Exhibit 10.1

NOTE: PORTIONS OF THIS AGREEMENT ARE THE SUBJECT OF A

CONFIDENTIAL TREATMENT REQUEST BY THE REGISTRANT TO THE

SECURITIES AND EXCHANGE COMMISSION. SUCH PORTIONS HAVE BEEN

REDACTED AND ARE MARKED WITH A “[****]” IN PLACE OF THE REDACTED LANGUAGE.

Broadridge Financial Solutions, Inc.

 

1981 Marcus Avenue      TO BE PREPARED AND Lake Success, New York 11042     
SIGNED IN DUPLICATE

MASTER SERVICES AGREEMENT

Client:    Penson Worldwide, Inc. Address:    1700 Pacific Avenue, Suite 1400
City:    Dallas, Texas, 75201

This Master Services Agreement (this “Master Services Agreement”), dated as of
November 2, 2009 (the “Effective Date”), is made and entered into by and between
Penson Worldwide, Inc. (“Penson”) and Broadridge Financial Solutions, Inc.
(“Broadridge”).

WHEREAS, in connection with that certain Asset Purchase Agreement, dated
November 2, 2009, (as amended, the “Asset Purchase Agreement”) among Broadridge,
Ridge Clearing & Outsourcing Solutions, Inc., Penson and Penson Financial
Services, Inc., Client (as defined in Section 1.B below) will acquire certain
correspondent clearing contracts and other assets relating to the clearing
business of Ridge (as defined in Section 1.B below) (the “Acquisition”); and

WHEREAS, in connection with the Acquisition, Ridge desires to perform, and
Client desires to have performed by Ridge, the Services (as defined herein) in
connection with the servicing of Client’s and its Affiliates newly acquired,
existing and future business in accordance with the terms and conditions set
forth in this Master Services Agreement and the Schedules (as defined in
Section 1.A below).

NOW THEREFORE, in consideration of the terms and conditions set forth herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound hereby, the parties
agree as follows:

 

1. SCOPE OF AGREEMENT.

 

  A. Services Schedules.

 

  (i) Broadridge and Penson shall cause their respective Affiliates to enter
into schedules (including, without limitation, any and all Attachments thereto,
each a “Schedule” and collectively, the “Schedules”) in Canada, the United
States and the United Kingdom. The Broadridge Affiliate that is a party to a
Schedule is referred to in this Agreement (as defined in Section 1.A
(iii) below) as the “Ridge Local Affiliate” and the Client Affiliate that is a
party to a Schedule is referred to in this Agreement as the “Client Local
Affiliate”. The Client Local Affiliate for the United States Schedule shall be
Penson Financial Services, Inc., the Client Local Affiliate for the Canadian
Schedule shall be Penson Financial Services Canada, Inc. and the Client Local
Affiliate for the United Kingdom Schedule shall be Penson Financial Services
Ltd. Each Schedule shall be governed by the terms and conditions of this Master
Services Agreement as may be amended in accordance with its terms.

 

  (ii) Notwithstanding the fact that a Schedule is implemented,

Broadridge/Penson Proprietary and Confidential

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MASTER SERVICES AGREEMENT

 

  (a) Broadridge shall (x) be responsible for the performance of all of the
Services, and the performance of all obligations of Ridge under this Agreement,
(y) be responsible for the compliance with any provisions of this Agreement
applicable to Ridge and (z) if Ridge fails, neglects or refuses to perform any
such Services or obligation under or otherwise breaches this Agreement, perform,
or cause to be performed, any such Services or obligation or cure, or cause to
be cured, such breach and bear joint and several liability with Ridge; provided,
however, that in no event shall Broadridge or any other entity that is not
properly registered or licensed to perform any such Services or obligation be
required to perform such Services or obligation; and

 

  (b) Penson shall (x) be responsible for the performance of all obligations of
Client under this Agreement, (y) be responsible for the compliance with any
provisions of this Agreement applicable to Client and (z) if Client fails,
neglects or refuses to perform any obligation under or otherwise breaches this
Agreement, perform, or cause to be performed, any such obligation or cure, or
cause to be cured, such breach, or bear joint and several liability with Client;
provided, however, that in no event shall Penson or any other entity that is not
properly registered or licensed to perform any such obligation be required to
perform of such obligation.

 

  (iii) From time to time during the Term (as defined in Section 2 (Term)
below), Broadridge and Penson (or their Affiliates) may elect to enter into
additional written schedules in Canada, the United States, the United Kingdom
and such other countries for which Broadridge and Penson may agree from time to
time (each, a “Territory” and collectively the “Territories”). Each such
additional schedule shall set forth:

 

  (a) the Services (defined below) that Ridge shall perform under such schedule;

 

  (b) specific Software (defined below) that Ridge licenses to Client in
connection with Client’s receipt of the Services to be performed by Ridge under
the schedule; and

 

  (c) other terms and conditions as the parties may agree.

Each such schedule (when signed by authorized officers of both parties) shall be
governed by the terms and conditions of this Master Services Agreement and
deemed a Schedule hereunder. This Master Services Agreement, together with all
Exhibits hereto and the Schedules, together with all Attachments thereto, shall
be referred to, collectively, as the or this “Agreement.”

 

  (iv) In the event of a conflict between the terms and conditions of any
Schedule (including, without limitation, any Attachment or Appendix) and the
terms and conditions of this Master Services Agreement, the terms and conditions
of the Schedule shall control for the purpose of the relevant Schedule. Except
where otherwise indicated, all references in this Master Services Agreement to
Sections or Exhibits are to Sections to, and Exhibits of, this Master Services
Agreement.

 

  B. Certain Defined Terms.

The term “Affiliate” as used throughout this Agreement means as to any entity,
any other entity that, directly or indirectly, Controls, is Controlled by or is
under common Control with such entity.

The term “Client” as used throughout this Agreement means the applicable Client
Local Affiliate receiving the Services under the applicable Schedule. For
purposes of this Master Services Agreement, the use of the term “Client” shall
mean “Penson” when Penson is obligated to perform on behalf of Client under
Section 1.A(ii)(b).

The term “Control” (and derivatives thereof) as used throughout this Agreement
means, with respect to any entity, the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such entity, whether through the ownership of voting securities (or other
ownership interest), by contract or otherwise.

 

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MASTER SERVICES AGREEMENT

 

The term “Governmental Authority” as used throughout this Agreement means any
governmental, regulatory or administrative body, agency or authority, any court
of judicial authority, any arbitrator or any public, private or industry
regulatory authority (including, without limitation, any SRO as defined in the
Exchange Act), whether foreign, federal, state or local.

The term “Laws” as used throughout this Agreement means all laws, rules and
regulations, including, without limitation, all privacy and data protection
laws, rules and regulations, all as enacted, promulgated and amended from time
to time by any Governmental Authority. “Laws” shall also include contractual
restrictions or obligations imposed upon a party by a Governmental Authority of
which the affected party shall have given notice to the other party.

The term “Ridge” as used throughout this Agreement means the applicable Ridge
Local Affiliate and permitted subcontractors of the applicable Ridge Local
Affiliate performing the Services under the applicable Schedule. For purposes of
this Master Services Agreement, the use of the term “Ridge” shall mean
“Broadridge” when Broadridge is obligated to perform on behalf of Ridge under to
Section 1.A(ii)(a).

The term “Services” as used throughout this Agreement means the services,
products, functions and responsibilities of Ridge that are specified in the
Schedules, together with the services, products, functions and responsibilities
that are an inherent or customary part of such specified services, products,
functions and responsibilities, even if such inherent or customary services,
products, functions and responsibilities are not specifically described in this
Agreement.

The term “Software” as used throughout this Agreement means all of the software
and other technology necessary for Client to access and use the Services,
whether owned by Broadridge or Ridge or licensed by Broadridge or Ridge from
third parties and including, without limitation, all improvements enhancements,
modifications, updates, releases and revisions provided in connection therewith.

 

  C. Service Levels. Ridge shall provide the Services and, as applicable, the
Software so that they meet or exceed the service levels set forth in each
Schedule, any applicable service level agreement (each a “Service Level
Agreement”), or as otherwise agreed to by the parties in writing (the “Service
Levels”). Ridge will in the regular course of its business monitor its
performance with respect to such Service Levels and report such performance to
Client in writing on a monthly basis or as otherwise required by each Schedule.

In the event of a Service Level failure by Ridge that is not insignificant,
Ridge shall take the following actions, each as soon as practicable under the
circumstances: (a) investigate and report in writing on the root cause of the
problem, (b) advise Client in writing of the remedial efforts being undertaken
with respect to this failure to meet the Service Level and provide Client with
and implement an improvement plan, (c) execute such remedial efforts, correct
the problem and begin meeting the Service Level, (d) advise Client in writing
from time to time on the status of Ridge’s remedial efforts and (e) provide
reasonable evidence to Client that the problem has been corrected.

Upon a failure by Ridge to meet a Service Level, Client shall have the right
either (a) to receive, subject to the terms and conditions of Attachment C
(Service Levels) to the applicable Schedule, a credit in connection with such
failure (each, a “Service Level Credit”) against fees owing by Client under this
Agreement, (b) if the acts or omissions or performance that relate to or
underlie such failure to meet a Service Level also constitute a breach by
Broadridge or Ridge of any of its obligations under this Agreement, to forgo
such Service Level Credit and seek monetary damages, subject to the provisions
of Section 15 (Limitation on Liability) below or (c) to pursue any termination
or other remedy available to Penson or Client under this Agreement.

 

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MASTER SERVICES AGREEMENT

 

Throughout the Term (defined below), Ridge shall seek to improve the quality,
efficiency and effectiveness of the Services to keep pace with technological and
operational advances. Ridge shall do this, among other things, by identifying
and assessing the implementation of industry practices, ‘best practice’
techniques and methods in providing the Services. In addition, Ridge shall
provide the Services in a manner consistent with Ridge’s operation of its
business generally, including, without limitation, training Ridge personnel in
techniques and technologies used generally within the Ridge’s industry and
making investments to maintain the currency of the tools, infrastructure and
other resources Ridge uses to provide the Services.

 

2. TERM.

 

  A. Term. The term of this Master Services Agreement shall begin on the
Effective Date and shall continue until the later to occur of (i) all Schedules
hereunder expiring or being terminated and (ii) the end of any applicable
Transition Period (as defined below) (the “Term”).

 

  B. Transition Services. At Client’s request upon termination or expiration of
any Schedule for any reason, Ridge shall extend the provision of the Services
and the term of any licenses relating to Software for a period not to exceed
twenty-four (24) months (“Transition Period”) beyond the effective date of
expiry or termination of such Schedule and in good faith and commercially
reasonable manner agree to provide transition services to Client as requested by
Client in writing for an orderly de-conversion of Client from Ridge’s platform
(the “Transition Services”). In addition, during the Transition Period, unless
otherwise agreed to by the parties in writing, Ridge shall continue to provide
the Services and any Software as they had been provided prior to the termination
or expiration of the applicable Schedule in accordance with the terms and
conditions set forth in this Agreement. Any Transition Services to be provided
by Ridge as requested in writing by Client during the Transition Period shall be
provided to Client in accordance with the then-applicable rates for the relevant
services (unless the applicable Schedule is terminated pursuant to Section 18.A
(Ridge’s Material Breach) in which case Transition Services shall be provided at
Ridge’s cost) or as otherwise agreed to by the parties in writing. In the event
a Schedule is terminated by Ridge in connection with Client’s failure to pay any
fees due under such Schedule (except for payment failures that are subject to a
bona fide dispute between the parties), Ridge shall not be required to provide
Transition Services or Services during the Transition Period until Client has
cured any payment failures that are not subject to a bona fide dispute between
the parties and unless Client pays for such Transitions Services and Services
monthly in advance.

 

3. CHARGES.

 

  A. Fees. The fees for the Services and Software provided to Client under any
Schedule shall be set forth in such Schedule. Except as expressly set forth in
this Agreement, there shall be no fees payable by Penson or Client in respect of
Broadridge’s and Ridge’s performance of its obligations pursuant to this
Agreement. Without limiting the generality of the foregoing, except as may be
otherwise provided in this Agreement, expenses incurred by Ridge in performing
the Services and providing the Software shall not be separately reimbursable by
Client.

 

  B. Fee Increases and Adjustments. Subject to the terms and conditions of any
Schedule, Ridge may only increase the charges payable by Client under a Schedule
as set forth in the applicable Schedule. Except as set forth in a Schedule, in
no event shall the charges be increased at anytime during the Schedule Term (as
such term is defined in the applicable Schedule).

 

  C. Communications and Third-Party Charges. The communication and other
non-Affiliated third-party charges set forth in the Schedules, if any, are based
on current costs that Ridge pays to common carriers and other third parties.
Ridge reserves the right to pass on any increase, and shall pass on any
decrease, in the charges of third parties not Affiliated with Ridge to Client
provided any such increases shall be passed through only to the extent they are
passed through in the applicable Territory to all Ridge customers generally
receiving the services of such common carriers and other third parties. Ridge
shall use reasonable commercial efforts to provide Client not less than thirty
(30) days prior notice thereof. For clarity, Ridge shall not pass through
communication or other charges of any Affiliates of Ridge.

 

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MASTER SERVICES AGREEMENT

 

  D. Taxes. There shall be added to all charges invoiced to Client pursuant to
this Agreement amounts equal to any applicable taxes, duties, charges and other
levies of any kind (other than taxes based on Ridge’s income or franchise taxes)
applicable in the applicable Territory to the purchase or consumption of the
Services, including, without limitation, provincial and local taxes, (exclusive
of taxes based on Ridge’s income and franchise taxes), payable in respect of the
Services received by Client. Ridge agrees to reasonably cooperate with Client to
enable Client to more accurately determine its tax liability and to minimize
such liability to the extent legally permissible and administratively
reasonable. Ridge shall provide and make reasonably available to Client any
exemption certificates, resale certificates, information regarding out-of-state
or out-of-country sales or use of equipment, materials or Services and other
information reasonably requested by Client and reasonably available to Ridge.

 

  E. Payment. Client shall pay each invoice that Ridge provides to Client thirty
(30) days after the date Client receives such invoice, subject to any bona fide
dispute. If Client fails to pay any undisputed amounts under this Agreement when
due, Client shall, upon written demand from Ridge, pay interest on such
undisputed amounts at the rate of one percent (1%) per month (but in no event
more than the highest interest rate allowable by Law) from the due date until
the date of payment.

 

  F. Rights of Offset. Without prejudice or limitation to any other rights or
remedies of Penson or Client, if Penson or Client becomes entitled to receive
any payment, or receive any credit, under or in connection with this Agreement,
including, but not limited to, in connection with Service Level Credits,
indemnification claims and claims by Penson or Client for breach of this
Agreement, Penson or Client may, in its sole discretion, elect to reduce the
principal amount of any note, or multiple notes, issued in connection with the
Asset Purchase Agreement by an amount or amounts equal to all or part of such
payment or credit in lieu of collection payment or receiving credit.

 

4. RIDGE RESPONSIBILITIES. Without limitation or prejudice to the provisions of
this Master Services Agreement, any Schedule or any Service Level Agreement, in
the performance of any Services under the provisions of a Schedule, Ridge agrees
and undertakes to:

 

  A. perform the Services professionally in accordance with any applicable
Service Levels and the applicable provisions of this Agreement;

 

  B. liaise and communicate in a timely manner with Client through Client’s
designated representative or such representative’s designee on matters related
to the Services and assign a qualified Ridge representative with whom Client
will communicate. Ridge and Client may change their respective representatives
from time to time by giving notice to the other. Ridge shall ensure that the
representatives servicing Client’s account are fully informed about the Services
and Client’s business requirements;

 

  C. in a timely manner, provide Client with its standard user documentation
relating to (i) the Services and/or Software, including, without limitation, any
changes thereto and (ii) Ridge’s procedures relating to the Services and use
thereof;

 

  D. to the extent permitted by this Agreement or any applicable user
documentation or procedures provided to Client, provide user access to the
Services to persons authorized by Client, such access being governed by Ridge’s
reasonable security procedures;

 

  E. notify Client, and secure Client’s prior approval, if expenses beyond the
defined charges within a Schedule or any Statement of Work (as defined below)
may be incurred or expected, unless otherwise specified in this Agreement;

 

  F. proceed according to Client’s reasonable written instructions for the
disposition or delivery to Client of Client Information (as defined herein) or
any data relating to Customers (as defined herein);

 

  G. provide Penson and Client and their respective employees or authorized
contractors with reasonable access to any facilities, machines, supplies or
equipment which are owned, operated or leased by Penson or Client in connection
with the Services and which are located on the premises of Broadridge, Ridge or
their agents subject to compliance by Penson and Client and their respective
employees and authorized contactors, with Broadridge’s and Ridge’s reasonable
security, data center procedures and confidentiality requirements. Broadridge
and Ridge will advise Penson and Client in advance of the applicable procedures
and requirements;

 

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MASTER SERVICES AGREEMENT

 

  H. from time to time, at Client’s request, perform professional services that
will be described in a written statement of work executed by both Ridge and
Client (“Statement-of-Work”). Upon the request of Client, Ridge and Client will
in good faith, and without undue delay by Ridge, agree to the terms and
conditions of a Statement-of-Work that will include, to the extent applicable
and without limitation, the information specified below:

 

  (i) Project identification, approach and objectives and the agreed-upon scope
of the services;

 

  (ii) The deliverables, including, without limitation, reports, software,
services, specifications, lists, plans, manuals, diagrams, flow charts, data and
other documents reports and recommendations, whether in written or electronic
form (“Deliverables”) to be developed, delivered, prepared or required
specifically for Client under such Statement of Work;

 

  (iii) Specifications in respect of each Deliverable;

 

  (iv) Acceptance tests or means proposed for testing Deliverables (“Acceptance
Test”);

 

  (v) If applicable, the fees for the services under such Statement of Work and
the applicable payment terms;

 

  (vi) Identification of project managers and other staffing by the parties,
including, without limitation, names and position titles of key Ridge personnel
who will be providing the services (which personnel may be substituted by
Ridge);

 

  (vii) Key project assumptions and responsibilities;

 

  (viii) Project schedule showing the time frame for all stages of
implementation of the services and milestones of the Statement of Work along
with all associated milestone dates and production date, and other remedies for
non-performance by Ridge;

 

  (ix) Description of the hardware and software that may have to be procured by
Client or any of Customers (as defined herein) for the provision of the services
pursuant to the Statement of Work, as applicable;

 

  (x) Maintenance and support services to be provided by Ridge in connection
with the Deliverables, if applicable;

 

  (xi) Applicable Service Levels, if applicable;

 

  (xi) Training services and training materials to be provided by Ridge under
the Statement of Work, if applicable;

 

  (xii) Any Client resource commitments and responsibilities in addition to
those set forth in this Agreement; and

 

  (xiii) Any other information or agreements deemed relevant by Ridge and
Client;

 

  I. except as otherwise expressly provided in this Agreement and subject to
Client providing the resources and materials required for it to receive the
Services, provide at Ridge’s expense, all software, hardware, communication
lines and services, equipment, systems and other technology, resources and
materials necessary for Ridge to provide the Services to Client in accordance
with the provisions of this Agreement;

 

  J. subject to Section XIV (Acquisition of or by Another Ridge Local Affiliate
Client) and Attachment B (Service Bureau and Operations Support Services Price
Schedule) of the applicable Schedule, increase or decrease the volume of the
Services upon Client’s request;

 

  K. subject to Section XIV (Acquisition of or by Another Ridge Local Affiliate
Client) and Attachment B (Service Bureau and Operations Support Services Price
Schedule) of the applicable Schedule, under an existing Schedule provide the
Services, in the applicable Territory, to such additional Affiliates of Penson
or Client, as may be identified by Penson or Client from time to time to receive
the Services at the rates and in accordance with the terms and conditions set
forth in this Agreement (however, in no event shall any Affiliate of Penson or
Client be obligated or required to receive Services from Ridge); provided,
however, that any conversion services required for any such Affiliate shall be
implemented pursuant to the Change Control Procedures applicable to Mandatory
Changes and the Affiliate shall agree to be bound by the terms and conditions of
the applicable Schedule;

 

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MASTER SERVICES AGREEMENT

 

  L. notify Client of any proposed change of the locations from which Ridge
provides the Services under a Schedule and obtain Client’s prior consent (which
consent shall not be unreasonably withheld) with respect to any such change in
location only if such consent is required by Law;

 

  M. use commercially reasonable efforts to obtain the approval of each relevant
regulatory or self-regulatory agency or entity, if any, which regulates Ridge’s
performance of the Services and whose approval is necessary for Ridge to perform
and deliver the Services in the applicable Territory (including, without
limitation, securities and commodities exchanges, associations of securities
and/or commodities dealers, federal, provincial and local Governmental
Authorities);

 

  N. as required by all applicable Laws and Ridge policies in effect from time
to time, conduct, in compliance with such Laws and policies, a criminal
background check and drug-screening on, and provide bonding for, each individual
who provides Services, at Ridge’s cost and expense, and not allow anyone to
perform Services or assign anyone to the account of Penson or Client who has
(i) a felony conviction or (ii) failed a drug test administered by Ridge; and

 

  O. provide an adequate number of qualified individuals with suitable training,
education, experience and skill to perform the Services.

 

5. COMMUNICATIONS LINES AND EQUIPMENT. Subject to receiving Client’s approval,
Ridge may procure appropriate communications lines and equipment to enable
Client to access the Services. Where Ridge procures such communication lines or
equipment for Client, Ridge shall procure such services from reputable vendors
but shall not be responsible for the reliability or continued availability of
the communications lines and equipment used by Client in accessing the Services.
Ridge shall replace any such third party vendors in the event that
(a) reliability or continued availability is a significant issue or (b) at least
fifty percent (50%) of Ridge’s clients utilizing such services in the applicable
Territory request such replacement.

 

6. GOVERNANCE. Broadridge and Penson shall each appoint at least two senior
level managers to a joint committee that shall meet no less than monthly to
address issues that may arise in connection with the performance of the
Services. In addition to the foregoing, the parties have agreed to the detailed
governance provisions set forth in Exhibit C (Governance Structure).

 

7. USE OF THE SERVICES AND TRAINING.

 

  A. Use of Services. Client shall use the Services in accordance with such
rules as may be generally established and communicated by Ridge as applied to
all of Ridge’s customers in the applicable Territory generally and set forth in
materials promptly furnished by Ridge to Client in writing, provided, however,
that Ridge shall not change the Services or any such rules in a manner that
significantly interferes or significantly negatively impacts Client’s use of the
Services or that results in any breach or violation in connection with the
Assigned Contracts (as defined in the Asset Purchase Agreement) or establish
rules that are inconsistent with or violate the provisions of this Agreement.
Ridge agrees to use commercially reasonable efforts to provide Client with no
less than thirty (30) days’ notice of any change to the rules relating to the
use of the Services.

Except with respect to those Model A Clearing services provided by Client to its
clients in the U.K., Client (and Affiliates of Client who have agreed to be
bound by the terms and conditions of the applicable Schedule) shall use the
Services only for its own business purposes in support of the brokerage or
financial services and/or products it provides to its customers, correspondents
and the clients and customers of such correspondents (including, without
limitation, the brokerage customers introduced to Client by its correspondents
(i.e., broker-dealers or other registered persons clearing or receiving services
through Client) (collectively “Customers”)). For the avoidance of doubt, the
foregoing prohibits Client (and Affiliates of Clients who have agreed to be
bound by the terms and conditions of the applicable Schedule), except as
expressly permitted by Ridge in writing, or other than as permitted herein, from
selling, leasing, licensing, providing as a service bureau or otherwise
providing, directly or indirectly, any of the Services or any portion thereof to
any third-party exclusively as a technology services reseller or provider or
outsourcer (e.g., acting in the same capacity as Ridge with respect to such
third-party) without providing to such third-party Client’s normal course
securities or financial services.

 

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  B. Approvals. Client will use commercially reasonable efforts to obtain the
approval of each relevant regulatory or self-regulatory agency or entity, if
any, which regulates Client and whose approval is necessary for Client to
receive the Services in the applicable Territory (including, without limitation,
securities and commodities exchanges, associations of securities and/or
commodities dealers, federal, provincial and local Governmental Authorities).

 

  C. Training. Ridge, at its expense, shall provide Client with training in the
use of the Services as reasonably requested by Client.

 

8. SOFTWARE.

 

  A. License Grant. Broadridge and Ridge hereby grant to Client in each
Territory during the applicable Schedule Term a limited, non-exclusive,
non-transferable (other than as permitted herein including, without limitation,
a permitted assignment), royalty-free license and/or sublicense, as the case may
be, to use, and as applicable for Customers to use, the Software and related
documentation in connection with their receipt and use of the Services. The
Software and documentation may only be used by Client and its Customers in
connection with the Services as permitted in Section 7.A (Use of Services).
above except as otherwise permitted by Broadridge and Ridge. The license of
Software shall be to the object code only unless specifically stated otherwise
in the Schedule related thereto. Client accepts such license and/or sublicense,
as the case may be, from Broadridge and Ridge for the Software upon the terms
and conditions set forth in this Master Services Agreement. Broadridge and Ridge
will be responsible for obtaining and maintaining all required consents with
respect to the license for the Software in this Section 8.A (License Grant),
including, without limitation, responsibility for the financial costs of
obtaining such consents (e.g., for third party access, use, update or relocation
consents).

 

  B. Updates. Broadridge and Ridge agree and undertake to provide the Client
with, as and when released and at no additional charges, any and all
improvements, enhancements, modifications, updates, releases and revisions to
the Ridge Products (as defined below), including, without limitation,
customizations generally made available to Ridge’s other clients, delivered or
made available by Broadridge and Ridge to Ridge’s clients generally using the
Services (or applicable portion thereof) or substantially similar services.
Client shall use commercially reasonable efforts to implement all improvements,
enhancements, modifications, updates, releases and revisions to the Ridge
Products delivered by Broadridge or Ridge to Client within forty-five (45) days
after Client’s receipt thereof; provided, however, that the implementation of
any such change required by the foregoing will not significantly impair use of
the Services by Client or its Customers as contemplated by this Agreement.
Broadridge and Ridge undertake not to modify the Ridge Products in a manner
which negatively impacts use of the Ridge Products by Client or its Customers or
receipt of the Services by Client or its Customers as set forth in this
Agreement. Client shall not, without the prior consent of Broadridge or Ridge,
which shall not be unreasonably withheld or delayed, change or otherwise modify
any Software, except for Client Software (as defined below).

 

  C. Client Software. Upon Client’s request, Ridge shall use its commercially
reasonable efforts to provide Client with custom modification to the Services,
custom software programming with respect to the Software (the “Client Software”)
or custom program maintenance, in which case, the terms and conditions governing
such custom modification to the Services, Client Software or custom program
maintenance will be set forth in the applicable Schedule or Statement-of-Work
(including, without limitation, the ownership thereof and any changes therefor).
Any Client Software, custom modification to the Services, custom software
programming, custom program maintenance or other professional services
associated with the Client Software shall be provided in a timely manner and on
terms and conditions at least no less favorable then those offered to any other
customer of Ridge (including, without limitation, as to priority and resource
allocation).

 

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9. OWNERSHIP AND USE OF RIDGE PRODUCTS.

