Document:

AGREEMENT
      

     

    This
      Agreement dated the 1st
      day of
      December 2005 by and between Clayton Dunning and  Company,
      Inc., a domestic corporation with offices at 40 Wall Street, 315t
      Floor,
      New York, New York 10005 hereinafter referred to as "The Assignor," and Mercer
      Asset Management Company, Inc., a New York with offices at 45 Broadway,
      30lh
      Floor,
      New York, New York 10006, hereinafter referred to as "The Assignee."

     

    WHEREAS
      The
      Assignor is a tenant at 40 Wall Street, 31st Floor,
      New York, New York; and 

     

    WHEREAS
      The
      Assignor executed a lease with 40 Wall Street, LLC, a limited liability company,
      with office at 725 5th
      Avenue,
      New York, New York 10022, dated the 23rd
      day of
      December  2004
      (the
      "Lease"); and  .
      

     

    WHEREAS A
      copy of
      the Lease is annexed hereto and made a part thereof; and 

     

    WHEREAS
      Pursuant
      to the terms of the Lease, the Assignor has as security with the landlord
      $162,197; and 

     

    WHEREAS
      The
      Assignor does not desire to continue to lease its space on the 31st
      Floor of
      40 Wall Street, New York, New York; and  

     

    WHEREAS
      The
      Assignee wishes to lease the space on the 31st Floor
      of
      40 Wall Street, New York, New York where the Assignor currently resides; and
      

     

    NOW
      THEREFORE IT IS AGREED: 

     

    1.
      The
      Assignor hereby assigns the Lease to the Assignee; 

     

    2.
      The
      Assignee, upon the execution of this agreement and upon the consent of the
      owner
      of the building, does hereby assume and undertake to perform all liabilities
      enumerated on the Lease; 

     

    3.
      The
      Assignor does hereby assign to the Assignee all of its interest in the security
      that it posted with 40 Wall Street, LLC, a limited liability company, pursuant
      to the terms of the Lease; 

     

    4.
      At the
      termination of the Lease, the Assignee is at liberty to renew the Lease or
      vacate the premises pursuant to the terms to the Lease; 

     

    5.
      The
      Assignor has no right to re-enter the premises at the expiration of the
      Lease;

     

    6.
      This
      assignment is subject to the acknowledgement and consent of 40 Wall Street,
      LLC,
      that the Lease is valid, subsistence, and that there are no defaults therein,
      and the security deposits being held, as indicated herein, are still intact;
      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    7.
      40
      Wall Street, LLC, pursuant to the Lease will not release the Assignor from
      its
      liability under the terms of this lease; 

     

    IN
      WITNESS THEREOF dated 1st
      day of
      December 2005.Exhibit
      10.12

    
 

    EMPLOYMENT
      AGREEMENT

    

    AGREEMENT
      dated
      this 31st
      day of
      October 2005 by and between Clayton, Dunning Group Inc., 2901 South Bayshore
      Drive, #1E, New York, NY 10022 and its subsidiaries (the “Company”), and Robert
      C. Lau (“Employee”).

     

    WITNESSETH:

    

    WHEREAS,
      the
      Company agrees to employ Employee as Chairman of the Board and Chief Executive
      Officer, as well as Chairman of the Board and Chief Financial Officer of each
      of
      the Company’s subsidiaries; and

    

    WHEREAS,
      Employee desires to accept employment by the Company upon the terms and
      conditions hereinafter set forth.

    

    NOW,
      THEREFORE,
      in
      consideration of the mutual promises and covenants hereinafter set forth and
      for
      other good and valuable consideration, the parties hereto, intending to be
      legally bound, agree as follows:

    

    1.
      Term. The
      term
      of employment shall be for a period of five (5) years commencing on the date
      hereof, and continuing until October 30, 2010, extendable by the Board of
      Directors of the Company.

    

    2.
      Duties.
      Subject
      to the terms and conditions and for the compensation hereinafter set forth,
      the
      Company hereby agrees to employ you for and during the term of this Agreement.
      You shall be responsible for performing the all the reasonable functions of
      Chairman of the Board and Chief Executive Officer, as well as Chairman of the
      Board and Chief Financial Officer of each of the Company’s
      subsidiaries.

    

    3.
      Time.
      You
      shall perform all duties in a professional, ethical and businesslike manner.
      The
      Company agrees that Employee also may also be engaged as a Securities Expert
      at
      Employee’s option.

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    4.
      Compensation.
      During
      the term of your employment, the Company agrees to pay you a base salary of
      $125,000 per year plus an annual bonus after the end of each year of an amount
      equal to 20% of the consolidated net profits before taxes of the Company. In
      addition you may be paid the Company’s normal payout on commissions and fees
      that you produce for the Company. The Company agrees to provide you and your
      dependents with health insurance..

    

    5.
      Branch Offices.
      The
      Company agrees to maintain New York office and living quarters for you at a
      rent
      not to exceed $6,000 per month.

     

    6.
      Termination. Your
      employment shall terminate upon any of the following events: (i) your death
      or
      (ii) in the event you become physically or mentally incapacitated and by reason
      thereof are absent from the duties hereunder for 90 consecutive days within
      any
      one year period.

     

    7.
      Compensation upon Termination. In
      the
      event of your termination, the Company will pay you a salary equal to 75% of
      your base salary.

     

    8.
      Waiver of Breach.
      The
      waiver of the Company of a breach by you of any provision of this Agreement
      shall not operate or be construed as a waiver of any subsequent breach by you.
      No waiver shall be valid unless in writing and signed by an authorized officer
      of the Company.

    

    9.
      Headings. Headings
      used in this Agreement are provided for convenience only and shall not be used
      to construe meaning or intent.

    

    10.
      Amendments; Governing Law; Arbitration. This
      Agreement represents the entire Agreement between us with respect to the subject
      matter contained herein, and this Agreement terminates and supersedes any and
      all prior understandings or agreements heretofore reached or made by and between
      the parties hereto. This Agreement shall not be changed orally, but only by
      an
      agreement in writing and signed by the party against whom enforcement of any
      waiver, change, modification or discharge is sought. This Agreement shall be
      governed by and interpreted in accordance with the laws of the State of Florida.
      Each of the parties hereby agrees that any action or proceeding arising out
      of
      this Agreement shall be brought only before an arbitration panel convened by
      the
      American Arbitration Association, and each of the parties hereby unconditionally
      submits to and accepts the jurisdiction of the aforesaid arbitration panel.
      Each
      of the parties hereby irrevocably waives any objection it may have to the laying
      of the venue of any such action or proceeding before a NASD arbitration panel
      convened in the Miami, FL, area. 

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    11.
      Notices.
      Any
      notice or other written instrument required or permitted to be given, made
      or
      sent hereunder shall be in writing, signed by the party giving or making the
      same, and shall be sent by registered or certified mail or through courier
      delivery service to the other party hereto at their respective addresses
      hereinabove set forth. Any party hereto shall have the right to change the
      place
      to which any such notice or writing shall be sent by a similar notice sent
      in
      like manner to the other party hereto.

    

    12.
      Severability.
      The
      invalidity or unenforceability of any provision hereof shall in no way affect
      the validity or enforceability of any other provision of our
      Agreement.

    

    13.
      Final Agreement. This
      Agreement may be modified only by a further writing that is duly executed by
      the
      parties herein.

    

    14.
      Indemnification Against Legal Costs.
      The
      Company agrees to pay for your legal costs in the event that you must defend
      yourself against actions brought against you as the result of your position
      and
      duties with the Company or any of its subsidiaries.

     

    
      	CLAYTON, DUNNING GROUP
              INC.	 	 	 
	 	 	 	 
	By:	 	 	 
	
              
Robert
              C. Lau, Chairman of the Board of Directors &
              Chief Executive Officer	 	 	
              
Patricia
              D. Lau, Secretary
	 	 	 	 
	 	 	 	 
	AGREED AND ACCEPTED
              THIS
              31ST
              DAY OF OCTOBER 2005	 	 	 
	 	 	 	 
	
              

              Robert
                C. Lau, Employee

            	 	 	 

    

     

    
      
         

      

        3Exhibit
      10.13

     

    FULLY
      DISCLOSED CLEARING AGREEMENT

     

     

    This
      Fully Disclosed Clearing Agreement (the "Agreement") is executed and entered
      into by and between First Southwest Company ("FSWC"), a Texas Corporation,
      and
      Charleston Capital ("CLAY')
      This
      Agreement will be deemed effective at 12:01 a.m. on the first day business
      is
      transacted hereunder. 

     

    RECITALS:
      

     

    WHEREAS,
      CLAY is
      in the
      process of registering or is registered with the Securities and Exchange
      Commission ("SEC") as a broker-dealer of securities in accordance with Section
      15(b) of the Securities Exchange Act of 1934 (the "Act") and is applying for
      membership or is a member of the National Association of Securities Dealers,
      Inc. ("NASD"), and desires to enter into an agreement with FSWC for FSWC to
      clear and maintain customer accounts on behalf of CLAY;
      

     

    WHEREAS,
      FSWC desires to enter into an agreement to provide clearing services and to
      maintain cash, margin, option or other accounts ("Accounts") for CLAY or
      customers ("Customers") of CLAY;
      

     

    WHEREAS,
      the parties intend that CLAY will
      introduce certain of Customers to FSWC, and that FSWC, as an independent
      contractor, may elect to clear and carry the Accounts of said Customers pursuant
      to the terms and conditions hereof; and 

     

    WHEREAS,
      the parties do not intend that a joint venture, partnership, or other similar
      relationship be created as between them, but rather that each party will
      maintain an independent relationship with the Customers whose Accounts are
      introduced hereunder. 

     

    NOW,
      THEREFORE, in consideration of the mutual covenants contained herein, and of
      the
      guarantee of this Agreement by any guarantor(s), and for other good and valuable
      consideration, the receipt and sufficiency of which are hereby acknowledged,
      the
      parties agree as follows: 

     

    1.
       REPRESENTATIONS
      AND WARRANTIES 

     

    CLAY
      represents and warrants to FSWC that: 

     

    (a)
       CLAY is
      either
      a corporation, a partnership, limited liability company or other entity as
      specified on the signature page hereof, in either case dilly organized, validly
      existing and in good standing under the laws of the state of its incorporation
      or other formation. 

     

    (b)
       CLAY has
      all
      the requisite authority in conformity with all applicable laws and regulations
      to enter into this Agreement, to retain the services of FSWC in accordance
      with
      the terms hereof, and to perform its obligations hereunder. 

     

    (c)
       CLAY shall
      employ as a manager of its brokerage operation only a person who has all
      requisite licenses and experience in compliance with applicable securities
      laws
      and regulations. 

     

    (d) 
      CLAY shall
      duly employ only such sales and supervisory personnel ("Registered
      Representatives") who have the requisite licenses and experience in compliance
      with applicable securities laws and regulations. 

     

    (e)
       CLAY has
      advised FSWC of any arrangements in existence with any other firm for the
      provision by such other firm of clearing services for any Customer Accounts
      or
CLAY Accounts;
      and satisfactory provisions have been made for the termination of any
      such
      arrangements in connection with the implementation of the clearing services
      to
      be provided by FSWC hereunder. 

     

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

    (t)
       CLAY has,
      if
      applicable, informed FSWC of any independent agents or independent contractors
      used in providing the services contemplated hereunder. 

