THESE
      SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
      OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
      EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
      AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
      TO
      SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
      COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
      ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
      INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE
      SECURITIES ACT.

     

    STOCK
      PURCHASE WARRANT

    


    WARRANT
      No. 001

    


    To
      Purchase 4,000,000 Shares of Common Stock of

     

    Hudson
      Holding Corporation

     

    THIS
      STOCK PURCHASE WARRANT CERTIFIES that, for value received, Seaport Hudson LLC
      (the “Holder”), is entitled, upon the terms and subject to the limitations on
      exercise and the conditions hereinafter set forth, at any time on or after
      June__, 2008 (the “Initial
      Exercise Date”)
      and on
      or prior to 5:00 P.M. Eastern Time on the five year anniversary of the Initial
      Exercise Date (the “Termination
      Date”)
      but
      not thereafter, to subscribe for and purchase from Hudson Securities, Inc.,
      a
      corporation incorporated in the State of Delaware (the
      “Company”),
      up to
      4,000,000 shares (the “Warrant
      Shares”)
      of
      Common Stock, par value $0.001 per share, of the Company (the “Common
      Stock”).
      The
      purchase price of one share of Common Stock (the “Exercise
      Price”)
      under
      this Warrant shall be $0.75 or market price at the end of the Trading Date
      on
      the Closing Date, whichever is higher, subject to adjustment hereunder. The
      Exercise Price and the number of Warrant Shares for which the Warrant is
      exercisable shall be subject to adjustment as provided herein. Capitalized
      terms
      used and not otherwise defined herein shall have the meanings set forth in
      that
      certain Securities Purchase Agreement (the “Purchase
      Agreement”),
      dated
      June __, 2008, between the Company and the investors signatory
      thereto.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    1. Title
      to Warrant.
      Prior
      to the Termination Date and subject to compliance with applicable laws and
      Section 7 of this Warrant, this Warrant and all rights hereunder are
      transferable, in whole or in part, at the office or agency of the Company by
      the
      Holder in person or by duly authorized attorney, upon surrender of this Warrant
      together with the Assignment Form annexed hereto properly endorsed.


     

    2. Authorization
      of Shares.
      The
      Company covenants that all Warrant Shares which may be issued upon the exercise
      of the purchase rights represented by this Warrant will, upon exercise of the
      purchase rights represented by this Warrant, be duly authorized, validly issued,
      fully paid and nonassessable and free from all taxes, liens and charges in
      respect of the issue thereof (other than taxes in respect of any transfer
      occurring contemporaneously with such issue).

     

    3. Exercise
      of Warrant.
      

     

