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Exhibit 10.40A

                           SOFTWARE LICENSE AGREEMENT

         This Software License  Agreement (this  "AGREEMENT"),  dated as of July
31, 2002 (the  "EFFECTIVE  DATE"),  is by and among A.B.  Watley  Group Inc.,  a
Delaware  corporation  ("WATLEY"),  A.B.  Watley,  Inc., a New York  corporation
("ABWI"),  and  Integrated  Trading  Solutions,  Inc.,  a  Delaware  corporation
("INTEGRATED").  Watley,  ABWI and Integrated are each sometimes  referred to in
this Agreement as a "PARTY" and are  collectively  referred to in this Agreement
as the "PARTIES."

                                   BACKGROUND

         WHEREAS,  the Parties have entered  into that  certain  Asset  Purchase
Agreement,  dated as of even date  herewith  (the "ASSET  PURCHASE  AGREEMENT"),
pursuant to which Watley and ABWI  transferred to Integrated all of Watley`s and
ABWI`s  right,  title and interest in and to the  Licensed  Software (as defined
below); and

         WHEREAS,  Watley and ABWI  desire to obtain a license  to the  Licensed
Software  for use in their  businesses.  Integrated  desires to grant Watley and
ABWI a license for such purposes in accordance  with the terms and conditions of
this Agreement.

                                    AGREEMENT

         NOW, THEREFORE, the Parties agree as follows:

1. DEFINITIONS.

         As used in this Agreement,  the following terms will have the following
meanings.

         "AFFILIATE" means, with respect to any Person, any corporation or other
entity of which at least a majority of the outstanding  shares of stock or other
ownership interests having by the terms thereof ordinary voting power to elect a
majority of the board of directors (or Persons  performing similar functions) of
such  corporation or entity  (irrespective of whether or not at the time, in the
case of a corporation,  stock of any other class or classes of such  corporation
will  have or  might  have  voting  power  by  reason  of the  happening  of any
contingency) is, at the time, directly or indirectly owned or controlled by such
Person.

         "AUTHORIZED USERS" means (i) Watley, but solely for the benefit of ABWI
or any other  Affiliate of Watley or ABWI that is wholly owned by Watley  and/or
ABWI  provided  that (A) the  Affiliate  is  conducting  a  business  or line of
business  that ABWI is  currently  engaged  in or could be engaged in within the
scope of this  Agreement,  (B) the Affiliate  becomes a party to Fully Disclosed
Clearing  Agreement  dated as of  October,  3,  1996,  between  ABWI and  Penson
Financial  Services,  Inc., as amended (the  "Clearing  Agreement") on identical
terms as set forth therein,  as applicable,  (C) the Affiliate  becomes bound by
the terms of this  Agreement and the Related  Documents,  as applicable on terms
satisfactory to Integrated and the other parties to such Related Documents,  (D)
such  Affiliate  does not benefit from the Licensed  Software as a result of any
transaction  involving a transaction  prohibited by Section  13(h),  and (E) the
Affiliate executes such other  documentation as Integrated and/or its affiliates
reasonably  request and provides to Penson a business  plan and other  financial
information acceptable to Penson (each an "Authorized Affiliate"),  (ii) ABWI or
any  Authorized  Affiliate , but solely at those  locations  of ABWI or any such
Authorized  Affiliate  within the United  States (it being  agreed that ABWI and
each such Authorized  Affiliate may use the Licensed Software to service trading
customers of ABWI or any such Authorized Affiliate located outside of the United
States  solely to the extent they execute  trades with ABWI in the United States
in full compliance with all applicable laws,  rules and  regulations,  and (iii)


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ABWI`s or any  Authorized  Affiliates`  customers  (e.g.,  retail or proprietary
traders registered with ABWI). The parties acknowledge and agree that Authorized
Users shall exclude all brokerage  and/or dealer firms trading in securities and
any  current or  prospective  customers  of  Integrated  and/or its  affiliates.
Notwithstanding  anything in the immediately  preceding sentence to the contrary
or any other provision of Section 3 hereof, but solely with respect to customers
noted in such  sentence  that are not  brokerage  and/or  dealer  firms  (each a
"NON-BD"),  if any such  Non-BD  customer  of Watley  or ABWI or any  Authorized
Affiliate that is an Authorized User is also a customer of Integrated`s software
solutions and/or other Integrated  products and services or a potential customer
that has been  solicited by or on behalf of  Integrated  and has entered into or
has  agreed to enter  into good  faith  negotiations  to  become a  customer  of
Integrated,  then Watley shall pay Integrated its then current  standard license
fees  for  each  such  customer;  provided,  however,  that  Watley,  ABWI,  any
Authorized  Affiliate and other Authorized Users shall,  under no circumstances,
market the  Licensed  Software in a manner that  purposefully  or  intentionally
adversely effects marketing opportunities of Integrated as reasonably determined
by Integrated; provided, further, that, any determination by Integrated that any
of Watley,  ABWI, any Authorized Affiliate or other Authorized User has marketed
or is marketing the Licensed Software in a manner that deprives  Integrated of a
licensing   opportunity   (whether  or  not  such  marketing  is  purposeful  or
intentional) shall result in an obligation, as determined by Integrated, for the
recipient or  beneficiary  of the Licensed  Software to pay  Integrated its then
current standard licensing fees and/or to cease using the Licensed  Software.  A
transaction  with a Non-BD  that is  otherwise  permitted  by the  terms of this
Agreement and the Related  Documents  shall not  constitute a  transaction  that
deprives Integrated of a marketing opportunity if (i) Watley shall have notified
Integrated in writing (sent by telecopy marked  conspicuously on the cover sheet
with  "Urgent-Immediate  Reply Needed" to each of Integrated`s CEO and COO, each
of Penson`s CEO, COO, CFO, General Counsel and Chief  Compliance  Officer and to
Andrew Koslow  (208-275-3940))  in  reasonable  detail of the general terms of a
proposed  transaction  with the  Non-BD  and the  identity  of the  Non-BD,  and
Integrated   either  confirms  that  such  transaction  does  not  constitute  a
transaction  that  deprives  Integrated of a marketing  opportunity  or does not
notify  Watley  within six business  days after the day on which it receives the
notice from Watley that  Integrated  deems the  transaction  to be a transaction
that deprives Integrated of a marketing  opportunity and Watley, ABWI and/or its
applicable  Authorized  Affiliate  completes  a  transaction  on  terms  no less
favorable to Watley, ABWI and/or its applicable  Authorized  Affiliate than that
provided in the notice.  Existing  brokerage  customers  of ABWI with active and
funded  accounts  that trade  securities  through ABWI as of the date hereof and
that are  Non-BDs  are not  deemed by  Integrated  to  deprive  Integrated  of a
marketing  opportunity  to the extent ABWI  engages in a  transaction  with such
party that is otherwise permitted by the terms of this Agreement and the Related
Documents.

