Exhibit 10.1

FULLY DISCLOSED CLEARING AGREEMENT

AS AMENDED

BETWEEN

RIDGE CLEARING & OUTSOURCING SOLUTIONS, INC.

-and-

HUDSON SECURITIES INC.

This agreement (the “Agreement”), dated as of December 1, 2007, between Ridge
Clearing & Outsourcing Solutions, Inc. (“Ridge”) and Hudson Securities Inc.
(“Correspondent”), sets forth the terms and conditions under which Ridge will
provide execution and clearing services, on a fully disclosed basis, to
Correspondent and its customers. Ridge will provide such services only to the
extent required by this Agreement, and shall not be responsible for any duties
or obligations not specifically allocated to Ridge by this Agreement. Nothing in
this Agreement shall be deemed to delegate to Ridge any regulatory obligation of
Correspondent. The parties agree that the target date for the conversion of
Correspondent onto the Services is April 1, 2008.

I.
APPLICABLE LAWS AND RULES AND APPROVAL BY NYSE

 

 
Throughout the term of this Agreement, each of the parties hereunder shall be
subject to the provisions of federal, state and local laws, rules and
regulations and the constitution, by-laws, rules, regulations and stated
policies of the New York Stock Exchange, Inc. (“NYSE”), and any other securities
exchange or association or regulatory or self-regulatory organization (“SRO”)
vested with authority over the parties and/or the transactions contemplated
hereby, applicable to the parties, as currently in effect or as they may be
hereinafter amended, revised or supplemented (collectively, the “Applicable Laws
and Rules”). To the extent that specific Applicable Laws and Rules are cited in
this Agreement, such individual Applicable Laws and Rules shall also apply as
currently in effect or as they may be hereinafter amended, revised or
supplemented. Correspondent agrees to comply with the NYSE rules cited herein,
as well as comparable SRO provisions (including, without limitation, comparable
NASD rules). In the event that Correspondent is not an NYSE member firm,
Correspondent agrees to comply with the NYSE rules specifically cited herein as
if it were an NYSE member firm. This Agreement will be submitted by Ridge for
approval by the NYSE, and will become effective upon such approval. In the event
that this Agreement is not approved, the parties shall negotiate in good faith
to obtain the requisite approval.

II.
SERVICES

 
A.
Services to be Performed by Ridge

   
Subject to compliance by Correspondent with its obligations under this
Agreement, Ridge will perform the following services:

   
1.
Upon Correspondent’s request, Ridge will execute orders for the proprietary
account(s) of Correspondent (the “Proprietary Accounts”), and the customer
accounts of Correspondent (the “Customer Accounts”), provided such accounts have
been accepted by Ridge (collectively, the “Accounts”), but only insofar as such
orders are transmitted by Correspondent to Ridge or are transmitted by a
customer of Correspondent (“Customer”) to Ridge in accordance with Section V.A.
of this Agreement.

 

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2.
Ridge will prepare and distribute confirmations with respect to transactions in
each of the Customer Accounts in accordance with Section VII.A. of this
Agreement, and Ridge will provide duplicates of such confirmations to
Correspondent.

   
3.
Ridge will prepare and distribute summary monthly statements to Customer
Accounts (or quarterly statements to Customer Accounts if no activity in the
Customer Account occurs during any quarter covered by such statement) in
accordance with Section VII.A. of this Agreement, and Ridge will provide
duplicates of such statements to Correspondent.

   
4.
Ridge will settle contracts and transactions in securities (including options to
buy or sell securities) (a) between Correspondent and other brokers and dealers,
(b) between Correspondent and the Accounts, and (c) between Correspondent and
persons other than the Accounts or other brokers and dealers.

   
5.
Ridge will engage in cashiering functions for the Accounts, including the
receipt, delivery and transfer of securities purchased, sold, borrowed and
loaned; receiving and distributing payment therefore; holding in custody and
safekeeping all securities and payments so received; the handling of margin
accounts, including paying and charging of interest; the receipt and
distribution of dividends and other distributions; and, at the instruction of
the Account, the processing of exchange offers, rights offerings, warrants,
tender offers and redemptions. To the extent that any cashiering functions with
respect to the receipt of securities and the making and receiving of payments
therefor may be relinquished to Correspondent, Correspondent shall have full
responsibility for such functions.

   
6.
Ridge will construct and maintain books and records of all transactions executed
or cleared through it and not specifically assigned to Correspondent pursuant to
the terms of this Agreement (e.g., account opening documentation), including a
daily record of required margin and other information required by the Applicable
Laws and Rules.

   
Any additional services to be performed shall be subject to the mutual agreement
of the parties. Such additional services, if applicable, shall be set forth with
related fees on Schedule A hereto. Schedule A is hereby incorporated in and made
an integral part of this Agreement.

 
B.
Services That Shall Not be Performed by Ridge

   
Unless otherwise agreed to in a writing executed by the parties hereto, Ridge
shall not engage in any of the following services on behalf of Correspondent,
the responsibility for which shall be solely and exclusively that of
Correspondent:

   
1.
Accounting, bookkeeping or recordkeeping, cashiering, or any other services with
respect to commodity transactions, and/or any transaction other than securities
transactions.

   
2.
Preparation of Correspondent’s payroll records, financial statements or any
analysis or review thereof or any recommendations relating thereto.

   
3.
Preparation or issuance of checks in payment of Correspondent’s expenses, other
than expenses incurred by Ridge on behalf of Correspondent pursuant to this
Agreement.

   
4.
Payment of commissions, salaries or other remuneration, or reimbursement of
expenses, to Correspondent’s salespersons or any other employees of
Correspondent.

 
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5.
Preparation and filing of reports with the Securities and Exchange Commission
(the ”SEC”), any state securities commission, any national securities exchange
registered under the Securities Exchange Act of 1934 (the “1934 Act”), or other
securities exchange or securities association or any other regulatory or
self-regulatory body or agency with which Correspondent is associated and/or by
which it is regulated. Ridge will, at the request of Correspondent, furnish
Correspondent with any necessary information and data contained in books and
records kept by Ridge and not otherwise reasonably available to Correspondent if
such information is required in connection with the preparation and filing of
such reports by Correspondent.

   
6.
Making, maintaining and filing reports and records required to be kept by
Correspondent by the Currency and Foreign Transactions Reporting Act of 1970
(the “Currency Act”), and the regulations promulgated thereunder (provided,
however, that the foregoing shall not affect Ridge’s obligations to make,
maintain and file reports and records required to be kept by Ridge by the
Currency Act).

   
7.
Making, maintaining and filing reports and records required of Correspondent by
the Bank Secrecy Act (the “Bank Secrecy Act”), the U.S.A. Patriot Act (the
“Patriot Act”), and the regulations promulgated thereunder, and other Applicable
Laws and Rules relating to anti-money laundering (“AML”) activities, including,
without limitation, (i) currency transaction reports (“CTRs”), (ii) currency or
monetary instrument reports (“CMIRs”), (iii) suspicious activity reports
(“SARs”), and (iv) foreign bank and financial account reports (“FBFARs”)
(provided, however, that the foregoing shall not affect Ridge’s obligations to
make, maintain and file reports and records required of Ridge by the Applicable
Laws and Rules). Notwithstanding the foregoing, Ridge reserves the right,
exercisable in its sole and exclusive discretion, to prepare and file such
reports on behalf of Correspondent. In the event that Ridge undertakes to
prepare or file such reports, Correspondent acknowledges that Ridge does not
assume any reporting responsibilities of Correspondent nor is Correspondent
relieved of any of its reporting obligations.

   
8.
Verification of the name or address of any Account.

   
9.
Verification of the authority of, or changes in the identity or address, of any
person holding any power of attorney over any Account.

   
10.
Verification of the validity of, or proper authorization for, any orders or
instructions received by Ridge from Correspondent or from any Customer in
connection with an Account.

   
11.
Obtaining and verifying new account information, and ensuring that such
information meets the requirements of the Applicable Laws and Rules, including,
without limitation, any requirements of the Bank Secrecy Act, the Patriot Act,
and the regulations promulgated thereunder.

   
12.
Maintaining a record of all personal and financial information concerning any
Account and all orders received by Correspondent therefrom, and maintaining all
documents and agreements executed by any Account.

 
13.
Compliance with the reporting, disclosure and record keeping requirements of the
Employee Retirement Income Security Act of 1974 (“ERISA”), and the regulations
promulgated thereunder.

 
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14.
Compliance by Correspondent with the statutes, rules and regulations
administered by the Office of Foreign Assets Control (“OFAC”), which prohibit,
among other things, engaging in financial transactions with certain sanctioned
or embargoed countries and foreign nationals (provided, however, that the
foregoing shall not affect Ridge’s obligations to comply with the statutes,
rules and regulations administered by OFAC).

 
C.
Exclusive Clearing Arrangement

   
Correspondent agrees that, for the term of this Agreement, all transactions in
all securities, including, without limitation, listed and over-the-counter
equities, fixed income securities, options, and mutual fund shares, shall be
cleared exclusively through Ridge, unless and except to the extent that:
(1) Ridge agrees in writing otherwise; or (2) Ridge has rejected a
proposed Account or has declined to execute or clear a particular transaction in
an Account; and (3) Correspondent currently clears its DVP/RVP institutional
business through Goldman Sachs Execution & Clearing L.P.. In the event that any
transaction is cleared through any other firm, nothing herein shall be construed
as a waiver by Ridge of the foregoing requirement nor an agreement by Ridge to
assume any obligations or liabilities arising from any such transaction.

III.
OPENING AND SUPERVISION OF ACCOUNTS

 
A.
Account Documentation

   
Correspondent shall be solely and exclusively responsible for obtaining,
verifying and maintaining all required information and the identity and address
of each potential Customer, including, without limitation, any customer
identification information required by the Applicable Laws and Rules, including,
without limitation, the Bank Secrecy Act or the Patriot Act, and any
regulation(s) promulgated thereunder. Correspondent shall be responsible for the
maintenance and retention of all account applications, and Correspondent hereby
acknowledges its obligation to retain account applications in an
easily-accessible place in accordance with the Applicable Laws and Rules and
agrees to provide the original application to Ridge by overnight delivery within
48 hours of a request from Ridge. All account documentation shall be on the
forms provided by Ridge for that purpose, or, alternatively, prepared by
Correspondent at its expense and pre-approved in writing by Ridge, in either
case in a format compatible with Ridge’s computerized accounting and records
maintenance systems. In accordance with Ridge’s procedures, Correspondent shall
notify Ridge promptly of any changes or corrections in any information,
instructions or documents previously forwarded to Ridge. Correspondent shall be
solely and exclusively responsible for obtaining, updating, and maintaining
current and correct customer addresses and other customer information, and Ridge
may for all purposes rely, without verification, on the accuracy of such
addresses and all other information and documents furnished by Correspondent to
Ridge regarding any Customer Account. Correspondent shall be solely and
exclusively responsible for complying with the requirements of Rule 15g-9 under
the 1934 Act, if applicable. Correspondent shall also promptly furnish Ridge
with such additional information or documentation as Ridge may request from time
to time.

 
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B.
Knowledge of Customer and

   
Customer’s Investment Objectives

   
Correspondent shall be solely and exclusively responsible through a general
partner, a principal executive officer or a person designated for supervisory
responsibilities to use due diligence to learn the essential facts relative to
every Customer and Account, every order for any Account, and every person
holding power of attorney over any Account, and to supervise diligently all
Accounts and their handling by Correspondent’s registered representatives so as
to be in full compliance with all Applicable Laws and Rules. The preparation or
possession by Ridge for Correspondent of surveillance records, exception reports
or other similar data shall not obligate Ridge to establish policies, practices
or procedures relating to such materials. Correspondent shall be solely and
exclusively responsible for ensuring that the Customers are not minors and do
not otherwise lack the capacity to enter into a contract and are not prohibited
from opening a securities account under the Applicable Laws and Rules.
Correspondent shall implement and enforce policies and procedures reasonably
designed to ensure that (i) the Customer is the individual or entity it
represents itself to be, (ii) the funds and securities in any Account do not
come from a prohibited source under the Applicable Laws and Rules, and (iii) the
Customer or its Customer Account(s) are not established or maintained for a
prohibited purpose under the Applicable Laws and Rules.

 
C.
Acceptance of Accounts

   
Each Customer Account and Proprietary Account accepted and approved by
Correspondent shall be subject to acceptance by Ridge (which shall not be
construed to require any due diligence on the part of Ridge). Correspondent
shall not approve any Customer Account unless all information required in
Section III.A. of this Agreement has been received and due diligence as set
forth in Section III.B. of this Agreement has been performed by Correspondent.
Ridge reserves the right, exercisable in its sole and exclusive discretion,
without prior notice to Correspondent or to the Customer, to reject any account
that Correspondent may offer as an Account, or to terminate any account
previously accepted by it as an Account. Without limiting the generality of any
of the foregoing, Ridge will be under no obligation to accept any Customer
Account as to which any documentation or information required to be submitted to
Ridge or maintained by Correspondent pursuant to Sections III.A. and III.B. of
this Agreement is incomplete. No action taken by Ridge or any of its employees,
including, without limitation, clearing a trade in any Account, shall be deemed
to be or shall constitute acceptance of such Customer Account. Without limiting
the generality of any of the foregoing, in the event that any information or
documentation requested by Ridge regarding a Customer Account is not promptly
provided to Ridge, Ridge may reject or terminate such account as a Customer
Account or refuse to execute or clear any further transactions therein. Ridge
shall endeavor to give prior notice to Correspondent or to the Customer of any
such rejection or termination to the extent practical under the circumstances
and in the event that Ridge does not give such prior notice, it shall promptly
give Correspondent notice after taking such action. If Ridge nevertheless
accepts or continues to execute or clear transactions in such Customer Account,
it shall not be deemed a waiver of Ridge’s right to receive such information or
documentation or to later terminate or refuse to execute or clear transactions
in such Customer Account.

