Document:

Exhibit 10.3

 

March 14, 2006

 

	
   

  	
   

  	
  Jean-Jacques
  Ogier

  
	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
  Société
  Générale Americas

  
	
   

  	
   

  	
   

  
	
  Mr. Kim
  S. Fennebresque

  	
   

  	
  Tel:
  212 278 6870

  
	
  Chairman & CEO

  	
   

  	
  Fax:
  212 278 7461

  
	
  Cowen &
  Co., LLC.

  	
   

  	
  jean-jacques.ogier@sgcib.com

  
	
  1221
  Avenue of the Americas

  	
   

  	
   

  
	
  10th
  Floor

  	
   

  	
   

  
	
  New
  York, NY 10020

  	
   

  	
   

  

 

Dear Mr. Fennebresque:

 

This letter shall constitute your agreement (“Agreement”) relating to employment
with Cowen & Co., LLC. (including any successor entity or its holding
company, collectively “Cowen,” or the “Company”) effective as of January 1,
2006, and supersedes and replaces the employment agreement entered into between
you and Cowen effective January 1, 2005 (the “Prior Agreement”). The terms
and conditions of your employment and compensation are set forth below.

 

1.                                       Position, Duties and Responsibilities.

 

(a)                                  Cowen shall continue to employ you as
Chairman of the Board of Directors and Chief Executive Officer. You shall
devote your full time and efforts to the performance of all of the duties associated
with that position and title as well as any and all other related duties that
the Board of Directors of Cowen may designate or assign to you.

 

(b)                                 During your employment, you may not, without
the prior written consent of Cowen, accept an appointment, whether or not for
remuneration, as Director, Officer or Manager of a company or business that is
not affiliated with Cowen.

 

(c)                                 You shall continue to be subject to and
comply with Cowen’s Code of Conduct, Conflict of Interest Policy, Employee
Investment Policy, customary compliance policies and all other policies, rules and
practices applicable to Cowen employees of similar rank and status, as now
existing or as subsequently modified or supplemented by Cowen in its sole
discretion.

 

2.                                       Term.

 

(a)                                  Your employment shall continue through December 31,
2007 (the “Term”), subject to provisions in Paragraph 6 concerning Termination
of Employment. The Term, and the terms of this Agreement, including the
compensation provisions, will be automatically

 

Société Générale

1221 Avenue of the Americas

New York NY 10020

 

 

renewed
for one additional two-year period, the 2008 and 2009 period (the “First
Renewal Term”) and one additional one-year period, the 2010 period (the “Second
Renewal Term”) unless either party provides written notice to the other that
the Term will not be so extended. Such notice must be provided by October 1st
of the second year of the term in accordance with the provisions of Paragraph
15 (i.e., notice on or before October 1, 2007 that the Agreement will not
be renewed for 2008 and 2009, terminates the agreement as of December 31,
2007). Notwithstanding the foregoing, this Agreement (and the Term) shall
automatically terminate upon the first to occur of (i) Abandonment of the
IPO (as defined below) or (ii) December 15, 2006, provided that the
Company has not consummated an IPO (as defined below) by such date.

 

(b)                                 For purposes of this Agreement, “IPO” shall
mean the consummation of an initial public offering of shares of Cowen whereby
Societe Generale or one of its subsidiaries (“SG”) offers a certain percentage
of Cowen (or any successor entity or its holding company) to the public for
sale on a nationally recognized securities exchange.

 

(c)                                  For purposes of this Agreement, “Abandonment
of the IPO” shall mean the first to occur of any of the following events: (i) execution
of an agreement by SG to sell, transfer or otherwise convey ownership of more
than 30% of its interest in Cowen to an entity not affiliated with SG, other
than as part of an IPO, (ii) withdrawal by Cowen of any registration
statement filed with the Securities and Exchange Commission in contemplation of
an IPO, (iii) a determination by SG that it no longer intends to pursue an
IPO of Cowen or (iv) any other action indicating abandonment of the IPO.

 

(d)                                 If either party provides notice not to renew
the Term, then you will be entitled to receive your Base Salary, and have use
of an office of comparable size and your secretary until March 31st
of the year following termination. You will be further entitled to the
Severance Amount set forth in Paragraph 6(e); provided, however, that you shall
not be entitled to the Severance Amount if this Agreement is not renewed beyond
the Second Renewal Term. You will not be entitled to a pro-rata bonus under
this Agreement for the period from January 1st through March 31st
of that year.

 

3.                                       Base Salary and Annual Bonus. You will be paid a base salary at the rate
of Two Hundred Fifty Thousand Dollars ($250,000) per annum, less applicable tax
and payroll deductions, payable in accordance with Cowen’s prevailing payroll
practices. The base salary in effect at any time during the Term is referred to
herein as “Base Salary.” In addition to your Base Salary, with respect to each
of the first four years of the Term (assuming you are still employed by Cowen)
you will be paid, less applicable tax and payroll deductions, a minimum annual
bonus in the amount of One Million Seven Hundred Fifty Thousand Dollars
($1,750,000) so that your total compensation for each such fiscal year is no
less than Two

 

2

 

Million
Dollars ($2,000,000). Commencing in the fifth year of the Term (i.e., 2010),
assuming you are still employed by Cowen, you shall be entitled to receive a
minimum annual bonus equal to One Million Seven Hundred Fifty Thousand Dollars
($1,750,000), of which Seven Hundred Fifty Thousand Dollars ($750,000) shall be
paid within two-and-one-half months after the end of the fiscal year in which
such bonus was earned and One Million Dollars ($1,000,000) of which shall be
deferred in accordance with the provisions of Section 409A (“Section 409A”)
of the Internal Revenue Code of 1986, as amended, and the guidance and
regulations promulgated thereunder (the “Code”) and shall be paid to you
immediately following the six-month anniversary of your termination of
employment (or earlier, if permitted by Section 409A). In addition, in
each year in which you are employed by Cowen you shall be entitled to earn an
additional annual performance-based bonus pursuant to a Company bonus plan as
determined by the Compensation Committee of the Board of Directors of Cowen.
The total annual bonus that may be earned by you for any year during the Term
is referred to herein as the “Annual Bonus.” Your Annual Bonuses for the 2006
through the 2010 fiscal years, and for any years thereafter, may at the
discretion of the Board of Directors of Cowen, and consistent with other senior
executives of Cowen, include a certain percentage of shares, restricted shares,
options, or other form of equity ownership in Cowen.

 

4.                                       Benefits. Cowen shall continue to provide you benefits, on the same basic terms
and conditions it customarily applies to Cowen employees of similar position,
rank and status, including life insurance, medical insurance, disability
insurance, holidays, vacation, 401(k) plan (if otherwise eligible), pension and
other employee benefits more particularly described in Cowen’s summary benefits
booklets, or as subsequently modified, changed or discontinued by Cowen. All
such benefits shall be provided in accordance with the terms and eligibility
requirements of their respective plans.

 

5.                                       Expenses. All documented and verified, reasonable and necessary expenses which
you incur in connection with the performance of your duties hereunder shall be reimbursed
in accordance with Cowen’s general policies.

 

6.                                       Termination of Employment.

 

(a)                                  Death or disability. Your employment shall terminate on your
death. If you become disabled, Cowen may terminate your employment by giving
you thirty (30) days written notice of its intention to terminate this
Agreement. In such event, your employment shall be terminated
unless you return to full-time performance of your duties within such thirty
(30) day period. “Disabled”, as used herein, shall mean “Disability,” as such
term is defined in Section 409A of the Internal Revenue Code of 1986, as
amended. Disputes on the issues of disability shall be determined by an
impartial, reputable physician agreed upon by the parties or their respective
doctors. Upon termination under this Paragraph

 

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6(a),
you or your estate shall be entitled to receive only that portion of your Base
Salary and any benefits or compensation that have been earned, but unpaid, as
of the date of termination and a pro-rata share of any Annual Bonus due for the
year in which your employment terminates, taking into account the number of
days that you were employed during the year during which termination occurs and
based on actual corporate performance. In addition, any outstanding equity
awards, including but not limited to any equity awards granted under Paragraph
8 of this Agreement, shall become fully vested and exercisable and any
restrictions thereon shall lapse. Any outstanding stock options shall remain
exercisable for the remainder of the respective terms of such stock options.

 

(b)                                 Cause. Nothing herein shall prevent the Board of Directors of Cowen from
terminating your employment for any reason, including for Cause. “Cause” shall
mean:

 

(i)                                     fraud, dishonesty, gross negligence or
substantial misconduct in the performance of your duties and responsibilities;

 

(ii)                                  any wrongful act that materially adversely
affects the business or reputation of Cowen, including, but without limitation,
breach of a fiduciary duty and/or intentional material violations of Cowen
policies or any violation of law;

 

(iii)                               your failure or refusal, after written notice
of such failure or refusal has been given to you, in any material respect, to
perform faithfully or diligently, the provisions of this Agreement or the
duties of your position, including, by way of example and not of limitation,
the failure or refusal to follow instructions reasonably given in the course of
employment, or violation of any material duty to Cowen.

 

Upon termination
of your employment for Cause you shall be entitled to receive only your Base
Salary and any other benefits or compensation that have been earned or vested
in accordance with the terms of the relevant plans, if any, pursuant to which
such benefits or compensation were awarded, but unpaid, as of the date of
termination. You shall not be entitled to any unpaid Annual Bonus whatsoever
for the year of termination.

 

(c)                                  Resignation/Voluntary Termination without
Good Reason. In the event you
resign or terminate your employment with Cowen of your own volition without
Good Reason (as defined below) prior to the expiration of the Term, you shall
be entitled to receive only your Base Salary and any benefits or compensation
that have been earned or vested in accordance with the terms of the relevant
plans, if any, pursuant to which such benefits or

 

4

 

compensation
were awarded, but unpaid, as of the date of termination of your employment. You
shall not be entitled to any unpaid Annual Bonus whatsoever for the year of
termination. You shall also be required to comply with the notice provision of
Paragraph 9.

 

(d)                                 Good Reason. For purposes of this Agreement, you shall have “Good Reason” to
terminate your employment hereunder (1) upon a failure by the Company to comply
with any material provision of this Agreement which has not been cured within
thirty (30) days after written notice of such noncompliance has been given by
you to the Company, (2) upon action by the Company resulting in a material
diminution of your title, duties or authority or (3) upon the Company’s
relocation of your principal place of employment to a location more than
twenty-five (25) miles outside of New York City.

 

(e)                                  Company-initiated Termination Other Than for
Cause or Resignation/Voluntary Termination for Good Reason. Cowen, in its discretion, or you may
terminate your employment at any time and for any reason during the Term or
upon its expiration. In the event that your employment terminates during the
Term, other than for death, disability, Cause, or your resignation/voluntary
termination without Good Reason, you shall be entitled to receive a lump sum
cash payment equal to that portion of your Base Salary and any other benefits
or compensation earned but unpaid as of the date of termination plus an amount
(the “Severance Amount”) equal to two times the sum of (1) your Base
Salary plus (2) the previous year’s Annual Bonus, less applicable tax and
payroll deductions. In addition, any outstanding equity awards, including but
not limited to any equity awards granted under Paragraph 8 of this Agreement
shall become fully vested and exercisable and any restrictions thereon shall
lapse, provided you have not otherwise violated the terms of the award
agreement pursuant to which such equity awards were granted. Any outstanding
stock options shall remain exercisable for the remainder of the respective
terms of such stock options. You will also be required to sign the standard
Cowen severance agreement and release in order to receive the Severance Amount.
Such compensation shall be paid to you within thirty (30) days of the date of
termination of your employment, assuming you have signed the severance
agreement referred to in the prior sentence.

 

(f)                                    Offset. In the event of termination, Cowen may offset, to the fullest extent
permitted by law, any amounts due to Cowen from you, or advanced or loaned to
you by Cowen, from any monies owed to you or your estate by reason of your
termination.

 

(g)                                 Section 409A Compliance. Notwithstanding anything in this Agreement
to the contrary, in the event that you are deemed to be a “specified employee”
within the meaning of Section 409A, no payment that is “deferred
compensation” subject to Section 409A shall be made to the Executive prior
to the date that is six (6) months after the date of your separation from
service (as defined in Section 409A)(or such earlier date as may

 

5

 

be
permitted by Section 409A). In such event, the payments subject to the six
(6)-month delay will be paid in a lump sum on the earliest permissible payment
date.

 

7.                                       Change in Control.

 

(a)                                  Upon a Change in Control (as defined below)
at any time following an IPO, any outstanding equity awards, including but not
limited to any equity awards granted under Paragraph 8 of this Agreement, shall
become fully vested and exercisable and any restrictions thereon shall lapse.
Any outstanding stock options shall remain exercisable for the remainder of the
respective terms of such stock options.

 

(b)                                 For purposes of this Agreement, a “Change in
Control” shall be deemed to have occurred if the event set forth in any one of
the following paragraphs shall have occurred:

 

(i)                                     any Person is or becomes the beneficial
owner, directly or indirectly, of securities of the Company (not including in
the securities beneficially owned by such Person any securities acquired
directly from the Company or its Affiliates) representing more than forty
percent (40%) of the combined voting power of the Company’s then outstanding
voting securities, excluding any Person who becomes such a beneficial owner (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934 (the “Exchange
Act”)) in connection with a transaction described in clause (A) of
paragraph (iii) below; or

 

(ii)                                  the following individuals cease for any
reason to constitute a majority of the number of directors then serving:
individuals who, on the date of the IPO of Cowen Group, Inc., constitute the
Board of Directors of the Company (the “Board”) and any new director (other
than a director whose initial assumption of office is in connection with an
actual or threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election by the Company’s
stockholders was approved or recommended by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors on the date of
the IPO or whose appointment, election or nomination for election was
previously so approved or recommended by such directors, provided, that no
Change of Control for this purpose shall be deemed to occur by virtue of (i) the
resignation, removal, retirement or other departure of any directors nominated
or designated by SG, (ii) the death, disability, retirement or voluntary
resignation of any directors, (iii) the resignation, removal or other
departure of any

 

6

 

director under circumstances involving cause or under circumstances
involving the affirmative vote, approval or acceptance of such departure by a
majority of the remaining directors; or

 

(iii)                               there is consummated a merger or
consolidation of the Company or any direct or indirect subsidiary of the
Company with any other corporation or other entity, other than (A) a
merger or consolidation which results in the voting securities of the Company
outstanding immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof), more than fifty
percent (50%) of the combined voting power of the voting securities of the
Company or such surviving entity or any parent thereof outstanding immediately
after such merger or consolidation, or (B) a merger or consolidation
effected to implement a recapitalization of the Company (or similar
transaction) in which no Person is or becomes the beneficial owner, directly or
indirectly, of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from the
Company or its Affiliates) representing more than forty percent (40%) of the
combined voting power of the Company’s then outstanding securities; or

 

(iv)                              the stockholders of the
Company approve a plan of liquidation or dissolution of the Company or there is consummated an agreement for the
sale or other disposition, directly, or indirectly, by the Company of all or
substantially all of the Company’s assets, other than such sale or other
disposition by the Company of all or substantially all of the Company’s assets
to an entity, more than fifty percent (50%) of the combined voting power of the
voting securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the Company
immediately prior to such sale and other than a sale.

