Exhibit
      10.14


    FULLY
      DISCLOSED CLEARING AGREEMENT

     

    BETWEEN
      TERRA NOVA TRADING, L.L.C.

     

    -and-

     

    Clayton,
      Dunning & Company 

     

    This
      agreement (the "Agreement"), dated as of July 6, 2004, by and between TERRA
      NOVA
      TRADING, L.L.C. ("Clearing Broker") and Clayton, Dunning & Company
      ("Correspondent"), sets forth the terms and conditions under which Clearing
      Broker shall provide execution, clearing and settlement services, on a fully
      disclosed basis, to Correspondent and its customers. Clearing Broker shall
      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
      Clearing Broker by this Agreement. 

     

    I.
       APPLICABLE
      LAWS AND RULES AND APPROVAL BY NASD 

     

    This
      Agreement and the obligations of the parties hereunder are subject to all
      applicable provisions of federal, state and local laws, rules and regulations
      and the constitution, by-laws, rules, regulations and stated policies of the
      National Association of Securities Dealers, Inc. ("NASD"), and any other
      securities exchange or association or regulatory or self-regulatory organization
      vested with authority or jurisdiction over the parties and/or the transactions
      contemplated hereby (collectively, the "Laws and Rules"). This Agreement shall
      be submitted by Clearing Broker or Correspondent, as required, for approval
      by
      the NASD in accordance with NASD Rule 3230, and shall become effective upon
      such
      approval. In the event of disapproval hereof, the parties shall bargain in
      good
      faith to obtain the requisite approval. 

     

    II.
       SERVICES
      

     

    A.
       Services
      to be Performed bv Clearing Broker 

     

    Subject
      to compliance by Correspondent with its obligations under this Agreement and
      the
      Laws and Rules,
      Clearing Broker shall perform the following services: 

     

    
      
        	1.  	
                Clearing
                  Broker shall execute orders for Correspondent's proprietary accounts
                  and
                  for Correspondent's customers (the "Customers") whose cash or margin
                  accounts have been accepted by Clearing Broker (the "Accounts"),
                  but only
                  insofar as such orders are transmitted by Correspondent to Clearing
                  Broker
                  or are transmitted by a Customer to Clearing Broker in accordance
                  with
                  Section V.A. of this Agreement. 

              


      

       

      
        	2.  	
                Clearing
                  Broker shall prepare and distribute confirmations relative to transactions
                  in each of the Accounts in accordance with Section VILA. of this
                  Agreement, and Clearing Broker shall provide duplicates of such
                  confirmations to Correspondent; provided,
                  however, that
                  Clearing Broker may, with Correspondent's prior approval, delegate
                  such
                  responsibilities to Correspondent. In the event that such responsibilities
                  are delegated to Correspondent, Correspondent shall have sole and
                  exclusive responsibility for the preparation and distribution of
                  confirmations and for their compliance with the Laws and Rules.
                  

              


      

       

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      	3.  	
              Clearing
                Broker shall prepare and distribute summary monthly statements (or
                quarterly statements if no activity in an Account occurs during any
                quarter covered by such statement) to Accounts in accordance with
                Section
                VILA. of this Agreement, and Clearing Broker shall provide duplicates
                of
                such statements to Correspondent. 

            


    

     

    
      	4.  	
              Clearing
                Broker shall clear and 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.  	
              Clearing
                Broker shall engage in cashiering functions for the Accounts, including
                the receipt, delivery and transfer of securities purchased, sold,
                borrowed
                and loaned, receiving and distributing payment therefor, holding
                in
                custody and safekeeping all securities and payments so received,
                the
                handling of margin accounts, including the paying and charging of
                interest, the receipt and distribution of dividends and other
                distributions, and 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.  	
              Clearing
                Broker shall prepare 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, including
                a daily
                record of required margin and ether information required by NASD
                Rule
                2520, or by similar provisions of the Laws and Rules.
                

            


    

     

    
      	7.  	
              Clearing
                Broker shall deliver or cause to be delivered prospectuses in connection
                with public offerings of securities (both initial public and secondary
                offerings) and sales of mutual funds.


            


    

     

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

     

    B.
       Services
      Not to be Performed bv Clearing Broker 

     

    Unless
      otherwise agreed to in a writing executed by the parties hereto, Clearing Broker
      shall not perform any of the following services on behalf of Correspondent,
      the
      responsibility for which shall be solely 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 Clearing Broker on behalf of Correspondent pursuant
                to this Agreement. 

            


    

     

    
      	4.  	
              Payment
                of commissions, salaries or other remuneration to Correspondent's
                salespersons, registered or associated personnel or any employees
                of
                Correspondent. 

            


    

    


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	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, as amended
                (the
                "1934 Act"), or other securities exchange or securities association
                or any
                other regulatory or self-regulatory body or agency of which Correspondent
                is a member, with which Correspondent is associated and/or by which
                Correspondent is regulated. Clearing Broker shall, at the request
                of
                Correspondent, furnish Correspondent with any necessary information
                and
                data contained in books and records kept by Clearing Broker 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
                and maintaining reports and records required to be kept by Correspondent
                by the Currency and Foreign Transactions Reporting Act of 1970, and
                the
                regulations promulgated pursuant thereto, any anti-money laundering
                laws
                or regulations applicable to Correspondent, its activities or any
                Accounts
                opened or transactions effected hereunder, including without limitation
                the USA PATRIOT Act (the "PATRIOT Act") and any rules or regulations
                adopted thereunder, or any similar laws or regulations enacted or
                adopted
                hereafter. 

            


    

    
       

      
        	7.  	
                Verification
                  of the address changes of any Account.


              


      

       

    

    
      	8.  	
              Verification
                of the authority of, or changes in the identity or address, of any
                person
                holding any power of attorney over any Account.


            


    

     

    
      	9.  	
              Verification
                of the validity of, or proper authorization for, any orders or
                instructions received by Clearing Broker from Correspondent or from
                any
                Customer in connection with an Account.


            


    

     

    
      	10.  	
              Obtaining
                and verifying new account information, and ensuring that such information
                meets the requirements of NASD Rule 3110, and any other applicable
                provision of the Laws and Rules. 

            


    

     

    
      	11.  	
              Maintaining
                a record of all personal and financial information concerning any
                Account
                and all orders received therefrom, and maintaining all documents
                and
                agreements executed by any Account.


            


    

     

    
      	12.  	
              Holding
                for safekeeping the securities of any Account registered in the name
                of
                the Account. 

            


    

     

    
      	13.  	
              Holding
                restricted or control securities in compliance with all SEC rules
                and
                regulations, and any other applicable provision of the Laws and Rules.
                

            


    

     

    
      	14.  	
              Accepting
                deposits from Correspondent in the form of coin or currency of the
                United
                States or of any other country, postal money orders or bank checks.
                

            


    

     

    
      	15.  	
              Compliance
                with the reporting, disclosure or record keeping requirements of
                the
                Employee Retirement Income Security Act of 1974, as amended (''ERISA''),
                or any rules or regulations promulgated thereunder.
                

            


    

    


    
      
        
        

      

      
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    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, for the Customer and
      proprietary accounts of Correspondent, shall be cleared exclusively through
      Clearing Broker, unless and except to the extent that: (1) Clearing Broker
      agrees in writing otherwise; or (2) Clearing Broker has rejected a proposed
      Account or has declined to clear a particular transaction in an Account. In
      the
      event that any transaction is cleared through any other firm, nothing herein
      shall be construed as an agreement by Clearing Broker to assume any obligations
      or liabilities arising from any such transaction. 

     

    III.
       OPENING
      AND SUPERVISION OF ACCOUNTS 

     

    A.
       Account
      Documentation 

     

    Clearing
      Broker acknowledges and agrees that it is subject to a variety of obligations
      (including, without limitation, certain review and reporting duties and other
      responsibilities listed in Exhibit B hereto) imposed upon it pursuant to the
      PATRIOT Act, the Bank Secrecy Act, The Currency and Foreign Transactions
      Reporting Act of 1970, and the rules and regulations issued or adopted in
      accordance therewith. Additionally, Correspondent shall be responsible for
      obtaining and verifying all required information and the identity of each
      potential Customer and for complying with all obligations applicable to the
      opening of Accounts under the PATRIOT Act and the rules and regulations adopted
      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 Laws and Rules and agrees to provide a copy of the original application
      to
      Clearing Broker (except that Correspondent shall provide originals of any
      documents to which Clearing Broker is a direct party including, without
      limitation, the margin agreement) by overnight delivery within 24 hours of
      a
      request from Clearing Broker, or as otherwise agreed. All account documentation
      shall be on the forms provided by Clearing Broker for that purpose, or,
      alternatively, prepared by Correspondent at its expense and approved in writing
      by Clearing Broker, in either case in a format compatible with Clearing Broker's
      computerized accounting and records maintenance systems. In accordance with
      Clearing Broker's procedures, Correspondent shall notify Clearing Broker
      promptly of any changes or corrections in any information, instructions or
      documents previously forwarded to Clearing Broker. Correspondent shall be
      responsible for obtaining, updating and maintaining correct customer addresses,
      and Clearing Broker may for all purposes rely, without verification, on the
      accuracy of such addresses and all other information and documents furnished
      by
      Correspondent to Clearing Broker regarding any Account. Correspondent shall
      be
      solely and exclusively responsible for complying with the requirements of Rule
      15g-9 under the 1934 Act, if applicable. Correspondent also shall promptly
      furnish Clearing Broker with such additional information or documentation as
      Clearing Broker may request from time to time. 

     

    B.
       Knowled2e
      of Customer and Customer'" Investment Obiectives 

     

    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 or discretion over any Account, and to supervise
      diligently all Accounts handled by Correspondent's registered representatives
      so
      as to be in full compliance with all Laws and Rules. The preparation or
      possession of surveillance records, exception reports and other similar data
      by
      Clearing Broker shall not obligate Clearing Broker 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 Laws and Rules.
      