 

  A. Ownership. Client acknowledges that, as between Client, Broadridge and
Ridge, the Ridge Products are and shall remain the exclusive and confidential
property of Broadridge and Ridge. For purposes of this Agreement: “Ridge
Products” means the Software and systems provided and owned by Broadridge or
Ridge and used to provide the Services, the Ridge websites used to host and
provide Services through the Internet and the Broadridge or Ridge processes and
materials and documentation relating to such Software, Services, systems and
websites, including, without limitation, (i) any modifications or enhancements
made to the Software, databases that are a part of the Services, or systems used
to provide the Services, (ii) any plans contemplating further development of the
foregoing and (iii) all copyrights, patents, trade secrets and other
intellectual and proprietary rights relating to all of the foregoing. Broadridge
and Ridge acknowledge that, as between Client, Broadridge and Ridge, the
intellectual property owned or provided by Penson or Client is and shall remain
the exclusive and confidential property of Client. For the avoidance of doubt,
nothing in this Agreement shall transfer, grant or provide Broadridge or Ridge
or any other person with any rights in intellectual property or confidential
information or proprietary rights or data or information of, or provided by,
Penson or Client or any of their Affiliates or any Customers, correspondents or
customers and none of such intellectual property or confidential information or
proprietary rights or data or information shall be considered Ridge Products or
Ridge Information.

 

  B. Use. Client may use the Ridge Products only in conjunction with the
Services and Software. Client shall not copy, in whole or in part, the Ridge
Products or related documentation, whether in the form of computer media,
printed or in any other form; provided, however, that Client may make an
appropriate number of copies of the Ridge Products for back-up, quality
assurance, testing, archive and disaster recovery purposes only or to comply
with the requirements of Governmental Authorities. Client shall not make any
alteration, change or modification to any of the Ridge Products without
Broadridge’s or Ridge’s prior consent in each instance, which consent shall not
be unreasonably withheld or delayed. CLIENT MAY NOT RECOMPILE, DECOMPILE,
DISASSEMBLE, OR REVERSE ENGINEER THE RIDGE PRODUCTS (INCLUDING, WITHOUT
LIMITATION, THE SOFTWARE).

 

  C. Return or Destroy. Upon the later of the (a) completion of Transition
Services and (b) expiration or termination of a Schedule for any reason, and
subject to the terms and conditions hereof, Client shall return to Ridge or,
upon Ridge’s request, use reasonable commercial efforts to destroy, all copies
of the Ridge Products that are in its possession that do not relate to any other
existing Schedules, except as otherwise required by applicable Law. Nothing is
this Agreement will require the destruction of copies of any records or files
containing information that has been created pursuant to any automated archiving
or back up procedure that cannot be reasonably deleted, which records and files
will continue to be subject to the confidentiality provisions herein.

 

10. CONFIDENTIALITY.

 

  A.

Definitions. In connection with this Agreement, including, without limitation,
the evaluation of new services contemplated by the parties to be provided by
Ridge under this Agreement, information will be exchanged between and among
Broadridge, Ridge, Penson and Client. Broadridge and Ridge shall provide
information that may include, without limitation, confidential information
relating to the Ridge Products, trade secrets, strategic information,
information about systems and procedures, confidential reports, Ridge customer
information, vendor and other third party information, financial information
including, without limitation, cost and pricing, sales strategies, computer
software and tapes, programs, source and object codes, and other information
that is provided under circumstances reasonably indicating it is confidential
(collectively, the “Ridge Information”), and Penson and Client shall provide
information that may include, without limitation, confidential information
relating to Penson, Client or any of their Affiliates, customer information,
which may include Personal Information (defined below), to be processed by the
Services, and other information, including, without limitation, trade secrets,
strategic information, information about systems and procedures, confidential
reports, customer information, vendor and other third party information,
financial information including, without limitation, cost and pricing,
descriptions of Penson’s or Client’s business (including, without limitation,
features of any product or service and details of implementation of any such
business), sales strategies, computer software and tapes, programs, source and
object codes, and other information that is provided under circumstances
reasonably indicating it is confidential (“Client Information”) (the Ridge
Information and the Client Information collectively referred to herein as the
“Information”). Subject to the terms and conditions hereof, Personal Information
that is exchanged shall also be deemed Information hereunder. “Personal
Information” means personal information about an identifiable individual
including, without limitation, name, address, contact

 

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information, age, gender, income, marital status, finances, health, employment,
social insurance number and trading activity or history. Subject to applicable
legal and regulatory requirements, Personal Information shall not include the
name, title or business address or business telephone number of an employee of
an organization in relation to such individual’s capacity as an employee of an
organization. As between the parties hereto, the Information of each party shall
remain the exclusive property of such party. Notwithstanding anything to the
contrary, (i) Ridge Information shall not include or contain any Client
Information, including, without limitation, Personal Information provided by
Penson or Client, which shall remain the exclusive property of Penson or Client
and (ii) Client Information shall not include or contain any Ridge Information,
including, without limitation, Personal Information provided by Ridge.

 

  B. Obligations. Subject to the terms and conditions hereof, the receiver of
Information (the “Receiver”) shall keep any Information provided by the other
party (the “Provider”) strictly confidential and shall not, without the
Provider’s prior consent, disclose such Information in any manner whatsoever, in
whole or in part, and shall not duplicate, copy or reproduce such Information,
including, without limitation, by means of photocopying or transcribing of voice
recording, except in accordance with the terms and conditions of this Agreement
or in connection with its receipt or provision of Services hereunder. The
Receiver shall only use, copy or duplicate the Information as reasonably
required to carry out the purposes of this Agreement.

 

  C. Disclosure Generally. Broadridge and Ridge and Penson and Client agree that
the Information shall be disclosed by the Receiver only to: (i) the employees,
agents and consultants of the Receiver and its Affiliates who have a “need to
know” such Information in connection with Receiver’s performance or use of the
Services, as applicable, and (ii) auditors, counsel, and other representatives
of the Receiver and its Affiliates for the purpose of providing assistance to
the Receiver in the ordinary course of Receiver’s performance or use of the
Services, as applicable; in each case, who have been informed of the
confidential nature of the Information and agreed to maintain the
confidentiality of such Information and who have entered into a written
confidentiality agreement with the Receiver on terms and conditions no less
restrictive than the confidentiality terms and conditions set forth in this
Agreement. The Receiver will take reasonable steps to prevent a breach of its
obligations by any employee or third party. The Receiver shall be liable for any
violation of this Section 10 (Confidentiality) by its employees, or any third
party to whom Receiver discloses Information of the Provider.

 

  D. Compelled Disclosure. If the Receiver or anyone to whom the Receiver
transmits the Information pursuant to this Agreement becomes compelled, in
accordance with any legal or regulatory requirement, including, without
limitation, the requirements of any self-regulatory organization or agency
having jurisdiction over such persons or any regulations or requirements
relating to fair disclosure pertaining to a party or its Affiliates, to disclose
any of the Information, then the Receiver will provide the Provider with prompt
notice before such Information is disclosed (or, in the case of a disclosure by
someone to whom the Receiver transmitted the Information, as soon as the
Receiver becomes aware of the compelled disclosure), if not legally prohibited
from doing so, so that the Provider may seek a protective order or other
appropriate remedy and/or waive compliance with the provisions of this
Agreement. If such protective order or other remedy is not obtained, then the
Receiver will furnish only that portion of the Information which the Receiver is
advised by reasonable written opinion of counsel is legally required and will
exercise its reasonable efforts to assist the Provider (at Provider’s sole
expense) in obtaining a protective order or other reliable assurance that
confidential treatment will be accorded to the Information that is disclosed.

 

  E. Exceptions. Except with respect to Personal Information, nothing contained
herein shall in any way restrict or impair the right of the Receiver to use,
disclose or otherwise deal with:

 

  (i) Information which at the time of its disclosure is publicly available, by
publication or otherwise, or which the Provider publicly discloses either prior
to or subsequent to its disclosure to the Receiver or which is or becomes part
of the public domain without breach of this Agreement by Receiver;

 

  (ii) Information which the Receiver can show was in the possession of the
Receiver, or its parent, subsidiary or Affiliated company, at the time of
disclosure and which was not acquired, directly or indirectly, under any
obligation of confidentiality to the Provider;

 

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  (iii) Information which is independently acquired or developed by the Receiver
without violation of its obligations hereunder, including, without limitation,
Information obtained from a third party, not known by the Receiver to have an
obligation to maintain the confidentiality of such information; or

 

  (iv) Information relating to this Agreement in the Receivers’ or its
Affiliates’ public securities filings if the Receiver or its Affiliates shall
determine that this Agreement is required to be so disclosed in accordance with
applicable securities Laws or any other applicable legal or regulatory
requirements.

In addition, each employee of the Receiver shall be free to use for any purpose,
after termination of this Master Services Agreement, any general knowledge,
skill or expertise (but which shall specifically exclude any Information) that
(i) is acquired by such employee in performance of a parties obligations
hereunder, (ii) remains part of the general knowledge of such employee after
access to the tangible embodiment of the Provider’s Information, (iii) does not
contain or include any such Information and (iv) is not otherwise specific to
the Provider.

 

  F. Return or Destroy. Upon the later to occur of the termination of a Schedule
for any reason or the completion of the applicable Transition Services, the
Receiver shall return to the Provider, or use reasonable commercial efforts to
destroy, any and all copies of Information of the other that are in its
possession relating to such terminated Schedule, except for any copies
reasonably required to maintain the Receiver’s customary archives or computer
back-up procedures, and as otherwise required by applicable Law. Notwithstanding
anything to the contrary, Broadridge and Ridge shall comply with Penson’s
instruction relating to return or disposition of any Client Information in
Broadridge’s or Ridge’s possession; provided, however, that, Ridge shall have
the right to keep one (1) copy of such Information as may be reasonably required
to evidence the fact that it has provided the Services to Client which records
and files will continue to be subject to the confidentiality provisions herein.
Client shall pay Ridge (at the rates set forth in the applicable Schedule, or,
if no such rates are set forth, at Ridge’s then current charges) for Ridge’s
actual time spent and incidental expenses actually incurred in connection with
such return. Additionally, upon termination or expiration of a Schedule, Ridge
agrees to store Client Information and other Client property for a period not to
exceed twelve (12) months in a reasonable format required by Client and at
Client’s reasonable cost and expense, and Ridge will continue to observe the
confidentiality provisions of this Agreement with respect thereto.

 

11. PERSONAL INFORMATION.

 

  A. Obligations. Neither Broadridge nor Ridge shall use any Personal
Information of Customers or such Customer’s clients except to the extent
reasonably required to carry out its obligations under this Agreement and shall
only disclose Personal Information to persons who have been informed of the
confidential nature of the Personal Information. Broadridge and Ridge shall have
such persons sign agreements whereby they agree to keep such information
strictly confidential and limit any use made of such Personal Information by
such persons to those reasons for which it was explicitly disclosed. In
connection with Ridge’s provision of the Services, Ridge shall comply with all
privacy and data protection Laws applicable to Ridge or its performance and
delivery of the Services, including, without limitation, if applicable, the EU
Data Protection Directive and EU Member State implementing laws, including,
without limitation, EU laws that apply to cross-border data transfers and
corresponding Laws in the Territories. Broadridge and Penson agree that where,
in order to receive Services under this Agreement, a Client Local Affiliate in
the European Economic Area (“EEA”) or Canada will need to transfer data to Ridge
in a country not ensuring an adequate level of data protection, in accordance
with EU Laws or Canadian Laws, the applicable Client Local Affiliate and Ridge
Local Affiliate will enter into the European Commission’s approved data export
clauses for data controller/data processor exports (version 2001) as soon as
practicable (and in any event within thirty (30) days) after the date that the
need for such transfer of data is first identified by the parties. For avoidance
of doubt, Broadridge and Penson understand and acknowledge that these
obligations are in addition to the privacy and security obligations specified in
this Agreement.

In addition, Ridge shall have obligations with respect to Compliance Directives
that relate to privacy and data protection Laws as set forth in Section 16.C
(Compliance Directives) below. Broadridge and Ridge agree to (and as long as
legally permitted) comply with Penson’s commercially reasonable requests in
connection with the treatment, handling and disclosure of Personal Information
made available to Ridge by Client, including, without limitation, any
information relating to Customers.

 

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In addition and notwithstanding anything to the contrary herein or otherwise,
with respect to Personal Information provided or otherwise made available to
Broadridge or Ridge by Penson, Client or Client’s Affiliates and Customers,
Broadridge and Ridge agree:

(i) not to use the Personal Information for any purposes other than those
related to the performance of Broadridge’s or Ridge’s obligations under this
Agreement;

(ii) to promptly forward any individual’s request for access to Personal
Information to Penson and Client, and to reasonably co-operate with Penson or
Client (at Penson’s or Client’s expense) in responding to such access request,
including, without limitation, providing information regarding the use and
disclosure of such Personal Information by Broadridge or Ridge;

(iii) to promptly notify Penson and Client of any complaints received or any
notices of investigation or non-compliance from any Governmental Authority
related to the collection, use or disclosure of Personal Information, and to
reasonably co-operate with Penson and Client and reasonably assist in any such
investigation, all at Penson’s and Client’s expense;

(iv) that as between Penson and Client and Broadridge and Ridge, Penson and
Client are and remain the exclusive owners of all right and title in and to the
Personal Information and shall be and remain in complete control of the
collection, use and disclosure of the Personal Information. No access to or
custody over Personal Information by Broadridge or Ridge or other persons as
permitted in this Agreement shall be construed in any manner as providing
control, power, authority or any other rights with respect to such Personal
Information. Control of all Personal Information is vested solely in Penson and
Client and their permitted assigns and nothing in this Agreement shall in any
way be construed to grant control of the Personal Information to Broadridge and
Ridge, or any subsidiary, Affiliate, subcontractor or third party except to the
extent expressly permitted by this Agreement. Broadridge and Ridge shall at all
times adhere to the written directions of Client (and its assignees) with
respect to the Personal Information, so long as such written directions are
lawful. Under no circumstances shall Broadridge or Ridge enter into any
relationship, contractual or otherwise, with another person (other than
regulatory authorities, or as required by applicable Law or the order of any
court) involving sharing or access to the Personal Information, except as set
out in this Agreement or approved by Penson or Client in advance; and

(v) upon the expiration or termination of a Schedule or upon Penson’s or
Client’s request, to cease any and all use of the Personal Information and other
data of Customers or any Affiliates’ customers and their respective clients
disclosed under such Schedule and all copies thereof, and return same to Penson
or Client or destroy same in a manner designated by Penson or Client or
otherwise agreed by the parties, except that Ridge may retain one (1) copy for
legal and audit purposes provided such copy is protected as Personal Information
and confidential information in accordance with this Agreement.

 

  B. Security Measures. In connection with providing the Services, Broadridge
and Ridge shall (i) establish, implement and maintain commercially reasonable
measures to protect the security, confidentiality and integrity of Personal
Information of Penson’s or Client’s customers against anticipated threats,
unauthorized access, disclosure or use, and improper disposal and (ii) provide
Penson or Client with information regarding such security measures upon the
reasonable request of Penson or Client.

 

  C.

Security Breaches. Each party shall promptly provide the other party with notice
of (i) any disclosure, access to or use of any Personal Information relating to
such other party’s customers or employees in breach of this Master Services
Agreement and (ii) any unauthorized intrusion into systems containing such other
party’s Personal Information. The party who had possession or control of the
applicable Personal Information at the time of the breach or intrusion shall at
its cost and expense (1) investigate and respond to, and remediate the effects
of, the breach or intrusion in accordance with applicable Laws and such party’s
own policies and procedures, and using commercially reasonable efforts and
(2) provide the other party with assurance reasonably satisfactory to such other
party that such breach or intrusion shall not recur. The

 

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response and remediation required under the preceding sentence may include, to
the extent applicable, (A) developing and delivering legal notices required by
any applicable Laws, (B) making available a toll free telephone number or
numbers (or where not available, a dedicated telephone number or numbers) where
affected individuals may receive individual specific assistance and information
relating to the breach or intrusion and (C) providing free credit reports,
and/or credit monitoring/repair services for affected individuals for the longer
of one (1) year or the period required by applicable Laws following the
announcement or disclosure of the breach or intrusion or notice to the affected
individuals. Client shall have the right to participate in any security
investigation relating to the Personal Information of any customer of Penson or
Client. Notwithstanding the foregoing or anything in this Agreement to the
contrary, neither party shall be precluded from immediately pursuing any rights
or remedies it may have under or relating to privacy, security or
confidentiality.

 

12. DATA SECURITY AND ACCESS.

 

  A. Data Security Measures. Broadridge and Ridge will maintain commercially
reasonable security measures, including, without limitation, without limitation
those described in Exhibit B (Ridge Data Security Measures) attached hereto,
designed to ensure that access to the Penson or Client files is available only
to Penson or Client and those entities that process information contained in the
Penson or Client files in order for Ridge to execute the Services (e.g.,
Canadian stock exchanges, clearing agencies, NYSE and DTC). Subject to the
foregoing and Section 16 (Laws and Governmental Regulations), Broadridge and
Ridge reserve the right to issue and change procedures from time to time to
improve file security. Broadridge or Ridge, as applicable, will notify Penson or
Client, as applicable, prior to making any such changes and obtain Penson’s or
Client’s prior consent (which consent shall not be unreasonably withheld) with
respect to the change only if such consent is required by Law.

 

  B. Loss or Alteration. Broadridge and Ridge will take commercially reasonable
precautions to prevent the loss of or alteration of the Penson and Client files
retained by Broadridge and Ridge which shall include commercially reasonable
data back-up procedures. Penson and Client will keep copies of the source
documents of the Penson and Client files delivered to Broadridge or Ridge and
will maintain procedures external to the Broadridge and Ridge systems for the
identification of such losses and for the reconstruction of lost or altered
Penson and Client files, to the extent deemed necessary by Penson and Client.

 

  C. Audits. Ridge’s practices relating to audits of the Services shall be set
forth in the Schedule relating to such Services. Except as otherwise provided in
the applicable Schedule relating to specific Services, Ridge shall have an
independent third party audit performed annually describing Ridge’s security and
control policies and procedures with respect to the Services consistent with
past practices.

 

  D. Personnel. Ridge personnel and contactors performing services at any Client
location will observe and comply with Client’s security procedures, rules,
regulations, policies, working hours and holiday schedules of which they have
actual notice and Ridge will use its commercially reasonable efforts to minimize
any disruption to Client’s normal business operations while performing services
at any Client location.

 

  E. Security Breaches. Broadridge and Ridge shall promptly provide Penson or
Client, as applicable, with notice of any breach of data security involving
Penson or Client files or Information, as applicable, in the possession of
Broadridge or Ridge or any of their Affiliates or subcontractors and shall at
its cost and expense (1) investigate and respond to, and remediate the effects
of, the security breach in accordance with applicable Laws and Broadridge’s and
Ridge’s policies and procedures, and using commercially reasonable efforts,
(2) provide Penson and Client with assurance reasonably satisfactory to such
other party that such breach or intrusion shall not recur, (3) promptly furnish
to Penson and Client full details that Broadridge or Ridge has or may obtain
regarding such unauthorized access and use reasonable efforts to assist Penson
and Client in investigating or preventing the reoccurrence of any such access
and (4) cooperate with Penson and Client in any litigation and investigation
against third parties deemed reasonably necessary by Penson and Client to
protect its rights.

 

  F.

Ownership and Access to Client Data. As between Penson and Client and Broadridge
and Ridge, Penson and Client shall own all right, title and interest in and to
all Client Information, files and data, including, without limitation, any and
all Client Information, files or data resulting from the performance of the

 

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Services. Penson and Client shall at all times have the right to access and use
the Client Information, files and data. Broadridge and Ridge shall deliver
Client Information, files and data, or cause the same to be delivered to Penson
and Client, upon demand in accordance with Attachment B (Service Bureau and
Operations Support Services Price Schedule) to the applicable Schedule or as
otherwise agreed by the parties, and upon the later of the expiration or
termination of the applicable Schedule or the completion of the Transition
Services (at Ridge’s cost). Broadridge and Ridge shall deliver such Information,
files and data in the format and on the media in use as of the date of the
demand or time of required delivery, as applicable.

 

13. WARRANTY.

 

  A. Conformance with Specifications. Broadridge and Ridge warrant to Penson and
Client that the Services, the Software and the Client Software, if any, will
conform to their respective functional and technical specifications. Such
specifications are subject to amendment by mutual agreement, from time to time,
in which case the Services, Software and Client Software will conform to their
respective modified functional and technical specifications; provided, however,
that any such amendment shall not significantly impair or reduce the
functionality of the Services or Client’s use of such Services. This warranty
shall not extend to Software or Client Software to the extent that the failure
to perform is caused by an alteration or modification by anyone other than
Broadridge or Ridge or their agents or otherwise authorized by Broadridge or
Ridge or their agents.

 

  B. Right to Furnish. Penson and Client represent and warrant to Broadridge and
Ridge that they have the right to furnish the Client Information and any other
materials provided to Broadridge and Ridge in connection with Broadridge and
Ridge performing their obligations as contemplated herein and in the Schedules
(neither Penson nor Client shall be deemed to have furnished to Broadridge or
Ridge any Client Information relating to any of the Assigned Contracts (as
defined in the Asset Purchase Agreement) as of the Effective Date). Broadridge
and Ridge represent and warrant to Client that they have the right (including,
without limitation, under the Assigned Contracts) to provide the Services,
Software, Ridge Information and any other services provided to Penson and Client
under this Agreement in connection with Broadridge and Ridge performing its
obligations as contemplated herein and in the Schedules.

 

  C. Professional Performance. Ridge warrants to Client that the Services shall
be performed in a diligent, professional and workmanlike manner and by competent
and skilled personnel duly qualified to carry out their responsibilities
required for the applicable service.

 

  D. Viruses. Broadridge and Ridge represent, warrant, and covenant to Penson
and Client that they shall use their commercially reasonable efforts to ensure
that the Software does not include, and it shall use commercially available
virus scanning software to detect the inclusion of, any computer code, program,
or programming device designed to disrupt, modify, delete, damage, deactivate,
disable, harm, or otherwise impede the operation of the Software, or any other
associated programs, firmware, hardware, computer system, or network (sometimes
referred to as “Trojan horses,” “viruses,” or “worms”), or any other similar
harmful, malicious, or hidden procedures, routines, or mechanisms that would
intentionally cause such Software to cease functioning or to damage or corrupt
data, storage media, programs, equipment, or communications, or otherwise
interfere with Penson’s or Client’s operations (collectively, “Destructive
Elements”). If Broadridge or Ridge detect any such Destructive Elements in the
Software, Broadridge or Ridge agree to eliminate such Destructive Elements as
promptly as reasonably practicable and shall notify Penson and Client thereof as
soon as possible.

 

  E. No Conflict with Assigned Contracts. Broadridge and Ridge represent and
warrant to Penson and Client that the transactions contemplated by this
Agreement (including, without limitation, the performance of the Services by
Ridge in accordance with the provisions of this Agreement), do not conflict with
or violate, or otherwise result in a breach of, the provisions of any of the
Assigned Contracts. Broadridge and Ridge represent, warrant and covenant to
Penson and Client that they shall not implement any changes to the Services that
will, or will be likely to, result in a breach under any of the Assigned
Contracts.

 

  F. Disclaimer. EXCEPT AS SPECIFICALLY PROVIDED IN THIS MASTER SERVICES
AGREEMENT OR ANY SCHEDULE, THERE ARE NO WARRANTIES, EXPRESS, IMPLIED OR
STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE.

 

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14. INDEMNITY.

 

  A. Broadridge Indemnity. Broadridge shall indemnify, defend and hold harmless
Penson and its Affiliates and its and their respective directors, officers,
employees, agents, successors and permitted assigns (“Client Indemnitees”) from
and against any and all losses, damages, liabilities, demands, claims, actions,
proceedings and related expenses (including, without limitation, reasonable
attorneys’ fees and expenses) (referred to collectively hereinafter as “Losses”)
incurred by Client Indemnitees arising out of or resulting from third-party
claims related to:

 

  (i) any infringement by the Services or the Software of any patent, copyright,
trademark, service mark, trade secret or other intellectual property rights in
the Territories (“Intellectual Property Right”) of any third party. With respect
to claims under this Subsection (i), if Client is enjoined or otherwise
prohibited from using the Services or such Software, Broadridge or Ridge shall,
at their sole expense and at their option, (a) procure for Client the right to
continue using the Services or such Software, or (b) substitute a non-infringing
version of the services or such Software so that the Services or such Software
becomes non-infringing and still conforms in all material respects to its
applicable functional and technical specifications or any documentation provided
hereunder, or, if neither of the foregoing options is available in a
commercially reasonable solution, then Ridge may terminate the infringing
Services and/or Software and eliminate the charges for the terminated Services
and/or Software and if Ridge elects to terminate such Services or Software, and
as a result of such termination, the Services and/or Software under the
applicable Schedule are adversely affected in a material manner, then Client may
terminate the applicable Schedule. Notwithstanding the foregoing, Broadridge or
Ridge shall have no liability for any claims of infringement of any Intellectual
Property Right to the extent such infringement is caused by (x) Client’s use of
the Software in combination with software, data or services not supplied by
Broadridge or Ridge as part of this Agreement or otherwise authorized by
Broadridge or Ridge, or (y) any modification or attempted modification of such
Software made by anyone other than Broadridge or Ridge or its agents or without
Ridge’s or its agents’ authorization;

 

  (ii) Broadridge or Ridge’s failure to comply with any Ridge Laws;

 

  (iii) any fines or penalties assessed by any Governmental Authority resulting
from the implementation of any change by Ridge or the establishment of any new
or modified rule by Ridge for which Ridge is responsible under Section 16.F
(Implementation of Changes in Laws) below;

 

  (iv) physical injury to persons or tangible personal property caused by the
fault or negligence of Broadridge’s or Ridge’s officers, employees, agents, or
representatives;

 

  (v) any claim or assertion by any of the individuals performing the Services
including, without limitation, any claim or assertion that Client Indemnitees
should be deemed the “employer” or “joint employer” of any of the individuals
performing Services under this Agreement, but excluding any claim or assertion
that is the subject of Penson’s indemnification obligation under
Section 14.B(ii) or Section 14.B(iii) below; or

 

  (vi) any claims brought against Penson or Client by Ridge’s suppliers arising
from or related to Ridge’s provision of providing the Services hereunder, but
excluding any claim or assertion that is the subject of Penson’s indemnification
obligation under Section 14.B(iii) below.

 

  B. Penson Indemnity. Penson shall indemnify, defend and hold harmless
Broadridge and its Affiliates and its and their respective directors, officers,
employees, agents, successors and permitted assigns (“Ridge Indemnitees”) from
and against any and all Losses incurred by Ridge Indemnitees arising out of or
resulting from any third-party claims related to:

 

  (i) Data or information provided by Penson or Client so long as such claims
relate to the data or information at the time they were initially provided to
Broadridge or Ridge by Penson or Client and in the form they were initially
provided to Broadridge or Ridge by Penson or Client;

 

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  (ii) Penson or Client’s failure to comply with any Client Laws;

 

  (iii) physical injury to persons or tangible personal property caused by the
fault or negligence of Penson’s or Client’s officers, employees, agents or
representatives;

 

  (iv) any Customer Dispute (as defined below) with respect to the Services,
except to the extent that such Customer Dispute arise from (a) Broadridge or
Ridge’s gross negligence, willful misconduct or fraud; (b) a Ridge operational
error for which Ridge is responsible under Section 15.B (Historical Losses)
(below); (c) a claim for which Penson or Client is indemnified under
Section 14.A (Ridge Indemnity); or (d) a matter that would give rise to an
indemnification obligation of Broadridge or Ridge under the Asset Purchase
Agreement. For purposes of the forgoing, a “Customer Dispute” shall mean any
error, controversy, dispute or discrepancy between Penson or Client and any of
its Customers, any Customers’ accounts, any counterparty to a transaction by
Penson or Client, and any of its correspondents or any of their Customers or
related to the Customers or any Customers accounts or clearing broker
proprietary accounts;

 

  (v) any claims brought against Broadridge or Ridge by Client’s suppliers
arising from or related to Ridge’s provision of the Services hereunder, but
excluding any claim or assertion that is the subject of Broadridge’s
indemnification obligation under Section 14.A(iv) above; or

 

  (vi) Penson or Client exercising its right to directly, or through an agent,
take control of a Service pursuant to Section 19.O (Step In Rights) below.

