Exhibit 10.3
                                                                    ------------

                          SECURITIES CLEARING AGREEMENT
                                     (GSCS)


         AGREEMENT, dated as of August 15, 2002, between Maxcor Financial Inc.
("Customer") and The Bank of New York ("Bank").

         WHEREAS, Customer has requested Bank to act as its clearing agent for
the purpose of receiving and delivering securities, either in definitive form,
through a securities depository or clearing agency or through the Federal
Reserve/Treasury Book-Entry System in furtherance of Customer's business as a
broker/dealer of securities; and

         WHEREAS, to induce Bank to act as clearing agent for Customer, Customer
is willing to enter into this Agreement;

         NOW, THEREFORE, the parties hereto agree as follows:

                              W I T N E S S E T H :

                                    ARTICLE I
                                   DEFINITIONS

         As used herein, the following terms shall have the meanings set forth
below:

         1.    "ACCOUNT" shall mean the clearing account(s) established and
maintained in the name of Customer from time to time and any related account
established and maintained by Bank for internal purposes in connection
therewith.

         2.    "AUTHORIZED PERSON" shall mean any person duly authorized by
Customer to give Bank Instructions on behalf of Customer, such persons to be
designated in a certificate signed by the Chief Operating Officer or Chief
Financial Officer of Customer.

         3.    "BOOK-ENTRY SYSTEM" shall mean the Federal Reserve/Treasury
Book-Entry System for receiving and delivering securities maintained therein,
its successors and nominees.

         4.    "BULK INPUT INSTRUCTIONS" shall mean instructions received by
Bank via bulk input computer tape or electronic file.

         5.    "BUSINESS DAY" shall mean any day on which Bank and either FRBNY
or the relevant Depository (as necessary for the particular transaction
involved) is open for business.

         6.    "COMPUTER TO COMPUTER INSTRUCTIONS" shall mean instructions
received by Bank in such data format as is specified in Bank's computer to
computer communication process specifications (as such specifications may be
amended from time to time).

         7.    "DEFINITIVE SECURITIES" shall mean Securities sold in the United
States which are evidenced by physical certificates and whose transfer is
effected by "street" delivery.

         8.    "DEPOSITORY" shall mean any clearing agency or securities
depository in the United States (including but not limited to The Depository
Trust Company) registered with the Securities and Exchange Commission or
otherwise authorized pursuant to applicable law to act as a securities
depository or clearing agency.

         9.    "DEPOSITORY SECURITIES" shall mean Securities other than FRB
Securities which are cleared through or held by a Depository.

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         10.   "DESEGREGATION INSTRUCTIONS" shall mean Instructions pursuant to
which Bank is requested to transfer Securities or cash balances from a
Segregated Account to the Account.

         11.   "FRB SECURITIES" shall mean Securities maintained in the
Book-Entry System.

         12.   "FRBNY" shall mean the Federal Reserve Bank of New York.

         13.   "GSCS" shall mean Government Securities Clearance System for
receiving and delivering Securities and accessing reports pursuant to this
Agreement.

         14.   "INSTRUCTIONS" shall mean Bulk Input Instructions, Computer to
Computer Instructions, Oral Instructions, Remote Clearance Instructions or
Written Instructions.

         15.   "MARKET VALUE" shall mean the amount as calculated by Bank as the
market value of each Security based on the most recent closing bid price of such
Security, plus accrued interest thereon, as made available to Bank usually the
next Business Day by a pricing information service which Bank uses generally for
pricing Securities.

         16.   "ORAL INSTRUCTIONS" shall mean verbal instructions.

         17.   "REMOTE CLEARANCE INSTRUCTIONS" shall mean instructions received
by Bank via remote terminal located at Customer's premises linked to Bank's
securities processing systems.

         18.   "SECURITIES" shall mean FRB Securities, Depository Securities and
Definitive Securities.

         19.   "SEGREGATED ACCOUNT" shall mean an account or subaccount (other
than the Account) established and maintained by Bank in the name of Customer
pursuant to the provisions of this Agreement.

         20.   "SEGREGATION INSTRUCTIONS" shall mean Instructions pursuant to
which Bank is requested to transfer Securities or cash balances from the Account
to a Segregated Account.

         21.   "WRITTEN INSTRUCTIONS" shall mean instructions in writing,
including facsimile transmissions and electronic transmissions though GSCS or
through any other on-line communication system provided by Bank.

         All references to time in this Agreement (including any Schedule) shall
mean the time in effect in New York on the relevant day.

                                   ARTICLE II
                                 CLEARING AGENCY

         Section 2.01.  Appointment of Clearing Agent; Use of Agents. Customer
hereby appoints Bank as its clearing agent for the purpose of accepting receipt
and making delivery of Securities. Bank hereby accepts such appointment and
shall act as Customer's clearing agent for the types of Securities as are
mutually agreed from time to time, all of which arrangements shall be subject to
the terms hereof. Bank is authorized and directed to use, to the extent
possible, the Book-Entry System and any Depository in connection with its
performance hereunder. Securities and cash deposited by Bank therein shall be
held subject to the rules, regulations, operating procedures and custody
arrangements thereof.

         Section 2.02.  Clearing Account. Bank shall establish and maintain the
Account in which it will hold on behalf of Customer Securities and monies
incidental to clearing Securities. Bank shall maintain accurate records with
respect to each transaction cleared through the Account, and is hereby
authorized to make appropriate debit and credit entries of Securities and monies
in the Account to effect the execution of each Instruction of Customer for the
receipt or delivery of Securities.

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         Section 2.03.  Delivery and Payment Risk. (a) Customer understands that
when Bank is instructed to deliver Definitive Securities against payment,
delivery of such Securities and receipt of payment therefor may not be completed
simultaneously. Customer assumes all responsibility and liability for all credit
risks associated with Bank's delivery of Definitive Securities pursuant to
Instructions of an Authorized Person, which responsibility and liability shall
continue until final payment in full has been received by Bank.

         (b)   Bank may, as a matter of bookkeeping convenience, credit the
Account with the proceeds from the sale, redemption or other disposition of
Securities prior to its actual receipt of final payment therefor and Customer
agrees that such bookkeeping credits may also be reflected on its books, and
otherwise, as "immediately available" or "same day" funds or by some other
characterization. Notwithstanding any such credit or characterization, all such
credits shall be conditional upon Bank's actual receipt of final payment and may
be reversed by Bank to the extent that final payment is not received. If Bank,
in its sole discretion, permits Customer to use funds credited to the Account
prior to receipt by Bank of final payment thereof, Customer shall nonetheless
continue to bear the risk of, and liability for, Bank's nonreceipt of final
payment in full, and to the extent that final payment in full for any Securities
delivered on any Business Day is not received by Bank by the close of business
on such day, Customer shall immediately upon demand reimburse Bank for the
amount so used in anticipation of final payment, plus interest thereon from and
including the Business Day such final payment should have been received until
such amount is repaid in full at a rate per annum equal to (i) prior to demand
and for up to twenty-four (24) hours immediately following Customer's receipt of
demand, as determined in accordance with Section 3.03(a) hereof, and (ii)
beginning twenty-four (24) hours after demand, Bank's prime commercial lending
rate as publicly announced by Bank to be in effect from time to time, such rate
to be adjusted on the effective date of any change in such prime commercial
lending rate. The rights of Bank and the obligations of Customer under this
Section 2.03(b) are absolute and unconditional whether or not Bank would be
entitled to indemnification pursuant to Section 4.05 hereof.

         (c)   For all purposes of this Agreement, payment with respect to a
transaction will not be "final" until Bank shall have received immediately
available funds which pursuant to Article 4A of the New York Uniform Commercial
Code ("UCC") and Part B of Regulation J of the Board of Governors of the Federal
Reserve System ("Regulation J") are irreversible, which are not subject to any
security interest, levy or other encumbrance, and which are specifically
applicable, or deemed by Bank to be specifically applicable, to such
transaction. A debit by Bank to any other account of Customer maintained by Bank
or to an account of any third party to whom or for whose account Securities have
been delivered shall not constitute final payment to the extent that such debit
creates an overdraft or does not otherwise result in the receipt by Bank of
immediately available, irreversible and unencumbered funds.