         "CONFIDENTIAL   INFORMATION"   means   any   and  all   technical   and
non-technical  information  (including  trade secrets,  know-how and proprietary
information,  firmware,  designs,  schematics,  techniques,  plans or any  other
information  relating  to  any  research  project,   work  in  process,   future
development, scientific, engineering, manufacturing, marketing or business plans
or financial or personnel  matters) relating to a Party or its present or future
products,  sales,  suppliers,   customers,   licensors,   licensees,  employees,
investors  or  Affiliates  and  disclosed  or  otherwise  supplied by a Party to
another Party pursuant to this Agreement.

         "ERROR" means any defect in the code of an Integrated  Enhancement that
prevents the Licensed Software from properly  performing its intended  functions
to the extent  such code is written by or on behalf of  Integrated  (all uses of
the phrase "on behalf of  Integrated"  in this  Agreement used in the context of
the  creation of software  code shall  refer to the case when  Integrated  hires
third  parties  to  create  software  for it but  shall  exclude  the case  when
Integrated  licenses or  purchases  third party  software  for  inclusion in the
Licensed Software).



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         "EVENT OF DEFAULT" means the occurrence of any of the following:  (i) a
party  fails to  perform  any of its  obligations  under this  Agreement  in any
material  respect;  (ii) a material  breach (as  determined in  accordance  with
Section  9.3 of the Asset  Purchase  Agreement)  by a party or its  affiliate(s)
under  the  Asset  Purchase  Agreement  or any other  material  breach  (without
reference  to  any  determination  under  Section  9.3  of  the  Asset  Purchase
Agreement) under any agreement or instrument  contemplated by the Asset Purchase
Agreement or under any of the Related  Documents;  (iii) any breach of a payment
obligation with respect to any debt owed by Watley or its Affiliates that is not
a part of the debt evidenced by the Related Documents;  or (iv) a breach by ABWI
or Penson of any  obligation  under the Clearing  Agreement;  PROVIDED  that the
non-breaching  party has given the  breaching  party  written  notice of default
setting  forth in  reasonable  detail the breach  that has  occurred;  PROVIDED,
FURTHER,  that the breaching  party shall have,  with respect to a  non-material
breach,  thirty (30) days after its receipt of such  written  notice to cure the
breach,  but if the breach is not capable of being cured within such thirty (30)
day period the breaching  party shall have an additional  thirty (30) day period
to cure the breach; and, PROVIDED, FURTHER, that the breaching party shall have,
with respect to a material  breach only fifteen (15) days (or such longer period
as set forth in the Asset  Purchase  Agreement,  the  Clearing  Agreement or the
applicable  Related Document relative to a breach arising  thereunder) after its
receipt of such written notice to cure the breach. In addition,  any breach by a
party  hereto  or their  affiliates  of a Related  Document  that  results  in a
termination by the non-breaching  party of such Related Document shall give rise
to an immediate  termination  event  hereunder  (without any requirement for any
additional grace or cure period as set forth herein).



         "INTEGRATED CORRECTIONS" means all bug fixes, patches,  corrections and
similar  modifications to the Licensed Software by or on behalf of Integrated in
the event of any Error in the Licensed Software.

         "INTEGRATED  ENHANCEMENTS" means all updates,  upgrades,  new versions,
additional functionality, and other similar modifications or improvements to the
Licensed  Software  (including  all new extensions or components of the Licensed
Software  and all  derivative  works of the  Licensed  Software),  made by or on
behalf of Integrated and generally made available to other licensees,  but shall
exclude any and all customized work for hire and any proprietary  development by
or on  behalf  of  Integrated  that is not  generally  made  available  to other
licensees  and all other  changes  for which  Integrated  generally  receives  a
designated  payment that an Authorized User has not accepted or for which it has
not paid.

         "INTELLECTUAL  PROPERTY  RIGHTS"  means any U.S.  or  foreign  patents,
patent applications,  trademarks, trade names, service marks, brand names, logos
and other trade designations (including unregistered names and marks), trademark
and service  mark  registrations  and  applications,  copyrights  and  copyright
registrations and applications, moral rights, inventions, invention disclosures,
formulae,  formulations,  processes,  methods, trade secrets,  computer software
(including  the  architecture  thereof),  computer  programs  and source  codes,
manufacturing research and similar technical information,  engineering know-how,
assembly and test data, drawings and royalty rights.

         "LICENSED   SOFTWARE"  means  the  object  (or   executable)   code  of
Integrated`s proprietary computer software, as described on Exhibit A, including
all Integrated  Enhancements and Integrated Corrections adopted by Watley to the
extent required and as otherwise permitted by this Agreement.