    


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    C.
       Acceptance
      of Accounts 

     

    Each
      Account accepted and approved by Correspondent and opened with Clearing Broker
      shall be subject to Clearing Broker's acceptance (which shall not be construed
      to include any due diligence on the part of Clearing Broker). Correspondent
      shall not approve any Account unless all information required in Section IIl.A.
      of this Agreement has been received and due diligence as set forth in Section
      UI.B. has been performed by Correspondent. Clearing Broker reserves the absolute
      right, exercisable in its sole discretion, without prior notice to Correspondent
      or to the Customer, to reject any account that Correspondent may offer as an
      Account, to terminate any account previously accepted by it as an Account,
      or to
      reject any order that may be transmitted to Clearing Broker for execution or
      clearing in any Account. Without limiting the generality of the foregoing,
      Clearing Broker shall be under no obligation to accept any Account as to which
      any documentation or information required to be submitted to Clearing Broker
      or
      maintained by Correspondent pursuant to Sections UI.A. and III.B. of this
      Agreement is incomplete. No action taken by Clearing Broker or any of its
      personnel or employees, including, without limitation, clearing a trade in
      any
      Account, shall be deemed to be or shall constitute acceptance of such Account.
      Without limiting the generality of any of the foregoing, in the event that
      any
      information or documentation requested by Clearing Broker relative to an Account
      is not promptly provided to Clearing Broker, Clearing Broker may, without prior
      notice to Correspondent or to the Customer, reject or terminate such account
      as
      an Account or refuse to execute or clear any further transactions therein.
      If
      Clearing Broker nevertheless accepts or continues to execute or clear
      transactions in such Account, it shall not be deemed to constitute a waiver
      of
      Clearing Broker's right to receive such information or documentation or to
      later
      terminate or refuse to execute or clear transactions in such 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 Laws
      and
      Rules, including, without limitation, any Laws and Rules relating to
      Correspondent's fiduciary responsibility to Customers under ERISA.
      Correspondent's responsibilities shall include, without limitation, the
      following: 

     

    
      	1.  	
              using
                due diligence to learn and on a continuing basis to know the essential
                facts relative to each Customer and each order in an Account, including
                verifying the address changes of each Customer, knowing all persons
                holding power of attorney over any Account and obtaining appropriate
                documentation from each Account in accordance therewith, being familiar
                with each order in any Account and otherwise complying fully with
                all of
                the requirements of NASD Rule 3110, any interpretations thereof,
                the
                PATRIOT Act and the rules and regulations adopted thereunder and
                all
                similar provisions of the Laws and Rules;


            


    

     

    
      	2.  	
              selecting,
                investigating, training, and supervising all personnel of Correspondent
                who open, approve or authorize transactions in the Accounts;
                

            


    

     

    
      	3.  	
              establishing
                written procedures for the opening, supervision and conduct of the
                Accounts and ongoing review of all transactions in the Accounts,
                and
                maintaining compliance and supervisory personnel adequate to implement
                and
                enforce such procedures; 

            


    

     

    
      	4.  	
              knowing
                the investment objectives of each Customer and determining the suitability
                of all transactions in the Accounts;


            


    

     

    
      	5.  	
              ensuring
                that there is a reasonable basis for any recommendations made by
                Correspondent to Customers; 

            


    

    


    
      
        
        

      

      
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          	6.  	
                  determining
                    the appropriateness of the frequency of trading in an Account;
                    

                


        

         

      

    

    
      
        	7.  	
                determining
                  that each transaction in an Account has been duly authorized;
                  

              


      

       

    

    
      	8.  	
              authenticating
                any instructions of the Customer, and forwarding such instructions
                to
                Clearing Broker; 

            


    

     

    
      	9.  	
              obtaining
                and maintaining all documents necessary for the performance of
                Correspondent's responsibilities under this Agreement and retaining
                such
                documents in accordance with the Laws and Rules;
                

            


    

     

    
      	10.  	
              complying,
                to the extent applicable to any transaction in an Account (and whether
                or
                not such transaction is executed by Clearing Broker), with the "three
                quote rule" as set forth by the NASD;


            


    

     

    
      	11.  	
              complying
                with all "Blue Sky" requirements applicable to any transaction in
                an
                Account; and 

            


    

     

    
      	12.  	
              informing
                Clearing Broker of the location of the securities which are the subject
                of
                any order transmitted to Clearing Broker for execution so that Clearing
                Broker may comply with applicable provisions of the Laws and Rules.
                

            


    

     

    E.  Accounts
      of Emplovees of Member Organizations. Self-Regulatorv 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 for the opening and maintenance of such Customer's Account,
      Correspondent shall be solely and exclusively responsible for obtaining the
      approval of such employer, and otherwise complying with NASD Rule 3050.


     

    F.
       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 Clearing Broker 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. 

     

    G.
       Customers
      

     

    Each
      Customer shall remain the customer of Correspondent and nothing herein shall
      cause any Customer to be construed as or deemed to be a customer of Clearing
      Broker 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 Clearing Broker as
      Correspondent's clearing firm, but only to the extent required by applicable
      Laws and Rules. 

     

    H.
       Screening
      of Accounts 

     

    Clearing
      Broker may in its discretion utilize at Correspondent's expense as set forth
      on
      Schedule B a third party service company 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 the
      preparation or possession of surveillance rec0rds or any other data, including
      exception reports, by

     

    
      
        
        

      

      
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    Clearing
      Broker on behalf of or for the use of ·Correspondent shall neither obligate
      Clearing Broker to review such material nor make Clearing Broker responsible
      to
      know their contents. 

     

    1.
       Discretionary
      Accounts 

     

    Correspondent
      shall be solely and exclusively responsible for the handling and supervisory
      review of any Accounts over which Correspondent's partners, officers, registered
      or associated personnel or employees have discretionary authority, as required
      by NASD Rule 2510, and any other provisions of the Laws and Rules. Correspondent
      shall furnish Clearing Broker with such documentation with respect thereto
      as
      may be requested by Clearing Broker. Correspondent hereby warrants that with
      regard to any orders or instructions given by Correspondent with respect to
      such
      discretionary Accounts, its partners, officers, registered or associated
      personnel 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
      Laws and Rules. 

     

    J.
       Option
      Accounts 

     

    Before
      engaging in option trading or accepting an option order for any Customer,
      Correspondent shall deliver to Customer a current disclosure statement of the
      Options Clearing Corporation, the Special Statement for Uncovered Option
      Writing, and any effective 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 Laws
      and
      Rules applicable to options accounts and options trading. Correspondent shall
      deliver to Clearing Broker a copy of a signed option agreement for each Customer
      approved by it for options trading in a form acceptable to Clearing Broker.
      

     

    K.
       Accounts
      for Which Agent Holds Power of Attorney 

     

    Upon
      the
      opening of any Account for which an agent holds a power of attorney on behalf
      of
      a principal, Correspondent shall provide Clearing Broker 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 Clearing
      Broker pursuant to this Agreement shall have been fully and properly authorized
      and that the execution of such instructions or orders shall not violate the
      Laws
      and Rules. 

     

    L.
       Capital
      Treatment of Assets Held in Proprietary Accounts of Correspondent


     

    In
      accordance with the No-Action Letter issued by the SEC on November 3, 1998
      (the
      "No-Action Letter"), Correspondent shall be permitted to include assets held
      in
      its proprietary accounts with Clearing Broker ("PAIB") as allowable assets
      in
      its net capital computations; provided,
      however, that
      Clearing Broker shall perform the PAIB calculation in accordance with the
      provisions, procedures and interpretations set forth in the No-Action Letter
      and
      specified in Exhibit A hereto. 

     

    M.
       Anti-Money
      Laundering; Compliance 

     

    Clearing
      Broker and Correspondent agree to comply with the anti-money laundering policies
      and procedures established in Exhibit B hereto, as amended or updated from
      time
      to time. 

    


    
      
        
        

      

      
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    IV.
       EXTENSIONS
      OF CREDIT 

     

    A.
       Margin
      Agreement 

     

    Prior
      to
      the execution or clearance of any margin transaction in an Account,
      Correspondent shall obtain and provide Clearing Broker 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
      of Correspondent, executed by Correspondent), such agreement to be in form
      and
      substance satisfactory to Clearing Broker. Clearing Broker 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 Clearing
      Broker has determined, in its sole discretion, to accept margin transactions
      therein and the duly executed margin agreement has been received by Clearing
      Broker. Clearing Broker may cancel and rebook as cash transactions any margin
      transactions for an Account for which no such 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.
      Clearing Broker shall be responsible for compliance with Rule lOb-16 under
      the
      1934 Act. If Correspondent elects to instruct Clearing Broker not to have direct
      communication or contact with its Customers, it shall obtain in advance of
      dissemination the written approval of Clearing Broker of any document to be
      provided to Customers in connection therewith. 

     

    B.
       Margin
      Requirements 

     

    Clearing
      Broker shall comply with Regulation T, Section 12 of the Code of Federal
      Regulations, Part 220, established by the Federal Reserve System, related
      interpretive rulings and the NASD's rules and interpretations relative to
      initial and maintenance margin requirements. In addition, Clearing Broker shall
      advise Customers of changes to its credit terms and conditions (unless directed
      otherwise by Correspondent). Correspondent shall be responsible to Clearing
      Broker 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 Laws and Rules, and with Clearing Broker's house
      margin rules. After initial margin has been received, maintenance margin calls
      shall be generated by Clearing Broker and made by Clearing Broker or by
      Correspondent at the instruction of Clearing Broker. Correspondent shall have
      sale and exclusive responsibility for any loss, liability, damage, claim, cost
      or expense, including but not limited to attorneys' fees, incurred or sustained
      by Clearing Broker as a result of the failure of any Customer timely to comply
      with any initial margin or maintenance margin requirements. 

     

    Correspondent
      understands and acknowledges that Accounts shall be subject to any house rules
      of Clearing Broker requiring initial margin or maintenance margin in amounts
      greater than would otherwise be required under Regulation T or any other
      provisions of the Laws and Rules. Clearing Broker may at any time, in its sole
      discretion, and subject to market conditions and periods of extreme volatility,
      change its house margin requirements as they pertain to any Account or class
      of
      accounts or specific securities or class of securities. Such changes shall
      be
      effective immediately upon the provision of notice to Correspondent and the
      Customers. Clearing Broker shall be responsible for advising the Customers
      of
      any such changes (unless directed otherwise by Correspondent), and Correspondent
      shall be responsible for the prompt collection of any additional margin
      necessary to ensure compliance therewith. 