     

    (g)
       CLAY is
      registered as a broker/dealer with the SEC and is in compliance with the rules
      and regulations thereof, or is in the process of so registering. 

     

    (h)
       CLAY is
      a
      member firm in good standing of the NASD and is in compliance with the rules
      and
      regulations thereof, or has applied for such membership. 

     

    FSWC
      represents and warrants to CLAY that:
      

     

    (a)
       FSWC
      is a
      corporation duly organized, validly existing and in good standing under the
      laws
      of the state of Texas. 

     

    (b)
       FSWC
      is
      registered as a broker-dealer with the SEC and is in compliance with the rules
      and regulations thereof. 

     

    (c)
       FSWC
      is a
      member firm in good standing of the NASD and is in compliance with the rules
      and
      regulations thereof. 

     

    (d)
       FSWC
      is
      in compliance with the rules and regulations of each national securities
      exchange of which it is a member. 

     

    2.
       CUSTOMER
      AND CLAY ACCOUNTS 

     

    Responsibility
      for compliance with the provisions of the Conduct Rules of the NASD regarding
      Customer accounts shall be allocated between FSWC and CLAY
      as
set
      forth
      below. 

     

    (a)
       Opening,
      Approving and Monitoring Customer Accounts. 

     

    (1)  
      Account
      Documentation.
      CLAY will
      be
      responsible for obtaining and verifying all required information and the
      identity of each potential Customer. CLAY will
      be
      responsible for the maintenance and retention of all documents relating to
      an
      Account. CLAY hereby
      acknowledges its obligation to retain said documents in an easily accessible
      place for the requisite time periods in accordance with SEC rules and agrees
      to
      provide the original application by overnight delivery or a legible copy by
      facsimile transmission of it within 24 hours of a request from FSWC. The
      foregoing notwithstanding, New Account Agreements, Customer Margin and Short
      Account Agreements and any other documents and/or Agreements as required by
      FSWC
      in the normal course of business shall be provided by CLAY to
      FSWC
      for maintenance and retention by FSWC. CLAY shall
      forward completed documents, and copies of any other documents as specified
      by
      FSWC, to FSWC in accordance with FSWC's procedures. FSWC shall have no
      responsibility for the verification of signatures or other information contained
      on any such agreements or documentation, but shall retain the right, in any
      instance where FSWC elects to do so, (i) to require CLAY to
      verify
      and authenticate to FSWC any such signatures or other information, or (ii)
      reject any such agreement or documentation as insufficient or incomplete.
CLAY will
      be
      responsible for complying with the requirements of SEC Rule 15 g2-6, relating
      to
      transactions in penny stocks, if applicable. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     (2) 
      Knowledge
      of Customer and Customer's Investment Objectives. CLAY will
      be
      responsible for learning and documenting all the facts relative to every
      Customer necessary to insure compliance by CLAY
      with
applicable
      rules and regulations, including the information and instructions submitted
      to
      FSWC pursuant to Section 2(a)(I), any additional facts relative to the
      Customer's investment objectives, and to the nature of every Customer Account,
      every order and every person holding power of attorney over any Customer
      Account. It shall be the responsibility of CLAY to
      ensure
      that those of its Customers who open or maintain Accounts hereunder shall not
      be
      minors; and CLAY will
      not
      accept Accounts for such persons as come within the express provisions of Rule
      3050 of the Conduct Rules of the NASD, relating to transactions for or by
      associated persons, unless CLAY
      has
      complied with the provisions of said Rule and, if applicable, provided evidence
      of employer approval as required by said Rule. CLAY shall
      be
      solely responsible for any issues regarding the suitability of any investments
      for CLAY’s Customers. 

     

     (3)
       Acceptance
      of Accounts. FSWC will execute orders for CLAY’s customers
      whose
      Accounts have been accepted by· FSWC through CLAY,
      but
      only
      insofar as such orders are transmitted by CLAY
      to
FSWC
      through the FSWC on-line system or telephonically after CLAY’s appropriate
      principals have accepted and approved said Accounts. CLAY
      shall
      be
      responsible for notifying FSWC in writing of the identity of the persons
      authorized to enter orders for CLAY and
      its
      customers; and until such notification is received, FSWC shall be fully
      protected in relying on the incumbency and authority of all persons who
      represent they are registered representatives of CLAY,
      or
      represent they are authorized to act for or on behalf of a registered
      representative of CLAY,
      without
      investigation or inquiry of any kind by FSWC. Any person so identified to FSWC
      as being authorized to enter orders shall be deemed to retain such authority
      until such time as CLAY establishes
      to the satisfaction of FSWC that such person is no longer employed by
CLAY.
      Each
      Customer and CLAY Account
      approved by CLAY and
      opened with FSWC shall be subject to FSWC's acceptance. CLAY will
      not
      submit any Customer for FSWC's acceptance unless FSWC's standards for the
      establishment of an Account, as set forth in this Agreement, have been met.
      FSWC
      reserves the right to withhold acceptance of or to reject, for any reason,
      any
      Customer Account, CLAY Account
      or any transaction for any Account and to terminate any Account previously
      accepted by FSWC at any time, for any reason, and without approval of or notice
      to CLAY.
      Initial
      acceptance of each Account shall be conditioned upon FSWC's receipt of completed
      forms as required by Section 2(a)(I). CLAY shall
      not
      submit such forms with respect to any Customer Account unless CLA
      Y
has
      in
      its possession the documentation of all information required pursuant to Section
      2(a)(2). FSWC shall be under no obligation to accept any Account as to which
      any
      documentation required to be submitted to FSWC or maintained by CLAY pursuant
      to Sections 2(a)(I) and 2(a)(2) is incomplete. Prior to acceptance of any
      Account, no action taken by FSWC or any of its employees, including without
      limitation, the clearing of a trade in any Account, shall be deemed to be or
      shall constitute acceptance of such Account. 

     

    (4)
       Compliance
      Supervision.  FSWC
      will
      not provide any compliance, supervision or enforcement support activities to
      CLAY.
      There
      is
      no written, verbal or implied agreement between FSWC and CLAY for
      FSWC
      to offer or provide these services. However, FSWC reserves the right to
      investigate any CLAY client,
      order or Account for the purposes of determining whether or not CLAY is,
      in
      fact, in compliance with all applicable rules and regulations, including
      compliance with FSWC House Rules. 

     

    (5)
       Supervision
      of Orders and Accounts.
      As
      between FSWC and CLAY,
      CLAY will
      be
      responsible for the review and supervision of, and the suitability of,
      investments made by every Customer. CLAY shall
      be
      responsible for insuring that all transactions in and activities related to
      all
      Accounts opened by it with FSWC, including discretionary Accounts, will be
      in
      compliance with all applicable laws, rules and regulations of the United States,
      the several states, governmental agencies, securities exchanges and the NASD,
      including any laws relating to CLAY’s fiduciary
      responsibilities to Customers, either under the Employee Retirement Income
      Security Act of 1974 or otherwise; and in this connection, CLAY shall
      diligently supervise the activities of its officers, employees and
      representatives with respect to such Accounts. FSWC will perform the clearing
      services provided for in this Agreement for Accounts accepted by it in
      accordance with the terms of this Agreement, as it may be amended from time
      to
      time, and otherwise in accordance with its judgment. To the extent, if any,
      that
      FSWC accepts from CLAY orders
      for execution in accordance with Section 7(a), CLAY shall
      be
      responsible for informing FSWC of the location of the securities that are the
      subject of the order so that FSWC may comply with the provisions of Rule 3110
      of
      the Conduct Rules of the NASD. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
      (b)
         Extension
        of Credit
        The
        division of responsibilities with respect to the extension of credit
is
        set
        forth in Section 3 of this Agreement. 

       

      (c)
         Maintenance
        of Books and Records.
        The
        division of responsibilities with respect to the maintenance
        of books and records is set forth in Section 4 of this Agreement. 

       

      (d)
         Receipt,
        Delivery and Safeguarding of Funds and Securities.
        The
        division of responsibilities with respect to the receipt and delivery of
        and
        safeguarding of funds and securities is set forth in Section 5 of this
        Agreement. 

       

      (e)
        Confirmations
        and Statements.
        The
        division of responsibilities with respect to confirmations and statements
        is set
        forth in Section 6 of this Agreement. 

       

      (f)
         Acceptance
        of Orders and Execution of Transaction.
        The
        division of responsibilities with respect to the acceptance of orders and
        the
        execution of transactions is set forth in Section 7 of this Agreement.

       

      (g)
         Customer
        Responsibility for Certain Purposes.
        Notwithstanding anything herein to the contrary, for purposes of the Securities
        Investment Protection Act of 1970 and the Financial Responsibility Rules
        adopted
        under the Act, the Customers who maintain Accounts with FSWC are customers
        of
        FSWC. For all other purposes, such Customers shall be customers of CLAY.
        

       

      (b)
         Notice
        to Customers.
        Subject
        to the requirements of the Conduct Rules of the NASD, CLAY shall
        provide, or cause to be provided, to every Customer, upon the opening of
        a
        Customer Account, notice of the existence and general terms of this Agreement.
        

    

     

    (i)   Option
      Accounts.
      In the
      event that any customer elects to engage in listed securities options
      transactions in an Account accepted by FSWC, or CLAY enters
      securities options transactions in an Account accepted by FSWC, CLAY agrees
      to
      (i) abide by FSWC's requirements and time limitation for accepting an exercise
      notice with respect to a Customer's options positions, which requirements and
      time limitations may be different from the minimum requirements imposed by
      the
      Options Clearing Corporation ("OCC") or other
      regulatory or self-regulatory organization from time to time, (ii) determine
      the
      suitability of the Customer for trading options and approving specific options
      strategies and transactions, (iii) provide the Customer with a current copy
      of
      the OCC disclosure
      document and applicable updates as published from time to time by
      OCC (and
      complying with such other requirements involving the dissemination of disclosure
      documents, including prospectuses, as may be required from time to time by
      applicable law), and (iv) notify the customer when customer has been assigned
      delivery responsibility regarding any short options positions, and accept
      exercise notices from the customer regarding long options positions.

     

    (j)   
      Accounts
      of Associated Persons.
      In each
      case in which a Customer is an employee or otherwise associated with an NASD
      member, CLAY shall
      be
      responsible for notifying such member in accordance with the provisions of
      RuIe
      3050 of the Conduct RuIes of the NASD.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    (k) 
       Proprietary
      Accounts.
      CLAY may
      request that FSWC maintain one or more Accounts on its books to reflect the
      proprietary securities and/or cash positions of CLAY (a
      "Proprietary Account”). FSWC may, in its sole discretion, agree or refuse to
      maintain any such Proprietary Account. If FSWC agrees to maintain one or more
      Proprietary Accounts, all of the other terms and conditions of this Agreement
      shall apply, and each such Proprietary Account shall be deemed an "Account"
      hereunder, except to the extent that this Agreement provides for differing
      treatment of Accounts and Proprietary Accounts. 

     

    3.
       EXTENSION
      OF CREDIT 

     

    Responsibility
      for compliance with the provisions of Regulation T, issued by the Board of
      Governors of the Federal Reserve System pursuant to the Securities Exchange
      Act
      of 1934 (“Regulation T”), and all other applicable rules, regulations and
      requirements of any exchange or regulatory agency affecting the extension of
      credit shall be allocated between FSWC and CLAY as
      set
      forth in this Section 3. 