 

Notwithstanding the foregoing, in no event shall an IPO or any
transactions or events in contemplation of an IPO constitute a Change in
Control for purposes of this Agreement.

 

“Person” shall have the meaning set forth in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
except that such

 

7

 

 

term shall not include (1) the Company or any subsidiary
corporation, (2) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any subsidiary corporation, (3) an
underwriter temporarily holding securities pursuant to an offering of such
securities, (4) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company, (5) SG or any affiliate of SG or (6) an
individual, entity or group which, pursuant to Rule 13d-l promulgated
pursuant to the Exchange Act, is permitted to, and actually does, report its
beneficial ownership of securities of the Company on Schedule 13G (or any
successor Schedule); provided that, if any such individual, entity or group
subsequently becomes required to or does report its beneficial ownership on Schedule 13D
(or any successor Schedule), then, for purposes of this paragraph, such
individual, entity or group shall thereupon become a “Person” and shall be
deemed to have first acquired, on the first date on which such individual,
entity or group becomes required to or does so report, beneficial ownership of
all of the Company securities beneficially owned by it on such date.

 

8.                                       IPO of Cowen: If there is an IPO of Cowen while you are
employed by Cowen during the Term, you shall be entitled to the following:

 

(a)                                  Shares of Cowen: You be entitled to shares of Cowen, in an
amount set forth below, that vest on December 31, 2010. The number of
shares you receive will be valued at 6.5% of the Value of Cowen. It is
understood that the shares of Cowen awarded to you pursuant to this Paragraph 8(a) shall
be subject to the terms and conditions of an award agreement, the terms of
which, to the extent covered in this Agreement shall not be materially
different than those set herein.

 

(b)                                 Value of Cowen: For purposes of this paragraph, the Value
of Cowen is determined by multiplying the offering share price for the IPO,
times the number of shares outstanding, plus any outstanding debt. All Cowen
stock granted to you under the preceding paragraph will be valued at the offering
price for the IPO.

 

8

 

(c)                                  Vesting of Cowen Shares: In order to vest in your Cowen shares you
must be employed by Cowen on December 31, 2010, provided, that your shares
of Cowen will become fully vested if your employment terminates by reason of
death or Disability, if you are terminated by Cowen without Cause or if you
terminate employment for Good Reason prior to that date. However, if you
voluntarily terminate your employment without Good Reason, or are terminated
with Cause, prior to December 31, 2010, you shall not be entitled to vest
in any of the shares of Cowen you received pursuant to this Paragraph 8.

 

9.                                       Notice of Retirement, Resignation or
Termination of Employment.
During the Term of this Agreement, you will not voluntarily retire, resign or
otherwise terminate your employment relationship with Cowen or any of its
affiliates, except for Good Reason as set forth in Paragraph 6(d), without
first giving Cowen at least 180 days prior written notice of the effective day
of your retirement, resignation or other termination. Such written notice shall
be sent, by certified mail, to Cowen & Co., LLC, Attn: General
Counsel, 1221 Avenue of the Americas, New York, NY 10020.

 

Cowen retains the right to waive the notice requirement in whole or in
part. Cowen may, but shall not be obligated to, provide you with work at any
time after such notice is given pursuant to this paragraph and the Cowen may,
in its discretion, in respect of all or part of an unexpired period of notice: (i) require
you to comply with such conditions as it may specify in relation to
transitioning your duties and responsibilities, (ii) assign you other
duties or (iii) withdraw any powers vested in, or duties assigned to, you.

 

10.                                 Non-Solicitation.

 

(a)                                  You agree that if you are terminated during
the Term or within one year following the expiration of the Term of this
Agreement, other than a termination of your employment from Cowen due to a
Change in Control, as defined in Paragraph 7(b), you will not, for a period of
six (6) months, without the Cowen’s prior written consent, directly or indirectly,
(a) solicit or induce, or cause others to solicit or induce, any employees
of the Cowen to leave Cowen, or in any way modify their relationship with Cowen
(except your current secretary), (b) hire or cause others to hire any
employees of Cowen, (c) encourage or assist in the hiring process of any
employees of the Cowen or in the modification of any such employee’s
relationship with Cowen, or cause others to participate, encourage or assist in
the hiring process of any employees of Cowen.

 

(b)                                 In addition, you agree that if you are
terminated during the Term or within one year following the expiration of the
Term of this Agreement, other than a termination of your

 

9

 

employment
from Cowen due to a Change in Control, as defined in Paragraph 7(b), you will
not, for a period of 90 days, directly or indirectly solicit the trade or
patronage of any clients or customers or any prospective clients or customers
of Cowen with respect to any products, services, trade secrets or other matters
in which Cowen is active.

 

11.                                 Non-Disclosure of Confidential Information. You will not at any time, whether during
your employment or following the termination or expiration of your employment,
for any reason whatsoever, and forever hereafter, directly or indirectly
disclose or furnish to any firm, corporation or person, except as otherwise
required by law, any confidential or proprietary information of Cowen with
respect to any respect of its operations or affairs. “Confidential or
proprietary information” shall mean information generally unknown to the public
to which you gain access by reason of your employment by Cowen and includes,
but is not limited to, information relating to all present or potential
customers, business and marketing plans, sales, trading and financial data and
strategies, salaries and employment benefits, and operational costs. This
provision survives the expiration of the term of this Agreement.

 

12.                                 Return of Company Property and Company Work
Product. All records, files,
memoranda, reports, customer information, client lists, documents, equipment,
and the like, relating to the business of SG or Cowen which you prepared or
came into contact with while you were an employee of SG and Cowen, shall remain
the sole property of Cowen. You agree that on request by SG or Cowen, and in
any event upon the termination of your employment, you shall turn over to Cowen
all documents, papers, or other material in your possession and under your
control which may contain or be derived from confidential information, together
with all documents, notes, or other work product which is connected with or
derived from your services to Cowen whether or not such material is in your possession.
You agree you shall have no proprietary interest in any work product developed or
used by you and arising out of employment by Cowen. This provision survives the
expiration of the term of this Agreement.

 

13.                                 Remedies and Rights to Injunctive Relief. In the event of a breach by you of your
obligation under this Agreement, Cowen, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. You
acknowledge that Cowen shall suffer irreparable harm in the event of a breach
or prospective breach of Paragraphs 9, 10, 11 and 12 hereof and monetary
damages would not be adequate compensation. Accordingly, Cowen shall be entitled
to seek injunctive relief in any federal or state court of competent
jurisdiction located in New York County. You waive the defense that a remedy at
law would be adequate. You further agree that Cowen and its affiliates shall be
entitled to recover all costs and expenses

 

10

 

(including
attorney’s fees) incurred in connection with the enforcement of Cowen’s rights
under this Agreement.

 

14.                                 Arbitration.

 

(a)                                  Other than as may be permitted by current
securities industry regulations, any disagreement or controversy arising out of
or relating to the terms of your employment as specified herein shall be
submitted for resolution to arbitration before three arbitrators in accordance
with the then prevailing Rules of the New York Stock Exchange, the NASD.
The arbitration shall be held in the City of New York. The award rendered in
said proceeding shall be final and binding upon both parties, and judgment upon
the award may be entered in any court having jurisdiction thereof.

 

(b)                                 The arbitrators shall not have authority to
amend, alter, modify, add to or subtract from the provisions hereof. The award
of the arbitrators, in addition to granting the relief prescribed above and
such other relief as the arbitrators may deem proper, may contain provisions
commanding or restraining acts or conduct of the parties or their representatives
and may further provide for the arbitrators to retain jurisdiction over this Agreement
and the enforcement thereof. If either party shall deliberately default in
appearing before the arbitrators, the arbitrators are empowered, nonetheless,
to take the proof of the party appearing and render an award thereon.

 

(c)                                  Following a Change in Control, you shall be
entitled to reimbursement for all reasonable attorneys’ fees and expenses in
connection with any dispute proceedings to the extent the arbitrator determines
that you are entitled to such reimbursement.

 

15.                                 Notices. Any notice to be given hereunder shall be in writing and delivered personally
or sent by certified mail, postage prepaid, return receipt requested, addressed
to the party concerned at the address indicated below or to such other address
as such party may designate in writing.

 

	
  To:

  	
   

  	
  To:

  
	
  Mr. Kim S. Fennebresque

  	
   

  	
  Cowen & Co., LLC.

  
	
  800 Park Avenue

  	
   

  	
  General Counsel

  
	
  New York, NY 10021

  	
   

  	
  1221 Avenue of the Americas

  
	
    And

  	
   

  	
  New York, NY 10020

  
	
  Cowen & Co., LLC.

  1221 Avenue of the Americas

  New York, NY 10020

  	
   

  	
   

  

 

11

 

Any notice delivered personally under this Paragraph shall be deemed
given on the date delivered, and any notice set by certified mail, postage
prepaid, return receipt requested, shall be deemed given on the dated mailed.

 

16.                                 Severability. Should any provision herein be rendered or
declared legally invalid or unenforceable by a court of competent jurisdiction
or by the decision of an authorized governmental agency, such invalidation of
such part shall not invalidate the remaining portions thereof.

 

17.                                 Other Agreements. You represent and warrant that you are not
a party to any agreement or bound by an obligation which would prohibit you
from accepting and agreeing hereto or fully performing the obligations
hereunder.

 

18.                                 Complete Agreement. The provisions herein contain the entire
agreement and understanding of the parties and fully supersede any and all
prior agreements or understandings between them pertaining to the subject
matter hereof, including the Prior Agreement. There have been no representations,
inducements, promises or agreements of any kind which have been made by either
party, or by any person acting on behalf of either party, which are not
embodied herein. The provisions hereof may not be changed or altered except in
writing duly executed by you and a duly authorized agent of Cowen.

 

19.                                 No Rule of Strict Construction. The language contained herein shall be deemed
to be that approved by all parties hereto and no rules of strict
construction shall be applied against any party hereto.

 

20.                                 Applicable Law. The interpretation and application of the
terms herein shall be governed by the laws of the State of New York without
regard to principles of conflict of laws.

 

21.                                 No Waiver. Any failure by either party to exercise its rights to terminate this Agreement
or to enforce any of its provisions shall not prejudice such party’s rights of termination
or enforcement for any subsequent or further violations or defaults by the
other party.

 

22.                                 Titles. Titles to the paragraphs in this Agreement are intended solely for convenience
and no provision of this Agreement is to be construed by reference to the title
of any paragraph.

 

23.                                 Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same
instrument.

 

12

 

24.                                 Section 409A. This Agreement is intended to comply with
the requirements of Section 409A and shall be interpreted accordingly. In
the event that any provision of this Agreement would or may cause this
Agreement to fail to comply with Section 409A, such provision may be
deemed null and void and you and the Company agree to amend or restructure this
Agreement, to the extent necessary and appropriate to avoid adverse tax consequences
under Section 409A.

 

25.                                 Successors and Assigns. This Agreement shall inure to the benefit
of, and shall be binding upon your heirs, executors, administrators, successors
and legal representatives and shall inure to the benefit of, and be binding
upon Cowen and its successors and assigns. You shall not assign, delegate,
subdelegate, transfer, pledge, encumber, hypothecate, or otherwise dispose of
this Agreement, or any rights, obligations or duties hereunder, and any such
attempted delegation or disposition shall be null and void and without any
force or effect; provided, however, that nothing contained herein shall prevent
you from designating beneficiaries for insurance, death or retirement benefits.

 

13

 

If you agree to the terms set forth in this Agreement please
acknowledge your agreement by signing the signature line set forth below.

 

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Cowen & Co.,
  LLC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BY:

  	
   /s/ JEAN-JACQUES OGIER

  
	
   

  	
   

  
	
  AGREED AND ACCEPTED

  	
   

  
	
   

  	
   

  
	
  Signed:

  	
  /s/ Kim S. Fennebresque

  	
   

  	
   

  
	
   

  	
  Kim
  S. Fennebresque

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  March 14,
  2006

  	
   

  
					

 

14Exhibit 10.8

 

FULLY
DISCLOSED CLEARING AGREEMENT

OF

SG AMERICAS SECURITIES, LLC

 

THIS AGREEMENT is made and entered into this                 
day of                                    
, 20     by and between SG AMERICAS SECURITIES, LLC
(“Clearing Agent”), a Delaware limited liability company, and COWEN AND
COMPANY, LLC (“Introducing Firm”), a Delaware limited liability company.

 

1.                                      AGREEMENT

 

From the date of this Agreement until the
termination of this Agreement as provided in Section 22 hereof, Clearing Agent
shall carry the proprietary accounts of Introducing Firm, and the cash, margin
and “receive versus payment” and “delivery versus payment” (“RVP/DVP”) accounts
of the customers of Introducing Firm introduced by Introducing Firm to Clearing
Agent, and accepted by Clearing Agent, and shall clear transactions on a fully
disclosed basis for such accounts, in the manner and to the extent set forth in
this Agreement.

 

2.                                      ALLOCATION OF RESPONSIBILITY

 

2.1                                 Responsibilities of the Parties.

 

Pursuant to New York Stock Exchange (“NYSE”) Rule
382, responsibility for compliance with applicable laws, rules, and regulations
of the Securities and Exchange Commission (“SEC”), the National Association of
Securities Dealers, Inc. (“NASD”), the NYSE, and any other regulatory or
self-regulatory agency or organization (collectively the “Rules”) shall be
allocated between Clearing Agent and Introducing Firm as set forth in this
Agreement. To the extent that a particular function is allocated to one party
under this Agreement, the other party shall supply that party with information
in its possession pertinent to the performance and supervision of that
function.

 

2.2                                 Relationship with Customers.

 

Clearing Agent shall provide services under this
Agreement to Introducing Firm only to the extent explicitly required by
specific provisions contained in this Agreement and shall not be responsible
for any duties or obligations not specifically allocated to Clearing Agent
pursuant to this Agreement. Introducing Firm shall enter into appropriate
contractual arrangements with customers on its own behalf, and such agreements
shall make Introducing Firm, and not Clearing Agent, responsible to customers
for the provision of services. Neither Introducing Firm nor any investment
advisor provided by Introducing Firm shall be deemed to be an agent of Clearing
Agent for any purpose, nor

 

 

shall Clearing Agent, except to the extent required
by law, be deemed to have a fiduciary relationship with any of Introducing
Firm’s customers. Introducing Firm acknowledges that Clearing Agent does not
control the business or operations of Introducing Firm.

 

3.                                      REPRESENTATIONS AND WARRANTIES

 

3.1                                 Introducing Firm.
Introducing Firm represents and warrants that:

 

3.1.1                        Duly Organized.
Introducing Firm is a limited liability company duly formed, validly existing,
and in good standing under the laws of the state of Delaware.

 

3.1.2                        Registration.
Introducing Firm is duly registered and in good standing as a broker-dealer
with the SEC.