         Section 2.04.  Segregation Accounts; Segregation and Desegregation
Instructions. (a) Upon Customer's request and execution and delivery to Bank of
such agreements as Bank shall require, Bank shall establish and maintain for and
in the name of Customer one or more Segregated Accounts for the purpose of
segregating fully paid for Securities of customers of Customer, Securities
subject to repurchase agreements, and for other purposes acceptable to Bank.
Subject to Bank's rights under Article III, Customer shall be entitled to
deliver to Bank a Segregation Instruction to transfer fully paid for Securities
and freely available cash balances into a Segregated Account. Each such
Segregation Instruction shall set forth (i) the specific issue of each Security
including CUSIP number (or other securities identification number acceptable to
Bank, if any), (ii) the Segregated Account into which such Security is to be
transferred, and (iii) the aggregate number of units of such Security to be so
transferred. Customer acknowledges and agrees that its issuance to Bank of a
Segregation Instruction and Bank's compliance therewith shall constitute the
sole means by which Customer shall identify to Bank any Securities as fully paid
for Securities of Customer's customers or Securities subject to repurchase
agreements or other purposes acceptable to Bank. Bank will not have, and will
not assert, any claim or lien against Securities held in a Segregated Account
nor will Bank grant any third party, including any Federal Reserve Bank, any
interest in such Securities.

         (b)   Customer shall be entitled to deliver to Bank a Desegregation
Instruction to transfer Securities from a Segregated Account to the Account.
Each Desegregation Instruction shall set forth (i) the specific issue of each
Security including CUSIP number (or other securities identification number
acceptable to Bank, if any), (ii) an instruction to transfer each such Security

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Security to the Account, and (iii) the aggregate number of units of such
Security to be so transferred. Customer's delivery of a Desegregation
Instruction shall constitute a representation and warranty by Customer to and
for the benefit of Bank that Customer is authorized to issue such Desegregation
Instruction and by so doing to transfer and pledge to Bank the full value of any
and all such Securities. Customer acknowledges and agrees that upon delivery of
Securities to the Account pursuant to a Desegregation Instruction, any and all
claims to such Securities by any third party, including without limitation,
claims of or by customers or counterparties of Customer, are discharged,
extinguished, released and terminated.

         (c)   On any Business Day that Bank receives Segregation and/or
Desegregation Instructions from Customer, Bank shall issue to Customer an
electronic notification of each Security held in the appropriate Segregated
Account as of the close of such Business Day. Customer shall notify Bank within
twenty-four (24) hours of any material discrepancy between any electronic
notification issued by Bank to Customer hereunder and Customer's record of
Segregated Account positions.

         (d)   Nothing in this Agreement shall create or give rise to, or be
interpreted or construed as creating or giving rise to, any contractual,
bailment, agency, fiduciary, or relationship of any nature whatsoever between
Bank and any non-party to this Agreement, including without limitation,
customers or counterparties of Customer.

         Section 2.05.  Clearance Instructions. As mutually agreed, an
Authorized Person shall give Bank Instructions to direct it to receive, deliver
or transfer Securities. It is Customer's obligation and responsibility to
deliver all such Instructions in accordance with the procedures, practices and
operational guidelines prescribed by Bank (and provided to Customer) from time
to time as to information required, manner of delivery, timeliness of delivery
and otherwise.

         Section 2.06.  Effectiveness of Instructions. Bank shall receive and
deliver Securities in and out of Customer's' Account in accordance with
Instructions from an Authorized Person. No such Instruction shall be effective
unless received by Bank. Bank will attempt to execute any Instruction received
after any deadline established by Bank and advised to Customer only if it is
received by Bank in sufficient time for Bank to be able to act thereon without
any obligation to do so or any representation or warranty as to Bank's ability
to do so. Bank shall conclusively presume that all Instructions (other than Oral
and Written Instructions) received by it have been duly authorized and delivered
and is hereby irrevocably authorized and directed to act in accordance
therewith. Bank shall be entitled to rely upon any Oral Instructions or Written
Instructions received by it and reasonably believed to have been given by an
Authorized Person. Customer agrees to forward to Bank Written Instructions
confirming Oral Instructions by the close of the same Business Day that such
Oral Instructions are given to Bank. Instructions may be revoked or amended only
by subsequent Oral or Written Instructions, provided that they are received by
Bank in sufficient time for it to act thereon under the circumstances. Customer
agrees that the fact that Written Instructions confirming Oral Instructions are
not received, or that subsequent contrary Instructions are received by Bank
shall in no way affect the validity or enforceability of any transactions
authorized by Customer and effected by Bank in accordance with this Agreement.
Bank shall not be liable for failures to execute, or "DKs", due to incorrect,
incomplete, conflicting or untimely Instructions or any other failure by
Customer to comply with the requirements prescribed by Bank from time to time.
Notwithstanding the foregoing, Bank will make a good faith effort to advise
Customer of any incorrect, incomplete or conflicting Instructions or any such
other failure by Customer of which Bank is aware.

         Section 2.07.  Settlements. (a) Transactions in FRB Securities and
Depository Securities will settle in accordance with the rules, procedures and
policies of the Book-Entry System or applicable Depository. Transactions in
Definitive Securities shall be settled in accordance with accepted industry
practices and the standard settlement timeframes for trades in the particular
Definitive Securities in the relevant markets. All Definitive Securities cleared
through Bank must be in good deliverable form.

         (b)   In order for Bank to complete same-day settlements, Bank must
receive Instructions from an Authorized Person in accordance with the time
frames established by Bank as set forth in Schedule I. Except as expressly
provided in Schedule I, Bank shall have no obligation to perform same-day
settlements.

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         Section 2.08.  Same-Day Turnaround Guarantee. (a) Whenever Bank has
received proper and timely Instructions from an Authorized Person both to accept
delivery of the types of Securities identified on Schedule II and to make
delivery of those same Securities, both transactions to settle on the same
Business Day, Bank guarantees to tender for delivery such Securities on such
Business Day, subject to the following provisions and the conditions set forth
on Schedule II.

         (b)   In the event Bank fails to complete a same-day turnaround
transaction on any Security after receiving proper and timely Instructions from
an Authorized Person as provided hereunder, Bank's sole liability to Customer
shall be to make an interest free overnight loan to Customer if as a result of
such failure it is necessary for Customer to finance overnight such Security.
For all purposes other than the overnight rate of interest, such loan shall be
subject to the provisions of Article III. Bank shall incur no other liability to
Customer nor to any non-party to this Agreement as a result of its failure to
complete a guaranteed same-day turnaround. The provisions of this Section
2.08(b) shall not be construed to limit or otherwise diminish Bank's liability
to Customer pursuant to Section 4.07 hereof.

         (c)   Except as expressly provided in Schedule II, Bank shall not be
liable for its failure to complete a same-day turnaround.

         Section 2.09.  Fees. (a) For its services hereunder, Customer agrees to
pay Bank the fees and charges set forth on a Fee Schedule attached hereto and
made a part hereof. Such fees or charges may be amended or supplemented by Bank
from time to time upon thirty days prior written notice to Customer, provided,
however, that if Customer objects to such fee change and, pursuant to Section
4.11, gives Bank written notice of termination of this Agreement within the
30-day period prior to the effective date of such change, the fee change shall
not go into effect and this Agreement shall continue at the existing fee rate
until the effective date of termination. Bank is hereby authorized to deduct the
fees and charges payable hereunder from the cash balances in the Account. Bank
shall generally debit the Account in arrears on the fifteenth day (or next
succeeding Business Day) of each month for fees incurred during the prior month,
although Bank reserves the right to debit the Account or to demand payment
simultaneously with clearing any Securities.

