Document:

Exhibit 10.2

Exhibit 10.2

PLACEMENT AGENCY AGREEMENT

June 9, 2010

Ladenburg Thalmann & Co. Inc.

4400 Biscayne Blvd

14th Floor

Miami, Florida 33137

Ladies and Gentlemen:

Introduction. Subject to the terms and conditions herein (this “Agreement”),
Cereplast, Inc., a Nevada corporation (the “Company”), hereby agrees to sell registered
securities (the “Securities”) of the Company, including, but not limited to, shares (the
“Shares”) of the Company’s common stock, par value $0.001 per share (the “Common
Stock”) and warrants to purchase Common Stock (the “Warrants”) directly to various
investors (each, an “Investor” and, collectively, the “Investors”) with Ladenburg
Thalmann & Co. Inc. acting as exclusive placement agent (the “Placement Agent”). The
purchase price to the Investors and terms of the Warrants shall be determined by negotiations
between the Company and the Investors. The Placement Agent may retain other brokers or dealers to
act as sub-agents or selected-dealers on its behalf in connection with the Offering (as defined
below).

The Company hereby confirms its agreement with the Placement Agent as follows:

Section 1. Agreement to Act as Placement Agent.

(a) On the basis of the representations, warranties and agreements of the Company
herein contained, and subject to all the terms and conditions of this Agreement, the
Placement Agent shall be the exclusive placement agent in connection with the offering and
sale by the Company of the Securities from time to time pursuant to the Company’s
registration statement on Form S-3 (File No. 333-166307) (the “Registration
Statement”), with the terms of such offering (the “Offering”) to be subject to
market conditions and negotiations between the Company and the prospective Investors. The
Placement Agent will act on a reasonable best efforts basis and the Company agrees and
acknowledges that there is no guarantee of the successful placement of the Securities, or
any portion thereof, in the prospective Offering. Under no circumstances will the Placement
Agent or any of its “Affiliates” (as defined below) be obligated to underwrite or purchase
any of the Shares for its own account or otherwise provide any financing. The Placement
Agent shall act solely as the Company’s agent and not as principal. The Placement Agent
shall have no authority to bind the Company with respect to any prospective offer to
purchase Shares and the Company shall have the sole right to accept offers to purchase
Shares and may reject any such offer, in whole or in part. Subject to the terms and
conditions hereof, payment of the purchase price for, and delivery of, the Securities shall
be made at one or more closings (each a “Closing” and the date on which each Closing
occurs, a “Closing Date”). As compensation for services rendered, on each Closing
Date, the Company shall pay to the Placement Agent the fees and expenses set forth below:

(i) A cash fee equal to 6.5% of the gross proceeds received by the Company from
the sale of the Securities at each Closing of the Offering.

 

 

 

(ii) Such number of Common Stock purchase warrants (the “Placement Agent
Warrants”) to Placement Agent or its designees at each Closing to purchase
 shares of Common Stock equal to 3% of the aggregate number of Shares sold in the
Offering. The Placement Agent Warrants shall have the same terms as the warrants
issued to the Investors in the Offering except that the exercise price shall be 125%
of the public offering price per share and shall have an expiration date of 5 years
from the effective date of the Registration Statement (as further defined below).
The Placement Agent Warrants shall not be transferable for six months from the date
of the Offering except as permitted by Financial Industry Regulatory Authority
(“FINRA”) Rule 5110(g)(1).

(iii) The Company also agrees to reimburse Placement Agent’s expenses (with
supporting invoices/receipts) up to a maximum of 0.8% of the aggregate gross
proceeds raised in the placement, but in no event more than $30,000. Such
reimbursement shall be payable immediately upon (but only in the event of) a Closing
of the Offering.

(b) The term of the Placement Agent’s exclusive engagement will be for a period of 12
months (the “Exclusive Term”). Notwithstanding anything to the contrary contained
herein, the provisions concerning confidentiality, indemnification and contribution
contained herein and the Company’s obligations contained in the indemnification provisions
will survive any expiration or termination of this Agreement, and the Company’s obligation
to pay fees actually earned and payable and to reimburse expenses actually incurred and
reimbursable pursuant to Section 1 hereof and which are permitted to be reimbursed under
FINRA Rule 5110(f)(2)(D), will survive any expiration or termination of this Agreement.
Nothing in this Agreement shall be construed to limit the ability of the Placement Agent or
its Affiliates to pursue, investigate, analyze, invest in, or engage in investment banking,
financial advisory or any other business relationship with Persons (as defined below) other
than the Company. As used herein (i) “Person” means an individual or corporation,
partnership, trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or subdivision thereof) or
other entity of any kind and (ii) “Affiliate” means any Person that, directly or
indirectly through one or more intermediaries, controls or is controlled by or is under
common control with a Person as such terms are used in and construed under Rule 405 under
the Securities Act of 1933, as amended (the “Securities Act”).

Section 2. Representations, Warranties and Covenants of the Company. The Company hereby
represents, warrants and covenants to the Placement Agent as of the date hereof, and as of each
Closing Date, as follows:

(a) Securities Law Filings. The Company has filed with the Securities and
Exchange Commission (the “Commission”) the Registration Statement under the
Securities Act, which was filed on April 26, 2010, and declared effective on May 26, 2010,
for the registration under the Securities Act of the Securities. Following the
determination of pricing among the Company and the prospective Investors introduced to the
Company by Placement Agent, the Company will file with the Commission pursuant to Rule
424(b) under the Securities Act, and the rules and regulations (the “Rules and
Regulations”) of the Commission promulgated thereunder, a prospectus supplement relating
to the terms of the Offering and of the Securities and the plan of distribution thereof and
will advise the Placement Agent of all further information (financial and other) with
respect to the Company required to be set forth therein. Such registration statement, at any
given time, including the exhibits thereto filed at such time, as amended at such time, is
hereinafter called the “Registration Statement”; such prospectus in the form in
which it appears in the Registration Statement is hereinafter called the “Base
Prospectus”; and the

 

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amended
or supplemented form of prospectus, in the form in which it will be filed with the
Commission pursuant to Rule 424(b) (including the Base Prospectus as so amended or
supplemented) is hereinafter called the “Prospectus Supplement.” The Registration
Statement at the time it originally became effective is hereinafter called the “Original
Registration Statement.” Any reference in this Agreement to the Registration Statement,
the Original Registration Statement, the Base Prospectus or the Prospectus Supplement shall
be deemed to refer to and include the documents incorporated by reference therein (the
“Incorporated Documents”), if any, which were or are filed under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), at any given time, as the
case may be; and any reference in this Agreement to the terms “amend,” “amendment” or
“supplement” with respect to the Registration Statement, the Original Registration
Statement, the Base Prospectus or the Prospectus Supplement shall be deemed to refer to and
include the filing of any document under the Exchange Act after the date of this Agreement,
or the issue date of the Base Prospectus or the Prospectus Supplement, as the case may be,
deemed to be incorporated therein by reference. All references in this Agreement to
financial statements and schedules and other information which is “contained,” “included,”
“described,” “referenced,” “set forth” or “stated” in the Registration Statement, the Base
Prospectus or the Prospectus Supplement (and all other references of like import) shall be
deemed to mean and include all such financial statements and schedules and other information
which is or is deemed to be incorporated by reference in the Registration Statement, the
Base Prospectus or the Prospectus Supplement, as the case may be. The Company has not
received any notice that the Commission has issued or intends to issue a stop order
suspending the effectiveness of the Registration Statement or the use of the Base Prospectus
or the Prospectus Supplement or intends to commence a proceeding for any such purpose.

(b) Assurances. The Original Registration Statement, as amended, (and any
further documents to be filed with the Commission) contains all exhibits and schedules as
required by the Securities Act. Each of the Registration Statement and any post-effective
amendment thereto, at the time it became effective, complied in all material respects with
the Securities Act and the applicable Rules and Regulations and did not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading. The Base Prospectus, and the
Prospectus Supplement, each as of its respective date, comply or will comply in all material
respects with the Securities Act and the applicable Rules and Regulations. Each of the Base
Prospectus and the Prospectus Supplement, as amended or supplemented, did not and will not
contain as of the date thereof any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Incorporated Documents, when
they were filed with the Commission, conformed in all material respects to the requirements
of the Exchange Act and the applicable rules and regulations promulgated thereunder, and
none of such documents, when they were filed with the Commission, contained any untrue
statement of a material fact or omitted to state a material fact necessary to make the
statements therein (with respect to Incorporated Documents incorporated by reference in the
Base Prospectus or Prospectus Supplement), in light of the circumstances under which they
were made not misleading. No post-effective amendment to the Registration Statement
reflecting any facts or events arising after the date thereof which represent, individually
or in the aggregate, a fundamental change in the information set forth therein is required
to be filed with the Commission. Except for this Agreement, there are no documents required
to be filed with the Commission in connection with the transaction contemplated hereby that
(x) have not been filed as required pursuant to the Securities Act or (y) will not be filed
within the requisite time period. Except for this Agreement, there are no contracts or other
documents required to be described in the Base Prospectus or Prospectus Supplement, or to be
filed as
exhibits or schedules to the Registration Statement, which have not been described or
filed as required.

 

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(c) Offering Materials. Neither the Company nor any of its directors and
officers has distributed and none of them will distribute, prior to each Closing Date, any
offering material in connection with the offering and sale of the Securities other than the
Base Prospectus, the Prospectus Supplement, the Registration Statement, copies of the
documents incorporated by reference therein and any other materials permitted by the
Securities Act.

(d) Subsidiaries. All of the direct and indirect subsidiaries of the Company
(the “Subsidiaries”) are set forth in the Incorporated Documents. The Company owns,
directly or indirectly, all of the capital stock or other equity interests of each
Subsidiary free and clear of any liens, charges, security interests, encumbrances, rights of
first refusal, preemptive rights or other restrictions (collectively, “Liens”), and
all of the issued and outstanding shares of capital stock of each Subsidiary are validly
issued and are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.

(e) Organization and Qualification. The Company and each of the Subsidiaries
is an entity duly incorporated or otherwise organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization, with the requisite
power and authority to own and use its properties and assets and to carry on its business as
currently conducted. Neither the Company nor any Subsidiary is in violation or default of
any of the provisions of its respective certificate or articles of incorporation, bylaws or
other organizational or charter documents. Each of the Company and the Subsidiaries is duly
qualified to conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or property owned
by it makes such qualification necessary, except where the failure to be so qualified or in
good standing, as the case may be, could not have or reasonably be expected to result in:
(i) a material adverse effect on the legality, validity or enforceability of this Agreement
or any other agreement entered into between the Company and the Investors, (ii) a material
adverse effect on the results of operations, assets, business, prospects or condition
(financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a
material adverse effect on the Company’s ability to perform in any material respect on a
timely basis its obligations under this Agreement or the transactions contemplated under the
Prospectus Supplement (any of (i), (ii) or (iii), a “Material Adverse Effect”) and
no an action, claim, suit, investigation or proceeding (including, without limitation, an
informal investigation or partial proceeding, such as a deposition), whether commenced or
threatened (“Proceeding”) has been instituted in any such jurisdiction revoking,
limiting or curtailing or seeking to revoke, limit or curtail such power and authority or
qualification.

(f) Authorization; Enforcement. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by this
Agreement and the Prospectus Supplement and otherwise to carry out its obligations hereunder
and thereunder. The execution and delivery of each of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby and thereby and under the
Prospectus Supplement have been duly authorized by all necessary action on the part of the
Company and no further action is required by the Company, the Company’s Board of Directors
(the “Board of Directors”) or the Company’s stockholders in connection therewith
other than in connection with the Required Approvals (as defined below). This Agreement has
been duly executed by the Company and, when delivered in accordance with the terms hereof,
will constitute the valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except (i) as limited by general equitable principles
and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be limited by
applicable law.

 

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(g) No Conflicts. The execution, delivery and performance by the Company of
this Agreement and the transactions contemplated pursuant to the Prospectus Supplement, the
issuance and sale of the Securities and the consummation by it of the transactions
contemplated hereby and thereby to which it is a party do not and will not (i) conflict with
or violate any provision of the Company’s or any Subsidiary’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii) conflict with,
or constitute a default (or an event that with notice or lapse of time or both would become
a default) under, result in the creation of any Lien upon any of the properties or assets of
the Company or any Subsidiary, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of, any
agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary
debt or otherwise) or other understanding to which the Company or any Subsidiary is a party
or by which any property or asset of the Company or any Subsidiary is bound or affected, or
(iii) subject to the Required Approvals, conflict with or result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company or a Subsidiary is subject (including federal
and state securities laws and regulations), or by which any property or asset of the Company
or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii),
such as could not have or reasonably be expected to result in a Material Adverse Effect.

(h) Filings, Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other governmental authority
or other Person in connection with the execution, delivery and performance by the Company of
this Agreement and the transactions contemplated pursuant to the Prospectus Supplement,
other than: (i) the filing with the Commission of the Prospectus Supplement, (ii)
application(s) to the Nasdaq Capital Market (the “Trading Market”) for the listing
of the Securities for trading thereon in the time and manner required thereby and (iii) such
filings as are required to be made under applicable state securities laws (collectively, the
“Required Approvals”).

(i) Issuance of the Securities; Registration. The Securities are duly
authorized and, when issued and paid for in accordance with the Prospectus Supplement, will
be duly and validly issued, fully paid and nonassessable, free and clear of all Liens
imposed by the Company. The shares underlying the Warrants (the “Warrant Shares”),
when issued in accordance with the terms of the Warrants, will be validly issued, fully paid
and nonassessable, free and clear of all Liens imposed by the Company. The Company has
reserved from its duly authorized capital stock the maximum number of shares of Common Stock
issuable pursuant to the Prospectus Supplement.

 

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(j) Capitalization. The capitalization of the Company is as set forth in the
SEC Reports. The Company has not issued any capital stock since its most recently filed
periodic report under the Exchange Act, other than pursuant to the exercise of employee
stock options under the Company’s stock option plans, the issuance of shares of Common Stock
to employees pursuant to the Company’s employee stock purchase plans and pursuant to the
conversion and/or exercise of securities of the Company or the Subsidiaries which would
entitle the holder thereof to acquire at any time any Common Stock, including, without
limitation, any debt, preferred stock, rights, options, warrants or other instrument that is
at any time convertible into or exercisable or exchangeable for, or otherwise entitles the
holder thereof to receive, Common
Stock (“Common Stock Equivalents”) outstanding as of the date of the most
recently filed periodic report under the Exchange Act. No Person has any right of first
refusal, preemptive right, right of participation, or any similar right to participate in
the transactions contemplated by this Agreement and the transactions contemplated pursuant
to the Prospectus Supplement. Except as a result of the purchase and sale of the
Securities, there are no outstanding options, warrants, scrip rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities, rights or obligations
convertible into or exercisable or exchangeable for, or giving any Person any right to
subscribe for or acquire, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is or may become bound
to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and
sale of the Securities will not obligate the Company to issue shares of Common Stock or
other securities to any Person (other than the Investors) and will not result in a right of
any holder of Company securities to adjust the exercise, conversion, exchange or reset price
under any of such securities. All of the outstanding shares of capital stock of the Company
are validly issued, fully paid and nonassessable, have been issued in compliance with all
federal and state securities laws, and none of such outstanding shares was issued in
violation of any preemptive rights or similar rights to subscribe for or purchase
securities. No further approval or authorization of any stockholder, the Board of Directors
or others is required for the issuance and sale of the Securities. There are no
stockholders agreements, voting agreements or other similar agreements with respect to the
Company’s capital stock to which the Company is a party or, to the knowledge of the Company,
between or among any of the Company’s stockholders.

(k) SEC Reports; Financial Statements. The Company has filed all reports,
schedules, forms, statements and other documents required to be filed by the Company under
the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, for the two years preceding the date hereof (or such shorter period as the Company
was required by law or regulation to file such material) (the foregoing materials, including
the exhibits thereto and documents incorporated by reference therein, together with the
Prospectus and the Prospectus Supplement, being collectively referred to herein as the
“SEC Reports”) on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such extension. As
of their respective dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing. Such financial
statements have been prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all footnotes required by GAAP,
and fairly present in all material respects the financial position of the Company and its
consolidated Subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited statements, to
normal, immaterial, year-end audit adjustments.

 

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(l) Material Changes; Undisclosed Events, Liabilities or Developments. Since
the date of the latest audited financial statements included within the SEC Reports, except
as specifically disclosed in a subsequent SEC Report filed prior to the date hereof, (i)
there has been no event, occurrence or development that has had or that could reasonably be
expected to result in
a Material Adverse Effect, (ii) the Company has not incurred any liabilities
(contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the
ordinary course of business consistent with past practice and (B) liabilities not required
to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in
filings made with the Commission, (iii) the Company has not altered its method of
accounting, (iv) the Company has not declared or made any dividend or distribution of cash
or other property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock and (v) the Company has not issued any
equity securities to any officer, director or Affiliate, except pursuant to existing Company
stock option plans. The Company does not have pending before the Commission any request for
confidential treatment of information. Except for the issuance of the Securities
contemplated by the Prospectus Supplement or disclosed in the Prospectus Supplement, no
event, liability, fact, circumstance, occurrence or development has occurred or exists or is
reasonably expected to occur or exist with respect to the Company or its Subsidiaries or
their respective business, prospects, properties, operations, assets or financial condition
that would be required to be disclosed by the Company under applicable securities laws at
the time this representation is made or deemed made that has not been publicly disclosed at
least 1 Trading Day prior to the date that this representation is made.

(m) Litigation. There is no action, suit, inquiry, notice of violation,
proceeding or investigation pending or, to the knowledge of the Company, threatened against
or affecting the Company, any Subsidiary or any of their respective properties before or by
any court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) which (i)
adversely affects or challenges the legality, validity or enforceability of any of this
Agreement and the transactions contemplated pursuant to the Prospectus Supplement or the
Securities or (ii) could, if there were an unfavorable decision, have or reasonably be
expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary,
nor any director or officer thereof, is or has been the subject of any Action involving a
claim of violation of or liability under federal or state securities laws or a claim of
breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is
not pending or contemplated, any investigation by the Commission involving the Company or
any current or former director or officer of the Company. The Commission has not issued any
stop order or other order suspending the effectiveness of any registration statement filed
by the Company or any Subsidiary under the Exchange Act or the Securities Act.

(n) Labor Relations. No material labor dispute exists or, to the knowledge of
the Company, is imminent with respect to any of the employees of the Company, which could
reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its
Subsidiaries’ employees is a member of a union that relates to such employee’s relationship
with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is
a party to a collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. No executive officer, to the
knowledge of the Company, is, or is now expected to be, in violation of any material term of
any employment contract, confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any restrictive covenant in
favor of any third party, and the continued employment of each such executive officer does
not subject the Company or any of its Subsidiaries to any liability with respect to any of
the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S.
federal, state, local and foreign laws and regulations relating to employment and employment
practices, terms and conditions of employment and wages and hours, except where the failure
to be in compliance could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.

 

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(o) Compliance. Neither the Company nor any Subsidiary: (i) is in default
under or in violation of (and no event has occurred that has not been waived that, with
notice or lapse of time or both, would result in a default by the Company or any Subsidiary
under), nor has the Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or credit agreement or any
other agreement or instrument to which it is a party or by which it or any of its properties
is bound (whether or not such default or violation has been waived), (ii) is in violation of
any judgment, decree or order of any court, arbitrator or governmental body or (iii) is or
has been in violation of any statute, rule, ordinance or regulation of any governmental
authority, including without limitation all foreign, federal, state and local laws relating
to taxes, environmental protection, occupational health and safety, product quality and
safety and employment and labor matters, except in each case as could not have or reasonably
be expected to result in a Material Adverse Effect.

(p) Regulatory Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal, state, local or
foreign regulatory authorities necessary to conduct their respective businesses as described
in the SEC Reports, except where the failure to possess such permits could not reasonably be
expected to result in a Material Adverse Effect (“Material Permits”), and neither
the Company nor any Subsidiary has received any notice of proceedings relating to the
revocation or modification of any Material Permit.

(q) Title to Assets. The Company and the Subsidiaries have good and marketable
title in fee simple to all real property owned by them and good and marketable title in all
personal property owned by them that is material to the business of the Company and the
Subsidiaries, in each case free and clear of all Liens, except for Liens as do not
materially affect the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company and the Subsidiaries and Liens
for the payment of federal, state or other taxes, the payment of which is neither delinquent
nor subject to penalties. Any real property and facilities held under lease by the Company
and the Subsidiaries are held by them under valid, subsisting and enforceable leases with
which the Company and the Subsidiaries are in compliance.

(r) Patents and Trademarks. The Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark applications, service
marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual
property rights and similar rights necessary or material for use in connection with their
respective businesses as described in the SEC Reports and which the failure to so have could
have a Material Adverse Effect (collectively, the “Intellectual Property Rights”).
None of, and neither the Company nor any Subsidiary has received a notice (written or
otherwise) that any of, the Intellectual Property Rights has expired, terminated or been
abandoned, or is expected to expire or terminate or be abandoned, within two (2) years from
the date of this Agreement. Neither the Company nor any Subsidiary has received, since the
date of the latest audited financial statements included within the SEC Reports, a notice
(written or otherwise) of a claim or otherwise has any knowledge that the Intellectual
Property Rights violate or infringe upon the rights of any Person. To the knowledge of the
Company, all such Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights. The Company and
its Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties, except where failure to
do so could not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

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(s) Insurance. The Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such amounts as are
prudent and customary in the businesses in which the Company and the Subsidiaries are
engaged, including, but not limited to, directors and officers insurance coverage. Neither
the Company nor any Subsidiary has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business without a
significant increase in cost.

(t) Transactions With Affiliates and Employees. Except as set forth in the SEC
Reports, none of the officers or directors of the Company and, to the knowledge of the
Company, none of the employees of the Company is presently a party to any transaction with
the Company or any Subsidiary (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal property to or
from, or otherwise requiring payments to or from any officer, director or such employee or,
to the knowledge of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or partner, in each
case in excess of $120,000 other than for (i) payment of salary or consulting fees for
services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and
(iii) other employee benefits, including stock option agreements under any stock option plan
of the Company.

(u) Sarbanes-Oxley; Internal Accounting Controls. The Company is in compliance
with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are
effective as of the date hereof, and any and all applicable rules and regulations
promulgated by the Commission thereunder that are effective as of the date hereof and as of
each Closing Date. The Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that: (i) transactions are
executed in accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to assets is
permitted only in accordance with management’s general or specific authorization, and (iv)
the recorded accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The Company has
established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) for the Company and designed such disclosure controls and procedures to
ensure that information required to be disclosed by the Company in the reports it files or
submits under the Exchange Act is recorded, processed, summarized and reported, within the
time periods specified in the Commission’s rules and forms. The Company’s certifying
officers have evaluated the effectiveness of the Company’s disclosure controls and
procedures as of the end of the period covered by the Company’s most recently filed periodic
report under the Exchange Act (such date, the “Evaluation Date”). The Company
presented in its most recently filed periodic report under the Exchange Act the conclusions
of the certifying officers about the effectiveness of the disclosure controls and procedures
based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have
been no changes in the Company’s internal control over financial reporting (as such term is
defined in the Exchange Act) that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial reporting.

(v) Certain Fees. Except as set forth in the Prospectus Supplement, no
brokerage or finder’s fees or commissions are or will be payable by the Company to any
broker, financial advisor or consultant, finder, placement agent, investment banker, bank or
other Person with respect to the transactions contemplated by this Agreement and the
transactions contemplated pursuant to the Prospectus Supplement. The Investors shall have
no obligation with respect to
any fees or with respect to any claims made by or on behalf of other Persons for fees
of a type contemplated in this Section that may be due in connection with the transactions
contemplated by this Agreement and the transactions contemplated pursuant to the Prospectus
Supplement.

 

9

 

(w) Investment Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Securities, will not be or be an Affiliate of,
an “investment company” within the meaning of the Investment Company Act of 1940, as
amended. The Company shall conduct its business in a manner so that it will not become an
“investment company” subject to registration under the Investment Company Act of 1940, as
amended.

(x) Registration Rights. No Person has any right to cause the Company to
effect the registration under the Securities Act of any securities of the Company.

(y) Listing and Maintenance Requirements. The Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action
designed to, or which to its knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such registration. The
Company has not, in the 12 months preceding the date hereof, received notice from any
Trading Market on which the Common Stock is or has been listed or quoted to the effect that
the Company is not in compliance with the listing or maintenance requirements of such
Trading Market. The Company is, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with all such listing and maintenance
requirements.

(z) Application of Takeover Protections. The Company and the Board of
Directors have taken all necessary action, if any, in order to render inapplicable any
control share acquisition, business combination, poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under the Company’s
certificate of incorporation (or similar charter documents) or the laws of its state of
incorporation that is or could become applicable to the Investors as a result of the
Investors and the Company fulfilling their obligations or exercising their rights under this
Agreement and the transactions contemplated pursuant to the Prospectus Supplement, including
without limitation as a result of the Company’s issuance of the Securities and the
Investors’ ownership of the Securities.

(aa) Disclosure. Except with respect to the material terms and conditions of
the transactions contemplated by this Agreement and the transactions contemplated pursuant
to the Prospectus Supplement, the Company confirms that neither it nor any other Person
acting on its behalf has provided any of the Investors or their agents or counsel with any
information that it believes constitutes or might constitute material, non-public
information which is not otherwise disclosed in the Prospectus Supplement. The Company
understands and confirms that the Investors will rely on the foregoing representation in
effecting transactions in securities of the Company. All of the disclosure furnished by or
on behalf of the Company to the Investors regarding the Company, its business and the
transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is
true and correct and does not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading. The press releases
disseminated by the Company during the twelve months preceding the date of this Agreement
taken as a whole do not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made and when made, not
misleading.

