Document:

efc8-0404_101.htm

    EXHIBIT
10.1

     

    FULLY
DISCLOSED CLEARING AGREEMENT

     

    OF

     

    PERSHING
LLC

    ([FINRA
MEMBER])

     

    

     

    THIS
AGREEMENT is made and entered into this 26 day of February, 2008 by and
between Pershing LLC (“Pershing”), a limited liability company, and Broadpoint Capital,
Inc. (“Broker”), a New York corporation.

     

    
      1.0
APPROVAL

    

     

    This
Agreement shall be subject to approval by the Financial Industry Regulatory
Authority  (“FINRA”) and by any other self-regulatory organization
vested with the authority to review or approve it. Pershing shall submit this
Agreement to the FINRA and Broker shall submit the Agreement to any other such
organization from which Broker is required to obtain approval.  In the
event of disapproval, the parties shall bargain in good faith to achieve the
requisite approval.

     

    
      2.0
AGREEMENT

    

     

    From the
effective date of this Agreement until the termination of this Agreement as
provided in Paragraph 23 hereof, Pershing shall carry the proprietary accounts
of Broker and the cash and margin accounts of the customers of Broker introduced
by Broker to Pershing, and accepted by Pershing, and shall clear transactions on
a fully disclosed basis for such accounts, in the manner and to the extent set
forth in this Agreement.  This Agreement shall be effective upon the
later to occur of: 1) approval by FINRA and 2) the closing of the transactions
contemplated by that certain Asset Purchase Agreement entered into between and
among Broker, Broadpoint Securities Group, Inc. and BNY Capital Markets, Inc.
dated January 30, 2008 (the “Closing”).  The parties agree and
acknowledge that if the Closing does not occur, this Agreement shall be null and
void.

     

    
      3.0 ALLOCATION
OF RESPONSIBILITY

    

    

    
      3.1
Responsibilities of the
Parties.

    

     

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

     

    
      3.2
Relationship with
Customers.

    

     

    Pershing
shall provide services under this Agreement to Broker only to the extent
explicitly required by specific provisions contained in this Agreement and shall
not be responsible for any duties or obligations not specifically allocated to
Pershing pursuant to this Agreement.  Broker shall enter into
appropriate contractual arrangements with customers on its own behalf, and such
agreements shall make

     

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1

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Broker,
and not Pershing, responsible to customers for the provision of
services.  Broker shall not be deemed to be an agent of Pershing for
any purpose, nor shall Pershing be deemed to have a fiduciary relationship with
any of Broker’s customers.  Broker acknowledges that Pershing does not
control the business or operations of Broker.

     

    
      4.0 REPRESENTATIONS
AND WARRANTIES

    

     

    
      4.1 Broker. Broker
represents and warrants that:

    

     

    4.1.1
Corporation Duly
Organized. Broker is a corporation duly organized, validly existing, and
in good standing under the laws of the state of its incorporation.

     

    4.1.2 Registration. Broker
is duly registered and in good standing as a broker-dealer with the
SEC.

     

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

     

    4.1.4
Material Compliance
with Rules and Regulations. Broker and, to the best of its knowledge,
each of its employees executive officers, directors, general securities
principals in charge of one of Broker’s principal divisions, and Chief Financial
and Operation Principals (the aforementioned individuals collectively referred
to as the “Broker Executives”) is in material compliance with, and during the
term of this Agreement shall remain in material compliance with, the
registration, qualification, capital, financial reporting, customer protection,
and other requirements of every self-regulatory organization of which Broker is
a member, of the SEC, and of every state to the extent that Broker or any of the
Broker Executives is subject to the jurisdiction of that state.

     

    4.1.5
No Pending Action,
Suit, Investigation, or Inquiry. Broker has disclosed to Pershing every
material action, suit, investigation, or proceeding pending against Broker, any
of its affiliates, or any of the Broker Executives , by or before any court or
other tribunal, any arbitrator, any governmental authority, or any
self-regulatory organization of which any of them is a member.  Broker
shall notify Pershing promptly of the initiation of any action, suit,
investigation, inquiry, or proceeding that will have a material adverse impact
on the capital of Broker, unless such notification is prohibited by
law.

     

    4.1.6
Broker
Responsibility. Broker shall be responsible for all internal operations
related to its business including without limitation (i) all accounting,
bookkeeping, record-keeping, cashiering, commodity transactions, or any other
transactions not involving securities; or any matter not contemplated by the
Agreement; (ii) preparation of Broker’s payroll records, financial statements,
or any analysis thereof; (iii) preparation or issuance of checks in payment of
Broker’s expenses, other than expenses incurred by Pershing on behalf of Broker
pursuant to this Agreement; and (iv) payment of commissions to Broker’s sales
personnel.

     

    4.2 Pershing. Pershing
represents and warrants that:

     

    4.2.1
Duly Organized.
Pershing is a Limited Liability Company duly organized, validly existing, and in
good standing under the laws of the state of Delaware.

     

    4.2.2
Registration.
Pershing is duly registered and in good standing as a broker-dealer with the SEC
and is a member firm in good standing of FINRA.

     

    
      
        
        

      

      
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    4.2.3
Authority to Enter
Agreement. Pershing has all requisite authority, whether arising under
applicable federal or state law, or the rules and regulations of any regulatory
or self-regulatory organization to which Pershing is subject, to enter into this
Agreement and to provide services in accordance with the terms of this
Agreement.

     

    4.2.4 Compliance with
Registration. Pershing and , to the best of its knowledge, each of its
employees, executive officers, directors, general securities principals in
charge of one of Pershing’s principal divisions, and Chief Financial and
Operation Principals (the “Pershing Executives” and each of its employees) is in
material compliance with, and during the term of this Agreement shall remain in
material compliance with the registration, qualification, capital, financial
reporting, customer protection, and other requirements of every self-regulatory
organization of which Pershing is a member, of the Securities and Exchange
Commission (“SEC”), and every state.

     

    5.0
 ESTABLISHING
AND ACCEPTING NEW ACCOUNTS

    

    5.1 Acceptance of New
Accounts. Broker shall be responsible for opening and approving new
accounts in compliance with the Rules.

     

    5.1.1
Pershing reserves the right to reject any account that the Broker may forward to
Pershing as a potential new account for commercially reasonable reasons,
including but not limited to, credit and reputational considerations. Pershing
also reserves the right to terminate any account previously accepted by it as a
new account for commercially reasonable reasons, including but not limited to,
credit and reputational considerations.

     

    5.2 Maintenance of Account
Information. Pershing may rely without inquiry on the validity of all
customer information furnished to it by Broker.  Possession of any
such documents or information, however provided, concerning Broker’s customers
does not create a duty on the part of Pershing to review or understand the
content of those documents.

     

    5.3 Pershing Operations
Manual. Broker acknowledges receipt and familiarity with the Pershing
“Quick Reference Guide” and “Bulletins” and agrees to familiarize itself with
any modifications or supplements to such documents that may be issued upon
reasonable prior notice to Broker from time to time. Broker further agrees to
abide by Pershing’s “Quick Reference Guide” and “Bulletins” and any
modifications or supplements to such documents that may be issued upon
reasonable prior notice to Broker from time to time and delivered or made
available to Broker.

     

    6.0 SUPERVISION
OF ORDERS AND ACCOUNTS

    

    6.1 Responsibility for
Compliance. Broker shall be solely responsible for compliance with
suitability, “Know Your Customer” rules, and other requirements of federal and
state law and regulatory and self-regulatory rules and regulations governing
transactions and accounts.  Possession by Pershing of surveillance
records, exception reports, or other similar data shall not obligate Pershing to
review or be aware of their contents.  Pershing shall not be required
to make any investigation into the facts surrounding any transaction that it may
execute or clear for Broker or any customer of Broker.

     

    6.2 Compliance
Procedures. Broker agrees to supervise compliance with the Rules. Broker
shall review transactions and accounts to assure compliance with prohibitions
against manipulative practices, insider trading, market timing and late trading
of mutual fund shares and other requirements of federal and state law and
applicable regulatory and self-regulatory rules and regulations to which Broker
or its customer are subject.  Without limiting the above, Broker shall
be responsible for compliance with the supervisory requirements in Section
15(b)(4) of the Securities Exchange Act of 1934, as amended, FINRA Rule 3010,
NYSE Rules 342, 351 and 431, and similar rules adopted by any other regulatory
or self-regulatory agency or organization, to the extent
applicable.

     

    
      
        
        

      

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

     

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

     

    6.5 Discretionary
Accounts. Broker shall be solely responsible for obtaining customer
approval for and supervising discretionary accounts.

     

    6.6 Obligations Regarding
Certain Disclosures. Unless otherwise agreed between the parties, Broker
shall make any disclosures and obtain any agreements from its customers required
by applicable law or regulation, including, without limitation, any disclosures
or agreements required for margin, listed options, IPO’s, mutual funds, penny
stocks, derivative securities, account transfers or conversions.  The
cost of making such disclosures or obtaining such agreements shall be borne by
Broker.

     

    7.0 EXTENSION
OF CREDIT

    

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

     

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

     

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

     

    7.3.1
Initial Margin.
Broker shall be responsible for the initial margin requirement for any
transaction until such initial margin has been received by Pershing in
acceptable form.

     

    7.3.2
Margin Calls.
After the initial margin for a transaction has been received, subsequent margin
calls may be made by Pershing at its discretion. Pershing shall calculate the
maintenance requirement and 

     

    
      
        
        

      

      
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    notify
Broker of any amounts due. Broker shall be responsible for forwarding the margin
call to its customer and obtaining the amount due directly from Broker's
customer. If Broker fails to take the appropriate action, Pershing reserves the
right to collect the amount due directly from Broker's customer. Broker agrees
to cooperate with Pershing in complying with and obtaining margin in response to
such calls.

     

    7.3.3
Actions upon Failure
to Meet Margin Calls or Deliver Securities. In the event that
satisfactory margin is not provided within the time specified by Pershing, or
securities sold are not delivered as required, Pershing may take such actions as
Pershing deems appropriate, including, but not limited to, entering orders to
buy-in or sell-out. Broker shall cooperate with Pershing by entering orders to
buy-in or sell-out securities. Compliance with a request to withhold action
shall not be deemed a waiver by Pershing of any of its rights under this
Agreement.

     

    
      	
              7.4

            	
              Charging of Interest
      and Disclosures Pursuant to Rule 10b-16 and NASD Rule 2341.
      Interest charged by Pershing to Broker's clients with respect to debit
      balances in customers' accounts shall be determined in accordance with
      Schedule A attached to this Agreement and in accordance with Pershing’s
      standard disclosure under NYSE Rule 382. Broker shall send each margin
      customer a written Margin Disclosure Statement and other written
      disclosures, in a form acceptable to Pershing, at the time of the opening
      of a margin account as required by SEC Rule 10b-16 and NASD Rule 2341. If
      not already delivered to each margin customer by Pershing in connection
      with the delivery of the written new account Disclosure Statement in
      accordance with NYSE Rule 382, Broker agrees to deliver a written
      disclosure statement to its customer as required by SEC Rule
      10b-16.  7.5 Unsecured Debits or Unsecured Short Positions.
      Pershing shall charge against the accounts of Broker an amount equal to
      the value of any unsecured debit or short position (on a "mark to market"
      basis) in a customer account if that position has not been promptly
      resolved by payment or delivery. Any remaining debit may be charged
      against Broker pursuant to Paragraph 20 of this
  Agreement.

            

    

     

    
      	
              7.5

            	
              Unsecured Debits or
      Unsecured Short Positions. Pershing shall charge against the
      accounts of Broker an amount equal to the value of any unsecured debit or
      short position (on a "mark to market" basis) in a customer account if that
      position has not been promptly resolved by payment or delivery. Any
      remaining debit may be charged against Broker pursuant to Paragraph 20 of
      this Agreement.

            

    

     

    7.6  EXTENSION
OF NONPURPOSE CREDIT

     

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

     

    7.6.2
Nonpurpose Lending
Requirements. Nonpurpose credit extended by Pershing shall be subject to
nonpurpose lending requirements as established and modified by Pershing from
time to time.  Pershing reserves the right to refuse to extend
nonpurpose credit without the actual receipt of the necessary underlying
collateral and to impose a higher underlying collateral value requirement for a
particular account when, in Pershing's discretion, the past history or nature of
the account or other factors or the securities held in it warrant such
action.  In all instances, Broker may require a lower loan advance
rate to collateral value than imposed by Pershing for any particular account,
group of accounts, or all accounts introduced by Broker to
Pershing.  In any case where Broker requests Pershing to extend
nonpurpose credit upon control or restricted securities, pursuant to Rule 144
under the Securities Act of 1933, as amended, or otherwise; 

     

    
      
        
        

      

      
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    Broker
shall submit to Pershing such documentation, agreements and information as shall
be reasonably required by Pershing to decide to extend such
credit.  Any extension of nonpurpose credit so approved shall be
subject to Pershing’s credit policies as shall be in effect from time to
time.

     

    
      	
            	
              7.6.3

            	
              Managed/Advisory
      Accounts as Underlying
Collateral

            

    

     

    
      	
              7.6.3.1

            	
              Managed/Advisory
      Account Eligible to Support Extension of Non Purpose Credit
      Pershing may, but is not required to, allow accounts meeting the
      following criteria to  participate in the non-purpose credit
      program and to be pledged by customers of Broker to support the extension
      of non-purpose credit:

            

    

     

    a)
Separately managed accounts managed by a third party money manager or
managers,

     

    b) Mutual
fund wrap programs where the Broker acts as Corporate Registered Investment
Advisor (“RIA”)

     

    c)
Advisory programs where Broker acts as Corporate RIA

     

    d)
Advisory programs where a Turnkey Asset Management Provider (TAMP) acts as
Corporate RIA,

     

    e)
Advisory programs where an individually registered RIA manages clients’ assets
on a fully discretionary basis.

     

    f)
Advisory programs where Representatives of Broker have the ability to adjust the
actual client investments, on a discretionary basis, within a set of parameters
set forth, approved and overseen by the Corporate RIA (the Corporate RIA
maintains the ADV agreement with the end customer).