         (b)   It is understood and agreed that Bank shall invoice the
Government Securities Clearance Corporation ("GSCC") for any fees incurred by
Customer hereunder in connection with Book-Entry System transactions (other than
transactions in agency Securities for which Customer shall be charged directly),
provided, however, that Customer shall remain liable to Bank for any such fees
that are not paid by GSCC.

         Section 2.10.  Third Party Claims. In the event a claim is made against
Bank for interest, penalty or any other amount in accordance with the rules or
regulations of FRBNY, any Depository or any regulatory authority on account of
any action or inaction by Customer and Bank determines such claim is justified
under applicable laws, rules or regulations, Bank shall promptly inform Customer
of such claim. In the event Customer does not settle the claim or pay Bank such
amount within two Business Days after notification of the claim, Bank is
authorized to debit the Account in the amount of such claim, provided that Bank
is required to remit such amount pursuant to such rules or regulations.

         Section 2.11.  Customer Training; Equipment. (a) Any computer (or other
remote terminal) and transmission line utilized by Customer in connection with
this Agreement shall be provided at Customer's expense and must be fully
compatible with GSCS. Customer assumes all responsibility for maintenance of
such terminals and transmission lines and, except as otherwise set forth in this
Agreement, assumes all liability resulting from any interruption of its ability
to deliver Computer to Computer or Remote Clearance Instructions due to any
problem associated with the terminal or transmission line not caused by GSCS.

         (b)   If Bulk Input Instructions are to be delivered by bulk input
computer tape, it must be on computer tape fully compatible with GSCS. Two
separately run original tapes, not merely duplicate tapes, must be delivered to
Bank. Bank will promptly advise an Authorized Person if for any reason Bank is
unable to input such Bulk Input Instructions into GSCS.

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         Section 2.12.  Reports. Bank will provide to Customer or make available
to Customer through GSCS, the reports set forth, and on the frequency described,
in the GSCS user manual(s) or other GSCS documentation provided by Bank to
Customer from time to time, provided, however, that such reports shall at a
minimum include daily transaction journal reports and other daily reconciliation
reports.

                                   ARTICLE III
                             FINANCING ARRANGEMENTS

         Section 3.01.  Fail Financing. Subject to the terms of this Agreement,
Bank hereby agrees to make loans to Customer for the purpose of financing failed
deliveries of Securities (each, a "Fail Financing Loan"). Each Fail Financing
Loan shall be in a principal amount not to exceed the Market Value of the
Securities financed thereby and shall be due and payable by 10:00 a.m. on the
next Business Day after the making thereof. In the event that Bank shall have
extended credit to Customer in receiving Securities on its behalf in an amount
greater than the Market Value of the Securities financed hereunder, Customer
agrees as a condition to obtaining such Fail Financing Loan to promptly pay Bank
an amount equal to the difference between the credit so extended and the Market
Value of such Securities or provide Bank with additional collateral acceptable
to Bank. For purposes of this Section 3.01, "DKs" shall not be deemed to be
failed deliveries, and the financing of "DKs" shall be governed by the
provisions of Section 3.02 below. Notwithstanding any of the foregoing, Bank
reserves the right, in good faith and upon notice to Customer, not to make Fail
Financing Loans secured by certain types of Securities.

         Section 3.02.  Position Financing. With the prior agreement of Bank to
provide a credit facility to Customer, Bank may make loans to Customer to
finance its position in Securities (each, a "Position Financing Loan"). Each
Position Financing Loan shall be in a principal amount not to exceed the
Collateral Value thereof (as defined below), and shall be due and payable by
10:00 a.m. on the next Business Day after the making thereof. Customer shall
conduct its business in such a way that the aggregate principal amount
outstanding of all Position Financing Loans shall not exceed the amount set
forth on Schedule III. Although Bank may in its sole discretion make Position
Financing Loans from time to time exceeding such aggregate principal amount as
an accommodation to Customer, Customer shall in no event rely upon Bank to do
so. In the event the principal amount of a Position Financing Loan exceeds the
Collateral Value thereof, Customer agrees as a condition to obtaining such
Position Financing Loan to promptly pay Bank an amount equal to the difference
between such Position Financing Loan and the Collateral Value thereof or provide
Bank with additional collateral acceptable to Bank. Schedule III may be amended
or supplemented by Bank from time to time in its sole discretion, in good faith,
by delivery to Customer of a revised Schedule III, and any such amendment or
supplement shall be effective upon receipt by Customer (unless otherwise stated
therein), except with respect to outstanding financed positions for which the
change shall be effective five (5) days following such receipt. For purposes
hereof, the "Collateral Value" of a Position Financing Loan shall mean the
Market Value of the Securities financed thereby minus the applicable Margin
Percent of the Market Value thereof (as set forth on Schedule III).

         Section 3.03.  Interest. Customer agrees to pay Bank interest as
follows:

         (a)   Rate Determination. Fail Financing Loans, Position Financing
Loans and any other loans or extensions of credit arising hereunder or in
connection with clearing Securities (collectively, "Loans") shall bear interest
at the rate set by Bank in light of money market conditions, availability of
funds and amount required, such rate not to exceed Bank's prime commercial
lending rate, as may be adjusted by Bank from time to time, to be made available
and advised to Customer in advance of any such Loan to Customer. If Bank makes
Position Financing Loans available to Customer, Fail Financing Loans shall
generally bear interest at the same rate, although Bank reserves the right to
set a different rate in light of money market conditions and availability of
funds as it deems necessary.

         (b)   Payment of Interest. Customer agrees to pay Bank interest monthly
in arrears, which amount Bank is authorized to debit from the cash balances in
the Account; however, Bank reserves the right, upon notice to Customer, to
charge interest daily in arrears.

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         Section 3.04.  Collateral Security. As security for the repayment of
Loans and for the payment of interest thereon and all other Customer obligations
to Bank arising hereunder or pursuant to any other extensions of credit by Bank
to Customer, Customer hereby grants Bank a security interest in any and all
Securities which may now or hereafter be held in the Account, any and all cash
balances now or hereafter deposited in the Account and such other collateral
pledged to Bank by Customer pursuant to Sections 3.01 or 3.02 hereof, as shall
be satisfactory to Bank (collectively, the "Collateral"). Bank shall be entitled
to its rights as a pledgee under common law and as a secured party under
Articles 8 and 9 of the New York Uniform Commercial Code and any and all other
applicable laws and/or regulations as then in effect with respect to the
Collateral. Notwithstanding the interest of any other party in the Collateral,
whether arising from transactions with Customer in Securities or from any other
circumstances, Bank shall have a first and prior lien on the Collateral.
Customer hereby grants Bank the right to foreclose upon and liquidate the
Collateral upon the occurrence of an Event of Default (as defined in Article
IV). The transfer of any Security from the Account to any Segregated Account or
other account on Bank's books (whether or not such account is in Customer's
name) pursuant to Instructions shall be conditional and such Security shall be
deemed to be held in the Account for all purposes hereunder and subject to the
security interest in favor of Bank until Bank determines it has no loans,
overdrafts or losses on its books for Customer (or until Bank has received
satisfactory collateral for all such loans, overdrafts or losses), all money
payments are final and irreversible pursuant to Article 4A of the UCC and
Regulation J, and Bank approves such transfer by making appropriate entries
evidencing such approval promptly on Bank's books and records. The Bank making
such entries on its books and records shall constitute the sole means by which
such approval shall be given and such transfer shall become effective.

         Section 3.05.  Security Agreement. To further assure Bank of its rights
to the Collateral under this Article III and secure repayment of Customer's
obligations to Bank, Customer agrees to execute and deliver to Bank a Security
Agreement in form and substance attached hereto as Exhibit I (the "Security
Agreement").