 

  C. Indemnity Procedures. A party seeking indemnity under this Section 14
(Indemnity) shall: (i) promptly after receiving notice of the commencement of a
claim or litigation for which indemnity may be sought under this Section 14
(Indemnity), give the indemnifying party prompt notice thereof, together with
any and all documentation received related to such claim or litigation;
(ii) give the indemnifying party full control over the defense and settlement of
any claim or litigation for which indemnification is sought under this
Section 14 (Indemnity), except to extent such claim involves a proceeding with
any Governmental Authority or action by or against any customer of Penson or
Client; and (iii) reasonably cooperate with the indemnifying party, at the
indemnifying party’s expense, to facilitate the defense or settlement of any
such claim or litigation; provided, however, that a failure to comply with the
foregoing procedures shall relieve the indemnifying party from its obligation to
indemnify solely to the extent that such failure results in prejudice to the
indemnifying party. The party seeking indemnification may participate in the
defense or negotiations at its own expense to protect its interests, except to
extent such claim involves a proceeding with any Governmental Authority or
action by or against any customer of Penson or Client. The indemnifying party
shall not enter into any settlement agreement that impairs the rights or expands
the obligations or admits wrongdoing of the party seeking indemnification
without the prior consent of such party; provided, however, that the
indemnifying party may settle any claim or cause of action to the extent such
claim seeks monetary damages if the indemnifying party agrees to pay such
monetary damages and that the other party to this Agreement is not required to
admit wrongdoing or is not otherwise negatively impacted by the settlement of
such claim or cause of action.

 

15. LIMITATION OF LIABILITY.

 

  [****].

 

16. LAWS AND GOVERNMENTAL REGULATIONS.

 

  A.

Client Laws. As used in this Agreement, “Client Laws” means (a) SARBOX (defined
below) and other similar Laws that govern the maintenance and assessment of a
company’s internal financial auditing controls, in each case as applicable to
Penson or Client, (b) Laws specifically promulgated for

 

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implementation by companies in the business of providing correspondent clearing
services to brokers, dealers or other financial intermediaries, whether on a
fully-disclosed or omnibus basis, including, without limitation, services
subject to FINRA Rule 3230, NYSE Rule 382 or comparable rules or laws of any
other Governmental Authority, (c) Laws that pertain to the operation of the
business of Penson or Client, (d) privacy and data protection Laws that are
applicable to Penson or Client or Client’s receipt or use of the Services or the
performance of its obligations under this Agreement and (e) Laws that are
specifically applicable to the receipt and use of the Services by Client. Penson
and Client shall comply with all Client Laws in connection with Client’s receipt
and use of the Services and the performance of their obligations under this
Agreement; provided, however, that nothing herein shall excuse or otherwise
limit the responsibilities of Broadridge or Ridge pursuant to this Agreement. As
used herein, the term “SARBOX” means the Sarbanes-Oxley Act of 2002 and any
rules and regulations promulgated thereunder (as enacted, promulgated and
amended from time to time).

 

  B. Ridge Laws. As used in this Agreement, “Ridge Laws” means (a) Laws that
pertain to the operation of Broadridge’s or Ridge’s business by Broadridge or
Ridge; (b) Laws that regulate Broadridge or Ridge in their capacity as a
provider of the Services; or (c) privacy and data protection Laws applicable to
Broadridge or Ridge or their performance and delivery of the Services or the
performance of their obligations under this Agreement. In connection with their
performance and delivery of the Services and their performance of their
obligations under this Agreement, Broadridge and Ridge shall comply with all
applicable Ridge Laws. If Broadridge or Ridge becomes aware of its
non-compliance with any Ridge Law, to the extent such non-compliance impacts the
Services or the Agreement, Broadridge and Ridge shall promptly notify Penson and
Client. Unless such non-compliance is caused by Penson or Client, Broadridge or
Ridge shall promptly implement such changes as may be necessary to correct such
non-compliance at Broadridge’s or Ridge’s sole cost and expense.

 

  C. Compliance Directives. From time to time Penson or Client may request Ridge
as to the manner in which Ridge should implement compliance with any Client Laws
and as to any changes in Ridge’s rules, policies, procedures or processes
relating to such compliance that Penson or Client instructs Ridge to make (each,
a “Compliance Directive”). Ridge is authorized to act and rely on, and shall
promptly implement, each Compliance Directive in the performance and delivery of
the Services including, without limitation, required changes to the Software and
Ridge Products, in accordance with the Change Control Procedures applicable to
Mandatory Changes.

 

  D. Changes in Laws. Each party shall identify and notify the other party of
any change in any Ridge Law or Client Law, as applicable, that affect the
delivery, receipt or use of Services of which it may become aware.

 

  E. Financial Responsibility for Changes to the Services. To the extent that at
least fifty percent (50%) of the Ridge clients in the applicable Territory
receiving the Services request that Ridge make a change to the Services as a
result of a new or modified Law or a change in Law that affect Ridge’s clients
or Penson’s clients, Ridge shall make such change to the Services to ensure
compliance with such new Law or such change in Law at no additional charge to
Client. In the event that (a) Penson or Client requests that Ridge make such a
change and (b) the Steering Committee does not agree that such change is
required for regulatory compliance purposes, then Ridge shall make such change,
at Penson’s or Client’s cost and expense as determined pursuant to the Change
Control Procedures set forth in Section IV (Change Control) of Exhibit C
(Governance Structure); provided, however, that in the event (i) the Steering
Committee subsequently requests that Ridge make such change or (ii) at least
fifty percent (50%) of the Ridge clients in the applicable Territory receiving
the Services request such change, in each case, within twelve (12) months after
Penson’s or Client’s request for such change, Ridge shall credit Penson or
Client such costs and expenses paid to Ridge by Penson or Client for such
change.

 

  F. Implementation of Changes in Laws. Notwithstanding anything to the contrary
in this Agreement,

 

  (i)

if Ridge implements a change to the Services pursuant to Section 16.C
(Compliance Directives) or Section 16.E (Financial Responsibility for Changes to
the Services) and Ridge fails to implement such change in accordance with the
written instructions of Penson or Client or the Steering Committee (as
applicable) for such change or implements such change in the production
environment prior to

 

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Penson’s, Client’s or the Steering Committee’s (as applicable) written
acceptance of the implementation of the change, then in accordance with
Section 14.A(iii) Ridge shall be liable for any fines or penalties assessed
against Penson, Client or any of its Affiliates by a Governmental Authority to
the extent resulting from Ridge’s implementation of the change;

 

  (ii) if Ridge implements a change to the Services and Ridge implements such
change in the production environment without Penson’s, Client’s or the Steering
Committee’s (as applicable) written acceptance of the implementation of the
change, then in accordance with Section 14.A(iii) Ridge shall be liable for any
fines or penalties assessed against Client or any of its Affiliates by a
Governmental Authority to the extent resulting from Ridge’s implementation of
the change; or

 

  (iii) if Ridge establishes a new or modified rule relating to the use of the
Services that is inconsistent with or violates any applicable Law, then in
accordance with Section 14.A(iii) Ridge shall be liable for any fines or
penalties assessed against Penson, Client or any of their Affiliates by a
Governmental Authority to the extent resulting from Ridge’s establishment of
such new or modified rule.

 

  G. Services in Violation of Laws. Subject to the provisions hereof, if
providing any of the Services to Client hereunder is determined or adjudicated,
by any court or Governmental Authority having jurisdiction (by a binding final
ruling or order), to constitute a violation of any material Laws or governmental
regulations, Ridge shall use commercially reasonable efforts to modify the
relevant Services in order to make such Services compliant with the relevant
Laws or regulations without material loss of functionality or performance. Where
making such Services compliant with such Laws or regulations is not possible,
Ridge or Client may, upon reasonable notice to the other party, terminate the
provision of such Services, and in any such case, Ridge agrees to provide a
refund to Client of any fees paid in advance by Client for such Services, and
the applicable Schedule shall be deemed terminated or amended to eliminate such
Services and the fees adjusted accordingly.

Client shall have the right to terminate the applicable Schedule if Client’s
primary regulators in the applicable Territory prohibit or deny approval, in a
final written ruling or order, for Client to receive the Services from Ridge.
Any such termination shall be on a “no fault” basis and for greater certainty,
Client will have no obligation to pay any termination charges, liquidated
damages or other damages or sums set forth hereunder as a result of such
termination. For the avoidance of doubt, Client shall be responsible for any use
it may make of the Services to assist it in complying with Client Laws,
provided, however, that Broadridge and Ridge shall remain responsible for the
performance of their obligations under this Agreement, including, without
limitation as provided in Section 16.F (Implementation of Changes in Laws).

 

17. NON-COMPETITION AND NON-SOLICITATION.

 

  A. Non-Competition.

 

  (i) During the Term and for one (1) year following the expiration or
termination thereof (including, without limitation, any Transition Period),
unless terminated by Broadridge for Penson’s or Client’s breach of this
Agreement, neither Broadridge nor any of its Affiliates shall, directly or
indirectly, own, manage, operate, join, control, finance or participate in the
ownership, management, operation, control or financing of, or be connected as an
advisor, partner, agent, representative, consultant or otherwise with or use or
permit its name, trade name, service name or service mark to be used in
connection with, any Restricted Client Business (defined below).

As used herein, the term “Restricted Client Business” means correspondent
clearing services including, without limitation, with respect to
(a) correspondent clearing services subject to FINRA Rule 3230, NYSE Rule 382 or
comparable rules of any other Governmental Authority or (b) any business or
enterprise involving or engaged in the business as a broker or dealer or future
commissions merchant in providing securities, futures, commodities or foreign
exchange transaction execution, clearance, settlement or financing (including,
without limitation, margin and portfolio margining) to brokers, dealers, other
professional traders or financial intermediaries, or customers.

 

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  (ii) It is recognized by Broadridge that the Restricted Client Business as
engaged in by Penson, Client and their Affiliates is and will continue to be
international in scope, and that geographical limitations on this
non-competition covenant (and the non-solicitation covenant set forth in
Section 17.B (No Solicitation) below) are therefore not appropriate.

 

  (iii) The restriction in Section 17.A(i), however, shall not be construed to
prohibit Broadridge or any of its Affiliates from:

 

  (a) conducting or engaging in Model A Clearing services in the U.K., where
Broadridge or any of its Affiliates provides, or will provide simultaneously
therewith, processing services to the same client or its affiliates in at least
one (1) other country;

 

  (b) maintaining a broker-dealer for purposes other than to provide Restricted
Client Business; and

 

  (c) owning not more than 5% of any class of securities of any corporation
which is engaged in the Restricted Client Business having a class of securities
registered pursuant to the Securities Exchange Act of 1934 as amended from time
to time (the “Exchange Act”); provided, however, that such ownership represents
a passive investment and that neither Ridge nor any of its Affiliates nor any
group of persons including, without limitation, Ridge or any of its Affiliates
in any way, either directly or indirectly, manages or exercises control of any
such corporation, guarantees any of its financial obligations, otherwise takes
any part in its business other than exercising its rights as a shareholder, or
seeks to do any of the foregoing.

 

  (iv) The parties acknowledge and agree that the agreements and covenants set
forth in this Section 17.A (Non-Competition) are: (a) necessary to protect the
legitimate business interests of Penson, Client, Broadridge and Ridge,
(b) reasonable as to time, geographic area and scope of activity and do not
impose a greater restraint on the activities of either party than is reasonably
necessary to protect such legitimate business interests of Penson, Client,
Broadridge and Ridge and (c) reasonable in light of the consideration and other
value provided under the Asset Purchase Agreement and this Agreement.

 

  (v) The parties acknowledge that (a) the foregoing agreements and covenants
are an essential element of this Agreement between the parties, (b) that the
foregoing agreements and covenants are a key part of the overall consideration
in connection with this Agreement and (c) that in the absence of such
limitations the terms and conditions set forth in this Agreement would be
substantially different.

 

  (vi) The parties hereby waive any and all right to, contest the validity of
any agreement or covenant in Section 17.A(i) above, including, without
limitation, the breadth of its geographic or business coverage or the length of
its term, without first procuring an unqualified opinion from a law firm with
attorneys licensed to practice in the applicable geographic area stating that
such agreement or covenant is unenforceable in such geographic area.

 

  (vii) If, notwithstanding the foregoing, any of the above agreements and
covenants in Section 17.A(i) (or any items or elements thereof) are held to be
unreasonable, invalid, or otherwise unenforceable, in whole or in part, Penson,
Client, Broadridge and Ridge each agree that any court or authority so finding
will have the authority to reform, redraft, blue pencil or otherwise modify any
and all portions ruled to be unreasonable, invalid or unenforceable, whether as
to time, scope, geography or otherwise, so that the covenant or covenants, as so
reformed, will be applicable and enforceable to the fullest extent allowed by
Law. The agreements and covenants contained in Section 17.A(i) and each
provision thereof are severable and distinct agreements, covenants and
provisions. The invalidity or unenforceability of any such agreement, covenant
or provision as written shall not invalidate or render unenforceable the
remaining agreements, covenants or provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such agreement, covenant or provision in any other jurisdiction.
The existence of any claim or cause of action by a party against another (or any
of its respective Affiliates) will not constitute a defense to the enforcement
by a party of such agreements, covenants or provisions.

 

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  B. No Solicitation.

 

  (i) During the Term, neither Broadridge nor any of its Affiliates shall,
either directly or indirectly, (a) call on or solicit or entice, or attempt to
solicit or entice, any person, firm, corporation or other entity who or which at
any time during the Term is a customer or client, or potential customer or
client, of Penson or any of its Affiliates with respect to the provision of the
Restricted Client Business, (b) influence, or attempt to influence, any person,
firm, corporation or other entity who or which at any time during the Term was
or is a customer or client of Penson or any of its Affiliates to stop doing
business with Penson or any of its Affiliates in connection with the Restricted
Client Business (except that Broadridge may take such actions with respect to
clients or customers of Penson or any of its Affiliates who have initiated
contact with Broadridge or one of its Affiliates for business other than the
Restricted Client Business) or (c) influence, or attempt to influence, any
person, firm, corporation or other entity who or which at any time during the
Term was or is a customer or client, or potential customer or client, of Penson
or any of its Affiliates to do business with a competing entity to provide the
Restricted Client Business. The restriction in this Section 17.B(i) shall not be
construed to prohibit Broadridge or any of its Affiliates from continuing to
call on solicit any person, firm, corporation or other entity who or which was
the subject of active calls or solicitation by Broadridge or one of its
Affiliates during the six (6) month period immediately prior to the Effective
Date.

 

  (ii) During the Term, neither Penson nor any of its Affiliates shall, either
directly or indirectly, (a) call on or solicit or entice, or attempt to solicit
or entice, any person, firm, corporation or other entity who or which at any
time during the Term is a customer or client, or potential customer or client,
of Broadridge or any of its Affiliates with respect to the provision of
transaction processing or outsourcing business by Broadridge or its Affiliates,
(b) influence, or attempt to influence, any person, firm, corporation or other
entity who or which at any time during the Term was or is a customer or client
of Broadridge or any of its Affiliates to stop doing business with Broadridge in
connection with the transaction procession or outsourcing business by Broadridge
or its Affiliates or (c) influence, or attempt to influence, any person, firm,
corporation or other entity who or which at any time during the Term was or is a
customer or client, or potential customer or client, of Broadridge or any of its
Affiliates to do business with a competing entity to provide the transaction
processing or outsourcing business by Broadridge or its Affiliates. The
restriction in this Section 17.B(ii) shall not be construed to prohibit Penson
or any of its Affiliates from continuing to call on solicit any person, firm,
corporation or other entity who or which was the subject of active calls or
solicitation by Penson or one of its Affiliates during the six (6) month period
immediately prior to the Effective Date.

 

  C. Equitable Remedies. In the event of a breach or a threatened breach by
either party of any of the provisions of Section 17.A (Non-Competition) or
Section 17.B (No Solicitation), each party acknowledges that the other party
will suffer irreparable damage or injury not fully compensable by money damages,
or the exact amount of which may be impossible to obtain, and, therefore, will
not have an adequate remedy available at law. Accordingly, the non-breaching
party will be entitled to obtain such injunctive relief or other equitable
remedy, without the necessity of posting bond therefor, from any court of
competent jurisdiction as may be necessary or appropriate to prevent or curtail
any such breach, threatened or actual. The foregoing will be in addition to any
other rights the non-breaching party may have at law or in equity, including,
without limitation, the right to sue for damages.

 

18. TERMINATION.

 

  A. [****]

 

  B. [****]

 

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  C. Insolvency. This Master Services Agreement or the applicable Schedule shall
terminate immediately upon the occurrence of any of the following events:

 

  (i) (a) a party applies for or consents to the appointment of a receiver,
trustee or liquidator for substantially all of its assets, or such a receiver,
trustee or liquidator is appointed for the other party; (b) a party has filed
against it an involuntary petition for bankruptcy that has not been dismissed
within sixty (60) days thereof, or files a voluntary petition for bankruptcy or
a petition or answer seeking reorganization; (c) a party admits in writing its
inability to pay its debts as they mature; or (d) a party makes an assignment
for the benefit of creditors; or

 

  (ii) a party becomes subject to a consent decree, settlement agreement,
enforcement decision, stipulation, letter of acceptance, waiver and consent, or
other order from a governmental regulatory body, self-regulatory organization,
exchange, or other financial services regulatory or self-regulatory authority
that makes it impossible or impractical for Broadridge or Ridge to perform or
Penson or Client to receive the Services.

 

  D. Force Majeure Event. Penson may terminate a Schedule upon notice to
Broadridge in the event a Force Majeure Event (as defined below) continues to
prevent the performance of the Services under such Schedule for more than a
period of thirty (30) days.

 

  E. [****].

 

  F. [****].

 

  G. Termination Relating to Service Levels. Notwithstanding anything to the
contrary, the Service Level Agreement shall specify mutually agreed-to
termination rights with respect to Service Level failures.

 

  H. Additional Termination Rights. Penson’s termination rights described herein
are in addition to, and shall not limit, the termination rights of the
applicable Client Local Affiliate in the applicable Schedule.

 

  I. [****].

 

  J. Termination Fees. Except as set forth in Sections IV.B (Client Local
Affiliate’s Termination) of any Schedule, no termination fees or termination
charges of any type shall be payable by Penson or Client to Broadridge or Ridge
in connection with the expiration or any termination of this Master Services
Agreement or Schedule in whole or by service.

 

  K. Survival. Upon expiration or termination of this Master Services Agreement,
the following sections shall survive: 1.A (ii) (Services Schedules), 1.B
(Certain Defined Terms)), 2.B (Transition Services), 3 (Charges) (with respect
to periods to and including the effective date of expiration or termination),
5 (Communications Lines and Equipment), 9.A (Ownership), 9.C (Return or
Destroy), 10 (Confidentiality), 11 (Personal Information), 12 (Data Security and
Access), 14 (Indemnity), 15 (Limitation of Liability), 16 (Laws and Governmental
Regulation), 17.A (Non-Competition), the last sentence of Section 18.B (Client’s
Material Breach), 18.K (Survival), 18J (Termination Fees), 19 (General) and any
additional provisions of this Master Services Agreement and a Schedule that by
their nature continue to survive any expiration or termination of this Master
Services Agreement or such Schedule.

 

  L. Failure to Close Asset Purchase Agreement. The Agreement shall terminate
automatically without payment of any termination fees or termination charges by
either party pursuant to this Agreement in the event the Asset Purchase
Agreement is terminated in accordance with its terms.

 

19. GENERAL.

 

  A. No Inducements. Each party acknowledges that it has not been induced to
enter into this Master Services Agreement or any of the Schedules by any
representation or warranty not set forth in this Master Services Agreement or
the Schedules.

 

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  B. Assignment. Neither this Master Services Agreement or any Schedule, nor any
of the rights, duties or obligations hereunder, may be delegated or assigned by
a party hereto or thereto without the prior consent of the other party hereto
except to an Affiliate or as part of any corporate reorganization, including,
without limitation, any merger, consolidation acquisition or amalgamation in
which all or substantially all of its assets or equity ownership are transferred
or as part of any sale of all or substantially all of the capital stock or
assets.

This Master Services Agreement and each Schedule shall be binding upon and shall
inure to the benefit of the parties hereto and thereto and their respective
successors and permitted assigns.

 

  C. Severability. If any provision of this Agreement (or any portion hereof) is
held to be invalid, illegal or unenforceable, then the validity, legality or
enforceability of the remainder of this Agreement shall not in any way be
affected or impaired thereby.

 

  D. Notices. All notices, consents, approvals, agreements, authorizations,
acceptances, rejections, requests and waivers under this Agreement must be in
writing and shall be forwarded by registered or certified mail or nationally
recognized overnight courier and sent to Broadridge, Ridge, Penson and Client at
the addresses set forth on the first page of this Master Services Agreement or
to any other address designated in writing hereafter. In the case of notices to
Penson or Client, Attention: President, with a copy to Penson Financial
Services, Inc, 1700 Pacific Ave., Ste. 1400 Dallas, TX 75201, Attention: General
Counsel. Any notice to Broadridge or Ridge shall be sent Attention: President,
with a copy to Ridge Clearing & Outsourcing, Inc., 1981 Marcus Avenue, Lake
Success, New York 11042, Attention: General Counsel.

 

  E. Headings. The headings in this Master Services Agreement and the Schedules
are intended for convenience of reference and shall not affect their
interpretation.

 

  F. Counterparts. This Master Services Agreement and any Schedule may be
executed in counterparts, each of which shall be deemed an original agreement,
but all of which together shall constitute one and the same instrument. This
Master Services Agreement and any Schedule may be executed by facsimile
signature.

 

  G. Equitable Relief. In the event of a breach or a threatened breach by either
party or any of its Affiliates of any of the provisions of Section 7.A (Use of
the Service), Sections 9 (Ownership and Use of Ridge Products),
10 (Confidentiality), 11 (Personal Information) or 17 (Non-Competition and
Non-Solicitation), each party acknowledges that the other party may suffer
irreparable damage or injury not fully compensable by money damages, or the
exact amount of which may be impossible to obtain, and, therefore, may not have
an adequate remedy available at law. Accordingly, the non-breaching party will
be entitled to seek to obtain such injunctive relief or other equitable remedy,
without the necessity of posting bond therefor, from any court of competent
jurisdiction as may be necessary or appropriate to prevent or curtail any such
breach, threatened or actual. The foregoing right will apply without having to
follow any dispute resolution process or procedure set forth elsewhere in this
Agreement. The foregoing will be in addition to any other rights the
non-breaching party may have under this Agreement, at Law or in equity,
including, without limitation, the right to sue for damages or terminate this
Agreement.

 

  H. Governing Law. This Master Services Agreement and the Schedules shall be
governed by, and construed and enforced in accordance with, the Laws of New York
applicable to agreements wholly to be executed and to be performed therein.

 

  I. Independent Contractor. Broadridge and Ridge are independent contractors
and their personnel are not Penson’s or Client’s agents or employees for
federal, provincial, or local tax purposes or any other purposes. Broadridge and
Ridge, and not Penson or Client, are solely responsible for the compensation of
personnel assigned to perform Services hereunder, and payment of worker’s
compensation, disability, and other similar benefits, unemployment and other
similar insurance, for withholding income and payroll taxes and for verifying
the work eligibility of each person performing services hereunder.

 

  J. Relationship of Parties. Nothing contained in this Master Services
Agreement or any Schedule, nor shall any activity hereunder, create a general or
limited partnership, association, joint venture or agency relationship between
Penson and Broadridge or the applicable Client Local Affiliate and Ridge Local
Affiliate.

 

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  K. Cumulative Remedies; Waiver. The enumeration herein of specific remedies
shall not be exclusive of any other remedies. Subject to Section 18.I (Timely
Exercise of Termination Rights), the waiver by either party of a breach of or a
default under any provision of this Agreement shall not be effective unless in
writing and shall not be construed as a waiver of any subsequent breach of or
default under the same or any other provision of this Agreement.

 

  L. Third-Party Beneficiaries. This Master Services Agreement is by and between
Broadridge and Penson only (and the Schedules are by and between the applicable
Ridge Local Affiliate and the applicable Client Local Affiliate only) and,
except as otherwise provided in Sections 14 (Indemnity) and 15 (Limitation of
Liability), above, is not intended to confer and shall not confer any benefits
or rights upon any other persons not expressly made parties hereto, including,
without limitation, customers of Penson or service providers of Broadridge.

 

  M. Force Majeure. In no event shall either party be liable or deemed to be in
default for any delay or failure to perform under this Agreement resulting
directly or indirectly from any cause beyond its reasonable control, including,
without limitation, acts of God, acts of the public enemy, acts of the
governments, fires, floods, epidemics, quarantine restrictions, acts of
terrorism, riots and freight embargoes (“Force Majeure Event”); provided that
(1) the non-performing party (and the suppliers and contractors of such party)
are without material fault in causing the default or delay and (2) the default
or delay cannot be reasonably circumvented by the non-performing party through
the use of commercially reasonable alternative sources, workarounds, plans or
other means (including, without limitation, with respect to Ridge, by Ridge
meeting its obligations to provide disaster recovery and business continuity
services, except to the extent that provision of such services is itself
prevented by a Force Majeure Event). Notwithstanding the foregoing, in every
case the party claiming excusable delay shall use its commercially reasonable
efforts to prevent and mitigate the effect and length of such Force Majeure
Event. Performance times under this Agreement shall be considered extended for a
period of time equivalent to the time lost because of any delay which is
excusable under this Section 19.M (Force Majeure). If Ridge fails to provide the
Services due to a Force Majeure Event for more than five (5) days, the fees
under this Agreement shall be adjusted in a manner such that Penson and Client
are not responsible for the payment of any fees (or other charges) for Services
that Ridge fails to provide.

 

  N. Disaster Recovery and Business Continuity. Ridge shall maintain the
disaster recovery and business continuity services as set forth in Attachment E
(Disaster Recovery; Business Continuity) to the applicable Schedule. Ridge shall
implement its disaster recovery and business continuity plans as required,
including, without limitation, in the event of a Force Majeure Event (except to
the extent that provision of such services is itself prevented by a Force
Majeure Event, in accordance therewith).

 

  O. Step In Rights. If Ridge fails to provide any Services and such failure
would give rise to a right for Penson to terminate this Master Services
Agreement or a Schedule pursuant to Section 18.A (Ridge’s Material Breach),
Penson or Client may, subject to following, take control of the part of the
Services that is impacted and, in doing so, may take such other action as is
reasonably necessary to restore the Services. In no event may Penson or Client,
or its agents, take control of any of the Services pursuant to this Section 19.O
(Step In Rights) to the extent doing so would cause Broadridge or Ridge to be in
breach of any agreement it has with any third party. If Penson or Client’s
election to take control of the part of the Services that is impacted will
require Penson or Client to enter Ridge locations, the provisions of Exhibit D
(Step In Rights) shall apply. Ridge shall cooperate fully with Penson or Client
and its agents and provide all reasonable assistance at no charge to Penson or
Client to restore such Services as soon as possible, including, without
limitation, giving Penson or Client and its agents all requested access to
Ridge’s premises, equipment, software (including, without limitation,
third-party software) and materials. Penson or Client shall disrupt Ridge’s
operations or compromise the confidentiality of any other clients of Ridge.