 

10

 

(bb) No Integrated Offering. Neither the Company, nor any of its Affiliates,
nor any Person acting on its or their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security, under circumstances that
would cause this offering of the Securities to be integrated with prior offerings by the
Company for purposes of any applicable shareholder approval provisions of any Trading Market
on which any of the securities of the Company are listed or designated.

(cc) Solvency. Based on the consolidated financial condition of the Company as
of each Closing Date, after giving effect to the receipt by the Company of the proceeds from
the sale of the Securities hereunder, (i) the fair saleable value of the Company’s assets
exceeds the amount that will be required to be paid on or in respect of the Company’s
existing debts and other liabilities (including known contingent liabilities) as they
mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on
its business as now conducted and as proposed to be conducted including its capital needs
taking into account the particular capital requirements of the business conducted by the
Company, and projected capital requirements and capital availability thereof, and (iii) the
current cash flow of the Company, together with the proceeds the Company would receive, were
it to liquidate all of its assets, after taking into account all anticipated uses of the
cash, would be sufficient to pay all amounts on or in respect of its liabilities when such
amounts are required to be paid. The Company does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and amounts of cash
to be payable on or in respect of its debt). The Company has no knowledge of any facts or
circumstances which lead it to believe that it will file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one year from each
Closing Date. The SEC Reports sets forth as of the date hereof all outstanding secured and
unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any
Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness”
means (x) any liabilities for borrowed money or amounts owed in excess of $50,000 (other
than trade accounts payable incurred in the ordinary course of business), (y) all
guaranties, endorsements and other contingent obligations in respect of indebtedness of
others, whether or not the same are or should be reflected in the Company’s balance sheet
(or the notes thereto), except guaranties by endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of business; and (z)
the present value of any lease payments in excess of $50,000 due under leases required to be
capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default
with respect to any Indebtedness.

(dd) Tax Status. Except for matters that would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse Effect, the
Company and each Subsidiary (i) has made or filed all United States federal and state income
and all foreign income and franchise tax returns, reports and declarations required by any
jurisdiction to which it is subject, (ii) has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be due on such
returns, reports and declarations and (iii) has set aside on its books provision reasonably
adequate for the payment of all material taxes for periods subsequent to the periods to
which such returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company or of any Subsidiary know of no basis for any such claim.

(ee) Foreign Corrupt Practices. Neither the Company, nor to the knowledge of
the Company, any agent or other person acting on behalf of the Company, has (i) directly or
indirectly, used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to any foreign or
domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf of which the
Company is aware) which is in violation of law, or (iv) violated in any material respect any
provision of the Foreign Corrupt Practices Act of 1977, as amended.

 

11

 

(ff) Accountants. The Company’s accounting firm is set forth in the Prospectus
Supplement. To the knowledge and belief of the Company, such accounting firm (i) is a
registered public accounting firm as required by the Exchange Act and (ii) shall express its
opinion with respect to the financial statements to be included in the Company’s Annual
Report on Form 10-K for the year ending December 31, 2010.

(gg) Regulation M Compliance.  The Company has not, and to its knowledge no one
acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or
to result in the stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased,
or, paid any compensation for soliciting purchases of, any of the Securities (other than for
Placement Agent’s placement of the Securities), or (iii) paid or agreed to pay to any Person
any compensation for soliciting another to purchase any other securities of the Company.

(hh) Office of Foreign Assets Control. Neither the Company nor, to the
Company’s knowledge, any director, officer, agent, employee or Affiliate of the Company is
currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control
of the U.S. Treasury Department.

(ii) U.S. Real Property Holding Corporation. The Company is not and has never
been a U.S. real property holding corporation within the meaning of Section 897 of the
Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Investor’s
request.

(jj) Bank Holding Company Act. Neither the Company nor any of its Subsidiaries
or Affiliates is subject to the Bank Holding Company Act of 1956, as amended (the
“BHCA”) and to regulation by the Board of Governors of the Federal Reserve System
(the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or
Affiliates owns or controls, directly or indirectly, five percent (5%) or more of the
outstanding shares of any class of voting securities or twenty-five percent or more of the
total equity of a bank or any entity that is subject to the BHCA and to regulation by the
Federal Reserve. Neither the Company nor any of its Subsidiaries or Affiliates exercises a
controlling influence over the management or policies of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve.

(kk) Money Laundering. The operations of the Company are and have been
conducted at all times in compliance with applicable financial record-keeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended,
applicable money laundering statutes and applicable rules and regulations thereunder
(collectively, the “Money Laundering Laws”), and no action, suit or proceeding by or
before any court or governmental agency, authority or body or any arbitrator involving the
Company with respect to the Money Laundering Laws is pending or, to the knowledge of the
Company, threatened.

(ll) Certificates. Any certificate signed by an officer of the Company and
delivered to the Placement Agent or to counsel for the Placement Agent shall be deemed to be
a representation and warranty by the Company to the Placement Agent as to the matters set
forth therein.

 

12

 

(mm) Reliance. The Company acknowledges that the Placement Agent will rely
upon the accuracy and truthfulness of the foregoing representations and warranties and
hereby consents to such reliance.

(nn) FINRA Affiliations. There are no affiliations with any FINRA member firm
among the Company’s officers, directors or, to the knowledge of the Company, any five
percent (5%) or greater stockholder of the Company.

Section 3. Delivery and Payment. Each Closing shall occur at the offices of the Placement Agent
(or at such other place as shall be agreed upon by the Placement Agent and the Company). Subject
to the terms and conditions hereof, at each Closing payment of the purchase price for the
Securities sold on such Closing Date shall be made by Federal Funds wire transfer, against delivery
of such Securities, and such Securities shall be registered in such name or names and shall be in
such denominations, as the Placement Agent may request at least one business day before the time of
purchase (as defined below).

Deliveries of the documents with respect to the purchase of the Securities, if any, shall be
made at the offices of Placement Agent. All actions taken at a Closing shall be deemed to have
occurred simultaneously.

Section 4. Covenants and Agreements of the Company. The Company further covenants and agrees with
the Placement Agent as follows:

(a) Registration Statement Matters. The Company will advise the Placement
Agent promptly after it receives notice thereof of the time when any amendment to the
Registration Statement has been filed or becomes effective or any supplement to any
Prospectus Supplement or any amended Prospectus Supplement has been filed and will furnish
the Placement Agent with copies thereof. The Company will file promptly all reports and any
definitive proxy or information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 14 or 15(d) of the Exchange Act subsequent to the date
of any Prospectus Supplement and for so long as the delivery of a prospectus is required in
connection with the Offering. The Company will advise the Placement Agent, promptly after
it receives notice thereof (i) of any request by the Commission to amend the Registration
Statement or to amend or supplement any Prospectus Supplement or for additional information,
and (ii) of the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or any post-effective amendment thereto or any order directed at
any Incorporated Document, if any, or any amendment or supplement thereto or any order
preventing or suspending the use of the Base Prospectus or any Prospectus Supplement or any
amendment or supplement thereto or any post-effective amendment to the Registration
Statement, of the suspension of the qualification of the Securities for offering or sale in
any jurisdiction, of the institution or threatened institution of any proceeding for any
such purpose, or of any request by the Commission for the amending or supplementing of the
Registration Statement or a Prospectus Supplement or for additional information. The Company
shall use its best efforts to prevent the issuance of any such stop order or prevention or
suspension of such use.  If the Commission shall enter any such stop order or order or
notice of prevention or suspension at any time, the Company will use its best efforts to
obtain the lifting of such order at the earliest possible moment, or will file a new
registration statement and use its best efforts to have such new registration statement
declared effective as soon as practicable.  Additionally, the Company agrees that it shall
comply with the provisions of Rules 424(b), 430A, 430B and 430C, as applicable, under the
Securities Act, including with respect to the timely filing of documents thereunder, and
will use its reasonable efforts to confirm that any filings made by the Company under such
Rule 424(b) are received in a timely manner by the Commission.

 

13

 

(b) Blue Sky Compliance. The Company will cooperate with the Placement Agent
and the Investors in endeavoring to qualify the Securities for sale under the securities
laws of such jurisdictions (United States and foreign) as the Placement Agent and the
Investors may reasonably request and will make such applications, file such documents, and
furnish such information as may be reasonably required for that purpose, provided the
Company shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction where it is not now so qualified or
required to file such a consent, and provided further that the Company shall not be required
to produce any new disclosure document other than a Prospectus Supplement. The Company
will, from time to time, prepare and file such statements, reports and other documents as
are or may be required to continue such qualifications in effect for so long a period as the
Placement Agent may reasonably request for distribution of the Securities. The Company will
advise the Placement Agent promptly of the suspension of the qualification or registration
of (or any such exemption relating to) the Securities for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the
event of the issuance of any order suspending such qualification, registration or exemption,
the Company shall use its best efforts to obtain the withdrawal thereof at the earliest
possible moment.

(c) Amendments and Supplements to a Prospectus Supplement and Other Matters.
The Company will comply with the Securities Act and the Exchange Act, and the rules and
regulations of the Commission thereunder, so as to permit the completion of the distribution
of the Securities as contemplated in this Agreement and any Prospectus Supplement. If
during the period in which a prospectus is required by law to be delivered in connection
with the distribution of Securities contemplated by any Prospectus Supplement (the
“Prospectus Delivery Period”), any event shall occur as a result of which, in the
judgment of the Company or in the opinion of the Placement Agent or counsel for the
Placement Agent, it becomes necessary to amend or supplement the Incorporated Documents or
any Prospectus Supplement in order to make the statements therein, in the light of the
circumstances under which they were made, as the case may be, not misleading, or if it is
necessary at any time to amend or supplement the Incorporated Documents or any Prospectus
Supplement or to file under the Exchange Act any Incorporated Document to comply with any
law, the Company will promptly prepare and file with the Commission, and furnish at its own
expense to the Placement Agent and to dealers, an appropriate amendment to the Registration
Statement or supplement to the Registration Statement, the Incorporated Documents or any
Prospectus Supplement that is necessary in order to make the statements in the Incorporated
Documents and any Prospectus Supplement as so amended or supplemented, in the light of the
circumstances under which they were made, as the case may be, not misleading, or so that the
Registration Statement, the Incorporated Documents or any Prospectus Supplement, as so
amended or supplemented, will comply with law. Before amending the Registration Statement
or supplementing the Incorporated Documents or any Prospectus Supplement in connection with
the Offering, the Company will furnish the Placement Agent with a copy of such proposed
amendment or supplement and will not file any such amendment or supplement to which the
Placement Agent reasonably objects.

(d) Copies of any Amendments and Supplements to a Prospectus Supplement. The
Company will furnish the Placement Agent, without charge, during the period beginning on the
date hereof and ending on the later of the last Closing Date of the Offering, as many copies
of the Incorporated Documents and any Prospectus Supplement and any amendments and
supplements thereto (including any Incorporated Documents, if any) as the Placement Agent
may reasonably request.

 

14

 

(e) Free Writing Prospectus. The Company covenants that it will not, unless it
obtains the prior written consent of the Placement Agent, make any offer relating to the
Securities that would constitute an Company Free Writing Prospectus or that would otherwise
constitute a “free writing prospectus” (as defined in Rule 405 of the Securities
Act) required to be filed by the Company with the Commission or retained by the Company
under Rule 433 of the Securities Act. In the event that the Placement Agent expressly
consents in writing to any such free writing prospectus (a “Permitted Free Writing
Prospectus”), the Company covenants that it shall (i) treat each Permitted Free Writing
Prospectus as a Company Free Writing Prospectus, and (ii) comply with the requirements of
Rule 164 and 433 of the Securities Act applicable to such Permitted Free Writing Prospectus,
including in respect of timely filing with the Commission, legending and record keeping.

(f) Transfer Agent. The Company will maintain, at its expense, a registrar and
transfer agent for the Common Stock.

(g) Earnings Statement. As soon as practicable and in accordance with
applicable requirements under the Securities Act, but in any event not later than 18 months
after the last Closing Date, the Company will make generally available to its security
holders and to the Placement Agent an earnings statement, covering a period of at least 12
consecutive months beginning after the last Closing Date, that satisfies the provisions of
Section 11(a) and Rule 158 under the Securities Act.

(h) Periodic Reporting Obligations. During the Prospectus Delivery Period, the
Company will duly file, on a timely basis, with the Commission and the Trading Market all
reports and documents required to be filed under the Exchange Act within the time periods
and in the manner required by the Exchange Act.

(i) Additional Documents. The Company will enter into any subscription,
purchase or other customary agreements as the Placement Agent or the Investors deem
necessary or appropriate to consummate the Offering, all of which will be in form and
substance reasonably acceptable to the Placement Agent and the Investors. The Company
agrees that the Placement Agent may rely upon, and is a third party beneficiary of, the
representations and warranties and applicable covenants set forth in any such purchase,
subscription or other agreement with Investors in the Offering.

(j) No Manipulation of Price.  The Company will not take, directly or
indirectly, any action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of the price of any
securities of the Company.

(k) Acknowledgment. The Company acknowledges that any advice given by the
Placement Agent to the Company is solely for the benefit and use of the Board of Directors
of the Company and may not be used, reproduced, disseminated, quoted or referred to, without
the Placement Agent’s prior written consent.

 

15

 

Section 5. Conditions of the Obligations of the Placement Agent. The obligations of the Placement
Agent hereunder shall be subject to the accuracy of the representations and warranties on the part
of the Company set forth in Section 2 hereof, in each case as of the date hereof and as of each
Closing Date as though then made, to the timely performance by each of the Company of its covenants
and other obligations hereunder on and as of such dates, and to each of the following additional
conditions:

(a) Accountants’ Comfort Letter. On the date hereof, the Placement Agent shall
have received, and the Company shall have caused to be delivered to the Placement Agent, a
letter from HJ Associates & Consultants, LLP (the independent registered public accounting
firm of the Company), addressed to the Placement Agent, dated as of the date hereof, in form
and substance satisfactory to the Placement Agent. The letter shall not disclose any change
in the condition (financial or other), earnings, operations, business or prospects of the
Company from that set forth in the Incorporated Documents or the applicable Prospectus
Supplement, which, in the Placement Agent’s sole judgment, is material and adverse and that
makes it, in the Placement Agent’s sole judgment, impracticable or inadvisable to proceed
with the Offering of the Securities as contemplated by such Prospectus Supplement.

(b) Compliance with Registration Requirements; No Stop Order; No Objection from the
FINRA. Each Prospectus Supplement (in accordance with Rule 424(b)) and Permitted Free
Writing Prospectus, if any, shall have been duly filed with the Commission, as appropriate;
no stop order suspending the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; no order preventing or suspending the use of any Prospectus
Supplement shall have been issued and no proceeding for that purpose shall have been
initiated or threatened by the Commission; no order having the effect of ceasing or
suspending the distribution of the Securities or any other securities of the Company shall
have been issued by any securities commission, securities regulatory authority or stock
exchange and no proceedings for that purpose shall have been instituted or shall be pending
or, to the knowledge of the Company, contemplated by any securities commission, securities
regulatory authority or stock exchange; all requests for additional information on the part
of the Commission shall have been complied with; and the FINRA shall have raised no
objection to the fairness and reasonableness of the placement terms and arrangements.

(c) Corporate Proceedings. All corporate proceedings and other legal matters
in connection with this Agreement, the Registration Statement and each Prospectus
Supplement, and the registration, sale and delivery of the Securities, shall have been
completed or resolved in a manner reasonably satisfactory to the Placement Agent’s counsel,
and such counsel shall have been furnished with such papers and information as it may
reasonably have requested to enable such counsel to pass upon the matters referred to in
this Section 5.

(d) No Material Adverse Change. Subsequent to the execution and delivery of
this Agreement and prior to each Closing Date, in the Placement Agent’s sole judgment after
consultation with the Company, there shall not have occurred any Material Adverse Change or
Material Adverse Effect.

(e) Opinion of Counsel for the Company. The Placement Agent shall have
received on each Closing Date the favorable opinion of legal counsel to the Company, dated
as of such Closing Date, including, without limitation, a negative assurance letter,
addressed to the Placement Agent in form and substance satisfactory to the Placement Agent.

 

16

 

(f) Officers’ Certificate. The Placement Agent shall have received on each
Closing Date a certificate of the Company, dated as of such Closing Date, signed by the
Chief Executive Officer and Principal Accounting and Financial Officer of the Company, to
the effect that, and the Placement Agent shall be satisfied that, the signers of such
certificate have reviewed the Registration Statement, the Incorporated Documents, any
Prospectus Supplement, any Permitted Free Writing Prospectus, and this Agreement and to the
further effect that:

(i) The representations and warranties of the Company in this Agreement are
true and correct, as if made on and as of such Closing Date, and the Company has
complied with all the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to such Closing Date;

(ii) No stop order suspending the effectiveness of the Registration Statement
or the use of the Base Prospectus or any Prospectus Supplement has been issued and
no proceedings for that purpose have been instituted or are pending or, to the
Company’s knowledge, threatened under the Securities Act; no order having the effect
of ceasing or suspending the distribution of the Securities or any other securities
of the Company has been issued by any securities commission, securities regulatory
authority or stock exchange in the United States and no proceedings for that purpose
have been instituted or are pending or, to the knowledge of the Company,
contemplated by any securities commission, securities regulatory authority or stock
exchange in the United States;

(iii) When the Registration Statement became effective, at the time of sale,
and at all times subsequent thereto up to the delivery of such certificate, the
Registration Statement and the Incorporated Documents, if any, when such documents
became effective or were filed with the Commission, contained all material
information required to be included therein by the Securities Act and the Exchange
Act and the applicable rules and regulations of the Commission thereunder, as the
case may be, and in all material respects conformed to the requirements of the
Securities Act and the Exchange Act and the applicable rules and regulations of the
Commission thereunder, as the case may be, and the Registration Statement and the
Incorporated Documents, if any, did not and do not include any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading (provided, however, that the preceding
representations and warranties contained in this paragraph (iii) shall not apply to
any statements or omissions made in reliance upon and in conformity with information
furnished in writing to the Company by the Placement Agent expressly for use
therein) and, since the effective date of the Registration Statement, there has
occurred no event required by the Securities Act and the rules and regulations of
the Commission thereunder to be set forth in the Incorporated Documents which has
not been so set forth; and

(iv) Subsequent to the respective dates as of which information is given in the
Registration Statement, the Incorporated Documents and any Prospectus Supplement,
there has not been: (a) any Material Adverse Change; (b) any transaction that is
material to the Company and the Subsidiaries taken as a whole, except transactions
entered into in the ordinary course of business; (c) any obligation, direct or
contingent, that is material to the Company and the Subsidiaries taken as a whole,
incurred by the Company or any Subsidiary, except obligations incurred in the
ordinary course of business; (d) any material change in the capital stock (except
changes thereto resulting from the exercise of outstanding stock options or
warrants) or outstanding indebtedness of the Company or
any Subsidiary; (e) any dividend or distribution of any kind declared, paid or
made on the capital stock of the Company; or (f) any loss or damage (whether or not
insured) to the property of the Company or any Subsidiary which has been sustained
or will have been sustained which has a Material Adverse Effect.

 

17

 

(g) Bring-down Comfort Letter.  On each Closing Date, the Placement Agent shall
have received from HJ Associates & Consultants, LLP, or such other independent registered
public accounting firm of the Company, a letter dated as of such Closing Date, in form and
substance satisfactory to the Placement Agent, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (a) of this Section 5, except
that the specified date referred to therein for the carrying out of procedures shall be no
more than three business days prior to such Closing Date.

(h) Stock Exchange Listing. The Common Stock shall be registered under the
Exchange Act and shall be listed on the Trading Market, and the Company shall not have taken
any action designed to terminate, or likely to have the effect of terminating, the
registration of the Common Stock under the Exchange Act or delisting or suspending from
trading the Common Stock from the Trading Market, nor shall the Company have received any
information suggesting that the Commission or the Trading Market is contemplating
terminating such registration or listing.

(i) Additional Documents. On or before each Closing Date, the Placement Agent
and counsel for the Placement Agent shall have received such information and documents as
they may reasonably require for the purposes of enabling them to pass upon the issuance and
sale of the Securities as contemplated herein, or in order to evidence the accuracy of any
of the representations and warranties, or the satisfaction of any of the conditions or
agreements, herein contained.

If any condition specified in this Section 5 is not satisfied when and as required to be
satisfied, this Agreement may be terminated by the Placement Agent by notice to the Company at any
time on or prior to a Closing Date, which termination shall be without liability on the part of any
party to any other party, except that Section 6 (Payment of Expenses), Section 7 (Indemnification
and Contribution) and Section 8 (Representations and Indemnities to Survive Delivery) shall at all
times be effective and shall survive such termination.

Section 6. Payment of Expenses. The Company agrees to pay all costs, fees and expenses incurred by
the Company in connection with the performance of its obligations hereunder and in connection with
the transactions contemplated hereby, including, without limitation: (i) all expenses incident to
the issuance, delivery and qualification of the Securities (including all printing and engraving
costs); (ii) all fees and expenses of the registrar and transfer agent of the Common Stock; (iii)
all necessary issue, transfer and other stamp taxes in connection with the issuance and sale of the
Securities; (iv) all fees and expenses of the Company’s counsel, independent public or certified
public accountants and other advisors; (v) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the Registration Statement (including
financial statements, exhibits, schedules, consents and certificates of experts), the Base
Prospectus and each Prospectus Supplement, and all amendments and supplements thereto, and this
Agreement; (vi) all filing fees, reasonable attorneys’ fees and expenses incurred by the Company or
the Placement Agent in connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Securities for offer and sale under the
state securities or blue sky laws or the securities laws of any other country, and, if requested by
the Placement Agent, preparing and printing a “Blue Sky Survey,” an “International Blue
Sky Survey” or other memorandum, and any supplements thereto, advising the
Placement Agent of such qualifications, registrations and exemptions; (vii) if applicable, the
filing fees incident to the review and approval by the FINRA of the Placement Agent’s participation
in the offering and distribution of the Securities; (viii) the fees and expenses associated with
including the Securities on the Trading Market; (ix) all costs and expenses incident to the travel
and accommodation of the Company’s and the Placement Agent’s employees on the “roadshow,”
if any; and (x) all other fees, costs and expenses referred to in Part II of the Registration
Statement.

 

18

 

Section 7. Indemnification. The Company agrees to indemnify the Placement Agent in accordance with
the provisions of Schedule A hereto, which is incorporated by reference herein and made a part
hereof.

Section 8. Representations and Indemnities to Survive. The indemnities, agreements,
representations, warranties and other statements of the Company or any person controlling the
Company, and of its officers, set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of the Placement Agent, or
any of its or their partners, officers or directors or any controlling person, as the case may be,
and will survive delivery of and payment for the Securities to be sold in the proposed Offering and
any termination of this Agreement. A successor to a Placement Agent, or to the Company, its
directors or officers or any person controlling the Company, shall be entitled to the benefits of
the indemnity, contribution and reimbursement agreements contained in this Agreement.

Section 9. Notices. All communications hereunder shall be in writing and shall be mailed, hand
delivered or telecopied and confirmed to the parties hereto as follows:

If to the Placement Agent to the address set forth above, attn: General Counsel, Facsimile:
305-572-4220

If to the Company:

300 Continental Blvd., Suite 100

El Segundo, CA 90245

Facsimile: (310) 615-9800

Attention: Frederic Scheer

With a copy to:

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32 nd Floor

New York, NY 10006

Facsimile (212) 930-9725

Attn: Gregory Sichenzia, Esq.

Marcelle Balcombe, Esq.

Any party hereto may change the address for receipt of communications by giving written notice
to the others.

 

19

 

Section 10. Successors. This Agreement will inure to the benefit of and be binding upon the
parties hereto, and to the benefit of the employees, officers and directors and controlling persons
referred to in Section 7 hereof, and to their respective successors, and personal representative,
and no other person will have any right or obligation hereunder.

Section 11. Partial Unenforceability. The invalidity or unenforceability of any section, paragraph
or provision of this Agreement shall not affect the validity or enforceability of any other
section, paragraph or provision hereof. If any Section, paragraph or provision of this Agreement
is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such
minor changes (and only such minor changes) as are necessary to make it valid and enforceable.

Section 12. Governing Law Provisions. This Agreement shall be deemed to have been made and
delivered in New York City and both this engagement letter and the transactions contemplated hereby
shall be governed as to validity, interpretation, construction, effect and in all other respects by
the internal laws of the State of New York, without regard to the conflict of laws principles
thereof. Each of the Placement Agent and the Company: (i) agrees that any legal suit, action or
proceeding arising out of or relating to this engagement letter and/or the transactions
contemplated hereby shall be instituted exclusively in New York Supreme Court, County of New York,
or in the United States District Court for the Southern District of New York, (ii) waives any
objection which it may have or hereafter to the venue of any such suit, action or proceeding, and
(iii) irrevocably consents to the jurisdiction of the New York Supreme Court, County of New York,
and the United States District Court for the Southern District of New York in any such suit, action
or proceeding. Each of the Placement Agent and the Company further agrees to accept and
acknowledge service of any and all process which may be served in any such suit, action or
proceeding in the New York Supreme Court, County of New York, or in the United States District
Court for the Southern District of New York and agrees that service of process upon the Company
mailed by certified mail to the Company’s address shall be deemed in every respect effective
service of process upon the Company, in any such suit, action or proceeding, and service of process
upon the Placement Agent mailed by certified mail to the Placement Agent’s address shall be deemed
in every respect effective service process upon the Placement Agent, in any such suit, action or
proceeding. If either party shall commence an action or proceeding to enforce any provision of
this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the
other party for its reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.

Section 13. General Provisions.

(a) This Agreement constitutes the entire agreement of the parties to this Agreement
and supersedes all prior written or oral and all contemporaneous oral agreements,
understandings and negotiations with respect to the subject matter hereof, including the
Investment Banking Agreement dated April 28, 2010 (the “IBA Agreement”), provided,
however, the terms and conditions set forth in Exhibit A to the IBA Agreement, other than
paragraph I thereof, shall expressly survive the execution and delivery of this Agreement.
This Agreement may be executed in two or more counterparts, each one of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement may not be amended or modified unless in writing by all of the
parties hereto, and no condition herein (express or implied) may be waived unless waived in
writing by each party whom the condition is meant to benefit. Section headings herein are
for the convenience of the parties only and shall not affect the construction or
interpretation of this Agreement.