    (a)
      Except as provided in Section 4 herein, exercise of the purchase rights
      represented by this Warrant may be made at any time or times on or after the
      Initial Exercise Date and on or before the Termination Date by the surrender
      of
      this Warrant and the Notice of Exercise Form annexed hereto duly executed,
      at
      the office of the Company (or such other office or agency of the Company as
      it
      may designate by notice in writing to the registered Holder at the address
      of
      such Holder appearing on the books of the Company) and upon payment of the
      Exercise Price of the shares thereby purchased by wire transfer or cashier’s
      check drawn on a United States bank. Upon such exercise, the Holder shall be
      entitled to receive a certificate for the number of Warrant Shares so purchased.
      Certificates for shares purchased hereunder shall be delivered to the Holder
      within three Trading Days after the date on which this Warrant shall have been
      exercised as aforesaid. Notwithstanding anything herein to the contrary, in
      lieu
      of issuing certificates for shares purchased hereunder, upon mutual agreement
      of
      the Company and the Holder, the Company may authorize its transfer agent to
      issue shares through electronic transactions. This Warrant shall be deemed
      to
      have been exercised and such certificate or certificates shall be deemed to
      have
      been issued, and Holder or any other person so designated to be named therein
      shall be deemed to have become a holder of record of such shares for all
      purposes, as of the date the Warrant has been exercised by payment to the
      Company of the Exercise Price and all taxes required to be paid by the Holder,
      if any, pursuant to Section 5 prior to the issuance of such shares, have been
      paid. If the Company fails to deliver to the Holder a certificate or
      certificates representing the Warrant Shares pursuant to this Section 3(a)
      by
      the third Trading Day after the date of exercise, then the Holder will have
      the
      right to rescind such exercise. In addition to any other rights available to
      the
      Holder, if the Company fails to deliver to the Holder a certificate or
      certificates representing the Warrant Shares pursuant to an exercise by the
      third Trading Day after the date of exercise, and if after such third Trading
      Day the Holder is required by its broker to purchase (in an open market
      transaction or otherwise) shares of Common Stock to deliver in satisfaction
      of a
      sale by the Holder of the Warrant Shares which the Holder anticipated receiving
      upon such exercise (a "Buy-In"),
      then
      the Company shall (1) pay in cash to the Holder the amount by which (x) the
      Holder's total purchase price (for costs incurred either directly by such
      Warrantholder or on behalf of a third party) for the shares of Common Stock
      so
      purchased exceeds (y) the amount obtained by multiplying (A) the number of
      Warrant Shares that the Company was required to deliver to the Holder in
      connection with the exercise at issue times (B) the price at which the sell
      order giving rise to such purchase obligation was executed, and (2) at the
      option of the Holder, either reinstate the portion of the Warrant and equivalent
      number of Warrant Shares for which such exercise was not honored or deliver
      to
      the Holder the number of shares of Common Stock that would have been issued
      had
      the Company timely complied with its exercise and delivery obligations
      hereunder. For example, if the Holder purchases Common Stock having a total
      purchase price of $11,000 to cover a Buy-In with respect to an attempted
      exercise of shares of Common Stock with an aggregate sale price giving rise
      to
      such purchase obligation of $10,000, under clause (1) of the immediately
      preceding sentence, the Company shall be required to pay the Holder $1,000.
      The
      Holder shall provide the Company written notice indicating the amounts payable
      to the Holder in respect of the Buy-In, together with applicable confirmations
      and other evidence reasonably requested by the Company. Nothing herein shall
      limit a Holder's right to pursue a decree of specific performance and/or
      injunctive relief with respect to the Company's failure to timely deliver
      certificates representing shares of Common Stock upon exercise of the Warrant
      as
      required pursuant to the terms hereof.



    
      
         

      

      
        2

        
          

        

      

      
         

      

    


    (b) If
      this
      Warrant shall have been exercised in part, the Company shall, at the time of
      delivery of the certificate or certificates representing Warrant Shares, deliver
      to Holder a new Warrant evidencing the rights of Holder to purchase the
      unpurchased Warrant Shares called for by this Warrant, which new Warrant shall
      in all other respects be identical with this Warrant.

     

    (c)
      Subject to the provisions of this Section 3, if after the Effective Date the
      Closing Price (the “Measurement
      Price”)
      exceeds 250% of the then Exercise Price (subject to adjustment
      herein)(“Threshold
      Price Date”)
      and
      the daily average trading volume of the Common Stock for the 10 Trading Days
      including and prior to such Threshold Price Date exceeds 100,000 shares, then
      the Company may, within five Trading Days of such date, call for the exercise
      of
      all or any portion of this Warrant for which a Notice of Exercise has not yet
      been delivered (such right, a “Call”).
      To
      exercise this right, the Company must deliver to the Holder an irrevocable
      written notice (a “Call
      Notice”),
      indicating therein the portion of unexercised portion of this Warrant to which
      such notice applies (such date, the "Call
      Date").
      If
      Holder wants to exercise Called Warrants within three Trading Days of the Call
      Date, the Holder shall pay to the Company by wire transfer of immediately
      available funds the exercise price (or exercise the Warrant on a cashless basis
      pursuant to Section 18 hereof) for the Warrant Shares to be issued in connection
      with the Call Notice. Any unexercised portion of this Warrant to which the
      Call
      Notice does not pertain will be unaffected by such Call Notice. Notwithstanding
      anything to the contrary set forth in this Warrant, the Company may not deliver
      a Call Notice or require the cancellation of this Warrant (and any Call Notice
      will be void), unless, at the time of sending such Call Notice, the Registration
      Statement shall be effective as to all Warrant Shares and the prospectus
      thereunder available for use by the Holder for the resale all such Warrant
      Shares and the Common Stock shall be listed or quoted for trading on the Trading
      Market. 

