Document:

Exhibit 10.3

 

FULLY DISCLOSED CLEARING AGREEMENT

OF

SG AMERICAS SECURITIES, LLC

 

THIS AGREEMENT is made and
entered into this 12th day of July, 2006 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.

 

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

 

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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.

 

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.

 

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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 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

 

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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 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.

 

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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.

 

6.3.3        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

 

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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 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.

 

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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 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

 

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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.

 

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.

 

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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.

 

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

 

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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 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

 

11

 

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.

 

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.

 

12

 

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 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

 

13

 

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 (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.

 

14

 

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.

 

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

 

15

 

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”).

 

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

 

16

 

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 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

 

17

 

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
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.

 

18

 

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.

 

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

 

19

 

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, 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.

 

20

 

	
  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 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,

 

21

 

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
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.

 

22

 

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.

 

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

 

23

 

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 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

 

24

 

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, 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

 

25

 

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
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.

 

26

 

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 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

 

27

 

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.

 

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:

 

28

 

	
   

  	
  If to Introducing Firm, to:

  
	
   

  	
   

  
	
   

  	
  Cowen and Company, LLC

  
	
   

  	
  1221 Avenue of the Americas

  
	
   

  	
  New York, New York 10020

  
	
   

  	
  Attn:  Albert Compitello

  
	
   

  	
  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:

 

(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.

 

29

 

(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 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.

 

30

 

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 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.

 

31

 

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 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

 

32

 

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.

 

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

 

33

 

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.

 

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 29 AND
30 IN SECTION 26 OF THIS AGREEMENT.

 

 

	
  COWEN AND
  COMPANY, LLC

  	
  SG AMERICAS
  SECURITIES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Christopher A. White

  	
   

  	
  By:

  	
  /s/ Walter
  Koller

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Christopher
  A. White

  	
   

  	
  Name:

  	
  Walter
  Koller

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Chief Administrative
  Officer

  	
   

  	
  Title:

  	
  Managing
  Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  July 12,
  2006

  	
   

  	
  Date:

  	
  July 12,
  2006

  	
   

  

 

34Exhibit 10.4

 

EXECUTION COPY

 

 

INDEMNIFICATION AGREEMENT

 

by and among

 

SOCIÉTÉ GÉNÉRALE,

 

SG AMERICAS SECURITIES HOLDINGS, INC.,

 

COWEN AND COMPANY, LLC

 

and

 

COWEN GROUP, INC.

 

 

Dated as of July 11, 2006

 

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE I

  	
  DEFINITIONS

  	
  1

  
	
   

  	
  SECTION
  1.01.

  	
  Definitions

  	
  1

  
	
   

  	
   

  
	
  ARTICLE II

  	
  MUTUAL
  RELEASES

  	
  13

  
	
   

  	
  SECTION
  2.01.

  	
  Cowen
  Release of SG

  	
  13

  
	
   

  	
  SECTION
  2.02.

  	
  SG Release
  of Cowen Inc

  	
  13

  
	
   

  	
  SECTION
  2.03.

  	
  SG
  Obligations Not Affected

  	
  14

  
	
   

  	
  SECTION
  2.04.

  	
  No Cowen
  Inc. Claims

  	
  14

  
	
   

  	
  SECTION 2.05.

  	
  No SG Claims

  	
  14

  
	
   

  	
  SECTION
  2.06.

  	
  Subsidiary
  Releases

  	
  14

  
	
   

  	
   

  
	
  ARTICLE III

  	
  INDEMNIFICATION

  	
  14

  
	
   

  	
  SECTION
  3.01.

  	
  Indemnification
  by Cowen Inc

  	
  14

  
	
   

  	
  SECTION
  3.02.

  	
  Indemnification
  by SG

  	
  15

  
	
   

  	
  SECTION
  3.03.

  	
  Clarification
  of Intent

  	
  16

  
	
   

  	
  SECTION
  3.04.

  	
  Indemnification
  Obligations Net of Insurance Proceeds and Other Amounts

  	
  17

  
	
   

  	
  SECTION
  3.05.

  	
  Procedures
  for Indemnification of Third Party Claims

  	
  17

  
	
   

  	
   

  
	
  ARTICLE IV

  	
  CERTAIN
  OTHER MATTERS

  	
  19

  
	
   

  	
  SECTION
  4.01.

  	
  Additional
  Matters

  	
  19

  
	
   

  	
  SECTION
  4.02.

  	
  Right of
  Contribution.

  	
  20

  
	
   

  	
  SECTION
  4.03.

  	
  Covenant Not
  to Sue

  	
  20

  
	
   

  	
  SECTION
  4.04.

  	
  Remedies
  Cumulative

  	
  21

  
	
   

  	
  SECTION
  4.05.

  	
  Inducement

  	
  21

  
	
   

  	
  SECTION
  4.06.

  	
  Post-Separation
  Date Conduct

  	
  21

  
	
   

  	
  SECTION
  4.07.

  	
  Late
  Payments

  	
  21

  
	
   

  	
   

  
	
  ARTICLE V

  	
  COOPERATION;
  CONFIDENTIALITY

  	
  21

  
	
   

  	
  SECTION
  5.01.

  	
  Other Agreements
  Providing for Exchange of Information

  	
  21

  
	
   

  	
  SECTION
  5.02.

  	
  Production
  of Witnesses; Records; Cooperation

  	
  21

  
	
   

  	
  SECTION
  5.03.

  	
  Confidentiality.

  	
  23

  
	
   

  	
  SECTION
  5.04.

  	
  Protective
  Arrangements

  	
  24

  
					

 

i

 

	
  ARTICLE VI

  	
  DISPUTE
  RESOLUTION

  	
  24

  
	
   

  	
  SECTION
  6.01.

  	
  Disputes

  	
  24

  
	
   

  	
   

  
	
  ARTICLE VII

  	
  TERMINATION

  	
  25

  
	
   

  	
  SECTION
  7.01.

  	
  Termination

  	
  25

  
	
   

  	
   

  
	
  ARTICLE VIII

  	
  MISCELLANEOUS

  	
  25

  
	
   

  	
  SECTION
  8.01.

  	
  Counterparts;
  Entire Agreement; Facsimile Signatures

  	
  25

  
	
   

  	
  SECTION
  8.02.

  	
  Governing
  Law

  	
  25

  
	
   

  	
  SECTION
  8.03.

  	
  Assignability

  	
  26

  
	
   

  	
  SECTION
  8.04.

  	
  Third Party
  Beneficiaries

  	
  26

  
	
   

  	
  SECTION
  8.05.

  	
  Notices

  	
  26

  
	
   

  	
  SECTION
  8.06.

  	
  Severability

  	
  27

  
	
   

  	
  SECTION
  8.07.

  	
  Force
  Majeure

  	
  27

  
	
   

  	
  SECTION
  8.08.

  	
  Headings

  	
  27

  
	
   

  	
  SECTION
  8.09.

  	
  Survival of
  Covenants

  	
  27

  
	
   

  	
  SECTION
  8.10.

  	
  Subsidiaries

  	
  28

  
	
   

  	
  SECTION
  8.11.

  	
  Waivers

  	
  28

  
	
   

  	
  SECTION
  8.12.

  	
  Amendments

  	
  28

  
	
   

  	
  SECTION
  8.13.

  	
  Interpretation

  	
  28

  
	
   

  	
  SECTION
  8.14.

  	
  Mutual
  Drafting

  	
  28

  
	
   

  	
  SECTION
  8.15.

  	
  No Right to
  Set-Off

  	
  29

  
	
   

  	
  SECTION
  8.16.

  	
  Enforcement
  Costs

  	
  29

  
	
   

  	
  SECTION
  8.17.

  	
  Remedies

  	
  29

  
					

 

ii

 

THIS
INDEMNIFICATION AGREEMENT, dated as of July 11, 2006,
is by and among SOCIÉTÉ GÉNÉRALE, a French banking corporation (“SocGen”),
SG AMERICAS SECURITIES HOLDINGS, INC., a Delaware corporation (“SGASH”
and, together with SocGen, “SG”), COWEN AND COMPANY, LLC, a Delaware
limited liability company (“Cowen LLC”) and COWEN GROUP, INC., a
Delaware corporation (“Cowen Inc.” and, together with Cowen LLC, “Cowen”).

 

R E C I T A L S:

 

WHEREAS,
SG and Cowen are parties to that certain Separation Agreement, dated as of the
date hereof, by and among SG, SGAI, and Cowen (the “Separation Agreement”);

 

WHEREAS,
SG and SGAI have determined that it is appropriate and advisable to separate
the Cowen Business from the SG Business (the “Separation”); and

 

WHEREAS,
each of the Parties has determined that it is necessary and advisable to enter
into this Agreement in connection with the Separation.

 

NOW, THEREFORE, in consideration of the mutual
agreements, provisions and covenants contained in this Agreement, the Parties
hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

SECTION 1.01.                 Definitions.
Reference is made to Section 8.13 regarding the interpretation of
certain words and phrases used in this Agreement. For the purpose of this
Agreement, the following terms shall have the meanings set forth below. Capitalized
terms used but not otherwise defined herein shall have the meaning given to
them in the Separation Agreement.

 

“AAA”
has the meaning set forth in Section 6.01(b).

 

“Agreement”
means this Indemnification Agreement.

 

“Assets”
means assets, rights, claims and properties of all kinds, real and personal,
tangible, intangible and contingent, including rights and benefits pursuant to
any contract, license, permit, indenture, note, bond, mortgage, agreement,
concession, franchise, instrument, undertaking, commitment, understanding or
other arrangement and any rights or benefits pursuant to any Proceeding.

 

“Business
Day” means any day other than (i) a Saturday or Sunday or (ii) a day on
which banks are required or authorized to close in New York, New York.

 

“Business
Entity” means any corporation, general or limited partnership, trust, joint
venture, unincorporated organization, limited liability entity or other entity.

 

 

“By-Laws”
means the amended and restated By-Laws of Cowen Inc., substantially in the form
of Exhibit A to the Separation Agreement.

 

“Certificate
of Incorporation” means the amended and restated Certificate of
Incorporation of Cowen Inc., substantially in the form of Exhibit B to
the Separation Agreement.

 

“Conveyance
and Assumption Instruments” means, collectively, such deeds, bills of sale,
Asset transfer agreements, endorsements, assignments, assumptions (including
Liability assumption agreements), leases, subleases, affidavits and other
instruments of sale, conveyance, contribution, distribution, lease, transfer
and assignment between SG or, where applicable, any SG Subsidiary, on the one
hand, and Cowen Inc. or, where applicable, any Cowen Subsidiary or designee of
Cowen Inc., on the other hand, as may be necessary or advisable under the laws
of the relevant jurisdictions to effect the Separation.

 

“Cowen”
has the meaning set forth in the Preamble.