     

    7.6.3.2
Utilization of
Managed/Advisory Accounts as Underlying Collateral. Broker will be
responsible for ensuring that managed/advisory account(s) pledged to support the
extension of non purpose credit continue to meet the requirements of a
managed/advisory account at all times. Accounts listed on the Federal Reserve
Form T4 will be recognized by Pershing as separately managed/advisory accounts.
In the event that a managed/advisory account(s) pledged to support the extension
of  non purpose credit cease to be classified as a managed/advisory
account(s), the Broker agrees to notify Pershing immediately and take the
necessary actions to ensure compliance with Regulation T.  Upon such
notification, Pershing may, but is not required to maintain the pledge
relationship.

     

    In the
event the Broker fails to take necessary actions to ensure compliance with
Regulation T, Pershing may remove the managed account from the non-purpose
credit program and may require immediate full payment of the loan.  In
the event that the removal from the program or the requirement of immediate full
payment of the loan results in a margin call, the Broker shall be responsible
for taking the necessary actions to satisfy the margin call as prescribed in the
Agreement.

     

    
      
        
        

      

      
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              7.6.4

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

            

    

     

    
      	
              7.6.4.1
      

            	
              Initial Underlying
      Collateral. Broker shall be responsible for the initial underlying
      collateral requirement for any extension of nonpurpose credit until such
      initial underlying collateral has been received by Pershing in acceptable
      form.

            

    

     

    
      	
              7.6.4.2
      

            	
              Underlying Collateral
      Calls. After the initial underlying collateral for an extension of
      nonpurpose credit has been received, subsequent underlying collateral
      calls may be made by Pershing at its discretion. Pershing shall calculate
      the maintenance requirement and notify Broker of any amounts
      due.  Broker shall be responsible for issuing the underlying
      collateral call to its customer and obtaining the amount due directly from
      Broker's customer.  If Broker fails to take the appropriate
      action, Pershing reserves the right to collect the amount due directly
      from Broker's customer.  Broker agrees to cooperate with
      Pershing in complying with and obtaining underlying collateral in response
      to such calls.

            

    

     

    
      	
              7.6.4.3
      

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

            

    

     

    
      	
              7.6.5

            	
              Charging of Interest
      and Disclosures Pursuant to Rule 10b-16. Interest charged with
      respect to the extension of nonpurpose credit shall be determined in
      accordance with Schedule A attached to this Agreement. Broker shall send
      each customer a written disclosure statement, in a form acceptable to
      Pershing, at the time of the extension of nonpurpose credit as required by
      SEC Rule 10b-16.

            

    

     

    7.6.6
Unsecured
Debits. Pershing shall charge against the accounts of Broker an amount
equal to the value of any unsecured debit (on a “mark to market” basis) in a
customer account if that position has not been promptly resolved by payment or
delivery.  Any remaining debit may be charged against Broker pursuant
to Pershing’s right to offset in the Agreement.

     

    7.6.7
Equal Credit
Opportunity Act
(“ECOA”).  In all cases, the introducing Broker/Dealer shall abide by
all Federal Law rules & regulations as it pertains to the (“ECOA”). More
specifically, this law is designed to prohibit discrimination in the extension
or terms of credit to creditworthy applicants on any one of the following
“prohibited bases”: race, color, religion, national origin, sex, marital status,
or age (provided that the applicant has the capacity to contract) or on the
basis that all or part of an applicant’s income is derived from a public
assistance program or the fact that the applicant has, in good faith, exercised
any “rights” under the Consumer Credit Protection Act, of which (“ECOA”) is a
part. Under (“ECOA”) and Regulation B, the introducing Broker/Dealer may not
discriminate against any applicant on a prohibited basis “regarding any aspect
of a credit transaction”.

     

    7.6.8 Deduction or Withholding for
Tax. All payments made by a borrower, who participates in Pershing’s
non-purpose credit program, shall be made without any deduction or withholding
for or on account of any tax imposed by any laws, other than US state or federal
laws, applicable to any payment under this agreement  (“Local Laws”).
The undersigned shall indemnify Pershing against any tax levied or imposed upon
Pershing by Local Laws in respect of any payment under this agreement in the
event such tax is not otherwise paid.

     

    
      
        
        

      

      
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    8.0 MAINTENANCE
OF BOOKS AND RECORDS

    

    8.1 Stock Records.
Pershing shall maintain stock records and other prescribed books and records of
all transactions executed or cleared through it on a basis consistent with
generally accepted practices in the securities industry and with applicable laws
and rules governing clearing brokers.  Pershing shall maintain, and
make available to Broker, such books and records after termination of this
Agreement for so long as Pershing is required to maintain such books and records
as required by and in accordance with applicable law. To the extent not required
by law, Pershing will make such books and records available to Broker after the
termination of this Agreement upon Broker’s reasonable request so long as
Pershing has retained such books and records set forth above. Broker shall
reimburse Pershing for its costs and expenses in retrieving such books and
records.

     

    8.2 Regulatory Reports and
Records. Broker shall prepare, submit, and maintain copies of all
reports, records, and regulatory filings required of Broker by any entity that
regulates it, including, but not limited to, copies of all account agreements
and similar documentation obtained pursuant to Paragraph 5 of this Agreement and
any reports and records required to be made or kept under the Currency and
Foreign Transactions Reporting Act of 1970, (the “Bank Secrecy Act”), and any
rules and regulations promulgated pursuant thereto.  Pershing will
promptly provide Broker with any information regarding Broker’s accounts in its
possession necessary to enable Broker to prepare any such reports.

     

    8.3
ANTI-MONEY LAUNDERING, OFFICE OF FOREIGN ASSETS CONTROL, AND ANTITERRORIST
FINANCING OBLIGATIONS

     

    8.3.1
Broker’s
Responsibilities:

     

    a. Anti-Money Laundering
Obligations. Broker hereby agrees and acknowledges that it is obligated
to and hereby represents and warrants that it now does and will continue to
comply with anti-money laundering laws and regulations, including any future
obligations that may be imposed on Broker by laws or regulations, to know its
customers, their source and use of funds, and to monitor for and identify
suspicious activity.

     

    b. Anti-Money Laundering
Program. Broker represents and warrants that it has established and
maintains an anti-money laundering program, consisting of, at a minimum, written
internal policies, procedures and controls including a means for monitoring and
identifying suspicious activity, the designation of an anti-money laundering
compliance officer (whose identity shall be made known to Pershing and to the
FINRA), an ongoing employee training program, an independent audit function to
test such programs annually, and any additional requirements set forth in the
rules of any self-regulatory organization of which Broker is a
member.  Broker will allow Pershing access to such information as
Pershing deems necessary in order for Pershing to test Broker’s adherence to
Broker’s anti-money laundering program.  To the extent the testing
would be conducted at Broker’s office, Pershing needs to provide Broker with
reasonable prior notice (at least three business days) and the testing needs to
be done on a business day and during regular business hours.

    

    8.3.2
Broker to File CTRs
and Provide Copies to Pershing. Broker is responsible for filing currency
transaction reports (“CTRs”) and will provide a copy of all such reports to
Pershing at the same time as they are filed in accordance with applicable
regulations.

     

    a. Suspicious Activity
Reports. Broker shall be responsible for reviewing for suspicious
activities and filing suspicious activity reports on Form SAR-SF and shall
coordinate such filing with Pershing.

     

    
      
        
        

      

      
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    Broker
shall, as soon as practical after identifying a suspicious activity and in any
event prior to filing a suspicious activity report on SAR-SF, notify Pershing’s
Anti-Money Laundering Compliance Officer and shall communicate with Pershing
about the transaction for purposes of sharing information about the transaction
and determining whether Broker or Pershing shall file the SAR-SF, unless such
sharing of information is prohibited by law.  Broker will provide
Pershing with copies of all SAR-SFs and other communications it files with
respect to accounts held at Pershing, unless prohibited by law.  In
addition, Broker shall promptly notify Pershing regarding any account activity
Broker reasonably believes to be suspicious, not legitimate, not having a
reasonably apparent explanation, or could support the filing of a Form
SAR-SF.

     

    b. Other Transaction
Reports. Prior to filing any report with the Treasury Department, the
IRS, the U.S.
Customs Service or any regulatory body or organization relating to the reporting
of currency transactions or the transfer of currency or monetary instruments
into or outside of the United States, including, but not limited to, CTRs, CMIRs
and SAR-SFs, Broker shall notify Pershing’s Anti-Money Laundering Compliance
Officer (unless such notification is prohibited by law) and cooperate with
Pershing as Pershing may deem appropriate.  Broker will provide
Pershing with copies of all reports and other communications with respect to
accounts held at Pershing that Broker files with the Treasury Department, the
IRS, the U.S. Customs Service, or any regulatory body or organization relating
to the reporting of currency transactions, the transfer of currency or monetary
instruments into or outside of the United States, or in regard to any suspicious
activity, including, but not limited to, CTRs, CMIRs and SAR-SFs, unless the
provision of such reports or communications is prohibited by law.

     

    8.3.3.
Reports by
Pershing. Pershing has the obligation and reserves the right to make and
file such suspicious activity or other reports as listed in Paragraph 8.3.2 when
it deems it necessary or appropriate; and Broker recognizes that when Pershing
does so, Pershing does not thereby assume any responsibility for making and
filing reports on behalf of Broker or relieve Broker of its own responsibility
for making and filing reports as necessary under U.S. or other laws and
regulations.  Pershing will provide Broker a copy of any such report
that relates to an account of the Broker or a customer of the Broker, unless
prohibited by law from doing so.

     

    8.3.4.
Restrictions and
Conditions on Certain Accounts. Broker hereby agrees and acknowledges
that it is obligated to comply with restrictions and conditions on opening and
accepting certain accounts, including but not limited to, the
following:

     

    a. Know Your Customer and
Government List Obligations, Including OFAC. At the time of the opening
of any new account, Broker must obtain sufficient information (but no less than
the minimum required under Section 326 of the USA PATRIOT Act) from its customer
in order to reasonably identify and verify the identity of the client and the
source of the client’s funds.  Broker also must satisfy itself that
opening the account would not violate the provisions of various Executive Orders
and regulations administered by the U.S. Treasury Department’s Office of Foreign
Assets Control (“OFAC”) or be subject to other restriction based on such
relevant government lists as may be published from time to time. Broker will
promptly inform Pershing of the existence of any account subject to an OFAC or
government list restriction.  Pershing uses interdiction software and
will provide such relevant information as may from time to time be available to
assist Broker in detecting possible OFAC and government list
violations.

     

    b. Non-Resident Alien Accounts
Carried Directly or Through an Investment Advisor. For any account opened
for a non-resident alien, Broker shall record the customer’s passport number and
obtain a copy of the government document used to verify the individual’s
identity at the time the account is opened. Broker shall also obtain a copy of a
passport or other governmental identification for any of the following: the
grantor/settlor of a foreign trust; and any beneficial owner of an offshore
corporate account if: (1) the account is a personal holding company or private
investment company; or (2) the beneficial owner of the entity which maintains
the account holds more than a 10% interest in the entity. Broker

     

    
      
        
        

      

      
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    shall not
open any introduced account for a personal holding company or private investment
company if one or more beneficial owners are U.S. persons.  With
respect to those accounts involving registered investment advisers, Broker shall
obtain, record and verify information as outlined above about the adviser’s
customer, including ascertaining the identity of each beneficial owner, of any
such account prior to opening the account unless Broker has ascertained that the
investment adviser meets the exception set forth in SEC No Action letter dated
February 13, 2004 relating to reliance on investment advisers or other SEC
guidance applies.

     

    c. Restrictions on Numbered
Accounts. Broker will not establish or maintain specially coded or
numbered accounts.

     

    d. Source and Use of
Funds. Broker will use reasonable efforts to ascertain that the source of
a customer’s funds are purportedly from customer, the customer is not engaged in
unlawful activities, the assets being invested have been legitimately obtained,
and any disbursements to a customer or third party are for legitimate
purposes.

     

    e. Transaction Reports and
Transaction Monitoring Systems. In order to detect suspicious activity,
Broker shall utilize the transaction reports and transaction monitoring systems
provided by Pershing or shall otherwise perform its own transaction monitoring
in order to detect suspicious activity.

     

    f. CIP. In order to
induce reasonable reliance by Pershing on Broker with respect to Broker’s
customer identification program (“CIP”), Broker represents and warrants: (1) it
has a written CIP consistent with Section 326 of the USA PATRIOT Act and the
rules thereunder; (2) it is subject to a rule implementing 31 U.S.C. 5318(h);
(3) it is regulated by a Federal functional regulator as that term is defined
under 31.C.F.R. § 103.120(a)(2); and (4) it will certify annually to Pershing
that it has implemented an anti-money laundering program and will perform the
requirements set forth in Broker’s written CIP.

     

    g. Shell Bank Accounts, Foreign
Bank Accounts, and Private Banking Accounts. Broker, working in
conjunction with Pershing, shall implement the provisions of sections 312, 313,
and 319 of the USA PATRIOT Act as set forth in Informational Bulletins
disseminated by Pershing from time to time.  Copies of all
certifications obtained by Broker shall be forwarded to Pershing.

    

    8.3.5
Pershing’s
Responsibilities:

     

    a. Anti-Money Laundering
Obligations. Pershing hereby agrees and acknowledges that it is obligated
to comply with anti-money laundering laws and regulations, including any future
obligations that may be imposed on Pershing, and that it is responsible to
combat money laundering and terrorist financing. Pershing shall (1) make
available to Broker such information as it may from time to time recognize as
potentially useful through use of Pershing’s various interdiction monitoring
tools to assist Broker in detecting possible money laundering and terrorist
financing schemes, and (2) conduct various manual and systematic screenings to
assist Broker in order to detect suspicious activity and OFAC and other
government list violations. The actual systems and tools used for these purposes
may vary from time to time, at Pershing’s discretion.

     

    b. Anti-Money Laundering
Program. Pershing has established and shall continue to maintain an
anti-money laundering compliance program in accordance with § 352 of the USA
PATRIOT Act as well as NYSE and FINRA rules.  Pershing further
represents and warrants: (1) it has written anti-money laundering policies and
procedures including procedures to identify and report suspicious activity; (2)
it has a designated Anti-Money Laundering Compliance Officer (whose identity has
been made known to Broker and the FINRA and FINRA); (3) it provides continuous
anti-money laundering training to its employees; and (4) its anti-money
laundering program is independently audited on an annual basis.