         "PENSON"  means  Penson  Financial  Services,  Inc.,  a North  Carolina
corporation.

         "PERSON"  means and includes  natural  persons,  corporations,  limited
partnerships,  limited liability companies,  general  partnerships,  joint stock
companies,  joint  ventures,  associations,   companies,  trusts,  banks,  trust
companies, land trusts, business trusts and other organizations,  whether or not
legal entities, and governmental authorities.



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         "RELATED  DOCUMENTS"  has the meaning  set forth in the Asset  Purchase
Agreement.

         "SYSTEM" will mean any of Watley`s,  ABWI`s, or any of their respective
Affiliates` (but solely to the extent Affiliates are Authorized Users) software,
firmware,  hardware,  computer systems or devices,  or networks,  whether owned,
leased or rented, or otherwise  provided for the benefit,  or under the control,
of any of the  foregoing  (but  solely  to the  extent  such  "System"  has been
recommended  for use in writing by Integrated  in  connection  with the Licensed
Software).



2. LICENSES.

         (a) LICENSE TO SOFTWARE.

                  (i) Subject to the terms of this Agreement,  Integrated hereby
grants  to  Watley  a  perpetual,  non-exclusive,  license  to use the  Licensed
Software,  including the right to sublicense the Licensed Software to Authorized
Users so long as each Authorized  User takes such action as Integrated  requests
(at Integrated`s expense,  except to the extent any Authorized User is creating,
involved in or  responsible  for the problem for which  Integrated is requesting
protective  action) with respect to the protection of its Intellectual  Property
Rights.

                  (ii)   Integrated   will  deliver  to  Watley  all  Integrated
Enhancements  in  accordance  with  Integrated`s  normal and  customary  release
schedule.  Watley will have no obligation to install any Integrated Enhancements
unless  the same are  provided  without  charge and  Watley  will be  provided a
reasonable  period to install  such  Integrated  Enhancements.  Integrated  will
deliver all Integrated Corrections to Watley promptly upon written notice of any
Error or potential Error to a duly authorized representative of Integrated. Upon
the installation of any Integrated  Enhancement or Integrated  Correction,  such
Integrated Enhancement or Integrated Enhancement,  as applicable, will thereupon
be deemed to be part of the Licensed Software.

         (b)  LICENSE  RESTRICTIONS.  Neither  Watley  nor  ABWI  or  any  other
Authorized User shall: (i) provide,  lease, lend, use or allow others to use the
Licensed  Software  to or for  the  benefit  of  third  parties,  other  than as
permitted by this  Agreement;  or (ii) use the Licensed  Software in  connection
with the execution of trades of securities  outside of the U.S. (subject to such
limited use for Authorized Users located outside of the U.S. as is expressly set
forth in the  definition of "Authorized  User" in Section 1 for such  Authorized
Users to execute  securities  trades within the U.S) or in violation of any law,
rule or regulation.

         (c) ADDITIONAL  SOFTWARE.  Watley will be responsible for obtaining any
third party software  licenses for the operating  system it determines is needed
to operate the Licensed Software.

3. FEES AND ROYALTIES.

          (a) ROYALTY PAYMENTS. For [*], Watley may use the Licensed Software in
accordance  with  this  Agreement  [*].  Upon  the expiration of the [*], and in
consideration for the license granted to Watley hereunder, Watley shall pay, and
shall  cause  all  Authorized Users to pay, to Integrated a royalty equal to [*]
per  month  for  each  user  of  the Licensed Software (the "ROYALTY"). [*], and
thereafter  on  each  anniversary  of  the  Effective Date, the Royalty shall be
adjusted  by  the  percentage  change in the "CPI" for the immediately preceding
calendar year. CPI means the monthly index of the Consumer Price Index for Urban
Wage  Earners  and  Clerical  Workers  (all  items; 1982-84 = 100) issued by the


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"BUREAU." Bureau means the U.S. Department of Labor, Bureau of Labor Statistics,
or if it ceases to publish the CPI, any  successor  agency of the United  States
that shall  publish the CPI or the data  necessary to determine  the CPI. If the
Bureau ceases to use the 1982-84 reference base, or a substantial change is made
in  determining  the CPI,  or the CPI  shall  be  discontinued  for any  reason,
Integrated shall designate an alternative index comparable to the CPI.

         (b) INTEGRATED  ENHANCEMENTS  AND  CORRECTIONS.  In  consideration  for
Integrated making all Integrated Enhancements available to Watley and installing
Integrated  Enhancements if and as directed by Watley, Watley, on its own behalf
and on  behalf of all  other  Authorized  Users,  shall  pay to  Integrated  the
then-current  fee that  Integrated  charges  all its  other  customers  for such
Integrated Enhancements (except as set forth in Section 2(a)(ii)).  Watley shall
remit  payment to  Integrated  within  thirty (30) days after receipt of invoice
therefor.  Integrated  shall make available to Watley and install all Integrated
Corrections at no additional cost.

         (c) OTHER COSTS.  From the Effective Date and so long as this Agreement
is in  effect,  Watley  shall,  on its own  behalf  and on  behalf  of all other
Authorized Users, pay all exchange fees and bandwidth  (provided that Watley may
select its bandwidth  provider in its sole discretion as long as the cost of any
change from the existing bandwidth provider is paid for at Watley`s sole expense
(including,  without  limitation,  the cost of any Integrated  personnel) and so
long as Integrated  is provided a reasonable  period of time to make such change
and so long as such changes of providers  occur no more  frequently than once in
any three year period) related to providing the Licensed Software as well as any
fees and costs associated with providing service to Authorized Users not located
at the current 40 Wall Street,  New York,  New York address of Watley other than
via the Internet.  Watley shall remit  payment to Integrated  within thirty (30)
days after receipt of invoice therefor.