 

“Cowen
Assets” means only the following Assets of the Parties or their respective
Subsidiaries, but excluding any Excluded Assets:

 

(A)  the outstanding membership
interests of Cowen LLC;

 

(B)  the outstanding capital
shares of Cowen UK;

 

(C)  the Assets included on the
Cowen Balance Sheet after completion of the transactions contemplated by the
Separation Agreement and the Transaction Documents or any notes or subledger
thereto that are owned by any Party or any of their respective Subsidiaries as
of the IPO Date;

 

(D)  the Assets of any Party or
any of their respective Subsidiaries as of the Separation Date that are of a
nature or type that would have resulted in such Assets being included as Assets
on a pro forma combined statement of financial condition of Cowen Inc. or the
notes or subledgers thereto as of the IPO Date (were such statement of
financial condition, notes and subledgers to be prepared) on a basis consistent
with the determination of the Assets included on the Cowen Balance Sheet or any
subledger thereto;

 

(E)  the Assets expressly
allocated to Cowen Inc. or any Cowen Subsidiary under the Separation Agreement
or any of the Principal Transaction Documents;

 

(F)  the Assets used or held by
Cowen Inc. or any Cowen Subsidiary for use in the Cowen Business and the rights
to the Cowen Business;

 

(G)  all right, title and
interest to the trade name, trademark and service mark “Cowen”, together with
the goodwill associated therewith;

 

(H)  the trade secrets, know-how,
proprietary information (including any clinical study data and product
registrations), any other rights or intellectual property and any other rights,
claims or properties, in each case:  (A)
as of the Separation Date; (B) to the

 

2

 

extent
primarily related to the Cowen Business; and (C) that are not otherwise
specifically addressed under any other subsection of this definition; and

 

(I)  the Assets identified on Schedule
2.02(a)(i) to the Separation Agreement.

 

“Cowen
Balance Sheet” means the audited combined statement of financial condition
of Cowen Inc., Cowen LLC and the other Cowen Subsidiaries, including the notes
thereto, as of December 31, 2005, included in the Prospectus.

 

“Cowen
Benefit Plans” means, collectively, the plans and arrangements set forth on
Schedule 1.01(a) to the Separation Agreement and any other benefit plans
maintained, sponsored or adopted by Cowen LLC, Cowen Inc. or the Cowen
Subsidiaries, whether before or after the Separation Date.

 

“Cowen
Business” means the businesses and operations conducted prior to the
Separation Date by Cowen LLC and the Transferred Entities, excluding the
Transferred Businesses.

 

“Cowen
Common Stock” means the outstanding shares of common stock, par value
$0.01, of Cowen Inc.

 

“Cowen
Contracts” means any contract, agreement or instrument (other than this
Agreement and any other Transaction Document) to which Cowen LLC, Cowen Inc. or
any Cowen Subsidiary is a party or by which any of their respective assets are
bound.

 

“Cowen
Employee Ownership Plan” means the 2006 Equity and Incentive Plan adopted
by Cowen Inc. as of the Separation Date, substantially in the form attached as Exhibit
C to the Separation Agreement.

 

“Cowen Inc.”
has the meaning set forth in the Preamble.

 

“Cowen
Indemnitees” means Cowen Inc. and each Cowen Subsidiary and each of their
respective successors and assigns.

 

“Cowen
Indemnity Obligations”  has the meaning set forth in Section
3.01.

 

“Cowen
Liabilities” means all of the following Liabilities of the Parties or their
respective Subsidiaries:

 

(i)                                     all
Liabilities included on the Cowen Balance Sheet or any subledger thereto that
remain outstanding as of the Separation Date after completion of the
transactions contemplated by this Agreement and the Transaction Documents;

 

(ii)                                  all
other Liabilities that are incurred or accrued by any Party or any of their
respective Subsidiaries from the date of the Cowen Balance Sheet to the
Separation Date that are of a nature or type that would have resulted in such
Liabilities being included as Liabilities on a pro forma combined statement of
financial condition of Cowen Inc. and the notes or subledgers thereto as of the
Separation Date (were such statement of financial condition, notes or
subledgers to be prepared) on a basis consistent with the

 

3

 

determination
of the Liabilities included on the Cowen Balance Sheet or any subledger
thereto;

 

(iii)                               all
Liabilities expressly allocated to Cowen Inc. or any Cowen Subsidiary pursuant
to this Agreement or any Transaction Document, and all agreements, obligations
and Liabilities of Cowen Inc. and any Cowen Subsidiaries under this Agreement
or any Transaction Document;

 

(iv)                              all
Liabilities relating to, arising out of or resulting from investment decisions
or the management of portfolio companies relating to SG Cowen Ventures (including all claims by limited partners
of SG Cowen Ventures and other Third Parties); provided, however,
that Liabilities relating to, arising out of or resulting from the
administration of SG Cowen Ventures, including the accuracy or correctness of
disbursements and the distribution of materials by or on behalf of the general
partner of SG Cowen Ventures to limited partners of SG Cowen Ventures shall be
deemed “SG Liabilities” as contemplated in Section 2.02(b) of the
Separation Agreement;

 

(v)                                 all
Liabilities relating to, arising out of or resulting from investment decisions
or the management of portfolio companies of or relating to the Merchant Banking
Fund on or after January 1, 2004 (including all claims by limited partners of
the Merchant Banking Fund and other Third Parties); provided, however,
that Liabilities relating to, arising out of or resulting from (w) the sale and
transfer of partnership interests in the Merchant Banking Fund to the MBF
Purchasers (except that any rights of SG or any SG Subsidiaries in respect of
the representations and warranties made to the MBF Purchasers in the sale and
transfer documents shall not be deemed to have been waived pursuant to this
clause (w)), (x) the administration of the Merchant Banking Fund, including the
accuracy or correctness of disbursements and the distribution of materials by
or on behalf of the Merchant Banking Fund to the partners of the Merchant
Banking Fund or participants in the Merchant Banking Co-investment Plan and (y)
any claim by former partners of the Merchant Banking Fund that do not relate to
investment decisions or management of the Merchant Banking Fund after January
1, 2004 shall be deemed “SG Liabilities” as contemplated in Section 2.02(b)
of the Separation Agreement;

 

(vi)                              all
Liabilities relating to, arising out of or resulting from any business or
operations conducted at any time prior to, on or after the IPO Date by the
employees of SG’s London Branch whose employment was primarily associated with
the Cowen Business (including but not limited to those employees who are
“Transferred Employees” as defined in the Cowen UK Purchase Agreement); provided,
however, that any such Liabilities relating to, arising out of or
resulting from claims pending as of the IPO Date shall be added to Schedule
1.01(b) and shall be deemed “SG Liabilities” as contemplated in Section
2.02(b) of the Separation Agreement;

 

(vii)                           all
Liabilities relating to, arising out of or resulting from any claim in respect
of any period prior to the IPO Date by an employee of Cowen Inc. or any Cowen
Subsidiary who does not execute an Executive Award Agreement and a release
satisfactory to SG and Cowen Inc.; provided, however, that the
foregoing shall exclude any such claim by any employee of Cowen Inc. or any
Cowen Subsidiary who did

 

4

 

execute an
Executive Award Agreement and release satisfactory to SG and Cowen Inc. and the
Parties acknowledge and agree that each of SG and the SG Subsidiaries, on the
one hand, and Cowen Inc. and the Cowen Subsidiaries, on the other, shall be
responsible for any Liabilities arising from claims against it (or its
Subsidiaries) in respect of any period prior to the IPO Date by an employee who
executed an Executive Award Agreement and release satisfactory to SG and Cowen
Inc;

 

(viii)                        all
Liabilities relating to, arising out of or resulting from the Cowen Benefit
Plans;

 

(ix)                                all
Liabilities relating to, arising out of or resulting from (1) Cowen Inc.’s
adoption of the Cowen Employee Ownership Plan, (2) Cowen Inc.’s adoption of any
directed share program, and (3) any employment agreements, retention
agreements, guaranteed bonuses, bonus plans or payments, deferred compensation
plans and any other agreements, arrangements or understandings between Cowen
LLC, Cowen Inc. or the Cowen Subsidiaries and their respective directors,
officers and employees; provided, however, that Liabilities
pertaining to deferred compensation plans (other than the SG-USA Fidelity Bonus
Plan) maintained by SG for any SG Subsidiary and Cowen LLC prior to the IPO
shall be deemed “SG Liabilities” as contemplated in Section 2.02(b) of
the Separation Agreement;

 

(x)                                   Cowen
Inc.’s portion, determined in accordance with Section 2.12 of the
Separation Agreement, of Liabilities associated with Mixed Contracts and Mixed
Accounts;

 

(xi)                                all
Liabilities relating to, arising out of or resulting from Cowen Inc.’s, Cowen
LLC’s or any of their respective Subsidiaries’ breach of or failure to perform
any Cowen Contract;

 

(xii)                             those
specific Liabilities set forth on Schedule 1.01(a) as of the Separation
Date (which schedule shall be updated from time to time as mutually agreed in
good faith by Cowen Inc. and SG up to the IPO Date), in each case subject to
the limitations set forth in such schedule; and

 

(xiii)                          except
to the extent expressly excluded from the Cowen Liabilities above, all other
known and unknown Liabilities relating to, arising out of or resulting from the
Cowen Business, the Cowen Assets, the other Cowen Liabilities or any business
or operations conducted by Cowen Inc., Cowen LLC or any of their respective
Subsidiaries, at any time prior to, on or after the Separation Date (whether or
not such Liabilities cease being contingent, mature, become known, are asserted
or foreseen, or accrue, in each case, before, on or after the Separation Date)
that are not expressly retained or assumed by SG or the SG Subsidiaries
pursuant to this Agreement or any Transaction Document.

 

Notwithstanding
anything to the contrary in this Agreement or any Transaction Document, Cowen
Liabilities shall in no event include any Liabilities (a) relating to, arising
out of or resulting from the Excluded Assets, (b) for which SG or any of its
Affiliates has responsibility pursuant to applicable provisions of any Service
Level

 

5

 

Agreements in
connection with the provision of services to Cowen Inc. or any Cowen Subsidiary
thereunder or (c) expressly allocated to or retained by SG or any SG Subsidiary
pursuant to clauses (i) through (v) or (ix) through (xiii)
of the definition of “SG Liabilities” herein.

 

“Cowen LLC”
has the meaning set forth in the Preamble.

 

“Cowen
Subsidiary” means any Subsidiary of Cowen LLC prior to the Separation
(including Cowen UK and any other Transferred Entities) and any Subsidiary of
Cowen Inc. following the Separation (including Cowen LLC and Cowen UK).

 

“Cowen UK”
means Cowen International Limited, a private limited company organized in
England and Wales.