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    


    4. No
      Fractional Shares or Scrip.
      No
      fractional shares or scrip representing fractional shares shall be issued upon
      the exercise of this Warrant. As to any fraction of a share which Holder would
      otherwise be entitled to purchase upon such exercise, the Company shall pay
      a
      cash adjustment in respect of such final fraction in an amount equal to such
      fraction multiplied by the Exercise Price.

     

    5. Charges,
      Taxes and Expenses.
      Issuance of certificates for Warrant Shares shall be made without charge to
      the
      Holder for any issue or transfer tax or other incidental expense in respect
      of
      the issuance of such certificate, all of which taxes and expenses shall be
      paid
      by the Company, and such certificates shall be issued in the name of the Holder
      or in such name or names as may be directed by the Holder; provided,
      however,
      that in
      the event certificates for Warrant Shares are to be issued in a name other
      than
      the name of the Holder, this Warrant when surrendered for exercise shall be
      accompanied by the Assignment Form attached hereto duly executed by the Holder;
      and the Company may require, as a condition thereto, the payment of a sum
      sufficient to reimburse it for any transfer tax incidental thereto.

     

    6. Closing
      of Books.
      The
      Company will not close its stockholder books or records in any manner which
      prevents the timely exercise of this Warrant, pursuant to the terms
      hereof.

     

    7. Transfer,
      Division and Combination.
      

     

    (a) Subject
      to compliance with any applicable securities laws and the conditions set forth
      in Sections 1 and 7(f) hereof and to the provisions of Section 4.1 of the
      Purchase Agreement, this Warrant and all rights hereunder are transferable,
      in
      whole or in part, upon surrender of this Warrant at the principal office of
      the
      Company, together with a written assignment of this Warrant substantially in
      the
      form attached hereto duly executed by the Holder or its agent or attorney and
      funds sufficient to pay any transfer taxes payable upon the making of such
      transfer. Upon such surrender and, if required, such payment, the Company shall
      execute and deliver a new Warrant or Warrants in the name of the assignee or
      assignees and in the denomination or denominations specified in such instrument
      of assignment, and shall issue to the assignor a new Warrant evidencing the
      portion of this Warrant not so assigned, and this Warrant shall promptly be
      cancelled. A Warrant, if properly assigned, may be exercised by a new holder
      for
      the purchase of Warrant Shares without having a new Warrant issued.

     

    (b) This
      Warrant may be divided or combined with other Warrants of like tenor and terms
      upon presentation hereof at the aforesaid office of the Company, together with
      a
      written notice specifying the names and denominations in which new Warrants
      are
      to be issued, signed by the Holder or its agent or attorney. Subject to
      compliance with Section 7(a), as to any transfer which may be involved in such
      division or combination, the Company shall execute and deliver a new Warrant
      or
      Warrants in exchange for the Warrant or Warrants to be divided or combined
      in
      accordance with such notice.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    


    (c) The
      Company shall prepare, issue and deliver at its own expense (other than transfer
      taxes) the new Warrant or Warrants under this Section 7.

    


    (d) The
      Company agrees to maintain, at its aforesaid office, books for the registration
      and the registration of transfer of the Warrants.

