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Redacted portions have been marked with asterisks (****). Confidential treatment
has been requested for the redacted portions. The confidential redacted portions
have been filed separately with the Securities and Exchange Commission.
EXHIBIT 10.4
Proprietary and Confidential
REMOTE PROCESSING AGREEMENT
BETWEEN
SUNGARD FINANCIAL SYSTEMS INC.
a Delaware corporation
("SUNGARD")
AND
PENSON FINANCIAL SERVICES, INC.
a North Carolina corporation
("CUSTOMER")
DATED
July 10 , 1995
------------------
("Effective Date")
By the signatures of their duly authorized representatives below, SunGard and
Customer, intending to be legally bound, agree to all of the provisions of this
Agreement and all Schedules and Addenda to this Agreement.
SUNGARD FINANCIAL SYSTEMS INC. PENSON FINANCIAL SERVICES, INC.
BY: /s/ DAVID H. TAYLOR BY: /s/ DANIEL P. SON
------------------------------- -------------------------------
PRINT NAME: David H. Taylor PRINT NAME: Daniel P. Son
----------------------- -----------------------
PRINT TITLE: President PRINT TITLE: President
---------------------- ----------------------
DATE SIGNED: 7-18-95 DATE SIGNED: 7-10-95
---------------------- ----------------------
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SUNGARD
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Proprietary and Confidential
1. SERVICES
1.1 PROVISION OF SERVICES. SunGard shall provide to Customer, and
Customer shall accept, the on-line processing, report services
and related services described on Schedule A to this Agreement
("System Services") available through use of SunGard's
proprietary applications software system identified on
Schedule A to this Agreement ("System") and the related
documentation listed on Schedule A ("Documentation"), as the
System Services, System and Documentation may be modified,
revised and updated in accordance with this Agreement.
1.2 ON-LINE PROCESSING SERVICES. SunGard shall provide to Customer
the on-line processing services described on Schedule A. The
System will be available to Customer twenty-four hours a day
except during System maintenance. Customer will have on-line
access to the System during every day that any of the United
States securities markets are open ("Business Day"). On each
Business Day, SunGard will perform a daily batch cycle which
will begin at 8:00 p.m. Eastern Time and takes approximately
twelve (12) hours for normal data processing, unless
additional processing is required by Customer ("Batch Cycle").
During the Batch Cycle access by Customer to the System is
limited to the inquiry functions and order entry of trades for
next Business Day processing. If Customer requests a delay in
the commencement of the Batch Cycle or if any clearing
entities are not available to be accessed by the System, Batch
Processing may be delayed and the System may not be available
for next Business Day processing for approximately twelve (12)
hours after the commencement of the Batch Cycle. The
Designated Location will be staffed at SunGard's usual levels
twenty-four (24) hours a day seven (7) days a week.
1.3 REPORT SERVICES. SunGard shall provide to Customer the report
services described on Schedule A, subject to any advance
notification procedures stated on Schedule A. SunGard shall
transmit all reports to Customer in the manner described in
the Documentation.
1.4 CUSTOMER DATA. Customer shall supply to SunGard all of the
data to be processed under this Agreement as described on
Schedule A and in the Documentation. Customer shall transmit
the data to SunGard by communications link or in another
manner described on Schedule A. Customer shall use its best
efforts to insure that any information or data which it
introduces into the System is accurate and complete. Customer
shall maintain copies of all source data and current backup
copies of all data supplied to SunGard, and SunGard shall have
no liability for any loss or damage caused by Customer's
failure to maintain copies.
1.5 LIMITED USE. Customer may use the System Services and
Documentation only in the ordinary course of its business
operations and for its own business purposes, including the
processing of trades of Customer's correspondent brokers in
its ordinary course of business. Customer shall use the System
Services only in accordance with the Documentation. Customer
may use only the copies of the Documentation that are provided
by SunGard, except that Customer may copy the Documentation to
the extent reasonably necessary for routine backup and
disaster recovery purposes.
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Proprietary and Confidential
2. INITIAL IMPLEMENTATION SUPPORT AND TRAINING
2.1 INITIAL IMPLEMENTATION. SunGard shall provide and Customer
shall accept the initial implementation Support described on
Schedule C. This shall include delivery to Customer of the
initial Copies of the Documentation stated on Schedule C and
assistance with any other implementation or related activities
described on Schedule C. Subject to the availability of
SunGard's personnel, SunGard shall provide to Customer
additional implementation support services reasonably
requested by Customer. After delivery, Customer shall bear all
risk of loss or damage to all copies of the Documentation
delivered by SunGard to Customer. SunGard shall provide to
Customer replacement or additional copies of the Documentation
reasonably requested by Customer.
2.2 TRAINING. SunGard shall provide and Customer shall accept the
Minimum Training described on Schedule C. This shall include
basic training in the use of the System Services for a
reasonable number of Customer's employees. Subject to the
availability of SunGard's personnel, SunGard shall provide to
Customer additional training services reasonably requested by
Customer. SunGard shall provide training at Customer's
location(s) whenever SunGard and Customer agree on-site
training is appropriate.
3. SUNGARD'S OTHER OBLIGATIONS
3.1 ONGOING SUPPORT SERVICES. SunGard shall provide the following
ongoing support services to Customer:
(a) TELEPHONE SUPPORT. SunGard shall provide to Customer,
during SunGard's normal business hours, Monday
through Friday from 7:30 a.m. Eastern Time to 7:30
p.m. Eastern Time (except that Customer and SunGard
may agree in advance to provide support services on
U.S. holidays), telephone consultative support
through SunGard's Customer Support Department
regarding Customer's proper and authorized use of the
Software. During normal business hours, SunGard shall
provide access to at least one of the following
people: (i) the primary support person for customer
account, (ii) the project manager for customer's
account or (iii) a senior manager of SunGard. In
addition, telephone consultive support will be
provided through the SunGard hotline twenty-four (24)
hours a day seven (7) days a week.
(b) ERROR CORRECTIONS. SunGard shall use commercially
reasonable efforts to correct failures of the
Software to perform in accordance with the
Documentation ("Errors") as follows:
1. CLASSIFICATION OF ERRORS. An Error shall be
classified in accordance with the following terms:
CLASS 1 ERROR. A "Class 1 Error" is any
Error that renders continued use of the
Software either impossible or seriously
impractical and either interrupts production
by Customer or makes continued production
substantially costly to Customer.
CLASS 2 ERROR. A "Class 2 Error" is any
Error that is not a Class 1 Error.