(b) The Company acknowledges that in connection with the offering of the Securities:
(i) the Placement Agent has acted at arms length, are not agents of, and owe no
fiduciary duties to the Company or any other person, (ii) the Placement Agent owes the
Company only those duties and obligations set forth in this Agreement and (iii) the
Placement Agent may have interests that differ from those of the Company. The Company
waives to the full extent permitted by applicable law any claims it may have against the
Placement Agent arising from an alleged breach of fiduciary duty in connection with the
offering of the Securities.

[The remainder of this page has been intentionally left blank.]

 

20

 

If the foregoing is in accordance with your understanding of our agreement, please sign below
whereupon this instrument, along with all counterparts hereof, shall become a binding agreement in
accordance with its terms.

	 	 	 	 	 
	 	Very truly yours,

CEREPLAST, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Frederic Scheer 	 
	 	 	Title:  	Chief Executive Officer 	 

The foregoing Placement Agency Agreement is hereby confirmed and accepted as of the date first
above written.

	 	 	 	 	 	 	 
	LADENBURG THALMANN & CO. INC.	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 

 

21

 

SCHEDULE A – INDEMNIFICATION

The Company hereby agrees to indemnify and hold the Placement Agent, its officers, directors,
principals, employees, affiliates, and members, and their successors and assigns, harmless from and
against any and all loss, claim, damage, liability, deficiencies, actions, suits, proceedings,
costs and legal expenses or expense whatsoever (including, but not limited to, reasonable legal
fees and other expenses and reasonable disbursements incurred in connection with investigating,
preparing to defend or defending any action, suit or proceeding, including any inquiry or
investigation, commenced or threatened, or any claim whatsoever, or in appearing or preparing for
appearance as witness in any proceeding, including any pretrial proceeding such as a deposition)
(collectively, “Losses”) arising out of, based upon, or in any way related or attributed to, (i)
any breach of a representation, warranty or covenant by the Company contained in this Agreement or
(ii) any activities or services performed hereunder by the Placement Agent, unless it is finally
judicially determined in a court of competent jurisdiction that such Losses were the primary and
direct result of the intentional misconduct or gross negligence of the Placement Agent in
performing the services hereunder.

If the Placement Agent receives written notice of the commencement of any legal action, suit
or proceeding with respect to which the Company is or may be obligated to provide indemnification
pursuant to this Schedule A, the Placement Agent shall, promptly after the receipt of such written
notice, give the Company written notice thereof (a “Claim Notice”). Failure to promptly give such
Claim Notice shall not constitute a waiver by the Placement Agent of its right to indemnity
hereunder with respect to such action, suit or proceeding. Upon receipt by the Company of a Claim
Notice from the Placement Agent with respect to any claim for indemnification which is based upon a
claim made by a third party (“Third Party Claim”), the Company may assume the defense of the Third
Party Claim with counsel of its own choosing, as described below. The Placement Agent shall
cooperate in the defense of the Third Party Claim and shall furnish such records, information and
testimony and attend all such conferences, discovery proceedings, hearings, trial and appeals as
may be reasonably required in connection therewith. The Placement Agent shall have the right to
employ its own counsel in any such action which shall be at the Company’s expense if (i) the
Company and the Placement Agent shall have mutually agreed in writing to the retention of such
counsel, (ii) the Company shall have failed in a timely manner to assume the defense and employ
counsel or experts reasonably satisfactory to the Placement Agent in such litigation or proceeding
or (iii) the named parties to any such litigation or proceeding (including any impleaded parties)
include the Company and the Placement Agent and representation of the Company and the Placement
Agent by the same counsel or experts would, in the reasonable opinion of the Placement Agent, be
inappropriate due to actual or potential differing interests between the Company and the Placement
Agent. The Company shall not satisfy or settle any Third Party Claim for which indemnification has
been sought and is available hereunder, without the prior written consent of the Placement Agent,
which consent shall not be delayed and which shall not be required if the Placement Agent is
granted a release in connection therewith. The indemnification provisions hereunder shall survive
the termination or expiration of this Agreement.

The Company further agrees, upon demand by the Placement Agent, to promptly reimburse the
Placement Agent for, or pay, any loss, claim, damage, liability or expense as to which the
Placement Agent has been indemnified herein with such reimbursement to be made currently as any
loss, damage, liability or expense is incurred by the Placement Agent. Notwithstanding the
provisions of the aforementioned indemnification, any such reimbursement or payment by the Company
of fees, expenses, or disbursements incurred by the Placement Agent shall be repaid by the
Placement Agent in the event of any proceeding in which a final judgment (after all appeals or the
expiration of time to appeal) is entered in a court of competent jurisdiction against the Placement
Agent based solely upon its gross negligence or intentional misconduct in the performance of its
duties hereunder, and provided further, that the Company shall not be required to make
reimbursement or payment for any settlement effected without the
Company’s prior written consent (which consent shall not be unreasonably withheld or delayed).

 

22

 

If for any reason the foregoing indemnification is unavailable or is insufficient to hold the
Placement Agent harmless, the Company agrees to contribute the amount paid or payable by the
Placement Agent in such proportion as to reflect not only the relative benefits received by the
Company, as the case may be, on the one hand, and the Placement Agent, on the other hand, but also
the relative fault of the Company and the Placement Agent as well as any relevant equitable
considerations. In no event shall the Placement Agent contribute in excess of the fees actually
received by it pursuant to the terms of this Agreement.

For purposes of this Agreement, each officer, director, member, and employee or affiliate of
the Placement Agent and each person, if any, who controls the Placement Agent (or any affiliate)
within the meaning of either Section 15 of the Securities Act of 1933, as amended, or Section 20 of
the Securities Exchange Act of 1934, as amended, shall have the same rights as the Placement Agent
with respect to matters of indemnification by the Company hereunder.

Notwithstanding any provision of this engagement letter to the contrary, the Company agrees
that neither the Placement Agent nor its Affiliates, and the respective officers, directors,
employees, agents and representatives of the Placement Agent, its Affiliates and each other person,
if any, controlling the Placement Agent or any of its affiliates, shall have any liability (whether
direct or indirect, in contract or tort or otherwise) to the Company for or in connection with the
engagement and transaction described herein except for any such liability for losses, claims,
damages or liabilities incurred by the Placement Agent or its Affiliates, and the respective
officers, directors, employees, agents and representatives of the Placement Agent, its Affiliates
and each other person, if any, controlling the Placement Agent or any of its affiliates, that are
finally judicially determined in a court of competent jurisdiction that such Losses were the
primary and direct result from the intentional misconduct or gross negligence of such individuals
or entities.

 

23Exhibit 10.1

Exhibit 10.1

PURCHASE AGREEMENT

by and among

UNITED WESTERN BANK

UNITED WESTERN BANCORP, INC.

LEGENT GROUP, LLC

and

HENRY C. DUQUES

DATED: June 9, 2010

 

 

 

PURCHASE AGREEMENT

TABLE OF CONTENTS

	 	 	 	 	 
	1. PURCHASE AND SALE OF UNITS
	 	 	1	 
	 
	 	 	 	 
	2. CONSIDERATION; PAYMENT
	 	 	1	 
	2.1 Consideration
	 	 	1	 
	2.2 Payment of Consideration
	 	 	2	 
	2.3 Determination of Adjusted Book Value and Final Cash Purchase Price
	 	 	3	 
	 
	 	 	 	 
	3. REPRESENTATIONS AND WARRANTIES OF SELLERS
	 	 	5	 
	3.1 Legent Clearing
	 	 	5	 
	3.2 Sellers
	 	 	6	 
	3.3 Title
	 	 	7	 
	3.4 No Violation
	 	 	7	 
	3.5 Financial Statements
	 	 	8	 
	3.6 Accounting Controls
	 	 	8	 
	3.7 Tax Matters
	 	 	8	 
	3.8 Accounts Receivable
	 	 	10	 
	3.9 Invoices
	 	 	10	 
	3.10 Securities
	 	 	10	 
	3.11 Absence of Certain Changes
	 	 	11	 
	3.12 Absence of Undisclosed Liabilities
	 	 	12	 
	3.13 Litigation
	 	 	13	 
	3.14 Compliance With Laws and Orders
	 	 	13	 
	3.15 Title to and Condition of Properties
	 	 	15	 
	3.16 Insurance
	 	 	16	 
	3.17 Contracts and Commitments
	 	 	16	 
	3.18 Labor and Employment Matters
	 	 	18	 
	3.19 Employee Benefit Plans
	 	 	18	 
	3.20 Employment Compensation
	 	 	21	 
	3.21 Agreements Binding on Employees
	 	 	21	 
	3.22 Intellectual Property
	 	 	21	 
	3.23 Technology Systems
	 	 	22	 
	3.24 Major Customers and Vendors
	 	 	23	 
	3.25 Bank Accounts
	 	 	23	 
	3.26 Transactions with Affiliates
	 	 	24	 
	3.27 Assets Necessary to Business
	 	 	24	 
	3.28 No Brokers or Finders
	 	 	25	 
	3.29 Investment Intent
	 	 	25	 
	3.30 Distribution of Consideration
	 	 	25	 
	3.31 Restricted Securities
	 	 	25	 

 

i

 

	 	 	 	 	 
	4. REPRESENTATIONS AND WARRANTIES OF BUYER
	 	 	26	 
	4.1 Corporate
	 	 	26	 
	4.2 Authorization; Validity
	 	 	26	 
	4.3 No Brokers or Finders
	 	 	26	 
	4.4 No Violation
	 	 	26	 
	4.5 Investment Intent
	 	 	27	 
	4.6 Financing
	 	 	27	 
	 
	 	 	 	 
	5. REPRESENTATIONS AND WARRANTIES OF PARENT
	 	 	27	 
	5.1 Corporate
	 	 	27	 
	5.2 Authorization; Validity
	 	 	27	 
	5.3 No Brokers or Finders
	 	 	27	 
	5.4 No Violation
	 	 	28	 
	5.5 Subject Shares
	 	 	28	 
	 
	 	 	 	 
	6. COVENANTS
	 	 	28	 
	6.1 Noncompetition; Confidentiality
	 	 	28	 
	6.2 General Releases
	 	 	30	 
	6.3 Conduct of Legent Clearing Prior to Closing
	 	 	30	 
	6.4 Negative Covenants
	 	 	31	 
	6.5 Notice of Certain Events
	 	 	33	 
	6.6 Access to Information and Records
	 	 	34	 
	6.7 Consultants
	 	 	35	 
	6.8 Employees and Employee Plans/Agreements
	 	 	35	 
	6.9 Corporate Name Change
	 	 	35	 
	6.10 Preparation of Tax Returns
	 	 	35	 
	6.11 Legent Clearing Organization Credits
	 	 	35	 
	6.12 Repayment of Outstanding Debt; Transfer of Certain Assets
	 	 	35	 
	6.13 Advance by Buyer
	 	 	36	 
	6.14 Distribution of Subject Shares
	 	 	36	 
	6.15 Required Approvals
	 	 	36	 
	6.16 No Negotiation
	 	 	36	 
	6.17 Audit
	 	 	37	 
	6.18 Commercially Reasonable Efforts
	 	 	37	 
	 
	 	 	 	 
	7. INDEMNIFICATION
	 	 	37	 
	7.1 By Member and Duques
	 	 	37	 
	7.2 By Member
	 	 	38	 
	7.3 By Buyer
	 	 	39	 
	7.4 By Parent
	 	 	39	 
	7.5 Indemnification of Third-Party Claims
	 	 	39	 
	7.6 Payment; Satisfaction from Escrowed Funds
	 	 	40	 
	7.7 Tax Effect
	 	 	41	 
	7.8 Limitations on Indemnification
	 	 	42	 
	7.9 No Waiver of Contractual Representations and Warranties
	 	 	43	 

 

ii

 

	 	 	 	 	 
	8. CLOSING
	 	 	44	 
	8.1 Documents to be Delivered by Sellers
	 	 	44	 
	8.2 Documents to be Delivered by Buyer or Parent
	 	 	45	 
	8.3 Conditions Precedent to Obligations of Buyer and Parent
	 	 	46	 
	8.4 Conditions Precedent to Obligations of Sellers
	 	 	47	 
	 
	 	 	 	 
	9. TERMINATION
	 	 	48	 
	9.1 Termination
	 	 	48	 
	9.2 Effect of Termination
	 	 	49	 
	9.3 Waiver of Conditions to Closing
	 	 	49	 
	9.4 Expenses upon Termination
	 	 	49	 
	 
	 	 	 	 
	10. RESOLUTION OF DISPUTES
	 	 	50	 
	10.1 Arbitration
	 	 	50	 
	10.2 Arbitrators
	 	 	50	 
	10.3 Procedures; No Appeal
	 	 	50	 
	10.4 Authority
	 	 	50	 
	10.5 Entry of Judgment
	 	 	50	 
	10.6 Confidentiality
	 	 	51	 
	10.7 Continued Performance
	 	 	51	 
	10.8 Tolling
	 	 	51	 
	 
	 	 	 	 
	11. MISCELLANEOUS
	 	 	51	 
	11.1 Disclosure Schedules
	 	 	51	 
	11.2 Further Assurance
	 	 	51	 
	11.3 Disclosures and Announcements
	 	 	52	 
	11.4 Assignment; Parties in Interest
	 	 	52	 
	11.5 Law Governing Agreement
	 	 	52	 
	11.6 Waiver; Remedies Cumulative
	 	 	52	 
	11.7 Amendment and Modification
	 	 	52	 
	11.8 Notice
	 	 	53	 
	11.9 Expenses
	 	 	54	 
	11.10 Entire Agreement
	 	 	55	 
	11.11 Counterparts
	 	 	55	 
	11.12 Headings
	 	 	55	 
	11.13 Knowledge
	 	 	55	 
	11.14 Glossary of Terms
	 	 	55	 

	 	 	 	 	 
	Exhibits
	 	 	 	 
	Exhibit 2.2(a) 
	 	Form of Escrow Agreement	 	 
	Exhibit 2.2(c) 
	 	Form of Registration Rights Agreement	 	 
	Exhibit 6.2 
	 	Form of Release	 	 
	Exhibit 8.1(f) 
	 	Form of Closing Certificate of Member	 	 
	Exhibit 8.1(g) 
	 	Form of Closing Certificate of Duques	 	 
	Exhibit 8.2(d) 
	 	Form of Opinion of Parent’s In-House Counsel	 	 
	Exhibit 8.2(f) 
	 	Form of Closing Certificate of Buyer and Parent	 	 

 

iii

 

	 	 	 	 	 
	Schedules
	 	 	 	 
	Schedule 3.1(c) 
	 	Foreign Qualifications	 	 
	Schedule 3.1(d) 
	 	Interests in Other Entities	 	 
	Schedule 3.1(e) 
	 	Managers & Officers 	 	 
	Schedule 3.1(f) 
	 	Capitalization 	 	 
	Schedule 3.4 
	 	Violation, Conflict, Default 	 	 
	Schedule 3.5
	 	 Financial Statements 	 	 
	Schedule 3.7(a) 
	 	Certain Tax Matters 	 	 
	Schedule 3.8 
	 	Accounts Receivable (Aged Schedule) 	 	 
	Schedule 3.10 
	 	Securities Held by Legent Clearing as of May 15, 2010 	 	 
	Schedule 3.11 
	 	Certain Changes 	 	 
	Schedule 3.12 
	 	Off-Balance Sheet Liabilities 	 	 
	Schedule 3.13 
	 	Litigation Matters 	 	 
	Schedule 3.14(a) 
	 	Non-Compliance with Laws 	 	 
	Schedule 3.14(b) 
	 	Licenses 	 	 
	Schedule 3.15(a) 
	 	Liens 	 	 
	Schedule 3.15(b) 
	 	Fixed Asset List 	 	 
	Schedule 3.15(d) 
	 	Real Property Leases 	 	 
	Schedule 3.16 
	 	Insurance 	 	 
	Schedule 3.17(b) 
	 	Personal Property Leases 	 	 
	Schedule 3.17(f) 
	 	Loan Agreements 	 	 
	Schedule 3.17(j) 
	 	Other Material Contracts 	 	 
	Schedule 3.18 
	 	Labor Matters 	 	 
	Schedule 3.19(a) 
	 	Employee Plans/Agreements 	 	 
	Schedule 3.21 
	 	Agreements Binding on Employees 	 	 
	Schedule 3.22 
	 	Intellectual Property 	 	 
	Schedule 3.24(a) 
	 	Major Customers 	 	 
	Schedule 3.24(b) 
	 	Major Vendors 	 	 
	Schedule 3.25 
	 	Bank Accounts 	 	 
	Schedule 3.26(a) 
	 	Contracts with Affiliates 	 	 
	Schedule 3.26(b) 
	 	Adverse Interests 	 	 
	Schedule 3.26(c) 
	 	Obligations of and to Affiliates 	 	 
	Schedule 6.2 
	 	Persons to Deliver Releases 	 	 
	Schedule 6.4 
	 	Certain Permitted Actions 	 	 
	Schedule 6.12 
	 	Outstanding Subordinated Indebtedness 	 	 

 

iv

 

PURCHASE AGREEMENT

THIS PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of June 9,
2010, by and among UNITED WESTERN BANK, a federal savings bank (“Buyer”), UNITED WESTERN
BANCORP, INC., a Colorado corporation and the sole stockholder of Buyer (“Parent”), LEGENT
GROUP, LLC, a Delaware limited liability company (“Member”), and HENRY C. DUQUES, the
controlling member of Member (“Duques” and, together with Member, “Sellers”).

RECITALS

A. Member, through its wholly-owned subsidiary, Legent Clearing, LLC, a Delaware limited
liability company (“Legent Clearing”), is engaged in the business of providing clearing
services to broker-dealers (the “Business”). Member owns all of the issued and outstanding
common units of membership interest in Legent Clearing (collectively, the “Units”).

B. Duques is an Affiliate (as defined in Section 3.26(a)) of and controls Member, and
as a result of such relationship is receiving, and will receive, substantial direct and indirect
benefits from the consummation of the transactions contemplated hereby, and Buyer has required that
Duques enter into this Agreement as a material inducement for Buyer to enter into this Agreement
and to perform its obligations hereunder.

C. Buyer desires to purchase the Units from Member and Member desires to sell the Units to
Buyer, upon the terms and conditions herein set forth.

NOW THEREFORE, in consideration of the foregoing and the respective representations,
warranties, covenants, agreements and conditions hereinafter set forth, and intending to be legally
bound hereby, the parties hereto agree as follows.

1. PURCHASE AND SALE OF UNITS

Subject to the terms and conditions of this Agreement, at the Closing (as hereinafter
defined), Sellers shall sell or cause to be sold to Buyer, and Buyer shall purchase, all of the
Units.

2. CONSIDERATION; PAYMENT

2.1 Consideration.

The consideration payable for the Units (collectively, the “Consideration”)
shall consist of cash in the amount of the Final Cash Purchase Price (as hereinafter
defined), plus the shares of Parent’s common stock, par value $0.0001 per share (the
“Parent Common Stock”), contemplated by Section 2.2(c) (collectively, the
“Subject Shares”).

 

1

 

2.2 Payment of Consideration.

The Consideration shall be paid by Buyer as follows:

(a) Cash to Escrow Agent. At the Closing (as hereinafter defined), Buyer shall
deliver to Wells Fargo Bank, National Association (or such other bank as may be mutually
agreed by Buyer and Member), as escrow agent (the “Escrow Agent”), pursuant to an
Escrow Agreement substantially in the form of Exhibit 2.2(a) attached hereto (the
“Escrow Agreement”), the sum of $6,000,000 (the “Escrowed Funds”). The
parties acknowledge and agree that the Escrowed Funds shall be held in escrow for the
satisfaction of all amounts, if any, due to Buyer pursuant to Section 2.2(d) or
Article 7, all as set forth in the Escrow Agreement.

(b) Cash to Member. At the Closing, Buyer shall deliver to Member a sum of
cash equal to the Estimated Cash Purchase Price (as hereinafter defined) less the amount of
the Escrowed Funds delivered to the Escrow Agent pursuant to Section 2.2(a). Not
less than three business days prior to the Closing Date, Member shall deliver to Buyer a
statement setting forth: (i) Member’s reasonable estimate of Adjusted Book Value, together
with a projected consolidated balance sheet, as of the Month-End Date, of Legent Clearing
(the “Estimated Balance Sheet”), together with schedules setting forth in reasonable
detail all adjustments thereto required by Section 2.3(b); (ii) based thereon, the
estimated Final Cash Purchase Price due at Closing (the “Estimated Cash Purchase
Price”); and (iii) wire transfer instructions for the payment of the Estimated Cash
Purchase Price and instructions with respect to the delivery of the Subject Shares.

(c) Issuance of Subject Shares to Member. At the Closing, Parent shall issue
and deliver to Member the Subject Shares, consisting of 2,419,688 shares of Parent Common
Stock. The registration rights associated with the Subject Shares shall be as set forth in
a Registration Rights Agreement substantially in the form of Exhibit 2.2(c) attached
hereto (the “Registration Rights Agreement”).

(d) Adjustment to Final Cash Purchase Price. On or before the fifth business
day following the final determination of the Final Balance Sheet (as hereinafter defined)
(such date being hereinafter referred to as the “Settlement Date”):

(i) If the Final Cash Purchase Price (as defined in Section
2.3(c)(iii)) is greater than the Estimated Cash Purchase Price, then Buyer shall
pay to Member the amount of such excess, together with interest on such amount from
the Closing Date to the date of such payment at a rate per annum equal to 3%.

(ii) If the Final Cash Purchase Price is less than the Estimated Cash Purchase
Price (such deficit, the “Overpayment Refund”), then Buyer and Member shall
instruct the Escrow Agent to disburse to Buyer a portion of the Escrowed Funds equal
to the amount of the Overpayment Refund, together with interest on such amount from
the Closing Date to the date of such payment at a rate per annum equal to 3%;
provided, however, that if the amount of the Overpayment Refund
exceeds $350,000, then Member shall be obligated to immediately remit to the Escrow
Agent, in replenishment of a portion of the Escrowed Funds disbursed to Buyer
pursuant to this Section 2.2(d)(ii), cash in the amount by which the
Overpayment Refund exceeds $350,000.

 

2

 

(e) Method of Payment. All payments under this Section 2.2 shall be
made in the form of certified or bank cashier’s check payable to the order of the recipient
or, at the recipient’s option, by wire transfer of immediately available funds to an account
designated by the recipient not less than 48 hours prior to the time for payment specified
herein.

2.3 Determination of Adjusted Book Value and Final Cash Purchase Price.

(a) Definition of Book Value. The term “Book Value” shall mean the
consolidated book value of Legent Clearing as of the last day of the month immediately
preceding the month in which the Closing Date occurs (the “Month-End Date”),
determined in accordance with United States generally accepted accounting principles
(“GAAP”).

(b) Definition of Adjusted Book Value. The term “Adjusted Book Value”
shall mean Book Value less the sum of the following items, in each case to the
extent such items are not already reflected in Book Value:

(i) the carried value as of the Month-End Date of: (A) 195 shares of Class B
non-voting common stock in Newbridge Securities Corporation (with a carry value at
cost of $750,000, to the extent the foregoing have been transferred from Legent
Clearing to any other individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, Governmental or
Regulatory Entity (as defined in Section 3.4) or other entity (each, a
“Person”) on or after June 30, 2009; and (C) certain debt owed to Legent
Clearing by Newbridge Securities Corporation (with a carry value of $911,000 and
shown on the Recent Balance Sheet as “Receivables-Sundry”) with respect to which
Legent Clearing has applied to the Financial Industry Regulatory Authority for
conversion from qualified subordinated debt into 521 shares of Class B non-voting
common stock in Newbridge Securities Corporation;

(ii) a reserve for contingent liabilities in the amount of $200,000;

(iii) any expenses of Legent Clearing after the Month-End Date and prior to the
Closing Date other than ordinary course expenses of the Business;

(iv) any costs incurred by Legent Clearing in connection with the transactions
contemplated by this Agreement, including, without limitation, legal fees and
expenses in negotiating this Agreement and closing the transactions contemplated
hereby; and

(v) all severance costs, if any, incurred by Legent Clearing since the
Month-End Date.

 

3

 

(c) Calculation of Adjusted Book Value. The final balance sheet of Legent
Clearing as of the Month-End Date shall be certified by a firm of independent accountants engaged by Buyer (“Buyer’s Accountants”) at Buyer’s sole cost and
expense, and the calculation of Adjusted Book Value shall be prepared as follows:

(i) Within 90 days after the Closing Date, Buyer shall deliver to Member a
balance sheet of Legent Clearing, prepared in accordance with GAAP from the books
and records of Legent Clearing, on a basis consistent with the accounting principles
theretofore followed by Legent Clearing in the preparation of the Estimated Balance
Sheet and in accordance with this Section 2.3, and fairly presenting
Adjusted Book Value. The balance sheet shall be accompanied by (A) detailed
schedules of the adjustments to the Estimated Balance Sheet and (B) a statement (I)
certifying that the balance sheet has been prepared in accordance with GAAP, on a
basis consistent with the accounting principles theretofore followed by Legent
Clearing, (II) setting forth the final calculation of Adjusted Book Value, and (III)
setting forth the amount of any adjustment to be paid on the Settlement Date
pursuant to Section 2.2(d).

(ii) Within 30 days following the delivery of the balance sheet referred to in
Section 2.3(c)(i), Member or a firm of independent accountants engaged by
Member (“Member’s Accountants”) may object to any of the information
contained in said balance sheet or accompanying schedules which could affect the
necessity or amount of any adjustment pursuant to Section 2.2(d). Any such
objection shall be made in writing and shall state Member’s determination of the
amount of Adjusted Book Value.