 

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  P. Integration; No Modification. This Master Services Agreement, the Schedules
and the agreements, instruments and documents referred to in this Master
Services Agreement and the Schedules contain the entire agreement of the parties
with respect to its subject matter and supersede all existing agreements and all
other oral, written or other communications between them concerning their
subject matter. This Master Services Agreement and the Schedules shall not be
modified in any way except by a writing signed by both parties.

 

  Q. Use of Name; Press. Each party agrees that neither it nor any of its
Affiliates will display or use any of the other party’s or such party’s
Affiliates’ trade-marks, trade names, logos or any other intellectual property
or issue any press release or other public statement or notice identifying the
other party or its Affiliates or any Customers as customers or otherwise
relating to this Agreement or the relationship between Broadridge and Ridge and
Penson and Client and/or their Affiliates without the prior consent of the other
party, which consent shall not be unreasonably withheld. In the event that a
party is required to disclose this Agreement or its existence by Law or to one
of its regulators (e.g., publicly filing this Agreement with the United States
Securities and Exchange Commission) the parties shall inform each other in
writing of such requirement and cooperate in good faith in order for this
Agreement to be redacted and afforded as much confidential treatment as is
feasible. Any consent of by either party required by this Section 19.P
(Integration; No Modification) shall be obtained from an officer holding a title
of Executive Vice President or higher.

 

  R. Claims. Any claims by Broadridge or a Ridge Local Affiliate under this
Master Services Agreement or a Schedule shall be brought by Broadridge and
Broadridge shall enforce the applicable provisions of this Master Services
Agreement or a Schedule to the same extent as a Ridge Local Affiliate as if such
Ridge Local Affiliate was a party to this Master Services Agreement. As such, in
no event shall a Ridge Local Affiliate be entitled to bring any claim against
Penson, or the applicable Client Local Affiliate, under this Master Services
Agreement or a Schedule. Notwithstanding the foregoing provisions of this
paragraph, a Ridge Local Affiliate may bring a claim against the Client Local
Affiliate that is party to such Schedule in the applicable Territory only to the
extent such claim is required by Law to be brought in such Territory. Broadridge
shall in such instance remain responsible for and shall oversee such claim and
such claim shall be subject to the limitations on liability in this Master
Services Agreement.

Any claims by Penson or a Client Local Affiliate under this Master Services
Agreement or a Schedule shall be brought by Penson and Penson shall enforce the
applicable provisions of this Master Services Agreement or a Schedule to the
same extent as a Client Local Affiliate as if such Client Local Affiliate was a
party to this Master Services Agreement. As such, in no event shall a Client
Local Affiliate be entitled to bring any claim against Broadridge, or the
applicable Ridge Local Affiliate, under this Master Services Agreement or a
Schedule. Notwithstanding the foregoing provisions of this paragraph, a Client
Local Affiliate may bring a claim against the Ridge Local Affiliate that is
party to such Schedule in the applicable Territory only to the extent such claim
is required by Law to be brought in such Territory. Penson shall in such
instance remain responsible for and shall oversee such claim and such claim
shall be subject to the limitations on liability in this Master Services
Agreement.

For clarity, Broadridge and Penson shall be entitled to the benefit of all
rights, defenses, counterclaims and other protections to which the Ridge Local
Affiliate or Client Local Affiliate, as applicable, may be entitled with respect
to any such cause of action under this Master Services Agreement or a Schedule.

 

  S.

Audit. Broadridge and Ridge shall maintain such books and records as are
(a) necessary to demonstrate Broadridge’s and Ridge’s compliance with its
obligations under this Agreement, (b) necessary to verify Service volumes and
fees and (c) necessary to comply with all applicable Ridge Laws and
(d) necessary to document any Compliance Directives implemented pursuant to the
provisions of Section 16.C (Compliance Directives) above. Broadridge and Ridge
shall provide to Penson, Client and their auditors access at all reasonable
times and after reasonable notice (not to exceed thirty (30) days unless a
shorter period is required by a Governmental Authority) to any Ridge service
location, to Ridge personnel providing the Services, and to data and records
relating to the Services and Broadridge’s or Ridge’s performance under this
Agreement, for the purposes of performing audits and inspections of
(i) Broadridge’s or Ridge’s compliance with the provisions of this Agreement,
including, without limitation, the fees charged to Client and (ii) Penson,
Client and their businesses to verify the integrity of Client Information and to
examine the Software and Ridge Products and systems that process, store, support
and transmit that Information. Additionally, during the Term, Broadridge and
Ridge shall obtain and have performed and provide

 

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Penson’s and Client’s internal and external auditors and regulators with
attested locally applicable audit reports (e.g., Model A / Model B Assurance
Report on Internal Controls (AAF), Canadian Institute of Chartered Accountants
Section 5970 and SAS-70 Type II audit reports) (the “Audit Reports”) on an
annual basis each for a period to end on September 30th of each calendar year
and delivered no later than November 15 th of each calendar year. Broadridge and
Ridge shall additionally provide Penson’s and Client’s internal and external
auditors, at Penson’s and Client’s request with any reasonable additional
information and assistance as may be reasonably requested by Penson and Client
(including, without limitation, with requests, reports and information relating
to compliance with SARBOX or equivalent regulatory requirements).

 

  T. Insurance. Ridge shall, throughout the Term and the Transition Period,
directly or through the insurance programs of Broadridge, maintain in full force
and effect from a third party that is rated “A-” or better in Best’s Insurance
Guide at a minimum the following insurance coverage for its operations
worldwide:

 

  (i) A policy of workers’ compensation insurance (as required by the applicable
Law) on its employees. Such policy shall provide statutory limits and contain
employer’s liability coverage in an amount not less than U.S. $1,000,000.

 

  (ii) Commercial general liability insuring against bodily injury, property
damage, contractors’ completed operations and contractual liability with a
combined single limit of not less than U.S. $1,000,000 per claim.

 

  (iii) Professional liability and errors and omissions insurance in an amount
not less than U.S. $25,000,000 per claim.

 

  (iv) Comprehensive crime insurance, including, without limitation, employee
dishonesty and computer fraud, with coverage limits of at least U.S. $10,000,000
in the annual aggregate. The policy shall provide coverage for fraud or
dishonesty by Ridge personnel whether acting alone or in collusion with others,
and whether acting from Ridge service locations or remote locations.

 

  (v) Umbrella/Excess liability coverage of not less than U.S. $25,000,000 over
the coverages shown above.

Penson and Client shall be named as additional insureds under the policies
described in Section 19.T(ii) under which the aforesaid insurance is provided.
Insurance carried on a claims made basis shall be maintained for two (2) years
after the expiration or termination of the Term. For the avoidance of doubt, any
policy amounts or limitations shall not in any event be construed as limitations
on Ridge’s liability under this Agreement, nor shall they be construed as
expanding Broadridge’s or Ridge’s liability under this Agreement. Ridge shall
furnish Penson and Client with certificates of insurance evidencing the above
coverages and providing for at least thirty (30) days prior notice to Penson and
Client of cancellation or non-renewal; provided, however, that Ridge shall not
be obligated to provide such notice if, concurrently with such cancellation or
non-renewal, Ridge provides self insurance as described below or obtains
coverage from another insurer meeting the requirements described above.
Notwithstanding the foregoing, so long as Ridge maintains a credit rating that
is not significantly worse than its credit rating as of the Effective Date,
Ridge reserves the right to self insure coverage, in whole or in part, in the
amounts and categories designated above, in lieu of Ridge’s obligations to
maintain insurance as set forth above, at any time.

*                        *                         *                        *

 

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BROADRIDGE FINANCIAL SOLUTIONS, INC.    PENSON WORLDWIDE, INC. Approved by:   

/s/    John Hogan

   Approved by:   

/s/    Daniel P. Son

   (signature – Authorized Officer)       (signature – Authorized Officer) Name:
   John Hogan    Name:    Daniel P. Son    (type or print)       (type or print)
Title:    President    Title:    President    (type or print)       (type or
print) Dated as of:    November 2, 2009    Dated as of:    November 2, 2009

THIS AGREEMENT SHALL BECOME EFFECTIVE UPON BEING SIGNED BY AN AUTHORIZED OFFICER
OF BOTH BROADRIDGE AND PENSON.

 

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Exhibit A

Intentionally left blank.

 

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Exhibit B

Ridge Data Security Measures

Broadridge and Ridge will carry out the following procedures to protect Client
Information:

 

1.    Maintain a Corporate Security Policy reviewed regularly and approved by
Broadridge Executive Management and Ridge Executive Management. 2.    Protect
against threats or hazards to confidentiality, availability, and integrity of
data and systems through the use of static and or dynamic vulnerability
assessment tools. 3.    Employ public or financial industry standards of
encryption, when communicating Client Information over untrusted networks, or
when transporting confidential information on mobile devices, USB media, and
backup media. 4.    Prohibit unauthorized physical access to systems as well as
employ facilities protection measures to deter, prevent and track unauthorized
access. 5.    Develop operational processes to ensure segregation of duties and
maintain access controls to critical resources. 6.    Develop internal processes
to limit and track all administrative functions. 7.    Develop documented
procedures for system configuration to eliminate potential for unauthorized
access. 8.    Employ firewall security and prohibit system administrative
functions through remote internet access to the firewall. 9.    Employ a
documented process and application development standards based upon reasonable
security development practices. 10.    Perform backups of system, application,
and data with reasonable procedures and frequency. Maintain backup information
in secure off-site storage. 11.    Employ industry reasonable best practices
procedures to ensure personnel security and ensure personnel understanding of
security processes and procedures. 12.    Develop documented procedures for the
retention and destruction of computer media and documents in electronic or paper
form. 13.    Perform background checks on all of its new hires who are involved
in performing the Services under this Agreement in accordance with Broadridge’s
and Ridge’s policies. 14.    Implement and maintain an information security
program with a dedicated program manager. 15.    The program shall have the
stated objective of continuously improving and monitoring performance of current
and future security initiatives. 16.    Comply with legislative and regulatory
requirements based on the jurisdiction of the information. 17.    Monitor and
log all access to data center facilities. 18.    Implement and maintain adequate
system logging to monitor and control changes to the production environment. 19.
   Implement and maintain adequate application logging to monitor and control
all changes to the production data and operational environment. 20.    Implement
data destruction procedures to eliminate the risk of data compromise on
decommissioned systems and media. (similar to 12 – but it sounds like they are
aiming for e-discovery). 21.    Implement and maintain a training program for
developers, administrators, and IT staff which covers topics specific to their
duties and expertise (secure development, server hardening, etc.).

 

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Exhibit C

Governance Structure

 

I. INTRODUCTION

This Exhibit provides the Governance Structure, which details: (i) those roles
and responsibilities of both parties that are required to maintain an effective
working relationship and (ii) reporting mechanisms to be established and
implemented by the parties to enable Penson and Client to review and evaluate
the performance of the Services by Ridge as part of Penson’s and Client’s
ongoing duties to supervise and control their business activities as a clearing
broker and to conduct continuing due diligence with respect to Ridge’s ability
to provide the Services.

The Governance Structure is intended to:

 

¨ Set forth the procedure for reporting by Ridge, and the related monitoring of
the performance of the Services.

 

¨ Maintain current knowledge of business direction and strategy.

 

¨ Maintain control of all Changes, and changes that are made to business
processes or any of the Services and manage associated financial, technical and
operational risks.

 

¨ Maintain disciplined management regarding cost, quality and each party’s
compliance with its contractual commitments and the Laws and Rules.

 

¨ Provide general oversight and consolidated performance reporting.

 

¨ Provide a clear route for program reporting; issue escalation and resolution
and risk management.

 

II. GOVERNANCE BODIES AND RESPONSIBILITIES

Governance Structure

The following joint governance bodies (“Governance Bodies”) will be established
no later than ninety (90) days after the Effective Date:

 

  •  

Executive Governance Committee

 

  •  

Business Governance Committees

 

2.1.1 Meetings: The parties agree that meetings within and among the various
Governance Bodies shall be part of the normal operations and are necessary
(i) to provide the most effective level for the performance of duties under the
Schedule and (ii) as part of Penson’s and Client’s ongoing duties to supervise
and control its business activities as a clearing broker and to conduct
continuing due diligence with respect to Ridge’s ability to provide the
Services. Meetings of the various Governance Bodies may be held either in person
or telephonically. As a general rule, meetings shall be held in person, with
telephone meetings being the exception and only as mutually agreed to by the
parties. The venue for meetings shall take into account both parties’ mutual
interest in minimizing costs, and each party shall be responsible for its own
costs and expenses with regard to attendance at meetings. The frequency of
meetings for each Governance Body is set forth below.

 

2.1.2 Members: The members of each Governance Body are set forth below. If a
party’s representative in a Governance Body ceases to be a member of such
Governance Body, that party shall, within thirty (30) days, notify the other
party of the replacement who shall be an individual of equivalent standing and
expertise. The other party’s consent to such proposal may not unreasonably be
withheld or delayed.

 

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Executive Governance Committee

The Executive Governance Committee (“EGC”) shall not be involved in day-to-day
management of this Master Services Agreement or a Schedule, but shall retain
overall accountability for this Agreement in addition to the business
relationship.

 

2.2.1 Key Responsibilities: The following key responsibilities shall be subject
to and in accordance with the terms and conditions of this Agreement:

 

¨ To monitor and direct the strategic relationship between Penson and Client and
Broadridge and Ridge.

 

¨ To provide an “interface” to the executive teams of the parties by providing
regular feedback on progress and achievements to executive meetings.

 

¨ To review long term plans, business trends and directions.

 

¨ To oversee compliance with terms and conditions of this Agreement and monitor
that regulatory developments are addressed.

 

¨ To consult on specified material industrial or public relations matters in
connection with the Services.

 

¨ To review overall performance of the Services including, without limitation,
financial performance investments and the effectiveness of gain/risk share
arrangements.

 

¨ To resolve issues and/or disagreements escalated by the Business Governance
Committees.

 

¨ To examine and authorize Changes.

 

¨ To examine and authorize proposals for amendments to the Schedules.

 

¨ To review new policies or changes to existing policies.

 

2.2.2 Specific Functions

 

¨ Review of select reports that are reflective of the performance of Ridge in
fulfilling the agreed upon Service Levels, in maintaining accurate books and
records, and adherence to various polices, procedures and regulations.

 

¨ Review of the results of select, completed SRO examinations and audit reports
of Broadridge and Ridge and Penson and Client business units.

 

¨ Review of the feedback provided by key business stakeholders within Penson and
Client and Penson’s and Client’s introducing brokers.

 

¨ The EGC will also address:

 

  •  

The Service Levels being provided by Ridge

 

  •  

Broadridge’s and Ridge’s and Penson’s and Client’s adherence to existing
polices, procedures and the Laws and Rules

 

  •  

The resolution of any unresolved disputes and controversies between the parties

 

  •  

The results of all audits conducted by Penson and Client as well as all SRO
examinations

 

  •  

Broadridge’s, Ridge’s and Penson’s and Client’s readiness in preparing for new
regulations and/or industry mandates

 

  •  

Any changes in the strategic direction of Broadridge or Ridge

 

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2.2.3 Meetings: Meetings shall take place quarterly, until otherwise agreed by
the parties. Each meeting of the EGC shall be attended by at least two members
from each of Broadridge and Ridge and Penson and Client.

 

2.2.4 Unresolved Disputes: In the event that the EGC cannot arrive at a mutually
agreeable solution to any dispute or disagreement that is escalated to it, the
dispute or disagreement shall be submitted to non-binding mediation prior to and
as a condition precedent to the commencement of litigation under the Schedule.
Said mediation shall be conducted by and in accordance with the mediation
procedures of FINRA. The costs of the mediation shall be borne equally by the
parties. All statements of any nature made in connection with this mediation
shall be privileged and shall be inadmissible in any subsequent arbitral
proceeding involving or relating to the claims at issue in the mediation.

 

2.2.5 Members of the EGC:

 

  The members of the EGC shall include an equal number of executive officers
from both parties.

Business Governance Committees

 

2.3.1 Structure:

 

¨ The parties to each Schedule shall establish a Business Governance Committee.

 

2.3.2 Purpose:

 

¨ Provide operational leadership for the Services, including, without
limitation, the delivery of the Services and initial strategic initiatives.

 

2.3.3 Key Responsibilities: The following key responsibilities shall be subject
to and in accordance with the terms and conditions of the applicable Schedule:

 

¨ Regularly establish audit and review responsibilities of Broadridge and Ridge,
in accordance with the applicable Schedule.

 

¨ Draft and update template Certification Reports, and Corrective Action
Certifications.

 

¨ Approve Services plans and guide overall activities.

 

¨ Review and approve business and technical proposals that impact the business
case for the Services.

 

¨ Review select reports to monitor performance of the Services, including,
without limitation, adherence to Service Level Agreements, the agreed-upon code
of conduct and to all laws.

 

¨ Review dependencies between Service areas.

 

¨ Assess operational and financial risk.

 

¨ Identify certain material current or future events that may affect Services.

 

¨ Resolve conflicts relating to Services where these are escalated by management
of the parties.

 

¨ Discuss and implement Changes, projects or new services that should be agreed
at a level above the day-to-day management team; part of this role shall be to
coordinate the scope of “Change” in the context of its impact on units in the
field and on central functions.

 

¨ Prepare and implement any necessary amendments to the applicable Schedule
within the authority of the team (which shall not include any authority to agree
to any new Services).

 

¨ Monitor compliance with the Laws and Rules and address routine compliance
issues.

 

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2.3.4 Members of the Business Governance Committee:

 

  The members of the Business Governance Committee (“BGC”) shall include an
equal number of senior officers from both parties to the applicable Schedule.

 

2.3.5 Meeting

 

  The BGC meetings shall be held monthly or as either party to the applicable
Schedule may reasonably request. Relevant Penson and Client representatives and
Broadridge and Ridge representatives shall also participate and provide input as
required.

 

III. REPORTS

To facilitate Penson’s and Client’s ongoing duties to supervise and control its
business activities as a clearing broker and to conduct continuing due diligence
with respect to Ridge’s ability to provide the Services, Broadridge and Ridge
shall provide or cause to be provided to Penson and Client copies of mutually
agreed-upon reports. All reports are run daily, except where noted.

The parties agree to update the list of reports from time to time as the parties
deem necessary to effect the purposes described above, in each case as mutually
agreed by the parties in writing.

 

IV. CHANGE CONTROL

Changes

The parties recognize that during the Term there may be changes to the Services
(as agreed upon by Ridge and Client) or the terms and conditions of this
Agreement (as agreed upon by Broadridge and Penson) either on a temporary or
permanent basis (each, a “Change”). Any such Changes shall be addressed and
processed through the “Change Control Procedure” set forth below. Except as set
forth in this Section IV regarding Mandatory Changes or as otherwise expressly
agreed between the parties in writing, until any Change is agreed between Ridge
and Client or Broadridge and Penson, as applicable, in accordance with the
Change Control Procedure, Ridge shall continue to perform the Services and be
paid the amounts set forth under this Agreement as if the Change had not been
requested. Notwithstanding the preceding sentences of this Section IV or any
provision of the Schedule (including, without limitation, the Attachments) to
the contrary, the parties shall consider all proposed Change Requests in good
faith through the Governance Structure, but shall not be required to agree to
the terms and conditions of any proposed Change.

Change Control Procedure

 

4.1 All Change Requests (defined below) and Changes shall be dealt with in
accordance with the procedure set forth below. Changes shall be effective only
if made in writing and signed by an officer of the parties who is authorized to
execute such documents under the terms and conditions of the Schedule and in
accordance with this Exhibit.

 

4.2 At any time and for any reason, either party may request a Change (each, a
“Change Request”). Each Change Request shall be submitted in writing to the
other party, and shall specify in reasonable detail:

 

  (a) any proposed Change;

 

  (b) the impact of the proposed Change on the existing Services;

 

  (c) any amendment to this Schedule required by the proposed Change;

 

  (d) other details which the other party might reasonably agree to include in
the Change Request; and

 

  (e) any other details set forth in the Change Request and Approval Form
(defined below).

 

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4.3 If Broadridge or Ridge submits the Change Request, it must set forth, if
appropriate, in reasonable detail any proposed adjustments to the fees and/or
any other pricing mechanisms to be charged or used under the applicable
Schedule, including, without limitation, any additional costs or expenses which
shall be incurred by Penson or Client if and to the extent that the Change
Request is approved.

 

4.4 If Penson or Client submits a Change Request, Broadridge and Ridge shall
evaluate the Change Request and, within ten (10) business days, submit a
response setting forth in reasonable detail:

 

  (a) with respect to Changes other than Mandatory Changes, whether or not
Broadridge and Ridge are prepared in principle to agree to the proposed Changes;

 

  (b) any adjustments to the fees and/or other pricing mechanisms to be charged
or used under the applicable Schedule that Broadridge and Ridge may propose,
including, without limitation, any additional costs or expenses that shall be
incurred by Penson or Client in the event the Change Request is approved; and

 

  (c) a good faith estimate of the effective date for the Change.

 

4.5 If Broadridge or Ridge requires more time to respond, due to the nature or
complexity of Penson’s or Client’s proposed Change Request or otherwise,
Broadridge or Ridge shall so inform Penson or Client and Broadridge or Ridge
shall have a reasonable amount of additional time to respond.

 

4.6 If Broadridge or Ridge submits a Change Request, Penson and Client shall
evaluate the Change Request and, within ten (10) business days, submit a
response setting out in reasonable detail:

 

  (a) whether or not Client are prepared in principle to agree to the proposed
Changes; and

 

  (b) Penson’s and Client’s response to Broadridge’s or Ridge’s proposed
Changes, including, without limitation, any proposed Changes to the Service
Charges and/or other pricing mechanisms provided in the applicable Schedule.

 

4.7 If Penson or Client requires more time to respond because of the size or
complexity of Broadridge’s or Ridge’s proposed Change Request or otherwise,
Penson or Client shall so inform Broadridge or Ridge and Penson or Client shall
have a reasonable amount of additional time to respond.

 

4.8 Once a response to the Change Request has been submitted, the parties shall
discuss the proposed Change and any related matters.

 

4.9 Changes shall become effective upon execution and delivery by both parties
of an amendment to this Master Services Agreement or the applicable Schedule
affecting such Change, which amendment shall be executed promptly and shall
include all relevant changes to this Master Services Agreement or the applicable
Schedule.

 

4.9 Each party shall bear its respective costs associated with proposing,
considering, responding to or otherwise dealing with Change Requests and
responses in accordance with this Exhibit, unless the parties otherwise agree in
writing.

Mandatory Changes

Notwithstanding any provision to the contrary in this Section IV or elsewhere in
this Agreement, any of the following Changes shall be considered a “Mandatory
Change”: Changes that (a) involves a request by Penson or Client for the
provision of Services to a new Affiliate of Penson, (b) are necessary to
implement new or modified Penson or Client policies, which will in any event be
processed as a Change, (c) are necessary to effect compliance with a new or
modified Client Law, Compliance Directive or Ridge Law or (d) are identified in
this Agreement as a Mandatory Change or a Change that is to be implemented in
accordance with the Change Control Procedures applicable to Mandatory Changes.
Upon receipt of a request for a Mandatory Change, and subject to the
“Development Scheduling” Service Level, Broadridge or Ridge shall provide a fee
estimate for each Mandatory Change and provide the schedule when such change
will be implemented. If such schedule is not acceptable to Penson or Client,
Broadridge or Ridge and Penson and Client shall negotiate in good faith an
accelerated schedule for the implementation of such change. Notwithstanding any
provision to the contrary in this Section IV, all Mandatory Changes shall be
implemented (i.e., neither party shall have the right to refuse to approve or
implement such Change) in accordance with the Change Control Procedures. Any
dispute or disagreement regarding any Mandatory Change (including, without
limitation, issues regarding fees, Service Levels, specifications for

 

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deliverables and the implementation of the Mandatory Change) shall not delay the
implementation of the Mandatory Change. For the avoidance of doubt, the Change
Control Procedures applicable to Mandatory Changes shall not apply to, and shall
not relieve Broadridge or Ridge from, changes Broadridge or Ridge is otherwise
required to make pursuant to this Agreement.

 

V. FEE DISPUTES

In accordance with Section 3.E (Payment) of this Master Services Agreement,
Client may withhold the portion of an invoice for particular fees, subject to a
bona fide dispute. Upon receipt of a Dispute Notice, the parties shall
immediately meet (including, without limitation, by telephone conference) to
attempt to resolve the dispute. If the parties are unable to resolve the dispute
at such meeting (a “Payment Dispute”) then either party may implement the
following expedited payment dispute escalation procedures:

 

5.1 Either party may initiate the expedited process by an arbitrator by sending
notice of such request to the other party and describing the dispute or
referencing this Section 5.1 (a “Dispute Notice”).

 

5.2 For five (5) business days after delivery of the Dispute Notice, the parties
each shall use good faith efforts to mutually agree upon an arbitrator. If the
parties are not able to agree upon an arbitrator within such period of time,
such arbitrator shall be selected in accordance with the International Institute
for Conflict Prevention and Resolution for Non-Administered Arbitration, or its
successor.

 

5.3 The arbitrator shall possess at least fifteen (15) years of relevant
experience in a law firm or corporate law department of over twenty-five
(25) lawyers or a judge of a court of general jurisdiction. The arbitrator shall
not have represented or acted on behalf of either party, or be otherwise
affiliated with or interested in either party.

 

5.4 Upon selection of the arbitrator, the parties shall agree on a schedule to
present the dispute to the arbitrator and obtain a decision as described herein,
during a time frame of no more than twenty (20) days. In the event the parties
cannot agree upon a schedule, the arbitrator shall provide a schedule. Each
party shall simultaneously submit a memorandum to the arbitrator that is not
more than ten (10) pages in length, accompanied by relevant documents and not
more than three (3) affidavits. After receiving and reviewing the memoranda and
supporting information, the arbitrator shall conduct a hearing of no more than
four (4) hours, that shall include not more than two representatives of each
party, at which the parties may present their case and shall submit to
questioning by the arbitrator. The arbitrator shall render his or her decision
within seventy-two (72) hours of the hearing.

 

5.5 The standard under which the arbitrator shall render his or her decision
shall be whether there exists a good faith basis for Client to withhold the
disputed charges under the terms and conditions of this Master Services
Agreement and the applicable Schedule. The arbitrator shall issue his or her
decision in the form of a ruling on that single issue, and shall not provide any
written basis or support for his or her opinion. If the arbitrator determines
that Client had a good faith basis for withholding the disputed fees, then such
sums shall remain in Client’s possession. If the arbitrator determines that
Client did not have a good faith basis for withholding the disputed charges,
then Client shall pay such disputed fees to Broadridge or Ridge, under
reservation of rights, within ten (10) days after the date of the arbitrator’s
decision. After the arbitrator renders such decision, each party may pursue any
and all rights associated with the Payment Dispute through the dispute
escalation procedures set forth in this Exhibit. The decision of the arbitrator
shall have no force or effect other than for the limited purposes stated in this
Section 5.