     

    (a) 
       Margin
      Agreements.
      At the
      time of opening of each margin account, CLAY will
      furnish FSWC
      with
      an FSWC Customer Margin and Short Account Agreement, executed by the Customer,
      on the form furnished to CLAY
      by
FSWC.
      As
      to any Account, until CLAY has
      furnished FSWC with an executed margin agreement, FSWC may, at its discretion,
      re-book any transactions initially cleared as a margin transaction to be a
      cash
      transaction, liquidate the Account or take any other action FSWC deems
      necessary. 

     

    (b) 
      Margin
      and Margin Maintenance.
      CLAY
      is
      responsible for the collection of initial margin and all amounts necessary
      to
      meet subsequent maintenance calls in each Customer and CLAY Account
      to insure compliance with Regulation T and the house rules of FSWC. FSWC shall
      have the unlimited right to buy in or sell out positions in Accounts whenever
      FSWC, in its sole discretion, deems such action appropriate. FSWC may take
      any
      such action regardless of whether any such Account is then in compliance with
      applicable margin maintenance requirements or a request has been made for an
      extension of time to make any payment required by Regulation T. CLAY acknowledges
      that FSWC has the right to demand payment on any debit balance in any
CLAY Customer
      Account, Proprietary Account or related CLAY Accounts;
      and CLAY shall
      be
      liable to FSWC for any non-receipt of such payments upon demand. 

     

    (c)
       Margin
      Requirements.
      Initial
      margin and margin maintenance requirements applicable to any
      margin Account shall be in accordance with the House RuIes of FSWC, to the
      extent such rules provide for higher requirements than those provided under
      any
      law, any ex-change or any regulatory agency. FSWC may, in its discretion, change
      the margin requirements applicable to any Account or class of accounts, as
      described in its House Rules, and FSWC will notify CLAY of
      any
      such changes. CLAY shall
      be
      responsible for advising each of its Customers of the changed requirements,
      for
      collecting any additional margin necessary to insure compliance with such
      increased requirements and, if necessary, liquidating positions in the Accounts.
      

     

    (d)  
      Margin
      Disclosure.
      CLAY shall
      be
      responsible for providing statements (Disclosure of credit Terms in Margin
      Transactions) under Rule 1 Ob-16 to CLAY customers.
      

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (e)
       Losses.
      In
      addition to, and not in limitation of, CLAY’s agreement
      to indemnify FSWC pursuant to the provisions of Section 10, CLAY indemnifies
      and holds harmless FSWC from and against any and all loss, cost, expense and
      liability (including legal and accounting fees and expenses) sustained by FSWC
      arising out of any of the following: 

     

    (i)
       any
      failure by any Customer to comply with the terms of any agreement with
FSWC,
      including without limitation, its Customer Margin and Short Account Agreement;
      

     

    (ii)
       FSWC's
      re-booking of margin transactions as cash transactions pursuant to Section
      3(a); 

     

    (iii)
      the
      execution by an FSWC broker of a transaction for the account of a Customer
      pursuant to Section 3(b); 

     

    (iv)
       in
      a
      margin transaction, the failure of CLAY or
      any
      Customer to comply with Regulation
      T; 

     

    (v)
       the
      failure of CLAY to
      satisfy its obligations under this Section 3; 

     

    (vi)
       in
      a cash
      transaction, the failure of delivery of securities sold or failure of payment
      for securities purchased in accordance with the provisions of Regulation T;
      the
      return to FSWC unpaid of any check given to FSWC by CLAY or
      any
      Customer; or the payment and/or delivery of all "when issued" transactions
      which
      FSWC may accept or execute for the Accounts; or 

     

    (vii)
       FSWC's
      refusal of any transaction or instruction from CLAY or
      a
      Customer of CLAY,
      regardless
      of the circumstances, if FSWC determines, in its discretion, that effecting
      such
      transaction or following such nstruction is or could be detrimental to any
      such
      Customer, to FSWC and/or to CLAY.
      

     

    4.
       MAINTENANCE
      OF BOOKS AND RECORDS 

     

    FSWC
      will
      maintain stock records and other records on a basis consistent with generally
      accepted practices and/or mandated in the securities industry and will maintain
      copies of such records as are produced by FSWC, in accordance with the NASD
      and
      SEC guidelines for record retention, in effect from time to time. FSWC and
      CLAY shall
      each be responsible for preparing and filing the reports required by the
      governmental and regulatory agencies that have jurisdiction over each and FSWC
      and CLAY will
      each
      provide the other with such information, if any, which is in the control of
      one
      party but is required by the other to prepare any such report. 

     

    At
      the
      commencement of business under the terms of this Agreement and annually
      thereafter, FSWC will furnish to CLAY a
      list of
      all reports (such as exception reports) which FSWC will offer to assist
CLAY in
      its
      efforts to supervise and monitor Customer Accounts and in order for CLAY to
      carry
      out its functions and responsibilities pursuant to this Agreement. CLAY must
      specify to FSWC, in writing within ten (10) days of receipt of the list, those
      reports offered by FSWC that CLAY requires
      to supervise and monitor its Customers' Accounts. FSWC shall preserve, as part
      of its books and records, copies of the specific reports requested by and/or
      supplied to CLAY.
      

    

    FSWC
      will
      give written notice to the chief executive officer and the compliance officer
      of
CLAY,
      indicating
      as of the date of such notice, the list of reports offered to CLAY and
      specifying those reports that were actually requested by and/or supplied to
      CLAY as
      of
      such date. FSWC shall provide a copy of this written notice at the same time
      to
      the NASD as the designated examining authority of CLAY
      .

     

    FSWC
      shall furnish, upon request of the NASD as the designated examining authority
      of
CLAY,
      (i)
      a
      recreated copy of the report originally produced; or (ii) the format of the
      report and the applicable data elements contained in the original report.

     

    5.
       RECEIPT,
      DELIVERY AND SAFEGUARDING OF FUNDS AND SECURITIES 

     

    
      
        (a)
            Receipt
          and Delivery in the Ordinary Course of Business. FSWC will receive and
          deliver
          all funds and securities in connection with transactions for Customer Accounts
          in accordance with the Customer's instructions to CLAY,
          provided
          that CLAY shall
          be
          respon-sible for advising Customers of their obligations to deliver funds
          or
          securities in connection with each such transaction and for any failure
          of any
          Customer to fulfill such obligation. FSWC shall be responsible for the
          safeguarding of all funds and securities delivered to and accepted by it,
          subject to count and verification by FSWC. However, FSWC will not be responsible
          for any funds or securities delivered by a Customer to CLAY,
          its
          agents or employees until such funds or securities are physically delivered
          to
          FSWC's premises and accepted by FSWC or deposited in bank accounts maintained
          in
          FSWC's name. It is ex-pressly understood and agreed, however, that CLAY is
          responsible for compliance with the Currency and Foreign Transactions Reporting
          Act (31 U.S.C. Section 5311. et
          seq.)
          and
          the rules and regulations promulgated thereunder (31 C.F.R. Section 103.11,
          as
          amended, et
          seq.).
          FSWC
          reserves the right to transfer any and all monies and securities in CLAY Customer
          Account(s) to the CLAY Customer,
          if CLAY Customer
          account(s) are deemed by FSWC, in its sole discretion, to be a risk to
          FSWC or
          if the account(s) do(es) not comply and conform to the House Rules of FSWC
          after
          request for compliance is transmitted to the CLAY and/or
          CLAY Customer.
          

         

        
          
            
            

          

          
            6

            
              

            

          

          
            
            

          

        

        (b)
           Custody
          Services.
          Whenever FSWC has been instructed to act as custodian of the securities
          in any
CLAY or
          Customer Account, or to hold such securities in "safekeeping," FSWC may
          hold the
          securities in the Customer's name or may cause such securities to be registered
          in the name of FSWC or its nominee or in the names of nominees of any depository
          used by FSWC. FSWC will perform the services required in connection with
          acting
          as custodian for securities in CLAY and
          Customer Accounts, such as: (i) collection and payment of dividends; (ii)
          transmittal and handling (through CLAY)
          of
          tenders or ex-changes pursuant to tender offers and exchange offers as,
          if and
          when received by FSWC; (iii) transmittal of all proxy materials and other
          shareholder communications; and (iv) han-dling of exercised, or expirations
          of,
          rights, warrants or redemptions; provided, however, FSWC shall not be
          responsible for reviewing or analyzing the terms and provisions of any
          securities held in any Account or for determining the rights of CLAY or
          any
          Customer with respect thereto. 

         

        (c) 
           Receipt
          and Delivery Pursuant to Special Instruction.
          Subject
          to the limitations set forth in
          this
          Agreement and consistent with the systems and procedures of FSWC, upon
          instruction from CLAY or
          a
          Customer, FSWC will make such transfers of securities or Accounts as may
          be
          requested. CLAY shall
          be
          responsible for determining if any securities held in CLAY or
          Customer Accounts are "restricted securities" or "control stock" as defined
          by
          the rules of the SEC; that orders executed for such securities are in compliance
          with applicable laws, rules and regulations; and that all necessary
          documentation required to clear legal transfer (including opinions of legal
          counsel, if requested by FSWC or the transfer agent) are provided in a
          timely
          manner. However, FSWC will not be required to transfer securities if, in
          the
          exercise of its good faith judgment, such transfer would violate any applicable
          laws, rules or regulations or would subject FSWC to liability or additional
          cost
          or expense. 

         

        (d)  
          When
          Issued Transactions.
          In the
          case of the payment and delivery of securities on a "when issued" basis,
          CLAY shall
          remain responsible, as set forth in this Agreement, until necessary and
          satisfactory payment of funds or delivery of securities has been received
          by
          FSWC. 

      

    

     

    6.
       CONFIRMATIONS
      AND STATEMENTS 

     

    (a) 
       Preparation
      and Transmission.
      FSWC
      will prepare and send to Customers monthly or quarterly statements of account,
      which statements shall meet FSWC's requirements as to format and quality and
      will indicate that CLAY introduced
      the Account. Unless otherwise agreed in writing, FSWC will be responsible for
      preparing and transmitting confirmations; provided, however, that CLAY’s right
      to
      prepare and transmit confirmations shall be subject to prior written approval
      by
      FSWC and compliance by CLAY with
      the
      provisions of Rule 2230 of the Conduct Rules of the NASD. CLAY shall
      be
      responsible for notifying the Customer and FSWC if it is preparing and
      transmitting confirmations. CLAY shall
      not
      generate and/or prepare any statements, billings or confirmation respecting
      any
      Account except as provided in this Agreement or pursuant to an agreement
      executed between FSWC and CLAY that
      authorizes CLAY to
      print
      and mail statements to Accounts on behalf of FSWC. If such an agreement has
      been
      executed, CLAY covenants
      that it shall comply with all requirements for statements imposed upon FSWC
      under all applicable laws, rules and regulations, including, but not limited
      to,
      the SEC, NASD, Federal Reserve Board and all other regulatory organizations.
      Copies of all monthly or quarterly statements sent by FSWC to Customers will
      be
      sent to CLAY.
      FSWC
      will
      also provide to CLAY monthly
      statements of clearing services performed by FSWC for CLAY and
      Customer Accounts showing the fees charged for such services during the month,
      as provided in Section 8. 