(iii) In the event of a dispute or disagreement relating to the balance sheet
or schedules which Buyer and Member are unable to resolve, either party may elect to
have all such disputes or disagreements resolved by an accounting firm of nationally
recognized standing (the “Third Accounting Firm”) to be mutually selected by
Member and Buyer or, if no agreement is reached, by Buyer’s Accountants and Member’s
Accountants. The Third Accounting Firm shall make a resolution of the calculation
of Adjusted Book Value, which shall be final and binding for purposes of this
Article 2. The Third Accounting Firm shall be instructed to use every
reasonable effort to perform its services within 15 days of submission of the
balance sheet to it and, in any case, as soon as practicable after such submission.
The fees and expenses for the services of the Third Accounting Firm shall be shared
by Buyer and Member as follows: Member shall pay a percentage of such fees and
expenses equal to A/(A+B) and Buyer shall pay a percentage of such fees and expenses
equal to B/(A+B), where A is equal to the absolute value of the difference (in
dollars) between Adjusted Book Value as finally determined by the Third Accounting
Firm and Adjusted Book Value as reflected in the objection prepared and delivered by
Member in accordance with Section 2.3(c)(ii), and B is equal to the absolute
value of the difference (in dollars) between Adjusted Book Value as finally
determined by the Third Accounting Firm and Adjusted Book Value as reflected in the
report prepared and delivered by Buyer in accordance with Section 2.3(c)(i).
As used in this Agreement, the term “Final Balance Sheet” shall mean the
balance sheet of Legent Clearing reflecting Adjusted Book Value as finally
determined for
purposes of this Article 2, whether by acquiescence of Member in the
figures supplied by Buyer in accordance with Section 2.3(c)(i), by
negotiation and agreement of the parties or by the Third Accounting Firm in
accordance with this Section 2.3(c)(iii), and the term “Final Cash
Purchase Price” shall mean the greater of (A) $13,000,000 or (B) the amount of
Adjusted Book Value as finally determined in accordance with this Section
2.3(c) based on the Final Balance Sheet; provided, however, that
if the amount of Adjusted Book Value as finally determined in accordance with this
Section 2.3(c) is less than $10,000,000, then the Final Cash Purchase Price
shall be an amount equal to (I) $13,000,000 minus (II) the product of (x)
1.3 times (y) the amount by which the Adjusted Book Value is less than
$10,000,000.

 

4

 

(iv) Buyer agrees to permit Member, Member’s Accountants and their respective
representatives, during normal business hours, to have reasonable access to, and to
examine and make copies of, all books and records of Legent Clearing, including but
not limited to the books, records, schedules, work papers and audit programs of
Buyer and Buyer’s Accountants, and access to representatives of Buyer’s accountants,
which documents and access are reasonably necessary to review the balance sheet
delivered by Buyer in accordance with this Section 2.3(c).

3. REPRESENTATIONS AND WARRANTIES OF SELLERS

The following representations and warranties are made to Buyer and Parent: (a) by Member and
Duques, jointly and severally, solely with respect to the representations and warranties set forth
in Section 3.1 [“Legent Clearing”], Section 3.2 [“Sellers”], Section 3.3
[“Title”] and Section 3.7(f) [“Tax Classification”] (collectively, the “Fundamental
Reps”); and (b) by Member only, with respect to all other representations and warranties set
forth in this Article 3. Each of the representations and warranties set forth in this
Article 3, whether made by Member and Duques, jointly and severally, or by Member only, as
set forth above, is true and correct, shall survive the Closing and is subject to the
qualifications and exceptions set forth in the Disclosure Schedules (as hereinafter defined). Any
reference in this Article 3 to Legent Clearing shall include any predecessor entities,
including Legent Clearing Corp, a Nebraska corporation.

3.1 Legent Clearing.

(a) Organization. Legent Clearing is a limited liability company duly
organized, validly existing and in good standing under the Laws of the State of Delaware.

(b) Power. Legent Clearing has all requisite limited liability company power
and authority to own, operate and lease its properties and to carry on its business as and
where such is now being conducted.

(c) Qualification. Legent Clearing is duly licensed or qualified to do
business as a foreign limited liability company, and is in good standing, in each
jurisdiction wherein the character of the properties owned or leased by it, or the nature of
its business,
makes such licensing or qualification necessary. The jurisdictions in which Legent
Clearing is licensed or qualified to do business are listed in Schedule 3.1(c).

 

5

 

(d) No Subsidiaries. Legent Clearing does not own, directly or indirectly, or
otherwise control, securities or other interests having the power to elect any member of the
board of directors, board of managers or similar governing body, or otherwise have the power
to direct the business and policies of, any other Person. Except as set forth in
Schedule 3.1(d) or with respect to entities in which Legent Clearing has an indirect
interest solely as a result of securities positions held in customer accounts, Legent
Clearing does not own, directly or indirectly, any capital stock or other equity securities
of any corporation (other than client securities held in a custodial or fiduciary capacity)
or have any direct or indirect equity or other ownership interest in any entity or business.

(e) Organizational Documents. The copies of the Certificate of Formation and
Operating Agreement of Legent Clearing, including any amendments thereto, which have been
delivered by Legent Clearing to Buyer are true, correct and complete copies of such
instruments as presently in effect. The minute book and stock records of Legent Clearing
which have been furnished to Buyer for inspection are true, correct and complete and
accurately reflect all material corporate action taken by Legent Clearing. The managers and
officers of Legent Clearing are listed in Schedule 3.1(e).

(f) Capitalization of Legent Clearing. Member owns all the issued and
outstanding Units described in Schedule 3.1(f), which are the only authorized equity
interests of Legent Clearing. All such Units are validly issued, fully paid and
non-assessable. There are no outstanding (a) securities convertible into or exchangeable
for any Units or other securities of or profit sharing rights in Legent Clearing; (b)
options, warrants or other rights to purchase or subscribe to Units or other securities of
or profit sharing rights in Legent Clearing or securities which are convertible into or
exchangeable for Units or other securities of or profit sharing rights in Legent Clearing;
or (c) contracts, commitments, agreements, understandings or arrangements of any kind
relating to the issuance, sale or transfer of any Units or other securities of or profit
sharing rights in Legent Clearing, any such convertible or exchangeable securities or any
such options, warrants or other rights.

3.2 Sellers.

(a) Organization. Member is a limited liability company duly organized,
validly existing and in good standing under the Laws of the State of Delaware. Duques is an
individual currently residing in the State of New York.

(b) Power. Sellers have full power, legal right and authority to enter into,
execute and deliver this Agreement and the other agreements, instruments and documents
contemplated hereby (such other documents sometimes referred to herein as “Ancillary
Instruments”), and to carry out the transactions contemplated hereby.

(c) Authorization. The execution and delivery of this Agreement and the
Ancillary Instruments, and the consummation of the transactions contemplated hereby
and thereby, have been duly authorized by Member and its board of managers, and no
other or further corporate action on the part of such board of managers is necessary
therefor. No approval by the members of Member is required in connection with the execution
and delivery of this Agreement and the Ancillary Instruments or the consummation of the
transactions contemplated hereby and thereby.

 

6

 

(d) Validity. This Agreement has been duly and validly executed and delivered
by Sellers and is, and when executed and delivered each Ancillary Instrument will be, the
legal, valid and binding obligation of each Seller, enforceable in accordance with their
respective terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors’ rights generally, and by general equitable
principles.

3.3 Title.

At the Closing, Buyer will acquire good and marketable title to all the Units, free and clear
of all Liens (as hereinafter defined) including, without limitation, voting trusts or agreements,
proxies and marital or community property interests.

3.4 No Violation.

Except as set forth in Schedule 3.4, and except for any consents or approvals required
by federal or state commercial banking regulatory authorities, with respect to which Buyer has made
its own evaluation, neither the execution and delivery of this Agreement or the Ancillary
Instruments nor the consummation by Sellers and Legent Clearing of the transactions contemplated
hereby and thereby: (a) will violate any statute, law, ordinance, rule or regulation of the United
States or any state thereof (collectively, “Laws”) or any order, writ, injunction,
judgment, plan, decree, agreement or memorandum of understanding (collectively, “Orders”)
of or with any court, arbitrator, department, commission, board, bureau, agency, authority,
instrumentality or other body located in the United States, whether federal, state, municipal or
other, or any stock exchange or any other self-regulatory body having jurisdiction over or charged
with the regulation of the business of brokers-dealers or of Legent Clearing, or any clearing
agency or securities depository in which Legent Clearing is a member or member organization
(collectively, “Governmental or Regulatory Entities”); (b) will require any authorization,
consent, approval, exemption or other action by or notice to any Governmental or Regulatory Entity
(including, without limitation, under any “plant-closing” or similar law); or (c) subject to
obtaining the consents referred to in Schedule 3.4, will violate or conflict with, or
constitute a default (or an event which, with notice or lapse of time, or both, would constitute a
default) under, or will result in the termination of, or accelerate the performance required by, or
result in the creation of any Lien upon any of the assets of Legent Clearing (or any of the Units)
under, any term or provision of the organizational documents of Legent Clearing or of any contract,
commitment, understanding, arrangement, agreement or restriction of any kind or character to which
Legent Clearing or Member is a party or by which Legent Clearing or Member or any of its or their
assets or properties may be bound or affected.

 

7

 

3.5 Financial Statements.

Included as Schedule 3.5 are true and complete copies of the consolidated financial
statements of Legent Clearing, consisting of (a) audited balance sheets of Legent Clearing as of
June 30, 2009 and 2008, and the related statements of income and cash flows for the fiscal years
then ended (including the notes contained therein or annexed thereto), which financial statements
have been reported on, and are accompanied by, the signed, unqualified opinions of Deloitte &
Touche LLP, independent auditors for Legent Clearing for such fiscal years, and (b) an unaudited
balance sheet of Legent Clearing as of April 30, 2010 (the “Recent Balance Sheet”), and the
related unaudited statements of income and cash flows for the ten months then ended. All of such
financial statements (including all notes and schedules contained therein or annexed thereto) are
true, complete and accurate, have been prepared in accordance with GAAP (except, in the case of
unaudited statements, for the absence of footnote disclosure) applied on a consistent basis, have
been prepared in accordance with the books and records of Legent Clearing, and fairly present, in
accordance with GAAP, the assets, liabilities and financial position, the results of operations and
cash flows of Legent Clearing as of the dates and for the years and periods indicated.

3.6 Accounting Controls.

To the knowledge of Member, Legent Clearing has devised and maintained, and has not received
any management letter or other communication from its auditors that would indicate that it had
failed to devise and maintain, systems of internal accounting controls sufficient to provide
reasonable assurance that (a) all material transactions are executed in accordance with
management’s general and specific authorization; (b) all material transactions are recorded as
necessary to permit the preparation of financial statements in conformity with GAAP consistently
applied with respect to broker-dealers and any other criteria applicable to such statements; (c)
access to the material property and assets of Legent Clearing is permitted only in accordance with
management’s general or specific authorization; and (d) the recorded accountability for items is
compared with the actual levels at reasonable intervals and appropriate action is taken with
respect to any differences.

3.7 Tax Matters.

(a) Tax Returns. Except as set forth in Schedule 3.7(a): (i) Legent
Clearing has filed all Tax Returns that it was required to file; (ii) all such Tax Returns
were correct and complete in all material respects; and (iii) Legent Clearing has withheld
and paid all Taxes required to have been withheld and paid in connection with amounts paid
or owing to any employee, independent contractor, creditor, member or other third party, and
all Forms W-2 and 1099 required with respect thereto have been properly completed and timely
filed. All Taxes due and owing by Legent Clearing (whether or not shown on any Tax Return)
have been paid. Legent Clearing is not currently the beneficiary of any extension of time
within which to file any Tax Return. There are no Liens for Taxes (other than Taxes not yet
due and payable) upon any of the assets of Legent Clearing.

 

8

 

(b) Tax Disputes. There is no material dispute or claim concerning any Tax
liability of Legent Clearing either (i) claimed or raised by any authority in writing or
(ii) as to which Member or any of the directors or officers of Legent Clearing has
knowledge.

(c) Tax Return Copies; Statute of Limitations. Member has delivered to Buyer,
or made available via Member’s internal electronic data site created in connection with the
transactions contemplated by this Agreement (the “Data Site”), correct and complete
copies of all income Tax Returns, other material Tax Returns, examination reports and
statements of deficiencies assessed against, or agreed to by, Legent Clearing. Legent
Clearing has not waived any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency.

(d) Tax Sharing Agreement. Legent Clearing is not a party to or bound by any
Tax allocation or Tax sharing agreement, other than an agreement entered into in the
ordinary course of business.

(e) Provision For Taxes. The provision made for Taxes on the Recent Balance
Sheet (excluding any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) is sufficient for the payment of all Taxes, whether or not
disputed, at the date of the Recent Balance Sheet and for all years and periods prior
thereto. Since the date of the Recent Balance Sheet, Legent Clearing has not incurred any
Taxes other than Taxes incurred in the ordinary course of business consistent in type and
amount with past practices of Legent Clearing, and the provision for Taxes (excluding any
reserve for deferred Taxes established to reflect timing differences between book and Tax
income) remains sufficient for the payment of all Taxes.

(f) Classification. Legent Clearing is, and has been since the date of its
formation, classified for federal income Tax purposes as an S corporation under Section
1361(a)(1) of the Code.

(g) No Obligation. Legent Clearing has no obligation (i) to indemnify another
Person for any Tax liability imposed on such Person; or (ii) otherwise to assume or succeed
to the Tax liability of another Person.

(h) Reportable Transaction. Legent Clearing is not and has not been a party to
any “reportable transaction,” as defined in Section 6707A(c)(1) of the Code and Treasury
Regulation Section 1.6011-4(b).

(i) Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:

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

(ii) “Tax” or “Taxes” means any federal, state, local or
foreign income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental (including taxes under
Code §59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, payroll, ad valorem, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty or addition thereto, whether disputed or not.

 

9

 

(iii) “Tax Return” means any return (including any information return),
declaration, report, statement, schedule, notice, form, claim for refund or other
document filed with or submitted to, or required to be filed with or submitted to,
any Governmental or Regulatory Entity in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Laws
relating to any Tax, including any schedule, exhibit or other attachment thereto.

3.8 Accounts Receivable.

All accounts receivable of Legent Clearing reflected on the Recent Balance Sheet, and as
incurred in the normal course of business since the date thereof, represent arm’s length
transactions actually made in the ordinary course of business and the reserve shown on the Recent
Balance Sheet for doubtful accounts was prepared in accordance with GAAP and, to the knowledge of
Member, are collectible in the ordinary course of business without the necessity of commencing
legal proceedings; are subject to no counterclaim or setoff; and are not in dispute. Schedule
3.8 contains an aged schedule of accounts receivable included in the Recent Balance Sheet. All
accounts receivable of Legent Clearing reflected on the Final Balance Sheet will represent arm’s
length transactions actually made in the ordinary course of business and will be collected (net of
the reserve shown on the Final Balance Sheet for doubtful accounts) in the ordinary course of
business without the necessity of commencing legal proceedings and will be subject to no
counterclaim or set-off, and will not be in dispute.

3.9 Invoices.

All invoices to customers or former customers conformed when issued to the requirements of
such customers’ contracts, and such customers were accurately billed for services performed in
compliance with such contracts.

3.10 Securities.

Set forth in Schedule 3.10 is a complete and accurate list and description of all
securities held by Legent Clearing as of May 15, 2010, along with a good faith estimate of the fair
value of each such security under GAAP. Legent Clearing has good and marketable title to, and
physical possession of, all securities held by it (except securities sold under repurchase
agreements or held in any fiduciary or agency capacity), free and clear of all Liens, except to the
extent such securities are pledged in the ordinary and usual course of business consistent with
prudent business practices to secure obligations of Legent Clearing. Such securities are properly
valued on Legent Clearing’s books in accordance with GAAP.

 

10

 

3.11 Absence of Certain Changes.

Except as and to the extent set forth in Schedule 3.11, since April 30, 2010 there has
not been:

(a) No Adverse Change. Any adverse change in the financial condition, assets,
liabilities, business, prospects or operations of Legent Clearing;

(b) No Damage. Any loss, damage or destruction, whether covered by insurance
or not, affecting Legent Clearing’s business or properties;

(c) No Increase in Compensation. Any increase in the compensation, salaries or
wages payable or to become payable to any employee or agent of Legent Clearing (including,
without limitation, any increase or change pursuant to any bonus, pension, profit sharing,
retirement or other plan or commitment), or any bonus or other employee benefit granted,
made or accrued, other than any annual increase or bonus to non-officer employees in amounts
consistent with past practice;

(d) No Labor Disputes. Any labor dispute or disturbance, other than routine
individual grievances which are not material to the business, financial condition or results
of operations of Legent Clearing;

(e) No Commitments. Any commitment or transaction by Legent Clearing
(including, without limitation, any borrowing or capital expenditure) involving
consideration or other expenditure in excess of $50,000;

(f) No Dividends. Any declaration, setting aside, or payment of any dividend
or any other distribution in respect of the Units; any redemption, purchase or other
acquisition by Legent Clearing of any of the Units, or any security relating thereto; or any
other payment to any holder of any of the Units as such, except as expressly contemplated
hereby;

(g) No Disposition of Property. Any sale, lease or other transfer or
disposition of any properties or assets of Legent Clearing, except for the sale of
securities in the ordinary course of business and except as expressly contemplated hereby;

(h) No Indebtedness. Any indebtedness for borrowed money incurred, assumed or
guaranteed by Legent Clearing, other than pursuant to margin loans made in the ordinary
course of business, consistent with past practice, provided that such margin loans are made
in compliance in all material respects with existing policies of Legent Clearing and
applicable Law;

(i) No Liens. Any Lien placed on any of the properties or assets of Legent
Clearing other than (i) Liens for current Taxes, assessments or governmental charges or
levies on property not yet due or delinquent, or being contested in good faith; (ii) Liens
incurred in the ordinary course of business consistent in type and amount with past
practices of Legent Clearing; (iii) all imperfections of title and encumbrances that do not
materially interfere with the present use or value of the underlying property; and (iv)
those Liens that are specifically identified as Permitted Liens in Schedule
3.11 (collectively, “Permitted Liens”);

 

11

 

(j) No Amendment of Contracts. Any entering into, amendment or termination by
Legent Clearing of any contract, or any waiver of material rights thereunder, other than in
the ordinary course of business;

(k) Loans and Advances. Any loan or advance (other than (i) advances to
employees in the ordinary course of business for travel and entertainment in accordance with
past practice and (ii) margin loans made in the ordinary course of business, consistent with
past practice, provided that such margin loans are made in compliance in all material
respects with existing policies of Legent Clearing and applicable Law) to any Person
including, but not limited to, any Affiliate;

(l) Credit. Any grant of credit to any customer on terms or in amounts more
favorable than those which have been extended to such customer in the past, any other change
in the terms of any credit heretofore extended or, except in the ordinary course of business
of Legent Clearing, any other change of policies or practices with respect to the granting
of credit; or

(m) No Unusual Events. Any other event or condition not in the ordinary course
of business of Legent Clearing.

3.12 Absence of Undisclosed Liabilities.

Except as and to the extent specifically disclosed in the Recent Balance Sheet or in
Schedule 3.12, Legent Clearing does not have any liabilities, commitments or obligations
(secured or unsecured, and whether accrued, absolute, contingent, direct, indirect or otherwise),
other than commercial liabilities and obligations incurred since the date of the Recent Balance
Sheet in the ordinary course of business and consistent with past practice and none of which has or
would reasonably be expected to have a Material Adverse Effect. Except as and to the extent
described in the Recent Balance Sheet or in Schedule 3.12, to the knowledge of Member,
there is no basis for the assertion against Legent Clearing of any liability, and there are no
circumstances, conditions, happenings, events or arrangements, contractual or otherwise, which may
give rise to liabilities, except commercial liabilities and obligations incurred in the ordinary
course of the business and consistent with past practice. For purposes of this Agreement, the term
“Material Adverse Effect” shall mean (a) a material adverse effect (or any development
which, insofar as reasonably can be foreseen, is reasonably likely to have a material adverse
effect) on the business, financial condition or results of operations of Legent Clearing, taken as
a whole; (b) a material adverse change in the ability of Sellers to consummate the transactions
contemplated by this Agreement; or (c) the existence of any Litigation not described on
Schedule 3.13 as of the date of this Agreement that (i) is pending or, to the knowledge of
Member, threatened against Legent Clearing, its directors, officers or employees (in such
capacity), its business or any of its assets as of the Closing Date; and (ii) otherwise satisfies
clause (a) or clause (b) above; provided, however, that the following shall not
constitute a Material Adverse Effect for purposes of this Agreement: (A) changes, effects, events,
occurrences or circumstances that generally affect the United States or the global economy or the
industry in which Legent Clearing operates, except to
the extent such changes, effects, events, occurrences or circumstances have a disproportionate
impact on Legent Clearing relative to other participants in such industry; (B) changes in GAAP,
except to the extent such changes have a disproportionate impact on Legent Clearing relative to
other participants in the industry in which Legent Clearing operates; (C) changes in Laws or any
interpretation thereof, except to the extent such changes have a disproportionate impact on Legent
Clearing relative to other participants in the industry in which Legent Clearing operates; (D) the
engagement by the United States in hostilities, whether or not pursuant to the declaration of a
national emergency or war, or the occurrence of any military or terrorist attack upon the United
States, or any of its territories, possessions or diplomatic or consular offices or upon any
military installation or personnel of the United States; (E) changes, effects, events, occurrences
or circumstances resulting from the entry into this Agreement by Member or the announcement of the
transactions contemplated thereby; (F) changes, effects, events, occurrences or circumstances
resulting from any action taken by Buyer, Parent or any of their Affiliates; or (G) changes,
effects, events, occurrences or circumstances resulting from the taking of any action required or
permitted by this Agreement or consented to in writing by Buyer (including, without limitation, by
any such consent Buyer is deemed to have provided pursuant to Section 6.3 or Section
6.4).

 

12

 

3.13 Litigation.

Except as set forth in Schedule 3.13, there is no action, suit, arbitration,
proceeding, investigation or inquiry, whether civil, criminal, administrative or by any
Governmental or Regulatory Entity (“Litigation”), pending or, to the knowledge of Member,
threatened against Legent Clearing, its directors, officers or employees (in such capacity), its
business or any of its assets, nor, to the knowledge of Member, is there any basis for any such
Litigation. Except as set forth in Schedule 3.13, neither Legent Clearing nor its business
or assets, or any of its directors, officers or employees (in such capacity), is subject to any
Order of any Governmental or Regulatory Entity. Schedule 3.13 also identifies all
Litigation to which Legent Clearing or any of its directors, officers or employees (in such
capacity) have been parties since inception.

3.14 Compliance With Laws and Orders.

(a) Compliance. Except as set forth in Schedule 3.14(a), Legent
Clearing (including each and all of its operations, practices, properties and assets) and
its directors, officers and employees in their capacities as such is in compliance with all
applicable Laws and Orders, including, without limitation, those applicable to
broker-dealers and their associated Persons. Except as set forth in Schedule
3.14(a), Legent Clearing has not received notice of any violation or alleged violation
of any Law or Order or raising any questions with respect to Legent Clearing’s capital
adequacy or any business practice of Legent Clearing, and Legent Clearing is not subject to
any Liability for past or continuing violation of, any Laws or Orders by Legent Clearing or
any of its directors, officers or employees. All filings, reports and returns and all
amendments thereto required to be filed by Legent Clearing with any Governmental or
Regulatory Entity, including but not limited to Form BD, have been timely filed, and were
accurate and complete when filed. Legent Clearing has furnished Buyer with true and
complete copies of such filings. To the knowledge of Member, all Forms T-4 with respect to
margin loans extended by
Legent Clearing prior to the Closing Date are truthful, and all such credits extended
were not purpose credits within the meaning of Regulation T.

 

13

 

(b) Licenses. Legent Clearing and all of its directors, officers and employees
have all registrations, licenses, permits, approvals, memberships, authorizations and
consents of all Governmental and Regulatory Entities required for the conduct of Legent
Clearing’s business (as presently conducted) and operation of Legent Clearing’s properties
(collectively, “Licenses”). All such Licenses are described in Schedule
3.14(b), are in full force and effect and, to the knowledge of Member, will not be
affected or made subject to loss, limitation or any obligation to reapply as a result of the
transactions contemplated hereby. Legent Clearing has not received any notice threatening
the revocation or suspension of any such Licenses or seeking to restrict any of the business
activities of Legent Clearing or its directors, officers and employees. Except as set forth
in Schedule 3.14(b), Legent Clearing (including its operations, properties and
assets) and its directors, officers and employees is and has been in compliance with all
such Licenses.

(c) Environmental Matters. Legent Clearing (including each and all of its
operations, practices, properties and assets) and its directors, officers and employees in
their capacities as such is in compliance with all applicable Environmental Laws. For
purposes of this Agreement, “Environmental Laws” means all Laws relating to
pollution or protection of the environment, including Laws relating to emissions,
discharges, generation, storage, releases or threatened releases of pollutants,
contaminants, chemicals or industrial, toxic, hazardous or petroleum or petroleum-based
substances or wastes (“Waste”) into the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata) or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Waste including, without limitation, the Clean Water Act, the Clean
Air Act, the Resource Conservation and Recovery Act, the Toxic Substances Control Act and
the Comprehensive Environmental Response Compensation Liability Act (“CERCLA”), as
amended, and their state and local counterparts. Without limiting the generality of the
foregoing provisions of this Section 3.14, Legent Clearing is in full compliance
with all limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in the Environmental Laws or contained in
any regulations, code, plan, order, decree, judgment, injunction, notice or demand letter
issued, entered, promulgated or approved thereunder. There is no Litigation nor any demand,
claim, hearing or notice of violation pending or, to the knowledge of Member, threatened
against Legent Clearing relating in any way to the Environmental Laws or any Order issued,
entered, promulgated or approved thereunder. There are no past or present (or, to the
knowledge of Member, future) events, conditions, circumstances, activities, practices,
incidents, actions, omissions or plans which may interfere with or prevent compliance or
continued compliance with the Environmental Laws or with any Order issued, entered,
promulgated or approved thereunder, or which may give rise to any liability, including,
without limitation, liability under CERCLA or similar state or local Laws, or otherwise form
the basis of any Litigation, hearing, notice of violation, study or investigation, based on
or related to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling, or the emission, discharge,
release or threatened release into the environment, of any Waste.