     

    
      
        
        

      

      
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    c. Transaction Reports.
Pershing shall provide Broker with anti-money laundering and other activity
reports that can be used to detect suspicious activity in order to assist Broker
to meet its obligations. Pershing will offer training in the use of such
reports.  Pershing will also, upon request, provide Broker with
relevant information in Pershing’s possession that the Broker needs in order to
file various required reports, including Forms CTR, CMIR, and SAR-SF and will
provide such further assistance as may be required in the filing of such
reports.

     

    d. Transaction Monitoring
Systems. Pershing shall make available to Broker various information
pertinent to Broker’s anti-money laundering efforts, including certain
systematic transaction monitoring tools such as The Rules EngineTM
anti-money laundering rules.  Pershing will provide training in the
use of such system to assist Broker in detecting suspicious activity and in
screening electronic customer account data stored by Pershing on behalf of
Broker against various databases through third-party service providers, for
purposes of detecting names of OFAC prohibited individuals, entities in
countries and other adverse information about the customer (“negative
verification”).

     

    e. Notification if Pershing
Detects Suspicious Activity. Through its trained employees and the use of
automated systems, Pershing will review for (including, but not limited to, the
items set forth in f through j below) and may detect suspicious activity
utilizing a risk-based approach.  Pershing’s review does not relieve
Broker of its own responsibilities to review for suspicious activity which may
involve the use of reports and systems listed in c and d above.  In
such circumstances when Pershing detects suspicious activity, Pershing will
contact Broker about the transaction for purposes of sharing information about
the transaction, unless Pershing believes that Broker itself may be engaged in
suspicious activity or Pershing would be prohibited by law from sharing with
Broker information about the suspicious transaction. Nothing in this Paragraph
shall be read to prohibit Pershing from filing its own suspicious activity and
other reports, as it believes necessary or appropriate.  Broker shall
take such steps as Pershing may reasonably request in connection with any
potential suspicious activity in an account, including closing the
account.

     

    f. Incoming FedWires.
For all incoming federal fund wires (“FedWires”), Pershing shall initially check
relevant information, including the remitter’s name, address, and account
number, and the originating bank’s name and address (to the extent provided on
an incoming wire) to detect possible OFAC restrictions.

     

    g. Outgoing FedWires for Third
Parties. Requests for third-party wires are processed by Pershing on an
exception basis using a risk-based approach. When allowed, for outgoing FedWires
ordered to the delivery of a person or entity other than the account holder,
Pershing shall review relevant information, including the payee’s name, address,
and account number, and the recipient bank’s name and address, to detect
possible violations of OFAC restrictions.

     

    h. Incoming Securities.
For securities received, Pershing shall review the names of the specified holder
of the security to detect possible violations of OFAC restrictions in those
circumstances when the registration on the security received is different than
the name on the account into which the securities are deposited.

     

    i. Outgoing Securities for
Third Parties. For outgoing securities to third parties, Pershing shall
check the names and addresses of the third party to whom the security is to be
delivered to detect possible violations of OFAC restrictions.

     

    j. Systematic Daily Screening,
Government Lists Including OFAC. On a daily basis, Pershing shall compare
all new accounts opened on its systems and all substantial changes made to
account data resident on its systems to determine if any such new or changed
account may be subject to an OFAC or other designated government
list.  In addition, Pershing shall compare its existing customer
database to added restrictions as may be published by the Federal Government
from time to time.  Further, periodically

     

    
      
        
        

      

      
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Pershing
shall compare its existing customer database to the existing OFAC government
lists. In the event that Pershing’s comparisons indicate that an account may be
subject to an OFAC or government list restriction, Pershing will notify Broker
if it believes there is a match.  Broker shall cooperate fully with
Pershing to determine whether, in fact, the account is subject to any such
restriction.  Broker will cooperate with Pershing in implementing any
such action as may be determined by Pershing to be necessary or
appropriate.  Broker acknowledges that Pershing may rely on a
third-party vendor to provide current OFAC and other government restricted list
data, and Pershing shall not be held liable for any errors or omissions caused
by such third-party vendor.

     

    k. Funds Transfer Rule and
Travel Rule. Pershing represents it has systems designed to comply with
the electronic transfer of funds rules, specifically the “Funds Transfer Rule”
and the “Travel Rule,” 31 C.F.R. 103.33(f) and (g), when processing
disbursements on behalf of Broker.  Pershing shall comply with these
rules based on information provided by Broker.

     

    8.3.6
Bulletins and Other
Informational Memoranda. Pershing shall from time to time issue Bulletins
or other informational memoranda to Broker setting forth Pershing’s policies and
procedures regarding anti-money laundering and terrorist
financing.  Pershing agrees to give Broker written notice of any
changes in such policies and procedures prior to their effectiveness and Broker
agrees to become familiar with such Bulletins and informational memoranda and to
abide by them.

     

    8.3.7
Cooperation.  Consistent
with Section 314(b) of the USA PATRIOT Act and this Agreement, Broker and
Pershing shall cooperate with each other and exchange information to assist each
other in detecting money laundering and terrorist financing.  Broker
and Pershing shall each submit to FinCEN the notice set forth in 31 CFR Part
103.110(b)(2) and shall renew such notice each year.  Each instance of
information sharing shall constitute a confirmation by Broker to Pershing and by
Pershing to Broker that the requisite notice has been filed. Pershing and Broker
agree to consult with each other from time to time on each other’s anti-money
laundering responsibilities.

     

    8.3.8 No Party to Cause Violation
by the Other. Neither Pershing nor Broker shall knowingly take any action
to cause the other party to be in violation of any anti-money laundering laws or
regulations.

     

    9.0 RECEIPT
AND DELIVERY OF FUNDS AND SECURITIES

    

    9.1 Receipt and Delivery of
Funds and Securities.

     

    9.1.1
Cashiering
Functions. Pershing shall perform cashiering functions for accounts
introduced by Broker. These functions shall include receipt, delivery and
transfer of securities; receipt and payment of funds owed by or to customers;
and provision of custody for securities and funds; the handling of margin
accounts; the receipt and distribution of dividends and other distributions; and
the processing of exchange offers, rights offerings, warrants, tender offers and
redemptions.  Broker shall provide Pershing with the data and
documents that are reasonably necessary or appropriate to permit Pershing to
perform its obligations under this Paragraph, including but not limited to
copies of records documenting receipt of customers’ funds and securities
received directly by Broker.  Such data and documents must be
compatible with the requirements of Pershing’s data processing
systems.  To the extent Broker is unable to provide data and documents
that are compatible with the requirements of Pershing’s data processing systems,
the parties agree to attempt to resolve in good faith the provision of such
information in a mutually acceptable format.

     

    9.1.2
Purchases.
Broker shall be responsible for purchases (including transactions on a “when
issued” basis) made for customers until actual and complete payment has been
received by Pershing. Broker shall not introduce accounts requiring settlement
on a “delivery versus payment” or “receive versus payment” 

     

    
      
        
        

      

      
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    basis
unless such account utilizes the facilities of a securities depository or
qualified vendor as defined in FINRA Rule 387 for all depository eligible
transactions.

     

    9.1.3
Sales. Broker
shall be responsible for sales (including those on a “when issued” basis), until
Pershing has received, in acceptable form, the securities involved in the
transaction.  If Pershing does not receive delivery of securities in
an acceptable form, Pershing may buy-in all or part of the
securities.

     

    9.1.4
Funds and Securities
Received by Broker. Broker shall promptly deposit with Pershing funds or
securities received by Broker from its customers, together with such information
as may be relevant or necessary to enable Pershing to record such remittances
and receipts in the respective customer accounts.

     

    9.1.5
Failure to Settle or
Pay. In the event of a failure to timely deposit required funds or
securities, Pershing may take appropriate remedial action.  Without
waiving or otherwise limiting its right to take other remedial action, Pershing
may at its option charge interest at rates as agreed in Schedule A (“Fully
Disclosed Pricing Schedule”) to this Agreement.  Broker may pass such
charges on to its customers but Broker remains responsible therefor until
actually paid.

     

    9.1.6
Check Writing
Authority. Pershing may, but is not required to, authorize certain of
Broker’s employees to sign checks to Broker’s customers for amounts due to, and
requested by them, with respect to their accounts. Broker shall designate, in
writing, the names of any employees it wishes to receive the authorization
described in this Paragraph.  All checks must be signed by two
employees who have received written authorization from Pershing.  No
check or checks totaling more than $100,000 shall be provided to any customer by
Broker on the same business day. All expenses incurred in connection with the
issuance of checks under the authority described in this Paragraph shall be
charged to Broker.  Broker remains responsible for the disbursement
and delivery of such checks to its customers.  Any lien on the
customer’s property granted by the customer to Broker or Pershing shall extend
to any funds which may be segregated in a separate account in connection with
the exercise of the authority described in this Paragraph. Broker has
established, and shall maintain and enforce, supervisory procedures with respect
to the issuance of such instruments as required by applicable law or
regulation.that are satisfactory to Pershing.

     

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

     

    9.3 Corporate Action
Requests/Soliciting Dealer Agreements. Broker requests and authorizes
Pershing to execute as Broker’s agent-in-fact any and all Soliciting Dealer
Agreements (except as provided in Paragraph 13.8) for corporate actions
involving securities or other interests held by Broker’s customers on the books
of Pershing.  Pershing agrees to provide a written advice of the
pending corporate action to Broker at its designated locations. Pershing further
agrees to collect and submit corporate action requests from Broker and submit
them to the soliciting party in accordance with the instructions received from
the soliciting party.  Pershing agrees to use commercially reasonable
efforts to communicate corporate action information to Broker and, where
applicable, Broker’s customers, but shall not be liable for a) any delays in the
communication of corporate action information or b) delays in the transmission
of collected corporate action requests to the soliciting party unless caused by
Pershing’s negligence.  All fees received from the soliciting party
will be credited to Broker.  In consideration of providing this
service to Broker, Broker agrees to indemnify and hold harmless Pershing, its
affiliates, officers, agents and employees from all claims, suits,
investigations, damages and defense costs (including reasonable attorney’s fees)
that arise in connection with this Paragraph, except to the extent that such
claims, suits, investigations, damages and defense costs result from the
negligence of Pershing, its affiliates, officers, agents and/or
employees..

     

    
      
        
        

      

      
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    10.0
SAFEGUARDING OF FUNDS AND SECURITIES

    

    Except as
otherwise provided in this Agreement, Pershing shall be responsible for the
safekeeping of all money and securities received by it pursuant to this
Agreement.  However, Pershing will not be responsible for any funds or
securities delivered by a customer to Broker until such funds or securities are
actually received by Pershing or deposited in bank accounts maintained by
Pershing.

    2 CONFIRMATIONS
AND STATEMENTS

    

    11.1
Preparation and
Transmission of Confirmations and Statements. Pershing shall prepare
confirmations and summary periodic statements and shall, to the extent required
by the Rules, transmit them to customers and Broker in a timely fashion except
to the extent the parties agree in writing that Broker may transmit
confirmations to customers.  Confirmations and statements shall be
prepared on forms disclosing that the account is carried on a fully-disclosed
basis for the Broker in accordance with applicable rules, regulations, and
interpretations.  Broker will have the ultimate responsibility for
compliance with the prospectus delivery requirements of the Securities Act of
1933, as amended, regardless of its retention of a prospectus fulfillment
service (including as may be provided by Pershing) to perform delivery of
same.

     

    11.2 Examination and Notification
of Errors. Broker shall examine all confirmations, statements, and other
reports in whatever medium provided to Broker by Pershing; provided however that
if Broker is unable to examine such reports in the provided medium, Broker and
Pershing shall attempt to resolve the issue in good faith .  Broker
must notify Pershing of any error claimed by Broker in any account; as to
purchase and sales transactions prior to settlement date and as to all other
transactions within the time in which Pershing is able to, without violating
applicable law, reverse the transaction.  If Broker fails to do so,
Broker shall be deemed to have waived its right to make any claim against
Pershing with respect to such error.

     

    12.0 ACCEPTANCE
AND EXECUTION OF TRANSACTIONS

    

    12.1
Responsibility to
Accept or Reject Trades. Pershing shall execute transactions in
customers’ accounts and release or deposit money or securities to or for
accounts only upon Broker’s instructions.  Pershing reserves the right
to accept written or oral transaction orders from Broker’s customers in
circumstances where it determines that either (i) the customers are unable to
execute those transactions through Broker or (ii) Pershing is required to do so
by applicable or relevant law.  Notwithstanding any instructions to
the contrary, Pershing may, after notifying Broker orally or in writing: (i)
refuse to confirm a transaction or cancel a confirmation; (ii) reject a delivery
or receipt of securities or money; (iii) refuse to clear a trade executed by
Broker; or (iv) refuse to execute a trade for the account of a customer or
Broker.

     

    12.2
Responsibility for
Errors in Execution. Broker shall be responsible for transmission to
Pershing of all orders and for any errors in the Broker’s recording or
transmission of such orders.

     

    12.3 Best Execution. In
accordance with the Rules, Pershing will provide best execution on all
transactions routed to the desk of Pershing or of a Pershing
affiliate.

     

    13.0 OTHER
OBLIGATIONS AND RESPONSIBILITIES OF BROKER

    

    13.1
Disciplinary Action,
Suspension, or Restriction. If Broker or any of the Broker Executives
becomes subject to disciplinary action, suspension, or restriction by a federal
or state agency, stock 

     

    
      
        
        

      

      
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    exchange,
or regulatory or self-regulatory organization having jurisdiction over Broker or
Broker’s securities or commodities business, Broker shall give notice to
Pershing promptly in writing, and provide Pershing a copy of any decision
relating to such action, suspension, or restriction, unless such notice is
prohibited by law. Pershing may take any action it reasonably deems to be
necessary (i) to assure that it will continue to comply with all applicable
legal, regulatory, and self-regulatory requirements, notwithstanding such
action, suspension, or restriction; and (ii) to comply with any requests,
directives, or demands made upon Pershing by any such federal or state agency,
stock exchange, or regulatory or self-regulatory
organization.  Notwithstanding the foregoing, Broker need not notify
Pershing of “minor rule violations” (as that term is defined in connection with
Form U-5) of Broker or Broker Executives.