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Proprietary and Confidential
2. NOTIFICATION OF ERRORS. SunGard shall provide to
Customer a list of persons (in increasing positions
of authority) and telephone numbers ("Calling List")
for Customer to contact in order to report an error.
When reporting any Error, Customer shall provide the
classification of the Error and reasonably detailed
documentation and explanation, together with
underlying data, to substantiate the Error and to
assist SunGard in its efforts to diagnose and correct
the Error. Customer will immediately report any Class
1 Error. If SunGard detects a Class 1 Error, then
SunGard will immediately contact Customer.
3. RESPONSE TIME. SunGard shall use commercially
reasonable efforts to respond to Customer's initial
Error reports with off-site telephone consultation,
assistance and advice within fifteen (15) minutes for
Class 1 Errors and within one (1) hour for Class 2
Errors, but in any event, SunGard shall respond
within four working hours. If SunGard fails to so
respond, or if the designated person from the Calling
List is not available when Customer makes contact
with SunGard to report an Error, then Customer shall
attempt to contact the next more responsible person
of the Calling List until contact is made and a
designated person responds to the call.
CLASS 1 ERRORS. For any Class 1 Error,
SunGard shall take all reasonably necessary
steps to supply a reasonable work-around or
correction to Customer as soon as possible.
This will include assigning qualified,
dedicated staff to work on the Error 24
hours per day, 7 days per week, at either
the SunGard site or Designated Location as
necessary. Upon detecting or being notified
of a Class 1 Error, SunGard shall
immediately assemble the appropriate
personnel to analyze the problem, identify
potential solutions and determine the best
plan of action. Customer shall participate
in this process when necessary and provide
SunGard with additional documentation and
examples, if possible, to assist in
resolving the Error. SunGard personnel shall
be dedicated to resolving the Error until an
acceptable work-around or correction is
supplied or until Customer determines in its
reasonable judgment after consultation with
SunGard that a work around or correction
cannot be produced. A SunGard representative
shall keep Customer informed of the status.
CLASS 2 ERRORS. For any Class 2 Error,
SunGard shall work with Customer to document
the Error through mutually established
standards. Class 2 Errors shall be resolved
according to mutually agreed priorities.
SunGard personnel shall be dedicated to
resolving Class 2 Errors through SunGard's
normal software support procedures.
3.2 MODIFICATIONS. SunGard shall provide to Customer, and Customer
shall accept, the following modifications to System Services:
(a) SunGard shall provide modifications, revisions and
updates to the System Services which SunGard, in its
sole discretion, incorporates into the System
Services without additional charge.
(b) SunGard shall use commercially reasonable efforts to
develop and implement changes to the System so that
the System Services will continue to comply with
applicable rules and regulations of regulatory
authorities as they may change from time to time.
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(c) At SunGard's option and subject to the availability
of SunGard personnel, SunGard shall evaluate and, if
feasible and appropriate, produce and implement
Customer requests for modifications in the System
Services or the System. In SunGard's sole discretion,
it may implement requested modifications at no charge
in accordance with Section 3.1(a) or offer them at an
additional charge in accordance with Section 3.4.
(d) SunGard shall deliver updates to the Documentation
whenever SunGard determines, in its sole discretion,
that such updates are necessary.
(e) Customer shall accept modifications, revisions and
updates in the System Services, System and
Documentation, including changes in programming
languages, rules of operation and screen or report
format, as and when they are implemented by SunGard
and provided the modifications, revisions or updates
do not have a material adverse effect on the System
Services. Customer acknowledges that modifications,
revisions and updates in the System Services and the
System permitted by this Agreement may result in
changes in the form, timing or other features of
on-line services, reports and other System Services
provided under this Agreement.
3.3 ENHANCEMENTS. SunGard shall offer to Customer the opportunity
to purchase services available through use of refinements,
improvements and enhancements to the System which SunGard, in
its sole discretion, does not incorporate into the System
without additional charge.
3.4 CONSULTING AND OTHER SERVICES. At Customer's reasonable
request and subject to the availability of SunGard's
personnel, SunGard shall provide to Customer conversion
assistance, consulting services, custom modification
programming, support services relating to custom
modifications, assistance with data transfers, assistance in
the use of the System Services security mechanisms and other
specialized support services with respect to the System
Services. These services shall be provided by SunGard at
Customer location(s) if SunGard and Customer agree that
on-site services are appropriate.
3.5 BACKUP COPIES AND DISASTER RECOVERY. SunGard will make a
backup copy, in digital form, of Customer's data files then in
SunGard's possession (i) at the end of each business day and
stored at an off-site location for a period of five (5)
business days and (ii) at the end of each month and saved at
an off-site location for a period of the twelve (12) months,
provided that the monthly data files for the first four (4)
months of any tax year will be saved until the fifth month of
the following tax year. SunGard will maintain an agreement for
backup processing services with an affiliated company
consisting of the right to use an installed, fully operational
computer system and networking capability subject to the
availability of computer and other hardware. The backup
processing will be performed by SunGard using backup copies
which will be sent to the backup facility. Customer will be
charged for any recovery services associated with any computer
hardware or communications equipment required for Customer or
its correspondent brokers to access the System that is not
located at the Designated Location. In the case of an
emergency requiring backup processing, SunGard will promptly
contact the person or persons designated in writing by
Customer to be notified in such circumstance.
3.6 SPECIAL PROCESSING. Upon the request of Customer and subject
to the limitations of the applications and hardware, SunGard
will use commercially reasonable efforts to provide special
processing services such as additional, customized reports or
other enhancements that are not included the processing
services provided under this Agreement. Such special
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Proprietary and Confidential
processing services will be provided for an additional charge
agreed upon by Customer and SunGard in writing.
4. CUSTOMER'S OTHER OBLIGATIONS
4.1 ACCESS TO FACILITIES AND EMPLOYEES. Customer shall provide to
SunGard access to the Customer's facilities, equipment and
employees, and shall otherwise cooperate with SunGard, as
reasonably necessary for SunGard to perform its
implementation, training, support and other obligations under
this Agreement.
4.2 PROCUREMENT OF HARDWARE AND OTHER ITEMS. Customer shall be
responsible, at its expense, for procuring and maintaining the
communications equipment and lines, computer equipment,
software and all other out of pocket expenses, which comprise
the Specified Configuration described on Schedule A, and for
updating the Specified Configuration in accordance with
SunGard's published updates to Schedule A.