 

3.1.3                        Authority to Enter Agreement. Introducing Firm has all requisite authority,
whether arising under applicable federal or state law or the rules and
regulations of any regulatory or self-regulatory organization to which
Introducing Firm is subject, to enter into this Agreement and to retain the
services of Clearing Agent in accordance with the terms of this Agreement.

 

3.1.4                        Material Compliance with Rules and Regulations. Introducing Firm and, to its knowledge, each of
its employees is in material compliance with, and during the term of this
Agreement shall remain in material compliance with, the registration,
qualification, capital, financial reporting, customer protection, and other
requirements of every self-regulatory organization of which Introducing Firm is
a member, of the SEC, and of every state to the extent that Introducing Firm or
any of its employees is subject to the jurisdiction of that state.

 

3.1.5                        No Pending Action, Suit, Investigation, or Inquiry. Introducing Firm has provided to Clearing Agent a
copy of its Form BD which discloses, to the extent required by such Form, every
material action, suit, investigation, inquiry, or proceeding (formal or
informal) pending or threatened against or affecting Introducing Firm, any of
its affiliates, or any officer, director, or general securities principal or
financial and operations principal of Introducing Firm, or their respective
property or assets, by or before any court or other tribunal, any arbitrator,
any governmental authority, or any self-regulatory organization of which any of
them is a member. Introducing Firm shall notify Clearing Agent promptly of the
initiation of any action, suit, investigation, inquiry, or proceeding that may
have a material impact on the capital of Introducing Firm.

 

3.1.6                        Introducing Firm Responsibility. Introducing Firm shall be responsible for all
internal operations related to its business including without limitation (i)
all accounting, bookkeeping, record-keeping, commodity transactions, or any
other transactions not involving securities; or any matter not contemplated by
this Agreement; (ii) preparation of Introducing Firm’s payroll records,
financial statements, or any analysis thereof; and (iii) preparation or
issuance of checks in payment of Introducing Firm’s expenses, other than expenses
incurred by Clearing Agent on behalf of Introducing Firm pursuant to this
Agreement.

 

2

 

3.1.7                        Customer Referrals. With respect to all introduced customers that
have been referred to Introducing Firm by other entities and as to which
customers Introducing Firm and the referring entities share commissions,
Introducing Firm has entered into duly authorized referral or similar
arrangements and such agreements are, to best of Introducing Firm’s knowledge, in
compliance with all applicable Rules.

 

3.1.8                        Licensure, Registration, Etc. Introducing Firm is licensed, registered or
authorized to conduct business in every jurisdiction, including every foreign
jurisdiction, in which any of its customers introduced to Clearing Agent by
Introducing Firm is domiciled.

 

3.2                                 Clearing Agent.
Clearing Agent represents and warrants that:

 

3.2.1                        Duly Organized.
Clearing Agent is a limited liability company duly organized, validly existing,
and in good standing under the laws of the State of Delaware.

 

3.2.2                        Registration.
Clearing Agent is duly registered and in good standing as a broker-dealer with
the SEC and is a member firm in good standing of the NYSE and the NASD and
every exchange of which it is a member.

 

3.2.3                        Authority to Enter Agreement. Clearing Agent has all requisite authority,
whether arising under applicable federal or state law, or the rules and
regulations of any regulatory or self-regulatory organization to which Clearing
Agent is subject, to enter into this Agreement and to provide services in
accordance with the terms of this Agreement.

 

3.2.4                        Compliance with Rules and Regulations. Clearing Agent and, to its knowledge, each of its
employees is in material compliance with, and during the term of this Agreement
shall remain in material compliance with the registration, qualification,
capital, financial reporting, customer protection, and other requirements of
every self-regulatory organization of which Clearing Agent is a member, of the
SEC, and every state.

 

4.                                      ESTABLISHING AND ACCEPTING NEW
ACCOUNTS

 

4.1                                 Opening of New Accounts. Introducing Firm shall be responsible for opening
and approving new accounts in compliance with the Rules, including all
applicable laws and regulations concerning Anti-Money Laundering and
regulations and guidance issued by the United States Department of Treasury’s
Office of Foreign Asset Control. No account may be opened without the prior
approval of Clearing Agent as provided in Section 4.2.

 

4.1.1                        Option Accounts.
Before engaging in option trading for any customer, Introducing Firm shall
deliver to customer a current disclosure statement of the Options Clearing
Corporation, the Special Statement for Uncovered Option Writing, and any
effective supplements. Introducing Firm shall obtain the required signatures on
all option agreements, shall obtain proper approval for the opening of all
option accounts, and shall otherwise comply with the rules applicable to
options accounts and options trading. Introducing Firm shall deliver to Clearing
Agent a copy of a signed option agreement for each customer approved by it for
options trading in a form acceptable to Clearing Agent.

 

3

 

4.1.2                        Accounts for Which Agent Holds Power of Attorney. Upon the opening of any Account for which an
agent holds a power of attorney on behalf of a principal, Introducing Firm
shall provide Clearing Agent with the name of each principal for whom such
agent is acting and with written evidence of the agent’s authority to act on
the principal’s behalf. Introducing Firm hereby warrants that any orders or
instructions of such agent which are transmitted to Clearing Agent pursuant to
this Agreement shall have been fully and properly authorized and that the
execution of such instructions or orders shall not violate the Rules.

 

4.1.3                        Third-Party Introducing Firm Accounts. Introducing Firm shall not open any account for
any third-party introducing firm with whom the Introducing Firm deals on a
principal or agency basis without the prior written approval of Clearing Agent.
If Clearing Agent decides, in its sole discretion, to permit Introducing Firm
to open accounts for a third-party introducing firm with whom the Introducing
Firm deals on a principal or agency basis, Clearing Agent will promptly
communicate its consent to Introducing Firm following receipt of all
information reasonably requested and contingent upon execution and approval by
all required regulatory authorities of all necessary agreements.

 

4.2                                 Acceptance of New Accounts by Clearing Agent. Clearing Agent reserves the right to reject any
account that the Introducing Firm may forward to Clearing Agent as a potential
new account, and to terminate any account previously accepted by it as a new
account. No funds or securities may be deposited into an account, nor may any
transactions be executed with respect to an account, before the account has
been accepted by Clearing Agent. Clearing Agent shall promptly notify
Introducing Firm of each such rejection or termination.

 

4.3                                 Maintenance of Account Information. Clearing Agent may rely without inquiry on the
validity of all customer information furnished to it by Introducing Firm.
Possession of any such documents or information, however provided, concerning
Introducing Firm’s customers does not create a duty on the part of Clearing
Agent to review or understand the content of those documents. Introducing Firm
shall regularly review its customer accounts, at least every thirty-six (36)
months, to keep its knowledge and understanding of the customer and the
customer’s business up to date.

 

4.4                                 Account Transfer.
Pursuant to written notification received by the Introducing Firm and forwarded
to the Clearing Agent, any account of the Introducing Firm may choose to reject
the services to be performed by the Clearing Agent pursuant to this Agreement
and thus choose not to be serviced pursuant hereto. Upon notice from another
member organization that the customer of Introducing Firm intends to transfer
his account thereto, the Clearing Agent shall expedite such transfer and shall
have the sole and exclusive responsibility for compliance with Rule 412 of the
Rules of the NYSE.

 

5.                                      SUPERVISION OF ORDERS AND ACCOUNTS

 

5.1                                 Responsibility for Compliance. Introducing Firm shall be solely responsible for
compliance with suitability, “Know Your Customer” rules, and other requirements
of

 

4

 

federal and state law and regulatory and
self-regulatory rules and regulations governing transactions and accounts that
are introduced by Introducing Firm, except for the responsibilities of Clearing
Agent as set forth in Section 7.3 of this Agreement. Possession by Clearing
Agent of surveillance records, exception reports, or other similar data that
have been provided by Introducing Firm shall not obligate Clearing Agent to
review or be aware of their contents. Clearing Agent shall not be required to
make any investigation into the facts surrounding any transaction that it may
execute or clear for Introducing Firm or any customer of Introducing Firm.

 

5.2                                 Compliance Procedures. Introducing Firm agrees to supervise compliance
with the Rules. Introducing Firm shall review transactions and accounts to
assure compliance with prohibitions against manipulative practices, insider
trading, market timing and late trading of mutual fund shares and other
requirements of federal and state law and applicable regulatory and
self-regulatory rules and regulations to which Introducing Firm or its customer
are subject. Without limiting the above, Introducing Firm shall be responsible
for compliance with the supervisory requirements in Section 15(b)(4) of the
Securities Exchange Act of 1934, as amended, NASD Rule 3010, NYSE Rules 342,
351 and 431, and similar rules adopted by any other regulatory or
self-regulatory agency or organization, to the extent applicable. In addition,
in each case in which a customer is an employee of a member organization, a
self-regulatory organization or financial institution, the approval of which is
necessary to the opening and maintenance of such customer’s account,
Introducing Firm shall be solely and exclusively responsible for obtaining the
approval of such employer, and otherwise complying with NYSE Rule 407 and NASD
Rule 3050.

 

5.3                                 Knowledge of Customer’s Financial Resources and
Investment Objectives.
Introducing Firm shall comply with Rule 405(1) of the NYSE or comparable
requirements of similar rules of any other regulatory or self-regulatory
organization to which Introducing Firm is subject. Introducing Firm shall
obtain all essential facts relating to each customer, each cash and margin
account, each order, and each person holding a power of attorney over any
account, in order to assess the suitability of transactions (when required by
applicable rules), the authenticity of orders, signatures, endorsements,
certificates, or other documentation, and the frequency of trading. Introducing
Firm warrants that, to the best of its knowledge, Introducing Firm will not
open or maintain accounts for persons who are minors or who are otherwise
legally incompetent and that Introducing Firm will comply with NYSE Rule 407
and other laws, rules, or regulations that govern the manner and circumstances
in which accounts may be opened or transactions authorized.

 

5.4                                 Furnishing of Investment Advice. Introducing Firm shall be solely responsible for
any recommendation or advice it may offer to its customers.

 

5.5                                 Discretionary Accounts. Introducing Firm shall be solely responsible for
obtaining customer approval for and supervising discretionary accounts.

 

5.6                                 Obligations Regarding Certain Disclosures. Introducing Firm shall make any disclosures and
obtain any agreements from its customers required by applicable law

 

5

 

or regulation, including, without limitation,
qualification letters or any disclosures or agreements required for margin,
listed options, IPOs, penny stocks, derivative securities, account transfers or
conversions. The cost of making such disclosures or obtaining such agreements
shall be borne by Introducing Firm.

 

6.                                      EXTENSION OF CREDIT

 

6.1                                 Presumption of Cash Account. Clearing Agent may, but is not required to,
permit customers of Introducing Firm to purchase securities on margin, but all
transactions for a customer will be deemed to be either RVP/DVP or cash
transactions, and payment for those transactions will be required in the manner
applicable to RVP/DVP or cash transactions, unless, on or prior to settlement,
Introducing Firm has furnished Clearing Agent with an executed margin agreement
and consent to loan of securities.

 

6.2                                 Margin Requirements. Margin accounts introduced by Introducing Firm,
including Introducing Firm’s own margin account carried by Clearing Agent,
shall be subject to Clearing Agent’s margin requirements as in effect from time
to time. Clearing Agent reserves the right to refuse to accept any transaction
in a margin account without the actual receipt of the necessary margin and to
impose a higher margin requirement for a particular account when, in Clearing
Agent’s discretion, the past history or nature of the account or other factors
or the securities held in it warrant such action. Introducing Firm may require
higher margin than imposed by Clearing Agent for any particular account, group
of accounts, or all accounts introduced by Introducing Firm to Clearing Agent.
In any case where Introducing Firm requests Clearing Agent to extend credit
upon control or restricted securities, pursuant to Rule 144 under the
Securities Act of 1933, as amended (“Rule 144”), or otherwise; Introducing Firm
shall submit to Clearing Agent such documentation, agreements and information
as shall be reasonably required by Clearing Agent to decide to extend such
credit. Any extension of credit so approved shall be subject to Clearing
Agent’s credit policies as shall be in effect from time to time.

 

6.3                                 Margin Maintenance and Compliance with Regulation T
and SEC Rule 15c3-3(m).

 

6.3.1                        Initial Margin.
Introducing Firm shall be responsible for the initial margin requirement for
any transaction until such initial margin has been received by Clearing Agent
in acceptable form.

 

6.3.2                        Margin Calls.
After the initial margin for a transaction has been received, subsequent margin
calls may be made by Clearing Agent at its discretion. Clearing Agent shall
calculate the maintenance requirement and notify Introducing Firm of any
amounts due. In the case of margin calls concerning its customers, Introducing
Firm shall be responsible for forwarding the margin call to its customer and obtaining
the amount due directly from Introducing Firm’s customer. If Introducing Firm
fails to take the appropriate action, Clearing Agent reserves the right to
collect the amount due directly from Introducing Firm’s customer or, in the
case of the Introducing Firm’s margin account, the Introducing Firm.
Introducing Firm agrees to cooperate with Clearing Agent in complying with and
obtaining margin in response to such calls.

 

6

 

6.3.3                        Actions upon Failure to Meet Margin Calls or
Deliver Securities. In the event that satisfactory
margin is not provided within the time specified by Clearing Agent, or
securities sold are not delivered as required, Clearing Agent may take such
actions as Clearing Agent deems appropriate, including, but not limited to,
entering orders to buy-in or sell-out. Introducing Firm shall cooperate with
Clearing Agent by entering orders to buy-in or sell-out securities. Compliance
with a request to withhold action shall not be deemed a waiver by Clearing
Agent of any of its rights under this Agreement.

 

6.4                                 Charging of Interest and Disclosures Pursuant to
Rule 10b-16 and NASD Rule 2341.
Interest charged by Clearing Agent to Introducing Firm’s customers with respect
to debit balances in customers’ accounts shall be determined in accordance with
Clearing Agent’s standard disclosure under NYSE Rule 382. Introducing Firm
shall send each margin customer a written Margin Disclosure Statement and other
written disclosures, in a form acceptable to Clearing Agent, at the time of the
opening of a margin account as required by SEC Rule 10b-16 and NASD Rule 2341.
If not already delivered to each margin customer by Clearing Agent in
connection with the delivery of the written new account Disclosure Statement in
accordance with NYSE Rule 382, Introducing Firm agrees to deliver a written
disclosure statement to its customer as required by SEC Rule 10b-16.

 

6.5                                 Unsecured Debits or Unsecured Short Positions. Pursuant to Section 19 of this Agreement,
Clearing Agent shall charge against the Deposit Accounts of Introducing Firm an
amount equal to the value of any unsecured debit or short position (on a “mark
to market” basis) in a customer account if that position has not been promptly
resolved by payment or delivery.