 
D.
Supervision of Orders and Accounts

   
Correspondent shall be solely and exclusively responsible for the conduct and
supervision of the Accounts and all transactions therein and their compliance
with the Applicable Laws and Rules. Correspondent’s responsibilities shall
include, without limitation, the following:

   
1.
selecting, training, and supervising all personnel of Correspondent who open,
approve, authorize or accept orders or transactions in the Accounts;

   
2.
establishing written procedures for the conduct of the Accounts and ongoing
review of all transactions in Accounts, and maintaining qualified compliance and
supervisory personnel to implement such procedures;

   
3.
knowing the investment objectives of each Customer and determining the
suitability of all transactions in the Accounts;

 
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4.
ensuring that there is a reasonable basis for any recommendations made by
Correspondent to Customers;

   
5.
determining the appropriateness of the frequency of trading in an Account;

   
6.
determining that each transaction in an Account has been duly authorized;

   
7.
timely forwarding instructions from the Customer to Ridge, and authenticating
any such instructions;

   
8.
obtaining and maintaining all documents necessary for the performance of
Correspondent’s responsibilities under this Agreement and retaining such
documents in accordance with the Applicable Laws and Rules;

   
9.
complying, to the extent applicable, with the “three quote rule” as set forth by
the NASD when functioning as an executing broker;

   
10.
complying with all “Blue Sky” requirements applicable to Correspondent with
respect to any order or transaction in an Account; and

11.
informing Ridge of the location of the securities which are the subject of any
order transmitted to Ridge for execution so that Ridge may comply with the
Applicable Laws and Rules.

 
E.
The AML Program

1.
Correspondent shall develop, implement and enforce written AML policies and
procedures (the “AML Program”), reasonably designed to ensure compliance with
the requirements of the Applicable Laws and Rules relating to AML, including,
without limitation, the Bank Secrecy Act, the Patriot Act, the regulations
promulgated thereunder, and the statutes, rules and regulations administered by
OFAC. The AML Program shall cover, among other things, (i) the identification
and verification of prospective Accounts (Patriot Act, § 326), (ii) the
identification of the source(s) of funds and securities in prospective Accounts,
(iii) the identification, monitoring and reporting of suspicious activities,
(iv) responses to requests for documents and information from law enforcement
authorities, (v) prohibitions on the opening, maintaining, administering or
managing of accounts on behalf of prohibited entities (such as, for example,
foreign “shell banks”), and (vi) special due diligence procedures for Accounts
involving non-U.S. persons (such as, for example, Accounts held directly or
indirectly by foreign banks). The AML Program shall be developed, implemented
and enforced by a qualified compliance officer designated by Correspondent for
such purposes. The AML Program shall be reviewed and approved in writing by a
member of senior management of Correspondent. Notwithstanding the foregoing,
Ridge reserves the absolute right, without prior notice to Correspondent or to
the Customer, to freeze or block assets in any Account, or terminate any Account
which, in the sole discretion of Ridge, may violate or may cause a violation of
the Bank Secrecy Act, the Patriot Act, or any other AML provision, or statute,
rule or regulation administered by OFAC.

Correspondent shall certify annually to Ridge that it is in compliance with this
Section III.E. and that has implemented and enforced the AML Program.

2.
Ridge acknowledges the following AML obligations under Applicable Laws and
Rules:

 
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a. Anti-Money Laundering Programs
Ridge acknowledges its obligation, to the extent applicable, to establish an AML
program that includes, among other things: (i) the development of internal AML
policies; procedures and controls; (ii) the designation of an AML compliance
officer; (iii) an ongoing AML employee training program; and (iv) an independent
audit function to test the AML program. (Patriot Act, § 352 and SRO rules).

b. Reporting of Suspicious Activities By Securities Brokers and Dealers;
Investment Company Study
Ridge acknowledges its obligation, to the extent applicable, to monitor and
report suspicious activities, and to prepare and submit SARs in accordance with
31 U.S.C. 5318(g). (Patriot Act, § 356).

c. Special Due Diligence for Correspondent Accounts and Private Banking Accounts

i. Ridge acknowledges its obligation, to the extent applicable, to conduct
enhanced due diligence in connection with “correspondent accounts” held by
foreign banks operating under: (i) an offshore banking license; or (ii) a
banking license issued by a foreign country that has been designated as
non-cooperative with international AML principles or procedures by an
intergovernmental group or organization of which the United States is a member,
with which designation the United States representative to the group or
organization concurs, or by the Secretary of the Treasury as warranting special
measures due to AML concerns. This “enhanced due diligence” includes, among
other things, reasonable steps: (i) to ascertain the identity of each of the
owners of the foreign bank, and the nature and extent of the ownership interest
of each such owner; (ii) to conduct enhanced scrutiny of such accounts to guard
against money laundering and report suspicious transactions; and (iii) to
ascertain whether such foreign bank provides correspondent accounts to other
foreign banks and, if so, the identity of those foreign banks and related due
diligence information. (Patriot Act, § 312(a)(2)(A) and (B)).

ii. Ridge acknowledges its obligation, to the extent applicable, to conduct
enhanced due diligence in connection with “private banking accounts” held by
non-United States persons. This “enhanced due diligence” includes, among other
things, reasonable steps: (i) to ascertain the identity of the nominal and
beneficial owner(s) of, and the source of funds deposited into, any “private
banking account” as needed to guard against money laundering and report
suspicious transactions; and (ii) to conduct enhanced scrutiny of any “private
banking account” that is requested or maintained by or on behalf of a senior
political figure, or any immediate family member or close associate of a senior
political figure, that is reasonably designed to detect and report transactions
that may involve the proceeds of foreign corruption. (Patriot Act, §
312(a)(3)(A) and (B)).

d. Forfeiture of Funds in United States Interbank Accounts
Ridge acknowledges its obligation, to the extent applicable, to obtain and
review certifications and re-certifications from each Account held by a foreign
bank that identify: (i) the owner(s) of such foreign bank; and (ii) the name and
address of a person who resides in the United States and is authorized to accept
service of legal process for records regarding the Account. (Patriot Act, § 319
(k)(3)(B)(i)).

e. Prohibition on United States Correspondent Accounts With Foreign Shell Banks 
 
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i. Ridge acknowledges its obligation, to the extent applicable, not to
establish, maintain, administer, or manage any “correspondent account” in the
United States for or on behalf of a foreign bank that does not have a physical
presence in any country (“foreign shell bank”). (Patriot Act, § 313(j)(1)).

ii. Ridge acknowledges its obligation, to the extent applicable, to take
reasonable steps to ensure that any “correspondent account” established,
maintained, administered or managed by Ridge in the United States for or on
behalf of a foreign bank is not being used by that foreign bank to provide
banking services indirectly to a “foreign shell bank”. (Patriot Act, §
313(j)(2)).

f. Special Measures for Jurisdictions, Financial Institutions, or International
Transactions of Primary Money Laundering Concern
Ridge acknowledges its obligation, to the extent applicable, to comply with
special measures imposed by the Secretary of the Treasury for jurisdictions,
financial institutions, and international transactions of primary money
laundering concern. (Patriot Act, § 311).

g. Cooperative Efforts to Deter Money Laundering

i. Ridge acknowledges its obligation, to the extent applicable, to respond to
requests made by the Financial Crimes Enforcement Network (“FINCEN”) on behalf
of a federal law enforcement agency investigating possible terrorist or money
laundering activities. (Patriot Act, § 314(a)).

ii. Ridge acknowledges its obligation, to the extent applicable, to submit
notices to FINCEN concerning the voluntary sharing of information with other
financial institutions relating to individuals, entities, organizations and
countries suspected of possible terrorist or money laundering activities, and to
comply with requirements concerning the confidentiality of such shared
information. (Patriot Act, § 314(b)).

h. Compliance Obligations

i. Ridge acknowledges its obligation, to the extent applicable, to make tools
available to Correspondent (such as, for example, exception reports and
automated systems) to assist Correspondent in complying with its obligation to
monitor and detect possible terrorist, money laundering and related activities.

ii. Ridge acknowledges its obligation, to the extent applicable, to comply with
record-keeping requirements in connection with each of the above obligations.
 

 
F.
Accounts of Employees of Member Organizations, Self-Regulatory Organizations and
Financial Institutions

 
 
In each case in which a Customer is an employee of a member organization, a
self-regulatory organization or financial institution, the approval of which is
necessary to the opening and maintenance of a Customer Account, Correspondent
shall be solely and exclusively responsible for obtaining the approval of such
employer, and otherwise complying with NYSE Rule 407.

 
G.
Soft-Dollar Arrangements

   
Correspondent shall be solely and exclusively responsible for compliance with
the Applicable Laws and Rules applicable to each agreement, arrangement or
understanding, if any, that it may have with any agent exercising any authority
(including, without limitation, investment discretion) over any Account to use
commissions to obtain research or other services (collectively, a “Soft-Dollar
Arrangement”).

 
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H.
Directed-Brokerage Arrangements

   
Correspondent shall be solely and exclusively responsible for compliance with
the Applicable Laws and Rules applicable to each agreement, arrangement or
understanding, if any, that it may have with any Account to rebate any funds,
including, without limitation, any portion of any commission, mark-up,
mark-down, fee or other charge, or to pay the cost of any service or product for
an account, or the expenses of an account (collectively, a “Directed Brokerage
Arrangement”). Correspondent shall use its best efforts to obtain from the
Account an authorization for Ridge to rely on the representations and warranties
of the Account in any Directed-Brokerage Arrangement and to be the direct
beneficiary of the covenants, including, without limitation, any indemnification
provision, in each case in a form acceptable to Ridge.

 
I.
Payment for Order Flow Arrangements

Correspondent shall be solely and exclusively responsible for compliance with
the Applicable Laws and Rules applicable to each agreement, arrangement or
understanding, if any, that it may have with any other broker-dealer to pay for
order flow, or to receive payment for order flow (collectively, a “Payment for
Order Flow Arrangement”), including, without limitation, any disclosure
requirements.

 
J.
Prime Brokerage

   
No Account in connection with which Correspondent is to act as an executing
broker in a prime brokerage arrangement shall be opened without the prior
written authorization of Ridge, which shall not be unreasonably withheld, and
the execution of appropriate documentation by the parties to such arrangement,
including, without limitation, an agreement in substantially the same form as
the Addendum annexed hereto.

 
K.
Customers

   
Each Customer shall remain the customer of Correspondent. Correspondent
acknowledges that Ridge shall not act in the capacity of a fiduciary with
respect to Correspondent or any of its customers. Nothing herein shall cause any
Customer to be construed as or deemed to be a customer of Ridge for any purpose
whatsoever, except that, for the purposes of the Securities Investor Protection
Act and the “financial responsibility” rules of the SEC, Customers shall be
deemed to be customers of Ridge as Correspondent’s clearing firm, but only to
the extent required by the Applicable Laws and Rules.

 
L.
Screening of Accounts

   
Ridge may, in its sole and exclusive discretion, utilize at Correspondent’s
expense (at the charges set forth in Schedule B hereto or as otherwise mutually
agreed by the parties) a third-party service provider to screen Customers and
transactions in the Accounts, and the use thereof shall not relieve
Correspondent of any of its obligations under this Agreement. Correspondent
acknowledges that such screening or the preparation or possession of
surveillance records or any other data (including, without limitation, exception
reports) by Ridge on behalf of or for the use of Correspondent shall not
obligate Ridge to review such material or make Ridge responsible to know their
contents.

 
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M.
Discretionary Accounts

   
Correspondent shall be solely and exclusively responsible for the handling and
supervisory review of any Customer Accounts over which Correspondent’s partners,
officers or employees have discretionary authority, as required by NYSE Rule
408, and any other provisions of the Applicable Laws and Rules. Correspondent
shall furnish Ridge with such documentation with respect thereto as may be
requested by Ridge. Correspondent hereby warrants that with regard to any orders
or instructions given by Correspondent with respect to such discretionary
Customer Accounts, its partners, officers or employees shall have been fully and
properly authorized relative thereto and that the execution of such orders shall
not be in violation of the Applicable Laws and Rules.

 
N.
Option Accounts

   
Before a Customer Account may engage in option trading, Correspondent shall
deliver to Customer a current disclosure statement of the Options Clearing
Corporation, the Special Statement for Uncovered Option Writing, and any
effective amendments or supplements thereto. Correspondent shall obtain the
required signatures on all option agreements, shall obtain proper approval for
the opening of all option accounts, and shall otherwise comply with the
Applicable Laws and Rules applicable to options accounts and options trading.
Correspondent shall deliver to Ridge a copy of a signed option agreement for
each Customer approved by Correspondent for options trading, such agreement to
be in a form acceptable to Ridge.

 
O.
Accounts for Which Agent Holds Power of Attorney

   
Upon the opening of any Customer Account for which an agent holds a power of
attorney on behalf of a principal, Correspondent shall provide Ridge with the
name of each principal for whom such agent is acting and with written evidence
of the agent’s authority to act on the principal’s behalf. Correspondent hereby
warrants that any orders or instructions of such agent which are transmitted to
Ridge pursuant to this Agreement shall have been fully and properly authorized
and that the execution of such instructions or orders shall not violate the
Applicable Laws and Rules.

 
P.
Prospectus Delivery

Correspondent shall be solely and exclusively responsible for delivering, or
causing to be delivered, prospectuses in connection with public offerings of
securities (both initial public and secondary offerings) and sales of mutual
funds; provided, however, that, at the request of Correspondent, Ridge will
assist Correspondent in mailing prospectuses that are delivered to Ridge in a
timely fashion.