43 NOTICES AND CERTIFICATIONS. Customer shall give written notice
to SunGard (in accordance with Section 9.1) whenever Customer
intends to increase the transaction volume, in any material
respect, to be processed on the System. Customer shall
promptly complete and return to SunGard periodic
certifications which SunGard, in its sole discretion, may from
time to time send to Customer, certifying that Customer has
complied and is then in compliance with the provisions of
Section 7.
4.4 CERTAIN LEGAL REQUIREMENTS. Customer shall be responsible, at
its expense, for complying with all laws and regulations of
any jurisdiction applicable to use of System Services,
including laws and regulations pertaining to (a) remote use of
software and related property, (b) communication or
transmission of data into or out of a jurisdiction or (c)
registration of this Agreement. Customer shall indemnify and
hold harmless SunGard (and its affiliates, and the respective
directors, officers, employees and agents of SunGard and its
affiliates) from and against all actions, claims, damages or
liabilities (including reasonable attorneys' fees) arising out
of any violation by Customer of any such laws or regulations.
5. PAYMENTS
5.1 INITIAL IMPLEMENTATION SUPPORT AND MINIMUM TRAINING. Customer
shall pay to SunGard the fees for Initial Implementation
Support and Minimum Training in the amounts stated on Schedule
C, in accordance with the payment terms stated on Schedule C.
5.2 MONTHLY FEES. On a monthly basis, beginning on the first day
of processing live trades on the System ("Effective Date") and
continuing until termination of this Agreement, Customer shall
pay to SunGard the fees described on Schedule C. Customer
shall pay minimum monthly fees for certain services as stated
on Schedule C.
5.3 SPECIAL SERVICE FEES. Customer shall pay to SunGard the
service fees stated on Schedule C for conversion, consulting
services, custom modification programming, support services
relating to custom modifications, assistance with data
transfers, and other specialized support services under
Sections 3.4. In each case where service fees are not
specified on Schedule C, then the fees for such services shall
be based upon SunGard's standard professional fee rates.
SunGard's standard professional fee rates in effect on the
date of this Agreement are stated on Schedule C and are
subject to increase in the ordinary course of business.
5.4 EXPENSE REIMBURSEMENTS. Customer shall be responsible for all
out-of-pocket expenses to receive, deliver or transmit reports
or data, and shall reimburse SunGard for all such
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expenses incurred by SunGard. Whenever any services are
provided by SunGard at a Customer location or any other
location requested by Customer other than one of SunGard's
locations, Customer shall reimburse SunGard for its reasonable
travel, lodging, meal and related expenses incurred by SunGard
personnel in providing such services.
5.5 OTHER FEES. If Customer requires replacement or additional
copies of the Documentation, then Customer shall pay to
SunGard the corresponding fees stated on Schedule C.
5.6 TAXES. The fees and other amounts payable by Customer to
SunGard under this Agreement do not include any taxes of any
jurisdiction that may be assessed or imposed upon the services
provided under this Agreement or the copies of the
Documentation provided to Customer, including sales, use,
excise, value added, personal property, export, import and
withholding taxes, excluding only taxes based upon SunGard's
net income. Customer shall directly pay any such taxes
assessed against it, and Customer shall promptly reimburse
SunGard for any such taxes payable or collectable by SunGard.
5.7 PAYMENT TERMS. SunGard shall submit invoices to Customer on a
monthly basis for monthly fees and routine expense
reimbursements. SunGard shall submit invoices to Customer for
any other fees or expense reimbursements as and when incurred.
All invoices shall be sent to Customer's address for invoices
stated on Schedule A. Customer's payments shall be due within
thirty (30) days after receipt of Invoice. Interest at the
rate of eighteen percent (18%) per annum (or, if lower, the
maximum rate permitted by applicable law) shall accrue on any
amount not paid by Customer to SunGard when due under this
Agreement, and shall be payable by Customer to SunGard on
demand unless subject to a good faith dispute. Except as
provided in Sections 6.1 and 6.2(c), all fees and other
amounts paid by Customer under this Agreement are
non-refundable, unless subject to a good faith dispute.
5.8 FEE INCREASES. Beginning on the first day of the sixth (6th)
year of processing of live trades and on an annual basis, by
giving at least one hundred and twenty (120) days advance
written notice to Customer (in accordance with Section 9.1),
SunGard may increase the fees payable under this Agreement.
6. WARRANTIES AND LIMITATIONS
6.1 PERFORMANCE. SunGard shall use reasonable care in processing
all work transmitted to it by Customer. SunGard shall have no
liability under this Section 6.1 unless, within thirty (30)
days after the applicable date of service, SunGard receives
notice from Customer (in accordance with Section 9.1)
describing a material processing error caused by SunGard's
failure to use reasonable care, together with adequate
supporting documentation and data. Upon receipt of any such
notice, SunGard's only obligation under this Section 6.1 is to
correct the error and redo the work affected as soon as
reasonably practical at no additional charge, or, at SunGard's
option, to refund or credit the charges applicable to the work
affected.
6.2 RIGHT TO PERFORM SERVICES; NO INFRINGEMENT. SunGard warrants
to Customer that it has the full legal right to use the System
to provide the System Services in accordance with this
Agreement, and that the System Services and Documentation, in
the form delivered to Customer by SunGard and when properly
used for the purpose and in the manner specifically authorized
by this Agreement, do not infringe in any material respect
upon any United States patent or copyright or any trade secret
or other proprietary right of any person. SunGard shall
reimburse Customer for any damages finally awarded against and
paid by Customer to the extent attributable to a violation of
the foregoing warranty. SunGard shall have no liability under
this Section 6.2 unless Customer gives written notice to
SunGard (in accordance with Section 9.1) within ten (10) days
after any applicable
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infringement claim is initiated against Customer and allows
SunGard to have sole control of the defense or settlement of
the claim. If any applicable infringement claim is initiated,
or in SunGard's sole opinion is likely to be initiated,
against Customer or SunGard, then SunGard shall have the
option, at its expense, to:
(a) modify or replace all or the infringing part of the
System Services, System or Documentation so that it
is no longer infringing, provided that the System
Services do not change in any material adverse
respect; or
(b) procure the right to continue using or providing the
infringing part of the System Services, System or
Documentation; or
(c) remove all or the infringing part of the System
Services, System or Documentation, and refund to
Customer the corresponding portion of any monthly fee
paid in advance, in which case this Agreement shall
terminate with respect to the affected System
Services.
6.3 CARE OF DATA. SunGard shall use commercially reasonable care
in handling tapes or other materials which encode or contain
data belonging to Customer. SunGard's only obligation for
breach of this Section 6.3 shall be to replace or repair the
tape or material lost or damaged and to make commercially
reasonable efforts to regenerate any lost data from backup
copies maintained by SunGard or from source data provided by
Customer.