     

    C.
       Interest
      on Margin Accounts 

     

    Clearing
      Broker shall 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 shall not exceed amounts that may be charged under
      applicable Laws and Rules. Clearing Broker may at any time, in its sole
      discretion, revise its credit terms and conditions. Correspondent shall have
      sole and exclusive responsibility
      for any loss, liability, damage, claim, cost or expense, including but not
      limited to attorneys' fees, incurred or sustained by Clearing Broker as a result
      of the failure of any Customer timely to pay such charges. 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    V.
       TRANSMISSION.
      ACCEPTANCE AND EXECUTION OF ORDERS 

     

    A.
       Transmission
      of Orders 

     

    All
      orders in Accounts shall be transmitted to Clearing Broker by Correspondent
      in
      accordance with such procedures as Clearing Broker may implement for that
      purpose. Customers shall not place orders directly with Clearing Broker.
      Notwithstanding the foregoing, Clearing Broker may, in its sole discretion,
      on a
      case-by-case basis, agree to accept orders directly from a particular Customer;
      provided,
      however, that
      in
      doing so Clearing Broker shall not assume or be deemed to have assumed any
      of
      the responsibilities for supervision of Accounts allocated to Correspondent
      under this Agreement. Clearing Broker 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 Clearing Broker, as well as for any errors or
      discrepancies therein. 

     

    B.
       Acceptance
      of Orders 

     

    Orders
      accepted by Clearing Broker for execution and clearance shall be executed and
      cleared in accordance with Clearing Broker's standard practices and the Laws
      and
      Rules. Clearing Broker reserves the absolute right, exercisable in its sole
      discretion, without prior notice to Correspondent or to the Customer, to reject
      for execution and clearance any transactions which exceed established limits
      or
      are otherwise unacceptable to Clearing Broker 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 problems of
      Correspondent or of the Customer, or for any reason whatsoever which, in the
      sole discretion of Clearing Broker, renders it advisable to reject a
      transaction. Clearing Broker also reserves the right, exercisable in its sole
      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 Clearing Broker
      with
      the names of the respective purchasing and selling broker-dealers (except as
      otherwise provided in the section below), and the wholesale and retail purchase
      and sale prices necessary for confirmation in accordance with applicable Laws
      and Rules. 

     

    D.
       Designation
      of Contra Brokers 

     

    Whenever
      Correspondent directs Clearing Broker 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 Clearing Broker 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 Clearing Broker for any losses or
      expenses sustained by Clearing Broker in connection therewith. 

    


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    E.
       Short
      Sales 

     

    Correspondent
      shall be responsible for determining and advising Clearing Broker whether each
      order for the sale of securities for an Account is "long" or "short" within
      the
      meaning of the Laws and Rules. Correspondent also shall be 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 Laws and Rules regarding short sales. 

     

    F.
       Low
      Priced/Pennv Stocks 

     

    Clearing
      Broker shall execute orders for "reported" issues or new issues approved for
      listing on a "National Securities Exchange," as such terms are defined in SEC
      Rule 3aSI-1. Correspondent shall not accept orders for transactions in
      securities that do not meet such criteria, and the disclosure requirements
      of
      SEC Rule 3a5I-l do not apply except that, Correspondent may accept orders to
      sell such securities if such securities were already held in a converted account
      or accounts that were received via ACATS, provided that Correspondent shall
      comply with all Laws and Rules relating to such sales, including, without
      limitation, SEC Rule ISg-2. 

     

    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 Clearing Broker with respect to transactions in the
      Accounts, which limits may be changed from time to time by Clearing Broker
      in
      its sole discretion upon notice to Correspondent. Correspondent agrees to notify
      Clearing Broker and obtain its approval prior to the entry of any trade in
      an
      Account which would exceed such limits. 

     

    H.
       Deliverv
      Versus Payment 

     

    Correspondent
      agrees that its Customers shall 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
      ("DVP") transactions, and that 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.
       Buv-Ins
      and Sell-Outs: Interest Charges 

     

    Upon
      the
      failure of any Customer (or Correspondent, in the case of Accounts which are
      proprietary accounts) 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, Clearing Broker shall be entitled, but not
      obligated, to take such remedial action, or direct Correspondent to take such
      remedial action, as Clearing Broker, in its sole and absolute discretion, deems
      appropriate, including but not limited to executing buy-ins or sell-outs for
      an
      Account. Clearing Broker shall provide prior verbal notice thereof to
      Correspondent and an opportunity to cure, to the extent practicable in Clearing
      Broker's sole and absolute discretion. Checks shall not constitute payment
      until
      they have cleared and the proceeds have been collected by Clearing Broker's
      bank
      and credited to Clearing Broker. The taking of any such remedial action by
      Clearing Broker, or its failure to do so, shall not in any way affect or
      diminish Correspondent's indemnification, reimbursement or payment obligations
      pursuant this Agreement. 

     

    To
      the
      extent permitted by Regulation T, Rule ISc3-3 under the 1934 Act or any other
      provisions of the Laws and Rules, Correspondent may request, in a writing signed
      by an officer, partner or principal of Correspondent,
      that Clearing Broker 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 sale discretion of Clearing Broker. Correspondent shall
      be liable to Clearing Broker for any loss or expense incurred by Clearing Broker
      in connection with such request, whether or not granted. 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    Clearing
      Broker may, at its option, charge Customers (and Correspondent, in the case
      of
      Accounts which are proprietary accounts) 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 Clearing Broker, arising from any debit in an Account however
      arising, including, without limitation, for late payments or late deliveries
      of
      securities. Correspondent shall be liable to Clearing Broker for such charges
      to
      the extent not paid by Customers. 

     

    J.
       Option
      Assignments, Tender Offers and Rights Offerings 

     

    Clearing
      Broker may, in its sale discretion, either buy back in the cash market or borrow
      shares on the day Clearing Broker 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 Clearing Broker's actual possession. Clearing Broker
      shall 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, Clearing Broker shall 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 Clearing Broker's request. be confirmed in writing by
      Correspondent. At Clearing Broker's request, Correspondent also shall confirm
      in
      writing that such tender is being made upon the instructions of persons
      authorized to direct the disposition of the shares. 

     

    In
      connection with a rights offering, Clearing Broker shall 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 Clearing Broker's request, be confirmed in
      writing by Correspondent. At Clearing Broker's request, Correspondent also
      shall
      confirm in writing that such exercise is being made upon the instructions of
      persons authorized to do so. 

     

    VI.
       RECEIPT
      AND DELIVERY OF FUNDS AND SECURITIES 

     

    A.
       Receipt
      and Deliverv in the Ordinary Course of Business 

     

    Clearing
      Broker shall receive and deliver funds and securities for Accounts in accordance
      with Correspondent's instructions to Clearing Broker, 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 of a Customer to satisfy such
      obligations. Correspondent agrees promptly to deliver to Clearing Broker any
      and
      all funds or securities received by Correspondent from Customers, together
      with
      such information as may be relevant or necessary to enable Clearing Broker
      properly to record such deliveries in the appropriate Accounts. Clearing Broker
      shall be responsible for the safeguarding of all funds and securities actually
      received and accepted by Clearing Broker, subject to count and verification
      by
      Clearing Broker. Clearing Broker 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
      Clearing Broker at its premises or deposited in Clearing Broker's bank accounts.
      It is expressly understood and agreed, however, that Correspondent shall be
      responsible for compliance with the Bank Secrecy Act and the rules and
      regulations promulgated thereunder. 

    


    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    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 or any securities which
      may have been forged, counterfeited, altered, lost or stolen. 

     

    C.
       Custodv
      Services 

     

    Whenever
      Clearing Broker has agreed to act as custodian of securities in any Account,
      or
      to hold securities in "safekeeping," Clearing Broker may hold the securities
      in
      the Customer's name ("Customer Name Securities"), or may cause such securities
      to be registered in the name of Clearing Broker or its nominee or in the names
      or nominees of any depository used by Clearing Broker. In connection with
      Customer Name Securities, Clearing Broker shall 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 Deliverv Pursuant to Special Instructions 

     

    Upon
      special instructions from Correspondent or from a Customer, Clearing Broker
      shall endeavor to make such transfers of securities or Accounts as may be
      requested, consistent with the 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 or control securities within the meaning
      of Rule 144 under the Securities Act of 1933, as amended (the "1933 Act"),
      and
      for "ensuring that any transactions in such securities are in compliance with
      the Laws and Rules. Prior to the time any such order shall be transmitted to
      Clearing Broker, Correspondent shall notify Clearing Broker and Clearing Broker
      may, in its sol6 discretion, charge such reasonable fees, in addition to the
      clearing charges described below, as it deems appropriate for handling such
      transactions. 

     

    VII.
       CONFIRMATIONS
      AND STATEMENTS 

     

    A.
       Preparation
      and Transmission 

     

    Clearing
      Broker shall prepare and mail to Customers (and to Correspondent for its
      proprietary accounts) confirmations and monthly or quarterly statements of
      account in connection with all transactions executed or cleared through Clearing
      Broker, on Clearing Broker's forms disclosing that the Accounts are carried
      on a
      fully disclosed basis for Correspondent: provided.
      However,
      that
      Clearing Broker may, with the prior approval of Correspondent, delegate such
      confirmation responsibilities to Correspondent. In the event that such
      responsibilities are delegated to Correspondent, Correspondent shall have sole
      and exclusive responsibility for confirmations and for their compliance with
      the
      Laws and Rules. In the event that such responsibilities are not delegated to
      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 the content of such confirmations and for their
      compliance with the Laws and Rules. Accordingly, Correspondent shall provide
      in
      writing to Clearing Broker any information required by the Laws and Rules to
      be
      disclosed in its confirmations, including, without limitation, information
      with
      respect to the receipt of any payment for order flow. Clearing Broker shall
      provide Correspondent with copies of all confirmations and statements sent
      by
      Clearing Broker to Customers
      in connection with the Accounts. Except as expressly provided in this Agreement.
      Correspondent shall not prepare or transmit confirmations or periodic account
      statements or other communications to Customers without the prior written
      consent of Clearing Broker. 

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    B.
       Examination
      and Notification of Errors 

     

    Correspondent
      shall examine promptly all confirmations, monthly and quarterly statements
      of
      account, the Reconciliation Statements (as defined below in Section IX.C.)
      and
      any other statements or reports provided to Correspondent by Clearing Broker.
      All such confirmations, statements and reports 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 within ten
      (10) business days of receipt thereof Correspondent notifies Clearing Broker
      in
      writing of any alleged errors or discrepancies therein. Any notice of error
      or
      discrepancy shall be accompanied by such documentation as may be necessary
      to
      substantiate Correspondent's claim. Upon the request of Clearing Broker,
      Correspondent promptly shall provide any additional documentation Clearing
      Broker reasonably believes is necessary or desirable to substantiate and correct
      any such alleged error or discrepancy. 

     

    C.
       Notations
      on Confirmations, Monthlv and Ouarterlv Statements and Notices 

     

    Clearing
      Broker shall make reasonable efforts to indicate on confirmations, monthly
      and
      quarterly statements, and notices to Customers that Customers are customers
      of
      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 Clearing Broker and Correspondent
      pursuant to this Agreement. 