 

6.6                                 Extension Of Credit To Introducing Firm. In addition to the provisions of this section 6
and any margin agreement between Clearing Agent and Introducing Firm, Clearing
Agent may, in its sole discretion, extend credit from time to time to
Introducing Firm in connection with trading in its proprietary or inventory
accounts. Such extension of credit will be generally consistent with past
practice between the parties. However, Clearing Agent will, in its sole
discretion, set limits on the amount of credit that will be extended, rates at
which such credit will be extended, and requirements on collateral that must be
posted. Clearing Agent will communicate these requirements to Introducing Firm.
If collateral levels are insufficient in view of the limits determined by
Clearing Agent, Clearing Agent shall so notify Introducing Firm and Introducing
Firm shall promptly post sufficient collateral to meet those requirements. If
Introducing Firm fails to meet the requirements in a timely fashion, Clearing
Agent shall have the right, in its complete discretion, to liquidate securities
in Introducing Firm’s accounts and/or to offset, deduct, setoff, recoup and/or
use and apply all or any portion of any Introducing Firm’s revenue and/or other
monies, including, but not limited to the Deposit Account and any commission
accounts (and the proceeds and products of any of the foregoing, collectively
the “Collateral”), then in possession, custody or control of Clearing Agent
(whether held in an account or otherwise), and to apply proceeds to Introducing
Firm’s obligations hereunder. Any remaining liability shall not be
extinguished. Introducing Firm hereby grants, transfers, assigns and conveys to
the Clearing Agent a first and prior lien and security interest in the

 

7

 

Collateral, including without limitation any
after-acquired Collateral which is now or subsequently in the possession,
custody or control of Clearing Agent. Introducing Firm hereby acknowledges and
agrees that any rights set forth herein shall be in addition to all other
remedies available to Clearing Agent under this Agreement or at law or equity.

 

6.7                                 EXTENSION OF NONPURPOSE CREDIT

 

6.7.1                        Nonpurpose Credit.
Clearing Agent may, but is not required to, extend and maintain nonpurpose
credit to customers of Introducing Firm not for purposes of purchasing,
carrying, or trading in securities, but all extensions of credit to a customer
will be deemed to be purpose credit subject to Regulation T unless, prior to
extending the credit, Introducing Firm or its customer has furnished Clearing
Agent with an executed Federal Reserve Form T-4.

 

6.7.2                        Nonpurpose Lending Requirements. Nonpurpose credit extended by Clearing Agent
shall be subject to nonpurpose lending requirements as established and modified
by Clearing Agent from time to time. Clearing Agent reserves the right to
refuse to extend nonpurpose credit without the actual receipt of the necessary
underlying collateral and to impose a higher underlying collateral value requirement
for a particular account when, in Clearing Agent’s discretion, the past history
or nature of the account or other factors or the securities held in it warrant
such action. In all instances, Introducing Firm may require a lower loan
advance rate to collateral value than imposed by Clearing Agent for any
particular account, group of accounts, or all accounts introduced by
Introducing Firm to Clearing Agent. In any case where Introducing Firm requests
Clearing Agent to extend nonpurpose credit upon control or restricted
securities, pursuant to Rule 144 under the Securities Act of 1933, as amended,
or otherwise, Introducing Firm shall submit to Clearing Agent such
documentation, agreements and information as shall be reasonably required by
Clearing Agent to decide to extend such credit. Any extension of nonpurpose
credit so approved shall be subject to Clearing Agent’s credit policies as
shall be in effect from time to time.

 

6.7.3                        Underlying Collateral Maintenance and Compliance
with Regulation T and SEC Rule 15c3-3(m).

 

6.7.3.1                         Initial Underlying Collateral. Introducing Firm shall be responsible for the
initial underlying collateral requirement for any extension of nonpurpose
credit until such initial underlying collateral has been received by Clearing Agent
in acceptable form.

 

6.7.3.2                         Underlying Collateral Calls. After the initial underlying collateral for an
extension of nonpurpose credit has been received, subsequent underlying
collateral calls may be made by Clearing Agent at its discretion. Clearing
Agent shall calculate the maintenance requirement and notify Introducing Firm
of any amounts due. Introducing Firm shall be responsible for issuing the
underlying collateral call to its customer and obtaining the amount due
directly from Introducing Firm’s customer. If Introducing Firm fails to take
the appropriate action, Clearing Agent reserves the right to collect the amount
due directly from Introducing Firm’s customer. Introducing Firm agrees to

 

8

 

cooperate with Clearing Agent in complying with and
obtaining underlying collateral in response to such calls.

 

6.7.4                        Actions Upon Failure to Meet Underlying Collateral
Calls or Deliver Securities. In the
event that satisfactory underlying collateral is not provided within the time
specified by Clearing Agent, or securities sold are not delivered as required,
Clearing Agent may take such actions as Clearing Agent deems appropriate,
including, but not limited to, entering orders to buy-in or sell-out. Introducing
Firm shall cooperate with Clearing Agent by entering orders to buy-in or
sell-out securities. Compliance with a request to withhold action shall not be
deemed a waiver by Clearing Agent of any of its rights under this Agreement.

 

6.7.5                        Charging of Interest and Disclosures Pursuant to
Rule 10b-16. Interest charged with respect
to the extension of nonpurpose credit shall be determined in accordance with
Clearing Agent’s standard disclosure under NYSE Rule 382. Introducing Firm
shall send each customer a written disclosure statement, in a form acceptable
to Clearing Agent, at the time of the extension of nonpurpose credit as
required by SEC Rule 10b-16.

 

6.7.6                        Unsecured Debits.
Pursuant to Section 19 of this Agreement, Clearing Agent shall charge against
the Deposit Accounts of Introducing Firm an amount equal to the value of any
unsecured debit (on a “mark to market” basis) in a customer account if that
position has not been promptly resolved by payment or delivery.

 

7.                                      MAINTENANCE OF BOOKS AND RECORDS

 

7.1                                 Stock Records.
Clearing Agent shall maintain stock records and other prescribed books and
records of all transactions executed or cleared through it. Unless otherwise
required by law, Clearing Agent shall have no obligation to maintain, or make
available to Introducing Firm, such books and records after termination of this
Agreement. If, however, Clearing Agent does make such books and records
available to Introducing Firm after the termination of this Agreement,
Introducing Firm shall reimburse Clearing Agent for its costs and expenses in
retrieving such books and records.

 

7.2                                 Regulatory Reports and Records. Introducing Firm shall prepare, submit, and
maintain copies of all reports, records, and regulatory filings required of
Introducing Firm by any entity that regulates it, including, but not limited
to, copies of all account agreements and similar documentation obtained
pursuant to Section 4 of this Agreement and any reports and records required to
be made or kept under the Currency and Foreign Transactions Reporting Act of
1970 (the “Bank Secrecy Act”) and any rules and regulations promulgated
pursuant thereto.

 

7.3.                              Records Provided to Clearing Agent. Introducing Firm shall provide Clearing Agent
with a copy of all records created and maintained pursuant to Sections 4.1 and
such records shall be maintained in the U.S. by Clearing Agent for review by
the SEC or any other regulatory body or governmental authority to whose
jurisdiction Clearing Agent is subject.

 

9

 

7.4.                              Services, Information, Reports and Other Data. Clearing Agent hereby agrees and acknowledges
that it is obligated to provide to Introducing Firm all such services,
information, reports and other data, in such manner and within such time
periods, as set forth in this Agreement and as required by applicable laws and
regulations.

 

7.5.                              Further Description of Services. Further description of services beyond that set
forth in this Agreement shall be set forth in writing and shall be subject to
the mutual agreement of the parties.

 

8.                                      RECEIPT AND DELIVERY OF FUNDS AND
SECURITIES

 

8.1                                 Receipt and Delivery of Funds and Securities.

 

8.1.1                        Cashiering Functions. Clearing Agent shall perform cashiering functions
for accounts introduced by Introducing Firm. These functions shall include
receipt and delivery of securities; receipt and payment of funds owed by or to
customers; provision of custody for securities and funds; the handling of
margin accounts; the receipt and distribution of dividends and other distributions;
and the processing of exchange offers, rights offerings, warrants, tender
offers and redemptions. Introducing Firm shall provide Clearing Agent with the
data and documents that are necessary or appropriate to permit Clearing Agent
to perform its obligations under this Section, including but not limited to
copies of records documenting receipt of customers’ funds and securities
received directly by Introducing Firm. Such data and documents must be
compatible with the requirements of Clearing Agent’s data processing systems.
Clearing Agent may reasonably refuse or decline to accept any particular
payment or form of payment, as it deems appropriate. Clearing Agent will not
accept payment in currency, money orders, traveler’s checks, double-endorsed checks,
checks drawn on non-U.S. banks, starter checks or checks drawn against lines of
credit.

 

8.1.2                        Purchases.
Introducing Firm shall be responsible for purchases (including transactions on
a “when issued” basis) made for customers until actual and complete payment has
been received by Clearing Agent. Introducing Firm shall not introduce accounts
requiring settlement on a “delivery versus payment” or “receive versus payment”
basis unless such account utilizes the facilities of a securities depository or
qualified vendor as defined in NYSE Rule 387 for all depository eligible
transactions.

 

8.1.3                        Sales.
Introducing Firm shall be responsible for sales (including those on a “when
issued” basis), until Clearing Agent has received, in acceptable form, the
securities involved in the transaction. If Clearing Agent does not receive
delivery of securities in an acceptable form, Clearing Agent may buy-in all or
part of the securities.

 

8.1.4                        Funds and Securities Received by Introducing Firm. Introducing Firm shall promptly deposit with
Clearing Agent funds or securities received by Introducing Firm from its
customers, together with such information as may be relevant or necessary to
enable Clearing Agent to record such remittances and receipts in the respective
customer accounts.

 

10

 

8.1.5                        Failure to Settle or Pay. In the event of a failure to timely deposit
required funds or securities, Clearing Agent may take appropriate remedial
action. Without waiving or otherwise limiting its right to take other remedial
action, Clearing Agent may at its option charge interest at rates as agreed in
Clearing Agent’s standard disclosure under NYSE Rule 382. Introducing Firm may
pass such charges on to its customers but Introducing Firm remains responsible
therefor until actually paid.

 

8.2                                 Restricted and Control Stock Requirements. Introducing Firm shall be responsible for
determining whether any securities held in Introducing Firm’s or its customer
accounts are restricted or control securities as defined by applicable laws,
rules, or regulations. Introducing Firm is responsible for assuring that orders
and other transactions executed for such securities comply with such laws,
rules, and regulations.

 

8.3                                 Corporate Action Requests/Soliciting Dealer
Agreements. Introducing Firm requests and
authorizes Clearing Agent to execute as Introducing Firm’s agent-in-fact any
and all Soliciting Dealer Agreements (except as provided in Section 12.7) for
corporate actions involving securities or other interests held by Introducing
Firm’s customers on the books of Clearing Agent. Clearing Agent agrees to
provide a written notice of the pending corporate action to Introducing Firm at
its designated locations. Clearing Agent further agrees to collect and submit
corporate action requests from Introducing Firm and submit them to the
soliciting party in accordance with the instructions received from the
soliciting party. Clearing Agent agrees to use commercially reasonable efforts
to communicate corporate action information to Introducing Firm and, where
applicable, Introducing Firm’s customers, but shall not be liable for a) any
delays in the communication of corporate action information or b) delays in the
transmission of collected corporate action requests to the soliciting party
unless caused by Clearing Agent’s gross negligence. All fees received from the
soliciting party will be credited to Introducing Firm. In consideration of
providing this service to Introducing Firm, Introducing Firm agrees to indemnify
and hold harmless Clearing Agent, its affiliates, officers, agents and
employees from all claims, suits, investigations, damages and defense costs
(including reasonable attorney’s fees) that arise in connection with this
Section.

 

8.4                                 Lost, Stolen or Forged Securities. Introducing Firm shall be responsible for any
defect in title to any securities purchased, sold, borrowed, delivered or
transferred under this Agreement which may have been forged, counterfeited,
raised, altered, lost or stolen.

 

9.                                      SAFEGUARDING OF FUNDS AND
SECURITIES

 

Except as otherwise provided in this Agreement,
Clearing Agent shall be responsible for the safekeeping of all money and
securities received by it pursuant to this Agreement. However, Clearing Agent
will not be responsible for any funds or securities delivered by a customer to
Introducing Firm until such funds or securities are actually received by
Clearing Agent or deposited in bank accounts maintained by Clearing Agent.
Whenever Clearing Agent has agreed to act as custodian of securities in any
account, or to hold securities in “safekeeping”, Clearing Agent may hold the
securities in the customer’s name (“Customer Name Securities”), or may cause
such securities to be registered in the name of Clearing Agent or its nominee
or in the

 

11

 

names
or nominees of any depository used by Clearing Agent. In connection with
Customer Name Securities, Clearing Agent shall have no responsibility for,
among other things, collecting and paying of dividends, transmitting and
handling tenders or exchanges pursuant to tender offers and exchange offers,
transmitting proxy materials and other shareholder communications, and handling
exercises or expirations of rights and warrants or redemptions.

 

10.                               CONFIRMATIONS AND STATEMENTS

 

10.1                           Preparation and Transmission of Confirmations and
Statements. Clearing Agent shall prepare
confirmations and summary periodic statements and shall, to the extent required
by the Rules, transmit them to customers and Introducing Firm in a timely
fashion except to the extent the parties agree in writing that Introducing Firm
may transmit confirmations to customers. Confirmations and statements shall be
prepared on forms disclosing that the account is carried on a fully-disclosed
basis for the Introducing Firm in accordance with applicable rules,
regulations, and interpretations. Introducing Firm will have the ultimate
responsibility for compliance with the prospectus delivery requirements of the
Securities Act of 1933, as amended, regardless of its retention of a prospectus
fulfillment service to perform delivery of same; provided that the parties
acknowledge that prospectus delivery services shall be provided to Introducing
Firm by Clearing Agent.

 

10.2                           Examination and Notification of Errors. Introducing Firm shall examine all confirmations,
statements, and other reports in whatever medium provided to Introducing Firm
by Clearing Agent. Introducing Firm must notify Clearing Agent of any error
claimed by Introducing Firm in any confirmation, statement or other report
within a reasonable time following receipt of the confirmation, statement or
other report at issue. If Introducing Firm fails to do so, Introducing Firm
shall be deemed to have waived its right to make any claim against Clearing
Agent with respect to such error.

 

11.                               ACCEPTANCE AND EXECUTION OF
TRANSACTIONS

 

11.1                           Responsibility to Accept or Reject Trades. Clearing Agent shall execute transactions in
customers’ accounts and release or deposit money or securities to or for
accounts only upon Introducing Firm’s instructions or the instructions of
Introducing Firm’s clients’ investment advisors. Clearing Agent reserves the
right to accept written or oral transaction orders from Introducing Firm’s
customers in circumstances where it determines that either (i) the customers
are unable to execute those transactions through Introducing Firm or (ii)
Clearing Agent is required to do so by applicable or relevant law.
Notwithstanding any instructions to the contrary, Clearing Agent may, after
notifying Introducing Firm orally or in writing: (i) refuse to confirm a
transaction or cancel a confirmation; (ii) reject a delivery or receipt of
securities or money; (iii) refuse to clear a trade executed by Introducing
Firm; or (iv) refuse to execute a trade for the account of a customer or
Introducing Firm.