6.4 APPLICATION OF DATA. SunGard shall have no liability for any
loss or damage resulting from any application of the results
obtained from the use of any services provided under this
Agreement or from any unintended or unforeseen results
obtained from the use of any services provided under this
Agreement.
6.5 EXCLUSION FOR UNAUTHORIZED ACTIONS. SunGard shall have no
liability under any provision of this Agreement with respect
to any performance problem, claim of infringement or other
matter to the extent attributable to any unauthorized or
improper use or modification of the System, any unauthorized
combination of the System with other software (other than
software included in the Specified Configuration), or any
breach of this Agreement by Customer.
6.6 FORCE MAJEURE. SunGard shall not be liable for, nor shall
SunGard be considered in breach of this Agreement due to, any
failure to perform its obligations under this Agreement as a
result of a cause beyond its control, including any act of God
or a public enemy, act of any military, civil or regulatory
authority, change in any law or regulation, fire, flood,
earthquake, storm or other like event, disruption or outage of
communications, power or other utility, labor problem,
unavailability of supplies, or any other cause, whether
similar or dissimilar to any of the foregoing, which could not
have been prevented by SunGard with reasonable care. Customer
acknowledges that availability of System Services is subject
to normal System downtime and that SunGard is not responsible
for delays or inability to access services caused by
communications problems.
6.7 DISCLAIMER AND EXCLUSIONS. EXCEPT AS EXPRESSLY STATED IN THIS
AGREEMENT, SUNGARD MAKES NO REPRESENTATIONS OR WARRANTIES,
ORAL OR WRITTEN, EXPRESSED OR IMPLIED, INCLUDING IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE, REGARDING THE SYSTEM, THE SYSTEM SERVICES OR ANY
OTHER MATTER PERTAINING TO THIS AGREEMENT. EXCEPT FOR DAMAGES
REIMBURSABLE UNDER SECTION 6.2, SUNGARD'S TOTAL LIABILITY
UNDER THIS AGREEMENT SHALL UNDER NO CIRCUMSTANCES EXCEED AN
AMOUNT EQUAL TO FIVE HUNDRED THOUSAND DOLLARS ($500,000).
UNDER NO CIRCUMSTANCES
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SHALL SUNGARD BE LIABLE TO CUSTOMER OR ANY OTHER PERSON FOR
LOST REVENUES, LOST PROFITS, LOSS OF BUSINESS, OR ANY INDIRECT
OR CONSEQUENTIAL DAMAGES OF ANY NATURE, WHETHER OR NOT
FORESEEABLE.
6.8 OTHER LIMITATIONS. The warranties made by SunGard in this
Agreement, and the obligations of SunGard under this
Agreement, run only to Customer and not to its affiliates, its
customers or any other persons. Under no circumstances shall
any other person be considered a third party beneficiary of
this Agreement or otherwise entitled to any rights or remedies
under this Agreement. Customer shall have no rights or
remedies against SunGard except as specifically provided in
this Agreement. No action or claim of any type relating to
this Agreement may be brought or made by Customer more than
one (1) year after Customer first has knowledge of the basis
for the action or claim.
7. CONFIDENTIALITY, OWNERSHIP AND RESTRICTIVE COVENANTS
7.1 CONFIDENTIAL INFORMATION. All business information disclosed
by one party to the other in connection with this Agreement
shall be treated as confidential information unless it is or
later becomes publicly available through no fault of the other
party or it was or later is rightfully developed or obtained
by the other party from independent sources free from any
duty of confidentiality. Each party's confidential information
shall be held in strict confidence by the other party,
using the same standard of care as it uses to protect its own
confidential information, and shall not be used or disclosed
by the other party for any purpose except as necessary to
implement or perform this Agreement, or except as required by
law provided that the other party is given a reasonable
opportunity to obtain a protective order. Without limiting the
generality of the foregoing, such confidential information
shall include Customer's data, reports generated by SunGard
from Customer's data and the details of Customer's computer
operations.
7.2 SUNGARD'S PROPRIETARY ITEMS. Customer acknowledges that the
System and Documentation, the object code and the source code
for the System, the name of the System, the visual
expressions, screen formats, report formats and other design
features of the System, all ideas, methods, algorithms,
formulae and concepts used in developing and/or incorporated
into the System or Documentation, all future modifications,
revisions, updates, releases, refinements, improvements and
enhancements of the System or Documentation, all derivative
works based upon any of the foregoing, and all copies of the
foregoing (referred to, collectively, as "Proprietary Items"
are trade secrets and proprietary property of SunGard, having
great commercial value to SunGard. Customer acknowledges that
the restrictions in this Agreement are reasonable and
necessary to protect SunGard's legitimate business interests.
7.3 OWNERSHIP RIGHTS. All Proprietary Items provided to Customer
under this Agreement are being provided on a strictly
confidential and limited use basis. Title to all Proprietary
Items and all related patent, copyright, trademark, service
mark, trade secret, intellectual property and other ownership
rights shall remain exclusively with SunGard, even with
respect to such items that were created by SunGard
specifically for or on behalf of Customer. This Agreement is
not an agreement of sale, and no title, patent, copyright,
trademark, service mark, trade secret, intellectual property
or other ownership rights to any Proprietary Items are
transferred to Customer by virtue of this Agreement. All
copies of Proprietary Items in Customer's possession shall
remain the exclusive property of SunGard and shall be deemed
to be on loan to Customer during the term of this Agreement.
7.4 DISCLOSURE RESTRICTIONS. All Proprietary Items in Customer's
possession, whether or not authorized, shall be held in strict
confidence by Customer, and Customer shall take all steps
reasonably necessary to preserve the confidentiality thereof.
Customer shall not, directly
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or indirectly, communicate, publish, display, loan, give or
otherwise disclose any Proprietary Item to any person, or
permit any person to have access to or possession of any
Proprietary Item. Customer shall limit its use of and access
to Proprietary Items to only those of its employees whose
responsibilities require such use or access. Customer shall
advise all such employees, before they receive access to or
possession of any Proprietary Items, of the confidential
nature of the Proprietary Items and require them to abide by
the terms of this Agreement. Customer shall be liable for any
breach of this Agreement by any of its employees or any other
person who obtains access to or possession of any Proprietary
Item from or through Customer.