     

    VIII.
      BOOKS
      AND RECORDS 

     

    Clearing
      Broker shall prepare and maintain stock records and other prescribed books
      and
      records of the services performed and transactions effected by Clearing Broker
      for the Accounts on a basis consistent with generally accepted practices in
      the
      securities industry and with the
      Laws
      and
      Rules governing the activities of clearing brokers. Such books and records
      shall
      include, without limitation, records of daily margin requirements as required
      by
      NASD Rule 2520. Clearing Broker reserves the right, at its sole 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
      Laws and Rules, are required to be prepared and filed with the SEC or any other
      regulatory or self-regulatory organization by Correspondent or Clearing Broker,
      respectively, shall remain the responsibility of the respective parties, and
      Clearing Broker 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 have sole discretion and responsibility for determining the amount of
      commissions, mark-ups and similar charges (collectively, "Commissions") to
      be
      charged to Customers for transactions in the Accounts, and Clearing Broker
      shall
      not exercise any control or influence over the amount of such Commissions.
      Correspondent shall be solely and exclusively responsible for the amounts of
      such\
      commissions
      and their compliance with the Laws and Rules, including, but not limited to,
      applicable mark-up and mark-down rules and 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 Clearing Broker 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 Clearing Broker. Clearing Broker shall debit
      and collect from Accounts the amounts shown on the Commission Schedule, but
      Clearing Broker shall 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 Clearing Broker's data processing and operations systems.
      Notwithstanding anything herein to the contrary, Clearing Broker shall not
      be
      obligated to charge Customers any amounts which it believes to be violative
      of
      the Laws and Rules, but Clearing Broker shall have no obligation to determine
      whether any such charges are violative of the Laws and Rules. 

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    B.
       Clearing
      Fees 

     

    Correspondent
      agrees to pay Clearing Broker the clearing fees and other amounts set forth
      in
      Schedule B hereto for the execution, clearing, settlement and related services
      to be provided under this Agreement. Schedule B is hereby incorporated into
      and
      made an integral part of this Agreement. Schedule B may be amended by Clearing
      Broker, in its sole discretion, at any time upon thirty (30) days' prior written
      notice to Correspondent, or from time to time as may be agreed in writing by
      the
      parties. 

     

    C.
       Collection
      and Remittance of Commissions 

     

    Clearing
      Broker shall collect all Commissions from the Accounts on behalf of
      Correspondent and shall deduct and retain the following amounts from such
      Commissions as shall be determined by Clearing Broker: 

     

    
      	1.  	
              all
                amounts payable to Clearing Broker In
                accordance
                with Schedule B and any amendments thereto;


            


    

     

    
      	                          
              2.	
              any
                expenses payable by Clearing Broker on Correspondent's behalf;
                

            


    

     

    
      	3.  	
              any
                loss, liability, damage, claim, cost or expense (including but not
                limited
                to attorneys' fees), as incurred, in respect of which any Clearing
                Broker
                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 Clearing
                Broker
                pursuant to this Agreement or any other agreement between Clearing
                Broker
                and Correspondent or between Clearing Broker and any Customer (including,
                without limitation, Customers' unsecured debit items, or unsecured
                or
                partially secured short positions).


            


    

     

    On
      or
      before the 10th
      business
      day of the month following the end of the month in which the Commissions are
      generated, Clearing Broker shall credit the Settlement Deposit Account (as
      defined in Section X.B.) with the amount of Commissions collected by Clearing
      Broker on Correspondent's behalf, net of all amounts to be deducted as set
      forth
      above and any other amounts due to Clearing Broker from Correspondent, however
      arising, as determined by Clearing Broker. If the amount due to Clearing Broker
      in any month exceeds the amount available in Correspondent's Settlement Deposit
      Account, Correspondent shall, in accordance with the provisions of Section
      X.A.,
      immediately deposit with Clearing Broker additional cash so that the Settlement
      Deposit Account shall always have a zero or credit balance. If Correspondent
      fails to make such additional deposit, Clearing Broker shall have full rights
      of
      setoff, including, without limitation, the right to charge any other Account
      maintained by Clearing Broker for Correspondent or any other assets of
      Correspondent held by Clearing Broker, including, but not limited to, the
      Security Deposit (as defined in Section X.B.) and positions and balances in
      Accounts which are proprietary accounts of Correspondent, for the net amount
      due
      Clearing Broker. If Clearing Broker elects not to charge such other Accounts
      or
      assets, or such assets are insufficient to discharge the net amount due to
      Clearing Broker, any amount due to Clearing Broker shall be paid to Clearing
      Broker by Correspondent by wire transfer within ten (10) days of Correspondent's
      receipt of a statement (the "Reconciliation Statement") showing the amount
      due
to
      Clearing Broker. If Clearing Broker does not receive payment within such period,
      Clearing Broker shall charge Correspondent interest at 1%
      above
      the
      broker's call rate, 'or such other rate as may be agreed in writing by Clearing
      Broker and Correspondent, until paid in full. Any failure by Clearing Broker
      to
      charge the Settlement Deposit Account or any other Account or assets of
      Correspondent held by Clearing Broker shall not constitute a waiver of Clearing
      Broker's right to demand payment of, or to charge Correspondent's Accounts
      for,
      the full amount due at any time. 

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    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 Clearing Broker 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 Clearing Broker a continuing lien,
      perfected first 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 Accounts which are proprietary accounts of Correspondent, and
      (c) any Commissions, funds, securities or other property of Correspondent held
      by Clearing Broker. Correspondent further agrees that Clearing Broker may debit
      any cash balances and/or liquidate any securities held in the Settlement Deposit
      Account or in any proprietary Account of Correspondent and credit the proceeds
      to Clearing Broker in such amounts as are necessary to satisfy Correspondent's
      obligations under this Agreement and at such times as Clearing Broker, in its
      sole discretion, deems appropriate; provided, however, that Clearing Broker
      has
      complied with the notice and cure provisions of Section XVIII.G. hereof. The
      lien, security interest and right of setoff created hereunder shall survive
      the
      termination of this Agreement until such time as, in the sole discretion of
      Clearing Broker, security for the performance of Correspondent's obligations
      is
      no longer required. 

     

    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 Clearing Broker. 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 value of at least $25,000.00 (the
      "Security Deposit"). Clearing Broker reserves the right, in its sole 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 the preceding section, 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, Clearing Broker shall be entitled to
      deposit in the Settlement Deposit Account such Commissions, funds, securities
      or
      other property of Correspondent in Clearing Broker's possession as are necessary
      to satisfy the deficiency. Correspondent agrees that if this Agreement is
      terminated for any reason, Clearing Broker may deduct from the Security Deposit
      any amounts Correspondent owes Clearing Broker because of failure to meet any
      of
      Correspondent's obligations under this Agreement. The Security Deposit in no
      way
      represents any type of ownership in the Clearing Broker under this Agreement.
      In
      this regard, Correspondent also acknowledges that the Termination Fee referred
      to in Section XVIII.D. is a non-allowable asset for purposes of its net capital
      computation. 

     

    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 shall be (a) in suitable form for transfer or shall be accompanied
      by
      duly executed instruments of transfer or assignment in blank and such other
      documentation
      as Clearing Broker may request, (b) transferred on the book-entry system of
      a
      Federal Reserve Bank, or (c) transferred by any other method acceptable to
      Clearing Broker. Clearing Broker 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 Clearing Broker. 

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    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
      Clearing Broker 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 will, within five (5)
      business days after their preparation, continue to provide Clearing Broker
      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 Clearing Broker in writing of
      any
      material errors in or omissions from 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 Clearing Broker
      with copies of all financial information and reports filed by Correspondent
      with
      the SEC, the NASD and any 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 amendments or
      supplement to its Form BD, and any reports on Disciplinary Reporting Pages
      thereunder relating to Correspondent's principals, together with any amendments
      or supplements to any of the foregoing information or reports. Correspondent
      shall provide immediate oral and written notice to Clearing Broker in the event
      that Correspondent's capital becomes subject to the "early warning" provisions
      of SEC Rule 17a-1 1. 

     

    B.
       Suspension
      or Restriction 

     

    In
      the
      event that Correspondent learns that Correspondent or any principal of
      Correspondent has become subject to revocation, suspension, bar, restriction,
      censure or other formal disciplinary action by the SEC, NASD or any other
      regulatory, self-regulatory or enforcement or governmental body having
      jurisdiction over Correspondent or such principal, Correspondent shall notify
      Clearing Broker immediately and, in addition to such other rights and remedies
      as Clearing Broker may have under this Agreement and the Laws and Rules,
      Correspondent authorizes Clearing Broker to take such steps as may be necessary
      for Clearing Broker to maintain compliance by Clearing Broker with the Laws
      and
      Rules. Correspondent further authorizes Clearing Broker, in such event, to
      comply with directives or demands made upon Clearing Broker by any such exchange
      or regulatory or self-regulatory body. In connection with such directives or
      demands, Clearing Broker may seek advice or legal counsel and Correspondent
      shall promptly reimburse Clearing Broker for the reasonable fees and expenses
      of
      such counsel, as incurred. 

    


    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    C.
       Additional
      Information 

     

    Correspondent
      shall promptly supply Clearing Broker, upon request, with such other information
      or reports reflecting or relating to Correspondent's financial integrity,
      including, without limitation, its aggregate indebtedness ratio and net capital;
      Correspondent's registered principals and registered representatives; and
      inquiries, investigations or disciplinary or enforcement action relating to
      Correspondent or its registered principals or registered representatives by
      the
      SEC, NASD or any other regulatory; self-regulatory or governmental body.


     

    XII.
       COMMUNICATIONS
      WITH CUSTOMERS 

     

    Correspondent
      shall promptly notify its Customers in writing of the respective obligations
      of
      the parties under this Agreement and any other customer-related responsibilities
      of the parties in accordance with NASD Rule 3230, such notification to be in
      substantially the form of Exhibit C annexed hereto; provided,
      However, that
      Clearing Broker may, in its sole discretion, undertake such responsibilities
      on
      behalf of Correspondent. Correspondent shall be responsible for the payment
      of
      all costs incurred in connection with the preparation and mailing of such
      notification. 