Q.
Proprietary Accounts of Correspondent

In accordance with the SEC Net Capital Rule (Rule 15c3-1) and for the purposes
of the Securities Investor Protection Act and the SEC’s financial responsibility
rules, Correspondent will be treated as a client of Ridge.
Account statements of activity for Correspondent’s Accounts are issued and
forwarded to Correspondent directly by Ridge.
This Section of the Agreement is in conformity with the SEC No-Action Letter,
dated November 3, 1998 (“No-Action Letter”) relating to the capital treatment of
assets in the proprietary account of an introducing broker (“PAIB”) and to
permit Correspondent to use PAIB assets in its net capital computations.
Correspondent shall identify to Ridge in writing all accounts that are, or from
time to time may be, proprietary accounts of Correspondent. Ridge shall perform
a computation for PAIB assets (“PAIB Reserve Computation”) of Correspondent in
accordance with the customer reserve computation set forth in Rule 15c3-3
(“customer reserve formula”) with the following modifications:
 
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(a) Any credit (including a credit applied to reduce a debit) that is included
in the customer reserve formula may not be included as a credit in the PAIB
reserve computation;
(b) Note E(3) to Rule 15c3-3a which reduces debit balances by 1% under the basic
method and subparagraph (a)(1)(ii)(A) of the net capital rule which reduces
debit balances by 3% under the alternative method shall not apply; and
(c) Neither Note E(1) to Rule 15c3-3a nor NYSE Interpretation /04 to Item 10 of
Rule 15c3-3a regarding securities concentration charges shall be applicable to
the PAIB reserve computation.
The PAIB reserve computation shall include all proprietary accounts of
Correspondent. All PAIB assets shall be kept separate and distinct from customer
assets under the customer reserve formula in Rule 15c3-3.
The PAIB reserve computation shall be prepared within the same time frames as
those prescribed by Rule 15c3-3 for the customer reserve formula.
Ridge shall establish and maintain a separate “Special Reserve Account for the
Exclusive Benefit of Customers” with a bank in conformity with the standards of
paragraph (f) of Rule 15c3-3 (“PAIB Reserve Account”). Cash and/or qualified
securities as defined in the customer reserve formula shall be maintained in the
PAIB Reserve Account in an amount equal to the PAIB reserve requirement.
If the PAIB reserve computation results in a deposit requirement, the
requirement may be satisfied to the extent of any excess debit in the customer
reserve formula of the same date. However, a deposit requirement resulting from
the customer reserve formula shall not be satisfied with excess debits from the
PAIB reserve computation.
Within two business days of entering into this PAIB Agreement, Correspondent
shall notify its designated examining authority in writing (with copy to Ridge)
that it has entered into this PAIB Agreement.
Commissions receivable and other receivables of Correspondent from Ridge
(excluding clearing deposits) that are otherwise allowable assets under the net
capital rule may not be included in the PAIB reserve computation, provided the
amounts have been clearly identified as receivables on the books and records of
Correspondent and as payables on the books of Ridge.
If Correspondent is a guaranteed subsidiary of Ridge or if Correspondent
guarantees Ridge (i.e., guarantees all liabilities and obligations) then the
proprietary account of Correspondent shall be excluded from the PAIB Reserve
Computation.
Upon discovery that any deposit made to the PAIB Reserve Account did not satisfy
its deposit requirement, Ridge shall by facsimile or telegram immediately notify
its designated examining authority and the Securities and Exchange Commission
(“Commission”). Unless a corrective plan is found acceptable by the Commission
and the designated examining authority, Ridge shall provide written notification
within 5 business days of the date of discovery to Correspondent that PAIB
assets held by Ridge shall not be deemed allowable assets for net capital
purposes. The notification shall also state that if Correspondent wishes to
continue to count its PAIB assets as allowable, it has until the last business
day of the month following the month in which the notification was made to
transfer all PAIB assets to another clearing broker. However, if the deposit
deficiency is remedied before the time at which Correspondent must transfer its
PAIB assets to another clearing broker, the Correspondent may choose to keep its
assets at Ridge.
The parties shall adhere to the terms of the No-Action Letter (a copy of which
is attached hereto as Exhibit B and which is hereby incorporated by reference),
including the Interpretations set forth therein, in all respects.
 
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IV.
EXTENSION OF CREDIT

A.
Margin Agreement

Prior to the execution or clearance of any margin transaction in an Account,
Correspondent shall obtain and provide Ridge with a margin agreement,
hypothecation agreement and consent to loan of securities (collectively, “margin
agreement”) executed by the Customer (or, in the case of any Proprietary
Account, executed by Correspondent), such agreement to be in a form acceptable
to Ridge. Ridge shall have all rights and remedies set forth in such margin
agreement, in addition to those set forth in this Agreement, with respect to
Accounts which are margin accounts. All transactions in an Account shall be
considered cash transactions until Ridge has determined, in its sole and
exclusive discretion, to accept margin transactions therein and the duly
executed margin agreement has been received by Ridge. Ridge may cancel and
rebook as a cash transaction any margin transaction for an Account for which no
such executed margin agreement has been received prior to settlement date, and
all transaction costs associated with each such cancellation and rebooking shall
be borne in their entirety by Correspondent. Correspondent shall be responsible
for compliance with Rule 10b-16 under the 1934 Act. Correspondent shall obtain
in advance of dissemination the written approval of Ridge of any document to be
provided to Customers in connection with Rule 10b-16 under the 1934 Act.

B.
Margin Requirements

   
Correspondent shall be solely and exclusively responsible to Ridge for the
collection of initial margin and for maintenance at all times of margin in each
Account sufficient to ensure compliance with Regulation T, promulgated by the
Board of Governors of the Federal Reserve System pursuant to the 1934 Act, and
any interpretations thereof, with any other margin or margin maintenance rules
under the Applicable Laws and Rules, and with Ridge’s house margin rules. After
initial margin has been received, maintenance margin calls shall be generated by
Ridge and made by Ridge or by Correspondent at the instructions of Ridge.

   
Correspondent understands and acknowledges that Accounts shall be subject to any
house rules of Ridge requiring initial margin or maintenance margin in amounts
greater than would otherwise be required under Regulation T or any other
provisions of the Applicable Laws and Rules. Ridge may at any time, in its sole
and exclusive discretion, change its house margin requirements as they pertain
to any Account or class of accounts or specific securities or class of
securities, including, without limitation, in response to market conditions and
periods of extreme volatility. Such changes shall be effective immediately upon
the provision of oral notice to Correspondent. Correspondent shall be solely and
exclusively responsible for advising the Customers of any such changes and for
the prompt collection of any additional margin necessary to ensure compliance
therewith.

C.
Interest on Margin Accounts

   
Ridge will charge interest on Accounts that are margin accounts in accordance
with the margin agreements applicable to such Accounts, provided that such
interest and other charges will not exceed amounts that may be charged under the
Applicable Laws and Rules. Ridge may at any time, in its sole and exclusive
discretion, revise its credit terms and conditions.

 
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V.
TRANSMISSION, ACCEPTANCE AND EXECUTION OF ORDERS

 
A.
Transmission of Orders

   
All orders in Accounts shall be transmitted to Ridge by Correspondent in
accordance with such procedures as Ridge may implement from time to time for
that purpose. Customers shall not place orders directly with Ridge.
Notwithstanding the foregoing, Ridge may, in its sole and exclusive discretion,
on a case-by-case basis, make exception and agree to accept orders directly from
a particular Customer or Account at the request of a Correspondent; provided,
however, that in doing so Ridge shall not assume or be deemed to have assumed
any of the responsibilities for supervision of Accounts allocated to
Correspondent under this Agreement. Ridge shall have no duty of inquiry or
investigation with respect to any orders transmitted to it for execution or
clearance. Correspondent shall be responsible for the timely and accurate
transmission of all orders to Ridge, as well as for any errors or discrepancies
therein.

 
B.
Acceptance of Orders

   
Orders accepted by Ridge for execution and clearance shall be executed and
cleared in accordance with Ridge’s standard practices and the Applicable Laws
and Rules. Ridge reserves the right, exercisable in its sole and exclusive
discretion, without prior notice to Correspondent or to the Customer, to reject
for execution and clearance any orders or trades which exceed established limits
or are otherwise unacceptable to Ridge due to such factors as adverse market
conditions, assumptions regarding the volatility and liquidity of the subject
securities, current market price, the financial condition or credit worthiness
of Correspondent or of the Customer, any regulatory issues relating to
Correspondent or the Customer, or for any reason whatsoever which, in the sole
and exclusive discretion of Ridge, renders it advisable to reject an order or
trade. Ridge also reserves the right, exercisable in its sole and exclusive
discretion, to restrict trading in Accounts in any manner, including, but not
limited to, restricting trading to liquidating orders only or cash transactions
only, or to prohibit certain trading strategies or trading of certain types of
securities.

 
C.
Over-the-Counter Transactions

   
For all over-the-counter transactions, Correspondent shall furnish Ridge with
the names of the respective purchasing and selling broker-dealers (except as
otherwise provided in Section V.D. of this Agreement), and the wholesale and
retail purchase and sale prices necessary for confirmation in accordance with
the Applicable Laws and Rules.

 
D.
Designation of Contra Brokers

   
Whenever Correspondent directs Ridge to route an order to a particular broker,
dealer, or market for execution, including, without limitation, designating the
contra broker in an over-the-counter transaction for an Account, Correspondent
shall be responsible to Ridge for all aspects of the transaction, including,
without limitation, any duty of best execution or any failure by such contra
broker or dealer to settle the transaction for any reason whatsoever, and
Correspondent shall immediately reimburse Ridge for any loss, liability, claim,
cost or expense, in each case as incurred, including, but not limited to,
attorneys’ fees and expenses incurred or sustained by Ridge in connection
therewith.

 
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E.
Short Sales

   
Correspondent shall be solely and exclusively responsible for determining and
advising Ridge whether each order for the sale of securities for an Account is
“long” or “short” within the meaning of the Applicable Laws and Rules.
Correspondent shall also be solely and exclusively responsible for ensuring that
each short sale for an Account complies with Rule 10a-1 under the 1934 Act, NYSE
Rule 440B, all provisions relating to short sales under NASD rules, and the
interpretations of such rules, and any other applicable provisions of the
Applicable Laws and Rules regarding short sales.

 
F.
Low Priced/Penny Stocks

Ridge shall not be required to execute orders in any securities that are not
“reported securities,” as defined in SEC Rule 3a51-1. Correspondent shall not
accept orders for transactions in securities that do not meet such criteria
without the prior written consent of Ridge, and the disclosure requirements of
SEC Rule 3a51-1 do not apply.

 
G.
Order Limits; Position and Credit Limits

   
Correspondent shall be responsible for maintaining continuing familiarity and
compliance with all limits on order size and all position and credit limits
which have been or may be established by Ridge with respect to transactions in
the Accounts, which limits may be changed from time to time by Ridge in its sole
and exclusive discretion. Correspondent agrees to notify Ridge and obtain its
approval prior to the entry of any trade in an Account which would exceed such
limits.

 
H.
Delivery Versus Payment

   
Correspondent agrees to comply with NYSE Rule 226 by ensuring that its Customers
utilize the facilities of a securities depository for the confirmation,
acknowledgment, and book entry settlement of all depository eligible
transactions in connection with delivery versus payment transactions.
Correspondent shall be solely and exclusively responsible for causing any
Customers engaging in such transactions to utilize such facilities.
Correspondent further agrees to ensure that its Customers shall provide their
agent with instructions in accordance with the requirements set forth in NASD
Rule 11860.

 
I.
Buy-Ins and Sell-Outs; Interest Charges

     

   
Upon the failure of any Customer (or, in the case of Proprietary Accounts,
Correspondent) to make timely payment for securities purchased or timely and
good delivery of securities sold, or the failure timely to comply with any
applicable margin requirements, Ridge will be entitled, but not obligated, to
take such remedial action, or direct Correspondent to take such remedial action,
as Ridge, in its sole and exclusive discretion, deems appropriate, including,
but not limited to, executing buy-ins or sell-outs for an Account. Checks shall
not constitute payment until they have cleared and the proceeds have been
collected by Ridge’s bank and credited to Ridge. The taking or not taking of any
such remedial action by Ridge shall not in any way affect or diminish
Correspondent’s indemnification, reimbursement, or payment obligations pursuant
to this Agreement.

 
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To the extent permitted by Regulation T, Rule 15c3-3(m) under the 1934 Act, or
any other provisions of the Applicable Laws and Rules, Correspondent may
request, in a writing signed by an officer, partner or principal of
Correspondent, that Ridge defer a buy-in or sell-out for an Account. The grant
or denial, in whole or in part, of any such request to defer a buy-in or
sell-out, or of any application for an extension of time for any Account to make
any payment required by Regulation T or any other provision of the Laws or
Rules, shall remain within the sole and exclusive discretion of Ridge.
Correspondent shall be liable to Ridge for any loss or expense incurred by Ridge
in connection with such request, whether or not granted.

   
Ridge may, at its option, charge Customers (or, in the case of Proprietary
Accounts, Correspondent) interest at the rate of 2% above the broker’s call
rate, or such other rate as may be agreed in writing by Correspondent and Ridge,
arising from any debit in an Account however arising, including, without
limitation, for late payments or deliveries of securities. Correspondent shall
be liable to Ridge for such charges to the extent not paid by Customers.

 
J.
Option Assignments, Tender Offers, and Rights Offerings

   
Ridge will process option assignments, tender offers, and rights offerings only
in accordance with the written instructions of Correspondent or the Customer.

   
Ridge may, in its sole and exclusive discretion, buy back in the cash market or
borrow shares on the day Ridge is notified of option assignments affecting
shares which have been tendered and which have caused short positions in
Accounts as of either the proration or withdrawal date. Shares purchased for
cash or borrowed shall not be considered part of an Account’s tendered position
until such shares are in Ridge’s actual possession. Ridge will reduce the tender
for Accounts by the size of the short or unreceived shares.

   
During a tender period in which there are competing and counter tender offers
for a security, Ridge will tender only upon the written instructions of
Correspondent or the Customer and only on a trade date basis the number of
shares net long in the Account as of either the proration or withdrawal date,
which number shall, at Ridge’s request, be confirmed in writing by
Correspondent. Correspondent shall be solely and exclusively responsible for
ensuring that such tender is being made upon the instructions of persons
authorized to direct the disposition of the shares and, at Ridge’s request,
shall confirm it in writing.