     

    (e) If,
      at the
time
      of
      the surrender of this Warrant in connection with any transfer of this Warrant,
      the transfer of this Warrant shall not be registered pursuant to an effective
      registration
      statement under the Securities Act
      and
under
      applicable state securities or blue sky laws, the Company may require, as a
      condition of allowing such transfer (i) that the Holder or transferee of this
      Warrant, as the case may be, furnish to the Company a written opinion of counsel
      (which opinion shall be in form, substance and scope customary for opinions
      of
      counsel in comparable transactions) to the effect that such transfer may be
      made
      without
      registration under
      the
      Securities Act and under applicable state securities or blue sky laws, (ii)
      that
      the holder or transferee execute and deliver to the Company an investment letter
      in form and substance acceptable to the Company and (iii) that the transferee
      be
      an "accredited investor" as defined in Rule 501(a) promulgated under the
      Securities Act.

     

    8. No
      Rights as Shareholder until Exercise.
      This
      Warrant does not entitle the Holder to any voting rights or other rights as
      a
      shareholder of the Company prior to the exercise hereof. Upon the surrender
      of
      this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares
      so purchased shall be and be deemed to be issued to such Holder as the record
      owner of such shares as of the close of business on the later of the date of
      such surrender or payment. 

     

    9. Loss,
      Theft, Destruction or Mutilation of Warrant.
      The
      Company covenants that upon receipt by the Company of evidence reasonably
      satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
      or any stock certificate relating to the Warrant Shares, and in case of loss,
      theft or destruction, of indemnity or security reasonably satisfactory to it
      (which, in the case of the Warrant, shall not include the posting of any bond),
      and upon surrender and cancellation of such Warrant or stock certificate, if
      mutilated, the Company will make and deliver a new Warrant or stock certificate
      of like tenor and dated as of such cancellation, in lieu of such Warrant or
      stock certificate.

     

    10. Saturdays,
      Sundays, Holidays, etc.
      If the
      last or appointed day for the taking of any action or the expiration of any
      right required or granted herein shall be a Saturday, Sunday or a legal holiday,
      then such action may be taken or such right may be exercised on the next
      succeeding day not a Saturday, Sunday or legal holiday.


    
      
         

      

      
        5

        
          

        

      

      
         

      

    


    11. Adjustments
      of Exercise Price and Number of Warrant Shares;
      Stock
      Splits, etc.
      The
      number and kind of securities purchasable upon the exercise of this Warrant
      and
      the Exercise Price shall be subject to adjustment from time to time upon the
      happening of any of the following. In case the Company shall (i) pay a dividend
      in shares of Common Stock or make a distribution in shares of Common Stock
      to
      holders of its outstanding Common Stock, (ii) subdivide its outstanding shares
      of Common Stock into a greater number of shares, (iii) combine its outstanding
      shares of Common Stock into a smaller number of shares of Common Stock, or
      (iv)
      issue any shares of its capital stock in a reclassification of the Common Stock,
      then the number of Warrant Shares purchasable upon exercise of this Warrant
      immediately prior thereto shall be adjusted so that the Holder shall be entitled
      to receive the kind and number of Warrant Shares or other securities of the
      Company which it would have owned or have been entitled to receive had such
      Warrant been exercised in advance thereof. Upon
      each
      such adjustment of the kind and number of Warrant Shares or other securities
      of
      the Company which are purchasable hereunder, the Holder shall thereafter be
      entitled to purchase the number of Warrant Shares or other securities resulting
      from such adjustment at an Exercise Price per Warrant Share or other security
      obtained by multiplying the Exercise Price in effect immediately prior to such
      adjustment by the number of Warrant Shares purchasable pursuant hereto
      immediately prior to such adjustment and dividing by the number of Warrant
      Shares or other securities of the Company resulting from such adjustment.
An
      adjustment made pursuant to this paragraph shall become effective immediately
      after the effective date of such event retroactive to the record date, if any,
      for such event.