                                   ARTICLE IV
                               GENERAL CONDITIONS

         Section 4.01.  Representations and Warranties of Customer. Customer
hereby represents and warrants to Bank, which representations and warranties
shall be deemed to be continuing and to be reaffirmed upon the delivery to Bank
of any Instructions by an Authorized Person under Article II:

         (a)   Organization. Customer is duly organized and existing under the
laws of the jurisdiction of its organization, with full power and authority to
carry on its business as now conducted, to enter into this Agreement and the
Security Agreement and to perform its obligations hereunder and thereunder;

         (b)   Binding Obligations. This Agreement and the Security Agreement
have been duly authorized, executed and delivered by Customer in accordance with
all requisite corporate action and constitute valid and legally binding
obligations of Customer, enforceable in accordance with their respective terms;

         (c)   Compliance with Laws. Customer is conducting its business in
compliance with all applicable laws and regulations, and has obtained all
regulatory licenses, approvals and consents necessary to carry on its business
as currently conducted; there is no statute, regulation, rule, order or judgment
binding on Customer and no provision of its charter or by-laws, nor of any
mortgage, indenture, credit agreement or other contract binding on Customer or
affecting its property which would prohibit the execution or performance by
Customer, in any material respect, of this Agreement or the Security Agreement;

         (d)   Security Interest. Customer owns the Securities in the Account
free and clear of all liens, claims, security interests and encumbrances (except
those granted herein) or, if the Securities in the Account are owned
beneficially by others, Customer has the right to pledge such Securities to the
extent financed by Bank hereunder, free of any right of redemption or prior
claim by the beneficial owner; Bank's security interest in the Collateral shall
be a first lien and security interest subject to no setoffs, counterclaims or
other liens prior to or on a parity with it in favor of any other party (other
than specific liens granted preferred status by statute or regulation) and
Customer shall take any and all additional steps which Bank requires to assure
itself of such priority and status, including notifying third parties or

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obtaining their consent to, Bank's security interest; no Securities in the
Account are "securities carried for the account of any customer" within the
meaning of Rules 8c-1 or 15c2-1 of the Securities Exchange Act of 1934, as
amended;

         (e)   Conduct of Business. Customer is conducting its business in all
material respects as required by applicable laws, rules or regulations to which
it is subject and has established and presently maintains audit and compliance
policies and procedures reasonably designed to prevent Customer from incurring
unreasonable or unwarranted risks or speculative exposures in light of its
capital base; and

         (f)   Financial Position. The annual and interim balance sheets and
income statements of Customer ("Financial Statements") heretofore delivered to
Bank, which are the most recent available, are to the best of Customer's
knowledge and belief, true and correct in all material respects, fairly present
the financial position of Customer as of their dates and have been prepared in
accordance with generally accepted accounting principles consistently applied;
there has been no material adverse change in the financial position or business
operations of Customer since the date of the most recent audited Financial
Statements.

         Section 4.02.  Covenants of Customer. Customer covenants with Bank as
follows:

         (a)   Delivery of Financial Statements. Customer shall deliver to Bank
promptly as they become available the annual, audited Financial Statements of
Customer, unaudited interim Financial Statements on a quarterly basis, and any
other financial statements which Bank shall reasonably request;

         (b)   Material Adverse Change. Customer shall notify Bank promptly of
any material adverse change in its financial position or business, since the
date of the most recent audited Financial Statements;

         (c)   Inspection. Customer shall allow Bank from time to time to visit
its offices, inspect its books and records and discuss Customer's business with
its management and senior officers, during business hours with reasonable prior
notice;

         (d)   No Actions in Violation of Law. Customer shall not use the
services provided by Bank hereunder in any manner that is in violation of or
will result in the violation of any law, rule or regulation (including but not
limited to, those of any self-regulatory organization) applicable to Customer or
Bank;

         (e)   Customer Confirmations. Customer understands and agrees any and
all Securities of customers of Customer held by Bank in connection with this
Agreement, must be segregated pursuant to Section 2.04 and Customer shall not
issue any confirmation to any third party with respect to any such Security
unless and until such Security has been transferred to a Segregated Account in
accordance with this Agreement; and

         (f)   Federal Reserve Form U-1. In the event that Bank makes an
extension of credit to Customer hereunder that is secured by margin stock,
Customer agrees, upon Bank's request, to execute and deliver a properly
completed Federal Reserve Form U-1 (i.e., Statement of Purpose for an Extension
of Credit Secured by Margin Stock) to Bank.

         Section 4.03.  Representations and Warranties of Bank. Bank hereby
represents and warrants to Customer, which representations and warranties shall
be deemed to be continuing and to be reaffirmed in connection with Bank's
execution of Customer's Instructions hereunder that:

         (a)   Organization. Bank is duly organized and existing under the laws
of the jurisdiction of its organization, with full power and authority to carry
on its business as now conducted, to enter into this Agreement, and to perform
its obligations hereunder;

         (b)   Binding Obligations. This Agreement has been duly authorized,
executed and delivered by Bank in accordance with all requisite corporate action
and constitutes valid and legally binding obligations of Bank, enforceable in
accordance with their respective terms;

                              Page 98 of 117 Pages
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         (c)   Compliance with Laws. Bank is conducting its business in all
material respects as required by all applicable laws and regulations to which it
is subject, and has obtained all regulatory licenses, approvals and consents
necessary to carry on its business as currently conducted; there is no statute,
regulation, rule, order or judgement binding on Bank and no provision of its
charter or by-laws, nor of any mortgage, indenture, credit agreement or other
contract binding on Bank or affecting its property which would prohibit the
execution or performance by Bank of this Agreement.

         Section 4.04.  Covenants of Bank. Bank covenants with Customer as
follows:

         (a)   Safekeeping. Bank will be responsible for the safekeeping of all
Securities received in the Account pursuant to this Agreement and for
maintaining accurate records with respect thereto; and

         (b)   No Actions in Violation of Law. Bank shall not use GSCS in any
manner that is in violation of or will result in the violation of any law, rule
or regulation (including but not limited to, those of any self-regulatory
organization) applicable to Customer or Bank.

         Section 4.05.  Events of Default. Bank shall have the right to
terminate this Agreement, to demand repayment of any Loans and other amounts
owing hereunder and to liquidate any Collateral, in each case following the
occurrence of any of the following events (each, an "Event of Default");

         (i)   The commencement of a voluntary case or other voluntary
               proceeding seeking liquidation, reorganization or other similar
               relief with respect to Customer or its debts under any
               bankruptcy, insolvency or similar law or seeking the appointment
               of a receiver, trustee, liquidator, conservator, administrator,
               custodian or other similar official for Customer or Customer's
               property;

         (ii)  The commencement of an involuntary case or other involuntary
               proceeding seeking liquidation, reorganization or other similar
               relief with respect to Customer or its debts under any
               bankruptcy, insolvency or similar law or seeking the appointment
               of a receiver, trustee, liquidator, conservator, administrator,
               custodian or other similar official for Customer or Customer's
               property and such case or proceeding continues undismissed for
               five (5) days;

         (iii) The failure to pay, when due and payable, the principal amount of
               any Loan or the failure to pay, when due and payable, any
               additional amount owing under Sections 3.01 or 3.02;

         (iv)  The failure to pay within two (2) Business Days after the same
               shall become due and payable the interest on any Loan or any
               other amount owing hereunder;

         (v)   The failure to comply with any other provision of this Agreement,
               which failure shall continue for thirty (30) days after receipt
               by Customer of a written notice specifying the nature of such
               failure; or

         (vi)  Any default under the Security Agreement.

         Section 4.06.  Effectiveness of Agreement. This Agreement shall become
effective upon the delivery to Bank of the following in form satisfactory to
Bank:

         (a)   Agreements. Duly executed originals of this Agreement and the
Security Agreement, together with such officer's certificates and opinions of
counsel as to corporate action and the matters set forth in Section 4.01 as Bank
shall request;

         (b)   Financial Statements. The most recent audited and interim
unaudited Financial Statements of Customer; and

                              Page 99 of 117 Pages
<PAGE>

         (c)   Certificate of Authorized Persons. Certificate, executed by the
Chief Operating Officer or Chief Financial Officer, identifying the Authorized
Persons who may give Bank Instructions hereunder.