     

    13.3
Provision of Financial
Information. Broker shall furnish Pershing copies of FOCUS Reports,
audited annual financial statements for the current fiscal year, the executed
Forms X-17a-5 (Parts I and IIA) filed with the SEC, any material amendments to
Broker’s Form BD, and any other material regulatory or financial reports
Pershing may from time to time reasonably require, unless prohibited by law.
Broker shall provide such reports to Pershing at the time Broker files such
reports with its primary examining authority, or promptly
thereafter..

     

    13.4
Executing
Brokers. If Broker wishes to act as an “Executing Broker” as such term is
understood in that certain letter dated January 25, 1994, from the Division of
Market Regulation of the SEC, as the same may be amended, modified or
supplemented from time to time (the “No-Action Letter”), then all terms herein
shall have the same meaning as ascribed thereto either in the Agreement or in
the No-Action Letter as the sense thereof shall require.  Broker may,
from time to time, execute trades (either directly or through Pershing) for
Prime Brokerage Accounts in compliance with the requirements of the No-Action
Letter. (The No-Action Letter requires, inter alia, that a contract be executed
between Pershing and Prime Broker, and between Broker and Prime Brokerage
Customer prior to the transaction of any business hereunder.) Broker shall
promptly notify Pershing, but in no event later than 5:00 p.m. New York time, of
trade date in a mutually acceptable fashion, of such trades in sufficient detail
for Pershing to be able to report and transfer any trade executed by Broker on
behalf of a Prime Brokerage Account to the relevant Prime
Broker.  Broker understands and agrees that if Prime Broker shall
disaffirm or “dk” any trade executed by Broker on behalf of a Prime Brokerage
Account, Broker shall open an account for such Prime Brokerage Account in its
range of accounts and shall transfer or deliver the trade to such account at the
risk and expense of Broker to the same extent as for any account introduced by
Broker pursuant to this Agreement. Broker understands and agrees that all Prime
Brokerage Accounts shall be conducted in accordance with the requirements of the
No-Action Letter and any relevant agreement between Broker and a Prime Brokerage
Customer or between Pershing and relevant Prime Broker.  Broker
further agrees to supply Pershing with such documents, papers and things, which
from time to time are reasonably required by Pershing to carry out the intention
of this Paragraph.  Broker agrees that it shall know its customer,
obtain appropriate documentation, including new account form, conduct its own
credit check and determine the availability of shares as required for processing
of any short sales.  Broker shall maintain facilities to clear any
disaffirmed trades.

     

    13.5
Protection of
Intellectual Property. Each party shall use all reasonable efforts to
preserve and protect the other party’s and its affiliates’ patent, trade secret,
copyright and other proprietary rights in such party’s or its affiliates’
products, services, trademarks and tradenames, at least to the same extent used
by the party to preserve and protect its own proprietary data or information and
to notify the other party of any action by any third party known by such party
to constitute an infringement of the other party’s or any of its affiliates’
proprietary rights and to cooperate with such party in protecting such rights.
Without limiting the foregoing, and subject to the permission required by
Paragraph 22 hereof, Broker shall note Pershing’s or its affiliates’ patent,
trade secret, copyrights, trademarks and trade names when Broker makes reference
to or distributes products or services provided by Pershing or its affiliates,
as applicable.

     

    
      
        
        

      

      
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    13.6
Currency
Fluctuation. If Broker directs Pershing to enter into any transaction to
be effected on any securities exchange or in any market on which transactions
are settled in a foreign currency, (i) any profit or loss arising as a result of
a fluctuation in the rate of exchange between such currency and the United
States Dollar shall be entirely for Broker’s account and risk, (ii) all initial
and maintenance margin deposits required or requested by Pershing shall be in
the currency required by the applicable marketplace or clearing agency in such
amounts as Pershing in its sole discretion may require, and (iii) Pershing is
authorized to convert funds in the Account into and from such foreign currency
at rates of exchange prevailing at the banking or other institutions (including
affiliated financial institutions including The  Bank of New York with
which Pershing normally does business.)

     

    13.7
Execution Away from
Pershing. Broker may place for execution with firms other than Pershing
orders for its customers’ accounts. Pershing will have no responsibility for the
transmission or execution of any such orders, and Broker agrees to assume full
responsibility for resolving any disputes and for bearing any losses resulting
from transactions with firms with which Broker executes, giving up Pershing for
clearance.  Broker also agrees that, with respect to any such orders,
it will report executions promptly to Pershing for clearance in accordance with
Pershing’s procedures.

     

    13.8 Mutual Fund Shares.
Broker shall be responsible for obtaining and executing dealer agreements with
any principal underwriter for mutual funds from which Broker seeks to purchase
mutual fund shares for its Customers’ accounts. Broker shall provide copies of
such agreements to Pershing upon Pershing’s request.

     

    14.0 OTHER
OBLIGATIONS AND RESPONSIBILITIES OF PERSHING

    

    14.1
Use of Third-Party
Services. Pershing may, at its reasonable option, and consistent with
common industry practice, retain one or more independent data processing or
other service bureaus to perform functions (including, but not limited to,
pricing services or proxy mailing services) assigned to Pershing under this
Agreement.

     

    14.2
Tax
Withholding. Broker hereby agrees to take necessary measures to comply
with the income tax withholding requirements of Section 3406 and Sections 1441
through 1446 (the nonresident alien withholding  requirements) of the
Internal Revenue Code of 1986, as amended (“IRC”) with respect to its customer
accounts.  Broker agrees to furnish to Pershing any tax information,
e.g., taxpayer identification numbers and certifications provided by the
customer on IRS Forms W-8, W-8BEN, W-8IMY, W-8EXP, W-8ECI, W-9, or any
acceptable substitute in its possession relating to each customer account
transferred to Pershing and to each future customer account
opened.  Broker acknowledges that Pershing will rely on such
information for purposes of determining Pershing’s obligation to withhold
federal income tax pursuant to Sections 1441 through 1446 and 3406 of the
Internal Revenue code.  Broker hereby authorizes Pershing to employ
any procedures permitted under applicable law or regulation to achieve
compliance with its withholding obligations under federal income tax
law.

     

    14.3 Retirement Account
Distributions.  For retirement accounts for which Pershing
makes designated distributions pursuant to Section 3405 of the IRC or any
successor provision thereto,  Broker shall (1) obtain customer
authorization to execute Form W-4P (or an acceptable substitute) on behalf of
such customer, and (2) electronically provide such Form W-4P or a copy thereof
to Pershing.

     

    15.0 ORDER
AUDIT TRAIL SYSTEM (OATS)

    

    Pursuant
to FINRA Rules 6950 through 6957 (Order Audit Trail System (“OATS”) Rules) and
the OATS Reporting Technical Specifications, it is hereby agreed between Broker
and Pershing that Pershing shall synchronize Pershing system clocks in
accordance with the National Institute of Standards 

     

    
      
        
        

      

      
        Pg. 16

        
          

        

      

      
        
        

      

    

     

    and
Technology clock and periodically monitor such clocks for performance within any
deviation time frame tolerance level permitted by the OATS Rules.

     

    Unless
otherwise directed in writing by Broker, Pershing will record and transmit to
the FINRA, on Broker’s behalf, all order information that is required to be
recorded pursuant to the OATS Rules and the OATS Technical Specifications
(including any modifications thereto) (the “Order Information”) for orders
entered on or linked to Pershing’s proprietary electronic order entry systems
(including Trade Order Processing System, BrokerView Order Entry, BrokerView
Direct Order, NetExchange ProTM,
NetExchange ClientTM,
Telexchange ProTM, and
Telexchange ClientTM and any
other electronic order entry system as Pershing may develop and implement from
time to time) (collectively “the Front-End Products”) and routed to a market
using Pershing’s routing routine.  Pershing will also record and
transmit to the FINRA information that is received via the Front-End Products by
Pershing in connection with modification or cancellation of any Order
Information previously entered into the system.

     

    Unless
specifically agreed to in writing, Pershing will not capture information or
transmit Order Information for orders that are not entered on the Front-End
Products or called in for execution or where Pershing does not determine the
order routing routine.

     

    For
trades not entered on Front-End Products, Broker is responsible for providing
information necessary for Pershing to report on Broker’s
behalf.  Broker agrees that Pershing may pass any out-ofpocket costs
associated with development and/or maintenance of this system on to
Broker.

     

    Broker
acknowledges and agrees that Pershing shall not be responsible for any Order
Information that is not received by Pershing.

     

    Pershing
shall be responsible for repairing any rejections of OATS data it receives or is
made aware of for data Pershing previously reported to the OATS reporting
authorities.  Broker agrees to notify Pershing of any rejection of
OATS data that it receives or is made aware of for data previously reported to
the OATS reporting authorities by Pershing.

     

    Notwithstanding
the foregoing, nothing contained herein shall relieve Broker of its reporting
obligations under paragraph (c)(3) of OATS Rule 6955.

     

    16.0
TRANSMISSION OF ORDERS TO PERSHING AS PRIME BROKER

     

    16.1
General Broker
Functions.  Broker may, from time to time, collect and transmit
to Pershing orders and other instructions to Pershing from Broker’s prime
brokerage customers (“Prime Brokerage Orders”) and provide Pershing with such
reports, data and services as Pershing requires in order to act as prime broker
with respect to such Prime Brokerage Orders, consistent with the SEC No-Action
Letter dated January 25, 1994 (“No-Action Letter”) and applicable rules and
regulations.

     

    16.2
Trading Activity
Functions. Broker shall perform the following functions as introducing
firm for its prime brokerage customers:

     

    
      	
            	
              a. 

            	
              Report
      all trading activity for the accounts of Broker’s prime brokerage
      customers (whether executing with Pershing or away) to Pershing via
      iPartner, NetExchange Advisor (or other agreed upon method) on trade date
      by a time to be determined by Pershing and Broker from time to
      time.

            

    

    
      	
            	
              b.

            	
              Assure
      that access to iPartner is limited to authorized persons
    only.

            

    

    
      	
            	
              c.

            	
              Accept,
      via electronic mail (or telephone) on T+1, information regarding all trade
      breaks and respond to the Investment Management Services (“PIMS”) group of
      Pershing regarding resolution of such trade breaks by 12:00 noon (NYC
      time) on T+1.

            

    

     

    
      
        
        

      

      
        Pg. 17

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              d.

            	
              Obtain
      pre-approval from Pershing for any short sales directed by Broker’s prime
      brokerage customers.

            

    

    
      	
            	
              e.

            	
              Provide
      all information to Pershing related to the eligibility of any of Broker’s
      customers to receive or to continue to receive prime brokerage
      services.

            

    

    

    16.3
Other Prime Brokerage
Functions. Broker shall perform the following additional functions as
introducing firm for its prime brokerage customers:

     

    
      	
            	
              a. 

            	
              Obtain
      and deliver to Pershing an executed Prime Brokerage Client Agreement in
      substantially the form provided by Pershing to Broker, for each prime
      brokerage customer of Broker.

            

    

    
      	
            	
              b. 

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

            

    

    
      	
            	
              c. 

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

            

    

    
      	
            	
              d. 

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

            

    

     

    
      	
            	
              e. 

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

            

    

    

    16.4 Broker Acknowledgements
Regarding Prime Brokerage. Broker acknowledges that Pershing may
disaffirm or DK transactions of any prime brokerage customers of
Broker.  Broker will be responsible for resolving all unmatched items,
and advising PIMS of their status in a timely manner.  Broker
acknowledges that PIMS shall monitor the net equity of accounts of Broker’s
prime brokerage customers carried by Pershing, and shall notify Broker who in
turn shall notify the relevant prime brokerage customers on Broker’s letterhead
whenever such customers’ net equity falls below the minimum required by
Pershing.  If an account falls below the minimum net equity set by
Pershing, the account will not be permitted to place any further Prime Brokerage
Orders until the net equity is increased to the level required by Pershing.
Broker agrees to provide access to its personnel and records, and submits to the
supervision of Pershing for the purpose of complying with Pershing’s obligations
as Prime Broker under the No-Action Letter and applicable laws, rules and
regulations in relation to the provision of the prime brokerage
services.

     

    16.5
Compensation.
In consideration of Pershing acting as Prime Broker, Broker agrees to pay the
amounts set forth in Schedule A hereto.

     

    16.6
Limitation of
Liability. Except as otherwise provided in Section 18 of this Agreement,
Broker acknowledges and agrees that:

     

    
      	
            	
              a. 

            	
              Pershing
      accepts no responsibility for the Prime Brokerage Orders received from the
      Broker via iPartner (or other agreed upon method) except in the event of
      gross negligence or willful misconduct by Pershing or its
      employees.

            

    

    
      	
            	
              b. 

            	
              Pershing
      accepts no responsibility and disclaims all liability for any
      communication

            

    

     

    
      
        
        

      

      
        Pg. 18

        
          

        

      

      
        
        

      

    

    
 

    linkage
failure associated with the transmittal of Prime Brokerage Orders except in the
event of gross negligence or willful misconduct by Pershing or its
employees.

    
      	
            	
              c.

            	
              Pershing
      is not responsible for fraudulent or unauthorized access to iPartner that
      may cause any loss, damage or liability to Broker, Pershing, Broker’s
      prime brokerage customers, or a third
party.

            

    

    
      	
            	
              d.

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

            

    

    
      	
            	
              e.

            	
              In
      connection with this Paragraph 16.6, Pershing disclaims liability not only
      for direct damages to the Broker, Pershing, Broker’s prime brokerage
      customers or a third party, but in addition disclaims any and all
      liability for special, indirect or consequential or incidental damages
      whether in tort or in contract even if Pershing has been advised of the
      possibility of such damage except in the event of gross negligence or
      willful misconduct by Pershing or its
employees.

            

    

    

    16.7
No Joint
Venture. Nothing contained in the Agreement (i) shall constitute Pershing
and Broker as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.

     

    16.8
Representations and
Warranties. In addition to, and no way in limitation of, Broker’s
representations and warranties as contained elsewhere in this Agreement, Broker
represents and warrants that:

     

    
      	
            	
              a.