 

14

 

3.15 Title to and Condition of Properties.

(a) Marketable Title. Legent Clearing has good and marketable title to all of
its assets, business and properties, including, without limitation, all such properties
(tangible and intangible) reflected in the Recent Balance Sheet, except for securities
disposed of in the ordinary course of business since the date of the Recent Balance Sheet,
free and clear of all mortgages, liens (statutory or otherwise), security interests, claims,
pledges, licenses, equities, options, conditional sales contracts, assessments, levies,
easements, covenants, reservations, restrictions, rights-of-way, exceptions, limitations,
charges or encumbrances of any nature whatsoever (collectively, “Liens”) except
those described in Schedule 3.15(a). Except as set forth in Schedule
3.15(a), none of Legent Clearing’s assets, business or properties are subject to any
restrictions with respect to the transferability thereof, and Legent Clearing’s title
thereto will not be affected in any way by the transactions contemplated hereby.

(b) Fixed Asset List. Schedule 3.15(b) sets forth a true and complete
list as of the date hereof of each asset of Legent Clearing with a book value of more than
$5,000, together with the book value thereof as of the date of the Recent Balance Sheet.

(c) Condition. To the knowledge of Member, all property and assets owned or
utilized by Legent Clearing are in good operating condition and repair, free from any
defects (except such minor defects as do not interfere with the use thereof in the conduct
of the normal operations of Legent Clearing), have been maintained consistent with the
standards generally followed in the industry and are sufficient to carry on the business of
Legent Clearing as conducted during the preceding 12 months. To the knowledge of Member,
all buildings and other structures owned or otherwise utilized by Legent Clearing are in
good condition and repair and have no structural defects or defects affecting the plumbing,
electrical, sewerage, or heating, ventilating or air conditioning systems.

(d) Real Property. Legent Clearing does not own any real property.
Schedule 3.15(d) sets forth, with respect to each parcel of real property leased or
otherwise occupied by Legent Clearing, the material terms of such lease, each of which
remains in full force and effect.

(e) No Condemnation or Expropriation. Neither the whole nor any portion of the
property or any other assets of Legent Clearing is subject to any Order to be sold or is
being condemned, expropriated or otherwise taken by any Governmental or Regulatory Entity
with or without payment of compensation therefor, nor to the knowledge of Member has any
such condemnation, expropriation or taking been proposed.

 

15

 

3.16 Insurance.

Set forth in Schedule 3.16 is a complete and accurate list and description, as of the
date hereof, of all fidelity bonds, policies of fire, liability, product liability, workers
compensation, health, business interruption, securities dealers blanket bond and other forms
of insurance in effect with respect to the business and properties of Legent Clearing, true and
correct copies of which have heretofore been delivered to Buyer. Schedule 3.16 includes,
without limitation, the carrier, the description of coverage, the limits of coverage, retention or
deductible amounts, amount of annual premiums, date of expiration and the date through which
premiums have been paid with respect to each such policy, and any pending claims in excess of
$10,000. To the knowledge of Member, all such policies are valid, outstanding and enforceable
policies. Such policies provide insurance coverage for the properties, assets and operations of
Legent Clearing of the kinds, in the amounts and against the risks customarily maintained by
organizations similarly situated. To the knowledge of Member, no such policy (nor any previous
policy) provides for or is subject to any currently enforceable retroactive rate or premium
adjustment, loss sharing arrangement or other actual or contingent liability arising wholly or
partially out of events arising prior to the date hereof. Schedule 3.16 indicates each
policy as to which (x) the coverage limit has been reached or (y) the total incurred losses to date
equal 75% or more of the coverage limit. No notice of cancellation or termination has been
received with respect to any such policy, and to the knowledge of Member there has been no act or
omission of Legent Clearing which could result in cancellation of any such policy prior to its
scheduled expiration date. Except as disclosed on Schedule 3.16, Legent Clearing has not
been refused any insurance with respect to any aspect of the operations of its business nor, to the
knowledge of Member, has its coverage been limited by any insurance carrier to which it has applied
for insurance or with which it has carried insurance since its inception. Legent Clearing has duly
and timely made all claims it has been entitled to make under each policy of insurance. All
general liability policies maintained by or for the benefit of Legent Clearing have been
“occurrence” policies and not “claims made” policies. There is no claim by Legent Clearing pending
under any such policies as to which coverage has been questioned, denied or disputed by the
underwriters of such policies, and, to the knowledge of Member, there is no basis for denial of any
claim under any such policy. Legent Clearing has not received any written notice from or on behalf
of any insurance carrier issuing any such policy that insurance rates therefor will hereafter be
substantially increased (except to the extent that insurance rates may be increased for all
similarly situated risks) or that there will hereafter be a cancellation or an increase in a
deductible (or an increase in premiums in order to maintain an existing deductible) or nonrenewal
of any such policy. Such policies are sufficient in all material respects for compliance by Legent
Clearing with all requirements of Law, with all requirements established by any applicable
Governmental or Regulatory Entity and with the requirements of all material contracts to which
Legent Clearing is a party.

3.17 Contracts and Commitments.

The representations and warranties set forth in Sections 3.17(a) through
3.17(j) below are made only as of the date of this Agreement.

(a) Real Property Leases. Except as set forth in Schedule 3.15(d),
Legent Clearing has no leases of real property.

(b) Personal Property Leases. Except as set forth in Schedule 3.17(b),
Legent Clearing has no leases of personal property involving consideration or other
expenditure in excess of $1,000 or involving performance over a period of more than 12
months.

 

16

 

(c) Customer Commitments. Legent Clearing has no customer contracts or
commitments involving consideration or other expenditure in excess of $50,000.

(d) Powers of Attorney. Legent Clearing has not given a power of attorney,
which is currently in effect, to any Person for any purpose whatsoever.

(e) Collective Bargaining Agreements. Legent Clearing is not a party to any
collective bargaining agreement with any union, guild, shop committee or other collective
bargaining group.

(f) Loan Agreements. Except as set forth in Schedule 3.17(f), Legent
Clearing is not obligated under any loan agreement, promissory note, letter of credit,
capitalized lease or other evidence of indebtedness as a signatory, guarantor or otherwise.

(g) Guarantees. Legent Clearing has not guaranteed the payment or performance
of any Person, agreed to indemnify any Person or act as a surety, or otherwise agreed to be
contingently or secondarily liable for the obligations of any Person.

(h) Contracts Subject to Renegotiation. Legent Clearing is not a party to any
contract with any Governmental or Regulatory Entity that is subject to renegotiation.

(i) Restrictive Agreements. Legent Clearing is not a party to, nor is it bound
by, any agreement requiring it to assign any interest in any trade secret or proprietary
information, or prohibiting or restricting it from competing in any business or geographical
area or soliciting customers or otherwise restricting it from carrying on its business
anywhere in the world.

(j) Other Material Contracts. Legent Clearing has no lease, contract or
commitment of any nature involving consideration or other expenditure in excess of $1,000,
or involving performance over a period of more than 12 months involving consideration or
other expenditure in excess of $1,000, or which is otherwise individually material to the
operations of Legent Clearing, except as set forth in Schedule 3.17(j) or in any
other Schedule.

(k) No Default. Legent Clearing is not in default under any lease, contract or
commitment, nor has any event or omission occurred which through the passage of time or the
giving of notice, or both, would constitute a default thereunder or cause the acceleration
of any of its obligations or result in the creation of any Lien on any of the assets owned,
used or occupied by it. To the knowledge of Member, no third party is in default under any
contract or commitment to which Legent Clearing is a party, nor has any event or omission
occurred which, through the passage of time or the giving of notice, or both, would
constitute a default thereunder or give rise to an automatic termination, or the right of
discretionary termination, thereof.

(l) True and complete copies of all documents disclosed in Schedules 3.17(a)
through 3.17(j) have been furnished to Buyer, or made available via the Data Site.

 

17

 

3.18 Labor and Employment Matters.

Legent Clearing has not experienced any labor dispute, union organization attempt or work
stoppage due to labor disagreements in connection with its business. Except to the extent set
forth in Schedule 3.18, (a) Legent Clearing is in compliance with all applicable laws
respecting employment and employment practices, terms and conditions of employment and wages and
hours, and is not engaged in any unfair labor practice; (b) there is no unfair labor practice
charge or complaint against Legent Clearing pending or, to the knowledge of Member, threatened; (c)
there is no labor strike, dispute, request for representation, slowdown or stoppage actually
pending or, to the knowledge of Member, threatened against or affecting Legent Clearing; (d) no
question concerning representation has been raised or is threatened respecting the employees of
Legent Clearing; (e) no grievance which might have a Material Adverse Effect, nor any arbitration
proceeding arising out of or under collective bargaining agreements, is pending and no such claim
therefor exists; and (f) there are no administrative charges or court complaints against Legent
Clearing concerning alleged employment discrimination or other employment related matters pending
or, to the knowledge of Member, threatened before the U.S. Equal Employment Opportunity Commission
or any Governmental or Regulatory Entity.

3.19 Employee Benefit Plans.

(a) Disclosure. Schedule 3.19(a) sets forth a list of all pension,
thrift, savings, profit sharing, retirement, incentive bonus or other bonus, medical,
dental, life, accident insurance, benefit, employee welfare, disability, group insurance,
stock purchase, stock option, stock appreciation, stock bonus, executive or deferred
compensation, hospitalization and other similar fringe or employee benefit plans, programs
and arrangements, and any employment or consulting contracts, “golden parachutes,”
noncompetition agreements, collective bargaining agreements, severance agreements or plans,
vacation and sick leave plans, programs, arrangements and policies, including, without
limitation, all “employee benefit plans” (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”)), all employee manuals,
and all written or binding oral statements of policies, practices or understandings relating
to employment, which are provided to, for the benefit of, or relate to, any Persons
currently or formerly employed by Legent Clearing. The items described in the foregoing
sentence are hereinafter sometimes referred to collectively as “Employee
Plans/Agreements,” and each individually as an “Employee Plan/Agreement.” Each
of the Employee Plans/Agreements is identified in Schedule 3.19(a), to the extent
applicable, as one or more of the following: an “employee pension benefit plan” (as defined
in Section 3(2) of ERISA), a “defined benefit plan” (as defined in Section 414 of the Code),
an “employee welfare benefit plan” (as defined in Section 3(1) of ERISA) and/or a plan
intended to be qualified under Section 401 of the Code. No Employee Plan/Agreement is a
“multiemployer plan” (as defined in Section 4001 of ERISA), and Legent Clearing has not ever
contributed or been obligated to contribute to any such multiemployer plan.

(b) Absence of Certain Plans. No Employee Plan/Agreement is subject to Title
IV of ERISA or the funding requirements of Section 302 of ERISA or Section 412 of the Code, nor does Legent Clearing have any liability, contingent or otherwise, with
respect to any such plans.

 

18

 

(c) Prohibited Transactions. There have been no “prohibited transactions”
within the meaning of Section 406 or 407 of ERISA or Section 4975 of the Code for which a
statutory or administrative exemption does not exist with respect to any Employee
Plan/Agreement, and no event or omission has occurred in connection with which Legent
Clearing or any of its assets or any Employee Plan/Agreement, directly or indirectly, could
be subject to any liability under ERISA, the Code or any other Law or Order applicable to
any Employee Plan/Agreement, or under any agreement, instrument, Law or Order pursuant to or
under which Legent Clearing has agreed to indemnify or is required to indemnify any Person
against liability incurred under any such Law or Order.

(d) Full Funding. The funds available under each Employee Plan/Agreement which
is intended to be a funded plan equal or exceed the amounts required to be paid, or which
would be required to be paid if such Employee Plan/Agreement were terminated, on account of
rights vested or accrued as of the Closing Date (using the actuarial methods and assumptions
then used by Legent Clearing’s actuaries in connection with the funding of such Employee
Plan/Agreement).

(e) Controlled Group; Leased Employees. There are no other entities that,
together with Legent Clearing, are treated as a single employer pursuant to Sections 414(b),
414(c) or 414(m) of the Code, nor has any other entity been treated as a single employer
with Legent Clearing under such provisions at any time prior to the date of this Agreement.
There are not and never have been any leased employees within the meaning of Section 414(n)
of the Code who perform services for Legent Clearing, and no individuals are expected to
become leased employees with the passage of time.

(f) Payments and Compliance. With respect to each Employee Plan/Agreement, (i)
all payments due from Legent Clearing to date have been made and all amounts properly
accrued to date as liabilities of Legent Clearing which have not been paid have been
properly recorded on the books of Legent Clearing and are reflected in the Recent Balance
Sheet; (ii) Legent Clearing has complied with, and each such Employee Plan/Agreement
conforms in form and operation to, all applicable Laws, including but not limited to ERISA
and the Code, in all respects and all reports and information relating to such Employee
Plan/Agreement required to be filed with any Governmental or Regulatory Entity have been
timely filed; (iii) all reports and information relating to each such Employee
Plan/Agreement required to be disclosed or provided to participants or their beneficiaries
have been timely disclosed or provided; (iv) each such Employee Plan/Agreement which is
intended to qualify under Section 401 of the Code has received a favorable determination
letter from the Internal Revenue Service with respect to such qualification, its related
trust has been determined to be exempt from taxation under Section 501(a) of the Code, and
nothing has occurred since the date of such letter that has or is likely to adversely affect
such qualification or exemption; (iv) there are no actions, suits or claims pending (other
than routine claims for benefits) or, to the knowledge of Member, threatened with respect to
such Employee Plan/Agreement or against the assets of such Employee Plan/Agreement; and (v)
no Employee Plan/Agreement is a plan which is established and maintained outside the United States primarily for the benefit of
individuals substantially all of whom are nonresident aliens.

 

19

 

(g) Post-Retirement Benefits. No Employee Plan/Agreement provides benefits,
including, without limitation, death or medical benefits (whether or not insured) with
respect to current or former employees of Legent Clearing beyond their retirement or other
termination of service other than (i) coverage mandated by Part 6 of Title I of ERISA
(COBRA), (ii) death or retirement benefits under any Employee Plan/Agreement that is an
employee pension benefit plan, (iii) deferred compensation benefits accrued as liabilities
on the books of Legent Clearing (including the Recent Balance Sheet), (iv) disability
benefits under any Employee Plan/Agreement that is an employee welfare benefit plan and
which have been fully provided for by insurance or otherwise or (v) benefits in the nature
of severance pay.

(h) No Triggering of Obligations. The consummation of the transactions
contemplated by this Agreement will not (i) entitle any current or former employee of Legent
Clearing to severance pay, unemployment compensation or any other benefit or payment, except
as expressly provided in this Agreement, (ii) accelerate the time of payment or vesting, or
increase the amount of compensation or benefits due to any such employee or former employee
or (iii) result in any prohibited transaction described in Section 406 of ERISA or Section
4975 of the Code for which an exemption is not available.

(i) Delivery of Documents. There has been delivered to Buyer, or made
available via the Data Site, with respect to each Employee Plan/Agreement, a true and
complete copy of each of the following:

(i) all of the documents constituting the Employee Plans/Agreements, including
all amendments thereto;

(ii) a copy of the annual report, if required under ERISA, with respect to each
such Employee Plan/Agreement for the last two years;

(iii) a copy of the summary plan description, together with each summary of
material modifications, required under ERISA with respect to such Employee
Plan/Agreement, all material employee communications relating to such Employee
Plan/Agreement, and, unless the Employee Plan/Agreement is embodied entirely in an
insurance policy to which Legent Clearing is a party, a copy of such Employee
Plan/Agreement;

(iv) if the Employee Plan/Agreement is funded through a trust or any third
party funding vehicle (other than an insurance policy), a copy of the trust or other
funding agreement and the latest financial statements thereof; and

(v) the most recent determination letter received from the Internal Revenue
Service with respect to each Employee Plan/Agreement that is intended to be a
“qualified plan” under Section 401 of the Code.

 

20

 

With respect to each Employee Plan/Agreement for which an annual report has been filed and
delivered to Buyer pursuant to clause (ii) of this Section 3.19(i), no material
adverse change has occurred with respect to the matters covered by the latest such annual
report since the date thereof.

(j) Future Commitments. Legent Clearing has not announced any plan or legally
binding commitment to create any additional Employee Plans/Agreements or to amend or modify
any existing Employee Plan/Agreement. Each Employee Plan/Agreement can be amended or
terminated at any time without approval from any Person, without advance notice, and without
any liability other than for benefits accrued prior to such amendment or termination.

3.20 Employment Compensation.

Buyer has been provided a true and correct list of all employees, and in the case of salaried
employees, such list identifies the current annual rate of base compensation and bonus opportunity
for each employee (together with incentive compensation) and in the case of hourly or commission
employees identifies certain reasonable ranges of rates, the number of employees falling within
each such range and the average annual hours and wages (including any incentive compensation) paid
to each, Buyer has been provided a schedule setting forth all accrued but unpaid vacation for each
employee as of the date of the Recent Balance Sheet.

3.21 Agreements Binding on Employees.

To the knowledge of Member, no employee of Legent Clearing is in violation of any employment
agreement, non-competition agreement or other agreement relating to the relationship of such
employee with Legent Clearing or any other party because of the nature of the business conducted by
Legent Clearing. Each of such agreements is listed on Schedule 3.21, and true and complete
copies of each such agreement have been furnished to Buyer.

3.22 Intellectual Property.

Schedule 3.22 lists all Intellectual Property (as defined below) in which Legent
Clearing now has any interest, specifying whether such Intellectual Property is owned, controlled,
used or held (under license or otherwise) by Legent Clearing, and also indicating which of such
Intellectual Property is registered. All Intellectual Property shown as registered in Schedule
3.22 has been properly registered, all pending registrations and applications have been
properly made and filed and all annuity, maintenance, renewal and other fees relating to
registrations or applications are current. Legent Clearing does not, in order to conduct its
business as such is currently being conducted, require any Intellectual Property that it does not
already have. Except as set forth on Schedule 3.22, Legent Clearing is not infringing and
has not infringed any Intellectual Property of another in the operation of Legent Clearing’s
business, nor, to the knowledge of Member, is any other Person infringing the Intellectual Property
of Legent Clearing. Legent Clearing has not granted any license or made any assignment of any
Intellectual Property listed in Schedule 3.22, nor, except as set forth in Schedule
3.22 does Legent Clearing pay any royalties or other consideration for the right to use any
Intellectual Property of others. There is no Litigation pending or, to the knowledge of Member,
threatened

 

21

 

to challenge Legent Clearing’s right, title and interest with respect to its continued use and
right to preclude others from using any of its Intellectual Property. All Intellectual Property of
Legent Clearing (other than licensed software, as to which Member has no knowledge, except for
Legent Clearing’s interest in such licensed software) is valid, enforceable and in good standing,
and there are no equitable defenses to enforcement based on any act or omission of Legent Clearing.
The consummation of the transactions contemplated hereby will not alter or impair any Intellectual
Property owned or used by Legent Clearing. As used herein, the term “Intellectual Property” shall
mean and include: (a) all trademark rights, business identifiers, trade dress, service marks,
trade names and brand names, all registrations thereof and applications therefor and all goodwill
associated with the foregoing; (b) all copyrights, copyright registrations and copyright
applications, and all other rights associated with the foregoing and the underlying works of
authorship; (c) all patents and patent applications, and all international proprietary rights
associated therewith; (d) all rights granted under contracts or agreements granting any right,
title, license or privilege under the intellectual property rights of any third party; (e) all
inventions, mask works and mask work registrations, know-how, discoveries, improvements, designs,
trade secrets, shop and royalty rights, employee covenants and agreements respecting intellectual
property and non-competition and all other types of intellectual property; and (f) all claims for
infringement or breach of any of the foregoing; but excludes any such items that are the subject of
so-called “shrink wrap” license agreements.

3.23 Technology Systems.

(a) The electronic data processing, information, record keeping,

communications, telecommunications, hardware, third party software, networks,
peripherals and computer systems, including any outsourced systems, services and processes,
and Intellectual Property that are used by Legent Clearing (collectively, “Technology
Systems”) are adequate for the operation of its business as currently conducted. There
has not been any material malfunction with respect to any of the Technology Systems that (i)
has had a material effect on Legent Clearing’s provision of services to its customers; (ii)
was within Legent Clearing’s reasonable control; and (iii) has not been remedied or replaced
or is not in the process of being remedied or replaced in all material respects.

(b) There is no existing pattern or repetition of customer complaints in excess of that
which would reasonably be expected to exist given the nature of Legent Clearing’s business
regarding the material functionality or performance of the Technology Systems (i) where such
complaints relate to a material effect on Legent Clearing’s provision of services to its
customers and (ii) where the cause of such complaints were within Legent Clearing’s
reasonable control. Legent Clearing’s engineers (or those of its suppliers or independent
contractors) have not currently identified any repeating adverse impact on the material
functionality or performance of the Technology Systems (A) where such impacts relate to a
material effect on Legent Clearing’s provision of services to its customers and (B) where
such impacts were within Legent Clearing’s reasonable control. The Technology Systems have
not suffered any material unplanned disruption that (I) has had a material effect on Legent
Clearing’s provision of services to its customers and (II) was within Legent Clearing’s
reasonable control.

 

22

 

(c) Legent Clearing has taken measures reasonable under the circumstances to protect
the internal and external security and integrity of the Technology Systems owned and
controlled by Legent Clearing and the data that such Technology Systems contain including,
without limitation: (i) procedures designed to prevent unauthorized access; (ii) procedures
designed to prevent the introduction of a virus; and (iii) the taking and storing on-site
and off-site of back-up copies of the critical data of Legent Clearing.

3.24 Major Customers and Vendors.

(a) Major Customers. Schedule 3.24(a) contains a list of the top 25
(by revenue) clearing customers of Legent Clearing for each of the two most recent fiscal
years and for the ten months ended April 30, 2010, showing the total net revenues from each
such customer during each such year or period, as applicable. No such customer is engaged
in any material dispute with Legent Clearing or has terminated, cancelled or materially
changed, or to the knowledge of Member, threatened to terminate, cancel or materially
change, any ongoing business relationship with Legent Clearing. Member has no knowledge or
information of any facts indicating, nor any other reason to believe, that any of the
customers listed in Schedule 3.24(a) will not continue to be customers of Legent
Clearing after the Closing at substantially the same or higher level of transactions and
revenue as heretofore. To the knowledge of Member, no customer of Legent Clearing has any
right to any credit or refund for services rendered or to be rendered by Legent Clearing
pursuant to any contract with or practice of Legent Clearing.

(b) Major Vendors. Schedule 3.24(b) contains a list of the top 25 (by
expense) vendors of Legent Clearing for each of the two most recent fiscal years and for the
ten months ended April 30, 2010, showing the total expenses paid to each such vendor during
each such year or period, as applicable. No such vendor is engaged in any material dispute
with Legent Clearing or has terminated, cancelled or materially changed, or to the knowledge
of Member, threatened to terminate, cancel or materially change, any ongoing business
relationship with Legent Clearing. Member has no knowledge or information of any facts
indicating, nor any other reason to believe, that any of the vendors listed in Schedule
3.24(b) will not continue to be vendors to the business of Legent Clearing after the
Closing and will not continue to supply the business with substantially the same quantity
and quality of goods or services at competitive prices.

3.25 Bank Accounts.

Schedule 3.25 sets forth the names and locations of all banks, trust companies,
savings and loan associations and other financial institutions at which Legent Clearing maintains a
safe deposit box, lock box or checking, savings, custodial or other account of any nature, the type
and number of each such account and the signatories therefore, a description of any compensating
balance arrangements, and the names of all Persons authorized to draw thereon, make withdrawals
therefrom or have access thereto. Schedule 3.25 sets forth with respect to each such
financial institution at which Legent Clearing maintains interest-bearing deposits, the name of
such institution, the average monthly balances on deposit with such institution during the last two
years, the interest rates paid and the dates on which the interest rates are adjusted, the terms of
any contract with such institution, how such contract may be terminated and the notice
required for termination. True and complete copies of all contracts documenting Legent
Clearing’s relationship with each such financial institution have been furnished to Buyer, or made
available via the Data Site, other than standard documentation customarily entered into by banks in
the ordinary course of business. Member has no knowledge or information of any facts indicating,
nor any other reason to believe, that any of such financial institutions with which Legent Clearing
maintains interest-bearing deposits will not continue to deal with Legent Clearing after the
Closing on substantially the same or better terms than as heretofore.

 

23

 

3.26 Transactions with Affiliates.

(a) Contracts with Affiliates of Member. All leases, contracts, agreements or
other arrangements between Legent Clearing and Member or any of its Affiliates are described
in Schedule 3.26(a) and, except as set forth in Schedule 3.26(a), all such
leases, contracts, agreements or other arrangements are cancelable by Legent Clearing on
notice of not longer than 30 days without liability, penalty or premium of any nature or
kind whatsoever. True and complete copies of all of such documents have been furnished to
Buyer. For purposes of this Agreement: (i) the term “Affiliate” of a Person shall
mean and include any other Person controlling, controlled by or under common control with
such Person; provided, that with respect to Member, the term “Affiliate”
specifically includes, without limitation, Duques; further provided, that with
respect to Member and solely for purposes of this Section 3.26(a), the term
“Affiliate” also specifically includes, without limitation, Guy A. Gibson, William D.
Snider, Lisa Snider, Michael J. McCloskey, Constance J. McCloskey, Michael A. Stallings and
any of their respective direct family members; and (ii) as used in this definition of the
term “Affiliate” and elsewhere herein with respect to any Affiliate of any Person, “control”
(including the terms “controlled by” and “under common control with”) means the possession,
directly or indirectly, of the power to direct or cause the direction of the management
policies of a Person, whether through the ownership of voting securities, by voting trust,
contract or similar arrangement, as trustee or executor or otherwise.