     

    12. Reorganization,
      Reclassification, Merger, Consolidation or Disposition of Assets.
      In case
      the Company shall reorganize its capital, reclassify its capital stock,
      consolidate or merge with or into another corporation (where the Company is
      not
      the surviving corporation or where there is a change in or distribution with
      respect to the Common Stock of the Company), or sell, transfer or otherwise
      dispose of all or substantially all its property, assets or business to another
      corporation and, pursuant to the terms of such reorganization, reclassification,
      merger, consolidation or disposition of assets, shares of common stock of the
      successor or acquiring corporation, or any cash, shares of stock or other
      securities or property of any nature whatsoever (including warrants or other
      subscription or purchase rights) in addition to or in lieu of common stock
      of
      the successor or acquiring corporation (“Other
      Property”),
      are
      to be received by or distributed to the holders of Common Stock of the Company,
      then the Holder shall have the right thereafter to receive upon exercise of
      this
      Warrant, the number of shares of Common Stock of the successor or acquiring
      corporation or of the Company, if it is the surviving corporation, and Other
      Property receivable upon or as a result of such reorganization,
      reclassification, merger, consolidation or disposition of assets by a Holder
      of
      the number of shares of Common Stock for which this Warrant is exercisable
      immediately prior to such event. In case of any such reorganization,
      reclassification, merger, consolidation or disposition of assets, the successor
      or acquiring corporation (if other than the Company) shall expressly assume
      the
      due and punctual observance and performance of each and every covenant and
      condition of this Warrant to be performed and observed by the Company and all
      the obligations and liabilities hereunder, subject to such modifications as
      may
      be deemed appropriate (as determined in good faith by resolution of the Board
      of
      Directors of the Company) in order to provide for adjustments of Warrant Shares
      for which this Warrant is exercisable which shall be as nearly equivalent as
      practicable to the adjustments provided for in this Section 12. For purposes
      of
      this Section 12, “common stock of the successor or acquiring corporation” shall
      include stock of such corporation of any class which is not preferred as to
      dividends or assets over any other class of stock of such corporation and which
      is not subject to redemption and shall also include any evidences of
      indebtedness, shares of stock or other securities which are convertible into
      or
      exchangeable for any such stock, either immediately or upon the arrival of
      a
      specified date or the happening of a specified event and any warrants or other
      rights to subscribe for or purchase any such stock. The foregoing provisions
      of
      this Section 12 shall similarly apply to successive reorganizations,
      reclassifications, mergers, consolidations or disposition of assets.



    
      
         

      

      
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    13. Voluntary
      Adjustment by the Company.
      The
      Company may at any time during the term of this Warrant reduce the then current
      Exercise Price to any amount and for any period of time deemed appropriate
      by
      the Board of Directors of the Company.

     

    14. Notice
      of Adjustment.
      Whenever the number of Warrant Shares or number or kind of securities or other
      property purchasable upon the exercise of this Warrant or the Exercise Price
      is
      adjusted, as herein provided, the Company shall give notice thereof to the
      Holder, which notice shall state the number of Warrant Shares (and other
      securities or property) purchasable upon the exercise of this Warrant and the
      Exercise Price of such Warrant Shares (and other securities or property) after
      such adjustment, setting forth a brief statement of the facts requiring such
      adjustment and setting forth the computation by which such adjustment was
      made.

     

    15. Notice
      of Corporate Action.
      If at
      any time:

     

    (a) the
      Company shall take a record of the holders of its Common Stock for the purpose
      of entitling them to receive a dividend or other distribution, or any right
      to
      subscribe for or purchase any evidences of its indebtedness, any shares of
      stock
      of any class or any other securities or property, or to receive any other right,
      or

    


    (b) there
      shall be any capital reorganization of the Company, any reclassification or
      recapitalization of the capital stock of the Company or any consolidation or
      merger of the Company with, or any sale, transfer or other disposition of all
      or
      substantially all the property, assets or business of the Company to, another
      corporation or,

    