 

12

 

11.2                           Responsibility for Errors in Execution. Introducing Firm shall be responsible for
transmission to Clearing Agent of all orders and for any errors in the
Introducing Firm’s recording or transmission of such orders.

 

11.3                           Transmission of Orders. All orders shall be transmitted to Clearing Agent
by Introducing Firm in accordance with procedures as Clearing Agent may
implement for that purpose. Introducing Firm shall have sole and exclusive
responsibility for reasonably ensuring that orders are properly, timely and
accurately transmitted to Clearing Agent.

 

12.                               OTHER OBLIGATIONS AND
RESPONSIBILITIES OF INTRODUCING FIRM

 

12.1                           Disciplinary Action, Suspension, or Restriction. If Introducing Firm or any of its affiliates, or
any officer, director, or general securities principal or financial and
operations principal of Introducing Firm, becomes subject to suspension,
restriction or disciplinary action by a federal or state agency, stock
exchange, or regulatory or self-regulatory organization having jurisdiction
over Introducing Firm or Introducing Firm’s securities or commodities business,
Introducing Firm shall give notice to Clearing Agent promptly, orally and in
writing, and provide Clearing Agent a copy of any decision relating to such
suspension, restriction or disciplinary action. Clearing Agent may take any
action it reasonably deems to be necessary (i) to assure that it will continue to
comply with all applicable legal, regulatory, and self-regulatory requirements,
notwithstanding such, suspension, restriction or disciplinary action; and (ii)
to comply with any requests, directives, or demands made upon Clearing Agent by
any such federal or state agency, stock exchange, or regulatory or
self-regulatory organization. Notwithstanding the foregoing, Introducing Firm
need not notify Clearing Agent of “minor rule violations” (as that term is
defined in connection with Form U-5) of individuals, with the exception of
directors, general securities principals, financial principals, operations
principals and individuals listed on Schedule A of Introducing Firm’s Form BD.

 

12.2                           Provision of Financial Information. Introducing Firm shall furnish Clearing Agent
copies of FOCUS Reports, financial statements for the current fiscal year, the
executed Forms X-17a-5 (Parts I and IIA) filed with the SEC, any amendments to
Introducing Firm’s Form BD, and any other financial reports Clearing Agent may
from time to time reasonably require. Introducing Firm shall provide such
reports to Clearing Agent at the time Introducing Firm files such reports with
its primary examining authority.

 

12.3                           Executing Brokers.
If Introducing Firm wishes to act as an “Executing Broker” as such term is
understood in that certain letter dated January 25, 1994, from the Division of
Market Regulation of the SEC, as the same may be amended, modified or
supplemented from time to time (the “No-Action Letter”), then all terms herein
shall have the same meaning as ascribed thereto either in this Agreement or in
the No-Action Letter as the sense thereof shall require. Introducing Firm may,
from time to time, execute trades (either directly or through Clearing Agent)
for Prime Broker Accounts in compliance with the requirements of the No-Action
Letter. (The

 

13

 

No-Action Letter requires, inter alia, that a
contract be executed between Clearing Agent and Prime Broker, and between
Clearing Agent and Prime Brokerage Customer prior to the transaction of any
business hereunder.)  Introducing Firm
shall promptly notify Clearing Agent, but in no event later than 5:00 p.m. New
York time, of trade date in a mutually acceptable fashion, of such trades in sufficient
detail for Clearing Agent to be able to report and transfer any trade executed
by Introducing Firm on behalf of a Prime Brokerage Account to the relevant
Prime Broker. Introducing Firm understands and agrees that if Prime Broker
shall disaffirm or “dk” any trade executed by Introducing Firm on behalf of a
Prime Brokerage Account, Introducing Firm shall open an account for such Prime
Brokerage Account in its range of accounts and shall transfer or deliver the
trade to such account at the risk and expense of Introducing Firm to the same
extent as for any account introduced by Introducing Firm pursuant to this
Agreement. Introducing Firm understands and agrees that all Prime Brokerage
Accounts shall be conducted in accordance with the requirements of the
No-Action Letter and any relevant agreement between Introducing Firm and a
Prime Brokerage Customer or between Clearing Agent and relevant Prime Broker.
Introducing Firm further agrees to supply Clearing Agent with such documents,
papers and things, which from time to time are reasonably required by Clearing
Agent to carry out the intention of this Section. Introducing Firm agrees that
it shall know its customer, obtain appropriate documentation, including new
account form, conduct its own credit check and determine the availability of
shares as required for processing of any short sales. Introducing Firm shall be
responsible for any disaffirmed trades.

 

12.4                           Protection of Intellectual Property. Introducing Firm shall use reasonable efforts to
preserve and protect Clearing Agent’s and its affiliates’ patent, trade secret,
copyright and other proprietary rights in Clearing Agent’s or its affiliates’
products, services, trademarks and tradenames, at least to the same extent used
by Introducing Firm to preserve and protect its own proprietary data or
information and to notify Clearing Agent of any action by any third party known
by Introducing Firm to constitute an infringement of Clearing Agent’s or any of
its affiliates’ proprietary rights and to cooperate with Clearing Agent in
protecting such rights. Without limiting the foregoing, Introducing Firm shall
note Clearing Agent’s or its affiliates’ patent, trade secret, copyrights,
trademarks and trade names when Introducing Firm makes reference to or distributes
products or services provided by Clearing Agent or its affiliates, as
applicable.

 

12.5                           Currency Fluctuation. If Introducing Firm directs Clearing Agent to
enter into or to clear and settle any transaction to be effected on any
securities exchange or in any market on which transactions are settled in a
foreign currency, (i) any profit or loss arising as a result of a fluctuation
in the rate of exchange between such currency and the United States Dollar
shall be entirely for Introducing Firm’s account and risk, (ii) all initial and
maintenance margin deposits required or requested by Clearing Agent shall be in
the currency required by the applicable marketplace or clearing agency in such
amounts as Clearing Agent in its reasonable discretion may require, and (iii)
Clearing Agent is authorized to convert funds in the Account into and from such
foreign currency at rates of exchange prevailing at the banking or other
institutions

 

14

 

(including affiliated financial institutions,
including Societe Generale) with which Clearing Agent normally does business.

 

12.6                           Execution Away from Clearing Agent. In the event that Introducing Firm shall place
for execution with firms other than Clearing Agent orders for its customers’
accounts, Introducing Firm shall be responsible for any duty of best execution
or any failure by any contra broker or dealer to settle the transaction for any
reason whatsoever, and Introducing Firm shall promptly reimburse Clearing Agent
for any losses or expenses sustained by Clearing Agent in connection therewith.

 

13.                               OTHER OBLIGATIONS AND
RESPONSIBILITIES OF CLEARING AGENT

 

13.1                           Use of Third-Party Services. Clearing Agent may, at its reasonable option, and
consistent with common industry practice, retain one or more independent data
processing or other service bureaus to perform functions (including, but not
limited to, pricing services or proxy mailing services) assigned to Clearing
Agent under this Agreement.

 

13.2                           Tax Withholding.
Introducing Firm hereby agrees to take necessary measures to comply with the
income tax withholding requirements of Section 3406 and Sections 1441 through
1446 (the nonresident alien withholding requirements) of the Internal Revenue
Code of 1986, as amended (“Internal Revenue Code”) with respect to its customer
accounts. Introducing Firm agrees to furnish to Clearing Agent any tax
information, e.g., taxpayer identification numbers and certifications provided
by the customer on IRS Forms W-8, W-8BEN, W-8IMY, W-8EXP, W-8ECI, W-9, or any
acceptable substitute in its possession relating to each customer account
transferred to Clearing Agent and to each future customer account opened.
Introducing Firm acknowledges that Clearing Agent will rely on such information
for purposes of determining Clearing Agent’s obligation to withhold federal
income tax pursuant to Sections 1441 through 1446 and 3406 of the Internal
Revenue Code. Introducing Firm hereby authorizes Clearing Agent to employ any
procedures permitted under applicable law or regulation to achieve compliance
with its withholding obligations under federal income tax law.

 

13.3                           Transmission of Exception Reports to Introducing
Firm. On or before the effective date
of this Agreement, and annually thereafter, Clearing Broker shall provide to
Introducing Firm, pursuant to NYSE Rule 382(e), a list of all reports (e.g.,
exception reports) it offers to Introducing Firm. Introducing Firm shall
promptly advise Clearing Agent, in writing, of those specific reports it elects
to receive. Pursuant to NYSE Rule 382(e) and NASD Rule 3230(c)(3), Clearing
Agent shall send to the Chief Executive Officer and Chief Compliance Officer of
Introducing Firm by July 31 of each year a list of exception reports available
from Clearing Agent as well as the reports requested by or supplied to the
Introducing Firm as of such date in order to assist Introducing Firm in
supervising its day to day business activities. Clearing Agent shall also
provide to the Introducing Firm’s Designated Examining Authority (or, if none,
to its appropriate regulatory agency or authority) a copy of the notice sent to
Introducing Firm transmitting the reports referred to in the preceding
sentence.

 

15

 

14.                               ORDER AUDIT TRAIL SYSTEM (OATS)

 

Clearing Agent shall have no responsibility for
capturing, recording or transmitting to the NASD, on Introducing Firm’s behalf,
any order information that is required to be recorded and transmitted pursuant
to the NASD Rules 6950 through 6957 (Order Audit Trail System (“OATS”) Rules)
and the OATS Reporting Technical Specifications.

 

15.                               TRANSMISSION OF ORDERS TO CLEARING
AGENT AS PRIME BROKER

 

15.1                           General Introducing Firm Functions. Introducing Firm may, from time to time, collect
and transmit to Clearing Agent orders and other instructions to Clearing Agent
from Introducing Firm’s prime brokerage customers (“Prime Brokerage Orders”)
and provide Clearing Agent with such reports, data and services as Clearing
Agent requires in order to act as prime broker with respect to such Prime
Brokerage Orders, consistent with applicable rules and regulations.

 

15.2                           Trading Activity Functions. Introducing Firm shall perform the following
functions as introducing firm for its prime brokerage customers:

 

a.                                       Report all trading activity for the accounts of
Introducing Firm’s prime brokerage customers (whether executing with Clearing
Agent or away) to Clearing Agent via such method as may agreed upon by Clearing
Agent and Introducing Firm) on trade date by a time to be determined by
Clearing Agent and Introducing Firm from time to time.

 

b.                                      Accept, via electronic mail (or telephone) on T+1,
information regarding all trade breaks and respond to Clearing Agent regarding
resolution of such trade breaks by 12:00 noon (NYC time) on T+1.

 

c.                                       Obtain pre-approval from Clearing Agent for any
short sales directed by Introducing Firm’s prime brokerage customers.

 

d.                                      Provide all information to Clearing Agent related
to the eligibility of any of Introducing Firm’s customers to receive or to
continue to receive prime brokerage services.

 

15.3                           Other Prime Brokerage Functions. Introducing Firm shall perform the following
additional functions as introducing firm for its prime brokerage customers:

 

a.                                       Obtain and deliver to Clearing Agent an executed
Prime Brokerage Client Agreement in substantially the form provided by Clearing
Agent to Introducing Firm, for each prime brokerage customer of Introducing
Firm.

 

b.                                      Obtain and deliver to Clearing Agent an executed
Prime Brokerage Investment Advisor Agreement in substantially the form provided
by Clearing Agent to Introducing Firm, for any investment advisor with
discretion over an account of a prime brokerage customer of Introducing Firm
(the “Investment Advisor”).

 

16

 

c.                                       Deliver to Clearing Agent for acceptance or
rejection the name of, and any information requested by Clearing Agent
regarding, each Executing Broker that Introducing Firm proposes to utilize to
execute prime brokerage trades. Introducing Firm acknowledges that Clearing
Agent does not select any Executing Broker, and makes no representation
regarding the financial condition or ability of any Executing Broker.

 

d.                                      Obtain and deliver to Clearing Agent an executed
Schedule A for each prime brokerage agreement between Clearing Agent (as Prime
Broker) and each Executing Broker accepted by Clearing Agent, showing each
prime brokerage customer of Introducing Firm for whose Account Prime Brokerage
Orders will be placed and, thereafter, deliver to Clearing Agent executed Forms
1 to Schedule A to reflect additions and deletions of prime brokerage customers
as appropriate.

 

e.                                       Perform any other functions reasonably requested by
Clearing Agent to facilitate Clearing Agent’s performance of the prime
brokerage services hereunder and as contemplated by the No-Action Letter.

 

15.4                           Introducing Firm Acknowledgements Regarding Prime
Brokerage. Introducing Firm acknowledges
that Clearing Agent may disaffirm or dk transactions of any prime brokerage
customers of Introducing Firm. Introducing Firm will be responsible for
resolving all unmatched items, and advising Clearing Agent of their status in a
timely manner. Introducing Firm acknowledges that Clearing Agent shall monitor
the net equity of accounts of Introducing Firm’s prime brokerage customers
carried by Clearing Agent, and shall notify Introducing Firm who in turn shall
notify the relevant prime brokerage customers on Introducing Firm’s letterhead
whenever such customers’ net equity falls below the minimum required by
Clearing Agent. If an account falls below the minimum net equity set by
Clearing Agent, the account will not be permitted to place any further Prime
Brokerage Orders until the net equity is increased to the level required by
Clearing Agent. Introducing Firm agrees to provide access to its personnel and
records for the purpose of complying with Clearing Agent’s obligations as Prime
Broker under applicable laws, rules and regulations in relation to the
provision of the prime brokerage services.

 

15.5                           Compensation.
In consideration of Clearing Agent acting as Prime Broker, Introducing Firm
agrees to pay the amounts set forth in Schedule A hereto.

 

15.6                           Limitation of Liability. In addition to the provisions of Section 17 in
this Agreement and not in limitation thereof, Introducing Firm acknowledges and
agrees that:

 

a.                                       Clearing Agent accepts no responsibility for the
Prime Brokerage Orders received from the Introducing Firm via such method as
may agreed upon by Clearing Agent and Introducing Firm, except in the event of
gross negligence or willful misconduct by Clearing Agent or its employees.

 

b.                                      Clearing Agent accepts no responsibility and
disclaims all liability for any communication linkage failure associated with
the transmittal of Prime Brokerage

 

17

 

Orders except in the event of gross negligence or
willful misconduct by Clearing Agent or its employees.

 

c.                                       Any notice by Clearing Agent hereunder or as
required to perform prime brokerage services to prime brokerage customers of
Introducing Firm shall be made to Introducing Firm, whether on Introducing
Firm’s behalf or on behalf of such customers. Any notice made to Introducing
Firm shall be deemed to be made to, or done for, Introducing Firm’s prime
brokerage customers, as applicable. Introducing Firm shall be responsible for
all communication with Introducing Firm’s prime brokerage customers regarding
all services to be performed hereunder. Clearing Agent is not responsible for
communication failure between Introducing Firm and Introducing Firm’s prime
brokerage customers.