     

    Clearing
      Broker agrees to forward promptly to Correspondent a copy of any written
      inquiry, complaint or other correspondence received from a Customer with respect
      to any Account. Correspondent agrees to forward promptly to Clearing Broker
      a
      copy of all of Correspondent's filings pursuant to NASD Rule 3070. Clearing
      Broker also shall provide a copy thereof to Correspondent's designated examining
      authority or self-regulatory organization and to advise the Customer that it
      has
      received the complaint and forwarded it to Correspondent and Correspondent's
      designated examining authority or self-regulatory organization. Additionally,
      Correspondent shall provide Clearing Broker with such additional information
      as
      Clearing Broker shall 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 NASD
      Rule 3070. 

     

    XIII.
       ERRORS,
      CONTROVERSIES AND ADDITIONAL INDEMNITIES 

     

    A.
       Errors
      and Controversies 

     

    Correspondent
      shall be solely 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. Correspondent shall indemnify, defend and hold Clearing Broker
      and
      its control persons, partners, shareholders, directors, officers, employees,
      agents, affiliates, successors and assigns (collectively, including Clearing
      Broker, the "Clearing Broker indemnities") harmless from and against any loss,
      liability, damage, claim, cost or expense (including but not limited to
      attorneys' fees), 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.


     

    B.
       Additional
      Indemnities 

     

    Correspondent
      hereby agrees to indemnify, defend and hold the Clearing Broker indemnities
      harmless from and against any loss, liability, damage, claim, cost or expense
      (including but not limited to attorneys' fees), in each case as incurred,
      arising directly or indirectly from or related to the Accounts or any
      transaction contemplated by or effected pursuant to 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
      arbitration or a court of competent jurisdiction, was caused primarily
      by the fraudulent conduct or gross negligence of Clearing Broker (in which
      case
      Clearing Broker shall bear responsibility only for the proportion of any such
      loss, liability, damage, claim, cost or expense finally determined by mutual
      agreement of the parties, arbitration or a court of competent jurisdiction
      to be
      attributable to Clearing Broker's fraudulent conduct or gross negligence).
      This
      indemnity is supplemental to any other obligation of Correspondent in this
      Agreement to pay or reimburse Clearing Broker for any fees, expenses, losses
      or
      liabilities. 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) arising from
      or
      relating to any of the following: 

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    
      	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 art Account, the failure
                of
                any Customer timely to comply with initial margin or maintenance
                margin
                requirements, 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 their obligations and responsibilities with respect to
                Accounts,
                it being understood and agreed that the participation of any of the
                Clearing Broker lndemnitees 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 arbitration or a court of competent jurisdiction to have been
                fraudulent or grossly negligent; 

            


    

     

    
      	3.  	
              any
                willful misconduct or negligent act or omission on the part of any
                of the
                Correspondent Parties or any Customer, including but not limited
                to any
                dishonest, fraudulent or criminal act or omission;
                

            


    

     

    
      	4.  	
              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 Clearing Broker shall be deemed to be solely an
                intermediary between Correspondent and Customers with respect to
                such
                securities and shall be deemed to make no representations or warranties
                other than as provided with respect to intermediaries in Section
                8-306(3)
                of the Uniform Commercial Code; 

            


    

     

    
      	5.  	
              any
                claim by any contra broker or any other person arising from or relating
                to
                Clearing Broker's rejection of a transaction for clearance and settlement
                pursuant to the terms of this Agreement, or the failure by any contra
                broker designated by Correspondent to settle any transaction for
                an
                Account; 

            


    

     

    
      
        
          	6.  	
                  any
                    errors or discrepancies in orders as transmitted by Correspondent
                    to
                    Clearing Broker; 

                


        

         

      

    

    
      
        	7.  	
                the
                  use of check-writing privileges in accordance with Section XXI.C.
                  hereof;
                  

              


      

       

    

    
      	8.  	
              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 Clearing Broker;
                

            


    

     

    
      	9.  	
              any
                guarantee by Clearing Broker of any signatures with respect to
                transactions in the Accounts; 

            


    

     

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    
      
        	10.  	
                the
                  exercise by Correspondent Parties of discretionary authority over
                  any
                  Account; 

              


      

      
         

        
          	11.  	
                  any
                    action or inaction by an agent holding a power of attorney for
                    an Account
                    on behalf of a principal; or 

                


        

        
           

          
            	12.  	
                    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 of the Clearing Broker
      Indemnities in respect of which indemnity may be sought against Correspondent
      pursuant to this Agreement, such Clearing Broker Indemnities shall 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 Clearing Broker Indemnities.
      Each Clearing Broker 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 Clearing
      Broker Indemnitee unless: (1) the employment of such separate counsel shall
      have
      been authorized in writing by Correspondent; (2) Correspondent shall not have
      employed counsel to conduct the defense of such Clearing Broker Indemnitee;
      or
      (3) such Clearing Broker Indemnitee, shall have reasonably concluded that as
      between such Clearing Broker Indemnitee and Correspondent or between such
      Clearing Broker Indemnitee and one or more of the other Clearing Broker
      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 Clearing Broker Indemnitee shall be borne in their entirety
      by
      Correspondent, and Correspondent shall not have the right to direct the defense
      of such Clearing Broker Indemnitee. In any event, Correspondent shall cooperate
      in the defense of any such claim or action against a Clearing Broker Indemnitee,
      including, without limitation, in the effectuation of any settlement which
      such
      Clearing Broker 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 also shall extend to the costs and expenses (including but not
      limited to attorneys' fees), if any, incurred by any of the Clearing Broker
      Indemnitees in enforcing such indemnity. 

     

    XIV.
      LIMITATION
      OF LIABILITY OF CLEARING BROKER 

     

    A.
       Indirect
      or Consequential Dama2es 

     

    In
      no
      event shall Clearing Broker be responsible to Correspondent, to any Customer
      or
      to any other person for indirect or consequential damages arising from or
      relating to any actual or alleged failure by Clearing Broker to perform the
      functions or provide the services required by this Agreement, regardless of
      whether Clearing Broker has been advised of or might otherwise have anticipated
      the possibility of such damages. Clearing Broker's sole responsibility and
      liability for any such actual or alleged failure shall be to Correspondent,
      and
      notwithstanding anything to the contrary in this Agreement, Clearing Broker
      shall have no liability whatsoever for any losses, damages, costs or expenses
      which are not finally determined by arbitration or a court of competent
      jurisdiction to have been caused primarily by its own fraudulent conduct or
      gross negligence (in which case Clearing Broker shall bear responsibility only
      for the proportion of any such loss, damage, cost or expense finally determined
      by arbitration or a court of competent jurisdiction to be attributable to
      Clearing Broker's fraudulent conduct or gross negligence). Clearing Broker
      shall
      not be bound to make any investigation into the facts surrounding any
      transaction that
      it
      may have with Correspondent or that Correspondent may have with or on behalf
      of
      any Customers or other persons, nor shall Clearing Broker be responsible for
      compliance by Correspondent with the Laws and Rules in connection with any
      Account or the performance by Correspondent of its obligations under this
      Agreement. Correspondent acknowledges and agrees that this Agreement
      significantly limits the liability of Clearing Broker and that such limitation
      is fair and reasonable in light of the limited responsibilities of Clearing
      Broker, and the amounts payable to Clearing Broker for its services, under
      this
      Agreement 

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    B.
       Svstems
      and Communications Failures: Errors in Instructions 

     

    Clearing
      Broker's sale responsibilities with respect to any systems or communications
      failures, or any interruptions or delays in the services provided or to be
      provided by Clearing Broker under this Agreement, shall be to use its best
      efforts to make such systems and services available as promptly as reasonably
      practicable. Clearing Broker 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. Clearing Broker 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.
      Clearing Broker shall have no responsibility whatsoever for any failures to
      execute or "DKs" 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 Clearing Broker as follows: 

     

    
      	1.  	
              Correspondent
                is and during the term of this Agreement shall be 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 where such membership is required
                in
                light of Correspondent's activities.


            


    

     

    
      	2.  	
              Correspondent
                has all requisite authority in conformity with all 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 ful1 compliance with the Laws and Rules,
                including but not limited to the registration, qualification, net
                capital,
                financial reporting, customer protection, and similar requirements
                of the
                SEC, the 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 120%
                of
                the amount required under the Law and Rules, or an amount specified
                in
                writing by Clearing Broker to Correspondent. Correspondent shall
                give
                prompt written notice to Clearing Broker in the event that Correspondent's
                excess net capital falls below 135%
                of
                the amount required under the Laws and Rules. 

            


    

    
 

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    
 

    
      	5.  	
              All
                orders and instructions transmitted to Clearing Broker 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 to the best knowledge of Correspondent any material
                action, suit, investigation, inquiry or proceeding, 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 Clearing Broker has not been informed and
                provided with copies of relevant documents. In the event any such
                action,
                suit, investigation, inquiry or proceeding is initiated or threatened
                at
                any time during the term of this Agreement, Correspondent shall promptly
                notify Clearing Broker in writing and provide it with copies of all
                relevant documents related thereto.


            


    

     

    
      	7.  	
              The
                services provided by Clearing Broker 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 (as defined thereunder), shall have been complied
                with.
                

            


    

     

    
      	8.  	
              Correspondent
                has and during the term of this Agreement shall maintain blanket
                bond
                insurance policies satisfactory to Clearing Broker covering any and
                all
                acts, errors and omissions of any of the Correspondent Parties and
                adequate to fully protect and indemnify Clearing Broker against any
                loss,
                liability, damage, claim, cost or expense (including but not limited
                to
                attorneys' fees) which Clearing Broker 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 an amount specified
                in
                writing by Clearing Broker 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. Clearing Broker 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 Clearing Broker each of its lines of business
                and
                any securities in which Correspondent makes a market. Correspondent
                shall
                give Clearing Broker at least ten (10) business days' prior written
                notice
                of any proposed changes in its market-making activities, including
                but not
                limited to any changes in the identity of securities in which it
                proposes
                to act as a market maker. Clearing Broker shall have the absolute
                right,
                in its sole discretion, to limit or prohibit Correspondent's market-making
                activities with respect to any security.


            


    

     

    
      	10.  	
              Correspondent
                shall give Clearing Broker at least ten (10) business days' prior
                written
                notice of any new lines of business that materially modify the mix
                of
                business that Correspondent is engaged in as of 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 Clearing Broker under this Agreement. In connection
                with any
                such new business or different business mix, Clearing Broker shall
                have
                the absolute right, in its sole discretion, to request additional
                assurances from Correspondent, to require Correspondent to increase
                the
                amount of its Security Deposit or to terminate this Agreement.
                