 

“Cowen UK
Purchase Agreement” means the Intra-Group Asset Sale and Purchase
Agreement, dated as of May 1, 2006, by and between SG London Branch and Cowen
UK.

 

“Employee
Matters Agreement” means the Employee Matters Agreement entered into on or
prior to the Separation Date among SG, SGAI, SGASH, Cowen LLC and Cowen Inc.,
substantially in the form attached as Exhibit D to the Separation
Agreement.

 

“Employment
Tax” means withholding, payroll, social security, workers compensation,
unemployment, disability and any similar tax imposed by any Tax Authority, and
any interest, penalties, additions to tax or additional amounts with respect to
the foregoing imposed on any taxpayer or consolidated, combined or unitary
group of taxpayers.

 

“Escrow
Agent” means JPMorgan Chase Bank, N.A., or such other financial institution
as mutually agreed upon by the Parties, in its capacity as escrow agent under
the Escrow Agreement.

 

“Escrow
Agreement” means the Escrow Agreement entered into on or prior to the
Separation Date among SGASH, Cowen LLC, Cowen Inc. and the Escrow Agent.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended, together with
the rules and regulations promulgated thereunder.

 

“Excluded
Assets” means all of the following assets of the Parties or their
respective Subsidiaries:

 

(i)  all Assets of the Parties or
their respective Subsidiaries to the extent such Assets relate to, arise out of
or result from the SG Business;

 

(ii)  all cash and cash
equivalents as of the Separation Date of SG, each SG Subsidiary, Cowen LLC and
each Cowen Subsidiary, except (x) any cash and cash equivalents included in the
Initial Capital retained by Cowen LLC pursuant to Section 2.05(a) of the
Separation Agreement and (y) any cash or cash equivalents held for customers
pursuant to Rule 15c3-3 promulgated under the Exchange Act;

 

6

 

(iii)  subject to Section 2.13
of the Separation Agreement, all Assets that are expressly contemplated by the
Separation Agreement or any Principal Transaction Document to be Assets
retained by or transferred to SG or any SG Subsidiary; and

 

(iv)  all other Assets listed or
described on Schedule 1.01(c) to the Separation Agreement.

 

“Governmental
Authority” means any supranational, international, national, federal, state,
or local court, government, department, commission, board, bureau, agency,
official or other regulatory, self-regulatory, administrative or governmental
authority, including the NASD, the NYSE and any similar regulatory or
self-regulatory body under applicable securities laws or regulations.

 

“Greenwich
Capital Partners” means SG Cowen/Greenwich Street Capital Partners II,
L.P., a Delaware limited partnership.

 

“Indemnifying
Party” has the meaning set forth in Section 3.04.

 

“Indemnitee”
means any Cowen Indemnitee or any SG Indemnitee, as appropriate.

 

“Indemnity
Payment” has the meaning set forth in Section 3.04.

 

“Information”
means information, whether or not patentable or copyrightable, in written,
oral, electronic or other tangible or intangible forms, including studies,
reports, records, books, contracts, instruments, surveys, discoveries, ideas,
concepts, know-how, techniques, designs, specifications, drawings, blueprints,
diagrams, models, prototypes, samples, flow charts, data, computer data, disks,
diskettes, tapes, computer programs or other software, marketing plans,
customer names, communications by or to attorneys (including attorney-client
privileged communications), memos and other materials prepared by attorneys or
under their direction (including attorney work product), and other technical,
financial, employee or business information or data.

 

“Initial
Capital” has the meaning set forth in Section 2.05(a) of the
Separation Agreement.

 

“IPO”
means the initial public offering of shares of Cowen Common Stock pursuant to
the Registration Statement.

 

“IPO Date”
means the date of the closing of the IPO.

 

“Leases”
means the real property leases and subleases entered into by Cowen LLC or any
of the Cowen Subsidiaries prior to the date hereof, each of which is listed on Schedule
1.01(d) to the Separation Agreement.

 

“Liabilities”
means all debts, liabilities, obligations, responsibilities, response actions,
losses, damages (other than punitive, consequential, treble or other similar
damages, except to the extent that the same are paid to Third Parties), fines,
penalties and sanctions, absolute or contingent, matured or unmatured,
liquidated or unliquidated, foreseen or unforeseen, joint,

 

7

 

several or individual,
asserted or unasserted, accrued or unaccrued, known or unknown, whenever
arising, including those arising under or in connection with any law, statute,
ordinance, regulation, rule or other pronouncements of Governmental Authorities
having the effect of law, Proceeding, threatened Proceeding, order or consent
decree of any Governmental Authority or any award of any arbitration tribunal,
those arising under any contract, guarantee, commitment or undertaking, whether
sought to be imposed by a Governmental Authority, private party, or Party,
whether based in contract, tort, implied or express warranty, strict liability,
criminal or civil statute, or otherwise, and those, in respect of Cowen Inc. or
any Cowen Subsidiary and SG and any SG Subsidiary, pursuant to indemnification
or contribution arrangements with their respective directors, officers,
employees and agents, and including any costs, expenses, interest, attorneys’
fees, disbursements and expense of counsel, expert and consulting fees and
costs related thereto (including allocated costs of in-house counsel and other
personnel) or to the investigation, preparation or defense thereof.

 

“MBF
Purchasers” means the purchasers of the partnership interests in the
Merchant Banking Fund identified on Schedule 1.01(c).

 

“Merchant
Banking Fund” means SG Merchant Banking Fund L.P., a Delaware limited
partnership.

 

“Mixed
Accounts” means any accounts receivable or accounts payable relating to
both the SG Business and the Cowen.

 

“Mixed
Contract” means any agreement to which SG, Cowen Inc., Cowen LLC or any of
their respective Subsidiaries is a party prior to the Separation Date that
inures to the benefit or burden of each of the SG Business and the Cowen
Business.

 

“NASD”
means the National Association of Securities Dealers, Inc.

 

“NYSE”
means the New York Stock Exchange, Inc.

 

“Notice”
has the meaning set forth in Section 3.05(a).

 

“Parties”
means the parties to this Agreement.

 

“Person”
means any:  (i) individual; (ii)
Business Entity; or (iii) Governmental Authority.

 

“Prime Rate”
means the rate which SG (or its successor or another major money center
commercial bank agreed to by the Parties) announces as its prime lending rate,
as in effect from time to time.

 

“Principal
Transaction Documents” means:  (i)
the Separation Agreement, (ii) the Employee Matters Agreement; (iii) the Escrow
Agreement; (iv) the Stockholders Agreement; (v) the Tax Matters Agreement;
(vi) the Transition Services Agreement; and (vii) any and all Leases.

 

“Proceeding”
means:  (i) any past, present or future
suit, countersuit, action, arbitration, mediation, alternative dispute
resolution process, claim, counterclaim, demand, proceeding; (ii) any
inquiry, proceeding or investigation by or before any Governmental Authority;
or

 

8

 

(iii) any
arbitration or mediation tribunal, in each case involving SG, any SG
Subsidiary, any SG Indemnitee (but only if in a capacity entitling such Person
to the rights of an SG Indemnitee), Cowen LLC, Cowen Inc., any Cowen Subsidiary
or any Cowen Indemnitee (but only if in a capacity entitling such Person to the
rights of a Cowen Indemnitee).

 

“Prospectus”
means the prospectus forming a part of the Registration Statement as the same
may be amended or supplemented from time to time.

 

“Registration
Statement” means the registration statement on Form S-1 (File No.
333-132602) filed under the Exchange Act on March 21, 2006, pursuant to which
the Cowen Common Stock to be sold in the IPO has been registered, together with
all amendments and supplements thereto.

 

“SEC”
means the Securities and Exchange Commission.

 

“Separation”
has the meaning set forth in the Recitals.

 

“Separation
Agreement” has the meaning set forth in the Recitals.

 

“Service
Level Agreements” has the meaning set forth in the Transition Services
Agreement.

 

“SG”
has the meaning set forth in the Preamble.

 

“SGAI”
means SG Americas, Inc.

 

“SGASH”
has the meaning set forth in the Preamble.

 

“SG
Business” means all businesses and operations conducted prior to the
Separation Date by SG and any of the SG Subsidiaries, in each case that are not
included in the Cowen Business. For purposes of this Agreement and the other
Transaction Documents only, the SG Business shall also be deemed to include the
Transferred Businesses.

 

“SG
Contracts” means any contract, agreement or instrument (other than this
Agreement and any other Transaction Document) to which SG or any of the SG
Subsidiaries is a party or by which SG or any SG Subsidiaries, or any of their
respective assets, are bound.

 

“SG Cowen
Ventures” means SG Cowen Ventures I, L.P., a Delaware limited partnership.

 

“SG
Indemnitees” means SG and each SG Subsidiary and each of their respective
successors and assigns.

 

“SG
Indemnity Obligations” has the meaning set forth in Section 3.02.

 

“SG
Liabilities” means all of the following Liabilities of the Parties or their
respective Subsidiaries:

 

9

 

(i)   all Liabilities expressly
allocated to SG or any SG Subsidiaries pursuant to this Agreement or any
Transaction Document, and all agreements, obligations and Liabilities of SG and
any SG Subsidiaries under this Agreement or any Transaction Document;

 

(ii)   all Liabilities relating
to, arising out of or resulting from the administration of SG Cowen Ventures,
including the accuracy or correctness of disbursements and the distribution of
materials by or on behalf of the general partner of SG Cowen Ventures to
limited partners of SG Cowen Ventures; provided, however, that
Liabilities relating to, arising out of or resulting from investment decisions
or the management of portfolio companies relating to SG Cowen Ventures
(including all claims by limited partners of SG Cowen Ventures and other Third
Parties) shall be deemed “Cowen Liabilities” as contemplated by Section
2.02(a)(ii) of the Separation Agreement;

 

(iii)   all Liabilities relating
to, arising out of or resulting from (x) the administration of the Merchant
Banking Fund, including the accuracy or correctness of disbursements and the
distribution of materials by or on behalf of the Merchant Banking Fund to the
partners of the Merchant Banking Fund or participants in the Merchant Banking
Co-investment Plan and (y) investment decisions or the management of portfolio
companies of or relating to the Merchant Banking Fund prior to January 1, 2004;
provided, however, that Liabilities relating to, arising out of
or resulting from investment decisions or the management of portfolio companies
of or relating to the Merchant Banking Fund on or after January 1, 2004
(including all claims by limited partners of the Merchant Banking Fund and
other Third Parties) shall be deemed “Cowen Liabilities” as contemplated by Section
2.02(a)(ii) of the Separation Agreement;

 

(iv)  all Liabilities relating to,
arising out of or resulting from the sale and transfer of partnership interests
in the Merchant Banking Fund to the MBF Purchasers (except that any rights of
SG or any SG Subsidiaries in respect of the representations and warranties made
to the MBF Purchasers in the sale and transfer documents shall not be deemed to
have been waived hereby);