         Section 4.07.  Standard of Care; Indemnification. (a) It is expressly
understood and agreed that in exercising its rights and performing its
obligations hereunder, Bank owes no fiduciary duty to Customer. Bank shall not
be liable for any costs, expenses, damages, liabilities or claims, including
attorney's and accountant's fees (collectively, "Losses") incurred by Customer,
except those Losses arising out of the gross negligence or willful misconduct of
Bank. Bank shall not be liable for any Losses sustained or incurred by reason of
any action or inaction by FRBNY, any Depository, or any of their respective
successors or nominees; it being understood that with respect to any such
Losses, Bank shall take all reasonable steps to recover such Losses from such
third parties, and Bank's sole responsibility and liability to Customer shall be
limited to amounts so received from such third parties (exclusive of costs and
expenses incurred by Bank). In no event will Bank be liable to Customer or any
third party for special, indirect or consequential damages, or lost profits or
loss of business, arising under or in connection with this Agreement, even if
previously informed of the possibility of such damages and regardless of the
form of action.

         (b)   Customer agrees to indemnify Bank and hold it harmless against
any and all Losses, sustained or incurred by, or which may be asserted against,
Bank as a result of its operating hereunder, including reasonable fees and
expenses of counsel incurred by Bank in a successful defense of claims by
Customer, excepting only those Losses arising from Bank's gross negligence or
willful misconduct. This indemnity shall be a continuing obligation of Customer,
its successors and assigns, notwithstanding the termination of this Agreement or
Bank ceasing to clear Securities hereunder. Upon written demand from Bank,
Customer agrees to pay promptly amounts owing under this indemnity free and
clear of any right of offset, counterclaim or other deduction asserted by
Customer. Bank's determination of amounts owing hereunder shall be binding,
absent manifest error. Customer shall be entitled to an accounting for any
amounts owing hereunder, but this shall not affect Customer's obligation to pay
such amounts promptly on demand.

         Section 4.08.  Limitation of Liability. Without limiting the generality
of the foregoing, Bank shall be under no duty or obligation to inquire into, and
shall not be liable for, the validity of any Securities received, delivered or
held by it hereunder, the legality of their purchase or sale, or the propriety
of the amount paid or received upon purchase or sale.

         Section 4.09.  No Obligation to Extend Credit. Notwithstanding the fact
that Bank from time to time, and whether or not as a regular pattern, makes
Loans to Customer or makes funds available to Customer in anticipation of final
payment for Securities delivered, Bank may at any time decline to continue or
re-extend any such Loan or credit, or any other credit, if Bank in its sole
discretion, in good faith, deems any of such obligations to be insecure, or the
risk of non-payment or non-performance by Customer to be increased.

         Section 4.10.  Force Majeure. Neither party shall be liable for any
failure or delay in the performance of its obligations under this Agreement
arising out of or caused, directly or indirectly, by circumstances beyond its
control, including without limitation, any act of God; earthquake; fire; flood;
war; civil or military disturbance; terrorist attack; sabotage; epidemic; riot;
interruption or suspension of any communication or wire facilities or services;
loss or malfunction of utilities, transportation, computer (hardware or
software) or communications service; accident; labor dispute; act of civil or
military authority; governmental action or inability to obtain labor, material,
equipment or transportation. If a force majeure event occurs, Bank agrees that
for the duration of such event, it will waive the requirement that Oral
Instructions be confirmed by Written Instructions if the preparation and
delivery of Written Instructions is materially hindered due to such event.

         Section 4.11.  Termination. (a) This Agreement may be terminated by
either party at any time upon not less than sixty (60) days prior written notice
delivered to the other party specifying the date of termination; provided
however, that Bank shall be entitled to terminate this Agreement immediately
upon notice to Customer if (i) Bank for any reason determines that there is or
has been a material adverse change in the financial position of Customer which
might expose Bank to potential losses if it continued to act hereunder or that
any Loan is insecure or that the risk of non-payment or non-performance of any
of Customer's obligations hereunder is increased, or (ii) any representation or
warranty made by Customer hereunder is incorrect or misleading in any material
respect when made or repeated; and provided further, that Bank shall have the

                              Page 100 of 117 Pages
<PAGE>

right to terminate this Agreement immediately upon the occurrence of an Event of
Default. Bank agrees to provide subsequent notice to Customer of its exercise of
such right.

         (b)   Upon termination of this Agreement and provided that all Loans,
interest thereon and all other amounts due to Bank under this Agreement are paid
in full, Bank shall transfer all Securities and cash balances in the Account as
follows:

         (i)   if not less than three (3) Business Days prior to the termination
               date Customer shall have given Bank Written Instructions for the
               delivery of such Securities and cash balances, then in accordance
               with such Written Instructions; and

         (ii)  if no such Written Instructions have been given by Customer, then
               on the termination date, with respect to FRB Securities,
               Depository Securities and Non-U.S. Definitive Securities, Bank
               may establish a custody account and hold such Securities in
               escrow for the benefit of and at the expense of Customer, and
               with respect to U.S. Definitive Securities and cash balances,
               Bank shall deliver such Definitive Securities and cash balances
               (which may be by certified or official bank check) to Customer at
               the address provided below.

         (c)   Customer will upon demand reimburse Bank for all shipping and
insurance costs associated with the foregoing deliveries of any Definitive
Securities.

         Section 4.12.  Cumulative Rights and No Waiver. Each and every right
granted to Bank and Customer hereunder or under any other document delivered
hereunder or in connection herewith, or allowed it by law or equity, shall be
cumulative and may be exercised from time to time. No failure on the part of
either party to exercise, and no delay in exercising, any right will operate as
a waiver thereof, nor will any single or partial exercise by either party of any
right preclude any other or future exercise thereof or the exercise of any other
right.

         Section 4.13.  Severability. In case any provision in or obligation
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.

         Section 4.14.  Tape Recording. Each party understands that the other
party may tape record telephone conversations and each party consents to such
practice with respect to the other and will so inform its employees.

         Section 4.15.  Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to conflict of laws principles thereof.

         Section 4.16.  Judicial Proceedings. EACH OF CUSTOMER AND BANK HEREBY
CONSENTS TO THE JURISDICTION OF A STATE OR FEDERAL COURT SITUATED IN NEW YORK
CITY, NEW YORK IN CONNECTION WITH ANY DISPUTE ARISING HEREUNDER AND AGREES THAT
ALL ACTIONS AND PROCEEDINGS RELATING, DIRECTLY OR INDIRECTLY, TO THIS AGREEMENT
SHALL BE LITIGATED ONLY IN SAID COURTS AND THAT SUCH COURTS ARE CONVENIENT
FORUMS AND WAIVES PERSONAL SERVICE UPON IT. EACH OF CUSTOMER AND BANK HEREBY
WAIVES ITS RIGHT TO TRAIL BY JURY IN ANY PROCEEDING BROUGHT BY EITHER PARTY
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED
TO, OR CONNECTED WITH, THIS AGREEMENT. EACH PARTY CONSENTS TO SERVICE OF PROCESS
OUT OF SAID COURTS BY MAILING A COPY HEREOF TO IT BY REGISTERED OR CERTIFIED
MAIL.

         Section 4.17.  Notices. Any notice, demand or other communication
hereunder, other than those given pursuant to Article II, shall be delivered in
writing and shall be effective upon receipt:

                              Page 101 of 117 Pages
<PAGE>

         If to Customer, at

         Maxcor Financial Inc.
         One New York Plaza, 16th Floor
         New York, New York 10292
         Attention:  Steve Vigliotti, Chief Financial Officer

         If to Bank, at

         The Bank of New York
         Broker/Dealer Services
         One Wall Street - 5th Floor
         New York, New York 10286

                              Page 102 of 117 Pages
<PAGE>

         With a copy to

         The Bank of New York
         Securities Industry Banking Division
         One Wall Street
         New York, New York 10286

         IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.


                                       MAXCOR FINANCIAL INC.