            	
              Broker
      has been duly appointed and authorized by Broker’s prime brokerage
      customers to transmit Prime Brokerage Orders to
  Pershing.

            

    

    
      	
            	
              b.

            	
              All
      Broker’s customers whose accounts will participate in prime brokerage
      activities have been advised, via client agreements or otherwise, that
      their accounts will engage in prime brokerage activities, Pershing will
      act as Prime Broker for their accounts, and said customers or the
      Investment Advisor thereof may place orders for the execution of trades
      for their accounts at Executing Brokers, all in conformity with applicable
      provisions of the No-Action Letter.

            

    

    

     17.0           
DAMAGES

     

    As
between the parties, neither party shall be liable for special, indirect,
incidental, consequential or punitive damages, whether such damages are incurred
or experienced as a result of entering into or relying on this Agreement or
otherwise, even if the parties have been advised of the possibility of such
damages.  Broker and Pershing each agree not to assert any claim for
punitive damages against the other.

     

    
      
        
        

      

      
        Pg. 19

        
          

        

      

      
        
        

      

    

    18.0 LIABILITY

    

    18.1
Liability of Pershing

     

    18.1.1
Disclaimer
of Warranties. Broker
expressly agrees that Broker’s use of Pershing’s Services, including the Systems
as defined by Paragraph 30.1 and software products as defined herein, is at
Broker’s sole risk.  Except as otherwise provided in this Agreement,
neither Pershing nor any of its directors, officers, employees, agents,
contractors, affiliates, information providers, licensors, or other suppliers
providing data, information, services or software, including but not limited to
the FINRA, warrants that the services will be uninterrupted or error free; nor
do any of them make any warranty as to the results that may be obtained from the
use of the services or as to the timeliness, sequence, accuracy, completeness,
reliability or content of any data, information, services, or transactions
provided and Pershing shall not be responsible for any losses liabilities or
damages caused by the acts or omissions of those third party agents,
contractors, information providers or other suppliers beyond any amount which
Pershing is able to recover pursuant to its agreement with such
entity.  Except as specifically set forth in this Paragraph 18.1,
Pershing’s services are provided on an “as is,” “as available” basis, without
warranties of any kind, either express or implied, including, without
limitation, those of merchantability, fitness for a particular purpose, and
non-infringement, other than those warranties which are implied by and incapable
of exclusion, restriction or modification under the laws applicable to this
Agreement.

     

    18.1.2
Pershing
Indemnification. In addition to any other obligations it may possess
under other provisions of this Agreement, Pershing shall indemnify, defend, and
hold harmless Broker and any controlling person of Broker, from and against all
allegations, claims, demands, proceedings, suits and  actions
(“Claims”) and all liabilities, expenses, reasonable attorney’s fees (including
fees and costs incurred in enforcing Broker’s right to indemnification), and
costs in connection therewith arising out of any negligent, reckless, dishonest,
fraudulent, or criminal act or omission on the part of any of Pershing’s
officers or employees or contractor agents performing job typically done by
employees (“Contractor Agents”) with respect to the services provided by
Pershing under this Agreement.

     

    18.1.3
Right to
Compete. Nothing in this Agreement shall be deemed to restrict in any way
the right of either party or any affiliate to compete with the other party in
any or all aspects of the other party’s business.

     

    18.2
Liability of Broker

     

    18.2.1
Broker
Indemnification. In addition to any other obligations it may possess
under other provisions of this Agreement, Broker shall indemnify, and hold
harmless Pershing, and any controlling person of Pershing, from and against all
allegations, claims, demands, proceedings, suits, and actions (“Claims”) and all
liabilities, expenses, attorney’s fees (including fees and costs incurred in
enforcing Pershing’s right to indemnification), and costs in connection
therewith arising out of one or more of Broker’s or any of its contractor
agent’s or employee’s negligent, dishonest, fraudulent, or criminal act, or
omission including related to the following:

     

    18.2.1.1
Failure to Make
Payment or Deliver Securities. A check received by Pershing from a
customer shall not constitute payment until it has been paid and the proceeds
are actually received and finally credited to Pershing (without any subsequent
charge back) by its bank.

     

    18.2.1.2
Margin Calls.
Failure of a customer to meet any initial margin call or any maintenance call,
except that Pershing shall be responsible for the portion of any such loss or
damage that was attributable to Pershing’s failure to give notification to
Broker as required in Paragraph 7.3.2 of this Agreement.

     

    
      
        
        

      

      
        Pg. 20

        
          

        

      

      
        
        

      

    

     

    18.2.1.3
Broker’s Failure to
Perform. Failure of Broker to perform in a material respect any duty,
obligation, or responsibility with respect to customer accounts as set forth in
this Agreement.  Broker’s indemnification obligation under this
Paragraph shall not be affected by the participation of Pershing or any person
controlling it or controlled by it within the meaning of the Securities Exchange
Act of l934, as amended, in any transaction giving rise to such an obligation,
unless such participation constitutes negligence, recklessness, fraud, or
criminal conduct.

     

    18.2.1.4
Improper Conduct by
Agents. Any negligent, dishonest, fraudulent, or criminal act or omission
on the part of any of Broker’s officers, directors, employees, or
agents.

     

    18.2.1.5
Failure of a Customer
to Perform Obligations. Any failure by any of Broker’s customers to
perform any commitment or obligation with respect to a transaction carried by
Pershing under this Agreement.

     

    18.2.1.6
Customer Claims and
Disputes. Except to the extent such claim or dispute relates to the
negligent, reckless, dishonest, fraudulent, or criminal act or omission on the
part of any of Pershing’s officers or employees or contractor agents, any claim
or dispute between Broker and a customer with respect to services provided under
this Agreement, including, but not limited to, any claim or dispute concerning
the validity of a customer order in the form the order was transmitted to
Pershing by Broker and any claim arising in connection with Pershing’s guarantee
of any signature of any customer of Broker or at the request of
Broker.

     

    18.2.1.7
Warranties. Any
adverse claim with respect to any security delivered or cleared by Pershing,
including a claim of a defect in title with respect to securities that are
alleged to have been forged, counterfeited, raised or otherwise altered, or if
they are alleged to have been lost or stolen.  The parties agree that
Pershing shall be deemed to be an intermediary between Broker and customer and
shall be deemed to make no warranties other than as provided in Section 8-306(3)
of the Uniform Commercial Code.

     

    18.2.1.8
Default of Third-Party
Broker. Any default by a third-party broker with whom the Broker deals on
a principal or agency basis in a transaction either not executed by Pershing or
not cleared by Pershing.

     

    18.2.1.9
Check Signing.
Any negligence, fraud, malfeasance, or error of any employee of Broker with
respect to the use of the check-signing authority granted under Paragraph 9.1.6
of this Agreement.

     

    18.2.1.10
Prior Self-Clearing
Arrangements. Any guarantee, indemnification, or hold harmless agreement
in connection with Broker’s business or customers that Pershing may provide to
the National Securities Clearing Corporation, the Depository Trust Company, or
any other clearing, depository, or self-regulatory organization with respect to
transactions self-cleared by Broker prior to transfer of such functions to
Pershing.

     

    18.2.1.11
Breach of Warranty by
Broker. Any breach by Broker in a material respect of any material
representation or warranty made by it under this Agreement.

     

    18.2.1.12
Deposit of Checks to
Customer Accounts.  Any failure to exercise due diligence in
reviewing checks received from customers to ensure that same are in proper form,
or in the issuance of instructions to Pershing regarding the accounts into which
checks are to be deposited.

     

    18.2.1.13
Infringement of
Intellectual Property Rights. Any act or omission of Broker, its agents
or  employees which infringes on any patent, trade secret, copyright,
trademark, or other intellectual property right of Pershing or any violation of
the terms set forth in Paragraph 30 hereof.

     

    
      
        
        

      

      
        Pg. 21

        
          

        

      

      
        
        

      

    

     

    18.2.1.14
Misuse of Passwords
and Unauthorized Access.  The misuse, loss or unauthorized
access to the Systems and Software Products using the Identification Devices (as
that term is defined in Paragraph 30.1 of this Agreement) provided to Broker or
its customers.

     

    
      	
              18.2.2

            	
              Defense of Claims by
      Broker. Broker will institute defense against any Claims at the
      sole expense of Broker and using counsel reasonably acceptable to
      Pershing.  Broker will keep Pershing informed of the status of
      the defense of such Claims, and Broker will not agree to any settlement
      without consent of Pershing, which consent will not be unreasonably
      withheld.  Notwithstanding the foregoing, Pershing will have the
      right to assume the defense of such Claims at the sole expense of Broker
      if  (i) Broker has not employed counsel to conduct the defense
      of Pershing and (ii) Pershing shall have reasonably concluded that, as
      between Pershing and Broker, there may be a conflict of interest requiring
      separate counsel or counsel selected is not competent to represent
      Pershing.

            

    

     

    
      	
            	
              18.2.3

            	
              Defense
      of Claims by Pershing. Pershing will institute defense against any claims
      against Broker for Pershing’s actions requiring indemnity under section
      18.1.2 at the sole expense of Pershing and using counsel reasonably
      acceptable to Broker. (i) If Pershing has not employed counsel to conduct
      the defense of Broker and (ii) Broker shall have reasonably concluded
      that, as between Broker and Pershing, there may be a conflict of interest
      requiring separate counsel or counsel selected is not competent to
      represent Broker.

            

    

     

    19.0 FEES AND
SETTLEMENTS FOR SECURITIES TRANSACTIONS

    

    19.1
Commissions.
Pershing shall charge each of Broker’s customers the commission, markup, and any
other charge or expense that Broker instructs it to charge for each
transaction.  If instructions are not received with respect to a
transaction in the time period required by Pershing to implement those
instructions, Pershing shall charge the customer the commission, markup, or
other charge or expense prescribed in the basic commission schedule delivered to
Pershing by Broker.  This basic schedule may be amended from time to
time by Broker by written instructions delivered to Pershing. Pershing shall
only be required to implement such amendments to the basic schedule to the
extent such amendments are within the capabilities of Pershing’s data processing
and operations systems and only within such reasonable time limitations as
Pershing may deem necessary to avoid disruption of its normal operating
capabilities.

     

    19.2
Miscellaneous
Charges. Broker agrees to pay Pershing the fees and charges described in
Schedule A hereto. Notwithstanding the foregoing, Broker may instruct Pershing
to pass through such fees to Broker’s customers.

     

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

     

    20.0 DEPOSIT
ACCOUNT

    

    20.1
Establishment of
Deposit Account. To further assure Broker’s performance of its
obligations under this Agreement, including but not limited to its
indemnification obligations under Paragraph 18, Broker shall, on or before the
execution of this Agreement, establish an account at Pershing to be designated
as the Broker’s Deposit Account (the “Deposit Account”).  The Deposit
Account shall not represent an ownership interest by Broker in
Pershing.  The Deposit Account shall at all times contain cash,
securities, or a combination of both, having a market value of at least the
amount set forth in Schedule A. The securities placed in the Deposit Account
shall consist only of direct obligations issued by or guaranteed as to principal
and interest by the United States Government.  In the event of a
material 

     

    
      
        
        

      

      
        Pg. 22

        
          

        

      

      
        
        

      

    

     

    adverse
change in the nature and extent of Broker’s business operations, Pershing may
require that an additional amount be deposited promptly in the Deposit Account
upon reasonable prior written notice to Broker. If such a deposit is not made in
the amount specified within a reasonable time period after Broker’s receipt of
notice of the increase, whether or not Broker agrees that the amount is
justified under this Paragraph, Pershing may terminate this Agreement
forthwith.

     

    20.2
Pershing’s Right to
Offset.  If (i) Pershing shall have any claim against Broker or
a customer of Broker which has not been resolved within ten business days after
Pershing presents such claim to Broker; or (ii) if Pershing shall suffer any
loss or incur any expense for which it is finally judicially determined that it
is entitled to be indemnified pursuant to this Agreement, and Broker shall fail
to make such indemnification within ten  business days after being
requested to do so, Pershing may deduct the amount of such claim, loss, or
expense from any account of Broker.  Pershing may withdraw cash or
securities (or both) having a market value equal to the amount of such claimed
deficiency.  If those funds are withdrawn from the Deposit Account,
then Broker shall be obligated to make a prompt deposit in the Deposit Account
of cash or securities sufficient to bring the Deposit Account back to a value of
at least the amount required by Schedule A.  Pershing shall give prior
written advice to Broker of all deductions from the Deposit Account made
hereunder.

     

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

     

    21.0 PROPRIETARY
ACCOUNTS OF INTRODUCING BROKERS AND DEALERS (PAIB)

    

    Pershing
shall establish a separate reserve account for proprietary assets held by Broker
so that Broker can treat these assets as allowable assets under SEC Rule
15c3-1.  Pershing agrees to perform the required computation on behalf
of Broker in accordance with the following provisions, procedures, and
interpretations set forth in the SEC’s No-Action Letter regarding Proprietary
Accounts of Introducing Brokers and Dealers (PAIB) dated November 3, 1998 (the
“No-Action Letter”):

     

    21.1
Pershing will perform a separate computation for PAIB assets (PAIB reserve
computation) of Broker in accordance with the customer reserve computation set
forth in SEC Rule 15c3-3 (customer reserve formula) with the following
modifications:

     

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

     

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

     

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

    

    
      
        
        

      

      
        Pg. 23

        
          

        

      

      
        
        

      

    

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

     

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

     

    21.4
Pershing will establish and maintain a separate “Special Reserve Account for the
Exclusive Benefit of PAIB Customers” with a bank in conformity with the
standards of Rule 15c3-3(f) (PAIB Reserve Account). Cash and/or qualified
securities as defined in the Rule will be maintained in the PAIB Reserve Account
in an amount equal to the PAIB reserve requirement.

     

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

     

    21.6
Within two business days of entering into this Agreement, Broker shall notify
its designated examining authority (“DEA”) in writing that it has entered into a
PAIB agreement with its clearing broker-dealer.