 

(v)   all Liabilities for
expenses payable by SG as provided in Section 9.08 of the Separation
Agreement;

 

(vi)   SG’s portion, determined
in accordance with Section 2.12 of the Separation Agreement, of
Liabilities associated with Mixed Contracts and Mixed Accounts;

 

(vii)   all Liabilities relating
to, arising out of or resulting from SG’s or any SG Subsidiary’s breach of or
failure to perform any SG Contract;

 

(viii)   except to the extent
expressly excluded from the SG Liabilities or included as Cowen Liabilities,
all Liabilities relating to, arising out of or resulting from any business
conducted by SG or any SG Subsidiary at any time prior to, on or after the Separation
Date;

 

(ix)   all Liabilities relating
to, arising out of or resulting from the Discontinued or Transferred Businesses
whether conducted prior to, on or after the Separation Date;

 

10

 

(x)   all Liabilities relating
to, arising out of or resulting from employee-related claims made by any
current or former employees of SG or any SG Subsidiary that are asserted by
such current or former employees against Cowen Inc. or any Cowen Subsidiaries
in respect of any period prior to the IPO Date;

 

(xi)   all Liabilities (other
than Cowen Liabilities) to the extent such Liabilities relate to, arise out of
or result from a claim by any Third Party, including any Governmental
Authority, against Cowen Inc. or any Cowen Subsidiaries that relate primarily
to the terms, amount or procurement of insurance with respect to the Cowen
Business prior to the Separation Date; provided, however, that
the term “SG Liabilities” shall not include and SG shall have no indemnity
obligation in respect of Liabilities relating to, arising out of or resulting
from a claim (including but not limited to a claim by a Third Party) under or
relating to the insurance policies listed on Schedule 4.01 to the Separation
Agreement;

 

(xii)   those specific contingent
Liabilities set forth on Schedule 1.01(b) as of the Separation Date
(which schedule shall be updated from time to time as mutually agreed in good
faith by Cowen Inc. and SG up to the IPO Date), in each case solely to the
extent that payment in respect of such Liabilities has not been made out of the
escrow therefor pursuant to Section 2.05(b) of the Separation Agreement;
provided, however, that, unless otherwise specifically identified
on Schedule 1.01(b), any suit, inquiry, proceeding or investigation
(including but not limited to any such suit, inquiry, proceeding or
investigation that relates to, arises out of or results from the litigation and
regulatory matters set forth on Schedule 1.01(b)) that is not known to
SG as of the IPO Date shall not be deemed an “SG Liability” for purposes of
this Agreement; and

 

(xiii)   all Liabilities relating
to, arising out of or resulting from the Excluded Assets.

 

“SG
Subsidiary” means any Subsidiary of SG other than Cowen LLC, Cowen Inc. and
any Cowen Subsidiary.

 

“SocGen”
has the meaning set forth in the Preamble.

 

“Stockholders
Agreement” means the Stockholders Agreement entered into as of the
Separation Date among Cowen Inc. and certain of its stockholders, including
SGASH, substantially in the form attached as Exhibit F to the Separation
Agreement.

 

“Subsidiary”
of any Person means another Business Entity that is directly or indirectly
controlled by such Person. As used herein, “control” means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Business Entity, whether through ownership of
voting securities or other interests, by contract or otherwise. For the
avoidance of doubt, Cowen Inc. and the Cowen Subsidiaries are not Subsidiaries
of SG as that term is used in this Agreement.

 

“Tax”
means:  (i) any income, net income, gross
income, gross receipts, profits, capital stock, franchise, property, ad
valorem, stamp, excise, severance, occupation, service, sales, use, license, lease,
transfer, import, export, customs duties, value added, alternative minimum,

 

11

 

estimated or
other similar tax (including any fee, assessment, or other charge in the nature
of or in lieu of any tax) imposed by any Tax Authority, and any interest,
penalties, additions to tax or additional amounts with respect to the foregoing
imposed on any taxpayer or consolidated, combined or unitary group of
taxpayers; and (ii) any Employment Tax.

 

“Tax
Authority” means, with respect to any Tax, the Governmental Authority or
political subdivision thereof that imposes such Tax, and the agency (if any)
charged with the collection of such Tax for such entity or subdivision.

 

“Tax
Matters Agreement” means the Tax Matters Agreement entered into on or prior
to the Separation Date among SGAI, SGASH, Cowen LLC and Cowen Inc.,
substantially in the form attached as Exhibit G to the Separation
Agreement.

 

“Third
Party” means any Person other than SG, any SG Subsidiary, Cowen Inc. and
any Cowen Subsidiary.

 

“Third
Party Claim” has the meaning set forth in Section 3.05(a).

 

“Transaction
Documents” means all written agreements, instruments, understandings,
assignments or other arrangements (other than this Agreement) entered into by
the Parties or any of their respective Subsidiaries in connection with the
Separation and the other transactions contemplated by this Agreement, including
the following:  (i) the Separation
Agreement, (ii) the Conveyance and Assumption Instruments; (iii) the Employee
Matters Agreement; (iv) the Escrow Agreement; (v) the Stockholders Agreement;
(vi) the Tax Matters Agreement; (vii) the Transition Services Agreement;
(viii) any and all Leases; and (ix) any other agreements which the Parties
determine are necessary or advisable in connection with the Separation and the
other transactions contemplated by this Agreement and the Transaction
Documents.

 

“Transferred
Businesses” means (i) the Private Client Group division sold by SG Cowen
Securities Corporation to Lehman Brothers Holdings Inc. in October 2000, (ii)
the bond brokerage business sold by SG Cowen Securities Corporation to Fimat
Futures, USA, Inc. in 2000, (iii) the correspondent clearing operations sold by
SG Cowen Securities Corporation to BNY Clearing Services LLC in January 2000
and (iv) the SG Cowen Asset Management Business.

 

“Transferred
Entities” means the entities set forth on Schedule 1.01(f) to the
Separation Agreement.

 

“Transition
Services Agreement” means the Transition Services Agreement entered into on
or prior to the Separation Date among SG, SGAI, SGASH, Cowen LLC and Cowen
Inc., substantially in the form attached as Exhibit H to the
Separation Agreement.

 

“U.S.”
or “United States” means the United States of America, including each of
the 50 states thereof, the District of Columbia and Puerto Rico, but excluding
all other territories and possessions.

 

12

 

ARTICLE II

MUTUAL RELEASES

 

SECTION 2.01.                 Cowen Release
of SG. Except as provided in Section 2.03 and in the provisos to
this Section 2.01, effective as of the Separation Date, Cowen Inc. does
hereby, for itself, each Cowen Subsidiary, and their respective successors and
assigns, relinquish, release and forever discharge: (1) SG, each SG Subsidiary,
and their respective successors and assigns; and (2) all Persons who at any
time are or have been shareholders, directors, officers, agents,
representatives, counsel or employees of SG or any SG Subsidiary (in each case,
in their respective capacities as such), and their respective heirs, executors,
administrators, successors and assigns (except where such Cowen Liability is
caused by or related to any willful misconduct or fraud attributable to any
such Person, or such Person’s violation of regulatory rules or regulations or
applicable law to which SG, Cowen Inc. or any of their respective Subsidiaries
is subject), in each such case from all Cowen Liabilities; provided, however,
that nothing in this Section 2.01 shall relieve the Persons released in
this Section 2.01 from:  (x) any
Liability expressly allocated to SG or any SG Subsidiary in this Agreement
(including the indemnification obligations in Section 3.02 and the
contribution obligations in Section 4.02), any Principal
Transaction Document or any other agreement, arrangement, commitment or
understanding to the extent expressly preserved pursuant to Section 2.09(b)
of the Separation Agreement; (y) any Liability the release of which would
result in the release of any Person other than the Persons released in this Section
2.01; or (z) any Liability incurred by SG or any SG Subsidiary pursuant to
the terms and conditions of the Service Level Agreements and relating to any
period prior to the IPO, and, provided  further, that nothing in
this Section 2.01 shall relieve any Person released in this Section
2.01 who, after the Separation Date, is a director, officer or employee of
Cowen Inc. or any of the Cowen Subsidiaries and is no longer a director,
officer or employee of SG or any of the SG Subsidiaries from Liabilities
arising out of, relating to or resulting from his or her service as a director,
officer or employee of Cowen Inc. or any of the Cowen Subsidiaries after the
Separation Date.

 

SECTION 2.02.                 SG Release of
Cowen Inc. Except as provided in Section 2.03 and in the
proviso to this Section 2.02, effective as of the Separation Date,
SG does hereby, for itself, each SG Subsidiary, and their respective successors
and assigns, relinquish, release and forever discharge: (1) Cowen Inc., Cowen
LLC and each Cowen Subsidiary and their respective successors and assigns; and
(2) all Persons, other than the Persons identified on Schedule 2.02, who
at any time are or have been shareholders, directors, officers, agents,
representatives, counsel or employees of Cowen Inc. or any Cowen Subsidiary (in
each case, in their respective capacities as such), and their respective heirs,
executors, administrators, successors and assigns (except where such SG
Liability is caused by or related to any willful misconduct or fraud
attributable to any such Person, or such Person’s violation of regulatory rules
or regulations or applicable law to which SG, Cowen Inc. or any of their
respective Subsidiaries is subject), in each such case from all SG Liabilities;
provided, however, that nothing in this Section 2.02
shall relieve the Persons released in this Section 2.02 from:  (x) any Liability expressly allocated to
Cowen Inc. or any Cowen Subsidiary in this Agreement (including the
indemnification obligations in Section 3.01 and the contribution
obligations in Section 4.02), any Principal Transaction Document or any
other agreement, arrangement, commitment or understanding to the extent
expressly preserved pursuant to Section 2.09(b) of the Separation
Agreement; (y) any

 

13

 

Liability the
release of which would result in the release of any Person other than the
Persons released in this Section 2.02 or (z) any Liability incurred
by Cowen or any Cowen Subsidiary pursuant to the terms and conditions of the
Service Level Agreements and relating to any period prior to the IPO.

 

SECTION 2.03.                 SG Obligations
Not Affected. Nothing contained in this Article II shall release SG
or any SG Subsidiary from honoring existing obligations, if any:  (i) to indemnify any director, officer or
employee of Cowen Inc. or any of its Subsidiaries who was a director, officer
or employee of SG or any SG Subsidiary on or prior to the Separation Date, to
the extent such director, officer or employee was entitled to such
indemnification pursuant to then existing obligations; or (ii) to provide any
employment, post-employment or retirement benefits to any director, officer or
employee of Cowen Inc. or any of its Subsidiaries who was a director, officer
or employee of SG or any SG Subsidiary on or prior to the Separation Date, to
the extent such director, officer or employee was entitled to such benefits
pursuant to then existing obligations, except as otherwise provided in the
Employee Matters Agreement.