 

d.                                      In connection with this Section 15.6, Clearing
Agent disclaims liability not only for direct damages to the Introducing Firm,
Clearing Agent, Introducing Firm’s prime brokerage customers or a third party,
but in addition disclaims any and all liability for special, indirect or
consequential or incidental damages whether in tort or in contract even if
Clearing Agent has been advised of the possibility of such damage except in the
event of gross negligence or willful misconduct by Clearing Agent or its
employees.

 

15.7                           No Joint Venture.
Nothing contained in this Agreement (i) shall constitute Clearing Agent and
Introducing Firm as members of any partnership, joint venture, association,
syndicate, unincorporated business or other separate entity, (ii) shall be
construed to impose any liability as such on any of them or (iii) shall be
deemed to confer on any of them any express, implied or apparent authority to
incur any obligation or liability on behalf of the others.

 

15.8                           Representations and Warranties. In addition to, and no way in limitation of,
Introducing Firm’s representations and warranties as contained elsewhere in
this Agreement, Introducing Firm represents and warrants that:

 

a.                                       Introducing Firm has been duly appointed and
authorized by Introducing Firm’s prime brokerage customers to transmit Prime
Brokerage Orders to Clearing Agent.

 

b.                                      All Introducing Firm’s customers whose accounts
will participate in prime brokerage activities have been advised, via client
agreements or otherwise, that their accounts will engage in prime brokerage
activities, Clearing Agent will act as Prime Broker for their accounts, and
said customers or the Investment Advisor thereof may place orders for the
execution of trades for their accounts at Executing Brokers, all in conformity
with applicable under applicable laws, rules and regulations.

 

16.                               DAMAGES

 

As between the parties, neither party shall be
liable for special, indirect, incidental, consequential or punitive damages,
whether such damages are incurred or experienced as a result

 

18

 

of
entering into or relying on this Agreement or otherwise, even if the parties
have been advised of the possibility of such damages. Introducing Firm and
Clearing Agent each agree not to assist any claim for punitive damages against
the other.

 

16.1                           Allocation of Risks. Introducing Firm acknowledges and agrees that the
fees charged by Clearing Agent reflect the allocation of risks including, but
not limited to, any limitation of liability set forth in this Agreement. A
modification of the allocation of risks set forth in this Agreement would
affect the fees charged by Clearing Agent, and in consideration of such fees,
Introducing Firm agrees to such allocation of risks.

 

17.                               LIABILITY

 

17.1                           Liability of Clearing Agent.

 

17.1.1              Disclaimer of Warranties. Introducing Firm expressly
agrees that Introducing Firm’s use of Clearing Agent’s services is at
Introducing Firm’s risk. Neither Clearing Agent nor any of its directors,
officers, employees, agents, contractors, affiliates, information providers,
licensors, or other suppliers providing data, information, services or
software, including but not limited to the NYSE, warrants that the services
will be uninterrupted or error free; nor do any of them make any warranty as to
the results that may be obtained from the use of the services or as to the
timeliness, sequence, accuracy, completeness, reliability or content of any
data, information, services, or transactions provided and Clearing Agent shall
not be responsible for any losses liabilities or damages caused by the acts or
omissions of those third party agents, contractors, information providers or
other suppliers selected by the Clearing Agent with reasonable care beyond any
amount which Clearing Agent is able to recover pursuant to its agreement with
such entity. Except as specifically set forth in this Section 17.1, Clearing
Agent’s services are provided on an “as is,” “as available” basis, without
warranties of any kind, either express or implied, including, without
limitation, those of merchantability, fitness for a particular purpose, and
non-infringement, other than those warranties which are implied by and incapable
of exclusion, restriction or modification under the laws applicable to this
Agreement.

 

17.1.2                  Clearing Agent Indemnification. In addition to any other obligations it may
possess under other provisions of this Agreement, Clearing Agent shall
indemnify, defend, and hold harmless Introducing Firm and any controlling
person of Introducing Firm, from and against all allegations, claims, demands,
proceedings, suits and actions (“Claims”) and all liabilities, expenses,
reasonable attorney’s fees (including fees and costs incurred in enforcing
Introducing Firm’s right to indemnification), and costs in connection therewith
arising out of any negligent, reckless, dishonest, fraudulent, or criminal act
or omission on the part of any of Clearing Agent’s officers or employees with
respect to the services provided by Clearing Agent under this Agreement.

 

17.1.3                  Clearing Agent Right to Compete. Nothing in this Agreement shall be deemed to
restrict in any way the right of Clearing Agent or any affiliate of Clearing
Agent to compete with Introducing Firm in any or all aspects of Introducing
Firm’s business.

 

19

 

 

17.2                           Liability of Introducing Firm.

 

17.2.1                  Introducing Firm Indemnification. In addition to any other
obligations it may possess under other provisions of this Agreement,
Introducing Firm shall indemnify, defend and hold harmless Clearing Agent, and
any controlling person of Clearing Agent, from and against all Claims and all
liabilities, expenses, reasonable attorney’s fees (including fees and costs
incurred in enforcing Clearing Agent’s right to indemnification), and costs in
connection therewith arising out of one or more of Introducing Firm’s or any of
its employee’s negligent, dishonest, fraudulent, or criminal act or omission or
any of the following:

 

17.2.1.1                   Failure to Make Payment or Deliver
Securities.
A check received by Clearing Agent from a customer shall not constitute payment
until it has been paid and the proceeds are actually received and finally credited
to Clearing Agent (without any subsequent charge back) by its bank.

 

17.2.1.2                   Margin Calls. Failure of a customer to meet any
initial margin call or any maintenance call, except that Clearing Agent shall
be responsible for the portion of any such loss or damage that Introducing Firm
establishes was directly attributable to Clearing Agent’s failure to give
notification to Introducing Firm as required in Section 6.3.2 of this
Agreement.

 

17.2.1.3                   Introducing Firm’s Failure to
Perform.
Failure of Introducing Firm to perform any duty, obligation, or
responsibility with respect to customer accounts as set forth in this
Agreement. Introducing Firm’s indemnification obligation under this Section shall
not be affected by the participation of Clearing Agent or any person
controlling it or controlled by it within the meaning of the Securities
Exchange Act of l934, as amended, in any transaction giving rise to such an
obligation, unless such participation constitutes recklessness, fraud, or
criminal conduct.

 

17.2.1.4                   Failure of a Customer to Perform Obligations. Any failure by any of Introducing
Firm’s customers to perform any commitment or obligation with respect to a
transaction carried by Clearing Agent under this Agreement, whether or not such
failure was under the control of Introducing Firm.

 

17.2.1.5                   Improper Conduct by Agents. Any negligent, dishonest,
fraudulent, or criminal act or omission on the part of Introducing Firm’s
directors or agents.

 

17.2.1.6                   Customer Claims and Disputes. Any claim or dispute between
Introducing Firm and a customer with respect to services provided under this
Agreement, including, but not limited to, any claim or dispute concerning the
validity of a customer order in the form the order was transmitted to
Clearing Agent by Introducing Firm and any claim arising in connection with
Clearing Agent’s guarantee of any signature of any customer of Introducing Firm
or at the request of Introducing Firm.

 

17.2.1.7                   Warranties. Any adverse claim with respect to
any security delivered by Introducing Firm or cleared by Clearing Agent,
including a claim of a defect in title with respect to securities that are
alleged to have been forged, counterfeited, raised or otherwise altered,

 

 

20

 

or
if they are alleged to have been lost or stolen. The parties agree that
Clearing Agent shall be deemed to be an intermediary between Introducing Firm
and customer and shall be deemed to make no warranties other than as provided
in Section 8-306(3) of the Uniform Commercial Code.

 

17.2.1.8                   Default of Third-Party Introducing
Firm. Any
default by a third-party Introducing Firm with whom the Introducing Firm deals
on a principal or agency basis in a transaction either not executed by Clearing
Agent or not cleared by Clearing Agent.

 

17.2.1.9                   Prior Self-Clearing Arrangements. Any guarantee, indemnification, or
hold harmless agreement in connection with Introducing Firm’s business or
customers that Clearing Agent may provide to the National Securities
Clearing Corporation, the Depository Trust Company, or any other clearing,
depository, or self-regulatory organization with respect to transactions
self-cleared by Introducing Firm prior to transfer of such functions to
Clearing Agent.

 

17.2.1.10             Breach of Warranty by Introducing Firm. Any breach by Introducing Firm in
any material respect of any representation or warranty made by it under this
Agreement.

 

17.2.1.11             Deposit of Checks to Customer Accounts. Any failure to exercise due
diligence in reviewing checks received from customers to ensure that same are
in proper form, or in the issuance of instructions to Clearing Agent regarding
the accounts into which checks are to be deposited.

 

17.2.1.12             Infringement of Intellectual Property Rights. Any act or omission of Introducing
Firm, its agents or employees which infringes on any patent, trade secret,
copyright, trademark, or other intellectual property right of Clearing Agent.

 

17.2.2                  Defense of Claims. Introducing Firm will institute
defense against any Claims at the sole expense of Introducing Firm and using
counsel reasonably acceptable to Clearing Agent. Introducing Firm will keep
Clearing Agent informed of the status of the defense of such Claims, and
Introducing Firm will not agree to any settlement without consent of Clearing
Agent, which consent will not be unreasonably withheld. Notwithstanding the
foregoing, Clearing Agent will have the right to assume its defense of such
Claims at the expense of Clearing Agent if (i) the employment of such
separate counsel has been authorized in writing by Introducing Firm, such
authorization not to be unreasonably withheld, (ii) Introducing Firm has
not employed counsel to conduct the defense of Clearing Agent, or (iii) Clearing
Agent shall have reasonably concluded that, as between Clearing Agent and
Introducing Firm, there may be a conflict of interest requiring separate
counsel.

 

18.                               FEES AND
SETTLEMENTS FOR SECURITIES TRANSACTIONS

 

18.1                           Commissions. Clearing Agent shall charge each
of Introducing Firm’s customers the commission, markup, and any other charge or
expense that Introducing Firm instructs it to charge for each transaction. If
instructions are not received with respect to a transaction in the time period
required by Clearing Agent to implement those instructions, Clearing Agent
shall charge the customer the commission, markup, or

 

21

 

other
charge or expense prescribed in the basic commission schedule delivered to
Clearing Agent by Introducing Firm. This basic schedule may be
amended from time to time by Introducing Firm by written instructions delivered
to Clearing Agent. Clearing Agent shall only be required to implement such
amendments to the basic schedule to the extent such amendments are within
the usual capabilities of Clearing Agent’s data processing and operations
systems and only within such reasonable time limitations as Clearing Agent may deem
necessary to avoid disruption of its normal operating capabilities. Introducing
Firm shall be solely and exclusively responsible for the amounts of such
commissions, markup, or other charge and their compliance with the Rules,
including but not limited to, any disclosures to Introducing Firm’s customers
or others required to be made in connection with the Rules.

 

18.2                           Fees for Clearing Services. As compensation for services
provided pursuant to this Agreement, Clearing Agent shall deduct from the
commissions, mark-up, mark-down, or fees charged Introducing Firm’s customers
the amounts set forth in the fully-disclosed pricing schedule attached
hereto as Schedule A.

 

18.3                           Miscellaneous Charges. Introducing Firm agrees to pay
Clearing Agent the fees and charges described in Schedule A hereto.
Notwithstanding the foregoing, Introducing Firm may instruct Clearing
Agent to pass through such fees to Introducing Firm’s customers.

 

19.                               DEPOSIT ACCOUNT

 

19.1                           Establishment of Deposit Account. To further assure Introducing Firm’s
performance of its obligations under this Agreement, including but not limited
to its indemnification obligations under Section 17, Introducing Firm
shall, on or before the execution of this Agreement, establish an account at
Clearing Agent to be designated as the Introducing Firm’s Deposit Account (the “Deposit
Account”). The Deposit Account shall not represent an ownership interest by
Introducing Firm in Clearing Agent. The Deposit Account shall at all times
contain cash, securities, or a combination of both, having a market value of at
least seven hundred fifty thousand dollars ($750,000) (the “Required Amount”). The
securities placed in the Deposit Account shall consist only of direct
obligations issued by or guaranteed as to principal and interest by the United
States Government. In the event of a substantial change in the nature and
extent of Introducing Firm’s business operations, Clearing Agent may require
that an additional amount be deposited promptly in the Deposit Account. If such
a deposit is not made in the amount specified, whether or not Introducing Firm
agrees that the amount is justified under this Section, Clearing Agent may terminate
this Agreement forthwith.

 

19.2                           Clearing Agent’s Right to Offset. If (i) Clearing Agent shall
have any claim against Introducing Firm or a customer of Introducing Firm which
has not been resolved within ten (10) business days after Clearing Agent
presents such claim to Introducing Firm; or (ii) if Clearing Agent shall
suffer any loss or incur any expense for which it is entitled to be indemnified
pursuant to this Agreement, and Introducing Firm shall fail to make such indemnification
within ten (10) business days
after being requested to do

 

22

 

so,
Clearing Agent may deduct the amount of such claim, loss, or expense from
the Deposit Account and apply proceeds to Introducing Firm’s obligation
hereunder. Clearing Agent may withdraw cash or securities (or both) having
a market value equal to the amount of such claimed deficiency. If those funds
are withdrawn from the Deposit Account, then Introducing Firm shall be
obligated to make a prompt deposit in the Deposit Account of cash or securities
sufficient to bring the Deposit Account back to a value of at least the
Required Amount. Clearing Agent shall give prior notice to Introducing Firm of
all deductions from the Deposit Account made hereunder.

 

19.3                           Termination of Deposit Account. Within thirty (30) days of
termination of this Agreement, Clearing Agent shall pay and deliver to
Introducing Firm, the funds and securities in the Deposit Account, less any
amounts to which it is entitled under the preceding Section; provided, however,
that Clearing Agent may:  (i) retain
the Deposit Account until transfer of all customer and proprietary accounts of
Introducing Firm has been completed and (ii) retain in the Deposit Account
such amount for such period as it reasonably deems appropriate for its
protection from any claim or proceeding of any type, then pending or
threatened, until the final determination of such claim or proceeding is made.
If a threatened claim or proceeding is not resolved or if a legal action or
proceeding is not instituted within 90 days after the termination of this
Agreement, any amount retained with respect to such claim, proceeding, or
action shall be paid or delivered to Introducing Firm.