    (c) there
      shall be a voluntary or involuntary dissolution, liquidation or winding up
      of
      the Company;

    


    then,
      in
      any one or more of such cases, the Company shall give to Holder (i) at least
      20
      days’ prior written notice of the date on which a record date shall be selected
      for such dividend, distribution or right or for determining rights to vote
      in
      respect of any such reorganization, reclassification, merger, consolidation,
      sale, transfer, disposition, liquidation or winding up, and (ii) in the case
      of
      any such reorganization, reclassification, merger, consolidation, sale,
      transfer, disposition, dissolution, liquidation or winding up, at least 20
      days’
prior written notice of the date when the same shall take place. Such notice
      in
      accordance with the foregoing clause also shall specify (i) the date on which
      any such record is to be taken for the purpose of such dividend, distribution
      or
      right, the date on which the holders of Common Stock shall be entitled to any
      such dividend, distribution or right, and the amount and character thereof,
      and
      (ii) the date on which any such reorganization, reclassification, merger,
      consolidation, sale, transfer, disposition, dissolution, liquidation or winding
      up is to take place and the time, if any such time is to be fixed, as of which
      the holders of Common Stock shall be entitled to exchange their Warrant Shares
      for securities or other property deliverable upon such disposition, dissolution,
      liquidation or winding up. Each such written notice shall be sufficiently given
      if addressed to Holder at the last address of Holder appearing on the books
      of
      the Company and delivered in accordance with Section 20(d).


    
      
         

      

      
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    16. Authorized
      Shares.
      The
      Company covenants that during the period the Warrant is outstanding, it will
      reserve from its authorized and unissued Common Stock a sufficient number of
      shares to provide for the issuance of the Warrant Shares upon the exercise
      of
      any purchase rights under this Warrant. The Company further covenants that
      its
      issuance of this Warrant shall constitute full authority to its officers who
      are
      charged with the duty of executing stock certificates to execute and issue
      the
      necessary certificates for the Warrant Shares upon the exercise of the purchase
      rights under this Warrant. The Company will take all such reasonable action
      as
      may be necessary to assure that such Warrant Shares may be issued as provided
      herein without violation of any applicable law or regulation, or of any
      requirements of the Trading Market upon which the Common Stock may be listed.
      

     

    Except
      and to the extent as waived or consented to by the Holder, the Company shall
      not
      by any action, including, without limitation, amending its certificate of
      incorporation or through any reorganization, transfer of assets, consolidation,
      merger, dissolution, issue or sale of securities or any other voluntary action,
      avoid or seek to avoid the observance or performance of any of the terms of
      this
      Warrant, but will at all times in good faith assist in the carrying out of
      all
      such terms and in the taking of all such actions as may be necessary or
      appropriate to protect the rights of Holder as set forth in this Warrant against
      impairment. Without limiting the generality of the foregoing, the Company will
      (a) not increase the par value of any Warrant Shares above the amount payable
      therefor upon such exercise immediately prior to such increase in par value,
      (b)
      take all such action as may be necessary or appropriate in order that the
      Company may validly and legally issue fully paid and nonassessable Warrant
      Shares upon the exercise of this Warrant, and (c) use commercially reasonable
      efforts to obtain all such authorizations, exemptions or consents from any
      public regulatory body having jurisdiction thereof as may be necessary to enable
      the Company to perform its obligations under this Warrant.

    


    Before
      taking any action which would result in an adjustment in the number of Warrant
      Shares for which this Warrant is exercisable or in the Exercise Price, the
      Company shall obtain all such authorizations or exemptions thereof, or consents
      thereto, as may be necessary from any public regulatory body or bodies having
      jurisdiction thereof.

    


    17. Registration
      Rights.
      The
      initial Warrantholder is entitled to the benefit of certain registration rights
      with respect to the shares of Common Stock issuable upon the exercise of this
      Warrant as provided in the Registration Rights Agreement, and any subsequent
      Warrantholder may be entitled to such rights.