 

SECTION 2.04.                 No Cowen Inc.
Claims. Cowen Inc. shall not make, and shall not permit any Cowen
Subsidiary to make, any claim or demand, or commence any Proceeding asserting
any claim or demand, including any claim of contribution or indemnification,
against SG or any SG Subsidiary or any other Person released pursuant to Section
2.01, with respect to any Liabilities released pursuant to Section 2.01.

 

SECTION 2.05.                 No SG Claims.
SG shall not make, and shall not permit any SG Subsidiary to make, any claim or
demand, or commence any Proceeding asserting any claim or demand, including any
claim of contribution or indemnification, against Cowen Inc. or any Cowen
Subsidiary or any other Person released pursuant to Section 2.02,
with respect to any Liabilities released pursuant to Section 2.02.

 

SECTION 2.06.                 Subsidiary
Releases. At any time, at the request of any Party, the other Party shall
cause its Subsidiaries to execute and deliver releases reflecting the
provisions hereof.

 

ARTICLE III

INDEMNIFICATION

 

SECTION 3.01.                 Indemnification
by Cowen Inc. Except as otherwise specifically set forth in any provision
of this Agreement (including but not limited to the penultimate paragraph of
this Section 3.01) or of any Principal Transaction Document, effective
as of the Separation Date, Cowen Inc. shall, to the fullest extent permitted by
law, indemnify, defend and hold harmless each of the SG Indemnitees from and
against all Liabilities to the extent such Liabilities relate to, arise out of
or result from any of the following items (collectively, the “Cowen
Indemnity Obligations”):

 

(a)                          any
failure of Cowen Inc. or any Cowen Subsidiary to pay, perform or otherwise
promptly discharge any Cowen Liabilities in accordance with their terms and the

 

14

 

terms of this
Agreement and any Transaction Document, whether prior to, on or after the
Separation Date;

 

(b)                         any
breach by Cowen Inc. or any Cowen Subsidiary of this Agreement or any of the
Transaction Documents (including any Liabilities relating to, arising out of or
resulting from such breach and payable pursuant to Section 8.16 of this
Agreement but excluding any Liabilities relating to, arising out of or
resulting from a breach of the representation and warranty in Section
2.01(f)(i) of the Separation Agreement), or any action by Cowen Inc. or any
Cowen Subsidiary in contravention of the Certificate of Incorporation or
By-Laws; and

 

(c)                          any
untrue statement or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, with respect to all information contained
in the Registration Statement, the Prospectus or any other document filed with
the SEC by Cowen Inc. in connection with the IPO pursuant to the Securities Act
or the Exchange Act (excluding the sections titled “Use of Proceeds”, “Certain
Relationships and Related Transactions”, “Business—Regulation” and
“Business—Legal Proceedings”, the Selling Stockholder Information in the
section titled “Principal and Selling Stockholders”, the combined statements of
financial condition and all other information which specifically relates to SG,
SGASH or any other SG Subsidiary or any of their respective employees which has
been furnished in writing by or on behalf of SGASH expressly for use therein).

 

Notwithstanding
the foregoing provisions of this Section 3.01, the indemnity in this Section 3.01
for Cowen Indemnity Obligations shall not extend to a SG Indemnitee to the
extent such Person is a natural person and was (a) engaged in willful
misconduct, (b) engaged in fraud or (c) in violation of regulatory rules or
regulations or applicable law to which SG, Cowen Inc. or any of their
respective Subsidiaries is subject, in each such case in connection with the
Cowen Indemnity Obligations for which indemnification is sought.

 

Any
indemnification by Cowen Inc. of the SG Indemnitees in respect of Liabilities
for Taxes shall be as set forth in the Tax Matters Agreement.

 

SECTION 3.02.                 Indemnification
by SG. Except as otherwise specifically set forth in any provision of this
Agreement (including but not limited to the penultimate paragraph of this Section
3.02) or of any Principal Transaction Document, effective as of the
Separation Date, SG shall, to the fullest extent permitted by law, indemnify,
defend and hold harmless each of the Cowen Indemnitees from and against all
Liabilities to the extent such Liabilities relate to, arise out of or result
from any of the following items (collectively, the “SG Indemnity Obligations”):

 

(a)                          all
Liabilities (other than Cowen Liabilities) to the extent such Liabilities
relate to, arise out of or result from any failure of SG or any SG Subsidiary
to pay, perform or otherwise promptly discharge any SG Liabilities in
accordance with their terms and the terms of this Agreement and any Transaction
Documents, whether prior to, on or after the Separation Date; and

 

15

 

(b)                         all
Liabilities (other than Cowen Liabilities) to the extent such Liabilities
relate to, arise out of or result from any breach by SG or any SG Subsidiary of
this Agreement or any of the Transaction Documents (including any Liabilities
relating to, arising out of or resulting from such breach and payable pursuant
to Section 8.16 of this Agreement but excluding any Liabilities relating
to, arising out of or resulting from a breach of the representation and
warranty in Section 2.01(f)(ii) of the Separation Agreement) ; and

 

(c)                          all
Liabilities (other than Cowen Liabilities) to the extent such Liabilities
relate to, arise out of or result from any untrue statement or alleged untrue
statement of a material fact made in the Registration Statement or the
Prospectus, or any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, in
each case to the extent, and only to the extent, that such untrue statement or
omission or alleged untrue statement or omission was contained in or omitted
from (i) the section of the Prospectus titled “Use of Proceeds”, (ii)
information relating solely to SG Americas Securities Holdings, Inc. (and not
to Cowen Inc., any of Cowen Inc.’s officers, directors or senior employees or
the beneficial ownership of Cowen Inc. following the IPO) in the section of the
Prospectus titled “Principal and Selling Stockholders” (the “Selling
Stockholder Information”), and (iii) information relating solely to Messrs.
Kaplan and Ogier in the sections of the Prospectus titled “Management—Directors
and Executive Officers”, “—Executive Compensation”, “—Option Exercises Table”
and “—Security Ownership of Management and Directors.

 

Notwithstanding
the foregoing provisions of this Section 3.01, the indemnity in this Section 3.02
for SG Indemnity Obligations shall not extend to a Cowen Indemnitee to the
extent such Person is a natural person and was (a) engaged in willful
misconduct, (b) engaged in fraud or (c) in violation of regulatory rules or
regulations or applicable law to which SG, Cowen Inc. or any of their
respective Subsidiaries is subject, in each such case in connection with the SG
Indemnity Obligations for which indemnification is sought.

 

Any
indemnification by SG of the Cowen Indemnitees in respect of Liabilities for
Taxes shall be as set forth in the Tax Matters Agreement.

 

SECTION 3.03.                 Clarification
of Intent.

 

(a)                                  The
provisions of Sections 3.01(c), 3.02(c) and 3.03(b) are
solely intended to allocate responsibility for any statements and omissions in
the Registration Statement and the Prospectus between SG and the SG
Subsidiaries, on the one hand, and Cowen Inc., Cowen LLC and the other Cowen
Subsidiaries, on the other hand, as agreed by the Parties. Nothing in Section
3.01(c), 3.02(c) or 3.03(b) shall operate to modify the other
provisions of this Agreement or the Principal Transaction Documents, including
the Parties’ allocation of Cowen Assets, Cowen Liabilities and SG Liabilities
hereunder and thereunder.

 

(b)                                 For
the avoidance of doubt, (i) neither SG nor Cowen Inc. shall indemnify, defend
or hold harmless the Cowen Indemnitees or SG Indemnitees, as the case may be,
in respect of the section of the Prospectus titled “Certain Relationships and
Related Transactions” or in respect of the combined statements of financial
condition contained in the Registration

 

16

 

Statement, the
Prospectus or any other document filed with the SEC by Cowen Inc. in connection
with the IPO pursuant to the Securities Act or the Exchange Act and (ii) other
than in respect of the Selling Stockholder Information as required by Section
3.02(c), SG shall not indemnify, defend or hold harmless the Cowen
Indemnitees for any portion of the Registration Statement, the Prospectus or
any other document filed with the SEC by Cowen Inc. in connection with the IPO
pursuant to the Securities Act or the Exchange Act.

 

SECTION 3.04.                 Indemnification
Obligations Net of Insurance Proceeds and Other Amounts. The Parties intend
that any Liability subject to indemnification or contribution pursuant to this
Agreement or any Transaction Document: 
(i) shall be reduced by any Insurance Proceeds or other amounts
recovered (net of any out-of-pocket costs or expenses incurred in the
collection thereof) from any Person by or on behalf of the Indemnitee in
respect of any indemnifiable Liability; (ii) shall not be increased to take into
account any Tax costs incurred by the Indemnitee arising from any Indemnity
Payments received from the Indemnifying Party (as defined below); and
(iii) shall not be reduced to take into account any Tax benefit received
by the Indemnitee arising from the incurrence or payment of any Indemnity
Payment. Accordingly, the amount which any Party against whom a claim is made
for indemnification under this Agreement (an “Indemnifying Party”) is
required to pay to any Indemnitee shall be reduced by any Insurance Proceeds or
any other amounts theretofore recovered (net of any out-of-pocket costs or
expenses incurred in the collection thereof) by or on behalf of the Indemnitee
in respect of the related Liability. If an Indemnitee receives a payment (an “Indemnity
Payment”) required by this Agreement from an Indemnifying Party in respect
of any Liability and subsequently receives Insurance Proceeds or any other
amounts in respect of the related Liability, then the Indemnitee shall pay to
the Indemnifying Party an amount equal to the excess of the Indemnity Payment
received over the amount of the Indemnity Payment that would have been due if
the Insurance Proceeds or such other amounts (net of any out-of-pocket costs or
expenses incurred in the collection thereof) had been received, realized or
recovered before the Indemnity Payment was made.

 

SECTION 3.05.                 Procedures for
Indemnification of Third Party Claims.

 

(a)                                  Notice
of Claims. If, at or following the date hereof, an Indemnitee receives
notice or otherwise learns of the assertion or commencement by a Third Party of
any Proceeding against the Indemnitee with respect to which the Indemnitee
believes that Cowen Inc. (in the case of an SG Indemnitee) or SG (in the case
of a Cowen Indemnitee) is obligated to provide indemnification to such
Indemnitee pursuant to this Agreement or any Transaction Document
(collectively, a “Third Party Claim”), such Indemnitee shall give such
Indemnifying Party written notice thereof (the “Notice”) within 20 days
after becoming aware of such Third Party Claim. The Notice must describe the
Third Party Claim in reasonable detail. Notwithstanding the foregoing, the
failure of any Indemnitee to give the Notice as provided in this subsection (a)
shall not relieve the related Indemnifying Party of its obligations under this Article
III, except to the extent that such Indemnifying Party is actually
materially prejudiced by such failure to give the Notice.