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (b)  
      Examination
      and Notification of Errors.
      CLAY shall
      examine promptly all monthly statements of account, monthly statements of
      clearing services and other reports provided to CLAY
      by
FSWC.
      CLAY shall
      notify FSWC of any error claimed by CLAY in
      any
      Account in connection with (i) any transaction, prior to the settlement date
      of
      such transaction, (ii) information appearing on daily reports, within five
      days
      of such report, and (ill) information appearing on monthly statements or
      reports, within 10 days of CLAY’s receipt
      of any monthly statement or report. Any notice of error shall be accompanied
      by
      such documenta-tion as may be necessary to substantiate CLAY’s claim.
      CLAY shall
      provide promptly upon FSWC's request any additional documentation which FSWC
      reasonably believes is necessary or desirable to establish and correct any
      such
      error. In all cases, FSWC reserves the right to determine the validity of any
      claimed error. 

     

    7.
       ACCEPTANCE
      OF ORDERS, EXECUTION OF TRANSACTIONS, OTHER SERVICES 

     

    (a)
       Customers'
      Orders.
      Acceptance of Customers' orders shall be the responsibility of CLAY.
      CLAY shall
      advise each of its Customers that its relationship with FSWC is solely that
      of
      an introducing broker to a clearing broker and that, except as set forth in
      Section 2 above, CLAY
      ears
      all
      responsibility for the Customer's Account. CLAY shall
      be
      responsible for the authenticity of all orders. FSWC is not obligated to accept
      for execution any orders placed directly with FSWC by a Customer. In addition,
      FSWC is not obligated to accept any orders from CLAY if
      FSWC
      determines in good faith that it should not. CLAY assumes
      the risk of failure by an over-the-counter dealer with which CLAY executes
      an order, in the event such dealer fails to perform, and CLAY will
      reimburse FSWC for any loss incurred by it in the transaction. 

     

    (b)
       Transactions
      Clearing.
      During
      the term of this Agreement, FSWC will clear transactions on
      a
      fully disclosed basis for Accounts of CLAY and
      the
      Customers that CLAY introduces
      and FSWC accepts as provided in Section 2(a)(3); provided, however, that FSWC
      is
      not obligated to clear any transactions for CLAY or CLAY’s Customers
      if FSWC determines in good faith that it should not. 

     

    (c)
       Other
      Services.
      FSWC
      will perform such other services, upon such terms and at such prices, as FSWC
      and CLAY
      may from
      time to time agree. 

     

    8.
       FEES
      AND SETTLEMENTS FOR SECURITIES TRANSACTIONS 

     

    (a)
       Commissions
      - Fees for Clearing Services. 

     

    (i)
       CLAY has
      provided to FSWC its basic commission schedule and FSWC will charge each
      Customer the commission shown on such schedule or which CLAY otherwise
      directs FSWC to charge on each transaction. CLAY’s basic
      commission schedule may be amended from time to time by written instructions
      to
      FSWC from CLAY;
      provided.,
      however, that FSWC shall be required to implement such changes only to the
      extent that they are within the usual capabilities of FSWC's data processing
      and
      operations systems and only over such reasonable time as FSWC may deem necessary
      or desirable to avoid disruption of FSWC's normal operational capabilities.
      FSWC
      may charge CLAY for
      changes in the basic commission schedule. CLAY’s basic
      commission schedule shall be within the format of FSWC's computer system and
      must be expressly agreed to by FSWC. 

     

    (ii)
       FSWC
      will
      charge CLAY for
      clearing services according to the fee schedule set forth in Schedule A attached
      hereto and incorporated herein for all purposes. As of the close of each month,
      FSWC shall forward to CLAY a
      statement setting forth the fees earned in accordance with Schedule A and the
      amounts due thereunder. These charges shall be promptly paid by CLAY. Charges
      may be modified from time to time by FSWC without re-execution of this
      Agreement. To implement new charges, FSWC will mail or telecopy a new Schedule
      A
      to CLAY;
      and
      the
      new charges shall become effective upon the expiration of 30 days from the
      date
      of such mailing or telecopy. Upon the expiration of such 30 days, the new
      Schedule A shall become a part of and modify this Agreement without any further
      action by the parties. During the pendency of such 30-day notice period, the
      previous charges shall continue to be effective. In addition, FSWC will charge
      CLAY expenses
      incurred by FSWC on behalf of CLAY pursuant
      to this Agreement. Expenses incurred by FSWC on behalf of CLAY that
      shall be deducted from any payments due to CLAY from
      FSWC
      include, but are not limited to, overlay of forms, system equipment expenses,
      changes to commission schedules and financial report information related
      thereto, installation of data communication lines and brokerage related credit
      inquiries, legal transfers, Regulation T extensions, Mailgrams (buy-in or
      sellout), microfiche of records, excess Security Investors Protection
      Corporation protection for Accounts and costs incurred in failure of
CLAY to
      provide social security or tax identification numbers. 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (b)
       Settlements.
      FSWC
      will collect all commissions from Customers on behalf of CLAY and
      through CLAY.
      Upon
      request, FSWC may make payments to CLAY against
      such commissions in advance of the monthly settlement contemplated by this
      Section 8(b); however, the amount of such payments shall be determined in FSWC's
      sole discretion based upon FSWC's experience with CLAY’s operations.
      

     

    As
      soon
      as practicable after the end of each month, FSWC will credit CLAY with
      the
      amount of commissions and other amounts collected by FSWC on CLAY’s behalf,
      and deduct all amounts due to FSWC from CLAY (including
      without limitation, Customers' unsecured debit items, however arising). FSWC
      shall pay CLAY
      the
amount
      by
      which the total owed CLAY exceeds
      the total owed FSWC, or shall send a statement to CLAY and
      CLAY shall
      pay
      FSWC the amount by which the total owed FSWC exceeds the total owed CLAY.
      If
      CLAY fails
      to
      make such payment, FSWC shall have the right to charge any other Account
      maintained by FSWC for CLAY or
      any
      other assets of CLAY held
      by
      FSWC (including the deposit required pursuant to Section 9 and positions and
      balances in CLAY Accounts)
      for the net amount due FSWC. Any failure by FSWC to charge any Account or assets
      of CLAY held
      by
      FSWC shall not act as a waiver of FSWC's right to demand payment of, or to
      thereafter charge CLAY’s Accounts
      for, the full amount due at any time. In addition, FSWC may establish on its
      books an "error account” for the account and risk of CLAY,
      upon
      terms and conditions which are consistent with custom and practice in the
      securities industry. The negative balance in such error account, if any, may
      at
      any time be charged by FSWC, in its sole discretion, to CLAY and
      FSWC
      may include such amount in the settlement statement from time to time.

     

    (c) 
      Training
      Expenses. FSWC may provide on-site training or other assistance which it deems
      necessary for the effective use of the FSWC system. CLAY shall
      be
      responsible for the prompt reimbursement of expenses upon receipt of an invoice
      from FSWC, incurred in connection with the training of CLAY personnel,
      including without limitation, travel, lodging, meals, incidentals, and amounts
      paid by FSWC to third parties under contracts to perform such services. However,
      FSWC shall have no obligation to provide such training or to supervise personnel
      of CLAY.
      

     

    9.
       DEPOSIT 

     

    (a)
       Contemporaneously
      with the signing of this Agreement, CLAY will
      deliver cash or securities to FSWC as specified in Schedule A attached, for
      deposit in an account maintained by FSWC (the "Deposit Account"). If at any
      subsequent time FSWC, in its sole discretion, requires an additional deposit,
      CLAY will
      deposit additional cash or securities in an amount specified by FSWC. Instead
      of
      making such additional deposit, CLAY may
      reduce CLAY's business
      volume or modify the nature of the securities involved in the CLAY's transactions
      ("business mix") as specified by FSWC. Any failure by FSWC to demand compliance
      with the requirement that CLAY
      either
      deposit additional amounts or modify CLAY's business
      mix shall not act as a waiver of FSWC's right to demand compliance with such
      requirements at any time. If the Deposit Account is not adequately funded as
      required by FSWC, FSWC may, in addition to all other rights under this
      Agreement, transfer cash or securities of CLAY held
      by
      FSWC in any other account to the Deposit Account. If CLAY fails
      to
      comply with a request by FSWC for an additional deposit, and FSWC does not
      transfer other cash or securities of CLAY to
      the
      Deposit Account, resulting in CLAY thereby
      electing to reduce its business or to modify its business mix, CLAY agrees
      that if FSWC determines it to be necessary, FSWC shall accept only liquidating
      transactions for Customer Accounts and that CLAY will
      give
      notice of such fact to Customers. If such notice is not given by CLAY to
      Customers in a timely manner, CLAY agrees
      that FSWC may give such notice to Customers. In addition to any and all other
      rights afforded at law, in equity, under any customer account agreement, under
      this Agreement, or otherwise, FSWC shall have the unlimited right to set-off
      any
      and all indebtedness or other obligations of CLAY to
      FSWC,
      whether arising under this Agreement, from debit balances in CLAY or
      Customer Accounts, or otherwise, against all or any portion of the Deposit
      Account. CLAY agrees
      that, if cash in the Deposit Account is insufficient to satisfy the indebtedness
      of CLAY to
      FSWC,
      or if this Agreement is terminated for any reason, FSWC shall have the right
      to
      liquidate securities deposited in the Deposit Account or maintained in any
      other
CLAY Account,
      without notice to CLAY,
      and
      to
      set off against the cash proceeds from such liquidation any and all indebtedness
      or other obligations of
      CLAY
      to
FSWC.
      

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (b)
       The
      cash
      and securities in the Deposit Account do not reflect or represent an ownership
      interest of FSWC in CLAY nor
      an
      ownership interest of CLAY in
      FSWC.
      When this Agreement has been terminated in accordance with the provisions hereof
      and FSWC has received payment in full of any and all amounts owing to it
      hereunder and CLAY has
      satisfied each and every of its outstanding obligations hereunder, FSWC shall
      return the cash and securities in the Deposit Account to CLAY within
      thirty (30) calendar days of the date on which all of said payments have been
      received and obligations satisfied. These obligations include, but are not
      limited to, any open and unsettled litigation matters between CLAY or
      its
      customers and FSWC, any unresolved unsecured Account debit balances, any open
      fails as a result of trades executed on behalf of any Accounts, and any failures
      to transfer to another broker any of your Customers' Accounts. 

     

    10.
       INDEMNIFICATION 

     

    (a)
       Indemnity.
      CLAY agrees
      to
      indemnify and hold harmless FSWC, each person who controls FSWC within the
      meaning of the Act and any other of the directors, officers, employees, agents
      and attorneys of FSWC ("FSWC Indemnified Persons") from and against all claims,
      demands, proceedings, suits and actions and all liabilities, losses, expenses
      and costs (including any legal and accounting fees and expenses) relating to
      FSWC's defense of any failure, for any reason, fraudulent or otherwise, by
      CLAY or
      CLAY’s employees
      or Customers to comply with any obligation under this agreement or any other
      agreement executed and delivered to FSWC in connection with FSWC's performance
      of services hereunder, and any act or failure to act by FSWC Indemnified
      Persons, except any act or failure to act which is the result of gross
      negligence or willful misconduct on the part of any such FSWC Indemnified
      Person. It is expressly agreed and understood that CLAY accepts
      full responsibility and liability for any act or failure to act by, if
      applicable, an independent agent or independent contractor used by CLAY in
      providing the services contemplated hereunder. Without limiting the generality
      of the foregoing, such failure is explicitly intended by the parties to include
      failure resulting from (i) suspension of trading or bankruptcy or insolvency
      of
      any company, securities of which are held in one or more Accounts; (ii) failure
      by any Customer or CLAY to
      maintain adequate margin; or (ill) breach of any obligation existing between
      CLAY and
      a
      customer of CLAY or
      any
      law, rule or regulation of the United States, a state or territory thereof,
      the
      SEC, the Federal Reserve Board or other authority, including but not limited
      to
      the CBOE, NYSE, OCC, GSCC, NASD, MSRB, DTC, NSCC, or any Transfer Agent,
      applicable to any transaction contemplated by this Agreement. 