            


    

    


    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    B.
       Representations.
      Warranties and Covenants of Clearing Broker 

     

    Clearing
      Broker represents, warrants and covenants to Correspondent as follows:


    
      
         

        
           

          
            
              	1.  	
                      Clearing
                        Broker 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 where such membership
                        is
                        required in light of Clearing Broker's activities.
                        

                    


            

            
              
                 

                
                  
                    	2.  	
                            Clearing
                              Broker has all requisite authority in conformity with
                              all 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.  	
                                  Clearing
                                    Broker 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. 

                                


                        

                        
                          
                             

                            
                              
                                	4.  	
                                        Clearing
                                          Broker has and during the term of this
                                          Agreement shall maintain excess net
                                          capital in an amount that is the greater
                                          of 120% of the amount required
                                          under the Law and Rules. Clearing Broker
                                          shall give prompt written notice
                                          to Correspondent in the event that Clearing
                                          Broker's excess net capital
                                          falls below 135% of the amount required
                                          under the Laws and
                                          Rules. 

                                      


                              

                              
                                
                                   

                                  
                                    
                                      	5.  	
                                              Clearing
                                                Broker has and during the term of
                                                this Agreement shall maintain insura.nce
                                                policies as required under NASD Rule
                                                3020. Clearing Broker is, and during
                                                this Agreement shall remain, a member
                                                of the Securities Investor
                                                Protection Corporation ("SIPC").
                                                In addition, Clearing Broker has
                                                secured
                                                additional protection through, an
                                                independent insurance provider for
                                                an
                                                excess of $9,500,000 per customer
                                                and $50,000,000 Clearing Broker SIPC
                                                coverage (see Terra Nova Trading,
                                                L.L.C. website and disclosures for
                                                additional information). 

                                            


                                    

                                    
                                       

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    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 Clearing Broker. Correspondent shall not hold itself out
      as an
      agent of Clearing Broker or of any subsidiary or company controlled directly
      or
      indirectly by or affiliated with Clearing Broker, nor shall it employ Clearing
      Broker'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 Clearing Broker, place any advertisement in any newspaper,
      publication, periodical or any other media if such advertisement in any manner
      makes reference to Clearing Broker or to the execution and clearing arrangements
      contemplated by this Agreement. Should Correspondent in any way hold itself
      out
      as, advertise or otherwise represent that it is the agent of Clearing Broker,
      Clearing Broker shall have the right, at its option, in addition to such other
      rights and remedies as it may have, to immediately terminate this Agreement
      and/or to obtain injunctive relief or any other provisional remedy in any
      Illinois 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) 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.L. of this Agreement. 

    


    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    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. Neither
      party shall have any obligation to deal with the other in any capacity other
      than as set forth in this Agreement. 

     

    XVII.
      CONFIDENTIALITY:
      EMPLOYEES 

     

    A.
       Confidentiality
      

     

    Correspondent
      and Clearing Broker 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, "Inquiry"). Except as otherwise prohibited by
      law, Correspondent and Clearing Broker shall 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 Clearing Broker. The confidentiality
      provisions of this Agreement shall survive the termination of this Agreement.
      

     

    B.
       Emplovees
      

     

    Without
      the other party's prior written consent, neither party shall solicit any
      employee who is, or within the preceding twelve (12) months has been, employed
      by the other party or any affiliate thereof. 

     

    XVIII.
      TERM
      AND TERMINATION 

     

    A.
       Term
      and Termination bv Either Party 

     

    The
      initial term of this Agreement shall be 2 years, commencing on (i) the date
      Clearing Broker first receives and accepts an Account pursuant to Section
      III.C., or (ii) its approval by the NASD, whichever occurs last, and shall
      continue for successive one-year periods thereafter. The end of the initial
      term
      is referred to as the "Initial Expiration Date." This Agreement shall be deemed
      to have been extended for an additional one-year period, and shall continue
      to
      be extended for one-year periods as of each anniversary of the Initial
      Expiration Date, provided that written notice of termination is not provided
      at
      least sixty (60) calendar days in advance of the end of each subsequent term.
      

     

    In
      addition. either party 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.  	
                Either
                  party fails to perform or observe any term, covenant or condition
                  to be
                  performed hereunder and such failure continues unremedied for a
                  period
                  often (10) business days· after receipt of written notice from the other
                  party specifying the failure and demanding that such party remedy
                  its
                  default; 

              


      

      
         

        
          	2.  	
                  Any
                    representation, warranty or covenant made by the other party
                    proves to be
                    incorrect at any time in any material respect;


                


        

        
           

          
            	3.  	
                    
                      The
                        other party is enjoined, disabled. suspended, prohibited,
                        or otherwise
                        unable to engage in the 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 such party;
                        or  

                    

                  


          

           

        

      

    

    
      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

      
        	4.  	
                The
                  other party is adjudicated bankrupt or insolvent or a trustee or
                  similar
                  creditors' representative is appointed by court order; or any property
                  of
                  such party 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 such party 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 such party 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.
                  

              


      

    

     

    The
      defaulting party shall promptly advise the other party 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, the non-defaulting party
      may, at its option, by notice in writing to the defaulting party, 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 the
      non-defaulting party 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 the non-defaulting party .. 

     

    B.
       Termination
      bv Clearing Broker 

     

    Clearing
      Broker may terminate this Agreement at any time, with or without cause, whether
      prior to or after the Initial Expiration Date, upon ninety (90) calendar days'
      prior written notice to Correspondent. 

     

    C.
       Changes
      in Control. Management or Business Mix 

     

    Notwithstanding
      any provision hereof, this Agreement may be terminated immediately by Clearing
      Broker at any time, upon written notice to Correspondent, if there is a material
      change in the control or 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 Clearing
      Broker. 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 Clearing Broker in writing
      upon the occurrence of any of the events described in this Section.


     

    D.
       Termination
      Fee 

     

    In
      the
      event that this Agreement is terminated prior to the Initial Expiration Date,
      for any reason whatsoever other than Clearing Broker's termination without
      cause
      pursuant to Section XVIII.B., Correspondent shall pay to Clearing Broker a
      termination fee (the "Termination Fee") equal to the sum of (1) the unamortized
      costs and expenses of Clearing Broker incurred in connection with establishing
      the systems, procedures and capacity for servicing the Accounts as contemplated
      by this Agreement, which Clearing Broker shall specify to Correspondent in
      writing, and (2) the costs and expenses of Clearing Broker incurred in
      connection with the conversion of Accounts pursuant to Section XVIIE. of this
      Agreement. In no event shall the Termination Fee 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 Clearing Broker setting forth in reasonable detail the costs
      and
      expenses comprising the Termination Fee. 

    


     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    At
      each
      time specified in the paragraph above, Correspondent shall promptly designate
      in
      writing to Clearing Broker which, if any, of such reports Correspondent requires
      during the succeeding twelve (12) months, and Clearing Broker shall thereafter
      provide such designated reports to Correspondent and shall advise
      Correspondent's designated examining authority or self-regulatory organization
      of the reports designated by Correspondent. 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. Clearing Broker shall retain the data from which each of such reports
      was produced in a manner sufficient for Clearing Broker 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.
       Check-
      Writing Authority 

     

    Clearing
      Broker may, but is not required to, authorize certain of Correspondent's
      employees to issue checks drawn against a Clearing Broker account to Customers
      for amounts due to and requested by them with respect to their Accounts.
      Correspondent shall provide Clearing Broker with a written representation that
      it has established, and shall maintain and enforce, supervisory procedures
      with
      respect to the issuance of negotiable instruments. Correspondent shall designate
      in writing the names of any employees it wishes to receive the authorization
      described in this Section. All checks must be signed by two employees of
      Correspondent who have received authorization from Clearing Broker. No check
      or
      checks totaling more than $50,000 shall be provided to any Customer by
      Correspondent on the same business day. All expenses incurred in connection
      with
      the issuance of checks under the authority described in this Section shall
      be
      charged to Correspondent. Correspondent remains responsible for the disbursement
      and delivery of such checks to Customers. Any lien on the Customer's property
      granted by the Customer to Correspondent or Clearing Broker shall extend to
      any
      funds which may be segregated in a separate account in connection with the
      exercise of the authority described in this Section. 

     

    D.
       Credit
      Investigations 

     

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


     

    F.
       No
      Third-Party Beneficiaries 

     

    Except
      as
      otherwise provided in Section XXI
      J
      hereof,
      this Agreement is between Clearing Broker 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 Clearing Broker Indemnitees)
      unless expressly agreed in writing otherwise. 

     

    G.
       Competition
      

     

    Nothing
      herein shall restrict or be deemed to restrict the right of either party or
      any
      affiliate of either party to compete with the other party in any or all aspects
      of such party's business, provided
      that neither
      party shall
      use, or permit the use of proprietary information regarding the business and
      affairs of the other party acquired as a result of this Agreement. 

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    H.
       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 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. 

     

    I.
       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. 

     

    J.
       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
      Clearing Broker with thirty (30) business days' prior written notice of any
      proposed change in control of Correspondent. Correspondent may not assign this
      Agreement, or assign or delegate any of its rights or obligations hereunder,
      without the prior written consent of Clearing Broker. Clearing Broker may assign
      this Agreement or assign or delegate any of its rights or obligations hereunder
      to any affiliate of Clearing Broker 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 Clearing Broker
      under this Agreement as have been delegated to it. Correspondent consents and
      agrees to the assignment and transfer by Clearing Broker of its rights and
      obligations hereunder at any future time resulting from a merger, sale of
      assets, liquidation or otherwise of all Accounts covered by this Agreement
      (including 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 Clearing Broker's equity
      securities, and such assignment shall be binding upon Correspondent, its
      successors and assigns. 

     

    K.
       Governing:
      Law 

     

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


     

    L.
       Arbitration
      

     

    Any
      dispute or controversy arising out of or relating in any way to this Agreement
      shall be submitted to arbitration before the NASD (conducted pursuant to the
      Code of Arbitration of the NASD), or any other self-regulatory organization
      or
      exchange chosen by Clearing Broker 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 may be entered in any court of
      competent jurisdiction. 

     

    M.
       Customer
      Actions 

     

    In
      the
      event of an arbitration or court action in which a Customer has asserted a
      claim
      against Clearing Broker, 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. 

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    N.
       Temporary
      or Provisional Relief 

     

    Notwithstanding
      Section XXI.L. hereof, either party 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 Northern District of Illinois 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
      the
      other party by certified mail, return receipt requested, at the address provided
      above for the delivery of notices under this Agreement. In this connection,
      each
      party 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.L. hereof.
      