         (d)  SOFTWARE  DEVELOPMENT.  In the event Watley  requests  software or
product  development,  Integrated  shall charge Watley its then  standard  rates
charged to similarly  situated  clients for similar  projects,  as determined by
Integrated in its sole discretion.

         (e)  PAYMENTS.  Watley shall remit  payment,  and shall cause all other
Authorized  Users to remit  payment,  due to Integrated  within thirty (30) days
after the last day of each  calendar  month for any  Royalty  earned  during the
immediately  preceding  month.  During the period that  Royalties are payable in
accordance  with this  Section 3, Watley  shall  render to  Integrated a monthly
report in such form as is  reasonably  satisfactory  to  Integrated.  The report
shall set forth the total number  users of the  Licensed  Software and any other
information reasonably requested by Integrated.  Watley shall maintain books and
records concerning the use of Licensed Software. Such books and records shall be
complete  and  accurate  and  Integrated  shall  have  the  right,  through  its
representatives or auditors,  to reasonable  inspection of the books and records
of Watley relating to the use of the Licensed  Software,  PROVIDED that any such
inspection  shall only occur (i) upon fifteen (15) days` prior written notice to
Watley,  (ii) with minimum  disruption to Watley`s  business  operations,  (iii)
subject to the  confidentiality  provisions  set forth in Section 8, and (iv) at
Integrated`s  expense except to the extent any audit  identifies an error on the
part of ABWI,  Watley or another  Authorized User that misstates the amounts due
to Integrated by 7.5% or more.

4.  SUPPORT  OBLIGATIONS.  Subject  to the  effect  Integrated`s  acceptance  or
non-acceptance  (for which  Integrated shall not have or incur any liability for
any  consequential  effect with  respect to the  performance,  functionality  or
specifications  of the Licensed  Software or related support  obligations  under
this  Agreement) of the Assumed  Liabilities  (as defined in the Asset  Purchase
Agreement) in accordance  with the provisions of the Asset  Purchase  Agreement,
Integrated  will  use  reasonable   business  efforts  to  provide  Watley  with
maintenance and support of the Licensed Software (including, without limitation,
provision of Integrated  Corrections)  reasonably appropriate for how Authorized
Users use the Licensed  Software as of the date of this  Agreement  (and use the


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Licensed  Software after the date of this Agreement solely to the extent changed
by  any  Integrated  Enhancement  or  Integrated  Correction).   Notwithstanding
anything to the contrary  herein,  Integrated  shall not be obligated to provide
co-location   facilities  or  redundant  server/data  feed  facilities  and  may
eliminate and/or substitute  services/products as it deems necessary in its sole
discretion. Integrated shall not be required to provide user support services in
connection  with the use of the  Licensed  Software by Watley or any  Authorized
Users, other than by telephone to Watley`s corporate representatives  designated
in writing to  Integrated  from time to time (but not  directly to  customers of
ABWI or Watley or any  Affiliate)  to address  network  related  issues.  To the
extent Watley,  ABWI or an Affiliate request  non-telephonic  support such as an
on-site visit,  Integrated may provide the same at its then prevailing rates for
such  service.  Integrated  will also use  commercially  reasonable  efforts  to
telephone third party vendors whose products have evidenced a failure to perform
their  intended  functions in order to request  that such vendors  repair such a
failure.

5. THIRD PARTY DATA AGREEMENTS.  Watley and ABWI understand and acknowledge that
Integrated,  in its sole discretion and without  liability,  may terminate,  not
renew,  replace or  otherwise  modify  agreements  currently in place with third
parties  (collectively,  "DATA  AGREEMENTS")  pursuant  to which  data,  orders,
confirmations  and other  information  are  provided  through or by the Licensed
Software, PROVIDED that Integrated provides Watley with substantially equivalent
information  and  functionality  (but  solely  to  the  extent  such  equivalent
information and functionality  exist at comparable prices and to the extent that
installing such information and functionality  does not impose significant extra
cost on Integrated).

6. TERM;  EVENT OF DEFAULT.  This  Agreement  shall commence as of the Effective
Date and may be terminated by any non-defaulting Party upon an Event of Default.

7. EXPENSES AND TAXES.

         (a)  EXPENSES.  Except as expressly set forth in this  Agreement,  each
Party will bear all costs and  expenses of the  performance  of its  obligations
under this Agreement.

         (b) TAXES. Each Party will bear all current and future local, state and
federal taxes and duties imposed upon the payments  received by that Party under
this Agreement, including all sales, use, services and income taxes.

8. PROPRIETARY RIGHTS; INDEMNIFICATION.

         (a)  RIGHTS.  Integrated  retains  ownership  of all  right,  title and
interest in the Licensed Software and Integrated`s other  Intellectual  Property
Rights.  Watley has no rights in the Licensed  Software  except those  expressly
granted by this Agreement.

         (b)  COPYRIGHT AND OTHER  NOTICES.  Watley will not remove or otherwise
change any of  Integrated`s  copyright,  trademark or other  proprietary  rights
notices  contained in the Licensed Software without the prior written consent of
Integrated.

         (c) INDEMNIFICATION.