                                       By: /s/ STEVEN R. VIGLIOTTI
                                           -------------------------------------
                                       Title:  Chief Financial Officer


                                       THE BANK OF NEW YORK

                                       By: /s/ JOHN VISCI
                                           -------------------------------------
                                               Broker/Dealer Services

                                       Title:  Vice President


                                       By: /s/
                                           -------------------------------------
                                                Securities Industry
                                                 Banking Division

                                       Title:  Vice President

                              Page 103 of 117 Pages
<PAGE>

                                   SCHEDULE I

                          TIME DEADLINES FOR RECEIPT OF
                        SAME DAY SETTLEMENT INSTRUCTIONS
                                (FRB SECURITIES)


(A)      Bulk Input Instructions: must be received not later than one (1) hour
prior to the close of the Book-Entry System on the date of settlement.

(B)      Computer to Computer Instructions: must be received not later than two
(2) minutes prior to the close of the Book-Entry System on the date of
settlement.

(C)      Oral Instructions: are acceptable only if Written Instruction
confirming Oral Instructions are received by 1:00 p.m. on the date of settlement
for cash same day settlements.

(D)      Remote Clearance Instructions: must be received not later than two (2)
minutes prior to the close of the Book-Entry System on the date of settlement.

(E)      Remote Job Entry: must be received not later than one (1) hour prior to
the close of the Book-Entry System on the date of settlement.

(F)      Written Instructions: must be received by 1:00 p.m. on the date of
settlement for cash same day settlements.

                              Page 104 of 117 Pages
<PAGE>

                                   SCHEDULE I

                          TIME DEADLINES FOR RECEIPT OF
                        SAME DAY SETTLEMENT INSTRUCTIONS
      (MORTGAGE BACKED SECURITIES DIVISION OF THE DEPOSITORY TRUST COMPANY)

(A)      Bulk Input Instructions: must be received not later than one (1) hour
prior to the close of the Mortgage Backed Securities Division of the Depository
Trust Company ("MBS") on the date of settlement.

(B)      Computer to Computer Instructions: must be received not later than two
(2) minutes prior to the close of the MBS on the date of settlement.

(C)      Oral Instructions: are acceptable only if Written Instructions
confirming Oral Instructions are received by 1:00 p.m. on the date of settlement
for cash same day settlements

(D)      Remote Clearance Instructions: must be received not later than two (2)
minutes prior to the close of the MBS on the date of settlement.

(E)      Remote Job Entry: must be received not later than one (1) hour prior to
the close of the MBS on the date of settlement.

(F)      Written Instructions: must be received by 1:00 p.m. on the date of
settlement for cash same day settlements.

                              Page 105 of 117 Pages
<PAGE>

                                   SCHEDULE I

                          TIME DEADLINES FOR RECEIPT OF
                        SAME DAY SETTLEMENT INSTRUCTIONS
                          (U.S. DEFINITIVE SECURITIES)


(A)      Bulk Input Instructions: must be received not later than 45 minutes
prior to the applicable securities delivery deadline.

(B)      Computer to Computer Instructions: must be received not later than 45
minutes prior to the applicable securities delivery deadline.

(C)      Oral Instructions: are acceptable only if Written Instructions
confirming Oral Instructions are received not later than 45 minutes prior to the
applicable securities delivery deadline.

(D)      Remote Clearance Instructions: must be received not later than 45
minutes prior to the applicable securities delivery deadline.

(E)      Remote Job Entry: must be received not later than 45 minutes prior to
the applicable securities delivery deadline.

(F)      Written Instructions: must be received not later than 45 minutes prior
to the applicable securities delivery deadline.

                              Page 106 of 117 Pages
<PAGE>

                                   SCHEDULE I

                          TIME DEADLINES FOR RECEIPT OF
                    SAME DAY/NEXT DAY SETTLEMENT INSTRUCTIONS
         (DEPOSITORY TRUST COMPANY SECURITIES OTHER THAN MBS SECURITIES)


(A)      Bulk Input Instructions: must be received (i) for same day settlements,
not later than 2:00 p.m. on the date of settlement, (ii) for next-day
settlement, not later than 4:00 p.m. on the Business Day prior to the date of
settlement.

(B)      Oral Instructions: are acceptable only if Written Instructions
confirming Oral Instructions are received by 1:00 p.m. on the date of settlement
for cash same day settlements.

(C)      Remote Clearance Instructions: must be received (i) for same day
settlements, not later than 1:00 p.m. on the date of settlement, (ii) for
next-day settlement, not later than 4:00 p.m. on the Business Day prior to the
date of settlement.

(D)      Remote Job Entry: must be received (i) for same day settlements, not
later than 2:00 p.m. on the date of settlement, (ii) for next-day settlement,
not later than 4:00 p.m. on the Business Day prior to the date of settlement.

(E)      Written Instructions: must be received (i) for same day settlements,
not later than 1:00 p.m. on the date of settlement (ii) for next-day settlement,
not later than 4:00 p.m. on the Business Day prior to the date of settlement.

                              Page 107 of 117 Pages
<PAGE>

                                   SCHEDULE II

                          SAME-DAY TURNAROUND GUARANTEE
                                (FRB SECURITIES)


         Bank must receive (as determined below) the FRB Securities at least two
(2) minutes prior to the close of FRBNY for FRB Securities to be delivered
through the Book-Entry System to accounts outside GSCS. Instructions will be
received by Bank and acknowledged by Bank's Communication "Front End" and such
instructions will then be sent to the "GSCS Application" to be validated, time
stamped and queued for outbound delivery. FRB Securities shall be deemed to have
been received by the Account (i) through FRBNY from another participant on the
Book-Entry System at the time the transaction message confirming delivery to
Bank's account at the Book-Entry System is received by the GSCS Application or
(ii) through GSCS from an account of another participant in GSCS at the time the
transaction message confirming delivery into the Account is logged onto GSCS,
which time is printed on Bank's confirmation as the GSCS "Receive Time". FRB
Securities shall be deemed to have been tendered for delivery out of the Account
at the time the transaction message is stamped by FRBNY with its GSCS "Delivery
Time" (x) for delivery to another participant on the Book-Entry System or (y) to
another participant in GSCS. Bank only guarantees turnaround times within GSCS
and is not responsible for delays or processing backlogs on the Book-Entry
System or for the Book-Entry System going down. Transaction messages which do
not reach Bank within the time frames set forth, regardless of when such
transaction messages had been queued by FRBNY for delivery to Bank, are not
covered by the turnaround guarantee.

                              Page 108 of 117 Pages
<PAGE>

                                   SCHEDULE II

                          SAME-DAY TURNAROUND GUARANTEE
      (MORTGAGE BACKED SECURITIES DIVISION OF THE DEPOSITORY TRUST COMPANY)


         Bank must receive MBS Securities at least two (2) minutes prior to the
close of MBS for MBS Securities to be delivered through MBS to accounts outside
GSCS. Instructions will be received by Bank and acknowledged by Bank's
Communication "Front End" and such instructions will then be sent to the "GSCS
Application" to be validated, time stamped and queued for outbound delivery. MBS
Securities shall be deemed to have been received by the Account (i) through MBS
from another participant of MBS at the time the transaction message confirming
delivery to Bank's account at MBS is received by the GSCS Application or (ii)
through GSCS from an account of another participant in GSCS at the time the
transaction message confirming delivery into the Account is logged onto GSCS,
which time is printed on Bank's confirmation as the GSCS "Receive Time". MBS
Securities shall be deemed to have been tendered for delivery out of the Account
at the time the transaction message is stamped by GSCS with the GSCS "Delivery
Time" (x) for delivery to another participant on the MBS system or (y) to
another participant in GSCS. Bank only guarantees turnaround times within GSCS
and is not responsible for delays or processing backlogs on the MBS system or
for the MBS system going down. Transaction messages which do not reach Bank
within the time frames set forth, regardless of when such transaction messages
had been queued by MBS for delivery to Bank, are not covered by the turnaround
guarantee.