     

    21.7 Upon
discovery that any deposit made to the PAIB Reserve Account did not satisfy its
deposit requirement, Pershing will immediately notify its DEA and the SEC by
facsimile or telegram. Unless a corrective plan is found to be acceptable by the
SEC and the DEA, Pershing will provide written notification within five business
days of the date of discovery to Broker that PAIB assets held by Pershing will
not be deemed allowable assets for net capital purposes.  The letter
will also state that if the Broker 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 notification was made to transfer all PAIB assets to another
clearing broker. However, if the deposit deficiency is remedied before that time
at which Broker must transfer its PAIB assets to another clearing broker, the
Broker may choose to keep its assets at Pershing.

     

    
      	
              21.8

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

            

    

    
      	
            	
              21.9

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

            

    

     

    22.0 COMMUNICATION

    

    22.1
Notice to
Customers. Pershing shall, upon the opening of an account pursuant to
Paragraph 5 of this Agreement, mail to each customer a copy of the notice to
customers required by NYSE Rule 382(c).

     

    22.2
Customer Complaint
Reporting and Customer Notification. Broker authorizes and instructs
Pershing to forward promptly, to the extent required by applicable law or
regulation, any written customer complaint received by Pershing regarding Broker
and/or its associated persons relating to functions and responsibilities
allocated to Broker under this Agreement to a) Broker and b) Broker’s DEA
designated under Section 17 of the Securities and Exchange Act of 1934, as
amended, or, if none, to Broker’s appropriate regulatory agency or
authority.  Further, to the extent required by applicable law or
regulation, Broker authorizes Pershing to notify the customer, in writing, that
Pershing has received the complaint, and the complaint has been forwarded to the
Broker and the Broker’s DEA (or, if none, to the appropriate regulatory
agency).

     

    
      
        
        

      

      
        Pg. 24

        
          

        

      

      
        
        

      

    

     

    22.3
Restriction on
Advertising. Except as may be required by law, neither Pershing nor
Broker shall utilize the name of the other in any way without the other’s prior
written consent except to disclose the relationship between the parties. Neither
party shall employ the other’s name in such a manner as to create the impression
that the relationship between them is anything other than that of clearing
broker and introducing broker.  Broker shall not hold itself out as an
agent of Pershing or as a subsidiary or company controlled directly or
indirectly by or affiliated with Pershing except as provided in this
Paragraph.

     

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

     

    23.0 TERMINATION
OF AGREEMENT

    

    This
Agreement shall continue until terminated as hereinafter provided:

     

    23.1
Termination upon
90-Day Notice. This Agreement may be terminated by either party without
cause upon ninety days prior notice.  If either party terminates the
Agreement pursuant to this Paragraph, Pershing shall have the right to impose
reasonable limitations upon Broker’s activities during the period between the
giving of Notice and the transfer of Broker’s accounts.

     

    23.2
Termination upon
60-Day Notice. Either party may terminate this Agreement upon sixty days
prior written notice to the other party in the event that: (i) the other party
breached a material provision of this Agreement and such breach, if curable,
shall continue without remedy for a period of 10 days after written notice from
the non-defaulting party is transmitted in accordance with Section 26 of this
Agreement, (ii) any material representation, warranty or covenant of the other
party in this Agreement is false or misleading in any material respect; (iii)
any of Broker Executives, is enjoined, prohibited, disciplined or suspended as a
result of administrative or judicial proceedings, or proceedings of a
self-regulatory organization of which Broker is a member, from engaging in
securities business activities constituting all or material portions of Broker’s
securities business

     

    23.3
Immediate
Termination. This Agreement may be terminated by Pershing or Broker
immediately in the event that (a) the other party is enjoined, disabled,
suspended, prohibited, or otherwise becomes unable to engage in the securities
business or any part of it by operation of law or as a result of any
administrative or judicial proceeding or action by the SEC, any state securities
law administrator, or any regulatory or self-regulatory organization having
jurisdiction over such party or (b) the other party (i) becomes or is declared
insolvent; (ii) voluntarily files or is the subject of, a petition commencing a
case under any chapter of Title 11 of the United States Code; (iii) makes a
general assignment for the benefit of its creditors; (iv) Pershing is enjoined ,
prohibited or suspended as a result of administrative or judicial proceedings,
or proceedings of a self – regulatory organization of which Pershing is a
member, from engaging in securities business activities constituting all or
material portions of Pershing’s securities business.(vi) files an application or
consents to the appointment of, or there is appointed, any receiver, or a
permanent or interim trustee of that party or any of its subsidiaries, as the
case may be, or all or any portion of its property, including, without
limitation, the appointment or authorization of a trustee, receiver or agent
under applicable law or under a contract to take charge of its property for the
purpose of enforcing a lien against such property or for the purpose of general
administration of such property for the benefit of its creditors; (vii) files a
petition seeking a reorganization of its financial affairs or to take advantage
of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution
or liquidation law or statute or files an answer admitting the material
allegations of a petition filed against it in any proceeding under any such law
or statute; or (viii) takes any corporate action for the purpose of effecting

     

    
      
        
        

      

      
        Pg. 25

        
          

        

      

      
        
        

      

    

     

    any of
the foregoing, in each of the foregoing instances, the particular petition or
order is not dismissed within 30 calendar days after such filing..

     

    23.4
Conversion of
Accounts. In the event that this Agreement is terminated for any reason,
Broker shall arrange for the conversion of Broker’s and its customer accounts to
another clearing broker or to Broker if it becomes
self-clearing.  Broker shall give Pershing Notice (the “Conversion
Notice”) of: (i) the name of the broker that will assume responsibility for
clearing services for Customers and Broker; (ii) the date on which such broker
will commence providing such services; (iii) Broker’s undertaking, in form and
substance satisfactory to Pershing, that Broker’s agreement with such clearing
broker provides that such clearing broker will accept on conversion all Broker
and customer accounts then maintained by Pershing; and (iv) the name of an
individual or individuals within new clearing broker’s organization whom
Pershing may contact to coordinate the conversion.  The Conversion
Notice shall accompany Broker’s notice of termination given pursuant to this
Paragraph.  If Broker fails to give Conversion Notice to Pershing,
Pershing may notify Broker’s customers as Pershing deems appropriate of the
termination of this Agreement and may make such arrangements as Pershing deems
appropriate for transfer or delivery of customer and Broker
accounts.  In such event, the expense of notifying those customers and
making such arrangements shall be charged to Broker.

     

    23.5
Survival.
Termination of this Agreement in any manner shall not release Broker or Pershing
from any liability or responsibility with respect to any representation or
warranty or transaction effected on the books of Pershing.

     

    [23.6
Termination
Fee. Unless otherwise agreed in writing by Broker and Pershing, if Broker
terminates this Agreement pursuant to Paragraph 23.1 above, or Pershing
terminates this Agreement pursuant to Paragraph 23.2 or 23.3 within the period
specified in Schedule A, Broker shall pay to Pershing a termination fee and will
reimburse Pershing for Deconversion Expenses as stated in Schedule
A].

     

     23.7
Termination Under
S.I.P.A. In the event that Broker is the subject of the issuance of a
protective decree pursuant to the Securities Investor Protection Act of 1970 (15
U.S.C. § 78aaa-111), Pershing’s claim for payment of a termination fee under
this Agreement shall be subordinate to claims of Broker’s customers that have
been approved by the Trustee appointed by the Securities Investor Protection
Corporation pursuant to the issuance of such protective decree.

     

    24.0 CONFIDENTIALITY

    

    24.1
“Confidential Information” of a party shall mean all data and information
submitted to the other party or obtained by the other party in connection with
the services, including information relating to a party’s customers (which
includes, without limitation, Non-Public Personal Information as that term is
defined in Securities and Exchange Commission Regulation S-P), technology,
operations, facilities, consumer markets, products, capacities, systems,
procedures, security practices, research, development, business affairs, ideas,
concepts, innovations, inventions, designs, business methodologies,
improvements, trade secrets, copyrightable subject matter and other proprietary
information.

     

    24.2 All
Confidential Information relating to a party shall be held in confidence by the
other party to the same extent and in at least the same manner as such party
protects its own confidential or proprietary information.  Neither
party shall disclose, publish, release, transfer or otherwise make available
Confidential Information of the other party in any form to, or for the use or
benefit of, any person or entity without the other party’s
consent.  Each party shall, however, be permitted to disclose relevant

     

    
      
        
        

      

      
        Pg. 26

        
          

        

      

      
        
        

      

    

     

    aspects
of the other party’s Confidential Information to its officers, agents,
subcontractors and employees to the extent such disclosure is reasonably
necessary for the performance of its duties and obligations under this Agreement
and such disclosure is not prohibited by Gramm-Leach-Bliley Act of 1999
(“GLBA”), which amends the Securities and Exchange Act of 1934, as it may be
amended from time to time, the regulations promulgated by the Securities and
Exchange Commission thereunder or other applicable law; provided, however, that
such party shall take all reasonable measures to ensure that Confidential
Information of the other party is not disclosed or duplicated in contravention
of the provisions of this Agreement by such officers, agents, subcontractors and
employees.  The obligations in this Paragraph shall not restrict any
disclosure by either party pursuant to any applicable law, or by order of any
court or government agency (provided that the disclosing party shall give prompt
notice to the non-disclosing party of such order to the extent such notice is
not prohibited by such order) and shall not apply with respect to information
which (i) is developed by the other party without violating the disclosing
party’s proprietary rights; (ii) is or becomes publicly known (other than
through unauthorized disclosure);

    (iii) is
disclosed by the owner of such information to a third party free of any
obligation of confidentiality; (iv) is
already known by such party without an obligation of confidentiality other than
pursuant to this Agreement or any confidentiality agreements entered into
between the parties before the effective date of this Agreement; or (v) is
rightfully received by a party free of any obligation of
confidentiality.  If the GLBA, the regulations promulgated by the
Securities and Exchange Commission thereunder or other applicable law now or
hereafter in effect imposes a higher standard of confidentiality to the
Confidential Information, such standard shall prevail over the provisions of
this Paragraph.

     

    24.3
Broker acknowledges that the services Pershing provides hereunder involve Broker
access to proprietary technology, trading and other systems, and that
techniques, algorithms and processes contained in such systems constitute trade
secrets and shall be safeguarded by Broker, and that Broker shall exercise
reasonable care to protect Pershing’s interest in such trade
secrets.  Broker agrees to make the proprietary nature of such systems
known to those of its consultants, staff, agents or clients who may reasonably
be expected to come into contact with such systems.  Broker agrees
that any breach of this confidentiality provision may result in its being liable
for damages as provided by law.

     

    24.4 Paragraphs
24.1 through 24.3 shall survive the termination of this
Agreement.

     

    25.0
ACTION AGAINST CUSTOMERS BY PERSHING

     

    Pershing
may, in its sole discretion and at its own expense and, upon written notice to
Broker, institute and prosecute in its name any action or proceeding against any
of Broker’s customers in relation to any controversy or claim arising out of
Pershing’s transactions with Broker or with Broker’s
customers.  Nothing contained in this Agreement shall be deemed either
(i) to require Pershing to institute or prosecute such an action or proceeding;
or (ii) to impair or prejudice its right to do so, should it so elect, nor shall
the institution or prosecution of any such action or proceeding relieve Broker
of any liability or responsibility which Broker would otherwise have had under
this Agreement.  Broker assigns to Pershing its rights against its
customer as necessary to effectuate the provisions of this
Paragraph.

     

    26.0  NOTICES

    

    Any
Notice required or permitted to be given under this Agreement shall be
sufficient only if it is in writing and sent by hand or by certified mail,
return receipt requested, to the parties at the following address:

     

    
      
        
        

      

      
        Pg. 27

        
          

        

      

      
        
        

      

    

     

    Broker:

     

    Broadpoint
Capital, Inc. 

    One Penn
Plaza, 42d Floor 

    New York,
New York 10119 

    Attn:
Laurence Mascera, Chief Administrative Officer 

    Cc:
General Counsel

     

    Pershing:

     

    Pershing
LLC 

    One
Pershing Plaza 

    Jersey
City, NJ  07399

    
      	
            	
              Attn:

            	
              Mr. James Crowley,
      Managing Director

            

    

    
      	
               
      

            	
              cc:

            	
              Legal
      Department

            

    

     

    
      	
              27.0

            	
              ARBITRATION

            

    

     

    
      	
            	
              27.1

            	
              Arbitration
      Requirement. Any dispute between Broker and Pershing that cannot be
      settled shall be taken to arbitration as set forth in Paragraph 27.3
      below.

            

    

     

    
      	
              27.2

            	
              ARBITRATION
      DISCLOSURE.

            

    

     

    
      	
            	
              o 

            	
              ARBITRATION
      IS FINAL AND BINDING ON THE
PARTIES.

            

    

     

    
      	
            	
              o 

            	
              THE
      PARTIES ARE WAIVING THEIR RIGHT TO SEEK REMEDIES IN COURT, INCLUDING THE
      RIGHT TO JURY TRIAL.

            

    

     

    
      	
            	
              o 

            	
              PRE-ARBITRATION
      DISCOVERY IS GENERALLY MORE LIMITED THAN AND DIFFERENT FROM COURT
      PROCEEDINGS.

            

    

     

    
      	
            	
              o 

            	
              THE
      ARBITRATORS’ AWARD IS NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL
      REASONING AND ANY PARTY’S RIGHT TO APPEAL OR TO SEEK MODIFICATION OF
      RULINGS BY THE ARBITRATORS IS STRICTLY
LIMITED.

            

    

     

    
      	
            	
              o 

            	
              THE
      PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF ARBITRATORS WHO
      WERE OR ARE AFFILIATED WITH THE SECURITIES
  INDUSTRY.

            

    

    

    
      	
              27.3

            	
              ARBITRATION
      AGREEMENT.

            

    

     

    ANY
CONTROVERSY BETWEEN US ARISING OUT OF YOUR BUSINESS OR THIS AGREEMENT SHALL BE
SUBMITTED TO ARBITRATION CONDUCTED BEFORE THE NEW YORK STOCK EXCHANGE, INC., OR
FINRA DISPUTE RESOLUTION, INC. (OR THEIR SUCCESSOR FIRMS), AND IN ACCORDANCE
WITH THE RULES THEN OBTAINING OF THE SELECTED ORGANIZATION AND SHALL BE
CONDUCTED AS A BROKER TO BROKER OR MEMBER VS MEMBER DISPUTE. ARBITRATION MUST BE
COMMENCED BY SERVICE UPON THE OTHER PARTY OF A WRITTEN DEMAND FOR ARBITRATION OR
A WRITTEN NOTICE OF INTENTION TO ARBITRATE, THEREIN ELECTING THE ARBITRATION
TRIBUNAL.