                  (i) Integrated,  at its expense, will defend and/or handle any
claim or  action  threatened  or  brought  against  Watley,  ABWI,  any of their
Affiliates or any of their respective officers,  directors,  employees,  agents,
consultants or other representatives,  or any third parties permitted to use the
Licensed   Software  in  accordance   with  the  provisions  of  this  Agreement
(collectively,  the "INDEMNIFIED  PARTIES") based on or arising out of any claim
that  the  Licensed  Software  as  modified  by any  Integrated  Enhancement  or
Integrated  Correction:  (a) constitutes an infringement,  violation,  trespass,
contravention or breach of any patent,  copyright,  trademark,  license or other


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property  or  proprietary   right  of  any  third  party,   or  constitutes  the
unauthorized use or  misappropriation of any trade secret of any third party; or
(b) is not in compliance with any applicable law, rule, regulation, order of any
governmental (including, without limitation, any regulatory or quasi-regulatory)
agency or contract,  including without limitation,  any financial  disclosure or
encryption law;  provided that, in each such case, the claim could not have been
made  but for an  Integrated  Enhancement  or an  Integrated  Correction  to the
Licensed  Software.   Integrated  further  agrees  to  indemnify  and  hold  the
Indemnified  Parties harmless from and against any and all  liabilities,  costs,
losses,  damages and expenses (including reasonable attorneys` and experts` fees
and expenses)  associated  with (x) any claim described in the first sentence of
this paragraph and (y) any breach of this  Agreement by Integrated.  Watley will
promptly  notify  Integrated  of any such  claim or action  and will  reasonably
cooperate  with  Integrated  in  the  defense  of  such  claim  or  action,   at
Integrated`s expense.

                  (ii)  Integrated  will  have the sole  right  to  conduct  the
defense of any such claim or action and all  negotiations  for its settlement or
compromise; PROVIDED, HOWEVER, that Watley may participate in the defense of any
such claim or action at Watley`s expense.

                  (iii) If the Licensed Software becomes the subject of any such
claim or action,  then Watley may terminate  this Agreement  unless  Integrated,
promptly after receiving written notice of any such claim or action, either: (a)
procures  for  Watley  the right to  continue  using the  Licensed  Software  as
contemplated  hereunder;  (b)  modifies  the  Licensed  Software  to render same
non-infringing or to correct such  non-compliance,  as the case may be (provided
such modification  does not materially  adversely affect the use of the Licensed
Software);  or  (c)  replaces  same  with  an  equally  suitable,   functionally
equivalent,  compatible,  non-infringing  (or  compliant,  as the  case  may be)
software  program.  If none of the  foregoing  is possible  and if the  Licensed
Software is found to infringe or to not comply,  Integrated  or Watley will have
the right to terminate this  Agreement and Integrated  will refund to Watley all
amounts  paid by Watley  hereunder  subject,  however,  to the effect of Section
12(b).

                  (iv) Each of Watley, ABWI and any Affiliate permitted to be an
Authorized User (each a "WATLEY INDEMNITOR"), at its expense, will indemnify and
hold  harmless  from  any  breach  of  this  Agreement  by an  Authorized  User,
Integrated,  any  of  its  affiliates  or  any  of  their  respective  officers,
directors,    employees,    agents,   consultants   or   other   representatives
(collectively,  the "INTEGRATED  INDEMNIFIED  PARTIES").  The Watley Indemnitors
further agrees to indemnify and hold the Integrated Indemnified Parties harmless
from and against any and all liabilities,  costs,  losses,  damages and expenses
(including reasonable attorneys` and experts` fees and expenses) associated with
such claim or action.  Integrated will promptly  notify the  appropriate  Watley
Indemnitor(s)  of any such claim or action and will  reasonably  cooperate  with
such Watley Indemnitor(s) in the defense of such claim or action, at such Watley
Indemnitors` expense. Integrated will have the right to terminate this Agreement
in the event of a breach of the provisions of this clause (iv).



9. CONFIDENTIALITY.

         (a)  CONFIDENTIAL  INFORMATION.  No Party will disclose another Party`s
Confidential  Information  to any Person except its Affiliates and its and their
employees,  agents  and  independent  contractors  to  whom it is  necessary  to
disclose  the  Confidential   Information  for  purposes  permitted  under  this
Agreement and who have agreed to receive it under terms at least as  restrictive
as those  specified  in this  Agreement.  Each  Party  will use best  efforts to
maintain the confidentiality of Confidential Information received from the other
Parties.  Each Party will use another Party`s Confidential  Information only for
the purposes of performing this Agreement.



                                       7
<PAGE>

         (b) EXCEPTIONS TO CONFIDENTIAL  INFORMATION.  Confidential  Information
will not include  information  to the extent that:  (i) such  information  is or
becomes publicly  available other than through any act or omission of a Party in
breach of this Agreement;  (ii) such information was rightfully  received by the
receiving Party, other than under an obligation of confidentiality, from a third
party who had no  obligation  to the Party  that  owns such  information  not to
disclose such  information to others;  (iii) such  information was rightfully in
the  possession  of the  receiving  Party at the time of the  disclosure  or was
independently  developed by the receiving  Party;  or (iv) any  applicable  law,
rule,  regulation or court order  requires the  disclosure of such  information,
provided that prior to such  disclosure  the Party  subject to such  requirement
will give notice to the Party that owns such  information so that such Party may
take reasonable  steps to oppose or limit such  disclosure.  The burden of proof
that  Confidential  Information  falls into any of the above  exemptions will be
borne by the Party claiming such exemption.

10. REPRESENTATIONS AND WARRANTIES.

         (a) Each  Party  represents,  and  warrants  to the other that each has
obtained all  authorizations,  approvals  and  consents  of, made all  necessary
filings and registrations  with, and given all necessary notices to, all Persons
necessary for their execution, delivery and performance of this Agreement.

         (b) Integrated represents,  warrants and covenants to the other Parties
that all maintenance and support services provided  hereunder shall be performed
in a workmanlike and professional manner.

         (c) Integrated represents,  warrants and covenants to the other Parties
that it will continue to license and support the Licensed  Software for a period
of no less than  three (3)  years  from the  Effective  Date  (but  without  any
limitation on its  assignment  rights set forth in Section  13(h)).  Thereafter,
Integrated  shall provide Watley with no less than nine (9) months prior written
notice if  Integrated  intends to cease  licensing  or  supporting  the Licensed
Software.