7.5 USE RESTRICTIONS. Customer shall not do, nor shall it permit
any other person to do, any of the following:
(a) use any Proprietary Item for any purpose, at any
location or in any manner not specifically authorized
by this Agreement; or
(b) make or retain any copy of any Proprietary Item
except as specifically authorized by this Agreement;
or
(c) create or recreate the source code for the System, or
re-engineer, reverse engineer, decompile or
disassemble the System; or
(d) modify, adapt, translate or create derivative works
based upon the System or Documentation, or combine or
merge any part of the System or Documentation with or
into any other software or documentation; or
(e) refer to or otherwise use any Proprietary Item as
part of any effort to develop a program having any
functional attributes, visual expressions or other
features similar to those of the System or to compete
with SunGard; or
(f) remove, erase or tamper with any copyright or other
proprietary notice printed or stamped on, affixed to,
or encoded or recorded in any Proprietary Item, or
fail to preserve all copyright and other proprietary
notices in any copy of any Proprietary Item made by
Customer; or
(g) sell, market, license, sublicense, distribute or
otherwise grant to any person, including any
outsourcer, vendor, consultant or partner, any right
to use any Proprietary Item, whether on Customer's
behalf or otherwise; or
(h) use the System to conduct any type of service bureau
or timesharing operation or to provide remote
processing, network processing, network
communications or similar services to any person,
whether on a fee basis or otherwise; or
(i) attempt to do any of the foregoing.
7.6 NOTICE AND REMEDY OF BREACHES. Customer shall promptly give
written notice to SunGard (in accordance with Section 9.1) of
any actual or suspected breach by Customer of any of the
provisions of this Section 7, whether or not intentional, and
Customer shall, at its expense, take all steps reasonably
requested by SunGard to prevent or remedy the breach.
7.7 AUDIT. SunGard may, at its expense and by giving reasonable
advance written notice to Customer (in accordance with Section
9.1), enter Customer locations during normal business hours
and audit the number of copies of the Documentation in
Customer's possession and information pertaining to Customer's
compliance with the provisions of this
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Section 7. If SunGard discovers that Customer is not in
compliance with the provisions of this Section 7 in any
material respect, then Customer shall reimburse SunGard for
the expenses incurred by SunGard in conducting the audit.
7.8 ENFORCEMENT. Customer acknowledges that any breach of any of
the provisions of this Section 7 shall result in irreparable
Injury to SunGard for which money damages could not adequately
compensate. If there is a breach, then SunGard shall be
entitled, in addition to all other rights and remedies which
SunGard may have at law or in equity, to have a decree of
specific performance or an injunction issued by any competent
court, requiring the breach to be cured or enjoining all
persons involved from continuing the breach. The existence of
any claim or cause of action which Customer or any other
person may have against SunGard shall not constitute a defense
or bar to the enforcement of any of the provisions of this
Section 7.
7.9 DOCUMENTATION FOR CORRESPONDENTS. Notwithstanding the
disclosure and use restrictions set forth herein, Customer may
copy and provide to its correspondent brokers those portions
of the Documentation pertaining to the proper use of the
System by Customer's correspondent brokers (e.g., portions
pertaining to trade input, data inquiries or report
generation), provided that (a) no Documentation shall be
provided to any correspondent broker of Customer unless and
until such correspondent broker signs a fully disclosed
clearing agreement or similar contract with Customer which
requires the correspondent broker to preserve the
confidentiality of such Documentation, (b) any such
Documentation provided to any correspondent broker of Customer
shall be accompanied by a cover page identifying it as
proprietary property of SunGard Financial Systems Inc., and
stating that it is subject to Customer's contractual
obligations to preserve the confidentiality thereof, and (c)
no modifications shall be made to the Documentation provided
to any correspondent broker of Customer without SunGard's
express prior written consent.
8. TERMINATION
8.1 INITIAL TERM; RENEWAL. The term of this Agreement begins on
the Effective Date stated on the first page of this Agreement
and shall continue for five (5) years, and thereafter for
successive one-year renewal terms unless and until terminated
in accordance with this Section 8 or any other section of this
Agreement. SunGard or Customer may terminate this Agreement at
the end of the Initial Term or at the end of any one-year
renewal term by giving at least ninety (90) days advance
written notice of termination (in accordance with Section 9.1)
to the other.
8.2 TERMINATION BY CUSTOMER.
(a) Customer may terminate this Agreement immediately upon notice
to SunGard (in accordance with Section 9.1) if SunGard
improperly denies Customer access to the System Services and
Customer's files maintained in the System for more than one
(1) business day, or if SunGard fails to provide to Customer
any daily reports described on Schedule A for more than two
(2) consecutive business days, in either case unless due to a
hardware or software malfunction or defect, in which case
SunGard shall be allowed a reasonable period of time to
correct the malfunction or defect.
(b) After the first two years of the Agreement, the Company may
terminate the Agreement upon at least six months notice if the
Company permanently discontinues its correspondent clearing
business and in no way provides correspondent clearing
services.
--------------------------------------------------------------------------------
-10-
<PAGE> 12
Proprietary and Confidential
8.3 TERMINATION BY SUNGARD. SunGard may immediately terminate this
Agreement, by giving written notice of termination to Customer
(in accordance with Section 9.1), upon the occurrence of any
of the following events:
(a) Customer fails to pay to SunGard, within ten (10)
days after SunGard makes written demand therefor, any
past-due amount payable under this Agreement
including interest thereon) that is not the subject
of a good faith dispute as to which Customer has
given written notice to SunGard (in accordance with
Section 9.1) explaining its position in reasonable
detail.
(b) Customer breaches, in any material respect, any of
the provisions of Section 7 or Section 9.3.
(c) Customer breaches any of its other obligations under
this Agreement and does not cure the breach within
thirty (30) days after SunGard gives written notice
to Customer (in accordance with Section 9.1)
describing the breach in reasonable detail.
(d) Bankruptcy, insolvency, dissolution or liquidation
proceedings of any nature are instituted by or
against Customer or Customer discontinues all or a
significant part of its business operations.
8.4 SUSPENSION OF SERVICES. On the occurrence of any event which
would permit SunGard to terminate this Agreement under Section
8.3, in addition to all other rights and remedies which
SunGard may have at law or in equity, SunGard may, without
terminating this Agreement, and in its sole discretion and
without further notice to Customer, suspend performance of any
or all of its services under this Agreement and/or activate
internal controls in the System that are designed to deny
Customer access to the System Services and files, until and
unless SunGard determines, in its sole discretion and upon
whatever conditions SunGard chooses to impose on Customer, to
resume performance of some or all of the suspended services or
allow Customer access to the System Services and files.