(b) No Adverse Interests. Except as set forth in Schedule 3.26(b), no
Affiliate of Member or of Legent Clearing has (i) any direct or indirect interest in any
entity which does business with Legent Clearing or is competitive with Legent Clearing’s
business, which interest provides such Affiliate with control over such entity, or (ii) any
direct or indirect interest in any property, asset or right which is used by Legent Clearing
in the conduct of its business.

(c) Obligations. All obligations of any Affiliate to Legent Clearing, and all
obligations of Legent Clearing to any Affiliate, are listed in Schedule 3.26(c).
True and complete copies of all writings giving rise to or evidencing such obligations have
been furnished to Buyer, or made available via the Data Site.

3.27 Assets Necessary to Business.

Legent Clearing presently has and at the Closing will have good, valid and marketable title to
all property and assets, tangible and intangible, and all leases, licenses and
other agreements, necessary to permit Buyer to carry on the business of Legent Clearing as
presently conducted in the United States.

 

24

 

3.28 No Brokers or Finders.

Neither any Seller nor Legent Clearing, nor any of their respective directors, officers,
employees, members or agents have retained, employed or used, or have incurred any obligation or
liability (contingent or otherwise) to, any broker or finder in connection with the transaction
provided for herein or in connection with the negotiation thereof.

3.29 Investment Intent.

The Subject Shares are being acquired by Member for investment only and not with the view to
resale or other distribution other than the distribution contemplated by Section 6.14.

3.30 Distribution of Consideration.

Except as expressly contemplated by this Agreement, no holder of any direct or indirect equity
interest in Member shall receive, directly or indirectly, any cash, securities or any other form of
consideration in connection with the transactions contemplated by this Agreement other than a share
of the Consideration proportionate to such holder’s direct or indirect equity interest in Member.

3.31 Restricted Securities.

Member understands that (a) the Subject Shares will not be registered under the federal or any
state securities Laws; (b) the Subject Shares will be “restricted securities” within the meaning of
Rule 144 promulgated under the Securities Act of 1933, as amended, and any applicable state
securities Laws; and (c) the Subject Shares may not be sold, pledged or otherwise disposed of
unless they are subsequently registered under the Securities Act of 1933, as amended, and any
applicable state securities Laws, or unless an exemption from such registration is available.

NOTWITHSTANDING ANY OTHERWISE EXPRESS REPRESENTATIONS AND WARRANTIES MADE BY MEMBER OR SELLERS IN
THIS AGREEMENT, NEITHER MEMBER NOR SELLERS MAKE ANY REPRESENTATION OR WARRANTY TO BUYER WITH
RESPECT TO ANY PROJECTIONS, ESTIMATES OR BUDGETS HERETOFORE DELIVERED TO BUYER, OR MADE AVAILABLE
VIA THE DATA SITE, OF FUTURE REVENUES, EXPENSES OR EXPENDITURES OR FUTURE RESULTS OF OPERATIONS.

EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN AN ANCILLARY INSTRUMENT, NO SELLER MAKES ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF THE BUSINESS OR
THE UNITS. BUYER HEREBY ACKNOWLEDGES AND AGREES THAT, EXCEPT TO THE EXTENT SPECIFICALLY SET FORTH
IN THIS AGREEMENT, BUYER IS PURCHASING LEGENT CLEARING, THE BUSINESS AND THE UNITS ON AN “AS-IS,
WHERE-IS” BASIS.

 

25

 

4. REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer makes the following representations and warranties, each of which is true and correct
and shall survive the Closing, to Sellers.

4.1 Corporate.

(a) Organization. Buyer is a federal savings bank duly organized, validly
existing and in good standing under the Laws of the United States.

(b) Corporate Power. Buyer has all requisite corporate power to enter into
this Agreement and the other documents and instruments to be executed and delivered by it,
and to carry out the transactions contemplated hereby and thereby.

4.2 Authorization; Validity.

(a) Authorization. The execution and delivery of this Agreement and the
Ancillary Instruments to be executed and delivered by Buyer pursuant hereto, and the
consummation of the transactions contemplated hereby and thereby, have been duly authorized
by the board of directors of Buyer, and no other or further corporate action on the part of
Buyer, its board of directors or Parent (as its sole stockholder) is necessary therefor.

(b) Validity. This Agreement has been duly and validly executed and delivered
by Buyer and is, and when executed and delivered each Ancillary Instrument to be executed
and delivered by Buyer pursuant hereto will be, the legal, valid and binding obligation of
Buyer, enforceable in accordance with their respective terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization or other laws affecting creditors’
rights generally, and by general equitable principles.

4.3 No Brokers or Finders.

Neither Buyer nor any of its directors, officers, employees or agents has retained, employed
or used, or has incurred any obligation or liability (contingent or otherwise) to, any broker or
finder in connection with the transactions contemplated hereby or in connection with the
negotiation thereof.

4.4 No Violation.

Neither the execution and delivery of this Agreement or the Ancillary Instruments to be
executed and delivered by Buyer pursuant hereto nor, assuming receipt of all necessary regulatory
and other approvals and expiration of all mandatory waiting periods, the consummation by Buyer of
the transactions contemplated hereby and thereby will violate or conflict with, or constitute a
default (or an event which, with notice or lapse of time, or both, would constitute a default)
under, or will result in the termination of, or accelerate the performance required by any term or
provision of the organizational documents of Buyer or of any contract, commitment, understanding,
arrangement, agreement or restriction of any kind or
character to which Buyer is a party or by which Buyer or any of its assets or properties may
be bound or affected.

 

26

 

4.5 Investment Intent.

The Units are being acquired by Buyer for investment only and not with the view to resale or
other distribution.

4.6 Financing.

Buyer has sufficient funds available for it to pay the Final Cash Purchase Price to Member as
contemplated hereby.

5. REPRESENTATIONS AND WARRANTIES OF PARENT

Parent makes the following representations and warranties, each of which is true and correct
and shall survive the Closing, to Sellers.

5.1 Corporate.

(a) Organization. Parent is a corporation duly organized, validly existing and
in good standing under the Laws of the State of Colorado.

(b) Corporate Power. Parent has all requisite corporate power to enter into
this Agreement and the Registration Rights Agreement, and to carry out the transactions
contemplated hereby and thereby.

5.2 Authorization; Validity.

(a) Authorization. The execution and delivery of this Agreement and the
Registration Rights Agreement by Parent, and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized by the board of directors of
Parent, and no other or further corporate action on the part of Parent, its board of
directors or its stockholders is necessary therefor.

(b) Validity. This Agreement has been duly and validly executed and delivered
by Parent and is, and when executed and delivered the Registration Rights Agreement will be,
the legal, valid and binding obligation of Parent, enforceable in accordance with their
respective terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors’ rights generally, and by general equitable
principles.

5.3 No Brokers or Finders.

Neither Parent nor any of its directors, officers, employees or agents has retained, employed
or used, or have incurred any obligation or liability (contingent or otherwise) to, any
broker or finder in connection with the transactions contemplated hereby or in connection with
the negotiation thereof.

 

27

 

5.4 No Violation.

Neither the execution and delivery of this Agreement or the Registration Rights Agreement nor,
assuming receipt of all necessary regulatory and other approvals and expiration of all mandatory
waiting periods, the consummation by Parent of the transactions contemplated hereby and thereby
will violate or conflict with, or constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, or will result in the termination of, or
accelerate the performance required by any term or provision of the organizational documents of
Parent or of any contract, commitment, understanding, arrangement, agreement or restriction of any
kind or character to which Parent is a party or by which Parent or any of its assets or properties
may be bound or affected.

5.5 Subject Shares.

All of the Subject Shares will be, upon issuance thereof at the Closing, validly issued, fully
paid and nonassessable, and free and clear of any Liens, other than any Liens that may be created
by: (a) Member; (b) any direct or indirect holder of Member’s equity interests to whom any of the
Subject Shares may be distributed in accordance with Section 6.14; or (c) any applicable
securities Laws.

6. COVENANTS

6.1 Noncompetition; Confidentiality.

Subject to the Closing, and as an inducement to Buyer to execute this Agreement and complete
the transactions contemplated hereby, and in order to preserve the goodwill associated with the
business of Legent Clearing being acquired pursuant to this Agreement, each Seller hereby covenants
and agrees as follows:

(a) Covenant Not to Compete. In return for Buyer’s payment of the
Consideration to Member, among other things, each Seller agrees that for a period of two
years from the Closing Date (the “Restricted Period”), no Seller will, directly or
indirectly, through one or more Affiliates or otherwise:

(i) engage in, continue in or carry on any business which competes with the
Business as conducted by Legent Clearing as of the Closing Date, or is substantially
similar thereto, including owning or controlling any financial interest in any
corporation, partnership, firm or other form of business organization which is so
engaged;

(ii) consult with, advise or assist in any way, whether or not for
consideration, any corporation, partnership, firm or other business organization
which is now or becomes a competitor of Legent Clearing in any aspect with respect
to the Business as conducted by Legent Clearing as of the Closing Date, including,
but not limited to, soliciting customers or otherwise serving as an
intermediary for any such competitor; loaning money or rendering any other form
of financial assistance to or engaging in any form of business transaction on other
than an arm’s length basis with any such competitor;

 

28

 

(iii) offer employment to an employee of Legent Clearing who is employed as of
the Closing Date and has not been terminated without cause by Legent Clearing,
without the prior written consent of Buyer; or

(iv) engage in any practice the purpose of which is to evade the provisions of
this covenant not to compete;

provided, however, that the foregoing shall not prohibit (x) the beneficial
ownership by Duques of his proportionate share of the Subject Shares (as distributed to him
in accordance with Section 6.14) or of not more than 9.9% of the total total number
of issued and outstanding shares of Parent Common Stock (including, without limitation, as a
result of the receipt by Duques of his proportionate share of the Subject Shares); or (y)
without increasing or duplicating the amounts permitted under clause (x) above in the case
of Duques, the ownership of securities of corporations which are listed on a national
securities exchange or traded in the national over-the-counter market in an amount which
shall not exceed 5% of the outstanding shares of any such corporation. The parties
specifically acknowledge that the Business conducts its affairs throughout the United
States, and thus agree that the geographic scope of this covenant not to compete shall
extend throughout the United States; and further, that this non-compete shall encompass
every statistical metropolitan area (as defined by the Office of Management and Budget) in
which Legent Clearing has conducted the Business in the two year period immediately
preceding the Closing Date. The parties agree that Buyer may sell, assign or otherwise
transfer this covenant not to compete, in whole or in part, to any Person that purchases all
or part of the business of Legent Clearing. In the event a court of competent jurisdiction
determines that the provisions of this covenant not to compete are excessively broad as to
duration, geographical scope or activity, it is expressly agreed that this covenant not to
compete shall be construed so that the remaining provisions shall not be affected, but shall
remain in full force and effect, and any such over broad provisions shall be deemed, without
further action on the part of any Person, to be modified, amended and/or limited, but only
to the extent necessary to render the same valid and enforceable in such jurisdiction.

(b) Covenant of Confidentiality. No Seller shall, and Member will cause its
directors, officers, managers, employees, agents, advisors and other representatives not to,
and Duques will cause his agents, advisors and other representatives not to, at any time
subsequent to the Closing, except as explicitly requested by Buyer, (i) use for any purpose,
(ii) disclose to any Person, or (iii) keep or make copies of documents, tapes, disks or
programs containing, any confidential information concerning Legent Clearing or the
Business; provided, that Member shall not be required to cause the destruction or
return of any client files retained by its counsel, provided, that Member shall not
obtain return of or access to any such files except in the event of threatened or actual
litigation. For purposes hereof, “confidential information” shall mean and include, without
limitation, the terms of this transaction, all Intellectual Property in which Legent
Clearing
has an interest, all customer lists and customer information, and all other information
concerning Legent Clearing’s processes, services and marketing methods, not previously
disclosed to the public directly by Legent Clearing.

 

29

 

(c) Equitable Relief for Violations. Each Seller agrees that the provisions
and restrictions contained in this Section 6.1 are necessary to protect the
legitimate continuing interests of Buyer in acquiring Legent Clearing, and that any
violation or breach of these provisions will result in irreparable injury to Buyer for which
a remedy at law would be inadequate and that, in addition to any relief at law which may be
available to Buyer for such violation or breach and regardless of any other provision
contained in this Agreement, Buyer shall be entitled to injunctive and other equitable
relief as a court may grant after considering the intent of this Section 6.1,
without posting any bond or security. If any Seller violates the restrictive covenant set
forth in this Section 6.1, then the Restricted Period shall automatically be
extended for a period of time equal to (i) the length of time during which such violation
occurred; plus (ii) the length of time during which any court proceedings necessary to stop
such violation were ongoing.

(d) Tax Allocation. The parties agree that no portion of the Final Cash
Purchase Price or the Subject Shares shall be allocated to this covenant not to compete for
Tax purposes.

6.2 General Releases.

At the Closing, Member shall deliver, and shall cause each Person listed on Schedule
6.2 attached hereto to deliver, general releases to Buyer, substantially in the form of
Exhibit 6.2 attached hereto (each, a “Release” and, collectively, the
“Releases”), releasing Legent Clearing and its directors, officers, agents and employees
from all claims with respect to Legent Clearing arising on or before the Closing Date, except (i)
as may be described in written contracts disclosed in the Disclosure Schedules and expressly
described and excepted from such Releases, and (ii) in the case of Persons who are employees of
Legent Clearing, compensation for current periods expressly described and excepted from such
Releases. Such Releases shall also contain waivers of any right of contribution or other recourse
against Legent Clearing with respect to representations, warranties or covenants made herein by
Legent Clearing.

6.3 Conduct of Legent Clearing Prior to Closing.

From the date hereof through the Closing Date, Member covenants and agrees to use its
reasonable best efforts to cause Legent Clearing to conduct its business in the ordinary course and
in accordance with past practice and not to take any action inconsistent therewith, except as
otherwise permitted or required by this Agreement, as consented to by Buyer in writing (such
consent not to be unreasonably withheld, conditioned or delayed; provided, that Buyer shall
be deemed to have provided consent to any particular action if Buyer does not object in writing to
Member’s written request for consent to such action within 5 business days after Buyer receives
such request) or as required by applicable Law. Without limiting the generality of the foregoing,
except as otherwise permitted or required by this Agreement, as consented to by Buyer in writing
(such consent not to be unreasonably withheld, conditioned or delayed; provided, that Buyer
shall be deemed to have provided consent to any

 

30

 

particular action if Buyer does not object in writing to Member’s written request for consent to such action within 5
business days after Buyer receives such request) or as required by applicable Law, Member shall
cause Legent Clearing to: (a) maintain its books and records in all material respects in the
usual, regular and ordinary manner and consistent with past practices; (b) maintain in full force
and effect the material insurance policies heretofore maintained with respect to Legent Clearing
and its business and properties and all material Licenses and other material rights or interests
that are required for Legent Clearing to carry on its business; (c) take such commercially
reasonable action as may be necessary to preserve the assets and properties of Legent Clearing in
all material respects in good condition (ordinary wear and tear excepted), including performing any
commercially reasonable repairs and maintenance on such assets and properties; (d) use its
commercially reasonable efforts to preserve the business of Legent Clearing intact and preserve for
Buyer the existing goodwill of Legent Clearing, as well as the employees, suppliers, customers,
Governmental or Regulatory Entities and others having significant business relations with Legent
Clearing in the conduct of its business; (e) comply in all material respects with all Laws, Orders
and Licenses applicable to Legent Clearing in the conduct of its business; (f) perform all of its
material obligations under contracts and leases to which it is a party or by which any of its
material assets or properties are bound, except such obligations as Legent Clearing may in good
faith reasonably dispute; (g) timely file all reports required to be filed with Governmental or
Regulatory Entities; (h) timely file or properly request an extension for filing all material Tax
Returns required to be filed by Legent Clearing and promptly pay all material Taxes, assessments,
governmental charges, duties, penalties, interest and fines that become due and payable, except
those being contested in good faith by appropriate proceedings; (i) withhold from each payment made
to each of its employees the amount of all Taxes required to be withheld therefrom and pay the same
to the proper Tax receiving officers when due; (j) maintain its capital levels at the minimum
levels required by all applicable Governmental or Regulatory Entities; and (k) notify Buyer of any
material claim that is brought or, to the knowledge of Member, threatened against Legent Clearing
by any third party or any Governmental or Regulatory Entity. From the date hereof through the
Closing, Member shall promptly advise Buyer in writing of (i) any loss or, to the knowledge of
Member, threatened loss of any significant customer or any material assets or properties of Legent
Clearing; (ii) any Material Adverse Effect that has occurred or that Sellers reasonably believe may
occur and (iii) any breach of any representation, warranty or covenant made by any Seller herein.

6.4 Negative Covenants.

In furtherance and not in limitation of the provisions of Section 6.3, from the date
hereof through the Closing Date, Member covenants and agrees to prevent Legent Clearing, directly
or indirectly, from doing any of the following, except as otherwise permitted or required by this
Agreement (including Section 6.3), as consented to by Buyer in writing (such consent not to
be unreasonably withheld, conditioned or delayed; provided, that Buyer shall be deemed to
have provided consent to any particular action if Buyer does not object in writing to Member’s
written request for consent to such action within 5 business days after Buyer receives such
request), as required by applicable Law or as set forth in Schedule 6.4:

(a) amend or otherwise change its certificate of formation or operating agreement;

 

31

 

(b) issue, sell, grant, pledge, dispose of or encumber, or authorize the issuance,
sale, grant, pledge, disposition or encumbrance of, any equity interests of any class, or
any options, warrants, convertible securities or other rights of any kind to acquire any
such equity interests or any other ownership interest in Legent Clearing;

(c) sell, lease, transfer or otherwise dispose of any of its properties or assets,
except in the ordinary course of business consistent with past practice;

(d) acquire any interest in any corporation, partnership or other business organization
or division thereof; or make any material investment whether by purchase of stock or
securities, contribution of capital or property transfer; or purchase all or substantially
all of the property or assets of any other Person;

(e) increase the compensation, salary or wages payable or to become payable to any of
its officers, directors, managers, employees or agents (including, without limitation, any
increase or change pursuant to any Employee Plan/Agreement), other than annual merit
increases consistent with past practices in both the timing and amount thereof, or grant any
material bonus, severance or termination pay to, or enter into any material bonus,
employment or severance agreement with, any of its directors, officers, managers, employees
or agents, or any bonus or other employee benefit granted, made or accrued, other than
annual bonuses consistent with past practices in both the timing and amount thereof;

(f) incur, assume or guarantee any obligation, commitment, capital expenditure or
indebtedness for borrowed money, other than pursuant to margin loans made in the ordinary
course of business, consistent with past practice, provided that such margin loans are made
in compliance in all material respects with existing policies of Legent Clearing and
applicable Law;

(g) make any declaration, setting aside or payment of any dividend or any other
distribution (other than (i) Tax distributions consistent with past practice; or (ii) cash
distributions in an aggregate amount not to exceed $100,000) in respect of the equity
interests of Legent Clearing; or any redemption, purchase or other acquisition of any equity
interests of Legent Clearing, or any security relating thereto; or any other payment to any
holder of any of equity interest of Legent Clearing as such;

(h) enter into any contract that would have been required to be disclosed pursuant to
Section 3.17 had such contract been entered into prior to the date hereof, or amend
or terminate any such contract or any contract disclosed pursuant to Section 3.17,
or waive any material rights thereunder, other than in the ordinary course of business
consistent with past practice;

(i) introduce any new material method of management or operation;

(j) intentionally take or fail to take any action that would cause or permit the
representations and warranties made in Article 3 to be inaccurate at the time of the
Closing;

 

32

 

(k) engage in any transaction with any Affiliate;

(l) make any capital expenditures, capital additions or betterments in excess of
$250,000 in the aggregate;

(m) make or acquiesce with any change in any accounting methods, principles or material
practices, except as required by GAAP or any Governmental or Regulatory Entity having
jurisdiction over Legent Clearing; or

(n) enter into any agreement that requires Legent Clearing to do any of the acts
prohibited by paragraphs (a)-(m) above.

6.5 Notice of Certain Events.

(a) From and after the date hereof through the Closing, Sellers shall promptly notify
Buyer of:

(i) the occurrence, or failure to occur, of any event subsequent to the date
hereof that renders or would render any representation, warranty or statement of
Member or Sellers in this Agreement or the Disclosure Schedules to be untrue or
inaccurate at any time from the date hereof to the Closing Date or that results or
may result in the failure to satisfy any of the conditions specified in Article
8. No notice under this clause (i) shall be deemed to avoid or cure any
misrepresentation or breach of warranty or constitute an amendment of any
representation, warranty or statement in this Agreement or the Disclosure Schedules;
provided, however, that if: (A) such notice relates to an event
occurring subsequent to the date hereof (without breach of Section 6.3 or
Section 6.4); (B) Sellers acknowledge in such notice that Buyer has the
right to terminate this Agreement pursuant to Section 9.1(b) as a result of
the information disclosed in such notice; (C) Buyer has been provided with all
information under the custody and control of Sellers that is reasonably necessary to
enable Buyer to assess the effects of such event; and (D) Buyer does not exercise
such termination right promptly following delivery by Sellers of the information
contemplated by clause (C) above, then the information disclosed in such notice
shall constitute an amendment of the Disclosure Schedules and the representations,
warranties or statements of Member or Sellers, as applicable, in this Agreement to
which such information relates for purposes of Article 7 and Article
8; further provided, that in the event such occurrence has been
consented to by Buyer pursuant to Section 6.3 or Section 6.4, then
the information related thereto shall constitute an amendment to the Disclosure
Schedules and the representations, warranties, or statements of Member or Sellers,
as applicable, in this Agreement to which such information relates for purposes of
Article 7 and Article 8; or

(ii) Any failure of any Seller to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by such Seller under this
Agreement.

 

33

 

(b) From and after the date hereof through the Closing, Buyer shall promptly notify
Member of:

(i) the occurrence, or failure to occur, of any event subsequent to the date
hereof that renders or would render any representation, warranty or statement of
Buyer or Parent in this Agreement to be untrue or inaccurate at any time from the
date hereof to the Closing Date or that results or may result in the failure to
satisfy any of the conditions specified in Article 8. No notice under this
clause (i) shall be deemed to avoid or cure any misrepresentation or breach of
warranty or constitute an amendment of any representation, warranty or statement in
this Agreement; provided, however, that if (A) such notice relates
to an event occurring subsequent to the date hereof in the ordinary course of
business of Buyer; (B) Buyer acknowledges in such notice that Member has the right
to terminate this Agreement pursuant to Section 9.1(c) as a result of the
information disclosed in such notice; (C) Member has been provided with all
information under the custody and control of Buyer that is reasonably necessary to
enable Member to assess the effects of such event; and (D) Member does not exercise
such termination right promptly following delivery by Buyer of the information
contemplated by clause (C) above, then the information disclosed in such notice
shall constitute an amendment of the representations, warranties or statements of
Buyer or Parent, as applicable, in this Agreement to which such information relates
for purposes of Article 7 and Article 8; or

(ii) any failure of Buyer or Parent to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it under this Agreement.

6.6 Access to Information and Records.

During the period prior to the Closing, Legent Clearing shall, and Member shall cause Legent
Clearing to, give Buyer and its counsel, accountants and other representatives: (a) access to all
of the properties, books, records, contracts and documents of Legent Clearing for the purpose of
such inspection, investigation and testing as Buyer deems appropriate (and Legent Clearing and
Member shall furnish or cause to be furnished to Buyer and its representatives all information with
respect to the business and affairs of Legent Clearing as Buyer may request); (b) access to
employees, agents and representatives for the purposes of such meetings and communications as Buyer
reasonably desires; and (iii) access to vendors, customers and others having business dealings with
Legent Clearing. In furtherance and not in limitation of the foregoing, as promptly as practicable
after the date hereof, and again approximately ten (10) days prior to the anticipated Closing Date,
Legent Clearing shall, and Member shall cause Legent Clearing to, grant such access as may be
reasonably requested by, and otherwise cooperate with, Buyer and its counsel, accountants and other
representatives in conducting an audit of the securities listed in Schedule 3.10 and the
valuation of such securities as are reported on Legent Clearing’s books.

 

34

 

6.7 Consultants.

Upon Closing, Buyer shall have no obligation to retain Duques, or any Affiliate of Legent
Clearing or any member of Member, in any capacity, including, without limitation, as an executive
officer, employee or consultant, unless mutually agreed in writing by the parties.

6.8 Employees and Employee Plans/Agreements.

(a) Promptly subsequent to Closing, Member and Buyer shall deliver a joint
communication, in form and substance mutually agreed to by Buyer and Member, to each
participant (or any employee who previously participated) in any option plan or similar plan
of Legent Clearing.

(b) Within 30 days after the date hereof, Member shall deliver to Buyer a compliance
audit with respect to Member’s 401(k) plan. Member and Buyer shall each bear one half of
the fees and expenses of the preparation of such compliance audit.

6.9 Corporate Name Change.

Immediately following the Closing, Member and each of its Affiliates, as applicable, shall
change its name to delete “Legent” from its corporate name.

6.10 Preparation of Tax Returns.

Buyer covenants to timely file Tax Returns with respect to Legent Clearing for the tax years
ended December 31, 2009 (to the extent not already filed) and on the Closing Date, subject to the
approval of Member, such Tax Returns to be prepared by Deloitte & Touche LLP, or such other
independent accounting firm as reasonably engaged by Buyer. Buyer shall make available, at no cost
to Member, appropriate personnel that such accounting firm may request in order to provide to
Member drafts of such filings no later than 30 days after the Closing Date. Member covenants to
pay the fees and expenses of the preparation of such Tax Returns by such accounting firm, in
proportion to the duration of its ownership of Legent Clearing.