                              Page 109 of 117 Pages
<PAGE>

                                   SCHEDULE II

                          SAME-DAY TURNAROUND GUARANTEE
         (DEPOSITORY TRUST COMPANY SECURITIES OTHER THAN MBS SECURITIES)


         Same-day turnaround for Depository Trust Company Securities will be
subject to the rules, procedures and policies of DTC and subject to such time
deadlines as Bank may specify from time to time. Bank shall not be liable
hereunder for its failure to complete same-day turnarounds as a result of delays
or processing backlogs at any depository.

                              Page 110 of 117 Pages
<PAGE>

                                   SCHEDULE II

                          SAME-DAY TURNAROUND GUARANTEE
                          (U.S. DEFINITIVE SECURITIES)


         Bank must receive (as determined below) the Definitive Securities in
good deliverable form at least thirty (30) minutes prior to the close of
business by Bank for clearing Definitive Securities (for deliveries within the
downtown financial district in Manhattan, New York City). Bank shall inform
Customer of any changes in the above time. Definitive Securities shall be deemed
received by Bank when accepted at the securities cage window, One Wall Street,
New York, New York 10286 (or such other place hereafter designated by Bank),
which time is stamped on Bank's receipt confirmation. Bank shall be deemed to
have tendered delivery of Definitive Securities at the time they are accepted by
the other clearing bank, which time is customarily stamped on its receipt form.
Bank does not guarantee same-day turnaround of Definitive Securities received
hereunder when the delivery of such Definitive Securities by Bank must be
accompanied by a Bank check representing accrued interest or other payment, but
Bank agrees to use its best efforts to tender for same-day delivery such
Definitive Securities.

                              Page 111 of 117 Pages
<PAGE>

                                  SCHEDULE III


Schedule III has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of
1934, as amended.

                              Page 112 of 117 Pages
<PAGE>

                                  FEE SCHEDULE


This Fee Schedule has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of
1934, as amended.


                              Page 113 of 117 Pages
<PAGE>

                                    EXHIBIT I

                               SECURITY AGREEMENT


One Wall Street, New York, New York                             August 15, 2002
                                                               -----------------
                                                                    (date)

         FOR VALUE RECEIVED, and in order to induce THE BANK OF NEW YORK (the
"Bank"), in its discretion, to make loans relating to the clearing of securities
or otherwise extend credit at any time, and from time to time to, or at the
request of, the undersigned (the "Debtor"), whether the loans or credit so
extended shall be absolute or contingent, the Debtor hereby grants to the Bank,
as security for all present or future obligations or liabilities of any and all
kinds of the Debtor to it under the Securities Clearing Agreement of even date
between Bank and Debtor (the "Securities Clearing Agreement") or any other
extension of credit by Bank to Debtor, whether due or to become due, secured or
unsecured, absolute or contingent, and howsoever or whensoever acquired by the
Bank, including interest accruing thereon before or after the commencement of
any insolvency, bankruptcy or reorganization proceeding of the Debtor (whether
or not such interest is an allowable claim in any proceeding and irrespective of
the discharge or release of the Debtor in such proceeding) (all of which are
referred to collectively as the "Obligations"), a security interest in and a
lien upon all property specified in Schedule A hereto, and also including all
interest, dividends and other distributions thereon paid and payable in cash or
in property, and all replacements and substitutions for, and all accessions and
additions to, and all products and proceeds of, all of the foregoing (all of
which are referred to as the "Collateral").

         The Debtor hereby agrees to deliver to the Bank whenever called for by
it in accordance with the terms of the agreement under which an Obligation
arises, such additional collateral security of a kind and of a market value
satisfactory to the Bank, so that there will, at all times, be with the Bank a
margin of security for the payment of all Obligations which shall be
satisfactory to it. In addition to the Bank's security interest in the
Collateral, it shall have, and the Debtor hereby grants to the Bank, a security
interest and a lien for all the Obligations in and upon any personal property of
the Debtor or in which the Debtor may have an interest which is now or may at
any time hereafter come into the possession or control of the Bank, or of any
third party acting on its behalf, whether for the express purpose of being used
by the Bank as collateral security or held in custody or for any other or
different purpose, including such personal property as may be in transit by mail
or carrier for any purpose, or covered or affected by any documents in the
Bank's possession or control, or in the possession or control of any third party
acting on its behalf (said additional personal property is also referred to as
the "Collateral"). The Debtor hereby authorizes the Bank in its discretion,
whether or not the Collateral is deemed by it adequate, following any default
(including the passage of any applicable notice and cure periods) by the Debtor
in any of the Obligations in accordance with the terms of such Obligation (each
a "Default"), to appropriate and apply upon any of the Obligations, any of such
property of the Debtor and to charge any of the Obligations against any balance
of any account standing to the credit of the Debtor on the books of the Bank.

         Upon a Default by the Debtor, the Bank shall have, in addition to all
other rights and remedies allowed by law, the rights and remedies of a secured
party under the Uniform Commercial Code as in effect in the State of New York
(the "Code") and, without limiting the generality of the foregoing, the Bank may
immediately, without demand of performance and without notice of intention to
sell or otherwise dispose of Collateral, or of time or place of sale or other
disposition, or of redemption or other notice or demand whatsoever to the
Debtor, all of which to the extent permitted by law are hereby expressly waived,
and without advertisement, sell at public or private sale, grant options to
purchase or otherwise realize upon, in the State of New York, or elsewhere, the
whole or from time to time any part of the Collateral upon which the Bank shall
have a security interest or lien as aforesaid, or any interest which the Debtor
may have therein. After deducting from the proceeds of any such sale or other
disposition of the Collateral all expenses (including, but not limited to,
reasonable attorneys' fees and expenses and other expenses as set forth below),
the Bank shall apply the remaining proceeds toward the payment of the
Obligations, in such order as the Bank shall elect, the Debtor remaining liable
for any deficiency remaining unpaid after such application, plus interest
thereon, provided, however, that any excess in such proceeds will be returned to
the Debtor. If notice of any sale or other disposition is required by law to be
given, the Debtor hereby agrees that a notice sent by facsimile or by hand
delivery to Debtor's Chief Financial Officer at least five days before the time
of any intended public sale or of the time after which any private sale or other
disposition of the Collateral is to be made, shall be reasonable notice of such
sale or other disposition. In the event that the Bank is not in possession of
any of the Collateral, the Debtor agrees to assemble such Collateral at such
place or places as the Bank designates by written notice.

                              Page 114 of 117 Pages
<PAGE>

         At any such sale or other disposition (which shall be conducted in a
commercially reasonable manner) the Bank or any other person designated by the
Bank may itself purchase the whole or any part of the Collateral sold, free from
any right of redemption on the part of the Debtor, which right, to the extent
permitted by law, is hereby waived and released.

         Whenever the Bank, in its discretion, believes that circumstances exist
that necessitate such action, without any notice to the Debtor and whether or
not any of the Obligations are due, it may in its name or in the name of the
Debtor, demand, sue for, collect and receive any money or property at any time
due, payable or receivable on or on account of or in exchange for, and may
compromise, settle or extend the time of payment of, any of the demands or
obligations represented by any of the Collateral, and may also exchange any of
the Collateral for other property upon the reorganization, recapitalization or
other readjustment of the issuer, maker or other person who is obligated on or
otherwise has liabilities with respect to the Collateral, and in connection
therewith may deposit any of the Collateral with any committee or depositary
upon such terms as the Bank may in its discretion deem appropriate, and the
Debtor does hereby constitute and appoint the Bank the Debtor's true and lawful
attorney to compromise, settle or extend payment of said demands or obligations
and exchange such Collateral as the Debtor might or could do personally; all
without liability or responsibility for action herein authorized and taken or
not taken in good faith. The Bank is entitled at any time in its discretion to
notify an account debtor or the obligor on any instrument to make payment to it,
regardless of whether or not the Debtor had been previously making collections
on the Collateral, and the Bank may take control of any proceeds of any of the
Collateral. Upon request of the Bank, the Debtor shall receive and hold all
proceeds of the Collateral in trust for the Bank and not commingle any
collections with any of its own funds and immediately deliver such collections
to the Bank.