     

    FSWC
      shall indemnify and hold CLAY harmless
      against any losses, claims, damages, liabilities or expenses, including without
      limitation, those asserted by its customers (which shall include, but not be
      limited to, all costs of defense and investigation and all attorney's fees)
      to
      which CLAY may
      become subject, insofar as such losses, claims, damages, liabili-ties or
      expenses arise out of, or are based upon the gross negligence or willful
      misconduct of FSWC or its employees in providing the services contemplated
      hereunder. 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    Promptly
      after receipt by any indemnified party under this Section of notice of the
      commencement of any action, such indemnified party will, if a claim in respect
      thereof is to be made against the indemnifying party under this Section, notify
      the indemnifying party of the commencement thereof; but the omission so to
      notify the indemnifying party will not relieve it from any liability that it
      may
      have to any indemnified party under this Section or otherwise. 

     

    In
      case
      any such action is brought against any indemnified party, and the indemnifying
      party receives notice of the commencement thereof, the indemnifying party will
      be entitled to participate in the defense thereof with counsel reasonably
      satisfactory to such indemnified party. Regardless of whether the indemnifying
      party elects to participate in the defense, the indemnified party shall have
      the
      right to employ separate counsel in any such action and to direct and control
      the defense thereof; and all fees and expenses of such counsel shall be the
      responsibility of the indemnifying party. 

     

    (b)
       Security
      Interest and Authorization to Offset.
      In
      order to secure the prompt payment when
      due
      of all indebtedness of any kind or character of CLAY to
      FSWC,
      whether arising under this Agreement, any Account agreement, by operation of
      law, or otherwise, now existing or hereafter arising, including without
      limitation, (i) any cost or expense resulting from failures to deliver or
      failures to receive securities, (ii) the amount of any unsecured debit balances
      in any Customer or CLAY Account
      which may exist at any time, and (iii) as and when incurred by FSWC, all amounts
      as to which FSWC shall be entitled to indemnification pursuant to the provisions
      of Section 10(a) (the "Obligation"), CLAY
      hereby
      grants to FSWC a first priority lien and security interest in and to any
CLAY Account
      (including Proprietary Accounts) maintained by FSWC and any other assets of
      any
      kind of CLAY now
      or
      hereafter held by FSWC. In addition to any and all other rights and remedies
      to
      which FSWC may be entitled under this Agreement or applicable law, upon the
      occurrence of a default in the payment of any portion of the Obligation as
      and
      when same becomes due, or following demand therefore by FSWC, FSWC may satisfy
      the payment of the Obligation, in whole or in part, by offsetting against any
      cash positions in such Account without prior notice thereof to CLAY.
      In
      this
      regard, FSWC shall have complete discretion to liquidate or sell any securities
      or other assets of CLAY
      from
      time
      to time held by FSWC, without notice to CLAY,
      and
      to
      offset against the proceeds of such sale(s) all or any part of the Obligation.
      No delay in proceeding against any CLAY Account
      or asset shall operate as a waiver of FSWC's right to do so at any future time
      as and when FSWC deems appropriate. In addition, FSWC shall have the unlimited
      right to set-off any part of the Obligation against any obligations of FSWC
      to
CLAY,
      including
      under the Deposit Account (as described in Section 9). 

     

    CLAY hereby
      constitutes and appoints FSWC as its lawful attorney-in-fact and grants to
      FSWC
      a power of attorney with full power and authority, in the name, place, and
      stead
      of CLAY,
      to
      exercise, do, or perform any act in connection with, arising out of, or relating
      to the exercise of any offset rights granted herein and the right to liquidate
      securities held by FSWC. This power of attorney further authorizes FSWC to
      sign,
      endorse, execute, acknowledge, deliver, receive, and possess all such notices,
      filings, agreements, covenants, conveyances, receipts and other documents or
      instruments in writing of whatever kind and nature as may be necessary or proper
      in the exercise of the rights and powers herein granted. 

     

    (c)
       Reserves.
      In
      connection with any claim that does or could give rise to a claim for
indemnification
      under this Section 10 for FSWC or an FSWC Indemnified Person, FSWC may, in
      its
      discretion, in addition to any and all other rights and remedies under this
      Agreement, reserve and retain any money, securities or other property of
CLAY pending
      a
      determination of such claim. The money, securities or other property of
CLAY set
      aside
      in such a reserve shall be subject to FSWC's standard lien and security interest
      described in Section 10(b) above. 

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    11.
       UNDERTAKINGS
      OF CLAY
      

     

    (a)
       Financial
      Statements and Other Reports.
      As soon
      as same become available, but in any event within 90 days after the end of
      each
      fiscal year of CLAY during
      the term hereof, CLAY will
      furnish to FSWC copies of CLAY’s balance
      sheet and statement of earnings for such fiscal year. Each such balance sheet
      and statement of earnings shall be certified by independent public accountants.
      CLAY also
      shall furnish FSWC with copies of its monthly and quarterly Focus filings
      simultaneously with the filing thereof. 

     

    (b)
       Other
      Clearing Services.
      During
      the term of this Agreement, CLAY will
      not
      offer the services contemplated hereunder to its Customers through a broker
      other than FSWC without prior written approval by FSWC. 

     

    (c)
       Suspension
      or Restriction.
      In the
      event that CLAY or
      any
      employee of CLAY shall
      become subject to suspension or restriction by any regulatory body having
      jurisdiction over CLAY and
      CLAY's securities
      business, CLAY will
      notify FSWC immediately and CLAY authorizes
      FSWC to take such steps as may be necessary for FSWC to maintain compliance
      with
      the rules and regulations to which FSWC is subject. CLAY further
      authorizes FSWC, in such event, to comply with directives or demands made upon
      FSWC by any exchange or regulatory body. In connection with such directives
      or
      demands, FSWC may seek advice or legal counsel and CLAY will
      reimburse FSWC for reasonable fees and expenses of such counsel. 

     

    (d)
       No
      Liens or Encumbrances.
      During
      the term of this Agreement and for so long thereafter
      as FSWC shall maintain any Proprietary Account(s) for CLAY or
      hold
      any cash or securities pursuant to the deposit arrangement specified in
      Paragraph 9 hereof ("Deposit"), CLAY will
      not,
      directly or indirectly, without the prior written consent of FSWC, (i) create,
      incur, or suffer or permit to be created or incurred or to exist any lien,
      security interest or other encumbrance upon or against any of the Proprietary
      Account(s) or the Deposit, other than the liens, security interests and other
      rights held by FSWC as provided for herein, or (ii) except for routine trading
      activity conducted in the ordinary course of the brokerage business of
CLAY,
      transfer,
      assign or otherwise convey all or any portion of the Proprietary Account(s)
      or
      the Deposit to any other person or entity. 

     

    (e)
       Underwritings;
      Power of Attorney.
      During
      the term of this Agreement and for so long thereafter as CLAY may
      be
      indebted to FSWC under the further terms of this Agreement, CLAY will
      not,
      without the prior written consent of FSWC, engage or participate in the
      underwriting of any securities offering. In the event CLAY shall
      hereafter engage or participate in the underwriting of any securities offering,
      CLAY hereby
      constitutes and appoints FSWC as its lawful attorney-in-fact and grants to
      FSWC
      a power of attorney with full power and authority, in the name, place, and
      stead
      of CLAY,
      to
      exercise, do, or perform any act, right, power, duty, or obligation whatsoever
      that CLAY now
      has
      or may acquire the legal right, power, or capacity to exercise, do, or perform
      in connection with, arising out of, or relating to the exercise of any
      over-allotment rights or privileges held by CLAY in
      connection with such underwriting or CLAY's participation
      therein. This power of attorney further authorizes FSWC to sign, endorse,
      execute, acknowledge, deliver, receive, and possess all such contracts,
      agreements, options, covenants, conveyances, receipts and other documents or
      instruments in writing of whatever kind and nature as may be necessary or proper
      in the exercise of the rights and powers herein granted. This power of attorney
      shall be conclusive proof that the rights, powers, and authority granted to
      FSWC
      are in full force and effect and may be relied upon by any person who acts
      in
      good faith under this power of attorney. 

     

    (f)
       Regulatory
      Investigations.
      CLAY will
      cooperate with FSWC in any investigation which FSWC shall undertake with the
      NASD, the SEC and any other regulatory body regarding the history,
      qualifications, disciplinary actions, sanctions, investigations and similar
      matters regarding CLAY and/or
      any of its registered representatives. Specifically, CLAY agrees
      to
      cause, or use its best efforts to cause, each registered representative of
      CLAY
      to
execute
      and deliver such consents, approvals and authorizations regarding such
      regulatory bodies as may be necessary in order for FSWC to complete its
      investigation. 

     

    (g)
       Net
      Capital Requirements. CLAY shall
      at
      all times maintain net capital levels which are in compliance with all
      applicable rules and regulations of the SEC, including without limitation SEC
      Rule 15c3-1, and other rules and regulations of any other regulatory body having
      jurisdiction with respect thereto. FSWC shall have no obligation to determine
      the net capital position of CLAY or
      whether or not such is in compliance with applicable net capital rules; all
      responsibility for such determinations shall rest with CLAY and
      CLAY shall
      notify FSWC of any change in its net capital position which effects its
      regulatory status in any manner, such notice to be provided verbally to FSWC
      within 24 hours after the determination of such change, to be followed by
      written notification within 3 business days. 

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (h)
       Merger,
      Consolidation, etc.
      In the
      event CLAY shall
      initiate, solicit, conduct, or negotiate with respect to, any merger,
      consolidation, acquisition, sale of substantially all of its assets, or other
      business combination of CLAY by,
      with
      or through any other entity, CLAY shall
      provide verbal notice thereof to FSWC within 24 hours of the initiation of
      discussions with respect to any such transaction, to be followed by written
      notification within 3 business days. During the term of this Agreement,
CLAY will
      not,
      without the prior written consent of FSWC, consummate any such merger,
      consolidation, acquisition, sale or other combination. 

     

    (i)
       Producing
      Documents and Providing Testimony.
      CLAY shall
      reimburse FSWC immediately upon request for any and all costs incurred by FSWC
      in responding to any document request, subpoena or similar demand or order
      (any
      such being herein referred to as a "Demand") issued in connection with any
      investigation, court proceeding, arbitration, regulatory inquiry or otherwise,
      regarding any of the business or activities of CLAY,
      its
      employees, principals, agents or customers. Such costs shall include, without
      limitation, all costs and expenses associated with travel, food and lodging
      incurred in personal appearances by personnel or attorneys of FSWC in response
      to a Demand, reasonable compensation for time expended by personnel and
      attorneys of FSWC (including, without limitation, compensation for the services
      of counsel employed on a full-time basis by FSWC) in responding to a Demand,
      copying costs, communications costs, mailing and delivery expenses and computer
      structuring fees. 