   
In connection with a rights offering, Ridge will exercise rights only upon the
written instructions of Correspondent or the Customer and only on a trade date
basis the number of rights relating to shares net long in the Account, which
number shall, at Ridge’s request, be confirmed in writing by Correspondent.
Correspondent shall be solely and exclusively responsible for ensuring that such
exercise is being made upon the instructions of persons authorized to do so and,
at Ridge’s request, shall confirm it in writing.

K.
Options Policy

At Ridge it is the policy that no uncovered (“naked”) index options orders are
to be entered on behalf of any client or correspondent. In addition, all option
orders are required to be designated as opening or closing, whichever term
applies. Correspondent is responsible for ensuring compliance with this policy
and will be liable for the consequences of any violations, including, but not
limited to, any damages caused. Ridge may terminate this Agreement in the event
that you fail to comply with this policy.

 
L.
Participation in Underwritings / Special Requirements

You agree to the following procedures which must be complied with in order to
participate in Initial Public Offerings (IPO’s) either as a Manager or a Co -
Manager:
 
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i.) Approval must be granted in advance of any such participation in an
underwriting. Such approval shall not be unreasonably withheld by Ridge.
 
ii.) At the very earliest, a preliminary prospectus (“Red Herring”) must be
forwarded to Ridge’s Risk Manager together with details concerning the size of
your commitment, expected price and the names of all brokerage firms which are
known to be participants.
 
iii.) In order to participate and takedown shares in an underwriting, you as the
Correspondent must have at least $250,000 in net capital. Your Good Faith
Deposit must be increased so that it will represent no less than the greater of
30% of your commitment (take-down) and the equivalent capital requirement of the
applicable SRO with respect to such transaction.
 
iv.) You must indicate whether or not you intend to be a market maker in the
secondary market with respect to the securities which are part of the public
distribution.
 
v.) You are not to proceed with such IPO participation unless and until the Risk
Manager of Ridge has specifically granted his approval and indicated the size of
the commitment granted. Such approvals must be received either by fax or wire
and they are to be retained as part of your records.

Any requests for exceptions to the above, must be submitted in writing with all
pertinent details included to Ridge’s Risk Manager.

 
M.
Execution Away

In the event you execute your own orders and give Ridge’s name to the other
broker for clearance and settlement, you agree that you will only execute bona
fide orders or request free delivery of cash or securities where you have
reasonable grounds to believe that the Account and the other broker have the
financial capability to complete the transaction. Ridge reserves the right at
any time to place a limit (of either dollars or number of securities) on the
size of transactions that Ridge in these circumstances will accept for
clearance. If, after you have received notice of such limitation, you execute an
order in excess of the limit established by Ridge, Ridge shall have the right to
notify the other party and other broker that it will not accept the transaction
for clearance and settlement. In the event any claim is asserted against Ridge
by the other broker because of such action by Ridge, you agree to indemnify and
hold Ridge harmless from any loss, liability, damage, cost or expense (including
but not limited to fees and expenses of legal counsel) arising directly or
indirectly therefrom.

In the event you execute orders away from Ridge, Ridge will on a best efforts
basis attempt to clear the transaction within a reasonable period and utilize
the same procedures it utilizes when clearing transactions on behalf of other
firms clearing through Ridge. If either you or the other broker for any reason
whatsoever fail to settle the transaction, you will be solely liable to Ridge
for any and all loss, including expenses caused thereby and Ridge shall have no
liability to you whatsoever in any such circumstance. You further agree to take
all appropriate capital charges on your books arising out of or incurred in
connection with your executing orders away from Ridge.

Notwithstanding the foregoing, option transactions shall be executed on behalf
of Customers and Accounts solely and exclusively by Ridge.
 
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VI.
RECEIPT AND DELIVERY OF FUNDS AND SECURITIES

 
A.
Receipt and Delivery in the Ordinary Course of Business

   
Ridge will receive and deliver funds and securities for Accounts in accordance
with Correspondent’s written instructions to Ridge, provided that Correspondent
shall be responsible for advising Customers of their obligations to deliver
funds or securities in connection with each transaction in an Account and shall
be responsible for any failure by a Customer to satisfy such obligations.
Correspondent agrees promptly to deliver to Ridge any and all funds or
securities received by Correspondent from Customers, together with such
information as may be relevant or necessary to enable Ridge properly to record
such deliveries in the appropriate Accounts. Ridge will be responsible for the
safeguarding of all funds and securities actually received and accepted by
Ridge, subject to count and verification by Ridge.  Ridge shall not be
responsible for any funds or securities delivered by a Customer to Correspondent
or its agents or employees until such funds or securities are physically
delivered to and accepted by Ridge at its premises or deposited in Ridge’s bank
accounts. It is expressly understood and agreed, however, that Correspondent
shall be responsible for compliance with the Currency Act, and the regulations
promulgated thereunder. Ridge reserves the right to reject any funds or
securities, without prior notice to Correspondent or to the Customer, that it
determines, in its sole and exclusive discretion, may violate or cause a
violation of the Applicable Laws and Rules, including, without limitation, the
Bank Secrecy Act, the Patriot Act, and the regulations promulgated thereunder.

 
B.
Lost, Stolen or Forged Securities

   
Correspondent shall be responsible for any defect in title to any securities
purchased, sold, borrowed, delivered or transferred under this Agreement which
may have been forged, counterfeited, altered, lost, stolen, or the subject of
any similar occurrence or act.

 
C.
Custody Services

   
Whenever Ridge has agreed in writing to act as custodian of securities in any
Account, or to hold securities in “safekeeping”, Ridge may hold the securities
in the Customer’s name (“Customer Name Securities”), or may cause such
securities to be registered in the name of Ridge or its nominee or in the names
or nominees of any depository used by Ridge. In connection with Customer Name
Securities, Ridge will have no responsibility for, among other things,
collecting and paying of dividends, transmitting and handling tenders or
exchanges pursuant to tender offers and exchange offers, transmitting proxy
materials and other shareholder communications, and handling exercises or
expirations of rights and warrants or redemptions.

 
D.
Receipt and Delivery Pursuant to Special Instructions

   
Upon special instructions from Correspondent or from a Customer, Ridge will
endeavor to make such transfers of securities or Accounts as may be requested,
consistent with the Applicable Laws and Rules. Any such special instructions
shall be in writing.

 
E.
Restricted or Control Securities

   
Correspondent shall be solely and exclusively responsible for determining
whether any securities in Accounts are restricted and/or control securities
within the meaning of Rule 144 under the 1933 Act, and for ensuring that any
transactions in such securities are in compliance with the Applicable Laws and
Rules. Prior to the time an order in such securities is transmitted to Ridge,
Correspondent shall notify Ridge and Ridge may, in its sole and exclusive
discretion, charge such reasonable fees, in addition to the clearing charges
described below, as it deems appropriate for handling such transactions.

 
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VII.
CONFIRMATIONS AND STATEMENTS

 
A.
Preparation and Transmission

In the case of Customer Accounts, Ridge will prepare and mail confirmations and
monthly or quarterly statements of account to Customers in connection with
transactions executed or cleared through Ridge. Confirmations and statements of
account shall disclose that the Accounts are carried on a fully-disclosed basis
for Correspondent. Correspondent acknowledges that such confirmations shall be
prepared and delivered on Correspondent’s behalf and at its direction, and that
such confirmations shall remain, for all purposes, the confirmations of
Correspondent. Correspondent further acknowledges that it shall have sole and
exclusive responsibility for information that it provides or fails to provide
for disclosure on confirmations and monthly or quarterly statements.
Accordingly, Correspondent shall provide in writing to Ridge any information
required by the Applicable Laws and Rules to be disclosed in its confirmations
and monthly and quarterly statements, including, without limitation, information
required in connection with any Directed-Brokerage Arrangement or Payment for
Order Flow Arrangement. Correspondent shall review and approve in writing the
form of confirmations and monthly and quarterly statements of account prior to
their use. Ridge will provide Correspondent with copies of all confirmations
and statements sent by Ridge to Customers in connection with the Accounts.
Correspondent shall not prepare or transmit confirmations or periodic account
statements to Customers without the prior written consent of Ridge.

 
B.
Examination and Notification of Errors

   
Correspondent shall examine promptly all confirmations, comparisons, monthly and
quarterly statements of account, the Reconciliation Statements (as defined in
Section IX.C. of this Agreement), and any other statements or reports provided
to Correspondent by Ridge or its clearing agency. Confirmations and comparisons
shall be deemed accurate and correct, and Correspondent shall be deemed to have
waived any claim with respect to the accuracy or correctness of the information
therein, unless Correspondent notifies Ridge in writing of any alleged errors or
discrepancies within twenty (20) business days of receipt of the applicable
confirmation. Monthly and quarterly statements of account shall be deemed
accurate and correct, and Correspondent shall be deemed to have waived any claim
with respect to the accuracy or correctness of the information therein, unless
Correspondent notifies Ridge in writing of any alleged errors or discrepancies
within twenty (20) business days of receipt. Any notice of error shall be
accompanied by such documentation as may be necessary to substantiate
Correspondent’s claim. At the request of Ridge, Correspondent promptly shall
provide any additional documentation or information Ridge reasonably believes is
necessary or desirable to substantiate and correct any such alleged error or
discrepancy.

 
C.
Notations on Confirmations, Monthly and Quarterly Statements, and Notices 

   
Ridge will make reasonable efforts to indicate on confirmations, monthly and
quarterly statements, and notices to Customers that Customers are customers of
Correspondents or are introduced by Correspondent. Occasional or inadvertent
omission of such notations shall not be deemed to constitute a breach of this
Agreement, and shall not affect the allocation of responsibilities between Ridge
and Correspondent pursuant to this Agreement.

 
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VIII.
BOOKS AND RECORDS

 
Ridge will prepare and maintain stock records and other prescribed books and
records of the services performed and transactions effected by Ridge for the
Accounts on a basis consistent with generally accepted practices in the
securities industry and with the Applicable Laws and Rules governing clearing
brokers. Such books and records will include, without limitation, records of
daily margin requirements as required by NYSE Rule 432. Ridge reserves the
right, at its sole and exclusive discretion, to amend its policies with respect
to the retention of reports requested by or provided to Correspondent. Any
reports relating to the Accounts that, under the Applicable Laws and Rules, are
required to be prepared and filed with the SEC or any other regulatory or
self-regulatory organization by Correspondent or Ridge shall remain the
responsibility of the respective parties, and Ridge and Correspondent each
agrees promptly to provide the other with any information in its possession
necessary to enable the other to prepare and file any such reports.

IX.
COMMISSIONS AND CLEARING FEES

 
A.
Commissions

   
Correspondent shall be solely and exclusively responsible for determining the
amount of commissions, mark-ups and similar fees charged by Correspondent
(collectively, “Commissions”) for transactions in the Customer Accounts, and
Ridge shall not exercise any control or influence over the amount of such
Commissions. Correspondent shall be solely and exclusively responsible for
compliance with the Applicable Laws and Rules relating to commissions,
including, but not limited to, any disclosures to Customers or others required
to be made in connection therewith. On or before the execution of this
Agreement, Correspondent shall have provided Ridge with a schedule (the
“Commission Schedule”) showing the amounts of Commissions to be charged to
Customers. Correspondent may amend the Commission Schedule from time to time by
written instructions to Ridge. Ridge will debit and collect from Customer
Accounts the amounts shown on the Commission Schedule, but Ridge will be
required to implement any amendments to the Commission Schedule only to the
extent and over such time as is within the normal capabilities of Ridge’s data
processing and operations systems. Notwithstanding anything herein to the
contrary, Ridge shall not be obligated to charge Customers any amounts that it
believes violate the Applicable Laws and Rules, but Ridge will have no
obligation to determine whether any such charges violate the Applicable Laws and
Rules.

 
B.
Clearing Fees

   
Correspondent agrees to pay Ridge the clearing fees and other amounts set forth
in Schedule B hereto for the execution, clearing and related services to be
provided under this Agreement. Schedule B is hereby incorporated in and made an
integral part of this Agreement.

 
C.
Collection and Remittance of Commissions

   
On behalf of Correspondent, Ridge will collect all Commissions paid by Customer
Accounts and will deduct and retain the following amounts from such Commissions:

   
1.
all amounts payable to Ridge in accordance with Schedule B and any amendments
thereto;

   
2.
any expenses payable by Ridge on Correspondent’s behalf;

 
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3.
any loss, liability, damage, claim, cost or expense (including, but not limited
to, attorneys’ fees and expenses), as incurred, in respect of which any Ridge
Indemnitee (as defined below) is entitled to indemnification by Correspondent
under this Agreement; and

   
4.
all other amounts owed by Correspondent or by any Customer to Ridge pursuant to
this Agreement or any other agreement between Ridge and Correspondent or between
Ridge and any Customer (including, without limitation, Customers’ unsecured
debit items or unsecured or partially secured short positions).

   
As soon as practicable after the end of each month, Ridge will credit the
Settlement Deposit Account (as defined in Section X.B. of this Agreement) with
the amount of Commissions collected by Ridge on Correspondent’s behalf, net of
all amounts to be deducted as set forth above and any other amounts due to Ridge
from Correspondent, however arising, as determined by Ridge. If the amount due
to Ridge in any month exceeds the amount available in Correspondent’s Settlement
Deposit Account, Correspondent shall, in accordance with the provisions of
Section X.A. of this Agreement, immediately deposit with Ridge additional cash
so that the Settlement Deposit Account shall always have a zero or credit
balance. If Correspondent fails to make such additional deposit, Ridge will have
full rights of setoff, including, without limitation, the right to charge any
other Account maintained by Ridge for Correspondent or any other assets of
Correspondent held by Ridge, including, but not limited to, the Security Deposit
(as defined in Section X.B. of this Agreement) and positions and balances in
Accounts which are proprietary accounts of Correspondent, for the net amount due
Ridge. If Ridge elects not to charge such other Accounts or assets, or such
assets are insufficient to discharge the net amount due to Ridge, any amount due
to Ridge will be paid to Ridge by Correspondent by check within twenty (20) days
of Correspondent’s receipt of a statement (the “Reconciliation Statement”)
showing the amount due to Ridge. If Ridge does not receive payment within such
period, Ridge will charge Correspondent interest at 2% above the broker’s call
rate, or such other rate as may be agreed in writing by Ridge and Correspondent
until paid. Any failure by Ridge to charge the Settlement Deposit Account or any
other Account or assets of Correspondent held by Ridge shall not act as a waiver
of Ridge’s right to demand payment of, or to charge Correspondent’s Accounts
for, the full amount due at any time.