         (d) Integrated represents,  warrants and covenants to the other Parties
that  modifications  of the Licensed  Software by any Integrated  Enhancement or
Integrated  Correction  will not contain  any  computer  code  designed by or on
behalf of Integrated (i) to disrupt,  disable,  harm, or otherwise impede in any
manner,  including aesthetical disruptions or distortions,  the operation of the
Licensed Software or any System (sometimes referred to as "viruses" or "worms");
(ii) that would disable the Licensed Software or any System or impair in any way
their  operation  based on the elapsing of a period of time, the exceeding of an
authorized  number of copies,  or the  advancement to a particular date or other
numeral  (sometimes  referred to as "time bombs",  "time locks",  or "drop dead"
devices);  or (iii) that would  contain any other  harmful,  malicious or hidden
procedures,  routines  or  mechanisms  that cause the  Licensed  Software or any
System to cease  functioning  or to  damage  or  corrupt  data,  storage  media,
programs,  equipment or  communications,  or otherwise  interfere with Watley`s,
ABWI`s, or their respective Affiliates` operations.

         (e) Integrated represents,  warrants and covenants to the other Parties
that,  with  respect to all  date-related  data and  functions  provided  by the
Licensed Software,  a modificaton to the Licensed Software and by any Integrated
Enhancement  or  Integrated  Correction  will  operate  in  a  manner  which  is
consistent  with the use of the  Licensed  Software by ABWI and Watley as of the
date of this Agreement.

11. OTHER AGREEMENTS.

         (a) The Parties  acknowledge  and agree that Integrated does not assume
any responsibility  whatsoever for Watley`s,  or ABWI`s performance of Watley`s,
or ABWI`s obligations under any agreement  regarding or relating to the Licensed
Software  between  Watley,  ABWI or any of their  Affiliates and any third party
that was not an Assumed  Liability  accepted by Integrated  under Section 1.2 of
the  Asset  Purchase  Agreement,   and  Integrated  hereby  disclaims  any  such
responsibility.



                                       8
<PAGE>

         (b) Notwithstanding  anything to the contrary herein,  Integrated shall
have no liability  for (i) any fee or expense  (including,  without  limitation,
late  charges  and  penalties)  incurred  prior to the  Effective  Date that was
incurred  by  Watley  or  ABWI  related  to  the  Licensed  Software,  the  Data
Agreements,  employment agreements or any product, equipment or services related
thereto and (ii) any fee or expense for  equipment  leased or owned by Watley or
ABWI prior to the Effective  Date;  PROVIDED that such fees or expenses were not
Assumed  Liabilities  expressly  accepted  in  writing by  Integrated  under the
Section 1.2 of the Asset Purchase Agreement.



12. DISCLAIMERS AND LIMITATIONS OF LIABILITY.

         (a)  DISCLAIMER  OF  WARRANTIES.  EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT:  INTEGRATED  EXPRESSLY DISCLAIMS ALL WARRANTIES,  EXPRESS OR IMPLIED,
WITH RESPECT TO THE LICENSED  SOFTWARE OR ITS QUALITY,  INCLUDING ANY WARRANTIES
OF  MERCHANTABILITY  OR FITNESS FOR A PARTICULAR  PURPOSE;  INTEGRATED  MAKES NO
REPRESENTATION  CONCERNING  THE  LIKELIHOOD  OF  PROFITABLE  TRADING  USING  THE
LICENSED  SOFTWARE;  AND THE LICENSED SOFTWARE IS LICENSED "AS-IS" AND "WITH ALL
FAULTS." NOTWITHSTANDING ANY OTHER PROVISION IN THIS AGREEMENT,  INTEGRATED DOES
NOT WARRANT  THAT THE USE OF THE  LICENSED  SOFTWARE  WILL BE  UNINTERRUPTED  OR
ERROR-FREE OR THAT ALL  DEFICIENCIES  OR ERRORS ARE CAPABLE OF BEING  CORRECTED.
NEITHER  WATLEY  NOR  ABWI  WILL  EXTEND  ANY  WARRANTIES  FOR OR ON  BEHALF  OF
INTEGRATED  NOT SPECIFIED IN THIS AGREEMENT AND WILL MAKE NO  REPRESENTATION  OR
WARRANTY  REGARDING THE  LIKELIHOOD OF PROFITABLE  TRADING BASED ON THE LICENSED
SOFTWARE.  IN NO EVENT  WILL  INTEGRATED  INCUR ANY  LIABILITY  TO WATLEY OR ANY
AUTHORIZED  USER ARISING OUT OF (I) ANY CONTRACT OR  ARRANGEMENT  BETWEEN WATLEY
AND ANY  AUTHORIZED  USER UNLESS  EXPRESSLY  AGREED TO IN  WRITING,  OR (II) ANY
COMMUNICATIONS,  INTERNET AND/OR OTHER FAILURE  AFFECTING THE LICENSED  SOFTWARE
ARISING IN  CONNECTION  WITH ACTS OF GOD OR THIRD  PARTY  ACTIONS OR  OMISSIONS.
INTEGRATED WILL, HOWEVER, USE COMMERCIALLY REASONABLE EFFORTS TO TELEPHONE THIRD
PARTIES WHOSE SYSTEMS FAIL IN ORDER TO REQUEST THEY REPAIR SUCH FAILURES.