6.11 Legent Clearing Organization Credits.

Legent Clearing is entitled to rebates and/or assessments with respect to its membership in
Depository Trust & Clearing Corporation (“DTC”) and The Options Clearing Corporation
(“OCC”). Promptly upon such rebate or assessment: (a) Legent Clearing will pay to Member
(i) any OCC rebate, less any pass through to independent correspondents, with respect to the month
of December, 2009 and (ii) any DTC rebate, less any pass through to independent correspondents,
with respect to the calendar year 2009; and (b) Member will pay to Legent Clearing (i) any OCC
assessment with respect to the month of December 2009 and (ii) any DTC assessment with respect to
the calendar year ended December 31, 2009.

6.12 Repayment of Outstanding Debt; Transfer of Certain Assets.

At the Closing, Member shall cause Legent Clearing to: (a) repay the outstanding subordinated
indebtedness (including all accrued interest thereon) set forth in Schedule 6.12;
provided, however, that any cash portion of any prepayment penalties incurred
in connection with such repayment of subordinated indebtedness shall be deducted from the Final
Cash Purchase Price on a dollar for dollar basis; (b) transfer to RIDAWN IV, LLC, a Florida limited
liability company, all of the collateral held by Legent Clearing that secures repayment of that
certain Secured Demand Note Collateral Agreement, with an effective date of April 22, 2009, between
Legent Clearing and RIDAWN IV, LLC, and related Secured Demand Note, dated April 22, 2009, in the
original principal amount of $6,000,000, as amended by that certain Amendment to Previously
Approved Subordination Agreement, dated May 20, 2010; and (c) transfer to Member all equity
interests in Newbridge Securities Corporation held by Legent Clearing.

 

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6.13 Advance by Buyer.

At the Closing, Buyer shall advance to Legent Clearing cash in an amount sufficient to permit
Legent Clearing to make the repayment of the cash portion of the subordinated indebtedness
(including all accrued interest thereon) set forth in Schedule 6.12.

6.14 Distribution of Subject Shares.

Immediately after the Closing, Member shall distribute the Subject Shares to the direct and
indirect holders of its equity interests in a manner so as to ensure that that each such holder
shall receive that number of the Subject Shares that is proportionate to such holder’s direct or
indirect equity interest in Member.

6.15 Required Approvals.

(a) As promptly as practicable after the date of this Agreement, Sellers will, and will
cause Legent Clearing to, make all filings required by Law to be made by them in order to
consummate the transactions contemplated by this Agreement. Between the date of this
Agreement and the Closing Date, Sellers will, and will cause Legent Clearing to, cooperate
with Buyer with respect to all filings that Buyer elects to make or is required by Law to
make in connection with the transactions contemplated by this Agreement.

(b) As promptly as practicable after the date of this Agreement, Buyer and Parent will
make all filings required by Law to be made by them in order to consummate the transactions
contemplated by this Agreement. Between the date of this Agreement and the Closing Date,
Buyer and Parent will cooperate with Member and Legent Clearing with respect to all filings
that Member or Legent Clearing elects to make or is required by Law to make in connection
with the transactions contemplated by this Agreement.

6.16 No Negotiation.

Until such time, if any, as this Agreement is terminated pursuant to Article 9,
Sellers will not, and will cause Legent Clearing and each of its directors, officers, managers,
employees, agents, advisors and other representatives not to, directly or indirectly, solicit,
initiate or encourage any inquiries or proposals from, discuss or negotiate with or provide any
non-public information to, any Person (other than Buyer) relating to any transaction involving the
sale of the business or assets (other than in the ordinary course of business consistent with
past practice) of Legent Clearing, or any of the Units, or any merger, consolidation, business
combination or similar transaction involving Legent Clearing.

 

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6.17 Audit.

If it becomes available prior to the Closing, then as soon as practicable after its receipt
thereof, Member shall deliver to Buyer a copy of the audited balance sheet of Legent Clearing as of
June 30, 2010, and the related statements of income and cash flows for the fiscal year then ended
(including the notes contained therein or annexed thereto), which financial statements shall have
been reported on, and shall be accompanied by a copy of, the signed, unqualified opinion of
Deloitte & Touche LLP, independent auditors for Legent Clearing for such fiscal year.

6.18 Commercially Reasonable Efforts.

Between the date of this Agreement and the Closing Date, Member or Buyer, as the case may be,
will use their respective commercially reasonable efforts to consummate the transactions
contemplated by this Agreement, including, in the case of Member, by causing the conditions set
forth in Section 8.3 to be satisfied and, in the case of Buyer, by causing the conditions
set forth in Section 8.4 to be satisfied.

7. INDEMNIFICATION

7.1 By Member and Duques.

Subject to the terms and conditions of this Article 7, from and after the Closing,
Member and Duques, jointly and severally, agree to indemnify, defend and hold harmless Buyer and
its Affiliates (including, without limitation, after the Closing, Legent Clearing), and their
respective directors, managers, officers, employees, agents and controlled and controlling Persons
(collectively, the “Buyer Indemnitees”) from and against all Claims asserted against,
resulting to, imposed upon or incurred by any Buyer Indemnitee, directly or indirectly, by reason
of, arising out of or resulting from (collectively, the “Special Indemnity Claims”):

(a) the inaccuracy or breach of any representation or warranty of Sellers contained in
any of the Fundamental Reps;

(b) the breach of any covenant of Member or Duques set forth in Section 6.1
[“Noncompetition; Confidentiality”] or Section 6.16 [“No Negotiation”];

(c) any Claim by any Person purporting to be the holder (other than Member) of any
Units or other securities of or profit sharing rights in Legent Clearing, or any option,
contract or other right to acquire any Units or other securities of or profit sharing rights
in Legent Clearing;

(d) any fines, penalties, interest or costs resulting from a disciplinary action,
enforcement action or similar proceedings before the Financial Industry Regulatory
Authority or similar regulatory bodies arising out of conduct of the Business which
occurred prior to Closing (collectively, “Regulatory Claims”); or

 

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(e) any matter covered by a Release.

As used in this Article 7, the term “Claim” shall include (i) all debts,
liabilities and obligations; (ii) all losses, damages (including, without limitation, consequential
damages), judgments, awards, settlements, costs and expenses (including, without limitation,
interest (including prejudgment interest in any litigated matter), penalties, court costs and
attorneys fees and expenses); and (iii) all demands, claims, suits, actions, arbitrations, costs of
investigation, causes of action, proceedings and assessments, whether or not ultimately determined
to be valid.

7.2 By Member.

Subject to the terms and conditions of this Article 7, from and after the Closing, and
in addition to its joint and several indemnification obligations pursuant to Section 7.1,
Member agrees to indemnify, defend and hold harmless the Buyer Indemnitees from and against all
Claims asserted against, resulting to, imposed upon or incurred by any Buyer Indemnitee, directly
or indirectly, by reason of, arising out of or resulting from:

(a) the inaccuracy or breach of any representation or warranty of Sellers, or either of
them, contained in or made pursuant to this Agreement;

(b) the breach of any covenant of Sellers, or either of them, contained in or made
pursuant to this Agreement;

(c) any Litigation set forth on Schedule 3.13 under the sub-heading “Specified
Litigation Matters” (such Litigation, together with any Litigation that should have been set
forth on Schedule 3.13 in order to make such schedule accurate as of the date of
this Agreement, the “Specified Litigation Matters”) or any Claim (other than
Regulatory Claims covered by Section 7.1(d)) by any Person arising out of actions
occurring prior to the Closing and that is based on or related to the same subject matter as
any Specified Litigation Matter (collectively, “Litigation Claims”);
provided that, by way of example and not limitation, a Claim shall be deemed to be
based on or related to the same subject matter as a Specified Litigation Matter if there
exists between such Claim and any Specified Litigation Matter a substantially similar or
common set of facts or circumstances surrounding the business relationship or relationships
out of which the theories of liability against Legent Clearing in such Claim arise, whether
such Claim is made by one or more customers of a clearing customer or vendor of Legent
Clearing, any receiver appointed to act on behalf of any such customers, any Governmental or
Regulatory Entity or any other Person; further provided, that the term “Litigation
Claims” shall not include any Claim arising out of or resulting from any Litigation that is
not pending, or threatened in writing, on or before the second anniversary of the Closing
Date; or

(d) any fines, penalties, interest or costs resulting from any fines assessed against
Legent Clearing by the Internal Revenue Service for filing informational returns with
incorrect and/or incomplete taxpayer identification numbers (“TIN’s”) for any
period between February 9, 2005 and the Closing Date, including, without limitation,
the penalty of approximately $99,600 assessed against Legent Clearing in connection with its
2007 Form 1099 filings (collectively, “Special Tax Claims”).

 

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7.3 By Buyer.

Subject to the terms and conditions of this Article 7, from and after the Closing,
Buyer agrees to indemnify, defend and hold harmless Member and the members of Member (collectively,
the “Seller Indemnitees”) from and against all Claims asserted against, resulting to,
imposed upon or incurred by any Seller Indemnitee, directly or indirectly, by reason of or
resulting from (a) the inaccuracy or breach of any representation or warranty of Buyer contained in
or made pursuant to this Agreement; or (b) the breach of any covenant of Buyer contained in or made
pursuant to this Agreement.

7.4 By Parent.

Subject to the terms and conditions of this Article 7, from and after the Closing,
Parent agrees to indemnify, defend and hold harmless the Seller Indemnitees from and against all
Claims asserted against, resulting to, imposed upon or incurred by any Seller Indemnitee, directly
or indirectly, by reason of or resulting from (a) the inaccuracy or breach of any representation or
warranty of Parent contained in or made pursuant to this Agreement; or (b) the breach of any
covenant of Parent contained in or made pursuant to this Agreement.

7.5 Indemnification of Third-Party Claims.

The obligations and liabilities of any party to indemnify any other under this Article
7 with respect to Claims relating to third parties shall be subject to the following terms and
conditions:

(a) Notice and Defense. The party or parties to be indemnified (whether one or
more, the “Indemnified Party”) will give the party from whom indemnification is
sought (the “Indemnifying Party”) written notice of any such Claim, and the
Indemnifying Party will undertake the defense thereof by representatives chosen by it.
Failure to give such notice shall not affect the Indemnifying Party’s duty or obligations
under this Article 7, except to the extent the Indemnifying Party is prejudiced
thereby. So long as the Indemnifying Party is defending any such Claim actively and in good
faith and can periodically demonstrate the financial resources to continue the defense and
pay the Claim if unsuccessful in the defense, the Indemnified Party shall not settle such
Claim. The Indemnified Party shall make available to the Indemnifying Party or its
representatives all records and other materials required by them and in the possession or
under the control of the Indemnified Party, for the use of the Indemnifying Party and its
representatives in defending any such Claim, and shall in other respects give reasonable
cooperation in such defense.

(b) Failure to Defend. If the Indemnifying Party, within a reasonable time
after notice of any such Claim, fails to defend such Claim actively and in good faith or
fails to demonstrate adequate financial resources to maintain the defense and pay the Claim
if unsuccessful, the Indemnified Party will (upon further notice) have the right to
undertake the defense, compromise or settlement of such Claim or consent to the entry
of a judgment with respect to such Claim, on behalf of and for the account and risk of the
Indemnifying Party, and the Indemnifying Party shall thereafter have no right to challenge
the Indemnified Party’s defense, compromise, settlement or consent to judgment therein.

 

39

 

(c) Indemnified Party’s Rights. Anything in this Section 7.5 to the
contrary notwithstanding, (i) if there is a reasonable probability that a Claim may
materially and adversely affect the Indemnified Party other than as a result of money
damages or other money payments, the Indemnified Party shall have the right to defend,
compromise or settle such Claim, and (ii) the Indemnifying Party shall not, without the
written consent of the Indemnified Party, settle or compromise any Claim or consent to the
entry of any judgment which does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to the Indemnified Party of a release from all liability in
respect of such Claim.

(d) Management of Proceedings relating to Litigation Claims, Special Tax Claims and
Regulatory Claims. Anything in this Section 7.5 to the contrary
notwithstanding, Buyer, acting in good faith, shall have sole authority with respect to the
management of all proceedings with respect to which Litigation Claims, Special Tax Claims or
Regulatory Claims may be made under this Article 7, including, without limitation,
all decisions with respect to the prosecution, defense, compromise or settlement thereof,
and whether or not to consent to the entry of, or appeal, any judgment of a court of
competent jurisdiction having the authority to determine the amount thereof and liability
with respect thereto (each, a “Judicial Order”), and Buyer shall not be required to
comply with the provisions of subsections (a) through (c) of this Section 7.5 in
connection therewith; provided, however, that (i) Buyer shall not settle or
compromise, or consent to the entry of any Judicial Order with respect to, any such
proceeding relating to any Litigation Claim or Regulatory Claim and with respect to which
Member is named as a co-defendent unless Buyer has first used its commercially reasonable
efforts to include as an unconditional term thereof the giving by the claimant or the
plaintiff to Member of a release from all liability in respect of such proceeding; (ii)
Member shall be entitled to participate in any such proceeding relating to any Litigation
Claim, Special Tax Claim or Regulatory Claim with counsel of its choice and at its own sole
cost and expense; and (iii) Buyer shall keep Member reasonably apprised as to the status,
defense, negotiation or settlement of any such proceeding relating to a Litigation Claim,
Special Tax Claim or Regulatory Claim with respect to which Member is not participating as
contemplated by clause (ii) above, including by promptly responding to any reasonable
inquiries or requests from Member for documents and other information relating thereto.

7.6 Payment; Satisfaction from Escrowed Funds.

(a) Subject to Section 7.6(b), the Indemnifying Party shall promptly pay the
Indemnified Party any amount due under this Article 7. Upon judgment,
determination, settlement or compromise of any third party Claim, the Indemnifying Party
shall pay promptly on behalf of the Indemnified Party, and/or to the Indemnified Party in
reimbursement of any amount theretofore required to be paid by it, the amount so
determined by judgment, determination, settlement or compromise and all other Claims of
the Indemnified Party with respect thereto, unless in the case of a judgment an appeal is
made from the judgment. If the Indemnifying Party desires to appeal from an adverse
judgment, then the Indemnifying Party shall post and pay the cost of the security or bond to
stay execution of the judgment pending appeal. Upon the payment in full by the Indemnifying
Party of such amounts, the Indemnifying Party shall succeed to the rights of such
Indemnified Party, to the extent not waived in settlement, against the third party who made
such third party Claim.

 

40

 

(b) Sellers acknowledge and agree that the Escrowed Funds shall be deposited with the
Escrow Agent in accordance with the terms of the Escrow Agreement to help assure the
indemnification obligations of Sellers under this Article 7. The indemnification
obligations of Sellers pursuant to this Article 7 shall be satisfied first from the
Escrowed Funds, in accordance with the Escrow Agreement (but such recovery shall not limit
the amount of any additional indemnification to which the Buyer Indemnitees may be entitled
pursuant this Agreement), and second, if such funds are not sufficient or are no longer
available to satisfy such obligations, then the Buyer Indemnitees may, subject to the other
provisions of this Article 7, assert their indemnification Claims against Sellers.

7.7 Tax Effect.

The indemnification obligation of an Indemnifying Party shall be adjusted so as to give effect
to any net reduction in federal, state, local or foreign income or franchise tax liability actually
realized at any time by the Indemnified Party in connection with the satisfaction by the
Indemnifying Party of the Claims with respect to which indemnification is sought hereunder. Any
Claims payable by the Indemnifying Party to the Indemnified Party hereunder shall include the
federal, state, local or foreign income or franchise tax liability which the Indemnified Party will
incur upon receipt of payment in respect of such Claims (taking into account any net operating
loss, capital loss or credit carryover of the Indemnified Party). With respect to any Claims for
which the Indemnified Party (but for the operation of this sentence) is entitled to indemnification
hereunder, there shall be disregarded any tax liabilities arising by reason of (a) any reduction or
disallowance of deductions from taxable income in one taxable year, to the extent such reduction or
disallowance results in a corresponding increase in allowable deductions from income in another
taxable year, (b) the shifting of items of income from one taxable year to another, or (c) the
capitalization of amounts which were expensed, but only if such capitalized amounts are subject to
amortization or depreciation or recovery in operating expenses, except insofar as such reduction,
disallowance, shifting or capitalization would only result in the increase of any unutilized net
operating loss, capital loss or credit carryover.

 

41

 

7.8 Limitations on Indemnification.

Except for any fraudulent breach or misrepresentation, as to which claims may be brought
without limitation as to time or amount:

(a) Time Limitation. No claim or action shall be brought under this
Article 7 for breach of a representation or warranty after the lapse of 15 months
following the Closing. Regardless of the foregoing, however, or any other provision of this
Agreement:

(i) There shall be no time limitation on Special Indemnity Claims (except as
set forth below with respect to Regulatory Claims), Litigation Claims, Special Tax
Claims or any claims or actions brought for breach of any representation or warranty
(A) made by Member in or pursuant to Section 3.14(c) [“Environmental
Matters”], Section 3.19, [“Employee Benefit Plans”] or Section 3.28
[“No Brokers or Finders”], and Sellers hereby waive all applicable statutory
limitation periods with respect thereto that would adversely affect any Buyer
Indemnitee’s rights hereunder; (B) made by Buyer in or pursuant to Section
4.1 [“Corporate”], Section 4.2 [“Authorization; Validity”] or
Section 4.3 [“No Brokers or Finders”], and Buyer hereby waives all
applicable statutory limitation periods with respect thereto that would adversely
affect any Seller Indemnitee’s rights hereunder; or (C) made by Parent in or
pursuant to Section 5.1 [“Corporate”], Section 5.2 [“Authorization;
Validity”], Section 5.3 [“No Brokers or Finders”] or Section 5.5
[“Subject Shares”], and Parent hereby waives all applicable statutory limitation
periods with respect thereto that would adversely affect any Seller Indemnitee’s
rights hereunder.

(ii) Any claim or action brought for breach of any representation or warranty
made by Sellers in or pursuant to Section 3.7 (“Tax Matters”) may be brought
at any time until the underlying tax obligation is barred by the applicable period
of limitation under federal and state laws relating thereto (as such period may be
extended by waiver).

(iii) Any Regulatory Claim shall be commenced prior to the second anniversary
of the Closing Date, and any such Regulatory Claim shall be deemed to have been
waived if not commenced prior to such second anniversary of the Closing Date.

(iv) Any Claim, including, without limitation, any Regulatory Claim, made by a
party hereunder prior to the termination of the survival period for such claim shall
be preserved despite the subsequent termination of such survival period.

(v) If any act, omission, disclosure or failure to disclose shall form the
basis for a claim for breach of more than one representation or warranty, and such
claims have different periods of survival hereunder, the termination of the survival
period of one claim shall not affect a party’s right to make a claim based on the
breach of representation or warranty still surviving.

 

42

 

(b) Amount Limitation.

(i) Except with respect to any Special Indemnity Claims, Litigation Claims,
Special Tax Claims or claims for breaches of representations or
warranties contained in Section 3.28 [“No Brokers or Finders”],
Section 4.1 [“Corporate”], Section 4.2 [“Authorization; Validity”],
Section 4.3 [“No Brokers or Finders”], Section 5.1 [“Corporate”],
Section 5.2 [“Authorization; Validity”], Section 5.3 [“No Brokers or
Finders”] or Section 5.5 [“Subject Shares”], for which no such limitations
shall apply, an Indemnified Party shall not be entitled to indemnification under
this Article 7 for breach of a representation or warranty (A) until the
aggregate of the Indemnifying Party’s indemnification by the Indemnified Party
pursuant to this Article 7 (but for this Section 7.8(b)) exceeds
$100,000, but in such event the Indemnified Party shall be entitled to
indemnification in full for all breaches of representations and/or warranties, it
being the intent of the parties that such minimum amount constitute a threshold and
not a deductible; or (B) to the extent the aggregate amount of all indemnification
claims exceeds $6,000,000.

(ii) With respect to Regulatory Claims, Member shall indemnify the Buyer
Indemnitees for: (A) 100% of any amounts up to $350,000, (B) 50% of any amounts
between $350,001 and $700,000 and (C) 0% of any amounts in excess thereof.

(iii) With respect to Litigation Claims, Member shall indemnify the Buyer
Indemnitees for: (A) 75% of all amounts for legal fees and expenses or other
out-of-pocket costs and expenses (in each case, other than amounts described in
clauses (B) and (C) below) paid by any Buyer Indemnitee in connection with any
Litigation Claims; (B) 85% of all amounts paid by any Buyer Indemnitee with respect
to any Litigation Claim pursuant to any binding settlement arrangement with respect
to which Buyer has fulfilled its obligation set forth in Section 7.5(d)(i);
and (C) 85% of all amounts paid by any Buyer Indemnitee pursuant to any Judicial
Order that is not being appealed by such Buyer Indemnitee.

(c) Tax Limitation. Indemnification for breaches of the representations
contained in Section 3.7 shall be limited to Taxes of Legent Clearing for taxable
periods ending on or prior to the Closing Date and the pre-Closing portion of any taxable
period that begins before but does not end on the Closing Date.

7.9 No Waiver of Contractual Representations and Warranties.

Sellers have agreed that Buyer’s rights to indemnification for the express representations and
warranties set forth herein are part of the basis of the bargain contemplated by this Agreement,
and, except to the extent specifically set forth in the Disclosure Schedules, Buyer’s rights to
indemnification (as specifically set forth in and limited by this Article 7) shall not be
affected or waived by virtue of (and Buyer shall be deemed to have relied upon the express
representations and warranties set forth herein notwithstanding) any knowledge on the part of Buyer
of any untruth of any such representation or warranty of Sellers expressly set forth in this
Agreement, regardless of whether such knowledge was obtained through Buyer’s own investigation or
through disclosure by Sellers or any other Person, and regardless of whether such knowledge was
obtained before or after the execution and delivery of this Agreement.
Without limiting the generality of the foregoing, the closing of the transactions contemplated
by this Agreement shall not constitute a waiver by any party of its rights to indemnification
hereunder, regardless of whether the party seeking indemnification has knowledge of the breach,
violation or failure of condition constituting the basis of the Claim at or before the Closing.

 

43

 

8. CLOSING

The closing of the transactions contemplated by this Agreement (the “Closing”) shall
take place at the offices of Hunton & Williams LLP, Dallas, Texas, at 9:00 a.m. on a date agreed to
by Buyer and Member, but in no event later than the third business day after the conditions set
forth in Section 8.3 and Section 8.4 have been satisfied or waived, or at such
other time and place as may be agreed upon by Buyer and Member (the date on which the Closing
actually occurs is referred to in this Agreement as the “Closing Date”).

8.1 Documents to be Delivered by Sellers.

At the Closing, Sellers shall deliver to Buyer the following documents, in each case duly
executed or otherwise in proper form reasonably acceptable to Buyer:

(a) Units. Such documentation evidencing the transfer to Buyer of the Units by
each holder thereof as Buyer reasonably requests.

(b) Registration Rights Agreement. The Registration Rights Agreement, duly
executed by Member.

(c) Escrow Agreement. The Escrow Agreement, duly executed by Member and the
Escrow Agent.

(d) Certified Resolutions. Certified copies of the resolutions of the board of
managers of Member, authorizing and approving this Agreement and the consummation of the
transactions contemplated hereby.

(e) Organizational Documents. A copy of the Operating Agreement of each of
Legent Clearing and Member, certified by their respective secretaries, and a copy of the
Certificate of Formation and good standing certificates of each of Legent Clearing and
Member, certified by the Secretary of State of the applicable state of organization.

(f) Closing Certificate of Member. A certificate of the President of Member,
substantially in the form of Exhibit 8.1(f) attached hereto, certifying fulfillment
of the matters referred to in paragraphs (a) through (d) of Section 8.3 and
containing certain representations regarding Member as of the Closing Date as set forth
therein.

(g) Closing Certificate of Duques. A certificate of Duques, substantially in
the form of Exhibit 8.1(g) attached hereto, certifying fulfillment of the matters
referred to in paragraphs (a) through (d) of Section 8.3.

 

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(h) Incumbency Certificate. Incumbency certificates relating to each Person
executing (as a corporate officer or otherwise on behalf of another Person) any document
executed and delivered to Buyer pursuant to the terms hereof.

(i) General Releases. The Releases, duly executed by the Persons listed on
Schedule 6.2.

(j) Subordinated Debt Pay-off. Evidence, satisfactory to Buyer, of payment of
the outstanding subordinated indebtedness set forth in Schedule 6.12.

(k) Other Documents. All other documents, instruments or writings required to
be delivered to Buyer at or prior to the Closing pursuant to this Agreement and such other
certificates of authority and documents as Buyer may reasonably request.

8.2 Documents to be Delivered by Buyer or Parent.

At the Closing, Buyer or Parent, as applicable, shall deliver to Member the following
documents, in each case duly executed or otherwise in proper form:

(a) Estimated Cash Purchase Price. Certified or bank cashier’s checks (or wire
transfers) as required by Sections 2.2(a) and 2.2(b).

(b) Subject Shares. Certificates representing the Subject Shares as required
by Section 2.2(c), together with the Registration Rights Agreement, duly executed by
Parent.

(c) Escrow Agreement. The Escrow Agreement, duly executed by Buyer and Parent.

(d) Opinion of Parent’s In-House Counsel. A written opinion of Parent’s
in-house legal counsel, dated as of the Closing Date, addressed to Member and its members,
substantially in the form of Exhibit 8.2(d) attached hereto.

(e) Certified Resolutions. Certified copies of the resolutions of the Boards
of Directors of Buyer and Parent authorizing and approving this Agreement and the
consummation of the transactions contemplated hereby.