X.
SECURITY FOR OBLIGATIONS OF CORRESPONDENT 

 
A.
Lien and Security Interest

   
In order to secure the performance by Correspondent of all of its obligations
under this Agreement, including, but not limited to, its liability to Ridge for
any failures by Customers timely to pay for or deliver securities purchased or
sold and for any losses resulting from unsecured debit balances or short
positions in Accounts, Correspondent hereby grants Ridge a continuing lien,
security interest in and right of setoff against (a) the Settlement Deposit
Account and the Security Deposit (as such terms are defined below), (b) any
Proprietary Accounts, and (c) any Commissions, funds, securities or other
property of Correspondent held by Ridge. Correspondent further agrees that Ridge
may debit any cash balances and/or liquidate any securities held in the
Settlement Deposit Account or in any Proprietary Account and credit the proceeds
to Ridge in such amounts as are necessary to satisfy Correspondent’s obligations
under this Agreement and at such times as Ridge, in its sole and exclusive
discretion, deems appropriate. The lien, security interest and right of setoff
created hereunder shall survive the termination of this Agreement until such
time as, in the sole and exclusive discretion of Ridge, security for the
performance of Correspondent’s obligations is no longer required.

 
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B.
Settlement Deposit Account and Security Deposit

   
On or before the execution of this Agreement, Correspondent shall have
established an account (the “Settlement Deposit Account”) with Ridge. The
Settlement Deposit Account shall at all times contain cash and/or securities
issued or guaranteed as to principal and interest by the United States (“U.S.
Government Securities”) having an aggregate present valueas set forth in
Schedule B (the “Security Deposit”). Ridge reserves the right, in its sole and
exclusive discretion, on written notice to Correspondent, at any time, to
increase the amount of the Security Deposit required to be maintained by
Correspondent. Correspondent shall immediately transfer to the Settlement
Deposit Account sufficient cash and/or U.S. Government Securities to satisfy the
increased amount of the Security Deposit. If Correspondent fails to transfer
such additional cash or U.S. Government Securities to the Settlement Deposit
Account, or if, for any other reason, including, but not limited to, the
exercise of any right of setoff pursuant to Section X.A. of this Agreement, the
aggregate value of cash and U.S. Government Securities in the Settlement Deposit
Account is less than the Security Deposit amount then in effect, Ridge will be
entitled to deposit in the Settlement Deposit Account such Commissions, funds,
securities or other property of Correspondent in Ridge’s possession as are
necessary to satisfy the deficiency. No later than thirty (30) days after
termination of this Agreement, Ridge shall refund all cash or securities in the
Settlement Deposit Account except for (i) deductions on account of (a) all
clearing and other charges, costs, or expenses due Ridge in accordance with the
terms of this Agreement, including any minimum monthly fee set forth on Schedule
B to the extent applicable; (b) all charges payable by Ridge on your account;
and (c) all amounts due Ridge from you under this Agreement including amounts
arising from any losses, liabilities, or damages in accordance with the terms
hereof and (ii) amounts held back as determined by Ridge, in the reasonable
exercise of its discretion, to be necessary to protect itself fully against any
liabilities, costs, or expenses (whether mature or contingent, liquidated or
unliquidated) for which Correspondent may be responsible under the terms of this
Agreement (without limiting the foregoing, amounts held back may include
reasonable amounts on account of transactions in respect of Customer Accounts
that have settled for ten days or less and on account of margin accounts of your
Customers or other Customer Accounts having a debit balance, other than accounts
that Correspondent has agreed in writing to accept).

 
C.
Funds, Securities and No Interest

   
All funds transferred to the Settlement Deposit Account shall be in immediately
available United States funds. All securities transferred to the Settlement
Deposit Account (a) shall be in suitable form for transfer or shall be
accompanied by duly executed instruments of transfer or assignment in blank and
such other documentation as Ridge may request, and (b) shall be transferred on
the book-entry system of a Federal Reserve Bank, or by any other method
acceptable to Ridge. Ridge shall not be obligated to pay interest to
Correspondent on any cash held in the Settlement Deposit Account. Neither the
Security Deposit nor the Settlement Deposit Account shall be deemed to be margin
for any Account, nor shall they give rise to or constitute an ownership interest
in Ridge.

 
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XI.
INFORMATION TO BE SUPPLIED BY CORRESPONDENT

 
A.
Financial Statements and Other Reports

   
On or before the execution of this Agreement, Correspondent shall have supplied
Ridge with copies of its most recent audited annual financial statements and its
most recent unaudited quarterly financial statements. Throughout the term of
this Agreement, Correspondent shall, within five (5) business days after their
preparation, continue to provide Ridge with copies of its audited annual and
unaudited quarterly financial statements, together with any amendments thereto,
for each subsequent fiscal year and quarterly period. Correspondent shall advise
Ridge in writing of any material errors in or omissions in such financial
statements, or of any material adverse change in its financial condition or
business prospects, immediately upon becoming aware of such error, omission or
change. In addition, simultaneously with their filing, Correspondent shall
supply Ridge with copies of all financial information and reports filed by
Correspondent with the SEC, NYSE, NASD, and any other national securities
exchange or association of which it is a member, including, but not limited to,
its monthly and quarterly Financial and Operational Combined Uniform Single
(“FOCUS”) Reports, any amendment or supplement to its Form BD, and any reports
on Form U-4 or Form U-5 relating to Correspondent’s principals, together with
any amendments or supplements to any of the foregoing information or reports.
Correspondent shall advise Ridge in writing of any material errors in or
omissions in such financial information and reports. Correspondent shall provide
immediate oral and written notice to Ridge in the event that Correspondent’s
capital becomes subject to the “early warning” provisions of SEC Rule 17a-11.

 
B.
Suspension or Restriction

   
In the event that Correspondent learns that Correspondent or any of its
employees becomes subject to revocation, suspension, bar, injunction,
restriction, censure, consent decree, cease-and-desist order, or other formal
disciplinary action by the SEC, NYSE, NASD, or any other regulatory or
governmental body having jurisdiction over Correspondent or such employee,
Correspondent shall notify Ridge immediately and, in addition to such other
rights and remedies as Ridge may have under this Agreement and the Applicable
Laws and Rules, Correspondent authorizes Ridge to take such steps as Ridge
determines, in its sole and exclusive discretion, may be necessary or advisable
for Ridge to be in compliance with the Applicable Laws and Rules. Correspondent
further authorizes Ridge, in such event, to comply with requests, directives or
demands made upon Ridge by any such exchange or regulatory body. In connection
with such requests, directives or demands, Ridge may seek advice or legal
counsel and Correspondent shall promptly reimburse Ridge for the reasonable fees
and expenses of such counsel, in each case as incurred.

 
C.
Actions, Lawsuits, Arbitrations, Investigations and Inquiries

   
In the event that Correspondent learns that Correspondent or any of its
employees becomes a subject, target, respondent or defendant in any action,
lawsuit, arbitration, investigation, inquiry or other proceeding (formal or
informal) relating, directly or indirectly, to its business, Correspondent shall
notify Ridge in writing within twenty (20) business days and, in addition to
such other rights and remedies as Ridge may have under this Agreement and the
Applicable Laws and Rules, Correspondent authorizes Ridge to take such steps as
Ridge determines, in its sole and exclusive discretion, may be necessary or
advisable for Ridge to be in compliance with the Applicable Laws and Rules.

 
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D.
Additional Information

   
At the request of Ridge, Correspondent shall promptly supply Ridge with such
other information, reports or documentation reflecting or relating to
Correspondent’s financial condition, including, without limitation, its
aggregate indebtedness ratio and net capital; Correspondent’s principals and
representatives; and inquiries, investigations, or disciplinary action relating
to Correspondent or its principals or representatives by the SEC, NYSE, NASD, or
any other regulatory or governmental body. Within five (5) business days after
their filing, Correspondent shall supply Ridge with copies of reports that it
files pursuant to the Bank Secrecy Act, the Patriot Act, or any other AML
provision, including, without limitation, CTRs, CMIRs, SARs or FBFARS. At the
request of Ridge, Correspondent shall (i) file a notice pursuant to Section 314
of the Patriot Act and any regulation(s) promulgated thereunder to permit the
voluntary sharing of information between the parties, and (ii) supply Ridge with
such additional information as is necessary for Ridge to satisfy its obligations
under the Bank Secrecy Act, the Patriot Act, and the regulations promulgated
thereunder.

XII.
COMMUNICATIONS WITH CUSTOMERS

 
Correspondent shall provide written notice to existing Customers within (30)
thirty days of the effective date of this Agreement, and to new Customers within
(30) thirty days of execution of the relevant customer agreement, describing the
respective obligations of the parties under this Agreement and any other
customer-related responsibilities of the parties in accordance with NYSE Rule
382 and NASD Rule 3230. The notifications shall be in substantially the form of
Exhibit A annexed hereto; provided, however, that Ridge may, in its sole and
exclusive discretion, provide the notifications on behalf of Correspondent.
Correspondent shall be responsible for the payment of all costs incurred in
connection with the preparation and mailing of the notifications.

 
Ridge and Correspondent each agrees to forward promptly to the other party a
copy of any written inquiry, complaint or other correspondence received from a
Customer that relates to services provided or obligations assumed under this
Agreement by the other party. Ridge and Correspondent each agrees to forward
promptly to the other party’s DEA a copy of any written complaint received from
a Customer that relates to services provided or obligations assumed under this
Agreement by the other party. Correspondent agrees to forward promptly to Ridge
a copy of all of Correspondent’s filings pursuant to NYSE Rule 351.
Correspondent shall also provide Ridge with such additional information as Ridge
may reasonably request, including, without limitation, a copy of any written
inquiry, complaint or other correspondence from any Customer of Correspondent,
whether or not such written inquiry, complaint or other correspondence was
disclosed by Correspondent in its filings pursuant to NYSE Rule 351.

XIII.
ERRORS, CONTROVERSIES AND ADDITIONAL INDEMNITIES

 
A.
Errors and Controversies

   
Correspondent shall be solely and exclusively responsible for any error,
controversy, dispute or discrepancy between Correspondent, or any of its control
persons, partners, shareholders, directors, officers, employees, agents,
affiliates, successors or assigns (collectively, including Correspondent, the
“Correspondent Parties”), and any of the Accounts or Customers. Correspondent
shall indemnify, defend and hold Ridge and its control persons, partners,
shareholders, directors, officers, employees, agents, affiliates, successors and
assigns (collectively, including Ridge, the “Ridge Indemnitees”) harmless from
and against any loss, liability, damage, claim, cost or expense (including, but
not limited to, attorneys’ fees and expenses), in each case as incurred, arising
directly or indirectly from any such error, controversy, dispute or discrepancy,
and from any action or proceeding commenced by or against any of the
Correspondent Parties by any Customer, or from the settlement of any such claim,
action or proceeding.

 
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B.
Additional Indemnities

 
Correspondent hereby agrees to indemnify, defend and hold the Ridge Indemnitees
harmless from and against any loss, liability, damage, claim, cost or expense
(including, but not limited to, attorneys’ fees and expenses), in each case as
incurred, arising directly or indirectly from or related to the Accounts, the
Customers or any order or transaction contemplated by this Agreement, or as a
result of any inquiry or investigation conducted in connection therewith or in
the defense or settlement of any threatened or pending action or proceeding
brought by any regulatory or self-regulatory organization, governmental agency
or private person arising out of or in connection with the same, unless such
loss, liability, damage, claim, cost or expense, as finally determined by a
court of competent jurisdiction, was caused solely and directly by the willful
misconduct or gross negligence of Ridge. This indemnity is supplemental to any
other obligation of Correspondent in this Agreement to pay or reimburse Ridge
for any loss, liability, damage, claim, cost or expense (including, but not
limited to, attorneys’ fees and expenses). Without limiting its generality, the
foregoing indemnity is intended to include, among other things, any loss,
liability, damage, claim, cost or expense (including, but not limited to,
attorneys’ fees and expenses) arising from or relating to any of the following:

   
1.
the failure of any Customer to make timely payment for securities purchased or
timely and good delivery of securities sold, the existence of an unsecured debit
balance or unsecured short position in an Account, the failure of any Customer
timely to comply with initial margin or maintenance margin requirements, the
failure of any Customer to pay interest in accordance with the applicable margin
agreement(s), or the failure of any Customer otherwise to fulfill any of its
obligations in connection with any Account, whether or not such failure is
within the control of Correspondent;

   
2.
the failure of any of the Correspondent Parties fully and properly to discharge
its obligations and responsibilities with respect to Accounts, it being
understood and agreed that the participation of any of the Ridge Indemnitees in
any transaction shall not diminish, reduce or otherwise affect Correspondent’s
indemnification obligations hereunder, except to the extent that such
participation has been finally determined by a court of competent jurisdiction
to have been caused solely and directly by the willful misconduct or gross
negligence of Ridge;

   
3.
any defect in title to any securities purchased, sold, borrowed, delivered or
transferred under this Agreement (including, without limitation, those that may
have been forged, counterfeited, altered, lost or stolen), and any adverse
claims with respect to any securities purchased, sold, borrowed, delivered or
transferred under this Agreement, it being understood that Ridge will be deemed
to be solely and exclusively an intermediary between Correspondent and Customers
with respect to such securities and will be deemed to make no representations or
warranties other than as provided with respect to intermediaries in Section
8-306 of the Uniform Commercial Code;

   
4.
any claim by any contra broker or any other person arising from or relating to
Ridge’s rejection of a transaction for clearance pursuant to the terms of this
Agreement, or the failure by any contra broker designated by Correspondent to
settle any transaction for an Account;

   
5.
any errors or discrepancies in orders as transmitted by Correspondent or
Customer to Ridge;

6.
the use of check-writing privileges pursuant to Section XXI.C. of this
Agreement;

 
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7.
any request by Correspondent to defer a buy-in or sell-out for an Account, or to
extend the time for the making of a required margin payment by an Account,
whether or not granted in whole or in part by Ridge;

   
8.
any guarantee by Ridge of any signatures with respect to a transaction in an
Account;

   
9.
the exercise by Correspondent Parties of discretionary authority over any
Account;

   
10.
any action or inaction by an agent holding a power of attorney for an Account on
behalf of a principal;

   
11.
any claim or dispute arising directly or indirectly from a Soft-Dollar
Arrangement, Directed-Brokerage Arrangement, or Payment for Order Flow
Arrangement;

   
12.
any act or omission of Correspondent, its agents, employees or customers which
infringes on any patent, trade secret, copyright, trademark, or other
intellectual property right of Ridge; or

   
13.
the breach by Correspondent of, or an untrue statement or omission in, any
representation, warranty or covenant in this Agreement.