         (b)  LIMITATIONS  OF  LIABILITY.  THE  LIABILITY  OF EACH PARTY AND ITS
EMPLOYEES,  AGENTS AND  AFFILIATES  TO THE OTHER  PARTIES  AND THEIR  RESPECTIVE
EMPLOYEES,  AGENTS AND AFFILIATES WILL BE LIMITED TO DIRECT DAMAGES. IN NO EVENT
WILL ANY PARTY OR ITS EMPLOYEES,  AGENTS OR AFFILIATES BE LIABLE FOR INCIDENTAL,
SPECIAL,  INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS) SUFFERED BY
ANOTHER PARTY OR ITS EMPLOYEES, AGENTS OR AFFILIATES, EVEN IF PREVIOUSLY ADVISED
OF THE  POSSIBILITY  OF SUCH  DAMAGES.  NOTWITHSTANDING  ANYTHING  HEREIN TO THE
CONTRARY,  INTEGRATED`S  MAXIMUM LIABILITY UNDER THIS AGREEMENT SHALL NOT EXCEED
THE GREATER OF (A) THE SUM OF ALL  AMOUNTS  RECEIVED  BY  INTEGRATED  DURING THE
TWELVE MONTH PERIOD  IMMEDIATELY  PRECEDING  THE RELEVANT  CLAIM OR (B) $100,000
DOLLARS.

13. GENERAL.

         (a) GOVERNING  LAW.  This  Agreement is to be governed and construed in
accordance  with the laws of the State of Texas,  without regard to its conflict
of law provisions.



                                       9
<PAGE>

         (b) JURISDICTION.  Any judicial  proceeding  brought against any of the
Parties to this  Agreement on any dispute  arising out of this  Agreement or any
matter  related  hereto  shall be  brought  solely in the  appropriate  state or
Federal   courts   located  in  Dallas,   Texas   (provided   that   Integrated,
notwithstanding  the  foregoing,  may elect to pursue its rights and remedies in
another  forum if it so desires).  Each of the Parties  hereby  irrevocably  and
unconditionally  submits,  for  itself  and  its  property,  to the in  personam
jurisdiction of the state and Federal courts sitting in Dallas County, Texas, in
each case with respect to any action or proceeding arising out of or relating to
this Agreement. Each Party hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and  effectively do so, any objection which it may
now or hereafter  have to the laying of venue of any suit,  action or proceeding
arising  out of or  relating to this  Agreement  in any such  court.  Each Party
hereby  irrevocably  waives, to the fullest extent permitted by law, the defense
of an inconvenient  forum to the maintenance of such action or proceeding in any
such court.

         (c) ENTIRE  AGREEMENT.  This  Agreement,  which  includes  the Exhibits
described in this Agreement, embodies the entire understanding among the Parties
with respect to its subject matter and  supersedes all previous  communications,
representations or understandings, either oral or written, regarding the subject
matter of this Agreement.

         (d) AMENDMENT.  No amendment or modification of this Agreement shall be
valid  or  binding  unless  signed  by all the  Parties  to this  Agreement.  No
amendment or modification of this Agreement shall be valid or binding if made by
electronic means.

         (e) WAIVER.  No provision of this  Agreement  can be waived except by a
written  document  signed by the Party  waiving  the  provision.  The failure to
insist,  in any  one or more  instances,  upon  the  strict  performance  of any
provision or to exercise any right of this Agreement shall not be deemed to be a
waiver or relinquishment of the future  performance of any such provision or the
future exercise of such right, but the obligations of each Party with respect to
such future performance shall continue in full force and effect.

         (f) NOTICES. Any notice, demand, consent,  approval,  request, or other
communication  or document to be provided under this  Agreement  shall be (a) in
writing  and (b) deemed to have been  provided  (i) 48 hours after being sent by
certified or registered mail in the U.S. mails, postage prepaid,  return receipt
requested, to the address of the recipient set forth below or such other address
in the United States as such Party may designate  from time to time by notice to
the  other  Parties,  or (ii)  upon  giving  by hand or  other  actual  delivery
(including delivery by a nationally recognized overnight courier) at the address
of the  recipient  set forth below or such other address in the United States as
such Party may designate  from time to time by notice to the other  Parties.  No
notice, amendment or waiver with respect to this Agreement shall be effective if
given by  electronic  means.  For purposes of this  Agreement,  Penson`s  notice
address is Penson  Financial  Services,  Inc., 1700 Pacific Avenue,  Suite 1400,
Dallas TX 75201, attn: President and Chief Operating Officer.

         (g) SEVERABILITY. In the event any provision of this Agreement is found
to be invalid,  voidable  or  unenforceable,  the  Parties  agree that unless it
materially  affects  the entire  intent  and  purpose  of this  Agreement,  such
invalidity, voidability or unenforceability shall affect neither the validity of
this Agreement nor the remaining provisions in this Agreement, and the provision
in  question  shall  be  deemed  to be  replaced  with a valid  and  enforceable
provision  most  closely  reflecting  the  intent and  purpose  of the  original
provision.

         (h)  SUCCESSORS;  ASSIGNMENT.  Subject  to  the  effect  of  the  other
provisions  of this  Section,  this  Agreeement  shall be binding upon and shall
inure to the benefit of the  successors  and assigns of the Parties.  Integrated
may freely  assign any and all of its rights,  interests and  obligations  under
this Agreement,  PROVIDED that,  solely in the case of an "asset sale" (the sale