 

5.6 The decision of the arbitrator and all communications, memoranda and
supporting documentation exchanged in connection with the procedures set forth
in this Section 5 shall be exchanged on a without prejudice basis and the
decision of the arbitrator and briefs of the parties shall be inadmissible in
any respect in any subsequent proceeding. All communications, memoranda,
supporting documentation, and the arbitrator’s decision shall be deemed
Information under this Agreement.

 

5.7 The arbitrator shall be compensated at his or her applicable billing rate,
which shall be split equally between the parties. Any costs incurred by either
party shall be borne by that party.

 

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MASTER SERVICES AGREEMENT

 

5.8 A party’s failure to commence or pursue the expedited procedures set forth
in this Section 5 shall not constitute, operate or be construed as a waiver of
any right the party may have under this Agreement.

 

VI. ACCEPTANCE

Without prejudice or limitation to any other rights or remedies of Client, new
Ridge Products shall be subject to acceptance testing by Client to verify that
such Ridge Products conform to the specifications provided in connection with
such Ridge Products (the “Acceptance Criteria”). When Ridge notifies Client that
a Ridge Product is ready for testing for conformance with the Acceptance
Criteria, Client may elect to test the Ridge Product to determine whether they
comply in all material respects with the Acceptance Criteria. Client shall have
thirty (30) business days to complete such testing. Upon completion of such
testing, Client shall promptly notify Ridge whether it has accepted such Ridge
Product (“Accept”), or whether it has identified discrepancies with the
Acceptance Criteria (“Reject”). If Client Accepts the Ridge Product it shall
issue a notice thereof. If Client Rejects the Ridge Product, Client shall
provide notice setting forth a list of items that Client claims must be
corrected and Ridge shall use commercially reasonable efforts to correct such
Ridge Product and the testing process shall resume as set forth above. If Client
does not provide notice to Ridge after such thirty (30) day period, then the
Ridge Products shall be deemed to be accepted.

 

35

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MASTER SERVICES AGREEMENT

 

Exhibit D

Step In Rights

 

1.1 If Penson or Client wishes to take action, either itself, through an
Affiliate or using a third party acting on its behalf, and such action involves
onsite access at a Ridge location, Penson or Client shall notify Broadridge or
Ridge of the following:

 

  (a) the action it wishes to be taken;

 

  (b) the reason for such action together with supporting evidence;

 

  (c) the date it wishes to commence such action; and

 

  (d) the estimated time period which it believes will be necessary for such
action.

 

1.2 Following service of such notice and subject to compliance with the other
terms and conditions of this Exhibit and the Agreement, Penson or Client shall
take such action as notified under Section 1.1 above and any consequential
additional action as it reasonably believes is necessary (together, the
“Required Action”) and Broadridge and Ridge shall give all reasonable assistance
to Penson or Client while it is taking the Required Action. Penson or Client
shall exercise its rights under this Exhibit reasonably and in a manner that
complies with applicable standard policies and procedures applicable to onsite
access at the Ridge locations (including, without limitation, policies relating
to access to other customers’ data).

 

1.3 Before ceasing the Required Action, if Penson or Client intends to hand the
Services back to Ridge, Penson or Client shall deliver notice to Broadridge,
specifying in reasonable detail (to the extent that it is reasonably practicable
in the circumstances):

 

  (a) the action it has taken; and

 

  (b) the date it plans to conclude such action

(the “Step Out Notice”).

 

1.4 Unless otherwise agreed by Broadridge or Ridge, Penson’s or Client’s right
to have onsite access to the Ridge locations for the purpose of exercising step
in rights under this Exhibit shall expire six (6) months after the date that
Client first has taken any Required Action onsite at a Ridge location, but only
if Penson or Client has not delivered a Step Out Notice prior to the date of
such expiration.

 

1.5 To the extent Penson or Client takes over responsibility for any of the
Services while onsite at a Ridge location during the exercise of its step in
rights, then Ridge shall not be responsible for meeting the Service Levels that
are associated with such Services, to the extent that Penson’s or Client’s
actions result in a failure to achieve Service Levels. Penson’s or Client’s
exercise of its step in rights shall not constitute a waiver by Penson or Client
of any termination rights or rights to pursue a claim for damages arising out of
the failure that led to the step in rights being exercised.

 

36

Broadridge/Penson Proprietary and Confidential

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NOTE: PORTIONS OF THIS AGREEMENT ARE THE SUBJECT OF A

CONFIDENTIAL TREATMENT REQUEST BY THE REGISTRANT TO THE

SECURITIES AND EXCHANGE COMMISSION. SUCH PORTIONS HAVE BEEN

REDACTED AND ARE MARKED WITH A “[****]” IN PLACE OF THE REDACTED

LANGUAGE.

Schedule A (United States)

SERVICE BUREAU AND OPERATIONS SUPPORT SERVICES SCHEDULE

To The Master Services Agreement

between

BROADRIDGE FINANCIAL SOLUTIONS, INC.

and

PENSON WORLDWIDE, INC.

This schedule (the “Schedule”), dated as of November 2, 2009 (the “Schedule
Effective Date”), between Ridge Clearing & Outsourcing Solutions, Inc. (“Ridge
Local Affiliate”) and Penson Financial Services, Inc. (“Client Local
Affiliate”), to the Master Services Agreement, dated as of the date hereof,
between Broadridge Financial Solutions, Inc. and Penson Worldwide, Inc., sets
forth the terms and conditions, in addition to the terms and conditions in the
Master Services Agreement, under which Ridge Local Affiliate will provide
service bureau and operations support services to Client Local Affiliate to
assist and support Client Local Affiliate in functioning as a clearing firm.
Each of Client Local Affiliate and Ridge Local Affiliate agrees to comply with
and fulfill all terms and conditions applicable to it under the Master Services
Agreement.

Unless otherwise defined herein, all capitalized terms shall have the meanings
given to them in the Master Services Agreement. In the event of a conflict
between the terms and conditions of this Schedule and the terms and conditions
of the Master Services Agreement, the terms and conditions of this Schedule
shall govern. The term “Client Local Affiliate” as used in this Schedule
includes all Affiliates, divisions and subsidiaries of Client Local Affiliate.
Except where otherwise indicated, all references in this Schedule to Sections or
Attachments are to Sections to, and Attachments of, this Schedule. The term
“party” as used in this Schedule means Ridge Local Affiliate or Client Local
Affiliate, as applicable. The term “parties” as used in this Schedule means
Ridge Local Affiliate and Client Local Affiliate.

 

I. SUBMISSION OF SCHEDULE

A. During the Schedule Term, Client Local Affiliate and Ridge Local Affiliate
shall each be subject, to the extent applicable to such party, to the provisions
of federal, state and local laws, rules and regulations and the constitution,
by-laws, rules, regulations and stated policies of the Securities and Exchange
Commission (“SEC”), the Financial Regulatory Authority (“FINRA”),

 

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the New York Stock Exchange, Inc. (“NYSE”), and any other securities exchange,
commission, association, regulatory or self-regulatory organization (“SRO”)
vested with authority over Client Local Affiliate or Ridge Local Affiliate (to
the extent applicable to a party, the “Laws and Rules”). Each party shall
perform its obligations under this Schedule in accordance with the Laws and
Rules.

B. Client Local Affiliate shall submit this Schedule to FINRA, or any other SRO,
as required, on behalf of itself and Ridge Local Affiliate for review and, if
necessary, approval. This Schedule shall not become effective until the date
upon which all necessary SRO approvals as to both parties are received (the
“Approval Date”); provided, however, that if no SRO approvals are required for
this Schedule to become effective, this Schedule shall become effective as of
the Schedule Effective Date. In the event that any such approval is required and
this Schedule is not so approved, the parties shall negotiate in good faith to
amend this Schedule as may be needed to obtain such approval. This Schedule will
be effective in connection with the Acquired Correspondents (“correspondents
receiving services under the Assigned Contracts (as such term is defined in the
Asset Purchase Agreement)”) upon the later of the Approval Date and the Closing
Date (as defined in the Asset Purchase Agreement.)

C. Ridge Local Affiliate acknowledges that Client Local Affiliate has regulatory
responsibilities as a clearing firm, including, among other things, a duty to
supervise the types of business in which it engages. To assist Client Local
Affiliate in satisfying such obligations, Ridge Local Affiliate agrees to
provide, at the reasonable request of Client Local Affiliate, performance
reports with respect to the Services and full access to relevant books and
records, information and Ridge Local Affiliate personnel engaged in providing
the Services. Ridge Local Affiliate acknowledges that Client Local Affiliate is
required, from time to time, to prepare and file reports with the SEC, FINRA,
NYSE and other SROs or Governmental Authorities. To assist Client Local
Affiliate in satisfying such requirements, Ridge Local Affiliate agrees to
provide Client Local Affiliate with information in its possession that is
necessary for Client Local Affiliate to prepare and file any such reports.

D. This Schedule is not intended, and shall not be construed, to limit, reduce,
or otherwise change any regulatory, contractual or other obligation that Client
Local Affiliate owes to a correspondent or to its customers.

 

II. SERVICES TO BE PERFORMED BY RIDGE LOCAL AFFILIATE

A. Subject to the second paragraph of Section 16.G of the Master Services
Agreement and Section I.B, Ridge Local Affiliate will perform the services,
functions and responsibilities described in Attachment A in accordance with the
terms and conditions of this Schedule and the Master Services Agreement.
Attachment A is hereby incorporated in and made an integral part of this
Schedule. Any additional services to be performed by Ridge Local Affiliate shall
be subject to the written agreement of the parties.

B. Ridge Local Affiliate represents and warrants that, in providing the
Services, the Transferred Operations Support Services (as defined in
Attachment A) and the Additional Technology Services (as defined in
Attachment A) to the Acquired Correspondents, Ridge Local Affiliate will be
providing to the Acquired Correspondents services, products and systems of an
identical or higher quality to the services, products and systems provided by
Ridge Local Affiliate to such Acquired Correspondents immediately prior to the
Schedule Effective Date.

 

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C. This Schedule and the Master Services Agreement are intended to create an
exclusive arrangement between Client Local Affiliate and Ridge Local Affiliate
with respect to the Services utilized by Client Local Affiliate as of the
applicable Live Date in the Territory for which a pricing schedule is included
in this Schedule except (A) as otherwise set forth in this Schedule and the
Master Services Agreement and (B) in the event that (i) Client Local Affiliate
or a Customer of Client Local Affiliate is prohibited by Law from receiving
Services from Ridge Local Affiliate in the Territory, (ii) Client Local
Affiliate obtains a business and in connection therewith is contractually
required to use an alternative system (and not the Services) as a condition of
obtaining such business or (iii) during any time period that Ridge Local
Affiliate is in material breach of this Schedule and has failed to cure such
breach within thirty (30) days following notice from Client Local Affiliate
specifying the nature of such breach in reasonable detail.

 

III. CONVERSION

A. Conversion of Client Correspondents. In connection with the conversion of the
correspondents of Client Local Affiliate, other than the Acquired
Correspondents, (“Client Correspondents”) to Ridge Local Affiliate, the parties
agree to the following:

 

  (i) Client Local Affiliate shall provide Ridge Local Affiliate with Client
Local Affiliate’s requirements with respect to the Client Local Affiliate files
and Service Levels applicable to the Client Correspondents (the “Client
Requirements”) after the Schedule Effective Date. The parties shall enter into a
statement of work (the “Conversion SOW”) that will describe Client Local
Affiliate’s migration to Ridge Local Affiliate’s service delivery and technology
platform [****]. The Conversion SOW will define the Target Live Date and
describe specific implementation activities and procedures required to migrate
Client Correspondents to the Ridge Local Affiliate, including, without
limitation, development, implementation and integration of Software and other
software and development and integration of correspondent clearing
functionalities, reporting and monitoring systems and such other services as may
be set forth in the Conversion SOW (the “Conversion Services”). Without limiting
the generality of the foregoing, the Conversion SOW shall (1) specify that Ridge
Local Affiliate will convert the applicable Client Local Affiliate files to make
them compatible with the Services and the other services, as may be required in
respect of the migration of Client Local Affiliate’s Customers to the Services
and (2) describe the development and integration of correspondent clearing
functionalities by Ridge Local Affiliate. The Conversion Services shall be
provided at no charge to Client Local Affiliate by Ridge Local Affiliate.

 

  (ii) The parties shall cooperate and provide each other with all information
and assistance reasonably required in connection with the Conversion Services.
Each party will assign a liaison person to assist and cooperate with the other
party in connection with the Conversion Services (which person may be replaced
by a party at its sole discretion from time to time by way of notice to the
other party).

 

IV. TERM OF SCHEDULE

A. Schedule Term. The term of this Schedule (the “Schedule Term”) shall begin on
the Schedule Effective Date and shall continue for a period of ten (10) years
after the last Live Date with respect to the Schedules under the Master Services
Agreement for the U.S., U.K. or Canada

 

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(for clarity, the Schedule Term of the Schedules under the Master Services
Agreement for the U.S., U.K. and Canada shall be coterminous with each other);
provided, however, that this Schedule’s effective date is subject to its review
and approval by the applicable regulatory agency as described in Section I.A.
The “First Billable Date” for the Services shall mean: (i) for the Services
provided in connection with the Acquired Correspondents, the later of the
Approval Date and the Closing Date (as such term is defined in the Asset
Purchase Agreement); and (ii) for the Services provided in connection with the
Client Correspondents, the Live Date. The “Live Date” is defined as the first
date upon which Ridge Local Affiliate processes trades on behalf of Client
Correspondents in accordance with the provisions and requirements of this
Schedule and the Master Services Agreement (excluding any beta testing or
similar testing of the system). The Schedule Term shall automatically extend
following its scheduled expiration date unless (1) either party gives notice of
termination at least one hundred eighty (180) days prior to the scheduled
expiration date, in which case the Schedule Term shall expire on the scheduled
expiration date or (2) either party gives notice of termination at any time
after the date that is one hundred eighty (180) days prior to the scheduled
expiration date of the Schedule Term (including any time beyond the scheduled
expiration date), in which case the Schedule Term shall expire on the date
specified in such notice of termination, which date must be at least one hundred
eighty (180) days after the date of such notice.

 

  B. [****].

 

  C. [****].

 

  D. [****].

 

  E. [****].

 

V. CHARGES

 

  A. The fees for the Services are set forth in Attachment B hereto.
Attachment B is hereby incorporated in and made an integral part of this
Schedule. All fees and charges set forth in Attachment B are in U.S. dollars.

 

  B. [****].

 

  C. [****].

 

VI. NO PARTNERSHIP OR AGENCY; NO SPECIAL TREATMENT

Neither this Schedule nor any activity hereunder shall create a general or
limited partnership, association, joint venture, branch or agency relationship
between Client Local Affiliate and Ridge Local Affiliate. Client Local Affiliate
shall not hold itself out as an agent of Ridge Local Affiliate or of any
subsidiary or company controlled directly or indirectly by or affiliated with
Ridge Local Affiliate, nor shall it employ Ridge Local Affiliate’s name in any
manner that creates the impression that the relationship created or intended
between them is anything other than that of service provider and clearing
broker. Except as reasonably necessary to provide the Services, Ridge Local
Affiliate shall not hold itself out as an agent of Client Local Affiliate or of
any subsidiary or company controlled directly or indirectly by or affiliated
with Client Local Affiliate, nor shall it employ Client Local Affiliate’s name
in any manner that creates the impression that the relationship created or
intended between them is anything other than that of service provider

 

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and clearing broker. Neither party shall, without the prior approval of the
other party, place any advertisement in any newspaper, publication, periodical
or any other media if such advertisement in any manner makes reference to the
other party or to the arrangements contemplated by this Schedule. Neither party
shall, without the prior approval of the other party (which approval shall not
be unreasonably withheld), furnish any link to the website(s) of the other party
or its Affiliates. For the avoidance of doubt, nothing herein shall prevent the
disclosure of (i) Ridge Local Affiliate’s name or the Services to be performed
under the Master Services Agreement or this Schedule to any of Client Local
Affiliate’s regulators or customers or (ii) a party’s name or the services it
offers to the extent necessary to carry out each party’s obligations under the
Master Services Agreement, this Schedule or Marketing Agreement.

Nothing herein shall cause Ridge Local Affiliate to be construed as or deemed to
be a fiduciary with respect to Client Local Affiliate, any correspondent of
Client Local Affiliate, or any customer of Client Local Affiliate or its
correspondents.

This Schedule is not intended, nor shall it be construed, to bestow upon either
party any special treatment regarding any other arrangements, agreements or
understandings that exist or may hereafter exist between the parties or their
affiliates. Neither party shall have any obligation to deal with the other in
any capacity other than as set forth in this Schedule.

 

VII. SERVICE LEVELS

Ridge Local Affiliate shall provide the Services in accordance with the terms
and conditions set forth in Section 1.C of the Master Services Agreement and
with respect to Service Levels set forth in Attachment C hereto and any other
Service Level agreement that may be agreed between the parties from time to time
with respect to the Territory. Attachment C is hereby incorporated in and made
an integral part of this Schedule. Ridge Local Affiliate agrees that the Service
Levels set forth in Attachment C shall be at least as stringent as any service
levels provided by Ridge Local Affiliate to its other clients in the U.S.

 

VIII. EXCHANGE OF INFORMATION

Throughout the Schedule Term, each party shall promptly supply the other with
information in its possession necessary or appropriate to enable the other party
properly to perform its obligations under this Schedule and as a registered
broker-dealer.

 

IX. RECORDS RETENTION

The information that Ridge Local Affiliate generates on behalf of Client Local
Affiliate are the books and records of Client Local Affiliate. Notwithstanding
anything to the contrary in the Master Services Agreement, Ridge Local Affiliate
will maintain and preserve such information in accordance with the agreed-upon
record retention policy set forth in Attachment G and the Laws and Rules. Any
additional retention period(s) shall be directed by Client Local Affiliate and
shall be subject to the mutual written agreement of the parties. Attachment G is
hereby incorporated in and made an integral part of this Schedule.

 

X. GOVERNANCE

Ridge Local Affiliate and Client Local Affiliate shall each appoint at least two
(2) senior level managers to a joint committee that shall meet no less than
monthly to address issues that may arise in connection with the performance of
the Services. In addition to the foregoing but without prejudice to the
obligations of the parties under this Schedule or the Master Services Agreement,
the parties have agreed to the detailed governance provisions set forth in
Exhibit C to the Master Services Agreement.

 

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Ridge Local Affiliate shall provide to Client Local Affiliate the reports set
forth in Attachment F. Attachment F is hereby incorporated in and made an
integral part of this Schedule.

 

XI. TAPE RECORDING

Unless otherwise prohibited by applicable Law, the parties shall have the right
to record telephone conversations between themselves, and waive any right to
further notice of any such recording. The parties agree to make such recordings
available to each other upon reasonable notice.

 

XII. THIRD PARTY VENDOR SERVICES

Client Local Affiliate may contract directly with and in such case will be
responsible for (i) complying with the terms and conditions of use relating to
additional third party products or services not affiliated with Ridge Local
Affiliate set forth in Attachment A that it elects to receive or access through
Ridge Local Affiliate from time to time and (ii) the costs relating thereto as
applicable, other than those third party products or services integrated into
the Services or provided as part of the Services. If third party products or
services, including, without limitation, data, are provided by or through Ridge
Local Affiliate to Client Local Affiliate or integrated into the Services or
provided as part of the Services, Ridge Local Affiliate shall obtain and
warrants and represents that it has the full right, title or license required to
provide such product or service to Client Local Affiliate. Additionally, Ridge
Local Affiliate hereby grants to Client Local Affiliate and customers of Client
Local Affiliate the right to use such product or service during, and for the
purposes of, and in accordance with, the Master Services Agreement and this
Schedule.

Client Local Affiliate shall be responsible for complying with the terms and
conditions of use (to the extent such terms and conditions of use are provided
by Ridge Local Affiliate to Client Local Affiliate) relating to the third party
products or services that it receives or accesses through Ridge Local Affiliate
and the costs relating thereto. If (i) any third party products or services, or
Ridge-owned products or services, provided by Ridge Local Affiliate become
unavailable and require replacement, (ii) Ridge Local Affiliate, upon notice to
Client Local Affiliate (and upon Client Local Affiliate’s consent, if and to the
extent such consent is required by Law), elects to replace any third party
products or services or Ridge-owned products or services provided by Ridge Local
Affiliate with new or different third party products or services or Ridge-owned
products or services or (iii) at least fifty percent (50%) of Ridge Local
Affiliate’s clients utilizing such products or services in the Territory request
such replacement, in each case, Ridge Local Affiliate shall replace such
products or services with equivalent or enhanced products or services without
increased cost.

Client Local Affiliate may contract directly with any vendor or subcontractor of
Ridge Local Affiliate for the services provided by such vendor or subcontractor
through Ridge Local Affiliate; provided, however, that (a) such contract does
not violate Ridge Local Affiliate’s obligations to such vendor or subcontractor
and (b) Client Local Affiliate shall be responsible for the cost of any
transition services (including, without limitation, any incremental costs
resulting from the transition) in connection therewith.

 

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XIII. OBLIGATIONS FOR RECEIPT OF DATA

Client Local Affiliate may be using data set forth in Attachment D hereto
provided by FT Interactive Data Corporation (“FT Interactive”). In such case,
Client Local Affiliate agrees to the provisions attached hereto as Attachment D
relating to its use of FT Interactive Data Corporation data in respect of the
Services. Attachment D is hereby incorporated in and made an integral part of
this Schedule. Client Local Affiliate shall be under no obligation to receive FT
Interactive Data Corporation data through Ridge Local Affiliate and to such
extent, the previous sentence shall not apply and Ridge Local Affiliate shall
not be responsible for the provision of such services to Client Local Affiliate
in such case or have any liability for such non-Ridge Local Affiliate FT
Interactive Data Corporation services that Client Local Affiliate decides to
receive. Ridge Local Affiliate warrants and represents that it has full right,
title or license required to provide such data to Client Local Affiliate for use
in the Services. Additionally, Ridge Local Affiliate hereby grants to Client
Local Affiliate the right to use and store such data pursuant to the terms and
conditions of Attachment D, for the purposes of Client Local Affiliate providing
services to its customers in the course of Client Local Affiliate’s standard
commercial operations.

 

XIV. ACQUISITION OF OR BY ANOTHER RIDGE LOCAL AFFILIATE CLIENT

In the event that Client Local Affiliate acquires, or is acquired by, by stock,
acquisition of substantially all the assets of, merger, or consolidation (a
“Business Combination”), a Client Local Affiliate of Ridge Local Affiliate’s
Brokerage Services Group that receives trade processing services substantially
similar to the Services provided under this Schedule (the “Other Entity”), and
Client Local Affiliate and the Other Entity, or the resulting entity as the case
may be, consolidate the trade processing carried out under this Schedule with
the trade processing carried out by the Other Entity prior to the termination or
expiration of the Client Local Affiliate’s or the Other Entity’s schedule
relating to trade processing services substantially similar to the Services
provided under this Schedule so that it is processed by Ridge Local Affiliate as
one entity, all service charges, including, without limitation, the Base Fee and
any other applicable tiered fees applicable for the brokerage processing
services provided by Ridge Local Affiliate shall be renegotiated in good faith
between Ridge Local Affiliate and Client Local Affiliate. Otherwise, the Ridge
Local Affiliate agreements with Client Local Affiliate and the Other Entity
agreements in place prior to the Business Combination shall remain in effect for
the respective services provided by Ridge Local Affiliate or any other Ridge
Local Affiliate’s Brokerage Services Group entity until the termination or
expiration of such agreements. For clarity and notwithstanding anything to the
contrary, Client Local Affiliate and the Other Entity shall be free to
consolidate their trade processing after the termination or expiration of either
of their agreements or relevant Schedule with Ridge Local Affiliate or any
entity of the Ridge Local Affiliate Brokerage Services Group without restriction
and without any obligation to renegotiate any fees relating to trade processing
or otherwise. In the event Client Local Affiliate participates in a Business
Combination with an entity that is not a client of Ridge Local Affiliate’s
Brokerage Services Group that receives trade processing and/or operations
support services substantially similar to the Services provided under this
Schedule, all rates in Attachment B (including, without limitation, the Base Fee
and any other applicable tiered fees applicable for the brokerage processing
services) provided by Ridge Local Affiliate shall remain as set forth in
Attachment B, subject to the adjustments described therein.

 

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XV. CLIENT LOCAL AFFILIATE RESPONSIBILITIES

Client Local Affiliate shall be responsible, to the extent necessary for the
Services it is receiving, in connection with the use of the Services for the
following:

 

  A. User security administration for the Services in accordance with, and as
set forth in, the relevant product specifications and user documentation.

 

  B. Forms and supplies required by Ridge Local Affiliate in connection with the
performance of the Services, which are agreed to by the parties in writing.
Ridge Local Affiliate shall provide Client Local Affiliate with reasonable
advance notice of any such requirements.

 

  C. Equipment, other than equipment provided by Ridge Local Affiliate, at
Client Local Affiliate’s location required in use of the Services (e.g.,
printers, terminals) as identified by Ridge Local Affiliate in writing.

 

  D. Dial backup ISDN circuits or other equivalent backup solution selected by
Client Local Affiliate.

 

  E. Third party telecommunications services not otherwise set forth in
Attachment B.

 

  F. Hardware, software, and telecommunications products required to interface
to the Services (e.g., terminal emulation software), other than any such
hardware, software, and telecommunications products provided by Ridge Local
Affiliate.

 

  G. Special equipment, which Client Local Affiliate may elect to place at Ridge
Local Affiliate locations, if required by Client Local Affiliate, specific to
Client Local Affiliate’s use of the Services as agreed to by the parties in
writing.

 

  H. Use commercially reasonable efforts to obtain the approval of each relevant
regulatory or self-regulatory agency or entity, if any, with regulates Client
Local Affiliate’s receipt of the Services (including, without limitation,
securities and commodities exchanges, associations of securities and/or
commodities dealers, federal, provincial and local Governmental Authorities).

For the avoidance of doubt, Ridge Local Affiliate shall not be responsible for
its failure to provide Services solely to the extent caused by the failure of
Client Local Affiliate to perform the above listed requirements. Ridge Local
Affiliate shall (i) provide Client Local Affiliate with reasonable notice of
Client Local Affiliate’s failure to perform any of its responsibilities set
forth in this Schedule and (ii) use commercially reasonable efforts to perform
notwithstanding Client Local Affiliate’s failure to perform, subject to Client
Local Affiliate reimbursing Ridge Local Affiliate for any reasonable incremental
cost to Ridge Local Affiliate in connection with such efforts.

 

XVI. REQUIRED PROVISION OF SYBASE, INC.

Client Local Affiliate acknowledges and agrees that the Sybase SQL Server
Program and the Sybase Replication Server Program (the “Programs”) to the extent
incorporated into the Services and used in connection with Ridge Local
Affiliate’s BPS Advantage product, if selected and received by Client Local
Affiliate, shall only be used by the Client Local Affiliate as set forth below
to read, in a view-only format, the Services, and the Programs shall not be
downloaded or used to create or alter tables, schemas or databases or otherwise
develop or modify in any way the applications or performance of other
programming tasks. Notwithstanding the foregoing, Client Local Affiliate may
access the Programs through Ridge Local Affiliate tools or third party tools;
provided, however, that any access shall be restricted to the following: Client
Local Affiliate may access the Services embedding a copy of the Programs which
are deployed on Ridge Local Affiliate’s premises or Client Local Affiliate’s
site, provided, however, that in either instance, Client Local Affiliate shall
not (i) copy the application(s) embedding the Programs, (ii) use the Programs
other than to process Client Local Affiliate’s own transactions, transactions
for entities that are correspondents or customers of the Client Local Affiliate
and transactions for entities that operate on a fully disclosed basis through
Client Local Affiliate as correspondents, or (iii) access the Programs for
general development. Client Local Affiliate may also develop applications
against the BPS Advantage database using tools supplied by Ridge Local
Affiliate, Sybase or other third parties.