     

    O.
       Force
      Maieure 

     

    Clearing
      Broker shall not be liable for losses caused directly or indirectly by
      government restrictions, exchange or market rulings or conditions, suspension
      or
      halts of trading, labor strikes, war, acts of civil or military authority,
      sabotage, terrorist attacks, epidemic, flood, earthquake, fire or other natural
      disasters or acts of God, or any other similar conditions or occurrences beyond
      Clearing Broker's reasonable control. 

     

    P.
       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. 

     

    Q.
       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. 

     

    R.
       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.
      

     

    [SIGNATURE
      PAGE FOLLOWS] 

    


    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    


    


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

     

     

    
      	 	
              TERRA
                NOVA TRADING, L.L.C. (Clearing
                Broker) 

            
	 	   
	 	
              BY________________________________

            
	
            	 
	 	
              Name:______________________________

            
	 	 
	 	
              Title:_______________________________

            
	 	 
	 	


    

    


    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    


    


     

    SCHEDULE
      A 

     

    Additional
      Services 

     

    NONE
      

     

    


     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    
 

    EXHIBIT
      A 

     

    PAIB
      PROCEDURES 

     

    In
      conformity with the SEC No-Action Letter dated November 3, 1998 and publicly
      available November 10, 1998 (the "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, Clearing Broker and Correspondent agree as follows: 

     

    
      	1.  	
              Correspondent
                shall identify to Clearing Broker in writing all accounts that are,
                or
                from time to time may be, proprietary accounts of Correspondent.
                Clearing
                Broker shall perform a computation for P AIB assets of Correspondent
                ("PAIB Reserve Computation") in accordance with the customer reserve
                computation set forth in Rule 15c3-3 under the 1934 Act ("Customer
                Reserve
                Formula") with the following modifications:


            


    

     

    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 PAID Reserve
      

    Computation;
      

     

    B.
       Note
      E
      (3) to Rule 15~3-3a which reduces debit balances by 1 %
      under
      the
      basic method and subparagraph (a)(l)(ii)(A) of Rule 15c3-1 which reduces debit
      balances by 3% under the alternative method shall not apply; and 

     

    C.
       Neither
      Note E (1) to Rule 15c3-3a nor Exchange Interpretation /04 to
      Item
      10 of Rule 15c3-3a regarding securities concentration charges shall be applied
      to the PAID Reserve Computation. 

     

    
      	2.  	
              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.
                

            


    

    
       

      
        	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.
                  

              


      

       

    

    
      
        
          	4.  	
                  Clearing
                    Broker 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 (''P AIB Reserve Account").
                    Cash
                    and/or qualified securities as defined in the . Customer Reserve
                    Formula
                    shall be m6.intained in the PAID Reserve Account in an amount
                    equal to the
                    PAm reserve requirement. 

                


        

         

      

    

    
      	5.  	
              Credits
                included in the PAIB Reserve Computation that result from the use
                of PAID
                securities pledged to meet intra-day margin calls in a cross margin
                account established between The Options Clearing Corporation and
                any
                regulated commodity exchange can be reduced to the extent that the
                excess
                margin held by the other clearing corporation in the cross margin
                relationship is used the following business day to replace the P
                AIB
                securities that were previously pledged. In addition, balances resulting
                from a cross margin account which are segregated pursuant to the
                Commodities Future Trading Commission regulations need not be included
                in
                the PAIB Reserve Computation. 

            


    

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    
      
        
          	6.  	
                  Deposits
                    received prior to a transaction pending settlement which are
                    $5 million or
                    greater for any single transaction or $10 million in aggregate
                    can be
                    excluded as credits from the PAIB Reserve Computation if such
                    balances are
                    placed and maintained in a separate P AIB Reserve Account by
                    12:00 p.m.
                    Eastern Time on the following business day. Thereafter, the money
                    representing any such deposits may be withdrawn to complete the
                    related
                    transactions without performing a new P AIB Reserve
                    Computation. 

                


        

         

      

    

    
      	7.  	
              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 P AIB Reserve Computation.
                

            


    

     

    
      	8.  	
              Within
                two (2) business days of entering into this Agreement, Correspondent
                shall
                notify its designated examining authority in writing (with a copy
                to
                Clearing Broker) that it has entered into this Agreement regarding
                the
                capital treatment of Correspondent's P AIB assets.
                

            


    

     

    
      	9.  	
              Commissions
                receivable and other receivables of Correspondent from Clearing Broker
                (excluding clearing deposits) that are otherwise allowable assets
                under
                Rule 15c3-1 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 Clearing
                Broker.
                

            


    

     

    
      	10.  	
              If
                Correspondent is a guaranteed subsidiary of Clearing Broker or if
                Correspondent guarantees Clearing Broker (i.e., guarantees all liabilities
                and obligations) then the proprietary accounts of Correspondent shall
                be
                excluded from the PAIB Reserve Computation.


            


    

     

    
      	11.  	
              Upon
                discovery that any deposit made to the PAIB Reserve Account did not
                satisfy its deposit requirement, Clearing Broker shall by facsimile
                or
                telegram immediately notify its designated examining authority and
                the
                SEC. Unless a corrective plan is found acceptable by the SEC and
                the
                designated examining authority, Clearing Broker shall provide written
                notification within five (5) business days of the date of discovery
                to
                Correspondent that PAIB assets held by Clearing Broker shall not
                be deemed
                allowable assets for net capital purposes. The notification also
                shall
                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, Correspondent may choose to keep its assets
                at
                Clearing Broker. 

            


    

     

    
      	12.  	
              Clearing
                Broker and Correspondent shall adhere to the terms of the No-Action
                Letter, including the Interpretations as set forth therein, in all
                respects. 

            


    

     

     

     

    AGREED
      AND ACCEPTED: 

    By:
      

    Name

     

    Title:.CEO_________________
      

     

    

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    
      
        EXHIBIT
          B 

      

      
         

        ANTI-MONEY
          LAUNDERING COMPLIANCE 

         

        Each
          of
          the parties hereto agrees that it is responsible for complying with all
          applicable anti-money laundering ("AML") legal and regulatory rules and
          reporting requirements, including but not limited to the PATRIOT Act and
          its
          implementing regulations. With respect to the allocation of such AML
          responsibilities between Clearing Broker and Correspondent under the Agreement,
          the parties agree as follows: 

      

       

      A.
        Correspondent's
        AML Responsibilities 

       

      1.
        In
        addition to any other obligations Correspondent has under the Agreement or
        the
        PATRIOT Act, Correspondent represents and warrants to Clearing Broker that:
        

       

      (a)
         It
        is not
        doing business with foreign shell banks and is in compliance, as of the date
        of
        the - Agreement
        and shall continue to be in compliance in the future, with Section 313 of
        the
        PATRIOT Act (Prohibition on United States Correspondent Accounts With Foreign
        Shell Banks) and any corresponding regulations issued by the U.S. Department
        of
        the Treasury on foreign banks and foreign shell banks in furtherance of Section
        313; 

       

      (b)
        It is
        responsible for and has appropriate procedures for: (i) determining which
        of its
        customers are foreign banks and properly identifying and coding such accounts
        and obtaining the required ownership and agent information from any such
        customers; (ii) determining whether any of its customers are, or are acting
        on
        behalf of, foreign shell banks; (iii) closing, or refusing to accept, as
        applicable, accounts where Correspondent determines that a customer is, ()r
        is
        acting on behalf of, a foreign shell bank, or where Correspondent is unable
        to
        obtain the required information; and (iv) providing prompt notice to Clearing
        Broker of any circumstances requiring Correspondent to terminate an account
        pursuant to the PATRIOT Act (e.g., Section 313 and Section 319); and


       

      (c)
        It
        has obtained from each foreign bank for which it currently maintains an account,
        and shall obtain from any such accounts opened in the future, a completed
        certification/recertification (in the form set forth in the PATRIOT Act and
        its
        implementing regulations) identifying: (i) the owners 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 foreign
        bank. Correspondent shall collect and maintain all such
        certifications/recertifications and promptly forward copies thereof to Clearing
        Broker. Clearing Broker shall review certifications/recertifications received
        from Correspondent for completeness. Correspondent agrees that, in addition
        to
        any other rights Clearing Broker has under the Agreement, Clearing Broker
        has
        the right to close or restrict an account should such
        certification/recertification not be obtained. 

       

      2.
        Correspondent is, and shall remain throughout the term of this Agreement,
        in
        compliance with the Bank Secrecy Act ("BSA") and any amendments thereto,
        which
        now requires, or in the future may require, among other things: 

       

      (a)
         Reports
        of any transaction over $10,000 in currency, including multiple transactions
        occurring during
        the course of the same day, on a Currency Transaction Report, Form 4789 ("CTR");
        

       

      (b)
        Recordkeeping, including collecting and maintaining records concerning wire
        fund
        transfers of $3,000 or more and verification of the identity of transmitters
        and
        recipients of such funds that are not established customers; and 

       

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

      (c)
        Reports of any transaction of more than $10,000 in currency or monetary
        instruments into or outside of the United States on a Report of International
        Transportation of Currency or Monetary Instruments Form 4790 ("CMIR").


       

      3.
        Correspondent will consult with Clearing Broker when required to file any
        reports concerning an account and will provide Clearing Broker with any
        information Clearing Broker requests relative to such reports. Correspondent
        shall provide Clearing Broker with a copy of all Forms CTR, CMIR and Suspicious
        Activity Report ("SAR"). as discussed below, that it files and any other
        reports
        Correspondent is required to file concerning any account, and shall attach
        an
        explanation of the action Correspondent has taken with respect to the account
        internally. 

       

      4.
        Correspondent will file on an annual basis a notice with the U.S. Department
        of
        the Treasury for purposes of sharing information. as described in Section
        314(b)
        of the PATRIOT Act. Correspondent will provide Clearing Broker with a copy
        of
        such notice. 

       

      5.
        Correspondent represents and warrants that it is responsible for conducting
        any
        special due diligence with respect to any private banking accounts and
        correspondent accounts as described in PATRIOT Act Section 312 and other
        types
        of accounts it introduces to Clearing Broker pursuant to the Agreement. and
        that
        it has appropriate procedures for: (i) determining which of its customers
        are
        subject to special due diligence requirements; (ii) determining the appropriate
        level of due diligence to apply to various types of private banking customers;
        (iii) performing the necessary due diligence; (iv) closing (or refusing to
        accept, as applicable) accounts where Correspondent is unable to perform
        adequate due diligence, or as otherwise appropriate; (v) preventing, detecting,
        investigating and reporting suspicious or unusual activity; and (vi) making
        and
        maintaining the necessary or required documentation. 