     

    
      
        
        

      

      
        Pg. 28

        
          

        

      

      
        
        

      

    

     

    NO PERSON
SHALL BRING A PUTATIVE OR CERTIFIED CLASS ACTION TO ARBITRATION, NOR SEEK TO
ENFORCE ANY PRE-DISPUTE ARBITRATION AGREEMENT AGAINST ANY PERSON WHO HAS
INITIATED IN COURT A PUTATIVE CLASS ACTION AND WHO IS A MEMBER OF A PUTATIVE
CLASS AND WHO HAS NOT OPTED OUT OF THE CLASS WITH RESPECT TO ANY CLAIMS
ENCOMPASSED BY THE PUTATIVE CLASS ACTION UNTIL: (i) THE CLASS CERTIFICATION IS
DENIED; (ii) THE CLASS IS DECERTIFIED; OR (iii) THE CUSTOMER IS EXCLUDED FROM
THE CLASS BY THE COURT.  SUCH FORBEARANCE TO ENFORCE AN AGREEMENT TO
ARBITRATE SHALL NOT CONSTITUTE A WAIVER OF ANY RIGHTS UNDER THIS AGREEMENT
EXCEPT TO THE EXTENT STATED HEREIN.

     

    28.0
INJUNCTIVE RELIEF

     

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

     

    29.0 GENERAL
PROVISIONS

    

    29.1
Successors and
Assigns. This Agreement shall be binding upon and shall inure to the
benefit of the respective successors and assigns of Broker and
Pershing.  Except to an affiliate with a a net capital amount similar
to Broker or Pershing respectively, no assignment of this Agreement or any
rights, including those to indemnification hereunder by either party shall be
effective unless the other party’s written consent shall be first
obtained.

     

    29.2
Severability.
If any provision of this Agreement shall be held to be invalid or unenforceable,
the validity or enforceability of the remaining provisions and conditions shall
not be affected thereby.

     

    29.3
Counterparts.
This Agreement may be executed in one or more counterparts, all of which taken
together shall constitute a single agreement.

     

    29.4
Entire Agreement
Amendments and Duties Not Specifically Enumerated Herein. This Agreement
represents the entire agreement between the parties with respect to the subject
matter contained herein and all prior discussions, agreements, and promises,
written or oral, are merged herein.  This Agreement may not be changed
orally, but only by an agreement in writing signed by the
parties.  Pershing shall not be responsible or liable for failure to
perform any duties not specifically enumerated herein.

     

    29.5
Captions.
Captions herein are for convenience only and are not of substantive
effect.

     

    29.6
Choice of Law.
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York, without giving effect to the conflicts
of laws or principles thereof.  This Agreement shall not be governed
by the United Nations Convention on the International Sale of
Goods.

     

    
      
        
        

      

      
        Pg. 29

        
          

        

      

      
        
        

      

    

     

    29.7
Citations. Any
reference to the rules or regulations of the SEC, FINRA, the NYSE, or any other
regulatory or self-regulatory organization are current citations.  Any
changes in the citations (whether or not there are any changes in the text of
such rules or regulations) shall be automatically incorporated
herein.

     

    29.8
Construction of
Agreement. Neither this Agreement nor the performance of the services
hereunder shall be considered to create a joint venture or partnership between
Pershing and Broker or between Broker and other brokers for whom Pershing may
perform the same or similar services.

     

    29.9
Third-Parties.
This Agreement is between the parties hereto and is not intended to confer any
benefits on third-parties including, but not limited to, customers of
Broker.

     

    29.10
Non-Exclusivity of
Remedies. The enumeration herein of specific remedies shall not be
exclusive of any other remedies.  Any delay or failure by a party to
this Agreement to exercise any right, power, remedy, or privilege herein
contained, or now or hereafter existing under any applicable statute or law,
shall not be construed to be a waiver of such right, power, remedy, or
privilege.  No single, partial, or other exercise of any such right,
power, remedy, or privilege shall preclude the further exercise thereof or the
exercise of any other right, power, remedy, or privilege.

     

    29.11
SIPA; Rule
15c3-3. All introduced customers are the customers of Broker except as
provided under the Securities Investor Protection Act (“SIPA”) and SEC financial
responsibility rules where the customers shall be considered customers of
Pershing.  Nothing in this Paragraph will otherwise change or affect
the provisions of this Agreement which provide that the customer account remains
Broker’s customer account for all other purposes, including but not limited to,
supervision, suitability and indemnification.

     

    29.12
United States Postal
Service Documents. Broker hereby appoints Pershing as its
attorney-in-fact for the purpose of executing such documents as are necessary to
allow Broker and its customers to participate in the FASTforward program of the
United States Postal Service.  This may include, but not be limited to
Pershing’s execution, on an annual basis, on Broker’s behalf, of the FASTforward
Processing Acknowledgment Form.

     

    29.13
Provision of Reports
and Exception Reports. Beginning on or before the effective date of this
Agreement and before July 31 of each calendar year thereafter, Pershing shall
provide to Broker, pursuant to NYSE Rule 382(e), a list of all reports (e.g.
exception-type reports) it offers to Broker.  Broker shall promptly
advise Pershing, in writing, of those specific reports it elects to receive.
Pershing and Broker each represent that their obligations relative to exception
reports, pursuant to NYSE Rule 382(e) have been completed.

     

    29.14
Force Majeure.
Pershing shall not be liable for any loss caused, directly or indirectly,
resulting from any circumstances beyond its reasonable control, including
without limitation, labor disputes, riots, sabotage, insurrection, fires, flood,
storm, explosions, earthquakes, electrical power failures, telecommunications
system failures, Internet failure, outbreaks of computer viruses, worms,
parasites and the like, acts of God or nature, war, both declared or undeclared,
or acts of terrorism (each a “Force Majeure Event”; collectively, “Force Majeure
Events”).  In addition, Pershing shall not be liable for any loss
caused, directly or indirectly, resulting from the acts or omissions of third
parties over which it has no control.

     

    29.15 Audio Taping of Telephone
Conversations. Each party understands that for quality control, dispute
resolution or other business purposes, the parties may record some or all
telephone conversations between them. Each party hereby consents to such
recording and will inform its employees, representatives and agents of this
practice.  It is further understood that all such conversations are
deemed to be solely for business purposes.

     

    
      
        
        

      

      
        Pg. 30

        
          

        

      

      
        
        

      

    

     

    30.0 OWNERSHIP
AND LICENSES

    

    30.1
Definitions.
For purposes of this Paragraph 30, the following terms have the meanings
ascribed to them.

     

    “Access
Device” means any type of computer, personal digital assistant (PDA), beeper,
television, telephone or any other communications device, including, without
limitation, any software Broker uses on such device whether Pershing provided
such software to Broker or otherwise, that enables Broker to access and use the
Pershing Services via a wired or wireless connection to any wireless network,
the Internet, the World Wide Web or any other computer or telecommunications
network.

     

    “Authorized
User” means each customer, employee and/or agent of Broker designated as
authorized by Broker to access the Software, Systems and Services.

     

    “Identification
Devices” means any passwords, codes, certificates, and other identification
devices and security processes or measures necessary to access and use the
Systems and Software.

     

    “Intellectual
Property Rights” with respect to any intellectual property means all applicable
copyrights (including without limitation, the exclusive right to reproduce,
distribute copies of, display and perform the copyrighted work and to prepare
derivative works), rights in trademarks,  rights in patents and patent
applications, tradenames, mask-work rights, trade secrets, moral rights,
authors’ rights, domain names and universal resource locators (“URLs”), TCP/IP
addresses, metatags, all renewal and extensions thereof, and the like,
regardless of whether any  such rights arise under the laws of the
United States, or any other state, country or jurisdiction.

     

    “Services”
or “Pershing Services” means the services to be provided by Pershing and/or its
Third Party Providers to Broker under this Agreement, including Internet-based
services, through the Software and Systems, including, without limitation, (a)
communication and content services, (b) access to account and financial
information, (c) securities trading, and other services to be provided by
Pershing to Broker under this Agreement.

     

    “Software”
means the software, including, without limitation, any and all documentation,
home page design(s), methodologies, techniques, know-how and software libraries,
and the code comprising the same, as such may be revised from to time to include
any upgrades, updates, new versions and other modifications, improvements and
enhancements made by or for Pershing in accordance with this
Agreement.

     

    “Systems”
means the data access, account information, trading and order entry, and report
generation systems, and related know-how, as such may be revised from to time to
include any upgrades, updates, new versions and other modifications,
improvements and enhancements made by or for Pershing in accordance with this
Agreement.

     

    “Third
Party Providers” means Pershing’s suppliers, vendors or providers that have
entered into third-party agreements with Pershing.

     

    30.2
License to Use Systems
and Software. Pershing hereby grants to Broker a non-exclusive,
nontransferable, non-assignable license for the term of this Agreement to access
and use the Software and Systems for the limited purpose of enabling Broker to
obtain the Services.  Pershing shall have the right 

     

    
      
        
        

      

      
        Pg. 31

        
          

        

      

      
        
        

      

    

     

    to
terminate or suspend such license and the provision of the Systems and Software
to Broker in the event of breach of this Agreement that is not cured within
thirty (30) days of Brokers’ receipt of Pershing’s notice of such
breach.

     

    30.3
No Reverse
Engineering. Broker shall not, directly or indirectly, modify the
features or functionality of, copy or create derivative works using all or any
portion of, analyze or remove semiconductor components from, decompile, or
otherwise reverse engineer or attempt to reverse engineer or derive source code,
techniques, algorithms or processes from the Systems or Software or permit or
encourage any third-party to do so.

     

    30.4
Ownership.
Except for the license granted in Paragraph 30.2 herein, nothing herein shall be
construed to transfer to Broker any rights, title and/or interest in and to the
Software, Systems and Services, including, without limitation, the Intellectual
Property Rights therein.  Except to the extent that any Intellectual
Property Rights in the Software, Systems and Services are published or otherwise
matters of public record, the Systems and Software Products are trade secrets of
Pershing and its affiliates.  As between Broker and Pershing, Pershing
shall at all times be and remain the sole and exclusive owner of the Systems,
Software and Services.

     

    30.5
Web-based
Communications. The Services shall be provided through various means,
including, without limitation, a site or pages of a site on the World Wide Web
that are accessible through an Internet address unique to Broker, but which
shall not be required to be a domain name unique to Broker.

     

    30.6
Revisions and
Modifications. From time to time during the term of this Agreement
Pershing may in its sole and absolute discretion revise or modify any Software,
Systems or Services to include any patches, upgrades, updates, new versions and
other modifications, improvements and enhancements made by or for Pershing (any
of which patches, upgrades, updates, new versions and other modifications,
improvements and enhancements are collectively referred to in this Agreement as
“revisions and modifications” or “revisions or modifications”, as the context
requires).  To the extent that any such revisions or modifications are
made, Schedule A shall be deemed to be revised to include such revision or
modification and any associated fees only upon reasonable prior written notice
of such revisions or modifications to Broker. (Associated fees under this
section shall not be increased more than 10% unless such fees relate to
regulatory or security related upgrades).

     

    30.7
Business
Continuity. Pershing agrees to maintain a written business continuity
plan identifying procedures relating to an emergency or significant business
disruption in accordance with applicable industry regulations.

     

    30.7.1
Pershing shall, from time to time, provide Broker with Identification Devices
for accessing and using the Software, Systems and Services.

     

    30.7.2
Broker shall be responsible for designating Authorized Users.  [Broker
shall provide Pershing with a list of Authorized Users so designated by Broker
and shall provide Pershing with changes to this list.]

     

    30.7.3
Broker shall be solely responsible for the assignment and distribution to
Authorized Users, and the maintenance of all Identification
Devices.  Broker agrees not to assign and/or distribute any
Identification Devices to individuals who are not Authorized Users.

     

    30.7.4
Each party shall be responsible for and shall provide the same level of security
as it applies to its own proprietary and confidential property in the
protection, maintenance, and distribution of those Identification Devices and
codes within its organization and to its agents and customers, but in no case
less than the security that a reasonably prudent person would use to protect
their own proprietary and confidential property.

     

     

    
      
        
        

      

      
        Pg. 32

        
          

        

      

      
        
        

      

    

    
       

      30.7.5
Broker shall report to Pershing any loss, theft, or discovery of any
Identification Devices immediately and Broker shall be responsible for any
unauthorized use, and for any loss resulting from unauthorized use, of any
Identification Device attributable to Broker prior to the time the loss, theft,
or discovery of the Identification Device is reported to Pershing.

       

    

    30.8
Restrictions on
Access, Viewing and Distribution.

     

    30.8.1
Quotes, news and research data, including market information (collectively,
“Market Data”) displayed on the Pershing Service may be based on or derived from
different Third Party Providers and may be updated at different time intervals,
and accordingly, the various trade status reports, including intraday updates of
balances and positions information, available via any Access Devices, which
incorporate such Market Data information, may differ due to the different Market
Data and sources and their update intervals.  Similarly, different
Access Devices may incorporate different Market Data and sources, and they may
differ for the same reasons.

     

    30.8.2
The Software, Systems, and design of the Pershing Service are the property of
Pershing.  The content, including both its form and substance,
included in the Pershing Service is the property of either Pershing or one or
more of its Third Party Providers (“Third Party Provider
Services”).  Broker shall have no rights in or to the Software,
Systems, or Pershing Service or Third Party Provider Services, except as
expressly provided herein, and Broker agrees not to take any action inconsistent
with Pershing’s rights in the Software, Systems, or Pershing Service or the
Third Party Providers’ rights in their Third Party Provider
Services.