 

(b)                                 Control
of Defense. The Indemnifying Party shall have the right to conduct and
control the defense of any Third Party Claim; provided, however,
that:  (i) a Cowen Indemnitee may
conduct and control the defense of any Third Party Claim in which no SG

 

17

 

Indemnitee is
a named party and a Cowen Indemnitee is a named party unless and until Cowen
Inc. asserts that such Third Party Claim reasonably may involve SG Indemnity
Obligations; (ii) in connection with any Third Party Claim with respect to
which an SG Indemnitee is seeking indemnification under this Agreement, if
within 20 days after receipt of the Notice Cowen Inc. irrevocably acknowledges
and agrees in writing with SG and any SG Indemnitee that all Liabilities
relating to, arising out of or resulting from the Third Party Claim are and
shall remain solely Cowen Liabilities, then Cowen Inc. shall thereafter have
the right to conduct and control the defense of such Third Party Claim at Cowen
Inc.’s sole cost and expense; and (iii) in connection with any Third Party
Claim with respect to which a Cowen Indemnitee is seeking indemnification under
this Agreement, if within 20 days after receipt of the Notice SG irrevocably
acknowledges and agrees with Cowen Inc. and any Cowen Indemnitee that all
Liabilities relating to, arising out of or resulting from such Third Party
Claim are and shall remain solely SG Liabilities, then SG shall thereafter have
the right to conduct and control the defense of such Third Party Claim at SG’s
sole cost and expense. If the Party otherwise entitled to conduct and control
the defense of any Third Party Claim hereunder nevertheless fails to assume the
defense of such Third Party Claim within 20 days, then the Indemnitee that is
the subject of such Third Party Claim shall be entitled to conduct and control
the defense of such Third Party Claim.

 

(c)                                  Allocation
of Defense Costs. Except as otherwise provided herein, the costs and
expenses of the defense of any Third Party Claim shall be borne by the
Indemnifying Party.

 

(d)                                 Right
to Monitor and Participate. An Indemnitee or Indemnifying Party that is not
entitled to conduct and control the defense of any Third Party Claim
nevertheless shall have the right to employ separate counsel of its own
choosing to monitor and participate in the defense of any Third Party Claim for
which it is a potential Indemnitee or Indemnifying Party, but the fees and
expenses of such counsel shall be at the expense of such Indemnitee or
Indemnifying Party, as the case may be, and shall not be subject to subsection
(c) above; provided, however, that if there is a conflict of
interest between Cowen or any Cowen Subsidiary, on the one hand, and SG or any
SG Subsidiary, on the other hand, then the Indemnitee shall be entitled to
employ separate counsel of its own choosing and at the reasonable expense of
the Indemnifying Party.

 

(e)                                  No
Settlement. No Party may settle or compromise any Third Party Claim for
which it is seeking to be indemnified hereunder without the prior written
consent of the Party from which such indemnification is sought, which consent
may not be unreasonably delayed or withheld. No Indemnifying Party may settle
or compromise any Third Party Claim without the prior written consent of the
Indemnitee, except where such settlement or compromise (i) is solely for
monetary damages as to which the Indemnitee is fully indemnified, (ii) includes
an unconditional release of the Indemnitee and (iii) does not include any
admission of wrongdoing by the Indemnitee.

 

(f)                                    Pending
Third Party Claims. The provisions of this Article III shall apply
to Third Party Claims that are already pending or asserted, including those set
forth on Schedules 1.01(a) and 1.01(b), as well as Third Party
Claims brought or asserted after the date hereof. There shall be no requirement
to give a Notice with respect to pending Third Party Claims as such claims
exist as of the Separation Date.

 

18

 

(g)                                 Cross-Claims.
Except as set forth in Section 4.01(a), neither SG nor Cowen Inc. shall,
nor shall they permit their respective Subsidiaries to, file claims or
cross-claims against each other or each other’s Subsidiaries in a Proceeding in
which a Third Party Claim is being resolved.

 

ARTICLE IV

CERTAIN OTHER MATTERS

 

SECTION 4.01.                 Additional
Matters.

 

(a)                                  Notice
of Claims. Any claim for indemnity under this Agreement or any Transaction
Document which does not result from a Third Party Claim must be asserted by
written notice given by the Indemnitee to the applicable Indemnifying Party; provided,
that the failure by an Indemnitee to so assert any such claim shall not
prejudice the ability of the Indemnitee to do so at a later time except to the
extent (if any) that the Indemnifying Party would be materially prejudiced
thereby. Such Indemnifying Party shall have a period of 30 days after the receipt
of such notice within which to respond thereto. If such Indemnifying Party does
not respond within such 30-day period, such Indemnifying Party shall be deemed
to have accepted responsibility to make payment. If such Indemnifying Party
does not respond within such 30-day period or rejects such claim in whole or in
part, such Indemnitee shall be free to pursue such remedies as may be available
to such Party as contemplated by this Agreement and the Principal Transaction
Documents, as applicable, including, without limitation, filing third party
claims or cross-claims against such Indemnifying Party in the relevant
Proceeding.

 

(b)                                 Subrogation.
In the event of payment by or on behalf of an Indemnifying Party to an
Indemnitee in connection with any Third Party Claim, such Indemnifying Party
shall be subrogated to and shall stand in the place of such Indemnitee as to
any events or circumstances in respect of which such Indemnitee may have any
right, defense or claim relating to such Third Party Claim against any claimant
or plaintiff asserting such Third Party Claim or against any other Person. Such
Indemnitee shall cooperate with the Indemnifying Party in a reasonable manner,
and at the cost and expense of such Indemnifying Party, in prosecuting any
subrogated right, defense or claim.

 

(c)                                  Pursuit
of Claims Against Third Parties. If (i) a Party incurs any Liability
arising out of any Principal Transaction Document; (ii) an adequate legal or
equitable remedy is not available for any reason against the other Party to
satisfy the Liability incurred by the incurring Party; and (iii) a legal or
equitable remedy may be available to the other Party against a Third Party for
such Liability, then the other Party will use commercially reasonable efforts
to cooperate with the incurring Party, at the incurring Party’s expense, to
permit the incurring Party to obtain the benefits of such legal or equitable
remedy against the Third Party.

 

(d)                                 Currency
Conversion. In the event that any indemnification payment required to be made
hereunder or under any Transaction Document may be denominated in a currency
other than U.S. Dollars, the amount of such payment shall be converted into
U.S. Dollars using the foreign exchange rate for such currency published by the
Federal Reserve Bank of New York at or about 12 noon (New York time) on the day
on which the Indemnified Party

 

19

 

made payment
to a Third Party with respect to the indemnifiable Liability (or, if such day
is not a Business Day, on the Business Day immediately preceding such day).

 

SECTION 4.02.                 Right of
Contribution.

 

(a)                                  Contribution
by Cowen Inc. If any right of indemnification contained in Section 3.01
is held unenforceable or is unavailable for any reason, then Cowen Inc., in
lieu of indemnifying the SG Indemnitees, shall contribute to the amounts paid
or payable by the SG Indemnitees in such proportion as is appropriate to
reflect the relative fault of Cowen Inc. and the Cowen Subsidiaries, on the one
hand, and the SG Indemnitees entitled to contribution, on the other hand.

 

(b)                                 Contribution
by SG. If any right of indemnification contained in Section 3.02
is held unenforceable or is unavailable for any reason, then SG, in lieu of
indemnifying the Cowen Indemnitees, shall contribute to the amounts paid or
payable by the Cowen Indemnitees in such proportion as is appropriate to
reflect the relative fault of SG and the SG Subsidiaries, on the one hand, and
the Cowen Indemnitees entitled to contribution, on the other hand.

 

(c)                                  Allocation
of Relative Fault. Solely for purposes of determining relative fault
pursuant to this Section 4.02: 
(i) any fault associated with the ownership, operation or activities of
the Cowen Business (other than SG Liabilities) prior to the Separation Date or
in respect of the Cowen Liabilities shall be deemed to be the fault of Cowen
Inc. and the Cowen Subsidiaries and no such fault shall be deemed to be the
fault of SG or the SG Subsidiaries; and (ii) any fault associated with the
ownership, operation or activities of the SG Business (other than Cowen
Liabilities) prior to the Separation Date or in respect of the SG Liabilities
shall be deemed to be the fault of SG and the SG Subsidiaries and no such fault
shall be deemed to be the fault of Cowen Inc. or the Cowen Subsidiaries, provided,
however, that if the foregoing allocation provided by clauses (i) and
(ii) above is not permitted by applicable law, then, in each case, such
allocation shall be adjusted as is appropriate to reflect not only the fault referred
to in clauses (i) and (ii) above, but also the relative benefits in connection
therewith as well as any other relevant equitable considerations.

 

(d)                                 Contribution
Procedures. The provisions of Sections 3.03 and 3.04 and
Sections 4.01 through 4.06 shall govern any contribution
claims.

 

SECTION 4.03.                 Covenant Not
to Sue. Each Party hereby covenants and agrees that none of it, any of its
Subsidiaries or any Person claiming through it shall bring suit or otherwise
assert any claim against any Indemnitee, or assert a defense against any claim
asserted by any Indemnitee, before any court, arbitrator, mediator or
administrative agency anywhere in the world, alleging that:  (a) the assumption or retention of any Cowen Liabilities
or SG Liabilities pursuant to the Separation is void or unenforceable for any
reason; or (b) the provisions of this Agreement are void or unenforceable for
any reason. The covenant in this Section 4.03 shall run with title to
the applicable SG Assets, Cowen Assets, SG Liabilities and Cowen Liabilities,
and shall bind any transferee, assignee or other Person to whom an interest in
the applicable Assets or Liabilities may be transferred or assigned.

 

20

 

SECTION 4.04.                 Remedies
Cumulative. The remedies provided in this Agreement shall be cumulative
and, subject to the provisions of Sections 3.04(g) and 6.01,
shall not preclude assertion by any Indemnitee of any other rights or the
seeking of all other remedies against any Indemnifying Party.

 

SECTION 4.05.                 Inducement.
The Parties acknowledge and agree that each Party’s willingness to cause,
effect and consummate the Separation has been conditioned upon and induced by
the Parties’ covenants and agreements in this Agreement and the Transaction Documents,
including the Parties’ assumption and/or retention of specified Liabilities
pursuant to the Separation and the provisions of the Transaction Documents and
the Parties’ covenants and agreements contained in this Agreement.