     

    12.
       TERMINATION
      OF AGREEMENT: TRANSFER OF ACCOUNTS 

    (a)  
      Effectiveness.
      Unless
      earlier terminated as provided herein, this Agreement shall
      remain in force for an initial term of eighteen months from the effective date
      hereof, subject to any required approval by the NASD. At any time during the
      forty-five (45) day period immediately preceding the conclusion of the initial
      eighteen month term (the ''Notice Period"), either party may terminate this
      Agreement by giving forty-five (45) days prior written notice to the other
      party. In the event no written notice of termination is given during the Notice
      Period, this Agreement shall automatically be renewed for an additional one-year
      period and may continue to be renewed for subsequent one-year periods until
      terminated as provided herein. 

     

    (b)
       Termination
      by FSWC.
      Notwithstanding Section 12(a), FSWC may terminate this Agreement
      at any time by giving forty-five (45) days prior written notice and may
      terminate at any time on twenty-four (24) hours written notice to CLAY in
      the
      event that CLAY:
      

     

    (i)   
       fails
      to
      comply with the terms of this Agreement and upon notification by FSWC
fails
      to
      begin compliance within 10 days from said notification; or 

     

    (ii) 
       is
      enjoined, prohibited or suspended, as a result of an administrative or judicial
      proceeding, from engaging in securities business activities constituting all
      or
      portions of CLAY’s securities
      business, which injunction, prohibition or suspension, in FSWC's judgment,
      makes
      impracticable the fully disclosed clearing relationship established in this
      Agreement. 

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    (i)  
       Either
      CLAY or
      FSWC
      is no longer registered as a broker/dealer with the SEC; or 

     

    (ii) 
       Either
      CLAY or
      FSWC
      is no longer a member in good standing of the NASD; or 

     

    (iii)
       CLAY ceases
      to
      operate as a Broker/Dealer; or 

     

    (iv)
       FSWC
      is
      suspended by any national securities exchange of which FSWC is a member
      for failure to comply with the rules and regulations thereof; or 

     

    (v)
       FSWC
      ceases to operate a Correspondent Clearing Operation/Division; or 

     

    (vi)
       CLAY or
      any
      Guarantor hereof shall make a general assignment for the benefit of creditors
      or shall petition or apply to any tribunal for the appointment of a trustee,
      custodian, receiver or liquidator of all or any substantial part of its
      business, estate or assets or shall commence any proceeding under any debtor
      relief laws of any jurisdiction; or any such petition or application shall
      be
      filed or any such proceeding shall be commenced against CLAY or
      any
      Guarantor, and CLAY or
      such
      Guarantor by any act or omission shall indicate approval thereof, consent
      thereto or acquiescence therein; or an order shall be entered appointing a
      trustee, custodian, receiver or liquidator of all or any substantial part of
      the
      assets of CLAY and/or
      such Guarantor or granting relief to CLAY and/or
      such Guarantor or approving the petition in any such proceeding, and such order
      shall remain in effect for more than thirty (30) days. As used herein, the
      term
      "debtor relief laws" shall mean any applicable liquidation, conservatorship,
      bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar
      laws affecting the rights or remedies of creditors generally, as in effect
      from
      time to time. 

     

    (d)
       Conversion
      of Accounts.
      In the
      event that this Agreement is terminated for any reason, it shall
      be
CLAY's responsibility
      to arrange for the conversion of CLAY and
      Customer Accounts to another clearing broker. CLAY will
      give
      FSWC notice (the "Conversion Notice") of: 

     

    (i)
       the
      name
      of the broker that will assume responsibility for clearing services for
Customers
      and CLAY;
      

     

    (ii)
       the
      date
      on which such broker will commence providing such services; 

     

    (iii)
       CLAY's undertaking,
      in form and substance satisfactory to FSWC, that CLAY's agreement
      with such broker provides that such broker will accept on conversion all
CLAY and
      Customer Accounts, then maintained by FSWC; and 

     

    (iv)
       the
      name
      of an individual within that organization who may be contacted by FSWC to
      coordinate the conversion. The Conversion Notice shall accompany CLAY's notice
      of
      termination given pursuant to Section 12(a) or within thirty (30) days of the
      occurrence of an event specified in Section 12(c) or a termination by FSWC.
      

     

    FSWC
      shall not be responsible for transfers not within the normal capabilities of
      its
      data processing and operational systems or for delays necessary to avoid
      disruption of its normal operations. 

     

    If
      CLAY fails
      to
      provide the Conversion Notice to FSWC within the time prescribed, FSWC may
      give
      to Customers of CLAY such
      notice as FSWC deems appropriate of the termination of this Agreement and may
      make such arrangements with the Customers as FSWC deems appropriate for transfer
      or delivery of Customer and CLAY Accounts.
      

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    CLAY will
      pay
      to FSWC a termination fee equal to the greater of (i) the actual costs and
      expenses incurred by FSWC in discontinuing the clearing arrangement hereunder
      and transferring the Accounts pursuant to the request of CLAY
      (ii)
      $10,000. Said termination fee shall be paid within 10 days after CLAY's receipt
      of FSWC's statement setting forth in reasonable detail the costs and expenses
      incurred by FSWC. FSWC's determination of the costs and expenses relating to
      the
      discontinuance of the clearing arrangement hereunder and the transferring of
      the
      Accounts shall be conclusive and binding on the parties hereto, absent a showing
      of manifest error. The obligation of CLAY to
      pay
      the termination fee as specified herein shall be and become a part of the
      Obligation and, if not paid when due, shall become subject to FSWC's rights
      of
      offset as provided under the terms of this Agreement. 

     

    (e) 
       Survival.
      Termination of this Agreement shall not affect FSWC's rights or liabilities
      relating to business transacted prior to the effective date of such termination.
      From the date of termination until transfer or delivery of all Customer and
      CLAY Accounts,
      FSWC's rights and liabilities relating to business transacted after such
      termination shall be governed by the same terms as those set forth in this
      Agreement. In addition, the terms and provisions of Sections 8, 9, 10, 12(d),
      13, 16, 17, 18, and Subsections (g), (I), (m), and (0) of Section 19 of this
      Agreement shall not be affected by any termination hereof, and such terms and
      provisions shall survive any such termination and shall remain in full force
      and
      effect without modification. 

     

    (f) 
       No
      Obligation to Release.
      FSWC
      shall not be required to release to CLAY any
      securities or cash held by FSWC for CLAY in
      one or
      more CLAY Accounts
      until (i) any amounts owing to FSWC pursuant to the provisions of this Agreement
      are paid; (ii) CLAY’s outstanding
      obligations hereunder to FSWC are determined, including determination of any
      disputed amounts, and satisfied; and (iii) any Property of FSWC in the
      possession of CLAY is
      returned to FSWC. 

     

    (g)
       Effect
      of Termination Under Certain Circumstances.
      In the
      event this Agreement is terminated (A) by FSWC pursuant to the provisions of
      Subsections l2(b)(i) or l2(b)(ii) or (B) automatically under Subsections
      l2(c)(i), l2(c)(ii), l2(c)(iii) and/or l2(c)(vi) by reason of CLAY being
      no
      longer registered as a broker/dealer, no longer a member in good standing of
      the
      NASD, ceasing to operate as a broker/dealer and/or becoming subject to debtor
      relief laws, then in any such event, the obligations of CLAY to
      make
      the minimum monthly fee payments for each of the months remaining on the term
      of
      this Agreement, as provided in Schedule A attached hereto, shall be accelerated
      and automatically become immediately due and payable without further action
      of
      any kind or character whatsoever by FSWC. In determining the amount which shall
      become immediately due and payable pursuant to the preceding sentence, the
      minimum monthly fee payment shall be multiplied by the number of months
      remaining for the contractually expressed term of this Agreement as same was
      in
      effect immediately prior to the date of termination. The amount so determined
      and accelerated shall become immediately subject to the right of set-off by
      FSWC
      as against the Deposit Account, any other Accounts of CLAY and/or
      any obligations of FSWC to CLAY.
      

     

    (h)
       SIPC
      Subordination.
      In the
      event of a determination that the amount payable by CLAY upon
      termination pursuant to the provisions of the preceding subparagraph l2(g)
      constitutes a termination fee, penalty or is otherwise considered a charge
      to
      the net capital of CLAY,
      then
      in
      the event that CLAY is
      or
      becomes the subject of the issuance of a protective decree pursuant to the
      Securities Investor Protection Act of 1970 (I5 U.S.C. Sec. 78aaa-lll), FSWC's
      claim for payment of such amount upon termination of this Agreement shall be
      subordinate to the claims of customers of CLAY that
      are
      approved by the Trustee appointed by the Securities Investor Protection
      Corporation pursuant to the issuance of such protective decree. 

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    13.
       CONFIDENTIALITY
      AND CONFIDENTIAL NATURE OF DOCUMENTS 

     

    FSWC
      will
      hold the names and addresses of CLAY's Customers
      in confidence and will not disclose them to any third parties, except to the
      extent necessary to comply with court process, judicial orders, investigative
      process and administrative requests from the SEC, NASD or other regulatory
      body
      having jurisdiction, or any applicable laws, rules or regulations. FSWC will
      not
      use such information for any purposes not contemplated within this Agreement.
      

     

    CLAY acknowledges
      that the services offered by FSWC under this Agreement, including the systems,
      software, procedures, facilities, and staff are proprietary, and represent
      valuable assets of FSWC. Accordingly, CLAY agrees
      that it will not make use of such services for any purposes not specifically
      contemplated within this Agreement, nor will it disclose to any third parties
      the terms of this Agreement or the assets of FSWC, except to its employees
      on a
      need-to-know basis and except to the extent necessary to comply with court
      process, judicial orders or any applicable laws, rules or regulations.

     

    14.
       EMPLOYEES 

     

    Without
      FSWC's prior written consent, CLAY will
      not
      solicit, or engage in negotiations with, any person who is, or within the
      preceding 12 months has been, employed by FSWC for the purpose of inducing
      such
      person to become employed or otherwise associated with CLAY.
      In
      the
      event CLAY does
      hire
      said person, or such person otherwise becomes associated with CLAY,
      then
      CLAY shall
      pay
      to FSWC the sum of $10,000.00 as liquidated damages for the loss sustained
      or to
      be sustained by FSWC in connection therewith, such payment to be made no later
      than thirty (30) days after said employee becomes employed or associated with
      CLAY.
      

     

    15.
       CUSTOMER
      COMPLAINT PROCEDURES 

     

    CLAY will
      be
      responsible for the handling of all Customer complaints. FSWC agrees to furnish
      promptly any written customer complaint received by FSWC regarding CLAY or
      its
      associated persons relating to functions and responsibilities allocated to
      CLAY pursuant
      to this Agreement directly to: (i) CLAY;
      and
      (ii)
      the NASD as the designated examining authority of CLAY.
      FSWC
      shall notify the customer submitting the complaint, in writing, that it has
      received the complaint and that the complaint has been furnished to CLAY and
      to
      the NASD as the designated examining authority of CLAY.
      CLAY specifically
      authorizes and directs FSWC to furnish such written complaints and provide
      such
      notices in the manner set forth in the two preceding sentences. If any complaint
      received by CLAY is
      based
      upon an alleged act or failure to act by FSWC, CLAY will
      notify FSWC promptly of such complaint and the basis therefore. CLAY will
      consult with FSWC regarding such complaint and the parties will cooperate in
      determining the validity of such complaint and the appropriate action to be
      taken. However, FSWC shall, at all times, be free to take such actions with
      regard to any such complaint as it deems necessary or appropriate to protect
      and
      preserve the interests of FSWC. 