     

    18. Cashless
      Exercise.
      Notwithstanding any other provision contained herein to the contrary, during
      the
      period from and after the six-month anniversary of the Closing Date and so
      long
      as the Company is required under the Registration Rights Agreement to have
      effected the registration of the Warrant Shares for resale to the public
      pursuant to a Registration Statement (as such term is defined in the
      Registration Rights Agreement), if the Warrant Shares may not be freely sold
      to
      the public for any reason (including, but not limited to, the failure of the
      Company to have effected the registration of the Warrant Shares or to have
      a
      current prospectus available for delivery or otherwise), the Warrantholder
      may
      elect to receive, without the payment by the Warrantholder of the aggregate
      Exercise Price in respect of the shares of Common Stock to be acquired, shares
      of Common Stock of equal value to the value of this Warrant, or any specified
      portion hereof, by the surrender of this Warrant (or such portion of this
      Warrant being so exercised) together with a Net Issue Election Notice, in the
      form annexed hereto, duly executed, to the Company. Thereupon, the Company
      shall
      issue to the Warrantholder such number of fully paid, validly issued and
      nonassessable shares of Common Stock as is computed using the following
      formula:


    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    


    X
      =
Y
      (A -
      B)

    A

    


    where 

    


    X
      = the
      number of shares of Common Stock to which the Warrantholder is entitled upon
      such cashless exercise;

    


    Y
      = the
      total
      number of shares of Common Stock covered by this Warrant for which the
      Warrantholder has surrendered purchase rights at such time for cashless exercise
      (including both shares to be issued to the Warrantholder and shares as to which
      the purchase rights are to be canceled as payment therefor);

    


    A
      = the
      “Market Price” of one share of Common Stock as at the date the net issue
      election is made; and

    


    B
      = the
      Exercise Price in effect under this Warrant at the time the net issue election
      is made.

     

    19. Miscellaneous.

     

    (a) Jurisdiction.
      This
      Warrant shall constitute a contract under the laws of New York, without regard
      to its conflict of law, principles or rules.

     

    (b) Restrictions.
      The
      Holder acknowledges that the Warrant Shares acquired upon the exercise of this
      Warrant, if not registered, will have restrictions upon resale imposed by state
      and federal securities laws.

     

    (c) Nonwaiver
      and Expenses.
      No
      course of dealing or any delay or failure to exercise any right hereunder on
      the
      part of Holder shall operate as a waiver of such right or otherwise prejudice
      Holder’s rights, powers or remedies, notwithstanding all rights hereunder
      terminate on the Termination Date. If the Company willfully and knowingly fails
      to comply with any provision of this Warrant, which results in any material
      damages to the Holder, the Company shall pay to Holder such amounts as shall
      be
      sufficient to cover any costs and expenses including, but not limited to,
      reasonable attorneys’ fees, including those of appellate proceedings, incurred
      by Holder in collecting any amounts due pursuant hereto or in otherwise
      enforcing any of its rights, powers or remedies hereunder.


    
      
         

      

      
        9

        
          

        

      

      
         

      

    


    (d) Notices.
      Any
      notice, request or other document required or permitted to be given or delivered
      to the Holder by the Company shall be delivered in accordance with the notice
      provisions of the Purchase Agreement.

     

    (e) Successors
      and Assigns.
      Subject
      to applicable securities laws, this Warrant and the rights and obligations
      evidenced hereby shall inure to the benefit of and be binding upon the
      successors of the Company and the successors and permitted assigns of Holder.
      The provisions of this Warrant are intended to be for the benefit of all Holders
      from time to time of this Warrant and shall be enforceable by any such Holder
      or
      holder of Warrant Shares.

     

    (f) Amendment.
      This
      Warrant may be modified or amended or the provisions hereof waived with the
      written consent of the Company and the Holder.