8.5 EFFECT OF TERMINATION. Upon a termination of this Agreement,
whether under this Section 8 or otherwise, Customer shall
immediately cease all use of the System Services,
Documentation and other Proprietary Items, Customer shall
promptly return to SunGard all copies of the Documentation and
any other Proprietary Items then in Customer's possession.
Customer shall remain liable for all payments due to SunGard
with respect to the period ending on the date of termination.
Within thirty (30) days after termination of this Agreement,
Customer shall give notice to SunGard (in accordance with
Section 9.1) containing reasonable instructions regarding the
disposition of tapes, data, files and other property belonging
to Customer and then in SunGard's possession. SunGard shall
comply with that notice, except that SunGard may retain all
such property until SunGard receives all payments due to
SunGard under this Agreement. Upon request contained in such
notice, SunGard shall convert Customer's data to machine
readable form to the extent practicable and at Customer's
expense. If Customer fails to give that notice within thirty
(30) days after termination of this Agreement, then SunGard
may dispose of such property as it sees fit. The provisions of
Sections 5, 6 and 7 shall survive any termination of this
Agreement, whether under this Section 8 or otherwise.
9. OTHER PROVISIONS
9.1 NOTICE. All notices, consents and other communications under
or regarding this Agreement shall be in writing and shall be
deemed to have been received on the earlier of the date of
actual receipt, the third business day after being mailed by
first class certified air mail, or
--------------------------------------------------------------------------------
SunGard: Customer:
[ILLEGIBLE] [ILLEGIBLE]
-11-
<PAGE> 13
Proprietary and Confidential
the first business day after being sent by a reputable
overnight delivery service. Any notice may be given by
facsimile, provided that signed written original is sent by
one of the foregoing methods within twenty-four (24) hours
thereafter. Customer's address for notices is stated on
Schedule A. SunGard's address for notices is 504 Totten Pond
Road, Waltham, Massachusetts 02154 Attention: Contract
Administration. Either party may change its address for
notices by giving written notice of the new address to the
other party in accordance with this Section 9.1.
9.2 DEFINED TERMS. As used in this Agreement, the following terms
have the following meanings:
(a) "affiliate" means, with respect to a specified
person, any person which directly or indirectly
controls, is controlled by, or is under common
control with the specified person as of the date of
this Agreement, for as long as such relationship
remains in effect.
(b) "copy" means any paper, disk, tape, film, memory
device, or other material or object on or in which
any words, object code, source code or other symbols
are written, recorded or encoded, whether permanent
or transitory.
(c) "including" means including but not limited to.
(d) "person" means any individual, sole proprietorship,
joint venture, partnership, corporation, company,
firm, bank, association, cooperative, trust, estate,
government, governmental agency, regulatory
authority, or other entity of any nature.
9.3 PARTIES IN INTEREST. This Agreement shall bind, benefit and be
enforceable by and against SunGard and Customer and, to the
extent permitted hereby, their respective successors and
assigns. Customer shall not assign this Agreement or any of
its rights hereunder, nor delegate any of its obligations
hereunder, without SunGard's prior written consent. SunGard's
consent shall not be unreasonably withheld in the case of an
assignment to a purchaser of or a successor to substantially
all of Customer's business, or to an affiliate of Customer,
provided that SunGard receives prior notice (in accordance
with Section 9.1) of the assignment together with the
successor's written undertaking to assume all of Customer's
obligations under this Agreement. Any change in control of
Customer, and any assignment by merger or otherwise by
operation of law, shall constitute an assignment of this
Agreement by Customer for purposes of this Section 9.3.
9.4 RELATIONSHIP. The relationship between the parties created by
this Agreement is that of independent contractors and not
partners, joint venturers or agents.
9.5 ENTIRE UNDERSTANDING. This Agreement, which includes and
incorporates the Schedules referred to herein, states the
entire understanding between the parties with respect to its
subject matter, and supersedes all prior proposals, marketing
materials, negotiations and other written or oral
communications between the parties with respect to the subject
matter of this Agreement. Any written, printed or other
materials which SunGard provides to Customer that are not
included in the Documentation are provided on an "as is"
basis, without warranty, and solely as an accommodation to
Customer.
9.6 MODIFICATION AND WAIVER. No modification of this Agreement,
and no waiver of any breach of this Agreement, shall be
effective unless in writing and signed by an authorized
representative of the party against whom enforcement is
sought. No waiver of any breach
--------------------------------------------------------------------------------
SunGard: Customer:
[ILLEGIBLE] [ILLEGIBLE]
-12-
<PAGE> 14
Proprietary and Confidential
of this Agreement, and no course of dealing between the
parties, shall be construed as a waiver of any subsequent
breach of this Agreement.
9.7 SEVERABILITY. A determination that any provision of this
Agreement is invalid or unenforceable shall not affect the
other provisions of this Agreement.
9.8 HEADINGS. Section headings are for convenience of reference
only and shall not affect the interpretation of this
Agreement.
9.9 JURISDICTION AND PROCESS. In any action relating to this
Agreement, (a) each of the parties irrevocably consents to the
exclusive jurisdiction and venue of the federal and state
courts located in the Commonwealth of Pennsylvania, (b) each
of the parties irrevocably waives the right to trial by jury,
(c) each of the parties irrevocably consents to service of
process by first class certified mail, return receipt
requested, postage prepaid, to the address at which the party
is to receive notice in accordance with Section 9.1, and (d)
the prevailing party shall be entitled to recover its
reasonable attorney's fees (including, if applicable, charges
for in-house counsel), court costs and other legal expenses
from the other party.
9.10 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA EXCLUDING CHOICE OF LAW.
--------------------------------------------------------------------------------
-13-
<PAGE> 15
Proprietary and Confidential
SCHEDULE A
TO REMOTE PROCESSING AGREEMENT
DATED JULY 10, 1995
--------------------------------------------------------------------------------
SOFTWARE AND RELATED INFORMATION
--------------------------------------------------------------------------------
SOFTWARE: PHASE3 System
DOCUMENTATION: PHASE3 Reference Manuals
PHASE3 Report Manuals
SPECIFIED
CONFIGURATION: Not applicable
ADDRESS FOR INVOICES: 717 North Harwood, Suite 680, Dallas, TX 75201
------------------------------------------------------
ADDRESS FOR NOTICES: 717 North Harwood, Suite 680, Dallas, TX 75201
------------------------------------------------------
--------------------------------------------------------------------------------
Customer's Name: PENSON Financial Services, Inc.