 

 
C.
Defense of Claims and Actions

   
If any claim or action is asserted or commenced against any Ridge Indemnitee in
respect of which indemnity may be sought against Correspondent pursuant to this
Agreement, such Ridge Indemnitee will notify Correspondent in writing, and
Correspondent shall assume the defense of such claim or action, including the
employment of counsel and payment of attorneys’ fees and expenses, as incurred,
on behalf of such Ridge Indemnitee. Each Ridge Indemnitee against whom such
claim or action is asserted or commenced shall have the right to employ its own
separate counsel, but the fees and expenses of such separate counsel shall be at
the expense of such Ridge Indemnitee unless: (1) the employment of such separate
counsel shall have been authorized in writing by the Correspondent; (2)
Correspondent shall not have employed counsel to conduct the defense of such
Ridge Indemnitee; or (3) such Ridge Indemnitee shall have reasonably concluded
that, as between such Ridge Indemnitee and Correspondent or between such Ridge
Indemnitee and one or more of the other Ridge Indemnitees, there may be a
conflict of interest requiring separate counsel. In the event that any of the
circumstances referred to in clauses (1)-(3) of the preceding sentence occurs,
the fees and expenses of the separate counsel employed by such Ridge Indemnitee
shall be borne in their entirety by Correspondent, and Correspondent shall not
have the right to direct the defense of such Ridge Indemnitee. In any event,
Correspondent shall cooperate in the defense of any such claim or action against
an Ridge Indemnitee, including, without limitation, in the effectuation of any
settlement which such Ridge Indemnitee, in its reasonable discretion, deems
appropriate, the costs of which settlement shall be borne in their entirety by
Correspondent.

 
D.
Survival of Indemnities

   
All indemnification, reimbursement and payment for expense provisions of this
Agreement shall survive the termination of the Agreement. Each indemnity under
this Agreement shall also extend to the costs and expenses (including, but not
limited to, attorneys’ fees and expenses), if any, incurred by any of the Ridge
Indemnitees in enforcing such indemnity.

 
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XIV.
LIMITATION OF LIABILITY OF RIDGE

 
A.
Limitation of Liability

   
In no event shall Ridge be responsible to Correspondent, to any Customer, or to
any other person for indirect, special, consequential or punitive damages
arising from or relating, directly or indirectly, to this Agreement, regardless
of whether Ridge has been advised of or might otherwise have anticipated the
possibility of such damages. Ridge shall have no liability under this Agreement
except to Correspondent. Notwithstanding anything to the contrary in this
Agreement, Ridge shall have no liability whatsoever for any losses, damages,
costs or expenses which are not finally determined by a court of competent
jurisdiction to have been caused solely and directly by its own willful
misconduct or gross negligence. Correspondent acknowledges and agrees that this
Agreement significantly limits the liability of Ridge and that such limitation
is fair and reasonable in light of the limited responsibilities of Ridge, and
the amounts payable to Ridge for its services, under this Agreement.

 
B.
Third-Party Service Providers

   
Ridge may, in its sole and exclusive discretion, use third-party service
companies to perform or assist it in the performance of selected services under
this Agreement (including affiliates of Ridge). In such event, the term “Ridge”
shall be deemed to include such third-party service companies, and the
limitations of liability in Section XIV.A. of this Agreement shall apply.

 
C.
Systems and Communications Failures; Errors in Instructions

   
Ridge’s sole responsibilities with respect to any systems or communications
failures, or any interruptions or delays in the services provided or to be
provided by Ridge under this Agreement, shall be to use its best efforts to make
such systems and services available as promptly as reasonably practicable. Ridge
shall have no responsibility whatsoever for the accuracy of, or any errors or
omissions in, any databases or securities information and related market and
statistical information displayed, carried or furnished by or through its
equipment or systems. Ridge shall have no responsibility whatsoever for any
loss, expense or damage suffered by Correspondent, any Customer or any other
person by reason of any interruption or delay in the transfer or receipt of
funds or securities through the Federal Reserve Book Entry System, the Federal
Funds Wire Transfer System or any similar system or from any clearing agent,
issuer, broker, dealer or other third party. Ridge shall have no responsibility
whatsoever for any failures to execute or “DK’s” directly or indirectly
resulting from incorrect, incomplete or untimely instructions or any other
failure by Correspondent, or any other person, to provide proper instructions.

XV.
ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS

 
A.
Representations, Warranties and Covenants of Correspondent

   
Correspondent represents, warrants and covenants to Ridge as follows:

   
1.
Correspondent is, and during the term of this Agreement shall remain, duly
registered and in good standing as a broker-dealer with the SEC, a member firm
in good standing of the NASD, and a member in good standing of every national
securities exchange and association of which it is a member.

 
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2.
Correspondent has all requisite authority in conformity with all Applicable Laws
and Rules to enter into and perform this Agreement and has taken all necessary
actions to authorize the execution of this Agreement and the performance of its
obligations hereunder.

   
3.
Correspondent and each of the other Correspondent Parties is, and during the
term of this Agreement shall remain, in full compliance with the Applicable Laws
and Rules, including, but not limited to, the registration, qualification,
capital, financial reporting, customer protection, disclosure and similar
requirements of the SEC, NYSE, NASD, any other securities exchange or
association of which it is a member, and every state to which jurisdiction it is
subject.

   
4.
Correspondent has, and during the term of this Agreement shall maintain, excess
net capital in an amount that is the greater of the amount required under the
Law and Rules and the amount set forth on Schedule B. Ridge may, in its sole and
exclusive discretion, increase that amount if it determines that a higher amount
is necessary and advisable for its protection. Correspondent shall immediately
notify Ridge in writing in the event that Correspondent’s excess net capital
falls below the greater of the amount required under the Applicable Laws and
Rules and the amount set forth on Schedule B.

   
5.
All orders and instructions transmitted to Ridge by Correspondent shall be valid
and shall have been duly and properly authorized.

   
6.
There is no action, suit, investigation, inquiry or proceeding (formal or
informal) pending or threatened against or affecting Correspondent or any of the
other Correspondent Parties, by or before any court or other tribunal,
arbitrator, governmental agency, instrumentality or authority or any
self-regulatory or clearing organization, as to which Ridge has not been
informed and provided with copies of all relevant documents.

   
7.
The activities of Correspondent pursuant to this Agreement do not and during the
term of this Agreement shall not give rise to a prohibited transaction within
the meaning of Section 406 of ERISA, and all applicable Prohibited Transaction
Class Exemptions shall have been complied with.

   
8.
Correspondent has, and during the term of this Agreement shall maintain, blanket
bond insurance policies satisfactory to Ridge covering any and all acts, errors,
and omissions of any of the Correspondent Parties and adequate fully to protect
and indemnify Ridge against any loss, liability, damage, claim, cost or expense
(including, but not limited to, attorneys’ fees and expenses) which Ridge may
suffer or incur directly or indirectly as a result of any such act, error, or
omission. Coverage to be maintained under such policies shall be in an amount
that is the greater of the amount required under NASD Rule 3020 or NYSE Rule
319, as applicable, and an amount specified in writing by Ridge to
Correspondent, and shall remain in effect during the term of this Agreement and
include coverage for any claims discovered or made within at least ninety (90)
calendar days following the termination of this Agreement. Ridge shall be
expressly named as the beneficiary of the errors and omissions policy required
to be maintained by Correspondent pursuant hereto.

   
9.
On or before the execution of this Agreement, Correspondent shall have
identified in writing to Ridge each of its lines of business and any securities
in which Correspondent makes a market. Correspondent shall give Ridge reasonable
prior written notice of proposed material changes in its market-making
activities; provided, however, that with respect to changes in the securities in
which Correspondent proposes to act as a market maker, Correspondent shall
endeavor to give such notice prior to the change only if and to the extent
practical.

 
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10.
Correspondent shall give Ridge at least thirty (30) business days’ prior written
notice of any new lines of business that materially modify the mix of business
that Correspondent is engaged in on the date of this Agreement. Such notice
shall be required notwithstanding that such new business or different business
mix does not affect the services to be performed by Ridge under this Agreement.
In connection with any such new business or different business mix, Ridge will
have the right, in its sole and exclusive discretion, to request additional
assurances from Correspondent, to require Correspondent to increase the amount
of its Security Deposit, or to terminate this Agreement.

 
B.
Representations, Warranties and Covenants of Ridge

   
Ridge represents, warrants and covenants to Correspondent as follows:

   
1.
Ridge is and during the term of this Agreement shall remain duly registered and
in good standing as a broker-dealer with the SEC, a member firm in good standing
of the NYSE and NASD, and a member in good standing of every national securities
exchange and association of which it is a member.

   
2.
Ridge has all requisite authority in conformity with all Applicable Laws and
Rules to enter into and perform this Agreement and has taken all necessary
actions to authorize the execution of this Agreement and the performance of its
obligations hereunder.

   
3.
Ridge has and during the term of this Agreement shall maintain net capital in an
amount no less than that required by the Law and Rules.

XVI.
NO PARTNERSHIP OR AGENCY; NO SPECIAL TREATMENT

Neither this Agreement nor any activity hereunder shall create a general or
limited partnership, association, joint venture, branch or agency relationship
between Correspondent and Ridge. Correspondent shall not hold itself out as an
agent of Ridge or of any subsidiary or company controlled directly or indirectly
by or affiliated with Ridge, nor shall it employ Ridge’s name in any manner that
creates the impression that the relationship created or intended between them is
anything other than that of clearing broker and introducing broker.
Correspondent shall not, without the prior written approval of Ridge, place any
advertisement in any newspaper, publication, periodical or any other media if
such advertisement in any manner makes reference to Ridge or to the execution
and clearing arrangements contemplated by this Agreement. Correspondent shall
not, without the prior written approval of Ridge, furnish any link to the
website(s) of Ridge or its affiliates. Should Correspondent in any way hold
itself out as, advertise or otherwise represent that it is the agent of Ridge,
Ridge shall have the right, at its option, in addition to such other rights and
remedies as it may have, to terminate this Agreement and/or to obtain injunctive
relief or any other provisional remedy in any New York federal or state court,
and Correspondent shall be liable for any loss, liability, damage, claim, cost
or expense (including, but not limited to, attorneys’ fees and expenses)
sustained or incurred as a result of such representation of agency. No such
application for a provisional remedy, however, nor any act by either party in
furtherance of or in opposition to such application, shall constitute a
relinquishment or waiver of any right to have the underlying dispute or
controversy with respect to which such application is made settled by
arbitration in accordance with Section XXI.M. of this Agreement.

This Agreement is not intended, nor shall it be construed, to bestow upon
Correspondent any special treatment regarding any other arrangements, agreements
or understandings that exist or may hereafter exist between the parties or their
affiliates. Neither party shall have any obligation to deal with the other in
any capacity other than as set forth in this Agreement.

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XVII.
CONFIDENTIALITY; EMPLOYEES

 
A.
Confidentiality

   
Correspondent and Ridge shall each keep confidential any information acquired as
a result of this Agreement regarding the business and affairs of the other,
except such information as may be required to be disclosed pursuant to subpoena,
court order or in any regulatory or self-regulatory inquiry, investigation,
proceeding or other matter (collectively, an “Inquiry”), or as may be required
to be disclosed under this Agreement. Except as otherwise prohibited by law,
Correspondent and Ridge will each give the other prompt notice of the receipt of
any Inquiry prior to such party’s disclosing information in connection
therewith. Correspondent agrees not to disclose the terms of this Agreement to
any person or entity except to regulatory bodies with appropriate jurisdiction
and to authorized employees of Correspondent on a need-to-know basis. Any other
publication or disclosure of the terms of this Agreement may be made only with
the prior written consent of Ridge. The confidentiality provisions of this
Agreement shall survive the termination of this Agreement.

 
B.
Employees

   
Without Ridge’s prior written consent, Correspondent shall not solicit, or
engage in negotiations with, any person who is, or within the preceding twelve
(12) months has been, employed by Ridge or by any affiliate of Ridge.

XVIII.
TERM AND TERMINATION

 
A.
Term

   
The initial term of this Agreement shall commence upon its approval by the NYSE
and shall continue until the date which is five years from the date that the
Services are first provided on a live basis (the “Initial Term”). The end of the
Initial Term shall be referred to as the “Initial Expiration Date.”

The term of this Agreement shall continue for successive one-year periods after
the Initial Term and this Agreement shall be deemed to have been extended for
such one-year periods as of the Initial Expiration Date and each anniversary of
the Initial Expiration Date, provided that written notice of termination is not
provided (1) by Correspondent at least sixty (60) calendar days in advance of
the commencement of any such one-year period or (2) by Ridge at least one
hundred and eighty (180) calendar days in advance of the commencement of any
such one-year period.