 

SECTION 4.06.                 Post-Separation
Date Conduct. The Parties acknowledge that, after the Separation Date, each
Party will be independent of the other Party, with responsibility for its own
actions and inactions and its own Liabilities relating to, arising out of or
resulting from the conduct of its business following the Separation Date,
except as may otherwise be provided in any Principal Transaction Document, and
each Party shall (except as otherwise provided in this Agreement, including Sections 3.01
and 3.02) use reasonable best efforts to prevent such Liabilities from
being borne inappropriately by the other Party.

 

SECTION 4.07.                 Late Payments.
Except as provided in any Transaction Document, any amount not paid when due
pursuant to this Agreement or any Transaction Document (and any amounts billed
or otherwise invoiced or demanded and properly payable that are not paid within
30 days of the date of such bill, invoice or other demand) shall accrue
interest at a rate per annum equal to the Prime Rate plus 2%.

 

ARTICLE V

COOPERATION; CONFIDENTIALITY

 

SECTION 5.01.                 Other
Agreements Providing for Exchange of Information. The rights and
obligations granted under this Article V are subject to any specific
limitations, qualifications or additional provisions on the sharing, exchange,
retention or confidential treatment of Information set forth in the Separation
Agreement or any other Principal Transaction Documents.

 

SECTION 5.02.                 Production of
Witnesses; Records; Cooperation.

 

(a)                                  Availability
of Witnesses and Information Generally. After the Separation Date, except
in the case of an adversarial Proceeding by one Party or any of its
Subsidiaries, officers, directors or employees against another Party or any of
its Subsidiaries, officers, directors or employees, each Party shall use commercially
reasonable efforts to make available to the other Parties, upon written
request, the former, current and future directors, officers, employees, other
personnel and agents of such Party or its Subsidiaries as witnesses and any
books, records or other documents within its control or which it otherwise has
the ability to make available, to the extent that any such Person (giving
consideration to business and personal demands of such directors, officers,
employees, other personnel and agents) or books, records or

 

21

 

other
documents may reasonably be required in connection with any Proceeding
(including the creation or establishment of due diligence defenses) in which
the requesting Party may from time to time be involved, regardless of whether
such Proceeding is a matter with respect to which indemnification may be sought
hereunder. The requesting Party shall bear all reasonable out of pocket costs
and expenses incurred by the other Parties in connection with their compliance
with such request.

 

(b)                                 Availability
of Witnesses and Information to Indemnifying Party. If an Indemnifying
Party chooses to defend or to seek to compromise or settle any Third Party
Claim, the other Party shall use commercially reasonable efforts to make
available to such Indemnifying Party, upon written request, the former, current
and future directors, officers, employees, other personnel and agents of such
Party or its Subsidiaries as witnesses and any books, records or other information
within its control or which it otherwise has the ability to make available, to
the extent that any such Person (giving consideration to business demands of
such directors, officers, employees, other personnel and agents) or books,
records or other information may reasonably be required in connection with such
defense, settlement or compromise, or the prosecution, evaluation or pursuit
thereof, as the case may be, and shall otherwise cooperate in such defense,
settlement or compromise, or such prosecution, evaluation or pursuit, as the
case may be; provided, however, that such other Party, subject to
Section 5.02(f), shall not be obligated to produce any books, records or
other information if such other Party reasonably believes, after consultation
with its counsel, that the production of such books, records or other
information would cause the forfeiture of an attorney-client privilege that is
applicable to such books, records or other information and entering into a
joint defense agreement as contemplated by Section 5.02(f) is not
practicable or appropriate.

 

(c)                                  Cooperation
Generally. Without limiting any provision of this Section 5.02, the
Parties shall cooperate and consult, and shall cause each of their respective
Subsidiaries, officers, employees and agents to cooperate and consult to the
extent necessary or advisable with respect to any Proceedings (other than a
Proceeding by one Party or any of its Subsidiaries against the other Party or
any of its Subsidiaries).

 

(d)                                 Infringement
Claims. Each Party acknowledges, on its own behalf and on behalf of its
Subsidiaries, that it has no basis to believe that the business or any act,
product, technology or service (including products, technology or services
currently under development) of the other Party infringes, dilutes or
misappropriates any intellectual property of a Third Party or constitutes
unfair competition or trade practices under the laws of any jurisdiction. Without
limiting any provision of this Section 5.02, each of the Parties agrees
to cooperate, and to cause each of its respective Subsidiaries to cooperate,
with each other in the defense of any infringement or similar claim by a Third
Party with respect to any intellectual property and shall not claim to
acknowledge, or permit any of its respective Subsidiaries to claim to
acknowledge, the validity, enforceability or infringing use of any intellectual
property of a Third Party in a manner that would hamper or undermine the
defense by the other Party or its Subsidiaries of such infringement or similar
claim.

 

(e)                                  Business
Conflicts to be Disregarded. The obligation of the Parties to provide
witnesses pursuant to this Section 5.02 is intended to be interpreted in
a manner so as to facilitate cooperation and shall include the obligation to
provide as witnesses those officers and employees

 

22

 

designated by
the Party seeking such witness, without regard to whether the witness or the
employer of the witness could assert a possible business conflict (subject to
the exception set forth in the first sentence of Section 5.02(a)).

 

(f)                                    Joint
Defense Agreement. In connection with any matter contemplated by this Section
5.02, the Parties will negotiate in good faith to enter into a mutually
acceptable joint defense agreement where appropriate so as to maintain to the
extent practicable any applicable attorney-client privilege, work product
immunity or other applicable privileges or immunities of each of the Parties
and their respective Subsidiaries.

 

SECTION 5.03.                 Confidentiality.

 

(a)                                  Confidentiality.
Subject to Section 5.04, SG, on behalf of itself and each SG Subsidiary,
and Cowen Inc., on behalf of itself and each Cowen Subsidiary, agrees to hold,
and to cause its respective directors, officers, employees, agents,
accountants, counsel and other advisors and representatives to hold, in strict
confidence, with at least the same degree of care that applies to SG’s
confidential and proprietary information pursuant to policies in effect as of
the Separation Date, all Information concerning the other (or its business) and
the other’s Subsidiaries (or their respective businesses) that is either in its
possession (including Information in its possession prior to the Separation
Date) or furnished by the other or the other’s Subsidiaries or their respective
directors, officers, employees, agents, accountants, counsel and other advisors
and representatives at any time pursuant to this Agreement or any Transaction
Document, and shall not use any such Information other than for such purposes
as may be expressly permitted hereunder or thereunder, except, in each case, in
connection with the prosecution of claims for indemnity or to the extent that
such Information has been: (i) in the public domain through no fault of such Party
or its Subsidiaries or any of their respective directors, officers, employees,
agents, accountants, counsel and other advisors and representatives; (ii) later
lawfully acquired from other sources by such Party (or any of its Subsidiaries)
which sources are not themselves bound by a confidentiality obligation; or
(iii) independently generated without reference to any proprietary or
confidential Information of the other Party.

 

(b)                                 No
Release; Return or Destruction. Each Party agrees not to release or disclose,
or permit to be released or disclosed, any Information addressed in Section
5.03(a) to any other Person, except its directors, officers, employees,
agents, accountants, counsel and other advisors and representatives who need to
know such Information, and except in compliance with this Section 5.03
and Section 5.04. Without limiting the foregoing, when any Information
furnished by the other Party after the Separation Date pursuant to this
Agreement or any Transaction Document is no longer needed for the purposes
contemplated by this Agreement or any Transaction Document, each Party shall,
at such Party’s option, promptly after receiving a written request from the
other Party either return to the other Party all such Information in a tangible
form (including all copies thereof and all notes, extracts or summaries based
thereon) or certify to the other Party that it has destroyed such Information
(and such copies thereof and such notes, extracts or summaries based thereon); provided,
however, that each Party may retain copies of such Information if
necessary to satisfy applicable regulatory requirements.

 

23

 

SECTION 5.04.                 Protective
Arrangements. In the event that SG or Cowen Inc. or any of their respective
Subsidiaries either determines on the advice of its counsel that it is required
to disclose any Information pursuant to applicable law or the rules or
regulations of any Governmental Authority or receives any demand under lawful
process or from any Governmental Authority to disclose or provide Information
of another Party (or such other Party’s Subsidiaries) that is subject to the
confidentiality provisions hereof, the Party contemplating such disclosure
shall notify the other Party prior to disclosing or providing such Information
and shall cooperate at the expense of the requesting Party in seeking any
reasonable protective arrangements requested by such other Party. Subject to
the foregoing, the Party that received such request, or its Subsidiaries, may thereafter
disclose or provide Information to the extent required by such law (as so
advised by counsel) or by lawful process or such Governmental Authority.

 

ARTICLE VI

DISPUTE RESOLUTION

 

SECTION 6.01.                 Disputes.

 

(a)                                  Agreement
to Arbitrate Disputes. The Parties acknowledge that, from time to time
after the Separation Date, a controversy, dispute or claim may arise relating
to a Party’s rights or obligations under this Agreement. The Parties agree that
any controversy, dispute or claim (whether arising in contract, tort or
otherwise) arising out of or in connection with the performance or breach of
this Agreement, including any question regarding its enforcement, existence,
validity, interpretation or termination shall be resolved by binding
arbitration.

 

(b)                                 Conduct
of the Arbitration. An arbitration conducted pursuant to this Article VI
shall be administered by and held before the American Arbitration Association
(“AAA”) in accordance with the laws of the State of New York and the
AAA’s then current Commercial Arbitration Rules. Notwithstanding the foregoing,
no pre-hearing discovery shall be permitted unless specifically authorized by
the arbitration panel, provided, however, that unless the Parties
agree otherwise, there shall be no pre-hearing depositions or interrogatories. Any
hearing or authorized discovery shall take place in New York City, unless the
Parties agree otherwise.

 

(c)                                  Composition
and Selection of Panel:  Unless the
Parties agree otherwise, the arbitration panel shall consist of three persons
appointed by the AAA from its National Roster pursuant to Rule R-11 of the
AAA’s Commercial Arbitration Rules.

 

(d)                                 Limitations
on Available Relief. The arbitration panel shall have no authority or
jurisdiction to award consequential, exemplary or punitive damages.

 

(e)                                  Confidentiality.
The Parties agree that any arbitration commenced pursuant to this Article VI
shall be and remain confidential, and the Parties shall not make any public
statements concerning any arbitration, except to the extent that disclosure of
or any statement concerning any arbitration is, in the opinion of counsel for
one of the Parties, required by law or applicable rules or regulations.

 

24

 

(f)                                    Final
and Binding Nature of Arbitration Award. Any award rendered by the
arbitrators shall be final and binding between the Parties and judgment thereon
may be entered in any court of competent jurisdiction. If a Party seeks to
vacate or to appeal an award rendered by the arbitration panel and such Party’s
motion to vacate is denied or its appeal is unsuccessful, then that Party shall
pay the costs and expenses, including reasonable attorneys’ fees, of the
prevailing Party.