         The Debtor agrees that the Collateral secures, and further agrees to
pay on demand, all expenses (including, but not limited to, reasonable
attorneys' fees and expenses and costs of any insurance and payment of taxes or
other charges) of, or incidental to, the custody, care, sale or collection of,
or realization upon, any of the Collateral or in any way relating to the
enforcement or protection of the rights of the Bank hereunder, whether or not
litigation is commenced, provided, however, that such expenses shall be separate
and distinct from, and shall not be construed to modify, any of the Bank's fees
for providing services to Debtor pursuant to any other agreement between the
Bank and the Debtor nor shall the foregoing be construed to limit any obligation
of the Bank with respect to the Collateral that is required by any such
agreement.

         The Debtor agrees to mark its books and records as the Bank shall
request in order to reflect the rights of the Bank granted herein. The Bank may,
in its sole discretion, for any Collateral for which it does not have custody,
and to the extent that it believes that circumstances exist which necessitate
such action, take possession of such Collateral at any time, either prior to or
subsequent to a default under any of the Obligations. The Debtor agrees to
maintain such insurance on the Collateral as the Bank may require. The Bank may,
without notice to the Debtor, in its discretion, and for its own benefit, lend,
use, transfer or repledge to any third party all or any part of the Collateral
by itself or commingled with the property of others, in bulk or otherwise. The
Bank may, without notice to the Debtor, sell, assign or transfer any of the
Obligations and the Bank's rights and duties hereunder, and may deliver the
Collateral, or any part thereof, to the assignee or transferee of any of the
Obligations, who shall become vested with all the rights, remedies, powers,
security interests and liens herein given to the Bank in respect thereto; and
the Bank shall thereafter be relieved and fully discharged from any liability or
responsibility in the premises.

         Upon a Default by the Debtor, the Bank may, without notice to the
Debtor, in its discretion, transfer, or cause to be transferred, all or any part
of the Collateral to its name, or to the name of its nominee, vote the
Collateral so transferred, and receive income and make or receive collections,
including money, thereon and hold said income and collections as Collateral or
apply said income and collections to any of the Obligations, the manner and
distribution of the application to be made as the Bank shall elect.

         Calls for Collateral, demand for payment or notice to the Debtor may be
given verbally or in writing (which may be transmitted by facsimile) to the
Debtor's Chief Financial Officer to by leaving same at the address given below
or any other address hereafter filed by the Debtor with the Bank, or by mailing
same to such address with the same effect as if delivered personally. Calls for
Collateral and any demand for payment shall be effective when given by the Bank.

         With respect to the Collateral, the Bank shall be under no duty to send
notices, perform services, exercise any rights of collection, enforcement,
conversion or exchange, vote, pay for insurance, taxes or other charges or take
any action of any kind in connection with the management thereof and its only
duty with respect thereto shall be to use reasonable care in its custody and
preservation while in its possession, which shall not include any steps
necessary to preserve, obtain, secure or acquire rights or property against or
from any parties, provided, however, that nothing contained herein shall be
construed to limit any of the Bank's obligations with respect to the Collateral
that is required by any other agreement between the Bank and the Debtor.

                              Page 115 of 117 Pages
<PAGE>

         The Debtor authorizes the Bank, at the Debtor's expense, to file one or
more financing statements and amendments thereto to perfect the security
interests granted herein, without the Debtor's signature thereon, and the Debtor
agrees to do, file, record, make, execute and deliver all such acts, deeds,
things, agreements, notices, instruments and financing statements as the Bank
may request in order to perfect and enforce the rights of the Bank herein.

         If at any time it is necessary in the opinion of counsel to the Bank,
that any or all of the securities that may be pledged to the Bank as Collateral
(other than FRB Securities or Depository Securities, as those terms are defined
in the Securities Clearance Agreement)(the "Pledged Securities") be registered
under the Securities Act of 1933, as amended, or that an indenture with respect
thereto be qualified under the Trust Indenture Act of 1939, as amended, in order
to permit the sale or other disposition of the Pledged Securities, the Debtor
shall at the Bank's request and at the expense of the Debtor use its best
efforts promptly to cause the registration of the Pledged Securities and the
qualification of such indenture and to continue such registration and
qualification under such laws and in such jurisdictions and for as long as
deemed appropriate by the Bank.

         The Debtor hereby authorizes the Bank to date this agreement as of the
date of the granting of any Obligation secured hereby and to complete any blank
space herein (including any schedule hereto) according to the terms upon which
said Obligation was granted.

         This agreement may not be amended orally or by course of dealing, but
only by a writing signed by an authorized officer of each of the Debtor and the
Bank.

         No failure on the part of the Bank to exercise, and no delay in
exercising, any right, remedy or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise by the Bank of any right,
remedy or power hereunder preclude any other or future exercise thereof or the
exercise of any other right, remedy or power.

         Each and every right, remedy and power hereby granted to either party
or allowed it by law or other agreement shall be cumulative and not exclusive of
any other right, remedy or power, and may be exercised by the respective party
at any time and from time to time.

         This agreement may be assigned by the Bank and its benefits shall inure
to the successors, indorsees and assigns of the Bank.

         This agreement shall be construed and interpreted, and all rights and
obligations hereunder shall be determined, in accordance with the laws of the
State of New York without regard to principles of conflict of laws.

         Unless otherwise defined herein or in the Securities Clearing Agreement
or the text otherwise requires, all terms used herein shall have the meanings
specified in the Code.

         Every provision of this agreement is intended to be severable; if any
term or provision of this agreement shall be invalid, illegal or unenforceable
for any reason whatsoever, the validity, legality and enforceability of the
remaining provisions hereof shall not in any way be affected or impaired
thereby.

         Unless otherwise specified herein, any notice from one party to the
other shall be effective only upon receipt by the other party at its respective
offices set forth herein or any other address hereafter specified by written
notice from one party to the other.

         The Debtor represents and warrants to the Bank that any information
furnished to the Bank regarding the Collateral shall be true and correct on the
date hereof and is complete in all material respects.

         The Debtor represents and warrants that it is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation; that the execution, delivery and performance of this
agreement are within the Debtor's corporate powers and have been duly authorized
by all necessary action of its board of directors and shareholders; and that
each person executing this agreement has the authority to execute and deliver
this agreement on behalf of the Debtor.

         THE DEBTOR SUBMITS TO THE JURISDICTION OF STATE AND FEDERAL COURTS
LOCATED IN THE COUNTY AND STATE OF NEW YORK IN PERSONAM AND AGREES THAT ALL
ACTIONS AND PROCEEDINGS RELATING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT SHALL
BE LITIGATED ONLY IN SAID COURTS OR IN COURTS LOCATED ELSEWHERE AS THE BANK MAY
SELECT AND THAT SUCH COURTS ARE CONVENIENT FORUMS AND WAIVES PERSONAL SERVICE

                              Page 116 of 117 Pages
<PAGE>

UPON IT AND CONSENTS TO SERVICE OF PROCESS OUT OF SAID COURTS BY MAILING A COPY
THEREOF TO IT BY REGISTERED OR CERTIFIED MAIL.

         THE DEBTOR AND THE BANK WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION
OR PROCEEDING BASED UPON, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.


MAXCOR FINANCIAL INC.



By ___________________________________

Name:

Title:

Address:   One New York Plaza, 16th Floor
           New York, New York 10292


--------------------------------------------------------------------------------

                                   SCHEDULE A

                                       TO

                               SECURITY AGREEMENT

                                   EXECUTED BY

                              MAXCOR FINANCIAL INC.
                              ---------------------
                                (Name of Debtor)


Property specifically included as "Collateral" for purposes of the within
Security Agreement:


         Any and all Securities and other property held in the Account, as these
terms are defined in the Securities Clearing Agreement between the Debtor and
the Bank, and any cash balances held in any cash account maintained by the Bank
in the name of Debtor in connection therewith.


                              Page 117 of 117 Pages