 
B.
Termination

   
Notwithstanding the foregoing, Ridge may terminate this Agreement, in accordance
with the procedures set forth below, whether prior to or after the Initial
Expiration Date, upon the occurrence of an “Event of Default”. For purposes
hereof, an “Event of Default” shall occur if:

   
1.
Correspondent fails to perform or observe any term, covenant or condition to be
performed hereunder and such failure continues unremedied for a period of thirty
(30) days after receipt of written notice from Ridge specifying the failure and
demanding that Correspondent remedy its default;

 
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2.
any material representation or warranty made by Correspondent hereunder proves
false or misleading at any time in any material respect and such breach
continues unremedied for a period of ten (10) days after Correspondent becomes
aware of the breach;

   
3.
Correspondent is enjoined, censured, suspended, prohibited, or otherwise unable
to engage in all or a material portion of its securities business as a result of
any administrative or judicial proceeding or action by the SEC, any state
securities law administrator, any national securities exchange, or any
self-regulatory organization or governmental body having jurisdiction over
Correspondent; or

   
4.
Correspondent is adjudicated bankrupt or insolvent or a trustee or similar
creditors’ representative is appointed by court order; or any property of
Correspondent is sequestered by court order and such order remains in effect for
more than thirty (30) calendar days; or a petition is filed by or against
Correspondent either voluntarily or involuntarily under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in effect, and is
not dismissed within thirty (30) calendar days after such filing; or
Correspondent makes an assignment for the benefit of its creditors, or admits in
writing its inability to pay its debts generally as they become due, or consents
to the appointment of a receiver, trustee or liquidator for itself or for any
property held by it.

   
Correspondent shall promptly advise Ridge in writing upon the occurrence of any
event which constitutes, or with the passage of time would constitute, an Event
of Default under this Agreement. Upon the occurrence of an Event of Default
under subsections (1) or (2) above, Ridge may, at its option, by notice in
writing to Correspondent, declare this Agreement terminated, and such
termination shall be effective as of the date such notice is delivered or such
later date as may be designated by Ridge in such notice. Upon the occurrence of
an Event of Default under subsections (3) or (4) above, this Agreement shall
immediately and automatically terminate without notice or any further action by
Ridge.

 
C.
Changes in the Applicable Laws and Rules

   
Notwithstanding any provision hereof, Ridge may, in its sole and exclusive
discretion, amend the fees that it charges Correspondent if there is a material
increase in its costs as a result of a change in the Applicable Laws and Rules.
Ridge agrees to give prior written notice to Correspondent of any such amendment
at least 180 days prior to the amendment (if Ridge has at least 180 days’ notice
of such material increase in its costs) or a number of days’ notice, not less
than 60 days, which is equal to the number of days’ notice that Ridge has of
such material increase in its costs (if Ridge has less than 180 days’ notice of
such material increase in its costs). Upon receipt of such written notice,
Correspondent will have the right to terminate this Agreement during such notice
period.

 
D.
Changes in Control, Management or Business Mix

   
Notwithstanding any provision hereof, this Agreement may be terminated by Ridge
at any time, upon written notice to Correspondent, if there is a change in
control or a material change in the management of Correspondent, or in the
scope, nature, or extent of the transactions effected in the Accounts or in the
business mix of Correspondent, in each case without the prior written approval
of Ridge. For purposes hereof, a change in the business mix of Correspondent
shall include, without limitation, a change in the market-making activities of
Correspondent. Correspondent shall immediately advise Ridge in writing upon the
occurrence of any of the events described in this Section.

 
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E.
Termination Fee

   
In the event that this Agreement is terminated by Correspondent in a manner
which is not expressly permitted herein (i.e., a termination for its
“convenience) or by Ridge in a manner which is expressly permitted herein (i.e.,
a termination for other than for its “convenience), prior to the Initial
Expiration Date, Correspondent shall pay to Ridge a termination fee (the
“Termination Fee”) equal to the sum of (1) the early termination fee set forth
on schedule B, and (2) an amount equal to the costs and expenses of Ridge
incurred in connection with the conversion of Accounts pursuant to Section
XVIII.F. of this Agreement, which amount shall in no event be less than $10,000.
Correspondent shall pay the Termination Fee, in immediately available U.S.
funds, within ten (10) calendar days of receipt of a written statement from
Ridge setting forth the costs and expenses comprising the Termination Fee.

     

    In the event that Correspondent is the subject of the issuance of a
protective decree pursuant to the Securities Investor Protection Act of 1970 (15
USC 78aaa-III), Ridge’s claim for a payment of a termination fee under this
Agreement shall be subordinate to claims of Correspondent’s customers that have
been approved by the trustee appointed by the Securities Investor Protection
Corporation pursuant to the issuance of such protective decree.

 
F.
Conversion of Accounts 

 

 
Upon termination of this Agreement for any reason, it shall be Correspondent’s
responsibility to arrange for the conversion of the Accounts to another broker
for clearing and/or execution services. Correspondent shall promptly upon
termination give Ridge written notice of the name of such other broker, the
anticipated date on which it shall commence acting as clearing broker with
respect to the Accounts, and the name of the individual(s) within that
organization whom Ridge can contact to coordinate the conversion. Correspondent
shall also provide Ridge with Correspondent’s written undertaking, in a form
acceptable to Ridge, that such other broker shall accept on conversion all
Accounts then maintained by Ridge for such Correspondent. If Correspondent fails
to provide Ridge with the notice and undertaking referred to above, Ridge may,
at the sole expense of Correspondent, give Customers such notice of termination
of this Agreement as Ridge deems appropriate and make such other arrangements as
Ridge deems appropriate for transfer or delivery of the Accounts. Ridge will
provide reasonable assistance to Correspondent in de-converting Accounts from
the systems of Ridge. Correspondent shall promptly pay to Ridge reasonable
expenses incurred by Ridge in processing the de-conversion.

 
G.
Survival

   
Termination of this Agreement shall not affect any of the rights or liabilities
of the parties relating to business transacted prior to the effective date of
such termination. From the date of termination until transfer or delivery of all
Accounts, the rights and liabilities of the parties relating to any business
transacted after such termination shall be governed by the same terms as those
set forth in this Agreement.

 
H.
No Obligation to Release Correspondent Accounts

   
Subject to Ridge’s obligation to refund cash or securities in the Settlement
Account within 30 days after termination of this Agreement in accordance with
Section X.B. above, Ridge shall not be required to release to Correspondent any
securities or cash held by Ridge for Correspondent in one or more Accounts of
Correspondent until all amounts owing to Ridge pursuant to the provisions of
this Agreement are paid in full and Correspondent’s outstanding obligations
(including any disputed obligations) to Ridge are determined and satisfied and
any property of Ridge in the possession of Correspondent is returned to Ridge.

 
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XIX.
ACTIONS AGAINST CUSTOMERS

 
If Correspondent is unable or unwilling to pursue a claim against any Customer,
Ridge shall have the right, but not the obligation, in its sole and exclusive
discretion, to institute and prosecute in either its own name or, at Ridge’s
option, in the name of Correspondent, any action or proceeding against any
Customer as to any controversy or claim arising (directly or indirectly) out of
any transaction with Ridge, Correspondent or any Customer, and nothing contained
in this Agreement shall be deemed or construed to impair or prejudice such right
in any way whatsoever, nor shall the institution or prosecution of any such
action or proceeding relieve Correspondent of any liability or responsibility
which Correspondent would otherwise have under this Agreement. Correspondent
hereby assigns to Ridge such rights against Customers, and, upon the request of
Ridge, agrees to execute such other and further instruments or documents, as are
reasonably necessary or appropriate to carry out the intent of this Section.

XX.
NOTICES

 
Except as otherwise expressly provided herein, any notice or instruction
required or permitted to be given under this Agreement shall be in writing,
shall be effective upon receipt, and shall be sent by hand or by certified mail,
in either case, return receipt requested, to the parties at the following
addresses, or at such other address as to which notice in writing shall have
been given:

If to Ridge:

Ridge Clearing & Outsourcing Solutions, Inc.
55 Water Street
New York, New York 10041
Fax No: (212) 747-2079
Attn: General Counsel

If to Correspondent:

Hudson Securities Inc.
111 Town Square Place
Jersey City, New Jersey 07310
Fax No.: (201)
Attn: Keith Knox, President

XXI.
MISCELLANEOUS

 
A.
Exchange of Information

   
Each party shall promptly supply the other with all appropriate information in
its possession necessary or appropriate to enable the other party properly to
perform its obligations under this Agreement.

B.
Exception and Other Reports

   
At the time of execution of this Agreement, and annually thereafter, Ridge will
provide to Correspondent a list of exception and other reports it can make
available to Correspondent, and the cost therefor, which may assist
Correspondent in complying with regulatory requirements, supervising and
monitoring the Accounts, and meeting its obligations under this Agreement.
Correspondent specifically acknowledges that such reports may not be inclusive
of all of the exception and other reports necessary for Correspondent to comply
with its regulatory obligations.

 
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At each time specified in the paragraph above, Correspondent shall promptly
designate in writing to Ridge which, if any, of such reports Correspondent
requires during the succeeding twelve months, and Ridge will thereafter provide
such designated reports to Correspondent. Within thirty (30) days of July 1 of
each year, Ridge will give written notice to Correspondent’s chief executive and
compliance officer identifying the list of reports offered to Correspondent and
those reports that were actually requested by Correspondent. A copy of the
written notice will also be provided to Correspondent’s designated examining
authority (or, if none, to its appropriate regulatory agency or authority). It
shall be the sole responsibility of Correspondent to determine whether
additional reports are necessary for Correspondent to meet its regulatory
obligations, and to obtain and use such reports. Ridge will retain the data from
which each of such reports was produced for at least six (6) years in a manner
sufficient for Ridge to reproduce the report.

Notwithstanding the foregoing, Correspondent shall itself maintain reports,
records and regulatory filings required to be kept by Correspondent by this
Agreement.

 
C.
[Intentionally Omitted]

D.
Credit Investigations

Both Ridge and Correspondent shall have the right to investigate, or to cause a
third party to investigate, the other party’s credit.

E.
Tape Recording

Both Ridge and Correspondent shall have the right to record telephone
conversations between themselves, and both Ridge and Correspondent waive any
right to further notice of any such recording.

 
F.
No Third-Party Beneficiaries

   
Except as otherwise provided in Section XXI.K of this Agreement, this Agreement
is between Ridge and Correspondent only, and is not intended to confer any
benefits or rights upon any Customers or other persons not expressly made
parties hereto (other than Ridge Indemnitees).

 
G.
Customer Agreements

   
All customer agreements used by Correspondent shall be provided by Ridge or,
alternatively, by Correspondent at its expense and pre-approved in writing by
Ridge. In the event that any customer agreement is prepared by Correspondent,
Correspondent agrees to designate Ridge as a beneficiary of each of Customer’s
representations, warranties, acknowledgments and covenants in the customer
agreement to the same extent as if such representations, warranties,
acknowledgments and covenants were made directly by Customer to Ridge, and that
Ridge, in its own name and for its own benefit, shall be entitled to enforce
such provisions and all other rights granted to Correspondent directly against
Customer.

 
H.
Competition

   
Nothing herein shall restrict or be deemed to restrict the right of Ridge or any
affiliate of Ridge to compete with Correspondent in any or all aspects of
Correspondent’s business. Notwithstanding the foregoing, Ridge’s current
business lines currently include only the provision of clearing and outsourcing
services and Ridge has no present intention of getting into or competing with
Correspondent’s market making business.

 
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I.
Remedies Cumulative

   
The enumeration herein of specific remedies shall not be exclusive of any other
remedies. Any delay or failure by any party to this Agreement to exercise any
right or remedy under this Agreement or under the Applicable Laws and Rules, or
the single or partial exercise of any such right or remedy, shall not be
construed to be a waiver of any such rights or remedies, or to limit the
exercise of such rights or remedies.

J.
Merger; Amendment

   
This Agreement represents the entire agreement between the parties and
supersedes all other understandings and agreements between the parties with
respect to the subject matter hereof. This Agreement may not be amended except
by a writing signed by the parties hereto.

K.
Assignment

   
This Agreement shall be binding upon and inure to the benefit of the respective
successors and authorized assigns of the parties. Correspondent shall provide
Ridge with thirty (30) business days’ prior written notice of any proposed
change in control. Correspondent may not assign this Agreement, or assign or
delegate any of its rights or obligations hereunder, without the prior written
consent of Ridge, which consent shall not be unreasonably withheld. Ridge may
assign this Agreement or assign or delegate any of its rights or obligations
hereunder to any affiliate of Ridge without Correspondent’s consent if such
affiliate executes and delivers to Correspondent an assumption agreement
pursuant to which such affiliate assumes all such obligations of Ridge under
this Agreement as have been delegated to it. Correspondent consents and agrees
to the assignment and transfer by Ridge of its rights and obligations hereunder
at any future time resulting from a merger, sale of all or a substantial portion
of its assets, liquidation or otherwise of all Accounts covered by this
Agreement (including, but not limited to, all securities positions, credit and
debit balances contained therein) to any such successor organization or
assignee, including any registered broker and/or dealer that owns any of Ridge’s
capital stock, and such assignment shall be binding upon the undersigned, its
successors, and assigns.

 
L.
Governing Law

   
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York, without regard to its conflict of laws principles.

 
M.
Arbitration

   
Any dispute or controversy arising out of or relating in any way to this
Agreement, including, without limitation, any dispute or controversy that might
give rise directly or indirectly to a class action or putative class action,
shall be submitted to arbitration before the NYSE (conducted pursuant to NYSE
Rules), or, if Correspondent is not a NYSE member, any other self-regulatory
organization or exchange chosen by Ridge that has jurisdiction over the dispute
or controversy. Arbitration must be initiated by service upon the other party of
a written demand for arbitration or notice of intention to arbitrate. Judgment
upon any award rendered by the arbitrator(s) shall be final, and may be entered
in any court, state or federal, having jurisdiction.