 

ARTICLE VII

TERMINATION

 

SECTION 7.01.                 Termination. This Agreement may not be terminated
except by an agreement in writing signed by all of the Parties.

 

ARTICLE VIII

MISCELLANEOUS

 

SECTION 8.01.                 Counterparts;
Entire Agreement; Facsimile Signatures.

 

(a)                                  Counterparts.
This Agreement may be executed in one or more counterparts, each of which when
executed shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile shall be as
effective as delivery of an executed original of such counterpart to this
Agreement.

 

(b)                                 Entire
Agreement. This Agreement, the Transaction Documents and the exhibits,
schedules and annexes hereto and thereto contain the entire agreement between
the Parties with respect to the subject matter hereof and supersede all
previous agreements, negotiations, discussions, writings, understandings,
commitments and conversations with respect to such subject matter, and there
are no agreements or understandings between the Parties other than those set
forth or referred to herein or therein. Notwithstanding any other provisions in
this Agreement to the contrary, in the event and to the extent that there is a
conflict between the provisions of this Agreement and the provisions of any
Principal Transaction Document, the provisions of such Principal Transaction
Document shall control.

 

(c)                                  Facsimile
Signatures. Each Party acknowledges that it and the other Parties may
execute this Agreement by facsimile, stamp or mechanical signature. Each Party
expressly adopts and confirms each such facsimile, stamp or mechanical
signature made in its respective name as if it were a manual signature, agrees
that it shall not assert that any such signature is not adequate to bind such
Party to the same extent as if it were signed manually and agrees that at the
reasonable request of the other Party at any time it shall as promptly as
reasonably practicable cause this Agreement to be manually executed (any such
execution to be as of the date of the initial date thereof).

 

SECTION 8.02.                 Governing Law.
This Agreement shall be governed by and construed and interpreted in accordance
with the laws of the State of New York, irrespective of

 

25

 

the choice of
laws principles of the State of New York, as to all matters, including matters
of validity, construction, effect, enforceability, performance and remedies.

 

SECTION 8.03.                 Assignability.
This Agreement shall be binding upon and inure to the benefit of the Parties
hereto and their respective successors and permitted assigns; provided, however,
that no Party hereto may assign its rights or delegate its obligations under
this Agreement without the express prior written consent of the other Parties
hereto. Notwithstanding the foregoing, this Agreement shall be assignable in
whole in connection with a merger or consolidation or the sale of all or
substantially all of the Assets of a Party so long as the resulting, surviving
or transferee Person assumes all the obligations of the relevant party thereto
by operation of law or pursuant to an agreement in form and substance
reasonably satisfactory to the other Party.

 

SECTION 8.04.                 Third Party
Beneficiaries. Except for the indemnification rights under this Agreement
of any SG Indemnitee or Cowen Indemnitee in their respective capacities as such
and for the releases under Article II of any Person provided therein:
(a) the provisions of this Agreement are solely for the benefit of the Parties
and their respective Subsidiaries, after giving effect to the Separation, and
are not intended to confer upon any Person except the Parties and their
respective Subsidiaries, after giving effect to the Separation, any rights or
remedies hereunder; and (b) there are no other Third Party beneficiaries of
this Agreement and this Agreement shall not provide any other Third Party with
any remedy, claim, liability, reimbursement, claim of action or other right in
excess of those existing without reference to this Agreement.

 

SECTION 8.05.                 Notices. All
notices or other communications under this Agreement must be in writing and
shall be deemed to be duly given: (a) when delivered in person; (b) upon
transmission via confirmed facsimile transmission, provided that such
transmission is followed by delivery of a physical copy thereof in person, via
U.S. first class mail, or via a private express mail courier; or (c) two days
after deposit with a private express mail courier, in any such case addressed
as follows:

 

If to SG:

 

Société
Générale

1221 Avenue of
the Americas

New York, New York 10020

Attn:  General Counsel, SG Americas

Facsimile:
 (212) 278-7432

 

With a copy
to:

 

Mayer, Brown,
Rowe & Maw LLP

1675 Broadway

New York, New York  10019

Attn:  James B. Carlson

Facsimile:  (212) 262-1910

 

26

 

If to Cowen:

 

Cowen Group,
Inc.

1221 Avenue of the Americas

New York, New York 10020

Attn:  General Counsel

Facsimile:  (646) 562-1861

 

With a copy
to:

 

Skadden, Arps,
Slate, Meagher & Flom LLP

Four Times Square

New York, NY  10036-6522

Attn:                    Lou
R. Kling

                                                Thomas
W. Greenberg

Facsimile:  (212) 735-2000

 

Any Party may,
by notice to the other Party, change the address to which such notices are to
be given.

 

SECTION 8.06.                 Severability.
If any provision of this Agreement or the application thereof to any Person or
circumstance is determined by a court of competent jurisdiction to be invalid,
void or unenforceable, the remaining provisions hereof, or the application of
such provision to Persons or circumstances or in jurisdictions other than those
as to which it has been held invalid or unenforceable, shall remain in full
force and effect and shall in no way be affected, impaired or invalidated
thereby, so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any Party. Upon
such determination, the Parties shall negotiate in good faith in an effort to
agree upon a suitable and equitable provision to effect the original intent of
the Parties.

 

SECTION 8.07.                 Force Majeure.
No Party shall be deemed in default of this Agreement to the extent that any
delay or failure in the performance of its obligations under this Agreement
results from any cause beyond its reasonable control and without its fault or
negligence, such as acts of God, acts of Governmental Authority, embargoes,
epidemics, war, riots, insurrections, acts of terrorism, fires, explosions,
earthquakes, floods, unusually severe weather conditions, labor problems or
unavailability of parts, or, in the case of computer systems, any failure in
electrical or air conditioning equipment. In the event of any such excused
delay, the time for performance shall be extended for a period equal to the
time lost by reason of the delay.

 

SECTION 8.08.                 Headings. The
article, section and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

 

SECTION 8.09.                 Survival of
Covenants. Except as expressly set forth in this Agreement, the covenants,
releases, indemnities, representations and warranties contained in this

 

27

 

Agreement, and
liability for the breach of any obligations contained herein, shall survive the
Separation Date and shall remain in full force and effect thereafter.

 

SECTION 8.10.                 Subsidiaries.
SG shall cause to be performed, and hereby guarantees the performance of, all
actions, agreements and obligations set forth herein to be performed by any SG
Subsidiary and Cowen Inc. shall cause to be performed, and hereby guarantees
the performance of, all actions, agreements and obligations set forth herein to
be performed by any Cowen Subsidiary.

 

SECTION 8.11.                 Waivers. The
observance of any term of this Agreement may be waived (either generally or in
a particular instance and either retroactively or prospectively) by the Party
hereto entitled to enforce such term, but such waiver shall be effective only
if it is in a writing signed by the Party hereto against whom the existence of
such waiver is asserted. Unless otherwise expressly provided in this Agreement,
no delay or omission on the part of any Party hereto in exercising any right or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
waiver on the part of any Party hereto of any right or privilege under this
Agreement operate as a waiver of any other right or privilege under this
Agreement nor shall any single or partial exercise of any right or privilege
preclude any other or further exercise thereof or the exercise of any other
right or privilege under this Agreement. No failure by any Party to take any
action or assert any right or privilege hereunder shall be deemed to be a
waiver of such right or privilege in the event of the continuation or
repetition of the circumstances giving rise to such right unless expressly
waived in writing by the Party hereto against whom the existence of such waiver
is asserted.

 

SECTION 8.12.                 Amendments.
No provisions of this Agreement shall be deemed amended, supplemented or
modified unless such amendment, supplement or modification is in writing and
signed by an authorized representative of each of the Parties.

 

SECTION 8.13.                 Interpretation.
Words in the singular shall be deemed to include the plural and vice versa and
words of one gender shall be deemed to include the other genders as the context
requires. The terms “hereof,” “herein,” and “herewith” and words of similar
import shall, unless otherwise stated, be construed to refer to this Agreement
as a whole and not to any particular provision of this Agreement. Article and
Section references are to the Articles and Sections to this Agreement unless
otherwise specified. Unless otherwise stated, all references to any agreement
shall be deemed to include the exhibits, schedules and annexes to such
agreement. The word “including” and words of similar import when used in this
Agreement shall mean “including, without limitation,” unless the context
otherwise requires or unless otherwise specified. The word “or” shall not be
exclusive. Unless otherwise specified in a particular case, the word “days”
refers to calendar days. References herein to this Agreement or any Transaction
Document shall be deemed to refer to this Agreement or such Transaction
Document as of the Separation Date and as it may be amended thereafter, unless
otherwise specified. References to the performance, discharge or fulfillment of
any Liability in accordance with its terms shall have meaning only to the
extent such Liability has terms; if the Liability does not have terms, the
reference shall mean performance, discharge or fulfillment of such Liability.

 

SECTION 8.14.                 Mutual
Drafting. This Agreement and the Transaction Documents shall be deemed to
be the joint work product of the Parties and any rule of

 

28

 

construction
that a document shall be interpreted or construed against a drafter of such
document shall not be applicable.

 

SECTION 8.15.                 No Right to
Set-Off. Each Party shall pay the full amount of any payments, costs and
disbursements required under this Agreement, and shall not set off,
counterclaim or otherwise withheld any other amount owed by such Party to other
Persons on account of any obligation owed by other Persons to such Party.

 

SECTION 8.16.                 Enforcement
Costs. In the event that a Party breaches any provision of this Agreement,
such Party agrees to reimburse the non-breaching Parties for all expenses
related to the enforcement by the non-breaching Parties of their respective
legal rights under this Agreement, including but not limited to the
non-breaching Parties’ respective attorneys’ fees, court costs, administrative
fees and all other costs, fees and expenses incurred by the non-breaching
Parties that are associated with enforcing their respective legal rights
hereunder.

 

SECTION 8.17.                 Remedies. In
the event of a breach by a Party of its obligations under this Agreement, each
other Party, 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. Each Party agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of any provision of this Agreement and hereby further agrees that, in the event
of any action for specific performance in respect of such breach, it will waive
the defense that a remedy at law would be adequate.

 

* * * * *

 

29

 

IN
WITNESS WHEREOF, the Parties have caused this
Agreement to be executed by their duly authorized representatives.

 

	
   

  	
  SOCIÉTÉ
  GÉNÉRALE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Jean-Philippe Coulier

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jean-Philippe
  Coulier

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Operating Officer, Americas

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SG
  AMERICAS SECURITIES HOLDINGS,

  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Jean-Philippe Coulier

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jean-Philippe
  Coulier

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COWEN
  AND COMPANY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Christopher A. White

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Christopher
  A. White

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Administrative Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COWEN GROUP,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Christopher A. White

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Christopher
  A. White

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  
						

 

30

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