 

20.                               PROPRIETARY
ACCOUNTS OF INTRODUCING FIRMS AND DEALERS (PAIB)

 

Clearing Agent
shall establish a separate reserve account for proprietary assets held by
Introducing Firm so that Introducing Firm can treat these assets as allowable
assets under SEC Rule 15c3-1. Clearing Agent agrees to perform the
required computation on behalf of Introducing Firm in accordance with the
following provisions:

 

20.1                           Clearing Agent will perform a
separate computation for PAIB assets (PAIB reserve computation) of Introducing
Firm in accordance with the customer reserve computation set forth in SEC Rule 15c3-3
(customer reserve formula) with the following modifications:

 

a.                                       Any credit (including a credit
applied to reduce a debit) that is included in the customer reserve formula
will not be included as a credit in the PAIB reserve computation;

 

b.                                      Note E(3) to Rule 15c3-3a,
which reduces debit balances by one percent under the basic method and
subparagraph (a)(1)(ii)(A) of Rule 15c3-1, which reduces debit
balances by three percent under the alternative method, will not apply; and

 

c.                                       Neither Note E(I) to Rule 15c3-3a
nor NYSE Interpretation /04 to Item 10 of Rule 15c3-3a regarding
securities concentration charges is applicable to the PAIB reserve computation.

 

23

 

20.2                           The PAIB reserve computation will
include all the proprietary accounts of Introducing Firm. All PAIB assets will
be kept separate and distinct from customer assets under the customer reserve
computation set forth in SEC Rule 15c3-3.

 

20.3                           The PAIB reserve computation will be
prepared within the same time frames as those prescribed by Rule 15c3-3
for the customer reserve formula.

 

20.4                           Clearing Agent will establish and
maintain a separate “Special Reserve Account for the Exclusive Benefit of PAIB
Customers” with a bank in conformity with the standards of Rule 15c3-3(f) (PAIB
Reserve Account). Cash and/or qualified securities as defined in the Rule will
be maintained in the PAIB Reserve Account in an amount equal to the PAIB
reserve requirement.

 

20.5                           If the PAIB reserve computation
results in a deposit requirement, the requirement can be satisfied to the
extent of any excess debit in the customer reserve formula of the same date.
However, a deposit requirement resulting from the customer reserve formula
cannot be satisfied with excess debits from the PAIB reserve computation.

 

20.6                           Within two business days of entering
into this Agreement, Introducing Firm shall notify its designated examining
authority (“DEA”) in writing that it has entered into a PAIB agreement with
Clearing Agent.

 

20.7                           Upon discovery that any deposit made
to the PAIB Reserve Account did not satisfy its deposit requirement, Clearing
Agent will immediately notify its DEA and the SEC. Unless a corrective plan is
found to be acceptable by the SEC and the DEA, Clearing Agent will provide
written notification within five business days of the date of discovery to
Introducing Firm that PAIB assets held by Clearing Agent will not be deemed
allowable assets for net capital purposes.

 

20.8                           To the extent applicable,
commissions receivable and other receivables of Introducing Firm from Clearing
Agent (excluding clearing deposits) that are otherwise allowable assets under
the net capital rule are not to be included in the PAIB reserve
computation, provided the amounts have been clearly identified as receivables
on the books and records of the Introducing Firm and as payables on the books
of Clearing Agent.

 

21.                               COMMUNICATION

 

21.1                           Notice to Customers. Clearing Agent shall, upon the
opening of an account pursuant to Section 4 of this Agreement, mail to
each customer a copy of the notice to customers required by NYSE Rule 382(c).
Clearing Agent shall provide Introducing Firm with a copy of its form of
notice on request, and if and when any material changes are made thereto,
Clearing Agent shall provide Introducing Firm, as a courtesy, a copy of the form of
notice prior to beginning use of such form .

 

21.2                           Customer Complaint Reporting and
Customer Notification. Introducing Firm authorizes and instructs Clearing
Agent to forward promptly any written customer complaint received by Clearing
Agent regarding Introducing Firm and/or its

 

24

 

associated
persons relating to functions and responsibilities allocated to Introducing
Firm under this Agreement to a) Introducing Firm and b) Introducing Firm’s DEA
designated under Section 17 of the Securities Exchange Act of 1934, as
amended, or, if none, to Introducing Firm’s appropriate regulatory agency or
authority. Further, Introducing Firm authorizes Clearing Agent to notify the
customer, in writing, that Clearing Agent has received the complaint, and that
the complaint has been forwarded to Introducing Firm’s DEA (or, if none, to the
appropriate regulatory agency). Consistent with its regulatory obligations,
Introducing Firm shall be responsible for investigating and responding all such
complaints. Clearing Firm authorizes and instructs Introducing Broker to
forward promptly any written customer complaint received by Introducing Broker
regarding Clearing Agent and/or its associated persons relating to functions
and responsibilities allocated to Clearing Agent under this Agreement to a)
Clearing Agent and b) Clearing Agent’s DEA designated under Section 17 of
the Securities Exchange Act of 1934, as amended, or, if none, to Clearing Agent’s
appropriate regulatory agency or authority. Further, Clearing Agent authorizes
Introducing Firm to notify the customer, in writing, that Introducing Firm has
received the complaint, and that the complaint has been forwarded to Clearing
Firm’s DEA (or, if none, to the appropriate regulatory agency). Consistent with
its regulatory obligations, Clearing Agent shall be responsible for
investigating and responding all such complaints.

 

21.3                           Restriction on Advertising. Neither Clearing Agent nor
Introducing Firm shall utilize the name of the other in any way without the
other’s prior written consent except to disclose the relationship between the
parties. Neither party shall employ the other’s name in such a manner as to
create the impression that the relationship between them is anything other than
that of clearing firm and introducing firm. Introducing Firm shall not hold
itself out as an agent of Clearing Agent or as a subsidiary or company
controlled directly or indirectly by or affiliated with Clearing Agent except
as provided in this Section. Notwithstanding the foregoing section 21.3,
Introducing Firm may hold itself out as a company affiliated with Clearing
Agent until Introducing Firm is no longer under common control with Clearing
Agent.

 

21.4                           Linking Between Sites. Without express written
authorization, following the initial public offering of Introducing Firm
neither party may provide or allow an electronic hyperlink directly from
its service or site on the Internet or another site over which that party has
control to the service or site on the Internet of the other party.

 

22.                               TERM OF
AGREEMENT AND TERMINATION OF AGREEMENT

 

22.1                           Term. The term of this Agreement shall
commence as of the date this Agreement is signed by both parties and continue
until the close of business on December 31, 2006 (the “Termination Date”)
(the “Initial Term”). At no time during the Initial Term of this Agreement
shall either Introducing Firm or Clearing Agent cancel this Agreement except as
provided in Sections 22.2 or 22.3. Either party must provide written notice no
later than sixty (60) days prior to Termination Date if it intends not to renew
this Agreement. Failure to do so will result in this Agreement being renewed
for successive sixty (60) day periods (“Renewal Term”). During any Renewal
Period,

 

25

 

either
party may cancel this Agreement without cause upon sixty (60) days prior
written notice to the other party.

 

22.2                           Termination upon 60-Day Notice. Either Party may terminate
this Agreement upon sixty (60) days prior written notice to the other party in
the event that: (i) the other party breaches a material provision of this
Agreement and such breach, if curable, shall continue without remedy for a
period of 10 days after written notice from the non-defaulting party is
transmitted in accordance with section 25 of this Agreement; (ii) any
representation, warranty or covenant of the other party in this Agreement is
false or misleading in any material respect; (iii) any director, executive
officer, general securities principal or financial and operations principal of
the other party is enjoined, prohibited, disciplined or suspended as a result
of administrative or judicial proceedings, or proceedings of a self-regulatory
organization of which the other party is a member, from engaging in securities
business activities constituting all or portions of the other party’s
securities business.

 

22.3                           Immediate Termination. This Agreement may be
terminated upon written notice by Clearing Agent or Introducing Firm
immediately in the event that (a) the other party is enjoined, disabled,
suspended, prohibited, or otherwise becomes unable to engage in the securities
business or any part of it by operation of law or as a result of any
administrative or judicial proceeding or action by the SEC, any state
securities law administrator, or any regulatory or self-regulatory organization
having jurisdiction over such party or (b) the other party (i) becomes
or is declared insolvent; (ii) voluntarily files or is the subject of, a
petition commencing a case under any chapter of Title 11 of the United States
Code; (iii) makes a general assignment for the benefit of its creditors; (iv) admits
in writing its inability to pay its debts as they mature; (v) sells or
enters into negotiations to sell all or substantially all of its assets; (v) files
an application or consents to the appointment of, or there is appointed, any
receiver, or a permanent or interim trustee of that party or any of its
subsidiaries, as the case may be, or all or any portion of its property,
including, without limitation, the appointment or authorization of a trustee,
receiver or agent under applicable law or under a contract to take charge of
its property for the purpose of enforcing a lien against such property or for
the purpose of general administration of such property for the benefit of its
creditors; (vii) files a petition seeking a reorganization of its financial
affairs or to take advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation law or statute or files an
answer admitting the material allegations of a petition filed against it in any
proceeding under any such law or statute; or (viii) takes any corporate
action for the purpose of effecting any of the foregoing.

 

22.4                           Conversion of Accounts. In the event that this Agreement
is terminated for any reason, Introducing Firm shall arrange for the conversion
of its customer accounts to another clearing broker or to Introducing Firm if
it becomes self-clearing. Introducing Firm shall give Clearing Agent Notice
(the “Conversion Notice”) of: (i) the name of the broker that will assume
responsibility for clearing services for Customers and Introducing Firm; (ii) the
date on which such broker will commence providing such services; (iii) Introducing
Firm’s undertaking, in form and substance satisfactory to Clearing Agent,
that Introducing Firm’s agreement with such clearing broker provides

 

26

 

that
such clearing broker will accept on conversion all Introducing Firm and
customer accounts then maintained by Clearing Agent; and (iv) the name of
an individual or individuals within the new clearing broker’s organization whom
Clearing Agent may contact to coordinate the conversion. The Conversion
Notice shall accompany Introducing Firm’s notice of termination given pursuant
to this Section. If Introducing Firm fails to give Conversion Notice to
Clearing Agent, Clearing Agent may notify Introducing Firm’s customers as
Clearing Agent deems appropriate of the termination of this Agreement and may make
such arrangements as Clearing Agent deems appropriate for transfer or delivery
of customer accounts. The expense of notifying those customers and making such
arrangements shall be charged to Introducing Firm.

 

22.5                           Survival. Termination of this Agreement in
any manner shall not release Introducing Firm or Clearing Agent from any
liability or responsibility with respect to any representation or warranty or
transaction effected on the books of Clearing Agent.

 

22.6                           Conversion
Costs. If Introducing Firm terminates this Agreement pursuant
to Section 22.1, 22.2 or 22.3 above,
Introducing Firm shall promptly pay all reasonable expenses directly
related to the transition of Introducing Firm’s business to any successor
Clearing Agent.

 

22.7                           Failure to Convert. Introducing Firm shall be solely
and exclusively responsible for any cost, expense (including, but not limited
to, reasonable fees and expenses of legal counsel) or damages sustained or
incurred by Clearing Agent arising out of Introducing Firm’s failure to
promptly convert all of Introducing Firm’s and its customer accounts for
clearing by Clearing Agent unless otherwise agreed in writing.

 

23.                               CONFIDENTIALITY

 

23.1                           “Confidential Information” of a
party shall mean all data and information submitted to the other party or
obtained by the other party in connection with the services, including information
relating to a party’s customers (which includes, without limitation, Non-Public
Personal Information as that term is defined in Securities and Exchange
Commission Regulation S-P), technology, operations, facilities, consumer
markets, products, capacities, systems, procedures, security practices,
research, development, business affairs, ideas, concepts, innovations,
inventions, designs, business methodologies, improvements, trade secrets,
copyrightable subject matter and other proprietary information.

 

23.2                           All Confidential Information
relating to a party shall be held in confidence by the other party to the same
extent and in at least the same manner as such party protects its own
confidential or proprietary information. Neither party shall disclose, publish,
release, transfer or otherwise make available Confidential Information of the
other party in any form to, or for the use or benefit of, any person or
entity without the other party’s consent. Each party shall, however, be
permitted to disclose relevant aspects of the other party’s Confidential
Information to its officers, agents, subcontractors and employees to the extent
such disclosure is reasonably necessary for the performance of its duties and
obligations under this Agreement and such disclosure is not prohibited

 

27

 

by
Gramm-Leach-Bliley Act of 1999 (“GLBA”), which amends the Securities Exchange
Act of 1934, as it may be amended from time to time, the regulations
promulgated by the Securities and Exchange Commission thereunder or other
applicable law; provided, however, that such party shall take all reasonable
measures to ensure that Confidential Information of the other party is not
disclosed or duplicated in contravention of the provisions of this Agreement by
such officers, agents, subcontractors and employees. The obligations in this Section shall
not restrict any disclosure by either party pursuant to any applicable law, or
by order of any court or government agency (provided that the disclosing party
shall give prompt notice to the non-disclosing party of such order) and shall
not apply with respect to information which (i) is developed by the other
party without violating the disclosing party’s proprietary rights; (ii) is
or becomes publicly known (other than through unauthorized disclosure); (iii) is
disclosed by the owner of such information to a third party free of any
obligation of confidentiality; (iv) is already known by such party without
an obligation of confidentiality other than pursuant to this Agreement or any
confidentiality agreements entered into between the parties before the
effective date of this Agreement; or (v) is rightfully received by a party
free of any obligation of confidentiality. If the GLBA, the regulations promulgated
by the Securities and Exchange Commission thereunder or other applicable law
now or hereafter in effect imposes a higher standard of confidentiality to the
Confidential Information, such standard shall prevail over the provisions of
this Section.

 

23.3                           Introducing Firm acknowledges that
the services Clearing Agent provides hereunder involve Introducing Firm access
to proprietary technology, trading and other systems, and that techniques,
algorithms and processes contained in such systems constitute trade secrets and
shall be safeguarded by Introducing Firm, and that Introducing Firm shall
exercise reasonable care to protect Clearing Agent’s interest in such trade
secrets. Introducing Firm agrees to make the proprietary nature of such systems
known to those of its consultants, staff, agents or clients who may reasonably
be expected to come into contact with such systems. Introducing Firm agrees
that any breach of this confidentiality provision may result in its being
liable for damages as provided by law.

 

23.4                           Sections 23.1 through 23.3 shall
survive the termination of this Agreement.

 

24.                               ACTION AGAINST
CUSTOMERS BY CLEARING AGENT

 

Clearing Agent
may, in its sole discretion and at its own expense and, upon written notice to
Introducing Firm, institute and prosecute in its name any action or proceeding
against any of Introducing Firm’s customers in relation to any controversy or
claim arising out of Clearing Agent’s transactions with Introducing Firm or
with Introducing Firm’s customers. Nothing contained in this Agreement shall be
deemed either (i) to require Clearing Agent to institute or prosecute such
an action or proceeding; or (ii) to impair or prejudice its right to do
so, should it so elect, nor shall the institution or prosecution of any such action
or proceeding relieve Introducing Firm of any liability or responsibility which
Introducing Firm would otherwise have had under this Agreement. Introducing
Firm assigns to Clearing Agent its rights against its customer to the extent
necessary to effectuate the provisions of this Section and not in
derogation of Introducing Firm’s own rights.