 
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N.
Customer Actions

   
In the event of an arbitration or court action in which a Customer has asserted
a claim against Ridge or an affiliate thereof, Correspondent agrees that (1) it
shall submit to the jurisdiction of any such forum in which such claim is
brought, and (2) it shall accept service of process for any such claim. Service
of process in any such action or arbitration shall be sufficient if served on
Correspondent by certified mail, return receipt requested, at the address
provided for the delivery of notices under this Agreement.

 
O.
Temporary or Provisional Relief

   
Notwithstanding Section XXI.M. of this Agreement, Ridge may, at any time prior
to an initial arbitration hearing with respect to any dispute or controversy
relating to or arising out of this Agreement, obtain upon application to the
United States District Court for the Southern District of New York or the
Supreme Court of the State of New York for the County of New York any temporary
or provisional relief or remedy that would be available in an action based upon
such dispute or controversy in the absence of an agreement to arbitrate. The
parties acknowledge and agree that it is their intention to have any such
application for provisional or temporary relief decided by the court to which it
is made and that such application shall not be referred to or settled by
arbitration. Process in any such proceeding shall be sufficient if served on
Correspondent by certified mail, return receipt requested, at the address
provided above for the delivery of notices under this Agreement. In this
connection, Correspondent expressly waives any defense (1) to personal
jurisdiction, (2) to service of process in the manner set forth above, and (3)
to venue. No such application to a court for provisional or temporary relief,
nor any act or conduct by either party in furtherance of or in opposition to
such application, shall constitute a relinquishment or waiver of any right to
have the underlying dispute or controversy settled by arbitration in accordance
with Section XXI.M. of this Agreement.

 
P.
Force Majeure

   
Ridge shall not be liable for losses caused directly or indirectly by government
restrictions, exchange or market rulings, suspension of trading, labor strike,
war, act of civil or military authority, sabotage, terrorism, epidemic, flood,
earthquake, fire, or other natural disaster, or any other conditions or
occurrences beyond Ridge’s reasonable control.

Q.
Headings

   
The headings contained herein have been inserted for convenience and ease of
reference only and shall not be construed to affect the meaning, construction or
effect of this Agreement.

 
R.
Enforceability

   
If any provision or condition of this Agreement is held to be invalid or
unenforceable by any court, arbitration tribunal or regulatory or
self-regulatory agency or body, the validity of the remaining provisions and
conditions shall not be affected thereby and this Agreement shall be carried out
as if any such invalid or unenforceable provision or condition were not
contained herein.

 
S.
Counterparts

   
This Agreement may be executed in counterparts, each of which shall constitute
an original, and all of which together shall constitute one and the same
agreement.

 
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T.
Sole and Exclusive Discretion

All provisions in this Agreement that permit Ridge to exercise its “sole and
exclusive discretion” shall be deemed to require that (i) Ridge act in good
faith when exercising its discretion, (ii) if practical under the circumstances,
Ridge shall give notice of its intentions prior to taking action, and if not
practical prior to the action, Ridge shall give notice of its action to
Correspondent promptly thereafter, and (iii) upon the request of a senior
officer of Correspondent, the parties shall meet to discuss Ridge’s rationale
behind its discretionary act, and the parties shall work in good faith to
resolve any disputes regarding such actions.

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

RIDGE CLEARING & OUTSOURCING SOLUTIONS, INC.
   
By:
/s/ Joseph Barra
 
  Joseph Barra
 
  President
   
HUDSON SECURITIES INC.
       
By:
/s/ Martin Cunningham
 
  Martin Cunningham
 
  Chief Executive Officer

 
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EXHIBIT A

[CORRESPONDENT LETTERHEAD]

Dear Customer:

[Correspondent] has a contractual arrangement with Ridge & Outsourcing Services,
Inc. (“Ridge”) for the performance of clearance services. In accordance with
NYSE Rule 382, this letter is intended to inform you, as the holder of an
account with us, of the allocation of responsibilities between [Correspondent]
and Ridge. It is intended to be a general disclosure, not a definitive
enumeration of each and every responsibility. Nothing in this letter shall be
deemed to delegate to Ridge any regulatory requirement or contractual obligation
of our firm. We are not an affiliate or subsidiary of Ridge, its parent
corporation, or any of Ridge’s affiliated companies; nor are we registered
representatives or other persons employed by Ridge, its parent corporation, or
affiliated companies.

You have appointed our firm to act as your agent for the purpose of carrying out
your directions with respect to your purchases and sales of securities,
disbursements of funds, transfers of securities, and related activities. Ridge
has been informed that we are authorized to place and cancel orders and take
such other steps as are reasonable to carry out your directions. Until receipt
of your written notice to the contrary, Ridge may accept instructions for your
account from us without inquiry or investigation by Ridge including, without
limitation, instructions with respect to the disbursement of funds and the
transfer of securities. Ridge is not responsible or liable for any of our acts
or omissions or those of our employees, nor is it responsible for any indirect
or consequential damages under any circumstances. As between you and Ridge, you
shall be responsible for any action Ridge takes in or for your account based
upon instructions Ridge receives from either you or our firm. In the event that
you maintain a delivery versus payment account, you agree to furnish your agent
with instructions for the delivery or receipt of securities promptly upon
receipt of confirmation (or the relevant data as to execution), which will be no
later than (i) the close of business on the second business day after execution
for purchases, and (ii) the close of business on the first business day after
execution for sales. Both Ridge and we have the right to reject any proposed
transaction in your account.

You understand that Ridge does not act as a fiduciary, investment adviser or
solicit orders, that Ridge does not advise you or us or make any investigation
or determination on any matters pertaining to the suitability of any order;
offer any opinion, judgment or other type of information pertaining to the
nature, value, potential or suitability of any particular investment; or review
the appropriateness of investment advice given or transactions entered by our
firm or any other person on your behalf. Ridge neither controls, audits or
otherwise supervises the activities of our firm or its registered
representatives, nor does it verify information provided by our firm regarding
your account, including any transactions therein.

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We shall at all times be solely and exclusively responsible for:

 
·
Opening, approving, servicing, and monitoring your account, including obtaining
and verifying your new account information.

 
·
Obtaining personal information from you, including your investment objectives.

 
·
Reviewing your account and all orders for that account, which includes
supervising all investment advice we give and, if your account is a
discretionary account, supervising the exercise of such discretion.

 
·
Accepting orders and arranging for execution of your transactions, and
establishing procedures for reviewing and transmitting orders prior to
execution.

 
·
Determining commissions, mark-ups or other fees charged for your transactions.

 
·
Transmitting instructions concerning your account to Ridge either generally or
in connection with tender or exchange offers or any other form of corporate
reorganization, unless Ridge accepts instructions directly from you.

 
·
Ensuring that securities sold by you may be transferred without restriction or
that transfer restrictions have been complied with.

 
·
Complying with all laws, rules and regulations applicable to any arrangement or
understanding that we may have: (i) to rebate to you any funds, including,
without limitation, any portion of any commission, mark-up, mark-down, fee, or
other charge or to pay on your behalf the cost of any service or product, or
(ii) to provide research or other services to any agent exercising authority
over your account (including, without limitation, investment discretion).

 
·
The conduct of your account and ensuring that all the transactions or transfers
therein are in compliance with all applicable laws, rules and regulations. Such
responsibility includes, without limitation: (i) knowing all persons holding
power of attorney over your account; (ii) selecting, investigating, training,
and supervising all personnel who open, approve, authorize or review
transactions in your account; (iii) establishing written procedures for the
conduct of your account and maintaining compliance and supervisory personnel
adequate to implement such procedures; (iv) determining the suitability and
legality of all transactions in your account; and (v) determining the
appropriateness of the frequency of trading in your account.

 
·
Receiving and delivering funds and securities (except where you either deliver
funds or securities directly to Ridge or you receive a check directly from
Ridge), and enforcing Ridge’s initial margin and maintenance margin
requirements.

 
·
Supplying all documentation required by Ridge. Ridge at all times has the right,
reasonably exercisable in its sole and exclusive discretion, to refuse to accept
orders for your account, which right it may exercise where, for example, it has
not received the necessary documentation of funds for your account.

 
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Ridge will be responsible for the following services provided at our request as
contemplated by the contractual arrangement between our firms:

 
·
Any extensions of credit to you, which includes complying with Regulation T of
the Federal Reserve Board, determining maintenance margin, paying and charging
interest and rehypothecation or loan of any of your margin securities.

 
·
Maintaining account records on your behalf with such name(s) and address(es) as
provided by our firm.

 
·
Keeping custody of funds and securities (while they are in Ridge’s physical
possession), and segregating such funds and securities as required by applicable
law.

 
·
Preparing and transmitting to you on our behalf confirmation of trades and
monthly or, if appropriate, quarterly account statements. Such confirmations and
statements shall rely, in whole or in part, on information provided by our firm.

Unless we receive a written communication from you to the contrary, your
understanding of and acceptance of the allocation of responsibilities described
herein is acknowledged and reaffirmed each time you enter an order with us.

Any questions you may have concerning the conduct of your account should be
addressed directly to [our Compliance Officer, _____, at _________].

Very truly yours,

[Correspondent]

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ADDENDUM TO CLEARING
AGREEMENT FOR SECURITIES
CLEARANCE SERVICES FOR PRIME BROKERAGE

Dear Correspondent:

We refer to a certain agreement for securities clearance services currently in
effect between you and Ridge & Outsourcing Services, Inc. (the “Clearing
Agreement”).

This Addendum conforms to the requirements outlined in a no-action letter,
issued by the Securities and Exchange Commission (the “SEC”) on or about January
25, 1994 (the “No-Action Letter”), which sets forth the requirements for
maintaining a prime brokerage arrangement.

The purpose of this Addendum is to set forth the obligations and
responsibilities of Ridge when you act as an executing broker in a prime
brokerage arrangement. When you act as the “executing broker,” as such term is
defined in the No-Action Letter, Ridge acts as your clearing agent and the prime
broker settles such transactions and carries the positions for the customer. All
defined terms herein shall have the same meanings as provided in the Clearing
Agreement.

1.You hereby agree as follows:

a) You will notify Ridge in advance with respect to each account for which you
intend to act as an executing broker in a prime brokerage arrangement.

b) As agreed to by you and Ridge, you are solely and exclusively responsible for
the conduct of the customer’s account, including, but not limited to, the
responsibilities to “know your customer,” determine the suitability of all
transactions, obtain all proper documentation (including, but not limited to,
all new account documents), and conduct your own credit review of the customer.

c) Prior to effecting a short sale, you shall be responsible for verifying with
Ridge that all orders effected by you will comply with all applicable short sale
provisions in the applicable rules and regulations, including, but not limited
to, Regulation SHO, SEC Rule 10a-1 and NASD Rule 3350, and you will be
responsible for verifying that securities can be borrowed in order to effect a
timely delivery against each short sale.

d) In the event of any execution error or trade discrepancy between a trade as
executed and a trade as recorded in the customer’s account with the prime
broker, you shall be responsible for correcting such error or resolving such
discrepancy with Ridge or your customer in accordance with securities industry
practice. You shall be liable to Ridge for any and all losses, including,
without limitation, expenses caused thereby, and Ridge will have no liability to
you or the customer under any circumstances. You agree to indemnify and hold
Ridge harmless from and against and pay promptly on demand any loss, liability,
damage, claim, cost or expense (including, but not limited to, the reasonable
fees and expenses of counsel), in each case as incurred, arising out of or
incurred in connection with such discrepancy or error.

e) You shall retain in your possession copies of all agreements that are
necessary to enable you to execute prime brokerage trades and, except to the
extent undertaken by Ridge in the Clearing Agreement, you shall preserve all
records relating to such trades, as required of an executing broker by the
applicable rules and regulations and the No-Action Letter.
 
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2.Ridge hereby agrees as follows:

a) Ridge will, on your behalf and pursuant to your instructions, inform the
prime broker of all trade data, including the contract amount, security
involved, number of shares or number of units, and whether the transaction was a
long or short sale or a purchase, by the morning of the next business day after
trade date.

b) Ridge will treat the customer as its own customer and record the transactions
in a cash or margin account at Ridge. Ridge will treat all disaffirmed and
“DK’d” trades as normal customer transactions. If the disaffirmed or “DK’d”
trade is a short sale, Ridge will treat the transaction as if it had been
executed in a customer margin account.

c) Ridge will not extend, or arrange for a prime broker to extend, credit on a
security sold by Ridge to the customer if Ridge was a member of a selling
syndicate or group within the prior thirty (30) days.

d) Ridge will be responsible for issuing confirmations directly to the customer
for each trade executed by you at Ridge, unless Ridge receives written
instructions from the customer explicitly requesting that the confirmations be
sent to the customer in care of its prime broker, in which case Ridge will send
the confirmations to such customer in care of the prime broker. In the event
that a trade is disaffirmed or “DK’d”, Ridge will promptly send a confirmation
of the transaction to the customer in the manner described above.

e) If a customer account, introduced by you to Ridge, is managed by an
investment advisor, each confirmation may cover a single bulk trade representing
transactions that have been combined with those of other accounts managed by
such investment advisor.

f) Ridge will keep and preserve records, as required by SEC Rule 17a-3, relating
to trades placed with Ridge pursuant to a prime broker arrangement.

3. Ridge hereby represents, warrants and covenants that it has and during the
term of this Addendum shall maintain the minimum net capital required by the
applicable rules and no-action letters.

4. All of the terms and conditions of the Clearing Agreement remain in full
force and effect except insofar as a conflict exists between the provisions
thereof and this Addendum, in which event the term or condition of this Addendum
shall supersede the conflicting term or condition of the Clearing Agreement, but
only to the extent of the conflict.

5. The terms of this Addendum may not be amended or waived unless agreed to in
writing by both parties.

Kindly acknowledge acceptance and agreement to this Addendum by signing in the
space provided.

ACCEPTED AND AGREED:
HUDSON SECURITIES INC.
 
RIDGE CLEARING & OUTSOURCING
SOLUTIONS, INC.
     
By:
   
By:
   
(Authorized Signature)
   
(Authorized Signature)
           
(Print Name/Title/Date)
   
(Print Name/Title/Date)

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