 

Ridge Clearing & Outsourcing Solutions, Inc.    8   

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XVII. SEVERABILITY

If any provision of this Schedule should be held invalid or unenforceable in a
court of law in any jurisdiction, such invalidity or unenforceability shall not
affect the enforceability of this Schedule or any other provision thereof. In
addition, the parties agree that it is their intention that such provision shall
be construed in a manner designed to effectuate the purposes of this Schedule to
the fullest extent enforceable under applicable Law. The parties further agree
that such ruling shall not affect the construction of that provision or any
other of the provisions in any other jurisdiction.

 

XVIII. DISASTER RECOVERY; BUSINESS CONTINUITY

Ridge Local Affiliate shall maintain the disaster recovery and business
continuity services as set forth in Attachment E. Attachment E is hereby
incorporated in and made an integral part of this Schedule.

 

XIX. [****].

 

XX. ACQUIRED CORRESPONDENTS

In addition, except for services for finance, conversions, legal/compliance,
sales/relationship management and risk management (which services shall be
provided by Client Local Affiliate), following the Schedule Effective Date and
until such time that Client Local Affiliate is completely converted to the
Broadridge platform, Ridge Local Affiliate shall provide all Services to Client
Local Affiliate hereunder in a substantially similar manner and in accordance
with the Service Levels that Ridge Local Affiliate provided with respect to the
Acquired Correspondents prior to the Schedule Effective Date.

 

XXI. CHANGES TO THE MASTER SERVICES AGREEMENT

The following general changes shall be made to the Master Services Agreement
when incorporating the terms and conditions of the Master Services Agreement
into this Schedule: NONE.

*            *            *            *

 

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IN WITNESS WHEREOF the parties have executed this Schedule as of the date first
written above.

 

RIDGE CLEARING & OUTSOURCING SOLUTIONS, INC. By:  

/s/    Joseph Barra

Name:   Joseph Barra Title:   President PENSON FINANCIAL SERVICES, INC. By:  

/s/    Daniel P. Son

Name:   Daniel P. Son Title:   Vice Chairman

 

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ATTACHMENT A

DESCRIPTION OF OUTSOURCED SERVICES

[****].

 

Ridge Clearing & Outsourcing Solutions, Inc.    11   

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Appendix 1 to Attachment A

Transferred Operations Support Services

[****].

 

Ridge Clearing & Outsourcing Solutions, Inc.    12   

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Appendix 1-A to Attachment A

Transitional Transferred Operations Support Services

[****].

 

Ridge Clearing & Outsourcing Solutions, Inc.    13   

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Appendix 2 to Attachment A

Transferred Technology Services

[****].

 

Ridge Clearing & Outsourcing Solutions, Inc.    14   

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Appendix 3 to Attachment A

Existing Operations Support Services – U.S.

[****].

 

Ridge Clearing & Outsourcing Solutions, Inc.    15   

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UNITED STATES

 

Appendix 4 to Attachment A

Existing Technology Services – U.S.

[****].

 

Ridge Clearing & Outsourcing Solutions, Inc.    16   

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UNITED STATES

 

Appendix 5 to Attachment A

Additional Technology Services

[****].

 

Ridge Clearing & Outsourcing Solutions, Inc.    17   

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ATTACHMENT B

Service Bureau and Operations Support Services Price Schedule

 

1. Charges for the Services. The charges for the Services are set forth in
Attachment B-1.

 

2. Changes to Schedule B. The parties agree, subject to the Change Control
Procedures set forth in Exhibit C to the Master Services Agreement, that any
changes that the Client Local Affiliate makes from time to time that result in
the addition or removal of specific Service functions (including, without
limitation, material changes required by Applicable Law or by a regulatory body)
may require changes to the charges payable by Client Local Affiliate.

 

3. Postage. Notwithstanding anything herein to the contrary, postage shall be
billed to Client Local Affiliate on a pass-through basis.

 

4. Customization. Any customization work shall be provided pursuant to a rate
schedule to be agreed upon by the parties no later than the Closing Date.

 

Ridge Clearing & Outsourcing Solutions, Inc.    18   

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Attachment B-1

Base Fee and Tiered Fees

[****].

 

Ridge Clearing & Outsourcing Solutions, Inc.    19   

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UNITED STATES

 

Attachment B-2

Third Party Providers

[****].

 

Ridge Clearing & Outsourcing Solutions, Inc.    20   

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ATTACHMENT C

SERVICE LEVELS

 

I. INTRODUCTION

In order to maintain the specified Service Levels for the Services set forth in
Attachment C-1, the parties have agreed that certain defined Service Levels (the
“SLAs”) are to be established and measured as set forth below. SLAs related to
the Services shall be established by the parties no later than [****] after the
Schedule Effective Date. New Service Levels may be added during the Schedule
Term, and existing Service Levels may be modified or eliminated, by the mutual
agreement of the parties from time to time.

 

II. OPERATIONS

 

A. General

Commencing on the Live Date and subject to this Section II, Ridge Local
Affiliate’s provision of the Services shall be in accordance with the Service
Levels identified in Attachment C-1.

The Service Levels set forth in Attachment C-1 shall (i) meet or exceed in all
material respects the service levels required under the Acquired Correspondents’
agreements transferred to Client Local Affiliate under the Asset Purchase
Agreement and (ii) be at least at levels that will enable Client Local Affiliate
to avoid breaches of any agreements with the Client Correspondents existing as
of the date hereof.

 

B. Reports; Performance Review; Corrective Action

(a) Ridge Local Affiliate shall, wherever the parties agree to use objective
data, utilize continuous measurement and data capture and shall prepare a
reasonably detailed report with respect to the Service Levels) (each, a “Service
Level Report”). Service Level Reports shall be provided to Client Local
Affiliate on a monthly basis.

(b) Ridge Local Affiliate and Client Local Affiliate shall meet at least
quarterly to review Ridge Local Affiliate’s performance with respect to the
Services during the immediately preceding quarterly period and the Service Level
Reports connected therewith, and, with respect to Ridge Local Affiliate’s
failure to achieve any Service Levels, the parties shall (1) jointly formulate a
formal action plan for corrective action, as applicable, and (2) agree upon the
appropriate consequences if such action plan does not prevent subsequent
instances of the same Service Level failures.

(c) The specific criteria for each Service Level shall be detailed in the
applicable SLA set forth in Attachment C-1. Prior to Live Date, the parties
shall modify such Service Levels, create such additional Service Levels, or
modify the method used to measure performance (including, without limitation,
appropriate objective data, quality control process or other methods) as the
parties mutually agree in writing.

(d) [****], the parties shall measure actual Ridge Local Affiliate performance
levels in the manner previously agreed to by the parties, and review the method
used to measure performance and such performance. The parties shall discuss in
good faith any appropriate modifications to the method used to measure
performance, the Service Levels or any remedial steps required to be taken by
Ridge Local Affiliate in light of such review and shall, at least once annually
during the Schedule Term, engage in such good faith discussions to determine any
appropriate modifications to the method used to measure performance, the Service
Levels or any remedial steps required to be taken by Ridge Local Affiliate in
light of such review.

 

Ridge Clearing & Outsourcing Solutions, Inc.    21   

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C. Changes to the Service Levels

(a) The parties acknowledge that the Service Levels shall be subject to
continuous improvement and that changing circumstances may necessitate
modifications to service, expectations and responsibilities. Accordingly, the
parties shall, at least once annually during the Schedule Term, engage in good
faith discussions to determine if (i) any modifications to the existing Service
Levels are necessary or advisable, (ii) any existing Service Levels should be
deleted and (iii) any new Service Levels should be added.

(b) For all new Service Levels, the parties shall mutually agree upon the
Service Level targets and the methodology and tools used to measure performance.
The parties shall mutually agree on any Service Level target based on [****] of
measurements of the applicable Service Level utilizing the agreed upon
methodology and tools. Any dispute regarding the establishment of such Service
Level targets or the methodology and tools used to measure performance shall be
resolved by the Executive Governance Committee. In addition, the Executive
Governance Committee shall review Service Level targets and performance and
shall give weight to Client Local Affiliate’s recommendations for continuous
improvement of Service Level targets, based on, among other things, advances in
technology.

 

D Service Level Credits

The amount of Service Level Credits credited to Client Local Affiliate with
respect to all Category 1 service level failures occurring in a single month
shall not exceed, in total, [****] of the monthly charges payable in connection
with the Schedule for that month (the “Service Level Credit Pool – Category 1”).
The amount of Service Level Credits credited to Client Local Affiliate with
respect to all other service level failures occurring in a single month shall
not exceed, in total, [****] of the monthly charges payable in connection with
the Schedule for that month (the “Service Level Credit Pool – All Other
Categories”, and together with the Services Level Credit Pool – Category 1, the
“Service Level Credit Pools”). The Service Level Credit Pools shall be allocated
to various Service Levels as set forth in Attachment C-1. The parties shall, at
least once annually during the Schedule Term, engage in good faith discussions
to determine if any modification to the allocation of the Service Level Credit
Pools set forth in Attachment C-1 are necessary or advisable.

 

E. Root-Cause Analysis

In the event Ridge Local Affiliate has a Service Level failure that is not
insignificant, Ridge Local Affiliate shall perform a root-cause analysis as
described in Section 1.C of the Master Services Agreement.

 

F. Excuse

Ridge Local Affiliate shall be excused from performing any Service or obligation
hereunder, including, without limitation, the attainment of any Service Level,
if and to the extent Ridge Local Affiliate’s failure to perform such Service or
obligation is caused by Client Local Affiliate’s or its agents’ act or omission,
including, without limitation, (a) Client Local Affiliate providing incomplete
or inaccurate data, specifications or requirements; and (b) failures, errors or
defects in facilities, equipment, materials or other resources provided by
Client Local Affiliate, including, without limitation, telecommunications,
hardware, infrastructure and network connectivity.

 

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Attachment C-1

SLAs

The parties shall include a Service Level for development work no later than
[****] after the Schedule Effective Date.

 

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UNITED STATES

 

ATTACHMENT D

No Warranty and Limitation on Liability Provisions

Required by Users of Third Party Data

No Warranties

EXCEPT IN CONNECTION WITH CONTRACTS OF THIRD PARTY DATA SUPPLIERS WITHOUT
CONTRACTUAL RESTRICTIONS SIMILAR TO THOSE BELOW, NO THIRD PARTY DATA SUPPLIERS
MAKE ANY WARRANTIES, EXPRESS OR IMPLIED, AS TO MERCHANTABILITY, FITNESS OR ANY
OTHER MATTER.

Limitation on Liability

(a) No third party data supplier shall have any liability to Client Local
Affiliate, or any other third party, for errors, omissions or malfunctions in
the services provided by such third party data supplier, other than the
obligation to endeavor, upon receipt of notice from Client Local Affiliate, to
correct a malfunction, error, or omission in any such services.

(b) Client Local Affiliate acknowledges that the services provided by any third
party data supplier are intended for use as an aid to institutional investors,
registered brokers or professionals of similar sophistication in making informed
judgments concerning securities.

Client Local Affiliate accepts responsibility for, and acknowledges it exercises
its own independent judgment in, its selection of any of the services provided
by any third party data supplier, its selection of the use or intended use of
such, and any results obtained. Nothing contained herein shall be deemed to be a
waiver of any rights existing under applicable law for the protection of
investors.

(c) Client Local Affiliate shall indemnify Ridge Local Affiliate’s third party
data suppliers (including, without limitation, FT Interactive) against and hold
such third party data suppliers harmless from any and all losses, damages,
liability, costs, including, without limitation, attorney’s fees, resulting
directly or indirectly from any claim or demand against such third party data
suppliers by a third party arising out of or related to the accuracy or
completeness of any services received by Client Local Affiliate, or any data,
information, service, report, analysis or publication derived therefrom. No
third party data supplier shall be liable for any claim or demand against Client
Local Affiliate by a third party.

(d) As between a third party data supplier and Client Local Affiliate, neither
party shall be liable for (i) any special, indirect or consequential damages
(even if advised of the possibility of such), (ii) any delay by reason of
circumstances beyond its control, including, without limitation, acts of civil
or military authority, national emergencies, labor difficulties, fire,
mechanical breakdown, flood or catastrophe, acts of God, insurrection, war,
riots, or failure beyond its control of transportation or power supply, or
(iii) any claim that arose more than one (1) year prior to the institution of
suit therefor.

 

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ATTACHMENT E

DISASTER RECOVERY; BUSINESS CONTINUITY

To be agreed upon by the parties within [****] after the Schedule Effective
Date.

 

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ATTACHMENT F

REPORTS

To be agreed upon by the parties within [****] after the Schedule Effective
Date.

 

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ATTACHMENT G

RECORD RETENTION POLICY

To be agreed upon by the parties within [****] after the Schedule Effective
Date.

 

Ridge Clearing & Outsourcing Solutions, Inc.    27   

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NOTE: PORTIONS OF THIS AGREEMENT ARE THE SUBJECT OF A

CONFIDENTIAL TREATMENT REQUEST BY THE REGISTRANT TO THE

SECURITIES AND EXCHANGE COMMISSION. SUCH PORTIONS HAVE BEEN

REDACTED AND ARE MARKED WITH A “[****]” IN PLACE OF THE REDACTED

LANGUAGE.

Schedule A (Canada)

SERVICE BUREAU AND OPERATIONS SUPPORT SERVICES SCHEDULE

To The Master Services Agreement

between

BROADRIDGE FINANCIAL SOLUTIONS, INC.

and

PENSON WORLDWIDE, INC.

This schedule (the “Schedule”), dated as of November 2, 2009 (the “Schedule
Effective Date”), between Broadridge Financial Solutions (Canada) Inc. (“Ridge
Local Affiliate”) and Penson Financial Services Canada Inc. (“Client Local
Affiliate”), to the Master Services Agreement, dated as of the date hereof,
between Broadridge Financial Solutions, Inc. and Penson Worldwide, Inc., sets
forth the terms and conditions, in addition to the terms and conditions in the
Master Services Agreement, under which Ridge Local Affiliate will provide
service bureau and operations support services to Client Local Affiliate to
assist and support Client Local Affiliate in functioning as a clearing firm.
Each of Client Local Affiliate and Ridge Local Affiliate agrees to comply with
and fulfill all terms and conditions applicable to it under the Master Services
Agreement. Simultaneously with the execution of this Schedule, this Schedule
supersedes and replaces the Master Services Agreement, dated June 30, 2009,
between Penson Financial Services Canada Inc. and Broadridge Financial Services
(Canada) Inc. and the BPS Canadian Services Bureau Schedule, dated June 30,
2009, between Penson Financial Services Canada Inc. and Broadridge Financial
Services (Canada) Inc. (the “Existing Canadian Agreement”).

Unless otherwise defined herein, all capitalized terms shall have the meanings
given to them in the Master Services Agreement. In the event of a conflict
between the terms and conditions of this Schedule and the terms and conditions
of the Master Services Agreement, the terms and conditions of this Schedule
shall govern. The term “Client Local Affiliate” as used in this Schedule
includes all Affiliates, divisions and subsidiaries of Client Local Affiliate.
Except where otherwise indicated, all references in this Schedule to Sections or
Attachments are to Sections to, and Attachments of, this Schedule. The term
“party” as used in this Schedule means Ridge Local Affiliate or Client Local
Affiliate, as applicable. The term “parties” as used in this Schedule means
Ridge Local Affiliate and Client Local Affiliate.

 

I. SUBMISSION OF SCHEDULE

A. During the Schedule Term, Client Local Affiliate and Ridge Local Affiliate
shall each be subject, to the extent applicable to such party, to the provisions
of federal, state and local laws, rules and regulations and the constitution,
by-laws, rules, regulations and stated policies of the

 

1

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CANADA

 

Investment Industry Regulatory Organization of Canada (“IIROC”), the Canadian
Investors Protection Fund (“CIPF”), the Ontario Securities Commission (“OSC”),
the Autorité des Marchés Financiers (“AMF”), the Montréal Exchange (“ME”) and
any other securities exchange, commission, association, regulatory or
self-regulatory organization (“SRO”) vested with authority over Client Local
Affiliate or Ridge Local Affiliate (to the extent applicable to a party, the
“Laws and Rules”). Each party shall perform its obligations under this Schedule
in accordance with the Laws and Rules.

B. Client Local Affiliate shall submit this Schedule to the IIROC, or any other
SRO, as required, on behalf of itself and Ridge Local Affiliate for review and,
if necessary, approval. This Schedule shall not become effective until the date
upon which all necessary SRO approvals as to both parties are received (the
“Approval Date”); provided, however, that if no SRO approvals are required for
this Schedule to become effective, this Schedule shall become effective as of
the Schedule Effective Date. In the event that any such approval is required and
this Schedule is not so approved, the parties shall negotiate in good faith to
amend this Schedule as may be needed to obtain such approval.

C. Ridge Local Affiliate acknowledges that Client Local Affiliate has regulatory
responsibilities as a clearing firm, including, among other things, a duty to
supervise the types of business in which it engages. To assist Client Local
Affiliate in satisfying such obligations, Ridge Local Affiliate agrees to
provide, at the reasonable request of Client Local Affiliate, performance
reports with respect to the Services and full access to relevant books and
records, information and Ridge Local Affiliate personnel engaged in providing
the Services. Ridge Local Affiliate acknowledges that Client Local Affiliate is
required, from time to time, to prepare and file reports with the IIROC, CIPF
and other SROs or Governmental Authorities. To assist Client Local Affiliate in
satisfying such requirements, Ridge Local Affiliate agrees to provide Client
Local Affiliate with information in its possession that is necessary for Client
Local Affiliate to prepare and file any such reports.

D. This Schedule is not intended, and shall not be construed, to limit, reduce,
or otherwise change any regulatory, contractual or other obligation that Client
Local Affiliate owes to a correspondent or to its customers.

 

II. SERVICES TO BE PERFORMED BY RIDGE LOCAL AFFILIATE

A. Subject to the second paragraph of Section 16.G of the Master Services
Agreement and Section I.B, Ridge Local Affiliate will perform the services,
functions and responsibilities described in Attachment A in accordance with the
terms and conditions of this Schedule and the Master Services Agreement.
Attachment A is hereby incorporated in and made an integral part of this
Schedule. Any additional services to be performed by Ridge Local Affiliate shall
be subject to the written agreement of the parties.

B. Intentionally left blank.

C. This Schedule and the Master Services Agreement are intended to create an
exclusive arrangement between Client Local Affiliate and Ridge Local Affiliate
with respect to the Services utilized by Client Local Affiliate as of the
applicable Live Date in the Territory for which a pricing schedule is included
in this Schedule except (A) as otherwise set forth in this Schedule and the
Master Services Agreement and (B) in the event that (i) Client Local Affiliate
or a Customer of Client Local Affiliate is prohibited by Law from receiving
Services from Ridge Local Affiliate in the Territory, (ii) Client Local
Affiliate obtains a business and in connection

 

Broadridge Financial Solutions (Canada) Inc.    2   

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CANADA

 

therewith is contractually required to use an alternative system (and not the
Services) as a condition of obtaining such business or (iii) during any time
period that Ridge Local Affiliate is in material breach of this Schedule and has
failed to cure such breach within thirty (30) days following notice from Client
Local Affiliate specifying the nature of such breach in reasonable detail.

 

III. CONVERSION

A. Conversion of Client Correspondents. In connection with the conversion of the
correspondents of Client Local Affiliate (“Client Correspondents”) to Ridge
Local Affiliate, the parties agree to the following:

 

  (i) Client Local Affiliate shall provide Ridge Local Affiliate with Client
Local Affiliate’s requirements with respect to the Client Local Affiliate files
and Service Levels applicable to the Client Correspondents (the “Client
Requirements”) after the Schedule Effective Date. The parties shall enter into a
statement of work (the “Conversion SOW”) that will describe Client Local
Affiliate’s migration to Ridge Local Affiliate’s service delivery and technology
platform [****]. The Conversion SOW will define the Target Live Date for each
Service and describe specific implementation activities and procedures required
to migrate Client Correspondents to the Ridge Local Affiliate, including,
without limitation, development, implementation and integration of Software and
other software and development and integration of correspondent clearing
functionalities, reporting and monitoring systems and such other services as may
be set forth in the Conversion SOW (the “Conversion Services”). Without limiting
the generality of the foregoing, the Conversion SOW shall (1) specify that Ridge
Local Affiliate will convert the applicable Client Local Affiliate files to make
them compatible with the Services and the other services, as may be required in
respect of the migration of Client Local Affiliate’s Customers to the Services
and (2) describe the development and integration of correspondent clearing
functionalities by Ridge Local Affiliate. The Conversion Services shall be
provided at no charge to Client Local Affiliate by Ridge Local Affiliate.

 

  (ii) The parties shall cooperate and provide each other with all information
and assistance reasonably required in connection with the Conversion Services.
Each party will assign a liaison person to assist and cooperate with the other
party in connection with the Conversion Services (which person may be replaced
by a party at its sole discretion from time to time by way of notice to the
other party).

 

IV. TERM OF SCHEDULE

A. Schedule Term. The term of this Schedule (the “Schedule Term”) shall begin on
the Schedule Effective Date and shall continue for a period of ten (10) years
after the last Live Date with respect to the Schedules under the Master Services
Agreement for the U.S., U.K. or Canada (for clarity, the Schedule Term of the
Schedules under the Master Services Agreement for the U.S., U.K. and Canada
shall be coterminous with each other); provided, however, that this Schedule’s
effective date is subject to its review and approval by the applicable
regulatory agency as described in Section I.A. The “Live Date” for a Service is
defined as the first date upon which Ridge Local Affiliate processes trades
utilizing the applicable Service on behalf of Client Correspondents in
accordance with the provisions and requirements of this Schedule and the Master
Services Agreement (excluding any beta testing or similar testing of the
system). The Schedule Term shall automatically extend following its scheduled
expiration date unless (1) either party gives notice of termination at least one
hundred eighty (180) days prior to the scheduled

 

Broadridge Financial Solutions (Canada) Inc.    3   

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CANADA

 

expiration date, in which case the Schedule Term shall expire on the scheduled
expiration date or (2) either party gives notice of termination at any time
after the date that is one hundred eighty (180) days prior to the scheduled
expiration date of the Schedule Term (including any time beyond the scheduled
expiration date), in which case the Schedule Term shall expire on the date
specified in such notice of termination, which date must be at least one hundred
eighty (180) days after the date of such notice.

 

B. [****].

 

C. [****].

 

D. [****].

 

E. [****].

 

V. CHARGES

 

  A. The fees for the Services are set forth in Attachment B hereto. Attachment
B is hereby incorporated in and made an integral part of this Schedule. Unless
otherwise indicated, all fees and charges set forth in Attachment B are in
Canadian dollars. Notwithstanding the immediately preceding sentence, for
purposes of calculating the aggregate amounts in connection with the last
paragraph in Attachment A and paragraph six of Section III to Attachment B-1,
such calculation shall be in U.S. dollars using the exchange rate published in
the Wall Street Journal on the Schedule Effective Date.

 

B. [****].

 

C. [****].

 

VI. NO PARTNERSHIP OR AGENCY; NO SPECIAL TREATMENT

Neither this Schedule nor any activity hereunder shall create a general or
limited partnership, association, joint venture, branch or agency relationship
between Client Local Affiliate and Ridge Local Affiliate. Client Local Affiliate
shall not hold itself out as an agent of Ridge Local Affiliate or of any
subsidiary or company controlled directly or indirectly by or affiliated with
Ridge Local Affiliate, nor shall it employ Ridge Local Affiliate’s name in any
manner that creates the impression that the relationship created or intended
between them is anything other than that of service provider and clearing
broker. Except as reasonably necessary to provide the Services, Ridge Local
Affiliate shall not hold itself out as an agent of Client Local Affiliate or of
any subsidiary or company controlled directly or indirectly by or affiliated
with Client Local Affiliate, nor shall it employ Client Local Affiliate’s name
in any manner that creates the impression that the relationship created or
intended between them is anything other than that of service provider and
clearing broker. Neither party shall, without the prior approval of the other
party, place any advertisement in any newspaper, publication, periodical or any
other media if such advertisement in any manner makes reference to the other
party or to the arrangements contemplated by this Schedule. Neither party shall,
without the prior approval of the other party (which approval shall not be
unreasonably withheld), furnish any link to the website(s) of the other party or
its Affiliates. For the avoidance of doubt, nothing herein shall prevent the
disclosure of (i) Ridge Local Affiliate’s name or the Services to be performed
under the Master Services Agreement or this Schedule to any of Client Local
Affiliate’s regulators or customers or (ii) a party’s name or the services it
offers to the extent necessary to carry out each party’s obligations under the
Master Services Agreement, this Schedule or Marketing Agreement.

 

Broadridge Financial Solutions (Canada) Inc.    4   

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CANADA

 

Nothing herein shall cause Ridge Local Affiliate to be construed as or deemed to
be a fiduciary with respect to Client Local Affiliate, any correspondent of
Client Local Affiliate, or any customer of Client Local Affiliate or its
correspondents.

This Schedule is not intended, nor shall it be construed, to bestow upon either
party any special treatment regarding any other arrangements, agreements or
understandings that exist or may hereafter exist between the parties or their
affiliates. Neither party shall have any obligation to deal with the other in
any capacity other than as set forth in this Schedule.

 

VII. SERVICE LEVELS

Ridge Local Affiliate shall provide the Services in accordance with the terms
and conditions set forth in Section 1.C of the Master Services Agreement and
with respect to Service Levels set forth in Attachment C hereto and any other
Service Level agreement that may be agreed between the parties from time to time
with respect to the Territory. Attachment C is hereby incorporated in and made
an integral part of this Schedule. Ridge Local Affiliate agrees that the Service
Levels set forth in Attachment C shall be at least as stringent as any service
levels provided by Ridge Local Affiliate to its other clients in Canada.

 

VIII. EXCHANGE OF INFORMATION

Throughout the Schedule Term, each party shall promptly supply the other with
information in its possession necessary or appropriate to enable the other party
properly to perform its obligations under this Schedule and as a registered
broker-dealer.

 

IX. RECORDS RETENTION

The information that Ridge Local Affiliate generates on behalf of Client Local
Affiliate are the books and records of Client Local Affiliate. Notwithstanding
anything to the contrary in the Master Services Agreement, Ridge Local Affiliate
will maintain and preserve such information in accordance with the agreed-upon
record retention policy set forth in Attachment G and the Laws and Rules. Any
additional retention period(s) shall be directed by Client Local Affiliate and
shall be subject to the mutual written agreement of the parties. Attachment G is
hereby incorporated in and made an integral part of this Schedule.

 

X. GOVERNANCE

Ridge Local Affiliate and Client Local Affiliate shall each appoint at least two
(2) senior level managers to a joint committee that shall meet no less than
monthly to address issues that may arise in connection with the performance of
the Services. In addition to the foregoing but without prejudice to the
obligations of the parties under this Schedule or the Master Services Agreement,
the parties have agreed to the detailed governance provisions set forth in
Exhibit C to the Master Services Agreement.