 

28

 

25.                               NOTICES

 

All notices
required or permitted by this Agreement shall be in writing and shall be deemed
to have been given one day after being delivered personally or by messenger or
being received via telecopy, telex or other electronic transmission, or two
days after being sent by overnight delivery service, in all cases addressed to
the person for whom it is intended at the addresses as follows:

 

If to
Introducing Firm, to:

 

Cowen and Company, LLC

1221 Avenue of the Americas

New York, New York 10020

Attn:                    Jeff Charne

Fax No.: (646) 562-1596

 

With a copy to:

 

General Counsel

Fax No.: (646) 562-1861

 

If to Clearing
Agent, to:

 

SG Americas
Securities, LLC

480 Washington
Blvd.

Jersey City,
NJ 07310

Attn:  Walter Koller

Fax No.: (201)
839-8243

 

With a copy
to:

 

SG Americas
Securities, LLC

1221 Avenue of
the Americas

New York, NY
10020

Attn: General
Counsel

Fax No.: (212)
278-7053

 

or to such
other address as a party hereto shall have designated by notice in writing to
the other party in the manner provided by this Section 25.

 

26.                               ARBITRATION

 

26.1                           ARBITRATION DISCLOSURE

 

This Agreement
contains a pre-dispute arbitration clause. By signing an arbitration agreement
the parties agree as follows:

 

29

 

(A)                              All
parties to this agreement are giving up the right to sue each other in court,
including the right to a trial by jury, except as provided by the rules of
the arbitration forum in which a claim is filed.

 

(B)                                Arbitration
awards are generally final and binding; a party’s ability to have a court
reverse or modify an arbitration award is very limited.

 

(C)                                The
ability of parties to obtain documents, witness statements and other discovery
is generally more limited in arbitration than in court proceedings.

 

(D)                               The
arbitrators do not have to explain the reason(s) for their award.

 

(E)                                 The
panel of arbitrators will typically include a minority of arbitrators who were
or are affiliated with the securities industry.

 

(F)                                 The
rules of some arbitration forums may impose time limits for bringing
a claim in arbitration. In some cases. A claim that is ineligible for
arbitration may be brought in court.

 

(G)                                The
rules of the arbitration forum in which the claim is filed, and any
amendments thereto, shall be incorporated into this agreement.

 

26.2                           ARBITRATION AGREEMENT

 

ANY DISPUTE, CLAIM OR CONTROVERSY BETWEEN US
ARISING OUT OF OR RELATING TO YOUR BUSINESS OR THIS AGREEMENT THAT CANNOT BE
RESOLVED BY THE PARTIES SHALL BE SUBMITTED TO ARBITRATION CONDUCTED BEFORE THE
NEW YORK STOCK EXCHANGE, INC., OR NASD DISPUTE RESOLUTION, INC. (OR
THEIR SUCCESSOR FIRMS), AND IN ACCORDANCE WITH THE RULES THEN OBTAINING OF
THE SELECTED ORGANIZATION AND SHALL BE CONDUCTED AS A BROKER TO BROKER OR
MEMBER VS MEMBER DISPUTE. ARBITRATION MUST BE COMMENCED BY SERVICE UPON THE
OTHER PARTY OF A WRITTEN DEMAND FOR ARBITRATION OR A WRITTEN NOTICE OF
INTENTION TO ARBITRATE, THEREIN ELECTING THE ARBITRATION TRIBUNAL. UNLESS
OTHERWISE AGREED BY THE PARTIES OR REQUIRED BY THE APPLICABLE ARBITRATION
FORUM, THE ARBITRATION SHALL BE HELD IN NEW YORK, NEW YORK, AND IN ALL EVENTS
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK, EXCEPT FOR ITS CONFLICTS OF LAWS
PRINCIPLES, SHALL GOVERN ALL CLAIMS AND DEFENSES SET FORTH IN THE ARBITRATION.
ANY FINAL AWARD RENDERED IN ARBITRATION SHALL BE FINAL AND BINDING BETWEEN THE
PARTIES, AND JUDGMENT THEREON MAY BE ENTERED IN ANY COURT OF COMPETENT
JURISDICTION.

 

NO PERSON SHALL BRING A PUTATIVE OR CERTIFIED
CLASS ACTION TO ARBITRATION, NOR SEEK TO ENFORCE ANY PRE-DISPUTE
ARBITRATION AGREEMENT AGAINST ANY PERSON WHO HAS INITIATED IN COURT A PUTATIVE CLASS ACTION
AND WHO IS A MEMBER OF A PUTATIVE CLASS

 

30

 

AND WHO HAS NOT OPTED OUT OF THE CLASS WITH
RESPECT TO ANY CLAIMS ENCOMPASSED BY THE PUTATIVE CLASS ACTION UNTIL: (i) THE
CLASS CERTIFICATION IS DENIED; (ii) THE CLASS IS DECERTIFIED; OR
(iii) THE CUSTOMER IS EXCLUDED FROM THE CLASS BY THE COURT. SUCH
FORBEARANCE TO ENFORCE AN AGREEMENT TO ARBITRATE SHALL NOT CONSTITUTE A WAIVER
OF ANY RIGHTS UNDER THIS AGREEMENT EXCEPT TO THE EXTENT STATED HEREIN.

 

27.                               INJUNCTIVE
RELIEF

 

In the event
of a breach or threatened breach of the provisions of Section 23 of this
Agreement by Introducing Firm or any employee or representative of Introducing
Firm, Introducing Firm acknowledges that Clearing Agent shall be entitled to
seek preliminary and permanent injunctive relief to enforce the provisions
hereof. In addition, Introducing Firm acknowledges that a breach of the terms
regarding confidentiality of information and ownership of Clearing Agent’s
intellectual property would cause irreparable and incalculable damage to
Clearing Agent. Nothing herein shall preclude the parties from pursuing any
action or other remedy for any breach or threatened breach of this Agreement,
all of which shall be cumulative.

 

28.                               BUSINESS
CONTINUITY

 

Clearing Agent
will provide Introducing Firm with a current copy of its disaster recovery and
business continuity plan and will cooperate and participate with Introducing
Firm and designated vendors in the periodic testing and implementation of
Introducing Firm’s disaster recovery and business continuity plan. Introducing
Firm will provide Clearing Agent with a current copy of its disaster recovery
and business continuity plan and will cooperate and participate with Clearing
Agent and designated vendors in the periodic testing and implementation of
Clearing Agent’s disaster recovery and business continuity plan.

 

29.                               AUDIT

 

29.1                           Subject to
satisfying the notice requirements set forth in Section 29.2 hereof,
Introducing Firm, or its designated representative, shall have the right
to audit, once during each twelve month period while this Agreement is in
effect, commencing on the date this Agreement is signed, all records and
materials pertaining to the services provided to Introducing Broker in order to
determine the adequacy of operational controls, including the quality and
completeness of data and services performed, physical and environmental
controls maintained at the Clearing Agent processing facility, adherence to
established service level agreements, general controls (e.g., operational controls and procedures, including program change
controls, quality assurance, system processing and data access controls),
security practices and procedures and disaster
recovery and back-up procedures that are used by Clearing Agent in providing
services (“Services”) to Introducing Firm pursuant to this Agreement.

 

29.2                           Introducing Firm shall give Clearing
Agent written notice of any proposed audit. In such notice, Introducing Firm
shall advise Clearing Agent of (i) the commencement date

 

31

 

of
the audit, which may not be earlier than thirty (30) days after the date
of Clearing Agent’s receipt of the audit notice, (ii) the scope of the
audit in detail, (iii) the anticipated termination date of the audit,
which may not be longer than thirty (30) days after
the commencement date, unless Clearing Agent agrees to a longer period and (iv) the
names of Clearing Agent’s employees who will conduct the audit. All audits will be conducted during
Clearing Agent’s normal business hours.
Notwithstanding anything else contained in this Section, Clearing Agent agrees
that it shall make its facilities, personnel and records available at any time
without prior notice if requested by any of Introducing Firm’s regulators
pursuant to an audit of Introducing Firm by any of such regulators.

 

29.3                           Clearing Agent
agrees to provide Introducing Firm’s employees who are conducting an audit with such assistance and with access to such
employees and agents of Clearing Agent and to such records, materials and
systems pertaining to, or that are used in providing, the Services to enable
Introducing Firm to determine whether Clearing Agent’s general controls,
operational procedures, security practices and procedures, disaster recovery and back-up procedures used
in providing the Services are adequately controlled and meet applicable
regulatory requirements; provided, however, that Clearing Agent reserves
the right to impose reasonable safeguards and to deny Introducing Firm access
to confidential information of other customers of Clearing Firm and their
clients.

 

29.4                           Clearing Agent
and Introducing Firm shall meet to review each audit report by Introducing Firm
promptly after the issuance thereof and shall mutually agree upon the
appropriate manner in which to respond to the changes, if any, suggested by the
audit report. Clearing Agent shall formally reply in writing to an audit report
by Introducing Firm’s auditors not later than forty five (45) days after the
audit report is issued. If Introducing Firm advises Clearing Agent that
Introducing Firm’s audit of Clearing Agent identified a bona fide, reasonable
problem that in Introducing Firm’s opinion materially and adversely affects
Clearing Agent’s control environment or security policies and procedures and
Clearing Agent agrees with Introducing Firm regarding such material and adverse
effect, then, at Introducing Firm’s request, Clearing Agent shall correct such
problem within a mutually acceptable timetable.

 

29.5                           At Introducing
Firm’s request, Clearing Agent shall furnish Introducing Firm with copies of
such portions of Clearing Agent’s internal and external audit reports that
relate to the Services (redacted to remove references to matters other than the
Services).

 

29.6                           Clearing Agent
shall promptly notify Introducing Firm of changes in Clearing Agent’s control
environment (including all changes in external auditors, disaster recovery
policies and standards, change control procedures and similar policies,
standards and statements), breaches of security, and regulatory violations and
investigations, which in Clearing Agent’s reasonable opinion materially and
adversely affect, directly or indirectly, Clearing Agent’s provision of the
Services.

 

29.7                           Introducing
Firm will bear its own costs relating to the performance of all

 

32

 

audits by or on behalf of Introducing Firm.

 

30.                               GENERAL
PROVISIONS

 

30.1                           Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the respective successors and assigns of
Introducing Firm and Clearing Agent. No assignment of this Agreement or any
rights, including those to indemnification hereunder by either party shall be
effective unless the other party’s written consent shall be first obtained.
Notwithstanding the foregoing, Clearing Agent may assign this Agreement to
any of its affiliates without the consent of Introducing Firm, provided that
the affiliate is a duly registered broker dealer in good standing with the SEC.
For the purpose of this section 30.1, “affiliate” shall mean any company
that, directly or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, Clearing Agent.

 

30.2                           Severability. If any provision of this Agreement
shall be held to be invalid or unenforceable, the validity or enforceability of
the remaining provisions and conditions shall not be affected thereby.

 

30.3                           Counterparts. This Agreement may be
executed in one or more counterparts, all of which taken together shall
constitute a single agreement.

 

30.4                           Entire Agreement Amendments and
Duties Not Specifically Enumerated Herein. This Agreement represents the entire agreement
between the parties with respect to the subject matter contained herein and all
prior discussions, agreements, and promises, written or oral, are merged
herein. This Agreement may not be changed orally, but only by an agreement
in writing signed by the parties. Clearing Agent shall not be responsible or
liable for failure to perform any duties not specifically enumerated
herein.

 

30.5                           Captions. Captions herein are for
convenience only and are not of substantive effect.

 

30.6                           Choice of Law. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of New York,
without giving effect to the conflicts of laws or principles thereof. This
Agreement shall not be governed by the United Nations Convention on the
International Sale of Goods.

 

30.7                           Citations. Any reference to the rules or
regulations of the SEC, NASD, the NYSE, or any other regulatory or
self-regulatory organization are current citations. Any changes in the
citations (whether or not there are any changes in the text of such rules or
regulations) shall be automatically incorporated herein.

 

30.8                           Construction of Agreement. Neither this Agreement nor the
performance of the services hereunder shall be considered to create a joint
venture or partnership between Clearing Agent and Introducing Firm or between
Introducing Firm and other Introducing Firms for whom Clearing Agent may perform the
same or similar services.

 

33

 

30.9                        Third-Parties. This Agreement is between the
parties hereto and is not intended to confer any benefits on third-parties
including, but not limited to, customers of Introducing Firm.

 

30.10                     Non-Exclusivity of Remedies. The enumeration herein of specific
remedies shall not be exclusive of any other remedies. Any delay or failure by
a party to this Agreement to exercise any right, power, remedy, or privilege
herein contained, or now or hereafter existing under any applicable statute or
law, shall not be construed to be a waiver of such right, power, remedy, or
privilege. No single, partial, or other exercise of any such right, power,
remedy, or privilege shall preclude the further exercise thereof or the
exercise of any other right, power, remedy, or privilege.

 

30.11                     SIPA; Rule 15c3-3. All introduced customers are the
customers of Introducing Firm except as provided under SIPA and SEC financial
responsibility rules. Nothing in this Section will otherwise change or
affect the provisions of this Agreement which provide that the customer account
remains Introducing Firm’s customer account for all other purposes, including
but not limited to, supervision, suitability and indemnification.

 

30.12                     Force Majeure. Clearing Agent shall not be liable
for any loss caused, directly or indirectly, resulting from any circumstances
beyond its reasonable control, including without limitation, labor disputes,
riots, sabotage, insurrection, fires, flood, storm, explosions, earthquakes,
electrical power failures, telecommunications system failures, Internet
failure, outbreaks of computer viruses, worms, parasites and the like, acts of
God or nature, war, both declared or undeclared, or acts of terrorism. In
addition, Clearing Agent shall not be liable for any loss caused, directly or
indirectly, resulting from the acts or omissions of third parties over which it
has no control.

 

30.13                     Audio Taping of Telephone Conversations. Each party understands that for
quality control, dispute resolution or other business purposes, the parties may record
some or all telephone conversations between them. Each party hereby consents to
such recording. It is further understood that all such conversations are deemed
to be solely for business purposes.

 

31.                               APPROVAL

 

This Agreement
shall be subject to approval by the NYSE and by any other self-regulatory
organization vested with the authority to review or approve it. Clearing Agent
shall submit this Agreement to the NYSE and Introducing Firm shall submit this
Agreement to any self-regulatory organization from which Introducing Firm is
required to obtain approval. In the event of disapproval, the parties shall
bargain in good faith to achieve the requisite approval.

 

34

 

IN WITNESS
WHEREOF the parties have hereto affixed their signatures by their duly
authorized officers on the day and date first above written.

 

THIS
AGREEMENT CONTAINS A PRE-DISPUTE ARBITRATION CLAUSE, WHICH CAN BE FOUND ON PAGES [   ] AND [  
] IN SECTION 26 OF THIS AGREEMENT.

 

 

	
  COWEN AND COMPANY, LLC

  	
  SG AMERICAS SECURITIES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name: 

  	
   

  	
   

  	
  Name: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title: 

  	
   

  	
   

  	
  Title: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  

 

35

 

SCHEDULE A

 

Fees and Charges

 

36

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