     

    16.
       REMEDIES
      CUMULATIVE 

     

    The
      enumeration herein of specific remedies shall not be exclusive of any other
      remedies. Any delay or failure by any party to this Agreement to exercise any
      right, 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, nor to limit the exercise of such right,
      power, remedy or privilege, nor shall it preclude the further exercise thereof
      or the exercise of any other right, power, remedy or privilege. 

     

    17.
       GUARANTEE 

     

    The
      corporation or individual(s) who guarantee the obligations of CLAY under
      this Agreement by executing the signature lines designated for such purpose
      at
      the end of this Agreement (the "Guarantor(s)"), in consideration of FSWC’s
      entering into the Agreement, do(es) hereby personally guarantee(s) (jointly
      and
      severally, if more than one) the performance by CLAY
      of the
      provisions of this Agreement (including without limitation the indemnification
      provisions of Section 10) and shall promptly pay any amount that is not paid
      by
CLAY
      to FSWC
      under the Agreement. This is an absolute, unconditional and unlimited guarantee
      of payment and may be proceeded upon by FSWC or an FSWC Indemnified Person
      before filing any action against CLAY
      or
      after
      any action against CLAY
      has
      been
      commenced. Guarantor(s) grants to FSWC a first lien and security interest on
      any
      and all money and securities of a Guarantor(s) held at any time by FSWC. FSWC
      shall have the unlimited right to set-off any amounts owed to it by Guarantor(s)
      against any obligation of FSWC to Guarantor(s). FSWC also shall have the
      absolute and unlimited right to sell, transfer, or liquidate any of the assets
      in any of Guarantor(s)' accounts with FSWC for any amounts owed to it by
CLAY
      or
      Guarantor(s). The obligations of the Guarantor(s) shall not be discharged or
      impaired or otherwise affected by the failure of FSWC or an FSWC Indemnified
      Person to assert, claim, demand or enforce any remedy under this Agreement,
      nor
      by waiver, modification or amendment of this Agreement or any compromise,
      settlement or discharge of obligations of CLAY
      under
      this Agreement, or any release or impairment of any collateral by FSWC or an
      FSWC Indemnified Person. 

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    18.
       LIMIT
      ON LIABILITY; NO CONSEQUENTIAL DAMAGES 

     

    In
      any
      action by CLAY
      against
      FSWC for any claim arising out of the relationship created by this Agreement,
      FSWC shall only be liable to CLAY
      in
      cases
      of gross negligence or willful misconduct, and in such cases FSWC shall only
      be
      liable for the amount of actual monetary losses suffered by CLAY.
      CLAY shall
      not, in any such action or proceeding, or otherwise, assert any claim, or be
      or
      become entitled to any recovery, against FSWC for consequential damages on
      account of any loss, cost, damage or expense which CLA
      Y
may
      suffer or incur related to transactions in connection with this Agreement or
      otherwise, including, but not limited to, any lost opportunity claims.

     

    19.
       MISCELLANEOUS 

     

    
      
        (a)
          Tax
          Reporting.
          FSWC
          shall be responsible for providing IRS form 1099 and other information
          required
          to be reported by federal, state or local tax laws, rules or regulations,
          to
          Accounts solely with respect to events subsequent to the effective date
          of this
          Agreement and for the mailing of same. 

         

        (b)Scope
          of services.
          FSWC
          shall limit its services pursuant to the terms of this Agreement to those
          services expressly set forth herein and related thereto. FSWC shall perform
          such
          services as agent for CLAY.
          

         

        (c)
           Modification.
          This
          Agreement may be modified only by a writing signed by both parties to
          this
          Agreement. Such modification shall not be deemed as a cancellation of this
          Agreement. Subject to the Conduct Rules of the NASD, this agreement and
          all
          modifications may be required to be submitted to the NASD for approval
          prior to
          effectiveness. It is expressly understood that brokerage services cannot
          be
          provided by CLAY
          under
          this Agreement until such approval, if required, is received. 

         

        (d)
           Assignment.
          This
          Agreement shall be binding upon all successors, assigns or transferees
          of
          both
          parties hereto, irrespective of any change with regard to the name of or
          the
          personnel of CLAY
          or
          FSWC.
          Any assignment of this Agreement shall be subject to the requisite review
          and/or
          approval of any regulatory or self-regulatory agency or body whose review
          and/or
          approval must be obtained prior to the effectiveness and validity of such
          assignment. No assignment of this Agreement by CLAY
          shall
          be
          valid unless FSWC consents to such an assignment in writing. Any assignment
          by
          FSWC to any majority- owned subsidiary that they may create or to an affiliated
          company controlling, controlled directly or indirectly by, or under common
          control with, FSWC will be deemed valid and enforceable in the absence
          of any
          consent from CLAY.
          Neither
          this Agreement nor any operation hereunder is intended to be, shall not
          be
          deemed to be, and shall not be treated as, 

      

    

    

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    a
      general
      or limited partnership, association or joint venture relationship between
CLAY
      and
      FSWC.

     

    (e)
       Account
      Documentation.
      Applicable laws and regulations require that FSWC must have proper documentation
      to support any account opened on its books. If, after reasonable requests
      therefor, the necessary documents to enable FSWC to comply with such account
      documentation requirements of the laws and regulations have not been received
      by
      FSWC, CLA
      Y
shall
      receive notification that no further orders will be accepted for the Account
      involved. This Agreement is not in any way intended to limit the responsibility
      of FSWC under the laws and regulations with respect to Accounts. 

     

    (f) 
       Governing
      Law.
      The
      construction and effect of every provision of this Agreement, the rights of
      the
      parties hereunder and any questions arising out of this Agreement, shall be
      governed by and construed in accordance with the substantive laws of the state
      of Texas. 

     

    (g)
       Arbitration.
      In the
      event of a dispute between the parties hereto, such dispute shall be settled
      by
      arbitration before arbitrators sitting in Dallas, Texas in accordance with
      the
      Code of Arbitration Procedures of the NASD, or such other codes of procedure
      of
      the NASD as may then be in effect. The arbitrators may allocate attorneys'
      fees
      and arbitration costs between the parties, and such award shall be final and
      binding upon the parties and judgment thereon may be entered in any court of
      competent jurisdiction. 

     

    (h)
       Headings.
      The
      headings preceding the text, articles and sections hereof have been inserted
      for
      convenience and reference only and shall not affect the meaning, construction
      or
      effect of this Agreement. 

     

    (i)  
       Entire
      Agreement.
      This
      Agreement represents the final and entire agreement of the parties hereto with
      respect to the subject matter hereof This Agreement shall cover only the types
      of services set forth herein and is in no way intended, nor shall it be
      construed, to bestow upon CLAY
      or
      FSWC
      any special treatment regarding any other arrangements, agreements or
      understandings that presently exist between CLAY
      and
      FSWC
      or that may hereafter exist. CLAY
      shall
      be
      under no obligation whatsoever to deal with FSWC or any of its subsidiaries
      or
      any companies controlled directly or indirectly by or affiliated with FSWC,
      in
      any capacity other than as set forth in this Agreement. Likewise, FSWC shall
      be
      under no obligation whatsoever to deal with CLA
      Y
or
      any of
      its affiliates in any capacity other than as set forth in this Agreement.

     

    (j)   
      Severability.
      If any
      provision or condition of this Agreement shall be held to be invalid or
      unenforceable by any court, or regulatory or self-regulatory agency or body,
      such invalidity or unenforceability shall attach only to such provision or
      condition. The validity of the remaining provisions and conditions shall not
      be
      affected thereby and this Agreement shall be carried out as if any such invalid
      or unenforceable provision or condition were not contained herein.

     

    (k)  
      Force
      Majeure.
      The
      parties hereto shall be excused for liability for non-performance of this
      Agreement arising from any external event beyond any party's control whether
      or
      not foreseeable by either party, in the nature of acts of war, civil uprising,
      imposition of martial law, riots, acts of God, labor disturbances, trading
      suspensions, general communications or transportation failures, fire,
      earthquakes, and other similar events or circumstances to those enumerated
      above. 

     

    (I)  
      Interpleader.
      If FSWC
      receives conflicting claims from CLAY,
      a
      Customer and/or other persons regarding money, securities or other property
      held
      by FSWC, FSWC may, in its discretion, tender such money, securities or other
      property to a court of competent jurisdiction and institute an action in
      interpleader or other appropriate legal proceeding to determine the rights
      of
      the respective claimants. FSWC shall have no liability to CLAY
      in
      connection with any such action, and shall be entitled to reimbursement for
      its
      costs and expenses in connection with such action from CLAY.

     

     

    (m)
       Notice.
      For the
      purposes of any and all notices, consents, directions, approvals, restrictions,
      requests
      or other communications required or permitted to be delivered hereunder, FSWC's
      address shall be: 

    

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    

      
        	 	
                Attention:
                  

              	
                Stephen
                  M. Samberg 

              
	 	 	
                First
                  Southwest Company 

              
	 	 	
                325
                  N. St. Paul Street, Suite 800

              
	 	
                 

              	
                Dallas,
                  Texas 75201 

              
	 	
                 

              	 
	 	
                and
                  CLAYs address shall be: 

              
	 	
                 

              	 
	 	
                Attention:
                  

              	
                Ara
                  Proudian Charleston Capital 

              
	 	
                 

              	
                216
                  East 45th Street 9th Floor 

              
	 	
                 

              	
                New
                  York, NY 10017

              

      

       

    

    Either
      party may provide such notice or change its address for notice purposes by
      giving written notice pursuant to registered or certified mail, return receipt
      requested, of the new address to the other party. 

     

    (n)
       Counterparts:
      NASD Approval.
      This
      Agreement may be executed in one or more counterparts, all of which taken
      together shall constitute a single agreement. When each party hereto has
      executed and delivered to the other a counterpart, this Agreement shall become
      binding on both parties, subject only to any required approval by the NASD.
      If
      required by the NASD, FSWC will submit this Agreement to the NASD promptly
      following execution and will notify CLAY,
      or
      cause
CLAY
      to
      be
      notified, promptly upon receipt of such approval. 

     

    (0)
       Disclosure
      of Relationship with FSWC.
      CLAY
      shall
      not
      hold itself out or represent to 

    any
      third
      party, including Customers, that it is affiliated with or is the agent of FSWC.
      Notwithstanding the above, CLAY
      may
      specifically represent that "customer accounts are cleared and carried by FSWC."
      

     

    20.
      AGREEMENT REGARDING PROPRIETARY ACCOUNTS. 

     

    In
      conformity with the SEC No-Action Letter dated November 3, 1998 (the "No-Action
      Letter"), relating to the capital treatment of assets in the proprietary
      accounts of an introducing broker ("PAIB"), CLAY
      and
      FSWC
      agree as follows: 

     

    (a.)
       FSWC
      shall perform a computation for PAIB assets ("PAIB Reserve Computation") of
      CLAY
      in
      accordance with the customer reserve computation set forth in SEC Rule 15c3-3
      ("customer reserve formula") with the following modifications: 

     

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

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

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

     

    (iii)
       Neither
      Note E(1) to Rule 15c3-3a nor NYSE Interpretation /04 to Item 10 of Rule
      15c3-3a regarding securities concentration charges shall be applicable to the
      P
      AIB reserve computation. 