       

      6.
        Correspondent is responsible for obtaining and verifying all necessary customer
        identification information and documentation and otherwise conducting all
        AML
        "know your customer" measures. Correspondent is responsible for providing
        notice
        (prior to account opening) to customers that it is requesting information
        to
        verify their identities. Correspondent also is responsible for maintaining
        appropriate identification and verification procedures and implementing a
        customer identification program that takes into account, among other things,
        the
        following factors: Correspondent's size; location and customer base; the
        method
        by which customers open accounts; and the types of accounts and transactions
        offered by Correspondent. 

       

      7.
        Correspondent is responsible for compliance with any special measures imposed
        by
        the Secretary of the Treasury for jurisdictions, financial institutions or
        international transactions of primary money laundering concern (PATRIOT Act
        Section 311). 

       

      B.
        Clearing:
        Broker's AML Responsibilities. 

       

      1.
        Clearing Broker shall perform, where practicable, a non-documentary "negative
        verification" function by screening customer names against a fraud database.
        Clearing Broker shall provide any adverse information obtained from such
        screening to Correspondent. 

       

      2.
        Clearing Broker shall make available to Correspondent a package of AML reports
        in order to assist Correspondent in identifying suspicious activity with
        respect
        to its accounts. Correspondent shall be responsible for setting relevant
        parameters with respect to such reports based upon its business and present
        and
        anticipated customer activity. Clearing Broker will provide training to
        Correspondent in the use of systems made available to Correspondent by Clearing
        Broker. 

       

      3.
        Clearing Broker will comply with all recordkeeping requirements in connection
        with the foregoing responsibilities. 

       

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

       

      C.
        Other
        AML Responsibilities 

       

      1.
        Each
        of the parties agrees to comply with the BSA and its requirement to report
        suspicious transactions to the Financial Crimes Enforcement Network (''FinCEN'')
        by filing an SAR. Correspondent has the primary responsibility for monitoring
        for suspicious activity and filing any SAR where warranted pursuant to Section
        356 of the PATRIOT Act. To the extent Clearing Broker identifies any suspicious
        activity, it will communicate the same to Correspondent, where permitted
        by law.
        In the event Clearing Broker identifies to Correspondent a transaction that
        appears to be suspicious, Correspondent is responsible for undertaking the
        appropriate follow--up measures, such as performing an investigation, blocking
        or closing an account, notifying law enforcement or filing an SAR or other
        report. Correspondent agrees to promptly report the results of any such
        follow-up measures to Clearing Broker or, if applicable, provide an explanation
        as to why it chose not to take any action. Notwithstanding the foregoing,
        Clearing Broker reserves the right to undertake whatever follow-up measures
        it
        deems appropriate, including but not limited to, filing an SAR. 

       

      2.
        Each
        of the parties agrees to comply with the rules of the SEC and applicable
        self-regulatory organizations relating to currency reporting, suspicious
        activity reporting and related recordkeeping requirements; applicable state
        reporting and record keeping requirements with regard to certain currency
        transactions, transportation of currency or monetary instruments, or reports
        of
        suspicious activity; and to comply with federal, state and international
        criminal and civil prohibitions against money laundering. 

       

      3.
        Clearing Broker and Correspondent each have established, implemented and
        shall
        enforce and maintain a written anti-money laundering compliance program ("AML
        Program") as required by the PATRIOT Act Section 352 and the rules of any
        applicable self-regulatory organizations (e.g., NYSE Rule 445 and NASD Rule
        3011). Such programs are reasonably designed to achieve and monitor such
        party's
        ongoing compliance with the PATRIOT Act and the BSA and the implementing
        regulations promulgated thereunder. Such programs consist of, at a minimum:
        establishment of policies, procedures and controls that can be reasonably
        expected to detect and cause the reporting of suspicious transactions;
        designation of an employee responsible for implementing and monitoring the
        program; employee training; and independent testing for compliance.
        Correspondent and Clearing Broker shall notify such party's relevant SRO
        of its
        designated AML officer. 

       

      4.
        Each
        of the parties agrees to respond to requests made by FinCEN on behalf of
        a
        federal law enforcement agency investigating terrorist or money laundering
        activity; and to submit a notice to FinCEN concerning voluntary information
        sharing, and to comply with all requirements concerning the confidentiality
        of
        shared information (PATRIOT Act Section 314). 

       

      5.
        Clearing Broker agrees that it will screen for Office of Foreign Assets Control
        ("OFAC") purposes all new accounts and outgoing and incoming wires. If it
        is
        readily apparent from the initial screening that the individual or entity
        is
        subject to OFAC restrictions, Clearing Broker will not permit the account
        to be
        opened or an outgoing wire to be sent. In the case of an incoming wire, the
        funds will be frozen in the client's account. If it is not readily apparent
        that
        it is subject to restriction, Clearing Broker will forward the information
        to
        Correspondent whose responsibility it is, in accordance with the Agreement
        and
        applicable laws and regulations, to determine whether the individual/entity
        is
        identified on the OF AC list and whether it is permissible for Correspondent
        to
        open an account and. transact business. 

       

      In
        no way
        does such screening by Clearing Broker relieve Correspondent of its obligation
        to have in place policies, procedures and systems to screen for and to confirm
        that Correspondent is not dealing with individuals, entities or countries
        on the
        OFAC list. Correspondent's continuing to do business with such individual/entity
        certifies to Clearing Broker that Correspondent has complied with all applicable
        laws, rules and regulations regarding Correspondent's ability to transact
        business with the identified individual/entity. 

       

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
        C

       

      Dear
        Customer: 

       

      You
        have
        opened a securities account with __________________________________  ("Correspondent"),
        a brokerage firm
        that
        has a contractual arrangement with Terra Nova Trading, L.L.C. ("Clearing
        Broker"), for the performance of clearance and settlement services. In
        accordance with NASD Rule 3230, this letter is intended to inform you of
        the
        allocation of responsibilities contained in that clearing agreement. It is
        intended to be a general disclosure, not a definitive enumeration of each
        and
        every responsibility. We are not an affiliate or subsidiary of Clearing Broker,
        its parent corporation, or any of Clearing Broker's affiliated companies;
        nor
        are we registered representatives or other employees employed by Clearing
        Broker, 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 purchase and sale of securities. Clearing
        Broker
        has been informed that we are authorized to open or close brokerage accounts,
        place and withdraw orders and take such other steps as are reasonable to
        carry
        out your directions. Until receipt of your written notice to the contrary,
        Clearing Broker may accept instructions for your account from our firm without
        inquiry or investigation by Clearing Broker including, without limitation,
        instructions with respect to the disbursement of funds and the transfer of
        securities. Clearing Broker 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 caused by us. As between you
        and
        Clearing Broker, you shall be responsible for any action taken by Clearing
        Broker in your account based upon instructions Clearing Broker received from
        either you or our firm. In the event that you maintain a delivery versus
        payment
        ("DVP") account, you agree to comply with NASD Rule 11860 by furnishing your
        agent with instructions for the delivery or receipt of securities promptly
        upon
        receipt of confirmation (or the relevant data as to execution), which shall
        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. 

       

      You
        understand that Clearing Broker does not act as investment adviser or solicit
        orders, that Clearing Broker does not advise you or us on any matters
        pertl1ining 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 or transactions entered by our firm on your behalf. Clearing
        Broker 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.


       

      Our
        firm
        shall at all times be 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
        recommendations made to you and, if your account is a discretionary account,
        supervising the exercise of such discretion. 

       

      Accepting
        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. 

      


      
        
          
          

        

        
          35

          
            

          

        

        
          
          

        

      

      Transmitting
        instructions concerning your account to Clearing Broker either generally
        or in
        connection with tender or exchange offers or any other form of corporate
        reorganization, unless Clearing Broker 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 services to any fiduciary
        exercising investment discretion with respect to your account. 

       

      The
        conduct of your account and ensuring that all the transactions effected 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, or authorize 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 Clearing Broker or you receive a check directly from
        Clearing Broker), and notifying you of Clearing Broker's margin requirements.
        

       

      Supplying
        all documentation required by Clearing Broker. Clearing Broker at all times
        has
        the right, reasonably exercisable in its sole 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.


       

      Clearing
        Broker shall be responsible for the following services provided at the request
        of our firm 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 Clearing Broker's physical
        possession), and segregating such funds and securities as required by applicable
        law. 

       

      Preparing
        and transmitting to you confirmation of transactions 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.


       

      Both
        Clearing Broker and we have the right to reject any proposed transaction.
        

       

      Unless
        we
        receive a written communication to the contrary, your understanding of and
        agreement with the clearing arrangement as described in this letter is
        acknowledged. 

       


      Any
        questions you may have concerning the conduct of your account should be
        addressed directly to 

      .
         at
        ______________________________ ,
        

       

      Very
        truly yours,

       

      ____________________________________

       

       

      
        
          
          

        

        
          36

          
            

          

        

        
          
          

        

      


      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)  	
                Clearing
                  Broker shall treat the customer as its own customer and record
                  the
                  transactions in a cash or margin account at Clearing Broker. Clearing
                  Broker shall treat all disaffirmed and "DKd" trades as normal customer
                  transactions. If the disaffirmed or "DKd" trade is a short sale,
                  Clearing
                  Broker shall treat the transaction as if it had been executed in
                  a
                  customer margin account. 

              


      

       

      
        	c)  	
                Clearing
                  Broker shall be responsible for issuing confirmations directly
                  to the
                  customer for each trade executed by you at Clearing Broker unless
                  Clearing
                  Broker 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 Clearing Broker will send the confirmations
                  to
                  such customer in care of the prime broker. In the event that a
                  trade is
                  disaffirmed or "DKd", Clearing Broker shall promptly send a confirmation
                  of the transaction to the customer in the manner described above.
                  

              


      

       

      
        
          	                                        
                  (d)	
                  If
                    a customer account introduced by you to Clearing Broker is managed
                    by an
                    investment advisor,
                    each confirmation may cover a single bulk trade or bunched order
                    representing transactions that have been combined with those
                    of other
                    accounts of such investment advisor.


                


        

      

       

      
        	3.  	
                Clearing
                  Broker 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, 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 receipt and acceptance of this Addendum by signing in the space
        provided. 

      



      


      


      Very
        truly yours,

      


      ____________________________   ____________________________

      


      ____________________________
        (Date)   ___________________________
        (Date)