Ridge Local Affiliate shall provide to Client Local Affiliate the reports set
forth in Attachment F. Attachment F is hereby incorporated in and made an
integral part of this Schedule.

 

Broadridge Financial Solutions (Canada) Inc.    5   

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CANADA

 

XI. TAPE RECORDING

Unless otherwise prohibited by applicable Law, the parties shall have the right
to record telephone conversations between themselves, and waive any right to
further notice of any such recording. The parties agree to make such recordings
available to each other upon reasonable notice.

 

XII. THIRD PARTY VENDOR SERVICES

Client Local Affiliate may contract directly with and in such case will be
responsible for (i) complying with the terms and conditions of use relating to
additional third party products or services not affiliated with Ridge Local
Affiliate set forth in Attachment A that it elects to receive or access through
Ridge Local Affiliate from time to time and (ii) the costs relating thereto as
applicable, other than those third party products or services integrated into
the Services or provided as part of the Services. If third party products or
services, including, without limitation, data, are provided by or through Ridge
Local Affiliate to Client Local Affiliate or integrated into the Services or
provided as part of the Services, Ridge Local Affiliate shall obtain and
warrants and represents that it has the full right, title or license required to
provide such product or service to Client Local Affiliate. Additionally, Ridge
Local Affiliate hereby grants to Client Local Affiliate and customers of Client
Local Affiliate the right to use such product or service during, and for the
purposes of, and in accordance with, the Master Services Agreement and this
Schedule.

Client Local Affiliate shall be responsible for complying with the terms and
conditions of use (to the extent such terms and conditions of use are provided
by Ridge Local Affiliate to Client Local Affiliate) relating to the third party
products or services that it receives or accesses through Ridge Local Affiliate
and the costs relating thereto. If (i) any third party products or services, or
Ridge-owned products or services, provided by Ridge Local Affiliate become
unavailable and require replacement, (ii) Ridge Local Affiliate, upon notice to
Client Local Affiliate (and upon Client Local Affiliate’s consent, if and to the
extent such consent is required by Law), elects to replace any third party
products or services or Ridge-owned products or services provided by Ridge Local
Affiliate with new or different third party products or services or Ridge-owned
products or services or (iii) at least fifty percent (50%) of Ridge Local
Affiliate’s clients utilizing such products or services in the Territory request
such replacement, in each case, Ridge Local Affiliate shall replace such
products or services with equivalent or enhanced products or services without
increased cost.

Client Local Affiliate may contract directly with any vendor or subcontractor of
Ridge Local Affiliate for the services provided by such vendor or subcontractor
through Ridge Local Affiliate; provided, however, that (a) such contract does
not violate Ridge Local Affiliate’s obligations to such vendor or subcontractor
and (b) Client Local Affiliate shall be responsible for the cost of any
transition services (including, without limitation, any incremental costs
resulting from the transition) in connection therewith.

 

XIII. OBLIGATIONS FOR RECEIPT OF DATA

Client Local Affiliate may be using data set forth in Attachment D hereto
provided by FT Interactive Data Corporation (“FT Interactive”). In such case,
Client Local Affiliate agrees to the provisions attached hereto as Attachment D
relating to its use of FT Interactive Data Corporation data in respect of the
Services. Attachment D is hereby incorporated in and made an integral part of
this Schedule. Client Local Affiliate shall be under no obligation to receive FT
Interactive Data Corporation data through Ridge Local Affiliate and to such
extent, the previous sentence shall not apply and Ridge Local Affiliate shall
not be responsible for the provision of such

 

Broadridge Financial Solutions (Canada) Inc.    6   

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services to Client Local Affiliate in such case or have any liability for such
non-Ridge Local Affiliate FT Interactive Data Corporation services that Client
Local Affiliate decides to receive. Ridge Local Affiliate warrants and
represents that it has full right, title or license required to provide such
data to Client Local Affiliate for use in the Services. Additionally, Ridge
Local Affiliate hereby grants to Client Local Affiliate the right to use and
store such data pursuant to the terms and conditions of Attachment D, for the
purposes of Client Local Affiliate providing services to its customers in the
course of Client Local Affiliate’s standard commercial operations.

 

XIV. ACQUISITION OF OR BY ANOTHER RIDGE LOCAL AFFILIATE CLIENT

In the event that Client Local Affiliate acquires, or is acquired by, by stock,
acquisition of substantially all the assets of, merger, or consolidation (a
“Business Combination”), a Client Local Affiliate of Ridge Local Affiliate’s
Brokerage Services Group that receives trade processing services substantially
similar to the Services provided under this Schedule (the “Other Entity”), and
Client Local Affiliate and the Other Entity, or the resulting entity as the case
may be, consolidate the trade processing carried out under this Schedule with
the trade processing carried out by the Other Entity prior to the termination or
expiration of the Client Local Affiliate’s or the Other Entity’s schedule
relating to trade processing services substantially similar to the Services
provided under this Schedule so that it is processed by Ridge Local Affiliate as
one entity, all service charges, including, without limitation, the Base Fee and
any other applicable tiered fees applicable for the brokerage processing
services provided by Ridge Local Affiliate shall be renegotiated in good faith
between Ridge Local Affiliate and Client Local Affiliate. Otherwise, the Ridge
Local Affiliate agreements with Client Local Affiliate and the Other Entity
agreements in place prior to the Business Combination shall remain in effect for
the respective services provided by Ridge Local Affiliate or any other Ridge
Local Affiliate’s Brokerage Services Group entity until the termination or
expiration of such agreements. For clarity and notwithstanding anything to the
contrary, Client Local Affiliate and the Other Entity shall be free to
consolidate their trade processing after the termination or expiration of either
of their agreements or relevant Schedule with Ridge Local Affiliate or any
entity of the Ridge Local Affiliate Brokerage Services Group without restriction
and without any obligation to renegotiate any fees relating to trade processing
or otherwise. In the event Client Local Affiliate participates in a Business
Combination with an entity that is not a client of Ridge Local Affiliate’s
Brokerage Services Group that receives trade processing and/or operations
support services substantially similar to the Services provided under this
Schedule, all rates in Attachment B (including, without limitation, the Base Fee
and any other applicable tiered fees applicable for the brokerage processing
services) provided by Ridge Local Affiliate shall remain as set forth in
Attachment B, subject to the adjustments described therein.

 

XV. CLIENT LOCAL AFFILIATE RESPONSIBILITIES

Client Local Affiliate shall be responsible, to the extent necessary for the
Services it is receiving, in connection with the use of the Services for the
following:

 

  A. User security administration for the Services in accordance with, and as
set forth in, the relevant product specifications and user documentation.

 

  B. Forms and supplies required by Ridge Local Affiliate in connection with the
performance of the Services, which are agreed to by the parties in writing.
Ridge Local Affiliate shall provide Client Local Affiliate with reasonable
advance notice of any such requirements.

 

  C. Equipment, other than equipment provided by Ridge Local Affiliate, at
Client Local Affiliate’s location required in use of the Services (e.g.,
printers, terminals) as identified by Ridge Local Affiliate in writing.

 

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  D. Dial backup ISDN circuits or other equivalent backup solution selected by
Client Local Affiliate.

 

  E. Third party telecommunications services not otherwise set forth in
Attachment B.

 

  F. Hardware, software, and telecommunications products required to interface
to the Services (e.g., terminal emulation software), other than any such
hardware, software, and telecommunications products provided by Ridge Local
Affiliate.

 

  G. Special equipment, which Client Local Affiliate may elect to place at Ridge
Local Affiliate locations, if required by Client Local Affiliate, specific to
Client Local Affiliate’s use of the Services as agreed to by the parties in
writing.

 

  H. Use commercially reasonable efforts to obtain the approval of each relevant
regulatory or self-regulatory agency or entity, if any, with regulates Client
Local Affiliate’s receipt of the Services (including, without limitation,
securities and commodities exchanges, associations of securities and/or
commodities dealers, federal, provincial and local Governmental Authorities).

For the avoidance of doubt, Ridge Local Affiliate shall not be responsible for
its failure to provide Services solely to the extent caused by the failure of
Client Local Affiliate to perform the above listed requirements. Ridge Local
Affiliate shall (i) provide Client Local Affiliate with reasonable notice of
Client Local Affiliate’s failure to perform any of its responsibilities set
forth in this Schedule and (ii) use commercially reasonable efforts to perform
notwithstanding Client Local Affiliate’s failure to perform, subject to Client
Local Affiliate reimbursing Ridge Local Affiliate for any reasonable incremental
cost to Ridge Local Affiliate in connection with such efforts.

 

XVI. REQUIRED PROVISION OF SYBASE, INC.

 

  Client Local Affiliate acknowledges and agrees that the Sybase SQL Server
Program and the Sybase Replication Server Program (the “Programs”) to the extent
incorporated into the Services and used in connection with Ridge Local
Affiliate’s BPS Advantage product, if selected and received by Client Local
Affiliate, shall only be used by the Client Local Affiliate as set forth below
to read, in a view-only format, the Services, and the Programs shall not be
downloaded or used to create or alter tables, schemas or databases or otherwise
develop or modify in any way the applications or performance of other
programming tasks. Notwithstanding the foregoing, Client Local Affiliate may
access the Programs through Ridge Local Affiliate tools or third party tools;
provided, however, that any access shall be restricted to the following: Client
Local Affiliate may access the Services embedding a copy of the Programs which
are deployed on Ridge Local Affiliate’s premises or Client Local Affiliate’s
site, provided, however, that in either instance, Client Local Affiliate shall
not (i) copy the application(s) embedding the Programs, (ii) use the Programs
other than to process Client Local Affiliate’s own transactions, transactions
for entities that are correspondents or customers of the Client Local Affiliate
and transactions for entities that operate on a fully disclosed basis through
Client Local Affiliate as correspondents, or (iii) access the Programs for
general development. Client Local Affiliate may also develop applications
against the BPS Advantage database using tools supplied by Ridge Local
Affiliate, Sybase or other third parties.

 

XVII. SEVERABILITY

 

  If any provision of this Schedule should be held invalid or unenforceable in a
court of law in any jurisdiction, such invalidity or unenforceability shall not
affect the enforceability of this Schedule or any other provision thereof. In
addition, the parties agree that it is their intention that such provision shall
be construed in a manner designed to effectuate the purposes of this Schedule to
the fullest extent enforceable under applicable Law. The parties further agree
that such ruling shall not affect the construction of that provision or any
other of the provisions in any other jurisdiction.

 

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XVIII.   DISASTER RECOVERY; BUSINESS CONTINUITY

 

  Ridge Local Affiliate shall maintain the disaster recovery and business
continuity services as set forth in Attachment E. Attachment E is hereby
incorporated in and made an integral part of this Schedule.

 

XIX. [****].

 

XX. INTENTIONALLY LEFT BLANK

 

XXI. CHANGES TO THE MASTER SERVICES AGREEMENT

 

  The following general changes shall be made to the Master Services Agreement
when incorporating the terms and conditions of the Master Services Agreement
into this Schedule: NONE.

 

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IN WITNESS WHEREOF the parties have executed this Schedule as of the date first
written above.

 

BROADRIDGE FINANCIAL SOLUTIONS (CANADA) INC. By:  

/s/ Michael Dignam

Name:   Michael Dignam Title:   President PENSON FINANCIAL SERVICES CANADA INC.
By:  

/s/ Philip A. Pendergraft

Name:   Philip A. Pendergraft Title:   Director

 

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ATTACHMENT A

DESCRIPTION OF OUTSOURCED SERVICES

[****].

 

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Appendix 1 to Attachment A

Intentionally left blank.

 

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Appendix 2 to Attachment A

Intentionally left blank.

 

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Appendix 3 to Attachment A

Existing Operations Support Services - Canada

[****].

 

Broadridge Financial Solutions (Canada) Inc.    14   

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Appendix 4 to Attachment A

Existing Technology Services - Canada

[****].

 

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Appendix 5 to Attachment A

Intentionally left blank.

 

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ATTACHMENT B

Service Bureau and Operations Support Services Price Schedule

 

1. Charges for the Services. The charges for the Services are set forth in
Attachment B-1.

 

2. Changes to Schedule B. The parties agree, subject to the Change Control
Procedures set forth in Exhibit C to the Master Services Agreement, that any
changes that the Client Local Affiliate makes from time to time that result in
the addition or removal of specific Service functions (including, without
limitation, material changes required by Applicable Law or by a regulatory body)
may require changes to the charges payable by Client Local Affiliate.

 

3. Postage. Notwithstanding anything herein to the contrary, postage shall be
billed to Client Local Affiliate on a pass-through basis.

 

4. Customization. Any customization work shall be provided pursuant to a rate
schedule to be agreed upon by the parties no later than the Closing Date.

 

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Attachment B-1

Base Fee and Tiered Fees

[****].

 

Broadridge Financial Solutions (Canada) Inc.    18   

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ATTACHMENT C

SERVICE LEVELS

SERVICE LEVELS

 

I. INTRODUCTION

In order to maintain the specified Service Levels for the Services set forth in
Attachment C-1, the parties have agreed that certain defined Service Levels (the
“SLAs”) are to be established and measured as set forth below. SLAs related to
the Services shall be established by the parties no later than [****] after the
Schedule Effective Date. New Service Levels may be added during the Schedule
Term, and existing Service Levels may be modified or eliminated, by the mutual
agreement of the parties from time to time.

 

II. OPERATIONS

 

A. General

Commencing on the Live Date and subject to this Section II, Ridge Local
Affiliate’s provision of the Services shall be in accordance with the Service
Levels identified in Attachment C-1.

 

B. Reports; Performance Review; Corrective Action

(a) Ridge Local Affiliate shall, wherever the parties agree to use objective
data, utilize continuous measurement and data capture and shall prepare a
reasonably detailed report with respect to the Service Levels) (each, a “Service
Level Report”). Service Level Reports shall be provided to Client Local
Affiliate on a monthly basis.

(b) Ridge Local Affiliate and Client Local Affiliate shall meet at least
quarterly to review Ridge Local Affiliate’s performance with respect to the
Services during the immediately preceding quarterly period and the Service Level
Reports connected therewith, and, with respect to Ridge Local Affiliate’s
failure to achieve any Service Levels, the parties shall (1) jointly formulate a
formal action plan for corrective action, as applicable, and (2) agree upon the
appropriate consequences if such action plan does not prevent subsequent
instances of the same Service Level failures.

(c) The specific criteria for each Service Level shall be detailed in the
applicable SLA set forth in Attachment C-1. Prior to Live Date, the parties
shall modify such Service Levels, create such additional Service Levels, or
modify the method used to measure performance (including, without limitation,
appropriate objective data, quality control process or other methods) as the
parties mutually agree in writing.

(d) [****], the parties shall measure actual Ridge Local Affiliate performance
levels in the manner previously agreed to by the parties, and review the method
used to measure performance and such performance. The parties shall discuss in
good faith any appropriate modifications to the method used to measure
performance, the Service Levels or any remedial steps required to be taken by
Ridge Local Affiliate in light of such review and shall, at least once annually
during the Schedule Term, engage in such good faith discussions to determine any
appropriate modifications to the method used to measure performance, the Service
Levels or any remedial steps required to be taken by Ridge Local Affiliate in
light of such review.

 

C. Changes to the Service Levels

(a) The parties acknowledge that the Service Levels shall be subject to
continuous improvement and that changing circumstances may necessitate
modifications to service, expectations and responsibilities. Accordingly, the
parties shall, at least once annually during the Schedule Term, engage in good
faith discussions to determine if (i) any modifications to the existing Service
Levels are necessary or advisable, (ii) any existing Service Levels should be
deleted and (iii) any new Service Levels should be added.

 

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(b) For all new Service Levels, the parties shall mutually agree upon the
Service Level targets and the methodology and tools used to measure performance.
The parties shall mutually agree on any Service Level target based on [****] of
measurements of the applicable Service Level utilizing the agreed upon
methodology and tools. Any dispute regarding the establishment of such Service
Level targets or the methodology and tools used to measure performance shall be
resolved by the Executive Governance Committee. In addition, the Executive
Governance Committee shall review Service Level targets and performance and
shall give weight to Client Local Affiliate’s recommendations for continuous
improvement of Service Level targets, based on, among other things, advances in
technology.

 

D Service Level Credits

The amount of Service Level Credits credited to Client Local Affiliate with
respect to all Category 1 service level failures occurring in a single month
shall not exceed, in total, [****] of the monthly charges payable in connection
with the Schedule for that month (the “Service Level Credit Pool – Category 1”).
The amount of Service Level Credits credited to Client Local Affiliate with
respect to all other service level failures occurring in a single month shall
not exceed, in total, [****] of the monthly charges payable in connection with
the Schedule for that month (the “Service Level Credit Pool – All Other
Categories”, and together with the Services Level Credit Pool – Category 1, the
“Service Level Credit Pools”). The Service Level Credit Pools shall be allocated
to various Service Levels as set forth in Attachment C-1. The parties shall, at
least once annually during the Schedule Term, engage in good faith discussions
to determine if any modification to the allocation of the Service Level Credit
Pools set forth in Attachment C-1 are necessary or advisable.

 

E. Root-Cause Analysis

In the event Ridge Local Affiliate has a Service Level failure that is not
insignificant, Ridge Local Affiliate shall perform a root-cause analysis as
described in Section 1.C of the Master Services Agreement.

 

F. Excuse

Ridge Local Affiliate shall be excused from performing any Service or obligation
hereunder, including, without limitation, the attainment of any Service Level,
if and to the extent Ridge Local Affiliate’s failure to perform such Service or
obligation is caused by Client Local Affiliate’s or its agents’ act or omission,
including, without limitation, (a) Client Local Affiliate providing incomplete
or inaccurate data, specifications or requirements; and (b) failures, errors or
defects in facilities, equipment, materials or other resources provided by
Client Local Affiliate, including, without limitation, telecommunications,
hardware, infrastructure and network connectivity.

 

Broadridge Financial Solutions (Canada) Inc.    20   

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Attachment C-1

SLAs

The parties shall include a Service Level for development work no later than
[****] after the Schedule Effective Date.

 

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ATTACHMENT D

No Warranty and Limitation on Liability Provisions

Required by Users of Third Party Data

No Warranties

EXCEPT IN CONNECTION WITH CONTRACTS OF THIRD PARTY DATA SUPPLIERS WITHOUT
CONTRACTUAL RESTRICTIONS SIMILAR TO THOSE BELOW, NO THIRD PARTY DATA SUPPLIERS
MAKE ANY WARRANTIES, EXPRESS OR IMPLIED, AS TO MERCHANTABILITY, FITNESS OR ANY
OTHER MATTER.

Limitation on Liability

(a) No third party data supplier shall have any liability to Client Local
Affiliate, or any other third party, for errors, omissions or malfunctions in
the services provided by such third party data supplier, other than the
obligation to endeavor, upon receipt of notice from Client Local Affiliate, to
correct a malfunction, error, or omission in any such services.

(b) Client Local Affiliate acknowledges that the services provided by any third
party data supplier are intended for use as an aid to institutional investors,
registered brokers or professionals of similar sophistication in making informed
judgments concerning securities.

Client Local Affiliate accepts responsibility for, and acknowledges it exercises
its own independent judgment in, its selection of any of the services provided
by any third party data supplier, its selection of the use or intended use of
such, and any results obtained. Nothing contained herein shall be deemed to be a
waiver of any rights existing under applicable law for the protection of
investors.

(c) Client Local Affiliate shall indemnify Ridge Local Affiliate’s third party
data suppliers (including, without limitation, FT Interactive) against and hold
such third party data suppliers harmless from any and all losses, damages,
liability, costs, including, without limitation, attorney’s fees, resulting
directly or indirectly from any claim or demand against such third party data
suppliers by a third party arising out of or related to the accuracy or
completeness of any services received by Client Local Affiliate, or any data,
information, service, report, analysis or publication derived therefrom. No
third party data supplier shall be liable for any claim or demand against Client
Local Affiliate by a third party.

(d) As between a third party data supplier and Client Local Affiliate, neither
party shall be liable for (i) any special, indirect or consequential damages
(even if advised of the possibility of such), (ii) any delay by reason of
circumstances beyond its control, including, without limitation, acts of civil
or military authority, national emergencies, labor difficulties, fire,
mechanical breakdown, flood or catastrophe, acts of God, insurrection, war,
riots, or failure beyond its control of transportation or power supply, or
(iii) any claim that arose more than one (1) year prior to the institution of
suit therefor.

 

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ATTACHMENT E

DISASTER RECOVERY; BUSINESS CONTINUITY

To be agreed upon by the parties within [****] after the Schedule Effective
Date.

 

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ATTACHMENT F

REPORTS

To be agreed upon by the parties within [****] after the Schedule Effective
Date.

 

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ATTACHMENT G

RECORD RETENTION POLICY

To be agreed upon by the parties within [****] after the Schedule Effective
Date.

 

Broadridge Financial Solutions (Canada) Inc.    25   

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NOTE: PORTIONS OF THIS AGREEMENT ARE THE SUBJECT OF A

CONFIDENTIAL TREATMENT REQUEST BY THE REGISTRANT TO THE

SECURITIES AND EXCHANGE COMMISSION. SUCH PORTIONS HAVE BEEN

REDACTED AND ARE MARKED WITH A “[****]” IN PLACE OF THE REDACTED LANGUAGE.

Schedule A (United Kingdom)

SERVICE BUREAU AND OPERATIONS SUPPORT SERVICES SCHEDULE

To The Master Services Agreement

between

BROADRIDGE FINANCIAL SOLUTIONS, INC.

and

PENSON WORLDWIDE, INC.

This schedule (the “Schedule”), dated as of November 2, 2009 (the “Schedule
Effective Date”), between Ridge Clearing & Outsourcing Solutions Limited (“Ridge
Local Affiliate”) and Penson Financial Services Ltd. (“Client Local Affiliate”),
to the Master Services Agreement, dated as of the date hereof, between
Broadridge Financial Solutions, Inc. and Penson Worldwide, Inc., sets forth the
terms and conditions, in addition to the terms and conditions in the Master
Services Agreement, under which Ridge Local Affiliate will provide service
bureau and operations support services to Client Local Affiliate to assist and
support Client Local Affiliate in functioning as a clearing firm. Each of Client
Local Affiliate and Ridge Local Affiliate agrees to comply with and fulfill all
terms and conditions applicable to it under the Master Services Agreement.

Unless otherwise defined herein, all capitalized terms shall have the meanings
given to them in the Master Services Agreement. In the event of a conflict
between the terms and conditions of this Schedule and the terms and conditions
of the Master Services Agreement, the terms and conditions of this Schedule
shall govern. The term “Client Local Affiliate” as used in this Schedule
includes all Affiliates, divisions and subsidiaries of Client Local Affiliate.
Except where otherwise indicated, all references in this Schedule to Sections or
Attachments are to Sections to, and Attachments of, this Schedule. The term
“party” as used in this Schedule means Ridge Local Affiliate or Client Local
Affiliate, as applicable. The term “parties” as used in this Schedule means
Ridge Local Affiliate and Client Local Affiliate.

 

I. SUBMISSION OF SCHEDULE

A. During the Schedule Term, Client Local Affiliate and Ridge Local Affiliate
shall each be subject, to the extent applicable to such party, to the provisions
of federal, state and local laws, rules and regulations and the constitution,
by-laws, rules, regulations and stated policies of the Financial Services
Authority (“FSA”), the London Stock Exchange Group plc (“LSE”) and any other
securities exchange, commission, association, regulatory or self-regulatory
organization (“SRO”) vested with authority over Client Local Affiliate or Ridge
Local Affiliate (to the extent applicable to a party, the “Laws and Rules”).
Each party shall perform its obligations under this Schedule in accordance with
the Laws and Rules.

 

Ridge Clearing & Outsourcing Solutions Limited    1   

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UNITED KINGDOM

 

B. This Schedule shall not become effective until the date upon which all
necessary SRO approvals as to both parties are received (the “Approval Date”);
provided, however, that if no SRO approvals are required for this Schedule to
become effective, this Schedule shall become effective as of the Schedule
Effective Date. In the event that any such approval is required and this
Schedule is not so approved, the parties shall negotiate in good faith to amend
this Schedule as may be needed to obtain such approval.

C. Ridge Local Affiliate acknowledges that Client Local Affiliate has regulatory
responsibilities as a clearing firm, including, among other things, a duty to
supervise the types of business in which it engages. To assist Client Local
Affiliate in satisfying such obligations, Ridge Local Affiliate agrees to
provide, at the reasonable request of Client Local Affiliate, performance
reports with respect to the Services and full access to relevant books and
records, information and Ridge Local Affiliate personnel engaged in providing
the Services. Ridge Local Affiliate acknowledges that Client Local Affiliate is
required, from time to time, to prepare and file reports with the FSA, LSE and
other SROs or Governmental Authorities. To assist Client Local Affiliate in
satisfying such requirements, Ridge Local Affiliate agrees to provide Client
Local Affiliate with information in its possession that is necessary for Client
Local Affiliate to prepare and file any such reports.

D. This Schedule is not intended, and shall not be construed, to limit, reduce,
or otherwise change any regulatory, contractual or other obligation that Client
Local Affiliate owes to a correspondent or to its customers.

 

II. SERVICES TO BE PERFORMED BY RIDGE LOCAL AFFILIATE

A. Subject to the second paragraph of Section 16.G of the Master Services
Agreement and Section I.B, Ridge Local Affiliate will perform the services,
functions and responsibilities described in Attachment A in accordance with the
terms and conditions of this Schedule and the Master Services Agreement.
Attachment A is hereby incorporated in and made an integral part of this
Schedule. Any additional services to be performed by Ridge Local Affiliate shall
be subject to the written agreement of the parties.

B. Intentionally left blank.

C. This Schedule and the Master Services Agreement are intended to create an
exclusive arrangement between Client Local Affiliate and Ridge Local Affiliate
with respect to the Services utilized by Client Local Affiliate as of the
applicable Live Date in the Territory for which a pricing schedule is included
in this Schedule except (A) as otherwise set forth in this Schedule and the
Master Services Agreement and (B) in the event that (i) Client Local Affiliate
or a Customer of Client Local Affiliate is prohibited by Law from receiving
Services from Ridge Local Affiliate in the Territory, (ii) Client Local
Affiliate obtains a business and in connection therewith is contractually
required to use an alternative system (and not the Services) as a condition of
obtaining such business or (iii) during any time period that Ridge Local
Affiliate is in material breach of this Schedule and has failed to cure such
breach within thirty (30) days following notice from Client Local Affiliate
specifying the nature of such breach in reasonable detail.

 

Ridge Clearing & Outsourcing Solutions Limited    2   

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III. CONVERSION

 

  A. Conversion of Client Correspondents. In connection with the conversion of
the correspondents of Client Local Affiliate (“Client Correspondents”) to Ridge
Local Affiliate, the parties agree to the following:

 

  (i) Client Local Affiliate shall provide Ridge Local Affiliate with Client
Local Affiliate’s requirements with respect to the Client Local Affiliate files
and Service Levels applicable to the Client Correspondents (the “Client
Requirements”) after the Schedule Effective Date. The parties shall enter into a
statement of work (the “Conversion SOW”) that will describe Client Local
Affiliate’s migration to Ridge Local Affiliate’s service delivery and technology
platform [****]. The Conversion SOW will define the Target Live Date for each
Service and describe specific implementation activities and procedures required
to migrate Client Correspondents to the Ridge Local Affiliate, including,
without limitation, development, implementation and integration of Software and
other software and development and integration of correspondent clearing
functionalities, reporting and monitoring systems and such other services as may
be set forth in the Conversion SOW (the “Conversion Services”). Without limiting
the generality of the foregoing, the Conversion SOW shall (1) specify that Ridge
Local Affiliate will convert the applicable Client Local Affiliate files to make
them compatible with the Services and the other services, as may be required in
respect of the migration of Client Local Affiliate’s Customers to the Services
and (2) describe the development and integration of correspondent clearing
functionalities by Ridge Local Affiliate. The Conversion Services shall be
provided at no charge to Client Local Affiliate by Ridge Local Affiliate.