                                       10
<PAGE>

of assets by Integrated  pursuant to operation of law, merger,  consolidation or
other similar  transaction  shall not be deemed to be an "asset sale" subject to
the effect of the proviso in this sentence) when Integrated transfers all of its
right,  title and interest in the Licensed  Software to a purchaser but does not
assign or delegate  to such  purchaser  its  obligations  under this  Agreement,
Integrated  will cause such  purchaser in such asset sale by  Integrated to such
purchaser to provide a license to Integrated to enable Integrated to continue to
license the Licensed  Software to the  Authorized  Users in accordance  with the
provisions  of this  Agreement.  Notwithstanding  any  other  provision  of this
Agreement,  neither this  Agreement  nor any  interest in this  Agreement or any
rights hereunder shall be sold,  transferred,  or assigned by Watley or ABWI, by
operation of law or otherwise,  including the merger or  consolidation of Watley
or ABWI with or into another entity. For purposes of this Section, any change in
"control" of Watley or ABWI shall  constitute an  assignment.  Control means the
direct or indirect  power to direct or cause  direction  of the  management  and
policies of an entity,  whether through the ability to exercise voting power, by
contract or otherwise, as determined by Integrated;  and provided further that a
transaction  shall not  constitute  a change in control if (i) Watley shall have
notified  Integrated in writing (sent by telecopy  marked  conspicuously  on the
cover sheet with "Urgent-Immediate Reply Needed" to each of Integrated`s CEO and
COO,  each of Penson`s  CEO,  COO,  CFO,  General  Counsel and Chief  Compliance
Officer and to Andrew Koslow (208-275-3940)) in reasonable detail of the general
terms of a proposed  transaction  and  identity  of the  applicable  investor(s)
and/or acquirer , and Integrated  either confirms that such transaction does not
constitute  a change in control or does not notify  Watley  within six  business
days after the day on which it receives  the notice from Watley that  Integrated
deems the transaction to be a change in control and Watley and/or its applicable
subsidiary  completes a transaction  on terms no less favorable to Watley and/or
its applicable  subsidiary  than that provided in the notice or (ii) it involves
the  issuance  by Watley or a  subsidiary  of common  stock or other  equivalent
equity securities (A) in connection with the conversion of existing indebtedness
on the date  hereof  of  Watley  or the  applicable  subsidiary  or (B) upon the
conversion or exercise of warrants, preferred stock or other securities existing
on the date hereof or issued  pursuant to clause (A) above into common  stock of
Watley or the applicable subsidiary.  Any attempted assignment,  transfer, sale,
or other delegation in violation of this Section shall be void.

         (i) JOINT AND SEVERAL OBLIGATIONS.  Watley, ABWI and any Affiliate that
becomes an Authorized  User shall have joint and several  liability with respect
to the duties and obligations of each under this  Agreement.  Each of Watley and
ABWI  acknowledge  and agree  that any liens or  security  interests  granted by
Watley or ABWI in favor of  Integrated  or  Penson,  whether  through  the Fully
Disclosed  Clearing  Agreement or other agreements or arrangements  currently in
place,  shall serve to secure the joint and several  obligations  and Watley and
ABWI owing to Integrated under this Agreement.

         (j) COUNTERPARTS.  The Parties may execute more than one counterpart of
this Agreement, and each fully executed counterpart shall be deemed an original.

         (k) FORCE MAJEURE.  Each Party will be excused from  performance  under
this  Agreement  for any  period  and to the extent  that it is  prevented  from
performing  any action  pursuant to this  Agreement,  in whole or in part,  as a
result of delays beyond its reasonable  control caused by another Party or by an
act of God, war, civil  disturbance,  court order,  labor  dispute,  third party
nonperformance or other cause beyond its reasonable control,  including failures
or fluctuations in power,  heat,  light, air conditioning or  telecommunications
equipment. Integrated will also be excused from performance under this Agreement
to the extent the  Licensed  Software  cannot  function  without  the benefit of
software  currently licensed to Watley or ABWI prior to the date hereof and such
software  vendors have not granted a license to provide their  software that not
only enables  Integrated to provide their software to Authorized  Users but also
on such other terms as shall be acceptable to Integrated in its sole discretion.
Integrated  may at its  option,  notwithstanding  any  provision  in any Related
Document to the contrary,  determine to continue providing  technical support to


                                       11
<PAGE>

Authorized Users  previously  provided by Penson under the terms of the Software
License Agreement dated as of June 1, 2002 among Penson, ABWI and Watley.

         (l)  FURTHER  ASSURANCES.  Each Party will  execute  and  deliver  such
further  agreements,  documents and  instruments and take such further action as
may be reasonably  requested by any other Party to carry out the  provisions and
purposes of this Agreement.

         (m)   RELATIONSHIP  OF  THE  PARTIES.   Each  Party  will  perform  its
obligations under this Agreement as an independent  contractor.  Nothing in this
Agreement  or in the  performance  of this  Agreement  is intended to create:  a
partnership, joint venture or other joint business arrangement among the Parties
or any of their  Affiliates;  any  fiduciary  duty owed by one Party to  another
Party or any of its Affiliates; or a relationship of employer and employee among
the Parties or any of their Affiliates.

         (n)  HEADINGS.  The headings used for the sections and  subsections  in
this Agreement are for  convenience  and reference  purposes only and will in no
way affect the meaning or  interpretation  of this  Agreement.  All Exhibits and
other attachments  referenced in this Agreement (if any) are hereby incorporated
for all purposes.  In the event of any conflict  between this  Agreement and any
Exhibits  or  other  attachments  to  this  Agreement,  the  provisions  of this
Agreement will control.

         (o)  SURVIVAL.  Sections  8, 9, 10,  12 and 13 of this  Agreement  will
survive any such termination of this Agreement.




                                       12
<PAGE>



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


INTEGRATED TRADING SOLUTIONS, INC.      A.B. WATLEY GROUP INC.


By:                                     By:
    -------------------------------       --------------------------------
     Name:                                   Name:
     Title:                                  Title:

Address:                                Address:
1700 Pacific Avenue                     40 Wall Street
Suite 1400                              New York, New York 10005
Dallas, Texas 75201                     Attention:  Leon Ferguson
Attention:  CEO


[*] Confidential information has been omitted and has been separately filed
with the Securities and Exchange Commission.


                 [SIGNATURE PAGE FOR SOFTWARE LICENSE AGREEMENT]



                                       13
<PAGE>






                                    EXHIBIT A
                                    ---------

                                LICENSED SOFTWARE



The Licensed Software  includes the software  programs known as  "UltimateTrader
II" and "Watley Trader."




                                       14
<PAGE>