----------------------------------
----------- -----------
SunGard: Customer:
[ILLEGIBLE] [ILLEGIBLE]
----------- -----------
<PAGE> 16
Proprietary and Confidential
SCHEDULE C1
TO REMOTE PROCESSING AGREEMENT
DATED JULY 10, 1995
****
<PAGE> 17
Proprietary and Confidential
SCHEDULE C2
TO REMOTE PROCESSING AGREEMENT
DATED JULY 10, 1999
----------------------------------------------------------------------------
TRADE DEFINITION
----------------------------------------------------------------------------
Trade Counts for PHASE3 Pricing
<TABLE>
<S> <C>
Principal
Customer Sell; Inventory Buy 1 Trade
Customer Buy; Inventory Sell 1 Trade
Inventory Buy; Inventory Sell 1 Trade
Agency
Client Buys; Broker Sells or Multiple Broker Sells 1 Trade
Client Sells; Broker Buys or Multiple Broker Buys 1 Trade
Cancel/Corrections
Originally billed for the first trade 1 Trade
Cancel 1 Trade
Rebill 1 Trade
-------
Total 3 Trades
When Issued
Originally billed for the first trade 1 Trade
Cancel When Issued 1 Trade
Regular Way Trade 1 Trade
-------
Total 3 Trades
Repo
Opening trade regardless of number of pieces of collateral 1 Trade
Closing trade regardless of number of pieces of collateral 1 Trade
Each collateral substitution 1 Trade
Reverse Repo
Same as Repo
TBA'S
Originally billed for TBA 1 Trade
Cancel TBA 1 Trade
Each pool within a lot of an allocation 1 Trade
</TABLE>
-------------------------------------------------------------------------------
SUNGARD: CUSTOMER:
CUSTOMER'S NAME: PENSON Financial Services, Inc. [ILLEGIBLE] [ILLEGIBLE]
-------------------------------
<PAGE> 18
Proprietary and Confidential
SCHEDULE C3
TO REMOTE PROCESSING AGREEMENT
DATED JULY 10, 1995
****
<PAGE> 19
Proprietary and Confidential
SCHEDULE C4
TO REMOTE PROCESSING AGREEMENT
DATED July 10, 1995
--------------------------------------------------------------------------------
CONVERSION PROCESS
--------------------------------------------------------------------------------
A. IMPLEMENTATION PLANNING
The implementation planning sessions are held early in the conversion
process, at the client site. Planning sessions will include Customer's
management and the SunGard conversion team. Objectives of these meetings
are:
o Define project organization
o Define status reporting mechanism
o Define issues resolution mechanism
o Define enhancement management mechanism
o Define file conversions
o Determine conversion dates
o Determine dependencies
o Develop conversion plan, complete with:
- key activities and target dates
- responsibilities of all participants
- training schedule
- testing methodologies
- network design
B. REVIEW OF OPERATIONAL PROCEDURES AND FUNCTIONS
The review of operational procedures and functions is conducted by the
SunGard conversion team. This review process is performed prior to
finalizing the detailed training schedule. Process includes:
o Complete review of each area of client operations:
- existing procedures
- existing forms
- existing reports
o Meet with supervisors and key personnel
o Review of work-flows
o Report mapping
o Identification and documentation of impact on operations
procedures/organizational structure
o Identification of interfaces
--------------------------------------------------------------------------------
SUNGARD: CUSTOMER:
Customer's Name: PENSON Financial Services, Inc. [ILLEGIBLE] [ILLEGIBLE]
-------------------------------
<PAGE> 20
Proprietary and Confidential
SCHEDULE C4 (CONT'D)
TO REMOTE PROCESSING AGREEMENT
DATED July 10, 1995
--------------------------------------------------------------------------------
CONVERSION PROCESS
--------------------------------------------------------------------------------
C. CREATION OF PHASE3 ENVIRONMENT
Telecommunications and additional hardware requirements are determined
jointly between Customer's technical representative and the SunGard's
communications manager. The ordering, installation and testing of
telecommunications is the responsibility of SunGard. The ordering and
installation of any additional terminals and printers is the responsibility
of Customer. SunGard and Customer will jointly test any new terminals and
printers.
SunGard is responsible for the setup and configuration for the testing and
training firm.
o Hardware and telecommunications requirements defined
o Equipment and lines ordered, installed and tested
o Training firm setup and configured
o Installation and testing of required software modifications
D. FILE CONVERSIONS
SunGard will develop conversion programs to convert Customer's data files.
Testing and approval of conversion programs is a joint responsibility
between Customer and SunGard.
o Determination of files to be converted
o Conversion strategy
o Specifications for converting each file determined
o Develop conversion programs
o Written procedures for testing developed
o Schedule test conversions and verification
E. STATEMENTS & FORMS
Customer is responsible for choosing a statement vendor for printing
monthly customer statements. SunGard will support Customer and the vendor
in the development and testing of statements. Customer and SunGard will
evaluate all forms and determine if existing forms must be modified for
utilization with the PHASE3 System.
o Customer statements
o Confirmations
o Transfer fanfolds
o New account forms
o Buy/Sell tickets
o Checks, N&A Cards, labels, etc.
F. TRAINING
SunGard and Customer will jointly develop a comprehensive training
schedule. SunGard will be responsible for training Customer staff on the
PHASE3 application. Customer will be responsible for ensuring staff is
available for participation in scheduled classes.
o Application training for testing of new software modifications
o Application training for users
o Procedural training
--------------------------------------------------------------------------------
SUNGARD: CUSTOMER:
Customer's Name: PENSON Financial Services. Inc. [ILLEGIBLE] [ILLEGIBLE]
-------------------------------
<PAGE> 21
Proprietary and Confidential
SCHEDULE C4 (CONT'D)
TO REMOTE PROCESSING AGREEMENT
DATED JULY 10, 1995
--------------------------------------------------------------------------------
CONVERSION PROCESS
--------------------------------------------------------------------------------
G. INTERFACES
SunGard and Customer are jointly responsible for testing of all external
and internal interfaces. SunGard will be responsible for installation and
execution of interfaces. Customer is responsible for notification to all
external vendors and service organizations of conversion dates.
o Interface requirements defined
- external
- internal
o Program/unit testing
o Extensive testing with external sources
o Documentation of procedures
o Notification of conversion
H. USER ACCEPTANCE TESTING
Customer and SunGard are jointly responsible for development and execution
of test plans for user acceptance testing.
o Development of test strategy and plan
o Identification of test cases
o Development of test data
o Systems integration tests
o Regression tests
o Verification of test results
I. PROGRESS MEETINGS
Progress meetings will be scheduled frequently to provide for status
updates and issue discussion/resolution.