 

  (ii) The parties shall cooperate and provide each other with all information
and assistance reasonably required in connection with the Conversion Services.
Each party will assign a liaison person to assist and cooperate with the other
party in connection with the Conversion Services (which person may be replaced
by a party at its sole discretion from time to time by way of notice to the
other party).

 

IV. TERM OF SCHEDULE

 

  A. Schedule Term. The term of this Schedule (the “Schedule Term”) shall begin
on the Schedule Effective Date and shall continue for a period of ten (10) years
after the last Live Date with respect to the Schedules under the Master Services
Agreement for the U.S., U.K. or Canada (for clarity, the Schedule Term of the
Schedules under the Master Services Agreement for the U.S., U.K. and Canada
shall be coterminous with each other); provided, however, that this Schedule’s
effective date is subject to its review and approval by the applicable
regulatory agency as described in Section I.A. The “Live Date” for a Service is
defined as the first date upon which Ridge Local Affiliate processes trades
utilizing the applicable Service on behalf of Client Correspondents in
accordance with the provisions and requirements of this Schedule and the Master
Services Agreement (excluding any beta testing or similar testing of the
system). The Schedule Term shall automatically extend following its scheduled
expiration date unless (1) either party gives notice of termination at least one
hundred eighty (180) days prior to the scheduled expiration date, in which case
the Schedule Term shall expire on the scheduled expiration date or (2) either
party gives notice of termination at any time after the date that is one hundred
eighty (180) days prior to the scheduled expiration date of the Schedule Term
(including any time beyond the scheduled expiration date), in which case the
Schedule Term shall expire on the date specified in such notice of termination,
which date must be at least one hundred eighty (180) days after the date of such
notice.

 

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  B. [****].

 

  C. [****].

 

  D. [****].

 

  E. [****].

 

V. CHARGES

 

  A. The fees for the Services are set forth in Attachment B hereto. Attachment
B is hereby incorporated in and made an integral part of this Schedule. Unless
otherwise indicated, all fees and charges set forth in Attachment B are in
British pounds sterling. Notwithstanding the immediately preceding sentence, for
purposes of calculating the aggregate amounts in connection with the last
paragraph in Attachment A and paragraph four of Section III to Attachment B-1,
such calculation shall be in U.S. dollars using the exchange rate published in
the Wall Street Journal on the Schedule Effective Date.

 

  B. [****].

 

  C. [****].

 

VI. NO PARTNERSHIP OR AGENCY; NO SPECIAL TREATMENT

 

  Neither this Schedule nor any activity hereunder shall create a general or
limited partnership, association, joint venture, branch or agency relationship
between Client Local Affiliate and Ridge Local Affiliate. Client Local Affiliate
shall not hold itself out as an agent of Ridge Local Affiliate or of any
subsidiary or company controlled directly or indirectly by or affiliated with
Ridge Local Affiliate, nor shall it employ Ridge Local Affiliate’s name in any
manner that creates the impression that the relationship created or intended
between them is anything other than that of service provider and clearing
broker. Except as reasonably necessary to provide the Services, Ridge Local
Affiliate shall not hold itself out as an agent of Client Local Affiliate or of
any subsidiary or company controlled directly or indirectly by or affiliated
with Client Local Affiliate, nor shall it employ Client Local Affiliate’s name
in any manner that creates the impression that the relationship created or
intended between them is anything other than that of service provider and
clearing broker. Neither party shall, without the prior approval of the other
party, place any advertisement in any newspaper, publication, periodical or any
other media if such advertisement in any manner makes reference to the other
party or to the arrangements contemplated by this Schedule. Neither party shall,
without the prior approval of the other party (which approval shall not be
unreasonably withheld), furnish any link to the website(s) of the other party or
its Affiliates. For the avoidance of doubt, nothing herein shall prevent the
disclosure of (i) Ridge Local Affiliate’s name or the Services to be performed
under the Master Services Agreement or this Schedule to any of Client Local
Affiliate’s regulators or customers or (ii) a party’s name or the services it
offers to the extent necessary to carry out each party’s obligations under the
Master Services Agreement, this Schedule or Marketing Agreement.

 

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  Nothing herein shall cause Ridge Local Affiliate to be construed as or deemed
to be a fiduciary with respect to Client Local Affiliate, any correspondent of
Client Local Affiliate, or any customer of Client Local Affiliate or its
correspondents.

 

  This Schedule is not intended, nor shall it be construed, to bestow upon
either party any special treatment regarding any other arrangements, agreements
or understandings that exist or may hereafter exist between the parties or their
affiliates. Neither party shall have any obligation to deal with the other in
any capacity other than as set forth in this Schedule.

 

VII. SERVICE LEVELS

 

  Ridge Local Affiliate shall provide the Services in accordance with the terms
and conditions set forth in Section 1.C of the Master Services Agreement and
with respect to Service Levels set forth in Attachment C hereto and any other
Service Level agreement that may be agreed between the parties from time to time
with respect to the Territory. Attachment C is hereby incorporated in and made
an integral part of this Schedule. Ridge Local Affiliate agrees that the Service
Levels set forth in Attachment C shall be at least as stringent as any service
levels provided by Ridge Local Affiliate to its other clients in the United
Kingdom.

 

VIII. EXCHANGE OF INFORMATION

 

  Throughout the Schedule Term, each party shall promptly supply the other with
information in its possession necessary or appropriate to enable the other party
properly to perform its obligations under this Schedule and as a registered
broker-dealer.

 

IX. RECORDS RETENTION

 

  The information that Ridge Local Affiliate generates on behalf of Client Local
Affiliate are the books and records of Client Local Affiliate. Notwithstanding
anything to the contrary in the Master Services Agreement, Ridge Local Affiliate
will maintain and preserve such information in accordance with the agreed-upon
record retention policy set forth in Attachment G and the Laws and Rules. Any
additional retention period(s) shall be directed by Client Local Affiliate and
shall be subject to the mutual written agreement of the parties. Attachment G is
hereby incorporated in and made an integral part of this Schedule.

 

X. GOVERNANCE

 

  Ridge Local Affiliate and Client Local Affiliate shall each appoint at least
two (2) senior level managers to a joint committee that shall meet no less than
monthly to address issues that may arise in connection with the performance of
the Services. In addition to the foregoing but without prejudice to the
obligations of the parties under this Schedule or the Master Services Agreement,
the parties have agreed to the detailed governance provisions set forth in
Exhibit C to the Master Services Agreement.

 

   Ridge Local Affiliate shall provide to Client Local Affiliate the reports set
forth in Attachment F. Attachment F is hereby incorporated in and made an
integral part of this Schedule.

 

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XI. TAPE RECORDING

 

   Unless otherwise prohibited by applicable Law, the parties shall have the
right to record telephone conversations between themselves, and waive any right
to further notice of any such recording. The parties agree to make such
recordings available to each other upon reasonable notice.

 

XII. THIRD PARTY VENDOR SERVICES

 

  Client Local Affiliate may contract directly with and in such case will be
responsible for (i) complying with the terms and conditions of use relating to
additional third party products or services not affiliated with Ridge Local
Affiliate set forth in Attachment A that it elects to receive or access through
Ridge Local Affiliate from time to time and (ii) the costs relating thereto as
applicable, other than those third party products or services integrated into
the Services or provided as part of the Services. If third party products or
services, including, without limitation, data, are provided by or through Ridge
Local Affiliate to Client Local Affiliate or integrated into the Services or
provided as part of the Services, Ridge Local Affiliate shall obtain and
warrants and represents that it has the full right, title or license required to
provide such product or service to Client Local Affiliate. Additionally, Ridge
Local Affiliate hereby grants to Client Local Affiliate and customers of Client
Local Affiliate the right to use such product or service during, and for the
purposes of, and in accordance with, the Master Services Agreement and this
Schedule.

 

  Client Local Affiliate shall be responsible for complying with the terms and
conditions of use (to the extent such terms and conditions of use are provided
by Ridge Local Affiliate to Client Local Affiliate) relating to the third party
products or services that it receives or accesses through Ridge Local Affiliate
and the costs relating thereto. If (i) any third party products or services, or
Ridge-owned products or services, provided by Ridge Local Affiliate become
unavailable and require replacement, (ii) Ridge Local Affiliate, upon notice to
Client Local Affiliate (and upon Client Local Affiliate’s consent, if and to the
extent such consent is required by Law), elects to replace any third party
products or services or Ridge-owned products or services provided by Ridge Local
Affiliate with new or different third party products or services or Ridge-owned
products or services or (iii) at least fifty percent (50%) of Ridge Local
Affiliate’s clients utilizing such products or services in the Territory request
such replacement, in each case, Ridge Local Affiliate shall replace such
products or services with equivalent or enhanced products or services without
increased cost.

 

  Client Local Affiliate may contract directly with any vendor or subcontractor
of Ridge Local Affiliate for the services provided by such vendor or
subcontractor through Ridge Local Affiliate; provided, however, that (a) such
contract does not violate Ridge Local Affiliate’s obligations to such vendor or
subcontractor and (b) Client Local Affiliate shall be responsible for the cost
of any transition services (including, without limitation, any incremental costs
resulting from the transition) in connection therewith.

 

XIII. OBLIGATIONS FOR RECEIPT OF DATA

 

 

Client Local Affiliate may be using data set forth in Attachment D hereto
provided by FT Interactive Data Corporation (“FT Interactive”). In such case,
Client Local Affiliate agrees to the provisions attached hereto as Attachment D
relating to its use of FT Interactive Data Corporation data in respect of the
Services. Attachment D is hereby incorporated in and made an integral part of
this Schedule. Client Local Affiliate shall be under no obligation to receive FT
Interactive Data Corporation data through Ridge Local Affiliate and to such
extent, the previous sentence shall not apply and Ridge Local Affiliate shall
not be responsible for the provision of such

 

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services to Client Local Affiliate in such case or have any liability for such
non-Ridge Local Affiliate FT Interactive Data Corporation services that Client
Local Affiliate decides to receive. Ridge Local Affiliate warrants and
represents that it has full right, title or license required to provide such
data to Client Local Affiliate for use in the Services. Additionally, Ridge
Local Affiliate hereby grants to Client Local Affiliate the right to use and
store such data pursuant to the terms and conditions of Attachment D, for the
purposes of Client Local Affiliate providing services to its customers in the
course of Client Local Affiliate’s standard commercial operations.

 

XIV. ACQUISITION OF OR BY ANOTHER RIDGE LOCAL AFFILIATE CLIENT

 

  In the event that Client Local Affiliate acquires, or is acquired by, by
stock, acquisition of substantially all the assets of, merger, or consolidation
(a “Business Combination”), a Client Local Affiliate of Ridge Local Affiliate’s
Brokerage Services Group that receives trade processing services substantially
similar to the Services provided under this Schedule (the “Other Entity”), and
Client Local Affiliate and the Other Entity, or the resulting entity as the case
may be, consolidate the trade processing carried out under this Schedule with
the trade processing carried out by the Other Entity prior to the termination or
expiration of the Client Local Affiliate’s or the Other Entity’s schedule
relating to trade processing services substantially similar to the Services
provided under this Schedule so that it is processed by Ridge Local Affiliate as
one entity, all service charges, including, without limitation, the Base Fee and
any other applicable tiered fees applicable for the brokerage processing
services provided by Ridge Local Affiliate shall be renegotiated in good faith
between Ridge Local Affiliate and Client Local Affiliate. Otherwise, the Ridge
Local Affiliate agreements with Client Local Affiliate and the Other Entity
agreements in place prior to the Business Combination shall remain in effect for
the respective services provided by Ridge Local Affiliate or any other Ridge
Local Affiliate’s Brokerage Services Group entity until the termination or
expiration of such agreements. For clarity and notwithstanding anything to the
contrary, Client Local Affiliate and the Other Entity shall be free to
consolidate their trade processing after the termination or expiration of either
of their agreements or relevant Schedule with Ridge Local Affiliate or any
entity of the Ridge Local Affiliate Brokerage Services Group without restriction
and without any obligation to renegotiate any fees relating to trade processing
or otherwise. In the event Client Local Affiliate participates in a Business
Combination with an entity that is not a client of Ridge Local Affiliate’s
Brokerage Services Group that receives trade processing and/or operations
support services substantially similar to the Services provided under this
Schedule, all rates in Attachment B (including, without limitation, the Base Fee
and any other applicable tiered fees applicable for the brokerage processing
services) provided by Ridge Local Affiliate shall remain as set forth in
Attachment B, subject to the adjustments described therein.

 

XV. CLIENT LOCAL AFFILIATE RESPONSIBILITIES

 

  Client Local Affiliate shall be responsible, to the extent necessary for the
Services it is receiving, in connection with the use of the Services for the
following:

 

  A. User security administration for the Services in accordance with, and as
set forth in, the relevant product specifications and user documentation.

 

  B. Forms and supplies required by Ridge Local Affiliate in connection with the
performance of the Services, which are agreed to by the parties in writing.
Ridge Local Affiliate shall provide Client Local Affiliate with reasonable
advance notice of any such requirements.

 

  C. Equipment, other than equipment provided by Ridge Local Affiliate, at
Client Local Affiliate’s location required in use of the Services (e.g.,
printers, terminals) as identified by Ridge Local Affiliate in writing.

 

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  D. Dial backup ISDN circuits or other equivalent backup solution selected by
Client Local Affiliate.

 

  E. Third party telecommunications services not otherwise set forth in
Attachment B.

 

  F. Hardware, software, and telecommunications products required to interface
to the Services (e.g., terminal emulation software), other than any such
hardware, software, and telecommunications products provided by Ridge Local
Affiliate.

 

  G. Special equipment, which Client Local Affiliate may elect to place at Ridge
Local Affiliate locations, if required by Client Local Affiliate, specific to
Client Local Affiliate’s use of the Services as agreed to by the parties in
writing.

 

  H. Use commercially reasonable efforts to obtain the approval of each relevant
regulatory or self-regulatory agency or entity, if any, with regulates Client
Local Affiliate’s receipt of the Services (including, without limitation,
securities and commodities exchanges, associations of securities and/or
commodities dealers, federal, provincial and local Governmental Authorities).

 

  For the avoidance of doubt, Ridge Local Affiliate shall not be responsible for
its failure to provide Services solely to the extent caused by the failure of
Client Local Affiliate to perform the above listed requirements. Ridge Local
Affiliate shall (i) provide Client Local Affiliate with reasonable notice of
Client Local Affiliate’s failure to perform any of its responsibilities set
forth in this Schedule and (ii) use commercially reasonable efforts to perform
notwithstanding Client Local Affiliate’s failure to perform, subject to Client
Local Affiliate reimbursing Ridge Local Affiliate for any reasonable incremental
cost to Ridge Local Affiliate in connection with such efforts.

 

XVI. REQUIRED PROVISION OF SYBASE, INC.

 

  Client Local Affiliate acknowledges and agrees that the Sybase SQL Server
Program and the Sybase Replication Server Program (the “Programs”) to the extent
incorporated into the Services and used in connection with Ridge Local
Affiliate’s BPS Advantage product, if selected and received by Client Local
Affiliate, shall only be used by the Client Local Affiliate as set forth below
to read, in a view-only format, the Services, and the Programs shall not be
downloaded or used to create or alter tables, schemas or databases or otherwise
develop or modify in any way the applications or performance of other
programming tasks. Notwithstanding the foregoing, Client Local Affiliate may
access the Programs through Ridge Local Affiliate tools or third party tools;
provided, however, that any access shall be restricted to the following: Client
Local Affiliate may access the Services embedding a copy of the Programs which
are deployed on Ridge Local Affiliate’s premises or Client Local Affiliate’s
site, provided, however, that in either instance, Client Local Affiliate shall
not (i) copy the application(s) embedding the Programs, (ii) use the Programs
other than to process Client Local Affiliate’s own transactions, transactions
for entities that are correspondents or customers of the Client Local Affiliate
and transactions for entities that operate on a fully disclosed basis through
Client Local Affiliate as correspondents, or (iii) access the Programs for
general development. Client Local Affiliate may also develop applications
against the BPS Advantage database using tools supplied by Ridge Local
Affiliate, Sybase or other third parties.

 

XVII. SEVERABILITY

 

  If any provision of this Schedule should be held invalid or unenforceable in a
court of law in any jurisdiction, such invalidity or unenforceability shall not
affect the enforceability of this Schedule or any other provision thereof. In
addition, the parties agree that it is their intention that such provision shall
be construed in a manner designed to effectuate the purposes of this Schedule to
the fullest extent enforceable under applicable Law. The parties further agree
that such ruling shall not affect the construction of that provision or any
other of the provisions in any other jurisdiction.

 

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XVIII.  DISASTER RECOVERY; BUSINESS CONTINUITY

 

   Ridge Local Affiliate shall maintain the disaster recovery and business
continuity services as set forth in Attachment E.  Attachment E is hereby
incorporated in and made an integral part of this Schedule.

 

XIX.  [****].

 

XX.  INTENTIONALLY LEFT BLANK

 

XXI.  CHANGES TO THE MASTER SERVICES AGREEMENT

 

   The following general changes shall be made to the Master Services Agreement
when incorporating the terms and conditions  of the Master Services Agreement
into this Schedule: NONE.

*                        *                         *                        *

 

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IN WITNESS WHEREOF the parties have executed this Schedule as of the date first
written above.

 

RIDGE CLEARING & OUTSOURCING SOLUTIONS LIMITED By:  

/s/ Joseph Barra

Name:   Joseph Barra Title:   Director PENSON FINANCIAL SERVICES LTD. By:  

/s/ Philip A. Pendergraft

Name:   Philip A. Pendergraft Title:   Director

 

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ATTACHMENT A

DESCRIPTION OF OUTSOURCED SERVICES

[****].

 

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Appendix 1 to Attachment A

Intentionally left blank.

 

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Appendix 2 to Attachment A

Intentionally left blank.

 

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Appendix 3 to Attachment A

Existing Operations Support Services – U.K.

[****].

 

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Appendix 4 to Attachment A

Existing Technology Services – U.K.

[****].

 

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Appendix 5 to Attachment A

Intentionally left blank.

 

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ATTACHMENT B

Service Bureau and Operations Support Services Price Schedule

Service Bureau and Operations Support Services Price Schedule

 

1. Charges for the Services. The charges for the Services are set forth in
Attachment B-1.

 

2. Changes to Schedule B. The parties agree, subject to the Change Control
Procedures set forth in Exhibit C to the Master Services Agreement, that any
changes that the Client Local Affiliate makes from time to time that result in
the addition or removal of specific Service functions (including, without
limitation, material changes required by Applicable Law or by a regulatory body)
may require changes to the charges payable by Client Local Affiliate.

 

3. Postage. Notwithstanding anything herein to the contrary, postage shall be
billed to Client Local Affiliate on a pass-through basis.

 

4. Customization. Any customization work shall be provided pursuant to a rate
schedule to be agreed upon by the parties no later than the Closing Date.

 

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Attachment B-1

Base Fee and Tiered Fees

[****].

 

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ATTACHMENT C

SERVICE LEVELS

 

I. INTRODUCTION

In order to maintain the specified Service Levels for the Services set forth in
Attachment C-1, the parties have agreed that certain defined Service Levels (the
“SLAs”) are to be established and measured as set forth below. SLAs related to
the Services shall be established by the parties no later than [****] after the
Schedule Effective Date. New Service Levels may be added during the Schedule
Term, and existing Service Levels may be modified or eliminated, by the mutual
agreement of the parties from time to time.

 

II. OPERATIONS

 

A. General

Commencing on the Live Date and subject to this Section II, Ridge Local
Affiliate’s provision of the Services shall be in accordance with the Service
Levels identified in Attachment C-1.

 

B. Reports; Performance Review; Corrective Action

(a) Ridge Local Affiliate shall, wherever the parties agree to use objective
data, utilize continuous measurement and data capture and shall prepare a
reasonably detailed report with respect to the Service Levels) (each, a “Service
Level Report”). Service Level Reports shall be provided to Client Local
Affiliate on a monthly basis.

(b) Ridge Local Affiliate and Client Local Affiliate shall meet at least
quarterly to review Ridge Local Affiliate’s performance with respect to the
Services during the immediately preceding quarterly period and the Service Level
Reports connected therewith, and, with respect to Ridge Local Affiliate’s
failure to achieve any Service Levels, the parties shall (1) jointly formulate a
formal action plan for corrective action, as applicable, and (2) agree upon the
appropriate consequences if such action plan does not prevent subsequent
instances of the same Service Level failures.

(c) The specific criteria for each Service Level shall be detailed in the
applicable SLA set forth in Attachment C-1. Prior to Live Date, the parties
shall modify such Service Levels, create such additional Service Levels, or
modify the method used to measure performance (including, without limitation,
appropriate objective data, quality control process or other methods) as the
parties mutually agree in writing.

(d) [****], the parties shall measure actual Ridge Local Affiliate performance
levels in the manner previously agreed to by the parties, and review the method
used to measure performance and such performance. The parties shall discuss in
good faith any appropriate modifications to the method used to measure
performance, the Service Levels or any remedial steps required to be taken by
Ridge Local Affiliate in light of such review and shall, at least once annually
during the Schedule Term, engage in such good faith discussions to determine any
appropriate modifications to the method used to measure performance, the Service
Levels or any remedial steps required to be taken by Ridge Local Affiliate in
light of such review.

 

C. Changes to the Service Levels

(a) The parties acknowledge that the Service Levels shall be subject to
continuous improvement and that changing circumstances may necessitate
modifications to service, expectations and

 

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responsibilities. Accordingly, the parties shall, at least once annually during
the Schedule Term, engage in good faith discussions to determine if (i) any
modifications to the existing Service Levels are necessary or advisable,
(ii) any existing Service Levels should be deleted and (iii) any new Service
Levels should be added.

(b) For all new Service Levels, the parties shall mutually agree upon the
Service Level targets and the methodology and tools used to measure performance.
The parties shall mutually agree on any Service Level target based on [****] of
measurements of the applicable Service Level utilizing the agreed upon
methodology and tools. Any dispute regarding the establishment of such Service
Level targets or the methodology and tools used to measure performance shall be
resolved by the Executive Governance Committee. In addition, the Executive
Governance Committee shall review Service Level targets and performance and
shall give weight to Client Local Affiliate’s recommendations for continuous
improvement of Service Level targets, based on, among other things, advances in
technology.

 

D Service Level Credits

The amount of Service Level Credits credited to Client Local Affiliate with
respect to all Category 1 service level failures occurring in a single month
shall not exceed, in total, [****] of the monthly charges payable in connection
with the Schedule for that month (the “Service Level Credit Pool – Category 1”).
The amount of Service Level Credits credited to Client Local Affiliate with
respect to all other service level failures occurring in a single month shall
not exceed, in total, [****] of the monthly charges payable in connection with
the Schedule for that month (the “Service Level Credit Pool – All Other
Categories”, and together with the Services Level Credit Pool – Category 1, the
“Service Level Credit Pools”). The Service Level Credit Pools shall be allocated
to various Service Levels as set forth in Attachment C-1. The parties shall, at
least once annually during the Schedule Term, engage in good faith discussions
to determine if any modification to the allocation of the Service Level Credit
Pools set forth in Attachment C-1 are necessary or advisable.

 

E. Root-Cause Analysis

In the event Ridge Local Affiliate has a Service Level failure that is not
insignificant, Ridge Local Affiliate shall perform a root-cause analysis as
described in Section 1.C of the Master Services Agreement.

 

F. Excuse

Ridge Local Affiliate shall be excused from performing any Service or obligation
hereunder, including, without limitation, the attainment of any Service Level,
if and to the extent Ridge Local Affiliate’s failure to perform such Service or
obligation is caused by Client Local Affiliate’s or its agents’ act or omission,
including, without limitation, (a) Client Local Affiliate providing incomplete
or inaccurate data, specifications or requirements; and (b) failures, errors or
defects in facilities, equipment, materials or other resources provided by
Client Local Affiliate, including, without limitation, telecommunications,
hardware, infrastructure and network connectivity.

 

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Attachment C-1

SLAs

The parties shall include a Service Level for development work no later than
[****] after the Schedule Effective Date.

 

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ATTACHMENT D

No Warranty and Limitation on Liability Provisions

Required by Users of Third Party Data

No Warranties

EXCEPT IN CONNECTION WITH CONTRACTS OF THIRD PARTY DATA SUPPLIERS WITHOUT
CONTRACTUAL RESTRICTIONS SIMILAR TO THOSE BELOW, NO THIRD PARTY DATA SUPPLIERS
MAKE ANY WARRANTIES, EXPRESS OR IMPLIED, AS TO MERCHANTABILITY, FITNESS OR ANY
OTHER MATTER.

Limitation on Liability

(a) No third party data supplier shall have any liability to Client Local
Affiliate, or any other third party, for errors, omissions or malfunctions in
the services provided by such third party data supplier, other than the
obligation to endeavor, upon receipt of notice from Client Local Affiliate, to
correct a malfunction, error, or omission in any such services.

(b) Client Local Affiliate acknowledges that the services provided by any third
party data supplier are intended for use as an aid to institutional investors,
registered brokers or professionals of similar sophistication in making informed
judgments concerning securities.

Client Local Affiliate accepts responsibility for, and acknowledges it exercises
its own independent judgment in, its selection of any of the services provided
by any third party data supplier, its selection of the use or intended use of
such, and any results obtained. Nothing contained herein shall be deemed to be a
waiver of any rights existing under applicable law for the protection of
investors.

(c) Client Local Affiliate shall indemnify Ridge Local Affiliate’s third party
data suppliers (including, without limitation, FT Interactive) against and hold
such third party data suppliers harmless from any and all losses, damages,
liability, costs, including, without limitation, attorney’s fees, resulting
directly or indirectly from any claim or demand against such third party data
suppliers by a third party arising out of or related to the accuracy or
completeness of any services received by Client Local Affiliate, or any data,
information, service, report, analysis or publication derived therefrom. No
third party data supplier shall be liable for any claim or demand against Client
Local Affiliate by a third party.

(d) As between a third party data supplier and Client Local Affiliate, neither
party shall be liable for (i) any special, indirect or consequential damages
(even if advised of the possibility of such), (ii) any delay by reason of
circumstances beyond its control, including, without limitation, acts of civil
or military authority, national emergencies, labor difficulties, fire,
mechanical breakdown, flood or catastrophe, acts of God, insurrection, war,
riots, or failure beyond its control of transportation or power supply, or
(iii) any claim that arose more than one (1) year prior to the institution of
suit therefor.

 

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ATTACHMENT E

DISASTER RECOVERY; BUSINESS CONTINUITY

To be agreed upon by the parties within [****] after the Schedule Effective
Date.

 

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ATTACHMENT F

REPORTS

To be agreed upon by the parties within [****] after the Schedule Effective
Date.

 

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ATTACHMENT G

RECORD RETENTION POLICY

To be agreed upon by the parties within [****] after the Schedule Effective
Date.

 

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