(f) Closing Certificate. Certificates of the Presidents of Buyer and Parent,
each substantially in the form of Exhibit 8.2(f) attached hereto, certifying
fulfillment of the matters referred to in paragraphs (a) through (b) of Section 8.4;

(g) Incumbency Certificate. Incumbency certificates relating to each Person
executing (as a corporate officer or otherwise on behalf of another Person) any document
executed and delivered to Member pursuant to the terms hereof.

(h) Other Documents. All other documents, instruments or writings required to
be delivered to Member at or prior to the Closing pursuant to this Agreement and such other
certificates of authority and documents as Member may reasonably request.

 

45

 

8.3 Conditions Precedent to Obligations of Buyer and Parent.

Each and every obligation of Buyer or Parent to be performed on the Closing Date shall be
subject to the satisfaction, or written waiver by Buyer, prior to or at the Closing of the
following express conditions precedent:

(a) No Material Adverse Effect shall have occurred;

(b) (i) the representations and warranties of Sellers contained in the Fundamental Reps
shall be true and correct in all respects when made and at and as of the Closing Date with
the same force and effect as if those representations and warranties had been made at and as
of the Closing Date and (ii) each other representation and warranty of Member contained in
Article 3 shall be true and correct in all material respects when made and at and as
of the Closing Date with the same force and effect as if those representations and
warranties had been made at and as of the Closing Date, in each case except (A) to the
extent such representations and warranties speak as of a specified earlier date; and (B) as
otherwise contemplated or permitted by this Agreement; provided, however,
that for purposes of clause (ii) above, any qualifications relating to materiality,
including the term “Material Adverse Effect,” contained in any representation or warranty
shall be disregarded and given no effect;

(c) Sellers shall in all material respects have performed all obligations and complied
with all covenants necessary to be performed or complied with by them on or before the
Closing Date, including, without limitation, the delivery of all items required to be
delivered pursuant to Section 8.1;

(d) Sellers shall have obtained all consents set forth in Schedule 3.4;

(e) Buyer shall have obtained all governmental and regulatory approvals and consents
necessary for the consummation of the transactions described in this Agreement on terms and
conditions satisfactory to the Buyer, including, without limitation, to the extent required,
(i) the approval of the Office of Thrift Supervision, the Federal Deposit Insurance
Corporation and any other applicable bank regulatory authority, and (ii) the approval of any
Governmental or Regulatory Entities, for the Buyer to acquire the Units and control of
Legent Clearing, and all applicable waiting periods shall have expired.

(f) Buyer shall have obtained approval from the Office of Thrift Supervision that
Legent Clearing’s margin loans and other comparable assets would be classified as Regulation
T assets and will be approved for treatment as 20% or lower risked-weighted category for the
purpose of Buyer’s risked-weighted asset calculation;

(g) Buyer shall have received evidence, satisfactory to Buyer in its reasonable
discretion, that each material issue reported in the compliance audit obtained by Member
pursuant to Section 6.8(b) has been resolved without any further liability to Legent
Clearing;

 

46

 

(h) no statute, rule or regulation shall have been enacted or promulgated by any
Governmental or Regulatory Entity which prohibits, restricts or makes illegal this Agreement
or the transactions contemplated hereby;

(i) no Litigation shall be pending or threatened before any court or Governmental or
Regulatory Entity that seeks restraint, prohibition, damages or other relief in connection
with this Agreement or the consummation of the transactions contemplated hereby, or that
otherwise questions the validity or legality of this Agreement or the consummation of the
transactions contemplated hereby; and

(j) Seller shall have obtained executed UCC-3 Termination Statements or other releases,
each in form and substance reasonably satisfactory to Buyer, to evidence the release of the
Liens listed in Schedule 3.15(a).

8.4 Conditions Precedent to Obligations of Sellers.

Each and every obligation of Sellers to be performed on the Closing Date shall be subject to
the satisfaction, or written waiver by Member, prior to or at the Closing of the following express
conditions precedent:

(a)
(i) the representations and warranties of Buyer contained in Section 4.1
[“Corporate”], Section 4.2 [“Authorization; Validity”], Section 4.3 [“No
Brokers or Finders”] and Section 4.6 [“Financing”] shall be true and correct in all
respects when made and at and as of the Closing Date with the same force and effect as if
those representations and warranties had been made at and as of the Closing Date; (ii) each
other representation and warranty of Buyer contained in Article 4 shall be true and
correct in all material respects when made and at and as of the Closing Date with the same
force and effect as if those representations and warranties had been made at and as of the
Closing Date; (iii) the representations and warranties of Parent contained in Section
5.1 [“Corporate”], Section 5.2 [“Authorization; Validity”], Section 5.3
[“No Brokers or Finders”] and Section 5.5 [“Subject Shares”] shall be true and
correct in all respects when made and at and as of the Closing Date with the same force and
effect as if those representations and warranties had been made at and as of the Closing
Date; and (iv) each other representation and warranty of Parent contained in Article
5 shall be true and correct in all material respects when made and at and as of the
Closing Date with the same force and effect as if those representations and warranties had
been made at and as of the Closing Date, in each case except (A) to the extent such
representations and warranties speak as of a specified earlier date; and (B) as otherwise
contemplated or permitted by this Agreement;

(b) Buyer and Parent shall in all material respects have performed all obligations and
complied with all covenants necessary to be performed or complied with by them on or before
the Closing Date, including, without limitation, the delivery of all items required to be
delivered pursuant to Section 8.2;

(c) Member shall have obtained all consents and approvals from any Governmental or
Regulatory Entities necessary for the consummation of the transactions
contemplated hereby, on terms and conditions reasonably satisfactory to Member,
including, without limitation, the approval of the Financial Industry Regulatory Authority;

 

47

 

(d) no statute, rule or regulation shall have been enacted or promulgated by any
Governmental or Regulatory Entity which prohibits, restricts or makes illegal this Agreement
or the transactions contemplated hereby; and

(e) no Litigation shall be pending or threatened before any court or Governmental or
Regulatory Entity that seeks restraint, prohibition, damages or other relief in connection
with this Agreement or the consummation of the transactions contemplated hereby, or that
otherwise questions the validity or legality of this Agreement or the consummation of the
transactions contemplated hereby.

9. TERMINATION

9.1 Termination.

This Agreement may be terminated at any time prior to the Closing:

(a) by mutual written consent of all of the parties hereto; or

(b) by written notice from Buyer to Member, if any Seller (i) fails to perform in any
material respect its covenants or agreements contained in this Agreement and required to be
performed on or prior to the Closing Date, or (ii) materially breaches any representation or
warranty contained in this Agreement, which failure or breach is not cured within 10 days
after Buyer has notified Member of its intent to terminate this Agreement pursuant to this
Section 9.1(b); provided, however, that to the extent that any such
covenant, agreement, representation or warranty contains a qualification relating to
materiality, including the term “Material Adverse Effect,” then for purposes of this
Section 9.1(b), such qualification shall be disregarded and given no effect; or

(c) by written notice from Member to Buyer, if Buyer or Parent (i) fails to perform in
any material respect its covenants or agreements contained in this Agreement and required to
be performed on or prior to the Closing Date, or (ii) materially breaches any representation
or warranty contained in this Agreement, which failure or breach is not cured within 10 days
after Sellers have notified Buyer of their intent to terminate this Agreement pursuant to
this Section 9.1(c); or

(d) by written notice from Buyer to Member upon the occurrence of any Material Adverse
Effect; or

(e) by written notice from Buyer to Member, or from Member to Buyer, as the case may
be, if the Closing has not occurred on or prior to October 31, 2010 (the “Drop Dead
Date”) for any reason other than delay or nonperformance of the party seeking such
termination; provided, however, that if any consent or approval required to
be obtained from any banking regulatory agency or any Governmental or Regulatory Entity with
respect to the transactions contemplated hereby has not been obtained by such
date, then the Drop Dead Date shall be automatically extended to November 30, 2010 or
such later date as may be mutually agreed upon by Buyer and Member; or

 

48

 

(f) by written notice from Buyer to Member if Buyer reasonably determines, in good
faith and after consulting with counsel, that there is a substantial likelihood that any
necessary approval by any banking regulatory agency or any Governmental or Regulatory Entity
will not be obtained or will be obtained only upon a condition or conditions that make it
inadvisable in Buyer’s discretion to proceed with the transactions contemplated by this
Agreement; or

(g) by written notice from Member to Buyer if Member reasonably determines, in good
faith and after consulting with counsel, that there is a substantial likelihood that any
necessary approval by any banking regulatory agency or any Governmental or Regulatory Entity
will not be obtained or will be obtained only upon a condition or conditions that would
reasonably be expected to materially and adversely affect Member should Member proceed with
the transactions contemplated by this Agreement; or

(h) by written notice from Buyer to Member, or from Member to Buyer, as the case may
be, if there shall be any applicable Law that makes the consummation of the transactions
contemplated hereby illegal or otherwise prohibited or if consummation of the transactions
contemplated hereby would violate any final, non-appealable Order of any Governmental or
Regulatory Entity having competent jurisdiction.

9.2 Effect of Termination.

If this Agreement is terminated as permitted by Section 9.1, such termination shall be
without liability of any party (or any owner, member, director, manager, officer, employee, agent,
consultant or representative of any party) to the other parties to this Agreement;
provided, however, that nothing herein shall relieve any party from liability for
any willful breach or failure to perform its obligations under this Agreement.

9.3 Waiver of Conditions to Closing.

If any of the conditions set forth in Section 8.3 hereof have not been satisfied,
Buyer may nevertheless elect to waive (to the extent permitted by applicable Law) such conditions
and proceed with the consummation of the transactions contemplated hereby. If any of the
conditions set forth in Section 8.4 have not been satisfied, Sellers may nevertheless elect
to waive (to the extent permitted by applicable Law) such conditions and proceed with the
consummation of the transactions contemplated hereby.

9.4 Expenses upon Termination.

Except as otherwise expressly provided herein, Buyer will pay its own legal fees and expenses
in negotiating this Agreement and closing the transactions contemplated hereby, and Sellers will
pay their own legal fees and expenses in negotiating this Agreement and closing the transactions
contemplated hereby, whether or not the transactions contemplated hereby are consummated.

 

49

 

10. RESOLUTION OF DISPUTES

10.1 Arbitration.

Any dispute, controversy or claim arising out of or relating to this Agreement or any contract
or agreement entered into pursuant hereto or the performance by the parties of its or their terms
shall be settled by binding arbitration held in Denver, Colorado, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect, except as specifically
otherwise provided in this Article 8.4(e). Notwithstanding the foregoing, Buyer may, in
its discretion, apply to a court of competent jurisdiction for equitable relief from any violation
or threatened violation of the covenants of Sellers under Section 6.1 of this Agreement.

10.2 Arbitrators.

If the matter in controversy (exclusive of attorney fees and expenses) shall appear, as at the
time of the demand for arbitration, to exceed $1,000,000, then the panel to be appointed shall
consist of three neutral arbitrators; otherwise, one neutral arbitrator.

10.3 Procedures; No Appeal.

The arbitrator(s) shall allow such discovery as the arbitrator(s) determine appropriate under
the circumstances and shall resolve the dispute as expeditiously as practicable, and if reasonably
practicable, within 120 days after the selection of the arbitrator(s). The arbitrator(s) shall
give the parties written notice of the decision, with the reasons therefor set out, and shall have
30 days thereafter to reconsider and modify such decision if any party so requests within 10 days
after the decision. Thereafter, the decision of the arbitrator(s) shall be final, binding, and
nonappealable with respect to all Persons, including (without limitation) Persons who have failed
or refused to participate in the arbitration process. The arbitrators shall be empowered only to
choose between the position taken on the issue by the Indemnified Party, or the position taken by
the Indemnifying Party, and shall not be empowered to render any other decision.

10.4 Authority.

The arbitrator(s) shall have authority to award relief under legal or equitable principles,
including interim or preliminary relief, and to allocate responsibility for the costs of the
arbitration and to award recovery of attorneys fees and expenses in such manner as is determined to
be appropriate by the arbitrator(s).

10.5 Entry of Judgment.

Judgment upon the award rendered by the arbitrator(s) may be entered in any court having in
personam and subject matter jurisdiction. Buyer, Parent, Member and Duques hereby submit to the in
personam jurisdiction of the Federal and State courts in Colorado, for the purpose of confirming
any such award and entering judgment thereon.

 

50

 

10.6 Confidentiality.

All proceedings under this Article 10, and all evidence given or discovered pursuant
hereto, shall be maintained in confidence by all parties.

10.7 Continued Performance.

The fact that the dispute resolution procedures specified in this Article 10 shall
have been or may be invoked shall not excuse any party from performing its obligations under this
Agreement and during the pendency of any such procedure all parties shall continue to perform their
respective obligations in good faith, subject to any rights to terminate this Agreement that may be
available to any party.

10.8 Tolling.

All applicable statutes of limitation shall be tolled while the procedures specified in this
Article 10 are pending. The parties will take such action, if any, as may be required to
effectuate such tolling.

11. MISCELLANEOUS

11.1 Disclosure Schedules.

The Schedules referred to in this Agreement have been compiled in a bound volume (the
“Disclosure Schedules”), executed by Member and Duques and dated and delivered to Buyer on
the date of this Agreement. Information set forth in the Disclosure Schedules specifically refers
to the article and section of this Agreement to which such information is responsive and such
information shall not be deemed to have been disclosed with respect to any other article or section
of this Agreement or for any other purpose, unless disclosure to such other article or section is
clear on its face. The Disclosure Schedules include a table of contents and/or index to all of the
information and documents contained therein. The Disclosure Schedule shall not vary, change or
alter the language of the representations and warranties contained in this Agreement other than
providing exceptions to statements therein. Seller may, from time to time prior to or at the
Closing, supplement or amend the Disclosure Schedules only to the extent and in the manner provided
in Section 6.5(a); and all references to any Schedule that has been properly supplemented
or amended in accordance with Section 6.5(a) shall for all purposes after the Closing be
deemed to be a reference to such Schedule as so supplemented or amended.

11.2 Further Assurance.

From time to time, at Buyer’s request and without further consideration, Legent Clearing and
Member will execute and deliver to Buyer such documents and take such other action as Buyer may
reasonably request in order to consummate more effectively the transactions contemplated hereby.

 

51

 

11.3 Disclosures and Announcements.

Announcements concerning the transactions provided for in this Agreement by Buyer, Parent,
Legent Clearing or Member shall be subject to the approval of the other parties, which approval
shall not be unreasonably withheld. Member and Duques agree not to disclose the terms of this
transaction except as required by Law. Notwithstanding the foregoing, any party or its applicable
Affiliates shall be permitted to make such public filings with respect to this Agreement and the
transactions contemplated hereby as may be required by Law or by obligations pursuant to any
listing agreement with any national securities exchange or inter-dealer quotation system.

11.4 Assignment; Parties in Interest.

(a) Assignment. Except as expressly provided herein, the rights and
obligations of a party hereunder may not be assigned, transferred or encumbered without the
prior written consent of the other parties.

(b) Parties in Interest. This Agreement shall be binding upon, inure to the
benefit of, and be enforceable by the respective successors and permitted assigns of the
parties hereto. Nothing contained herein shall be deemed to confer upon any other Person
any right or remedy under or by reason of this Agreement.

11.5 Law Governing Agreement.

This Agreement may not be modified or terminated orally, and shall be construed and
interpreted according to the internal laws of the State of Delaware, excluding any choice of law
rules that may direct the application of the laws of another jurisdiction.

11.6 Waiver; Remedies Cumulative.

The rights and remedies of the parties hereto under this Agreement are cumulative and not
alternative. Neither any failure nor any delay by any party in exercising any right, power or
privilege under this Agreement or any of the Ancillary Instruments will operate as a waiver of such
right, power or privilege, and no single or partial exercise of any such right, power or privilege
will preclude any other or further exercise of such right, power or privilege or the exercise of
any other right, power or privilege. To the maximum extent permitted by applicable Laws, (a) no
claim or right arising out of this Agreement or any of the Ancillary Instruments can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party will be applicable
except in the specific instance for which it is given; and (c) no notice to or demand on one party
will be deemed to be a waiver of any obligation of that party or of the right of the party giving
such notice or demand to take further action without notice or demand as provided in this Agreement
or any of the Ancillary Instruments.

11.7 Amendment and Modification.

Buyer and Member may amend, modify and supplement this Agreement in such manner as may be
agreed upon in writing between Buyer and Member.

 

52

 

11.8 Notice.

(a) All notices, requests, demands and other communications hereunder shall be given in
writing and shall be: (a) personally delivered; (b) sent by telecopier, facsimile
transmission or other electronic means of transmitting written documents; or (c) sent to the
parties at their respective addresses indicated herein by registered or certified U.S. mail,
return receipt requested and postage prepaid, or by private overnight mail courier service.
The respective addresses to be used for all such notices, demands or requests are as
follows:

	 	(i)	 	If to Buyer or Parent, to:
	 
	 	 	 	United Western Bank

700 17th Street, Suite 2100

Denver, CO 80202

Attention: Theodore J. Abariotes

Facsimile: (303) 390-0952

	 
	 	 	 	(with a copy to)
	 
	 	 	 	Hunton & Williams LLP

1445 Ross Avenue, Suite 3700

Dallas, TX 75202

Attention: Allen McConnell, Esq.

Facsimile: (214) 740-7147

or to such other Person or address as Buyer or Parent may furnish to Member in writing.

	 	(ii)	 	If to Member:
	 
	 	 	 	Legent Group, LLC

1239 North 138th Circle

Omaha, Nebraska 68154-5100

Attention: David P. Bailis

Facsimile: (402) 964-0192
	 
	 	 	 	(with a copy to)
	 
	 	 	 	Sidley Austin LLP

1 South Dearborn Street

Chicago, Illinois 60603

Attention: Frederick C. Lowinger
                 Luke
J. Valentino

Facsimile: (312) 853-7036

or to such other Person or address as Member shall furnish to Buyer in writing.

 

53

 

In addition, any notice to Legent Clearing given prior to Closing shall also be given in the
same manner to Member; and any notice to Legent Clearing given after Closing shall also be
given in the same manner to Buyer.

(b) If personally delivered, such communication shall be deemed delivered upon actual
receipt; if electronically transmitted pursuant to this Section 11.8, such
communication shall be deemed delivered the next business day after transmission (and sender
shall bear the burden of proof of delivery); if sent by overnight courier pursuant to this
Section 11.8, such communication shall be deemed delivered upon receipt; and if sent
by U.S. mail pursuant to this Section 11.8, such communication shall be deemed
delivered as of the date of delivery indicated on the receipt issued by the relevant postal
service, or, if the addressee fails or refuses to accept delivery, as of the date of such
failure or refusal. Any party to this Agreement may change its address for the purposes of
this Agreement by giving notice thereof in accordance with this Section 11.8.

11.9 Expenses.

Regardless of whether or not the transactions contemplated hereby are consummated:

(a) Brokerage. Member and Buyer each represent and warrant to each other that
there is no broker involved or in any way connected with the transactions provided for
herein on their behalf, respectively (and Member represents and warrants that there is no
broker involved on behalf of Legent Clearing), and each agrees to hold the other harmless
from and against all other claims for brokerage commissions or finder’s fees in connection
with the execution of this Agreement or the transactions provided for herein.

(b) Transfer Taxes. Member shall pay any sales, use, excise, transfer or other
similar tax imposed with respect to the transactions provided for in this Agreement, and any
interest or penalties related thereto.

(c) Legent Clearing Expenses. All expenses of Legent Clearing in connection
with the transactions contemplated hereby shall be deducted from the calculation of Adjusted
Book Value as provided in Section 2.3(b).

(d) Other. Except as otherwise provided herein, each of the parties shall bear
its own expenses and the expenses of its counsel and other agents in connection with the
transactions contemplated hereby.

(e) Costs of Litigation. The parties agree that the prevailing party in any
action brought with respect to or to enforce any right or remedy under this Agreement shall
be entitled to recover from the other party or parties all reasonable costs and expenses of
any nature whatsoever incurred by the prevailing party in connection with such action,
including without limitation attorneys’ fees and prejudgment interest.

 

54

 

11.10 Entire Agreement.

This instrument embodies the entire agreement between the parties hereto with respect to the
transactions contemplated herein, and there have been and are no agreements, representations or
warranties between the parties other than those set forth or provided for herein.

11.11 Counterparts.

This Agreement may be executed in one or more counterparts (including, without limitation, by
facsimile or portable document format (PDF)), each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

11.12 Headings.

The headings in this Agreement are inserted for convenience only and shall not constitute a
part hereof.

11.13 Knowledge.

Wherever the term “knowledge” is used herein, it shall mean the actual knowledge of the
applicable Person; provided, however, that the “knowledge” of Member shall mean the
actual knowledge of Duques, Christopher L. Frankel, Raymond J. Maratea, David Brant, David Jarvis,
Jean E. Luther, Craig Black, Leon Stafford, Gayann Henn, Stephanie Ripp, Donna Dorst, Steve
Dripchack, Sandy Antonoff, Roxanna Guinan, Brian Strasser, Maren Palmer, Steve Harper, Ginnie
Wikoff, Chris Dorst, Shawn Brown, Robin Hawley, Ted deWit, John Riddell, Jeanette Douglas, Jamie
Coffey, Cathy Davis, Christine Hansen or any individual who at any time after the date hereof and
prior to the Closing occupies the office of Chief Executive Officer, President, Chief Financial
Officer, Executive Vice President, Risk/Compliance or Senior Vice President, Operations, or any
equivalent office, of Member or Legent Clearing.

11.14 Glossary of Terms.

The following sets forth the location of definitions of capitalized terms defined in the body
of this Agreement (where any group or category of items or matters is defined collectively in the
plural number, any item or matter within such definition may be referred to using such defined term
in the singular number):

“Adjusted Book Value” — Section 2.3(b)

“Affiliate” — Section 3.26(a)

“Agreement” — Introductory Paragraph

“Ancillary Instruments” — Section 3.2(a)

“Book Value” — Section 2.3(a)

 

55

 

“Business” — Recital A

“Buyer” — Introductory Paragraph

“Buyer Indemnitees” — Section 7.1

“Buyer’s Accountants” — Section 2.3(c)

“CERCLA” — Section 3.14(c)

“Claim” — Section 7.1

“Closing” — Preamble to Article 8

“Closing Date” —Article 8

“Code” — Section 3.7(i)(i)

“Consideration” — Section 2.1

“Control” — Section 3.26(a)

“Data Site” — Section 3.7(c)

“DBTCA” — Section 8.4(e)

“Disclosure Schedules” — Section 11.1

“Drop Dead Date” — Section 9.1(d)

“DTC” — Section 6.11

“Duques” — Introductory Paragraph

“Employee Plans/Agreement(s)” — Section 3.19(a)

“Environmental Laws” — Section 3.14(c)

“ERISA” — Section 3.19(a)

“Escrow Agent” — Section 2.2(a)

“Escrow Agreement” — Section 2.2(a)

“Escrowed Funds” — Section 2.2(a)

“Estimated Balance Sheet” — Section 2.2(b)

“Estimated Cash Purchase Price” — Section 2.2(b)

 

56

 

“Final Balance Sheet” — Section 2.3(c)(iii)

“Final Cash Purchase Price” — Section 2.3(c)(iii)

“Fundamental Reps” — preamble to Article 3

“GAAP” — Section 2.3(a)

“Governmental or Regulatory Entities” — Section 3.4

“Indemnified Party” — Section 7.5(a)

“Intellectual Property” — Section 3.22

“Judicial Order” — Section 7.5(d)

“Laws” — Section 3.4

“Legent Clearing” — Recital A

“Licenses” — Section 3.14(b)

“Liens” — Section 3.15(a)

“Litigation” — Section 3.13

“Litigation Claims” — Section 7.2(c)

“Material Adverse Effect” — Section 3.12

“Member” — Introductory Paragraph

“Member Litigation Matters” — Section 3.13

“Member’s Accountants” — Section 2.3(c)(ii)

“Month-End Date” — Section 2.3(a)

“OCC” — Section 6.11

“Orders” — Section 3.4

“Overpayment Refund” — Section 2.2(d)(ii)

“Parent Common Stock” — Section 2.1

“Person” — Section 2.3(b)(i)

“Recent Balance Sheet” — Section 3.5

 

57

 

“Registration Rights Agreement” — Section 2.2(c)

“Regulatory Claims” — Section 7.1(d)

“Release” — Section 6.2

“Restricted Period” — Section 6.1(a)

“Seller Indemnitees” — Section 7.3

“Sellers” — Introductory Paragraph

“Settlement Date” — Section 2.2(d)

“Special Indemnity Claims” — Section 7.1

“Special Tax Claims” — Section 7.2(d)

“Specified Litigation Matters” — Section 3.13

“Subject Shares” — Section 2.1

“Tax” or “Taxes” — Section 3.7(i)(ii)

“Tax Return” — Section 3.7(i)(iii)

“Technology Systems” — Section 3.23(a)

“Third Accounting Firm” — Section 2.3(c)(iii)

“Units” — Recital A

“Waste” — Section 3.14(c)

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first
above written.

	 	 	 	 	 
	 	BUYER:

UNITED WESTERN BANK

 	 
	 	By:  	/s/ James R. Peoples
 	 
	 	 	Name:  	James R. Peoples 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	PARENT:

UNITED WESTERN BANCORP, INC.

 	 
	 	By:  	/s/ Guy A. Gibson
 	 
	 	 	Name:  	Guy A. Gibson 	 
	 	 	Title:  	Chairman of the Board 	 
	 
	 	MEMBER:

LEGENT GROUP, LLC

 	 
	 	By:  	/s/ Henry C. Duques
 	 
	 	 	Name:  	Henry C. Duques 	 
	 	 	Title:  	President 	 
	 
	 	DUQUES:

 	 
	 	/s/ Henry C. Duques
 	 
	 	HENRY C. DUQUES, Individually 	 

[Signature Page to Purchase Agreement]

 

59

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