--------------------------------------------------------------------------------
SUNGARD: CUSTOMER:
Customer's Name: PENSON Financial Services. Inc. [ILLEGIBLE] [ILLEGIBLE]
-------------------------------
<PAGE> 22
Proprietary and Confidential
SCHEDULE C5
TO REMOTE PROCESSING AGREEMENT
DATED JULY 10, 1995
****
<PAGE> 23
Proprietary and Confidential
AMENDMENT TO THE REMOTE PROCESSING AGREEMENT
BETWEEN
SUNGARD FINANCIAL SYSTEMS, INC.
AND
PENSON FINANCIAL SERVICES, INC.
This is an Amendment dated Sept. 13, 1996, ("Amendment") to the Data Services
Agreement between SunGard Financial Systems, Inc. ("SunGard"), 504 Totten Pond
Road, Waltham, Massachusetts, and Penson Financial Services, Inc. ("Customer"),
8080 N. Expressway, Suite 1010 Dallas, Texas, a North Carolina Corporation,
dated as of July 10, 1995 ("Agreement").
The parties to the Agreement intending to be legally bound agree as follows:
Schedule C1 entitled "SERVICE FEES", as referenced in Section 5 of the
Agreement, is hereby replaced with the attached, revised Schedule C1 which is
incorporated by reference herein and made a part hereof. This revised Schedule
C1 will take effect as of September 1, 1996.
Except as otherwise amended herein, the Agreement remains in full force and
effect.
SUNGARD FINANCIAL SYSTEMS, INC. PENSON FINANCIAL SERVICES, INC.
BY: /s/ DAVID TAYLOR BY: [ILLEGIBLE]
---------------------------- -------------------------------
TITLE: President TITLE: President
------------------------- -------------------------
DATE: 9/13/96 DATE: 9-26-96
-------------------------- --------------------------
--------------------------------------------------------------------------------
[SUNGARD LOGO]
<PAGE> 24
Proprietary and Confidential
AMENDMENT TO THE DATA SERVICES AGREEMENT
BETWEEN
SUNGARD FINANCIAL SYSTEMS INC.
AND
PENSON FINANCIAL SERVICES, INC.
This is an Amendment dated May 1, 1998, ("Amendment") to the Remote Processing
Agreement between SunGard Financial Systems Inc. ("SunGard") 504 Totten Pond
Road, Waltham, Massachusetts 02154 and Penson Financial Services, Inc.
("Customer"), 8080 North Central Expressway, Suite 1010, Dallas, TX 75206, a
North Carolina corporation, dated as of July 10, 1995 ("Agreement").
BACKGROUND
The Initial Term of the Agreement (as defined in Section 8.1 of the Agreement)
has expired. Both parties desire to modify the term and Service Fees of the
Agreement and establish a new Initial Term beginning on May 1, 1998 and
continuing for four years until May 1, 2002 with one (1) year extension terms
thereafter.
As part of this Amendment, SunGard agrees to provide Customer with a one-time
credit of $350,000 against currently outstanding invoices. In addition, SunGard
agrees to provide Customer with a development credit of $75,000 in January 1999
and $75,000 January 2000.
All other terms and conditions in the Agreement remain in full force and effect.
SUNGARD FINANCIAL SYSTEMS INC. PENSON FINANCIAL SERVICES, INC.
By: /s/ DAVID TAYLOR By: /s/ [ILLEGIBLE]
--------------------------- -------------------------------
Name Typed: David Taylor Name Typed:
------------------- --------------------
Title: President Title: President
------------------------ -------------------------
Date: 5/11/98 Date: 5-7-98
------------------------- --------------------------
--------------------------------------------------------------------------------
[SUNGARD LOGO]
<PAGE> 25
[PENSON WORLDWIDE, INC. LETTERHEAD]
September 12, 2000
Mr. Michael Nemerowski
SunGard Financial Systems, Inc.
32 Crosby Drive
Bedford, MA 01730
Re: Acknowledgment and Agreement regarding Creation and
Use of Penson Software
Dear Michael:
As we discussed, under the terms and conditions of that certain Remote
Processing Agreement by and between SunGard Financial Systems, Inc. ("SunGard")
and Penson Financial Services, Inc. ("Penson") and dated July 18, 1995 (the
"Agreement"), SunGard provided to Penson an open system interface for SunGard's
PHASE3 System. The purpose of the open system interface is to allow licensees
of the PHASE3 System to utilize other software programs to interface and
exchange data with the PHASE3 System. Penson independently created a
stand-alone application software program that exchanges data with the PHASE3
System through the open system interface (the "Penson Software").
Per our conversation, Penson's independent development of the Penson
Software and Penson's use of the open system interface to enable the Penson
Software to communicate with the PHASE3 System is consistent with the terms of
the Agreement and should not cause you concern. Nonetheless, in the spirit of
cooperation under the Agreement, we wanted to inform you of this development
and seek to obtain your acknowledgment of the propriety of Penson's actions.
Accordingly, this letter is intended to obtain your confirmation and agreement
as to the following:
1) The Penson Software does not constitute a refinement,
improvement, enhancement or derivative work of the PHASE3 System that
would be owned by SunGard pursuant to the provisions of Section 7.2 of
the Agreement;
2) The exchange of data through the open system interface does
not cause Penson to breach or otherwise violate the use restrictions
set forth in Section 7.5 of the Agreement including, without
limitation, the provisions of Sections 7.5(d) and 7.5(h); and
3) Penson's development of the Penson Software and use of the
Penson Software in connection with the PHASE3 System is not a
violation or breach of
1
<PAGE> 26
any other provision of the Agreement. Thus, Penson remains in good
standing under the Agreement and the Agreement remains in full force
and effect.
If you determine that the foregoing is acceptable, we would
appreciate acknowledgement of that determination by the execution and delivery
to us of the enclosed copy of this letter. This letter reflects the entire
understanding and agreement between Penson and SunGard with respect to the
subject matter hereof, and supercedes and replaces any other written or verbal
agreements, including any and all terms thereof, relating to Penson's use of
the open system interface and the Penson Software.
We look forward to your favorable consideration of this matter.
Very truly yours,
PENSON WORLDWIDE, INC.
By: /s/ PHIL PENDERGRAFT
-----------------------------------
Name: Phil Pendergraft
Title: Executive Vice President
The foregoing is agreed to and accepted.
SUNGARD FINANCIAL SYSTEMS, INC.
By: /s/ MIKE NEMEROWSKI
-----------------------------------
Name: Mike Nemerowski
---------------------------------
Title: President
---------------------------------
Date: September 14, 2000
---------------------------------
2