     

    30.8.3
All of the materials in the Pershing Service are protected by United States and
international copyright, trademark and other intellectual property
laws.  Broker’s right to use the Pershing Service, including the Third
Party Provider Services, is limited to use in connection with Broker’s
account(s) and for Broker’s personal benefit only (“Internal
Use”).  Broker may not modify, rent, lease, loan, sell, assign,
distribute, display, perform, publish or create derivative works based on any of
the content, materials or the like contained in the Pershing Service, in whole
or in part.  Broker may not copy, modify, create derivative works
from, reverse engineer, reverse assemble or otherwise attempt to discover the
source code of any software or techniques, algorithms or processes that are part
of the Pershing Service.  Broker may print out a reasonable number of
copies of the materials on the Pershing Service as is necessary for Broker’s
Internal Use, provided that Broker does not delete any copyright, trademark or
other intellectual property notices contained in such
materials.  Broker may prepare hard copy reports incorporating Third
Party Provider Services and download Third Party Provider Services into
commercially available spreadsheet software programs or delimited text files;
Broker may not, however, disseminate in electronic form or use Third Party
Provider Services for the construction of other products or
services.

     

    30.8.4
Broker acknowledges and agrees that the license to use the Software, Systems and
Services granted by Paragraph 30.2 does not diminish Broker’s responsibility for
compliance with all applicable rules as set forth in Paragraph 6 of this
Agreement.

     

    30.9
Indemnification;
Disclaimers.

     

    30.9.1
Pershing shall indemnify, defend, and hold Broker harmless from and against all
claims, demands, proceedings, suits, actions, liabilities, expenses, and
reasonable attorney’s fees, and costs in connection therewith (collectively,
“Losses”) arising out of a claim that the Software and/or Systems, or Broker’s
authorized use thereof, as set forth in this Agreement, infringes upon any
Intellectual Property Rights of any third party.  This Paragraph

    30.9.1
shall survive any termination of this Agreement; provided, however, that any
indemnity provided under this Paragraph 30.9.1 shall only be in respect of
events occurring during the term of this Agreement.

     

    
      
        
        

      

      
        Pg. 33

        
          

        

      

      
        
        

      

    

     

    30.9.2
Broker shall not be entitled to any indemnification under Paragraph 30.9.1
hereof to the extent that the Losses in respect of which such indemnification is
sought is attributable to Broker’s negligent activities and/or misuse of
Pershing Services, as set forth in this Agreement (“Unauthorized Use”) or to the
extent of such Losses due to a delay in providing notice of the circumstances
giving rise to such Losses. Broker shall indemnify, defend, and hold Pershing
harmless from and against all claims, demands, proceedings, suits, actions,
liabilities, expenses, and reasonable attorney’s fees, and costs in connection
therewith (collectively, “Losses”) arising out of such negligent activities by
Broker, Broker’s Unauthorized Use of Pershing Services or such delay by Broker
in providing such notice.  This Paragraph 30.9.2
shall survive any termination of this Agreement.

     

    30.9.3
DISCLAIMER OF
WARRANTIES FOR INFORMATION.

     

    THE
PERSHING SERVICE IS PROVIDED ON AN “AS IS”, “AS AVAILABLE” BASIS, WITHOUT
WARRANTY OF ANY KIND, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE
LAW.  PERSHING DISCLAIMS ALL WARRANTIES, INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, AND NON-INFRINGEMENT.  THERE IS NO WARRANTY THAT ANY
INFORMATION PROVIDED THROUGH PERSHING, THE PERSHING SERVICE OR THE SYSTEM WILL
FULFILL ANY PARTICULAR PURPOSES OR NEEDS.

     

    30.9.4
LIMITATION OF
LIABILITY; DATA NOT GUARANTEED.

     

    TO
THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW AND EXCEPT AS OTHERWISE PROVIDED
IN THIS AGREEMENT, IN NO EVENT SHALL PERSHING, ANY OF ITS AGENTS, AFFILIATES,
THIRD PARTY PROVIDERS OR ANYONE ELSE INVOLVED IN CREATING, PRODUCING, DELIVERING
OR MANAGING THE DELIVERY OF THE PERSHING SERVICE BE LIABLE TO BROKER OR ANYONE
ELSE FOR ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, PUNITIVE OR
ANY OTHER DAMAGES WHATSOEVER (INCLUDING WITHOUT LIMITATION DAMAGES FOR LOST
PROFITS, TRADING LOSSES, DAMAGES RESULTING FROM INCONVENIENCE OR LOSS OF USE OF
THE WEB SITE), EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES, ARISING OUT OF THE USE OF OR INABILITY TO USE THE PERSHING SERVICE OR
FOR ANY BREACH OF ANY WARRANTY.

     

    Quotes,
news and research data, including market information displayed on any Access
Device (collectively, “Market Data”) are obtained from sources Pershing believes
to be reliable.  HOWEVER, ALL MARKET DATA IS PROVIDED
“AS IS” AND “AS AVAILABLE”, AND THERE MAY BE DELAYS, OMISSIONS AND INACCURACIES
IN SUCH DATA.  NEITHER PERSHING NOR ITS AGENTS, AFFILIATES, OR THIRD
PARTY PROVIDERS OR ANYONE ELSE INVOLVED IN CREATING, PRODUCING, DELIVERING OR
MANAGING THE DELIVERY OF SUCH DATA, INFORMATION OR SERVICES (COLLECTIVELY, THE
(“Disseminating Parties”) CAN GUARANTEE, NOR DO PERSHING OR THEY GUARANTEE, THE
CORRECTNESS, QUALITY, ACCURACY, SEQUENCE, TIMELINESS, CURRENTNESS, RELIABILITY,
PERFORMANCE, COMPLETENESS, CONTINUED AVAILABILITY, MERCHANTABILITY, FITNESS FOR
A PARTICULAR PURPOSE, TITLE OR NONINFRINGEMENT OR OTHERWISE OF ANY MARKET DATA
OR THIRD PARTY PROVIDER SERVICES, AND PERSHING AND THEY HEREBY DISCLAIM ANY SUCH
EXPRESS OR IMPLIED WARRANTIES. Pershing also reserves the right to filter
the Market Data provided to Broker through the Pershing Service.  The
Disseminating Parties shall not be liable to Broker or to anyone else for any
loss or injury, whether or not caused in whole or in part by their negligence or
omission, in procuring, compiling, editing, writing, reporting or delivering any
Market Data or Third Party Provider Services through Pershing or by any Force
Majeure Event or other cause beyond their control. The Disseminating Parties
will not be liable to Broker or anyone else for any decision made or

     

    
      
        
        

      

      
        Pg. 34

        
          

        

      

      
        
        

      

    

     

    action
taken by Broker in reliance on such Market Data or for direct, indirect,
incidental, special, consequential, punitive or any other damages whatsoever
(including without limitation damages for lost profits, trading losses, damages
resulting from inconvenience or loss of use of the Pershing Service) even if
Pershing or its Third Party Providers have been advised of the possibility of
such damages.

     

    Except as
otherwise provided in this Agreement, Broker agrees that neither Pershing, nor
its Third Party Providers shall be liable in any way for, any liability, costs,
damages or loss caused directly or indirectly by government restrictions,
exchange or market rulings, suspension or delay of trading, equipment failure,
communication line failure, system failure, security failure, unauthorized
access, theft, Force Majeure Event or any problem, technological or otherwise,
that might prevent Broker from accessing or utilizing the Services.

     

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

     

    This
Agreement contains a pre-dispute arbitration clause in Paragraph
27.  Broker acknowledges receiving a copy of this
Agreement.

     

                Broadpoint Capital,
Inc:

                     

    By: Lee
Fensterstock          /s/
Lee Fensterstock

    Title:
CEO and Chairman

     

    PERSHING
LLC

         

    By:
Michael Row     /s/
Michael Row

    Title:
Managing Director

     

     

     

     

     

     

     

     

     

      Pg. 35efc8-0404_ex102.htm

    
      EXHIBIT
10.2

       

      [EXECUTION
VERSION]

      
 

    

    VOTING
AGREEMENT

     

    THIS
VOTING AGREEMENT dated as of February 29, 2008 (the “Agreement”), is made
by and between BROADPOINT SECURITIES GROUP, INC., a New York corporation (the
“Company”), and
MATLINPATTERSON FA ACQUISITION LLC, a Delaware limited liability company (“MatlinPatterson”).

     

    PRELIMINARY
STATEMENTS

     

    A.           MatlinPatterson
is the owner of 41,499,261 shares of the Company common stock, par value $0.01
per share (the “Common
Stock”).

     

    B.           The
Company entered into an Asset Purchase Agreement (the “Asset Purchase
Agreement”), dated as of January 30, 2008, with Broadpoint Capital, Inc.,
a New York corporation (“Broadpoint Capital”),
and BNY Capital Markets, Inc., a New York corporation.

     

    C.           Pursuant
to the Asset Purchase Agreement, Broadpoint Capital agreed to hire certain
Designated Key Employees (as defined in the Asset Purchase Agreement), and the
Company agreed to issue, subject to certain conditions, restricted stock units
and/or shares of restricted stock (“Awards”) to the
Designated Key Employees under the Company’s 2007 Incentive Compensation Plan
(the “Plan”);

     

    D.           Because
the number of shares of Common Stock authorized for issuance under the Plan is
insufficient to grant all the contemplated Awards to the Designated Key
Employees, the Board of Directors of the Company by resolution adopted on
January 29, 2008 approved an increase in the number of authorized shares under
the Plan (the “Plan
Increase”), subject to shareholder approval; and

     

    E.           The
Company agreed with the Designated Employees to obtain the written agreement of
MatlinPatterson to vote its shares in the Company in favor of the Plan Increase
when the Plan Increase is submitted to the shareholders of the Company for
approval, and MatlinPatterson is willing to enter into such an
agreement.

     

    NOW,
THEREFORE, for good and valuable consideration, the receipt, sufficiency and
adequacy of which are hereby acknowledged, the parties to this Agreement
intending to be legally bound do agree as follows:

     

    1.   Representations and
Warranties.  MatlinPatterson represents and warrants to the
Company that (i) this Agreement has been duly authorized, executed and delivered
by all necessary limited liability action on the part of MatlinPatterson; and
(ii) this Agreement constitutes the legal, valid and binding obligation of
MatlinPatterson, enforceable in accordance with its terms.

     

    2.   Agreement to Vote
Shares.  MatlinPatterson agrees to vote its Shares (as defined
below) in favor of the Plan Increase when the Plan Increase is submitted to a
vote of the shareholders of the Company.  For such purpose, the term
“Shares”
includes all shares of the Common Stock or any other voting securities of the
Company as to which MatlinPatterson is the

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    beneficial
owner or is otherwise able to direct the voting thereof at the time of the
applicable shareholder vote.

     

    3.   Specific
Performance.  MatlinPatterson acknowledges that it will be
impossible to measure in money the damage to the Company if MatlinPatterson
fails to comply with the obligations imposed by this Agreement, and that, in the
event of any such failure, the Company will not have an adequate remedy at law
or in damages.  Accordingly, MatlinPatterson agrees that injunctive
relief or any other equitable remedy, in addition to any remedies at law or
damages, is the appropriate remedy for any such failure and will not oppose the
granting of any such remedy on the basis that the Company has an adequate remedy
at law.  MatlinPatterson agrees not to seek, and agrees to waive any
requirement for, the securing or posting of a bond in connection with the
Company seeking or obtaining such equitable relief.

     

    4.   Miscellaneous.

     

    (a)   Entire
Agreement.  This Agreement constitutes the entire agreement
among the parties with respect to the subject matter of this Agreement and
supersedes all prior written and oral and all contemporaneous oral agreements
and understandings with respect to the subject matter of this
Agreement.

     

    (b)   Notices.  Any
notice, request, instruction or other document to be given hereunder by any
party to the others shall be in writing and shall be deemed to have been duly
given on the next business day after the same is sent, if delivered personally
or sent by telecopy or overnight delivery, or five calendar days after the same
is sent, if sent by registered or certified mail, return receipt requested,
postage prepaid, as set forth below, or to such other persons or addresses as
may be designated in writing in accordance with the terms hereof by the party to
receive such notice.

     

    If to the
Company:

     

    Broadpoint
Securities Group, Inc.

    One Penn
Plaza, 42nd
Floor

    New York,
New York 10019

    Attention:
General Counsel

    Fax:
(212) 273-7186

    

    If to
MatlinPatterson:

    

    MatlinPatterson
FA Acquisition LLC

    c/o
MatlinPatterson Global Advisers LLC

    520
Madison Avenue, 35th Floor

    New York,
New York 10022

    Attention:  General
Counsel

    Fax:
(212) 651-4011

     

    
 

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (c)   Governing
Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of New York as applied to contracts made
and fully performed in such state without giving effect to the principles of
conflict of laws thereof.

     

    (d)   Rules of
Construction.  The descriptive headings in this Agreement are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.  Words used
in this Agreement, regardless of the gender and number specifically used, shall
be deemed and construed to include any other gender, masculine or feminine, or
neuter, and any other number, singular or plural, as the context
requires.  As used in this Agreement, the word "including" is not
limiting, and the word "or" is not exclusive.

     

    (e)   Parties in
Interest.  This Agreement shall be binding upon and inure
solely to the benefit of the parties to this Agreement and their legal
successors-in-interest, and nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.

     

    (f)   Counterparts.  This
Agreement may be executed in one or more counterparts, and each of such
counterparts shall for all purposes be deemed to be an original, but all such
counterparts together shall constitute but one instrument.

     

    (g)   Assignment.  No
party hereto shall assign its rights and obligations under this Agreement or any
part thereof, nor shall any party assign or delegate any of its rights or duties
hereunder without the prior written consent of the other party, and any
assignment made without such consent shall be void.  Except as
otherwise provided herein, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.

     

    (h)   Amendment.  This
Agreement may not be amended except by an instrument in writing signed on behalf
of both parties.

     

    

     

    

     

    [the
next page is the signature page]

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
parties hereto, intending to be legally bound hereby, have duly executed this
Voting Agreement as of the date first above written.

     

     

    BROADPOINT
SECURITIES GROUP, INC.

     

    By:/s/ Lee
Fensterstock                                         .

    Name: Lee
Fensterstock

    Title:
Chief Executive Officer and Chairman

     

     

     

    MATLINPATTERSON
FA ACQUISITION LLC

     

    

     

    By:/s/ Lawrence M.
Teitelbaum                                  .

    Name:
Lawrence M. Teitelbaum

    Title:
President and Treasurer

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