges imposed by a Governmental
Authority, including all income, alternative or add-on minimum, gross receipts,
sales, use, transfer, gains, ad valorem, franchise, profits, license, state
guarantee fund assessments, withholding, payroll, direct placement, employment,
excise, severance, stamp, procurement, occupation, premium, property, real
property, escheat, environmental or windfall profit tax, custom, duty or other
tax, together with any interest, additions or penalties with respect thereto or
with respect to any Tax Return, whether disputed or not and including any
obligation to indemnify or otherwise assume or succeed to the Tax liability of
any other Person.

       

      “Tax Return” means any
return, declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.

       

      “Termination Date”
shall have the meaning specified in Section5.7.

       

      “Third Party Claim”
shall have the meaning specified in Section
8.3(b).

       

      “Third Party Intellectual
Property” shall have the meaning specified in Section
3.13(b)(ii).

       

      “Treasury Regulations”
means all proposed, temporary and final regulations promulgated under the Code
as amended from time to time.

       

      “Warrant” shall have
the meaning specified in Section
1.1(b).

       

      “Working Capital
Amount” shall have the meaning specified in Section
1.2(k).

      

      [SIGNATURE
PAGE FOLLOWS]

      
        
           

        

        
          -52-

          
            

          

        

        
           

        

      

      IN
WITNESS WHEREOF the parties hereto have caused this Amended and Restated
Contribution Agreement to be executed as of the date set forth above by their
duly authorized representatives.

       

      
        
          	
                  SANDERS
      MORRIS HARRIS GROUP INC.

                
	 
      	 
      
	
                  By:  

                	      
                  /s/  George
      L. Ball

                
	 
      	
                  Name:
      George L. Ball

                
	 
      	
                  Title:  
      Chief Executive Officer

                
	 
      	 
      
	
                  SMH
      CAPITAL INC.

                
	 
      	 
      
	
                  By:

                	/s/
      George L. Ball
	 
      	
                  Name: 
      George L. Ball

                
	 
      	
                  Title:   
      Chief Executive Officer

                
	 
      	 
      
	
                  PAN
      ASIA CHINA COMMERCE CORP.

                
	 
      	 
      
	
                  By:

                	/s/
      William W. Sprague
	 
      	
                  Name: 
      William W. Sprague

                
	 
      	
                  Title:   
      Chief Executive Officer

                
	 
      	 
      
	
                  FLETCHER
      ASSET MANAGEMENT INC.

                
	 
      	 
      
	
                  By:

                	/s/
      Stewart Turner
	 
      	
                  Name:
      Stewart Turner

                
	 
      	
                  Title:  
      Authorized Signatory

                
	 	 
	      
                  By:

                	/s/
      Peter Zayfert
	 	Name:
      Peter Zayfert
	 	Title:  
      Authorized Signatory
	 
      	 
      
	
                  MADISON
      WILLIAMS CAPITAL LLC

                
	
                  (formerly
      known as Siwanoy Capital, LLC)

                
	 
      	 
      
	
                  By:

                	/s/
      William W. Sprague 
	 
      	
                  Name:  William
      W. Sprague

                
	 
      	
                  Title:   
      Chief Executive Officer

                
	 
      	 
      
	
                  MADISON
      WILLIAMS AND COMPANY LLC

                
	
                  (formerly
      known as Siwanoy Securities, LLC)

                
	 
      	 
      
	
                  By:

                	/s/
      William W. Sprague
	 
      	
                  Name:  William
      W. Sprague

                
	 
      	
                  Title:   
      Chief Executive Officer

                

        

      

      
        
           

        

        
          -53-AMENDMENT
NO. 1 TO

    

    PUDA COAL, INC.
2008 EQUITY INCENTIVE PLAN

    

    July
30, 2009

    

    In
accordance with Sections 14 and 15 of the Puda Coal, Inc. (the “Company”) 2008 Equity
Incentive Plan (the “Plan”), the Plan is
hereby amended as follows in connection with a 7-to-1 reverse stock split
through incorporation from Florida to Delaware:

    

    
      	
              1.

            	
              The
      first sentence of Section 3(a) is hereby deleted in its entirety and
      replaced with the following:

            

    

    

    “Subject
to the provisions of Section 14 of the Plan, the aggregate number of Shares that
may be issued pursuant to Awards granted under the Plan is 714,286
Shares.”

    

    
      	
              2.

            	
              The
      first sentence of Section 3(b) is hereby deleted in its entirety and
      replaced with the following:

            

    

    

    “Subject
to the provisions of Section 14 of the Plan, the aggregate number of Shares
subject to Awards granted under this Plan during any calendar year to any one
Awardee shall not exceed 71,429, except that in connection with his or her
initial service, an Awardee may be granted Awards covering up to an additional
71,429 Shares.”

    

    This
Amendment to the Plan (this “Amendment”)
constitutes an integral part of the Plan.  For all purposes of this
Amendment, capitalized terms used herein without definition shall have the
meanings specified in the Plan, as the Plan shall be in effect on the date
hereof after giving effect to the Amendment.

    

    This
Amendment is executed pursuant to Section 15 of the Plan and shall (unless
otherwise expressly indicated herein) be construed, administered and applied in
accordance with all of the terms and provisions of the Plan, including Section
15 thereof.  Except as expressly amended or waived by the terms of
this Amendment, the terms and conditions of the Plan shall remain unamended and
unwaived.  The amendment set forth herein shall be limited precisely
as provided for herein to the provisions expressly amended herein and shall not
be deemed to be a waiver of, amendment or, consent to or modification of any
other term or provision of any other document or of any transaction or further
action on the part of the Company.

    

    This
Amendment becomes effective as of the date first written above.

    

    This
Amendment shall be binding upon and inure to the benefit of the Company and its
respective successors and assigns.

     

     [Signature
Page Follows]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, the
Company has executed this Amendment as of the date first written
above.

     

    
      
        	 	
                PUDA
      COAL, INC.

              
	 	 
      
	 	 
      
	 	
                By:
      /s/ Qiong Wu

              
	 	
                Name:
      Qiong Wu

              
	 	
                Title:
      Chief Financial Officer

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00165-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00165-of-00352.parquet"}]]