     

    (g) Severability.
      Wherever possible, each provision of this Warrant shall be interpreted in such
      manner as to be effective and valid under applicable law, but if any provision
      of this Warrant shall be prohibited by or invalid under applicable law, such
      provision shall be ineffective to the extent of such prohibition or invalidity,
      without invalidating the remainder of such provisions or the remaining
      provisions of this Warrant.

     

    (h) Headings.
      The
      headings used in this Warrant are for the convenience of reference only and
      shall not, for any purpose, be deemed a part of this Warrant.

    


    ********************


    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
      officer thereunto duly authorized.

    


    
      	
              Dated:  June
                __, 2008

            	 	 
	 	
              HUDSON
                HOLDING CORPORATION

            
	 	 	 
	 	
              By:

            	 
	 	 	
              Name:  Keith
                Knox

            
	 	 	
              Title:  President

            


    

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    NOTICE
      OF EXERCISE

    


    To: Hudson
      Holding Corporation

    


    (1) The
      undersigned hereby elects to purchase ________ Warrant Shares of Hudson
      Securities, Inc. pursuant to the terms of the attached Warrant, and tenders
      herewith such Warrant and payment of the exercise price in full, together with
      all applicable transfer taxes, if any.

     

    (2) Please
      issue a certificate or certificates representing said Warrant Shares in the
      name
      of the undersigned or in such other name as is specified below:

    _______________________________

    


    The
      Warrant Shares shall be delivered to the following:


    _______________________________

     

    _______________________________

     

    _______________________________

    


    (3)
      Accredited
      Investor.
      The
      undersigned is an “accredited investor” as defined in Regulation D promulgated
      under the Securities Act of 1933, as amended.

    


    
      	 	
              [PURCHASER]

            
	 	 	 
	 	
              By:

            	 
	 	 	
              Name:

            
	 	 	
              Title:

            
	 	 	 
	 	
              Dated:

            	 


    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    ASSIGNMENT
      FORM

    


    (To
      assign the foregoing warrant, execute

    this
      form
      and supply required information. 

    Do
      not
      use this form to exercise the warrant.)

    


    FOR
      VALUE
      RECEIVED, subject to receipt of the Company’s consent, the foregoing Warrant and
      all rights evidenced thereby are hereby assigned to

    


    _______________________________________________
      whose address is

    


    _______________________________________________________________.

    


    _______________________________________________________________

    


    
      	 	
               

            	
              
                Dated:  ________________,
                  ______

              

            
	 	 	 
	 	 	 
	 	
              Holder's Signature:

            	
              _____________________________

            
	 	 	 
	 	
              Holder's
                Address:

            	
              _____________________________

            
	 	 	 
	 	 	
              _____________________________

            


    

     

    
      	
              Signature Guaranteed:

            	
              ___________________________________________

            	 


    

     

    NOTE:
      The
      signature to this Assignment Form must correspond with the name as it appears
      on
      the face of the Warrant, without alteration or enlargement or any change
      whatsoever, and must be guaranteed by a bank or trust company. Officers of
      corporations and those acting in a fiduciary or other representative capacity
      should file proper evidence of authority to assign the foregoing
      Warrant.


    
      
         

      

      
        
        

        
          

        

      

      
         

      

    


    HUDSON
      HOLDING CORPORATION

    NET
      ISSUE
      ELECTION NOTICE


    


    To:
      [Name]

    


    Date:[_________________________]


    


    The
      undersigned hereby elects under Section
      20
      of this
      Warrant to surrender the right to purchase [____________] shares of Common
      Stock
      pursuant to this Warrant and hereby requests the issuance of [_____________]
      shares of Common Stock. The certificate(s) for the shares issuable upon such
      net
      issue election shall be issued in the name of the undersigned or as otherwise
      indicated below.


    


    
      	
               

            	 
	
              Signature

            	 
	 	 
	
               

            	 
	
              Name
                for Registration

            	 
	 	 
	
               

            	 
	
              Mailing
                Address