     

    
      
        (b.)  The
          PAIB
          reserve computation shall include all proprietary accounts of CLAY.
          All
          PAIB
          assets shall be kept separate and distinct from customer assets under the
          customer reserve formula in Rule 15c3-3. CLAY
          shall
          be
          responsible for identifying to FSWC all proprietary accounts, whether now
          existing or hereafter established or opened. 

         

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

         

        (d.)
           FSWC
          shall establish and maintain a separate "Special Reserve Account for the
          Exclusive Benefit of Customers" with a bank in conformity with the standards
          of
          paragraph (f) of Rule 15c3·3 ("PAIB Reserve Account"). Cash and/or qualified
          securities as defined in the customer reserve formula shall be maintained
          in the
          PAIB Reserve Account in an amount equal to the PAIB reserve requirement.
          

         

        (e.)
           lf
          the
          PAIB reserve computation results in a deposit requirement, the requirement
          may
          be satisfied to the extent of any excess debit in the customer reserve
          formula
          of the same date. However, a deposit requirement resulting from the customer
          reserve formula shall not be satisfied with excess debits from the P AIB
          reserve
          computation. 

         

        (f.)
           Within
          two business days of entering into this Agreement, CLAY
          shall
          notify its designated examining authority in writing (with copy to FSWC)
          that it
          has entered into this Agreement regarding PAIB Reserve Computation.

         

        (g.)
           Commissions
          receivable and other receivables of CLAY
          from
          FSWC
          (excluding the Deposit)
          that are otherwise allowable assets under the net capital rule may not
          be
          included in the PAIB Reserve Computation, provided the amounts have been
          clearly
          identified as receivables on the books and records of CLAY
          and
          as
          payables on the books of FSWC. 

         

        (h.)
           Upon
          discovery that any deposit made to the PAIB Reserve Account did not satisfy
          its
deposit
          requirement, CLAY
          shall
          by
          facsimile or telegram immediately notify its designated examining authority
          and
          the SEC. Unless a corrective plan is found acceptable by the SEC and the
          designated examining authority, FSWC shall provide written notification
          within 5
          business days of the date of discovery to CLAY
          that
          PAIB
          assets held by FSWC shall not be deemed allowable assets for net capital
          purposes. The notification shall also state that, if CLAY
          wishes
          to
          continue to count its PAIB assets as allowable, it has until the last business
          day of the month following the month in which the notification was made
          to
          transfer all PAIB assets to another clearing broker. However, if the deposit
          deficiency is remedied before the time at which CLAY
          must
          transfer its PAIB assets to another clearing broker, CLAY
          may
          choose to keep its assets at FSWC. 

         

        (i.)
           The
          parties shall adhere to the terms of the No-Action Letter, including the
          Interpretations
          set forth therein, in all respects. 

      

    

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    21.
       CASH
      FORCE VISA PROGRAM 

     

    From
      time
      to time during the term of this Agreement, FSWC may be or become a party to
      a
      VISA Processing Agreement, or similar contract (the "VISA Agreement") with
      a
      bank: or other party (the "VISA Provider") authorized to establish and offer
      participation in a VISA card program. Pursuant to the VISA Agreement, if
      requested by CLAY, FSWC may, but shall not be obligated to, provide eligible
      Customers with the ability to access certain assets in their Accounts, through
      the use of VISA cards, VISA checks and/or automatic teller machine (ATM)
      transactions which are part of the Cash Force VISA Program (the "Program")
      maintained by FSWC. Pursuant to the Program, if requested by CLAY, FSWC may,
      but
      shall not be obligated to, recommend that the VISA Provider establish VISA
      accounts for those Customers who are eligible to participate in the Program
      and
      who enter into appropriate customer agreements and documentation with FSWC
      and
      the VISA Provider. 

     

    In
      the
      event CLAY requests FSWC to offer participation in the Program to CLAY's
      eligible Customers and FSWC agrees to offer such participation, then, as part
      of
      CLAY's obligations under this Agreement, CLAY agrees to fully cooperate with
      FSWC and/or the VISA Provider and to comply promptly with all procedures
      applicable to operation of the Program as specified by FSWC and/or the VISA
      Provider, including, without limitation, all procedures applicable to the
      operation of the Program with respect to eligibility requirements, agreements,
      forms, materials, notifications and disclosures, credit terms and conditions.
      Procedures specified by FSWC and/or the VISA Provider with respect to the
      operation of the Program may be in the form of a written procedures manual,
      guide or brochure, one or more memoranda, contract provisions, or other written
      or oral instructions as amended or in effect from time to time. 

     

    In
      consideration of the offering of participation in the Program to eligible
      Customers, CLAY and FSWC agree that CLAY's indemnification and hold harmless
      obligations as set forth in this Agreement, including those under Section 10
      hereof, shall include and cover, without limitation, any and all claims,
      liabilities, losses and costs incurred or suffered by FSWC resulting from or
      in
      connection with the use of VISA cards or checks issued or provided to Customers
      of CLAY
      participating
      in the Program, including, without limitation, any claims, liabilities, losses
      and costs resulting from the unauthorized use of the cards or checks.

     

    22.
       ALLOCATION
      OF RESPONSIBILITIES FOR AML COMPLIANCE 

     

    Responsibility
      for compliance with the anti-money laundering ("AML") provisions of the Bank:
      

    Secrecy
      Act, as amended by the USA PATRIOT Act ("PATRIOT Act"), and other applicable
      laws and rules (including privacy regulations and other confidentiality
      requirements), with respect to introduced Accounts, shall be allocated between
      FSWC and CLAY
      as set
      forth
      below. 

     

    (a.)
       CLAY's
      AML Responsibilities 

     

    (1.)
       Establishing
      and maintaining an AML compliance program (PATRIOT Act § 352
      and
      SRO rules). 

     

    (2.)
       Notifying
      relevant SROs of CLAY's
      designated
      AML officer(s). 

     

    (3.)
       CTR
      and
      CMIR reporting, if applicable. 

     

    (4.)
       Monitoring
      for suspicious activity; and suspicious activity (SAR-SF) reporting (PATRIOT
      Act § 356). 

     

    (5.)
       Consulting
      with FSWC when required to file any reports concerning introduced Account
      and providing FSWC with any information requested by FSWC relating to such
      reports. 

     

    (6.)
       Obtaining
      and verifying customer identifying information (PATRIOT Act § 326);
      and
      otherwise conducting AML "know-your-customer" measures. 

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    (7.)
       Consistent
      with item # 3 below under FSWC's AML Responsibilities, screening for
      identifying individuals from OF AC prohibited countries. 

     

    (8.)
       Conducting
      enhanced due diligence for private banking accounts (PATRIOT Act
      §312). 

     

    (9.)
       Conducting
      enhanced due diligence for correspondent foreign bank accounts (PATRIOT
      Act § 312). 

     

    (10.)
       Compliance
      with any special measures imposed by the Secretary of the Treasury for
      jurisdictions, financial institutions, or international transactions of primary
      money laundering concern (PATRIOT Act § 311). 

     

    (11.)
       Closing
      all accounts for prohibited foreign shell banks, and obtaining certifications/recertifications
      regarding accounts for foreign banks, to include appropriate representations
      concerning foreign shell banks and information concerning the foreign bank's
      ownership and U.S. agent for service of process (PATRIOT Act §§ 313 and 319).

     

    (12.)
       Responding
      to requests made by the Financial Crimes Enforcement Network ("FinCEN")
      on behalf of a federal law enforcement agency investigating terrorist activity
      or money laundering; and submitting a notice to FinCEN concerning voluntary
      information sharing and complying with all requirements concerning the
      confidentiality of shared information (PATRIOT Act § 314). 

     

    (13.)
       Providing
      to FSWC, where permissible: copies of all Forms, CTR, CMIR, and SAR-SF,
      and any other reports CLA
      Y
is
      required to file, concerning any introduced Account; copies of notices to FinCEN
      pursuant to PATRIOT Act §314(b); copies of certifications/recertifications
      regarding accounts for foreign banks. 

     

    (14.)
       Providing
      prompt notice to FSWC of any circumstances requiring CLAY
      to
      terminate an introduced Account pursuant to the PATRIOT Act (e.g., §§ 313, 319).

     

    (15.)
       Providing
      ongoing AML training to appropriate personnel (PATRIOT Act § 352 and
      SRO
      rules). 

     

    (16.)
       Implementing
      an independent audit program to evaluate the effectiveness of CLAY's
      AML
      compliance program (PATRIOT Act § 352 and SRO rules). 

     

    (17.)
       Compliance
      with all recordkeeping requirements in connection with the above responsibilities.
      

     

    (b).
       FSWC's
      AML Responsibilities 

     

    (1.)
       Establishing
      and maintaining an AML compliance program (PATRIOT Act § 352
      and
      SRO rules). 

     

    (2.)
       Notifying
      relevant SROs of FSWC's designated AML officer(s). 

     

    (3.)
       Screening,
      or providing resources to permit CLA
      Y
to
      screen, electronic customer account data stored by FSWC on behalf of
CLA
      Y
against
      various databases through third-party service providers, or against other
      ources, for purposes of  detecting
      names of OFAC prohibited individuals, entities and countries, and other adverse
      information about the customer (“negative verification”).

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    (4.)  Reviewing
      certifications/recertifications regarding accounts for foreign banks
received
      from CLAY
      for
      completeness. 

     

    (5.)
      Providing
      CLAY
      with
      information it needs in order to file required reports, including Forms CTR,
      CMIR, and SAR-SF; and, where appropriate, filing such reports. Copies of any
      reports filed by FSWC with respect to CLAY
      Customers
      will be provided to CLAY,
      where
      permissible. 

     

    (6.)
       Responding
      to requests made by FinCEN on behalf of a federal law enforcement agency
      investigating terrorist activity or money laundering; and submitting a notice
      to
      FinCEN concerning voluntary information sharing, and complying with all
      requirements concerning the confidentiality of shared information (PATRIOT
      Act
§
      314).
      

     

    (7.)
       Conducting
      system screening to detect suspicious activity; and notifying CLAY,
      where
      permissible, of any suspicious activity detected. 

     

    (8.)
       Providing
      ongoing AML training to appropriate personnel (PATRIOT Act § 352 and
      SRO
      rules). 

     

    (9.)
       Implementing
      an independent audit program to evaluate the effectiveness of FSWC's
      AML compliance program (PATRIOT Act § 352 and SRO rules). 

     

    (10.)
      Compliance
      with all recordkeeping requirements in connection with the above
      responsibilities. 

     

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    MADE
      AND
      EXECUTED THIS 12 DAY
      OF
DECEMBER,
      2003

     

    
      	FSWC: 	 	 	FIRST SOUTHWEST COMPANY 
	 	 	 	 
	 	 	 	 
	/s/ 
Stephen
              M. Samberg	 	 	 
	
              
By:
              Stephen M. Samberg, Vice President	 	 	
            
	 	 	 	 
	
              325
                N. St. Paul Street, Suite 800

              Dallas,
                Texas 75201

            	 	 	 

    

    

     

    
      
        
        

      

      
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        25

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