exv10w35






Exhibit 10.35




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,






	 	(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





Broadridge/Penson Proprietary and Confidential


 









 





MASTER SERVICES AGREEMENT





	 	 	 	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.





Broadridge/Penson Proprietary and Confidential


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	 	 	 	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.
	 
	 	 	 	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




Broadridge/Penson Proprietary and Confidential


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	 	 	 	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 and expense) 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.
	 
	 	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




Broadridge/Penson Proprietary and Confidential


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	 	 	 	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;




Broadridge/Penson Proprietary and Confidential


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	 	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;
	 
	 	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;




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	 	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.
	 
	 	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




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	 	 	 	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).






	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




Broadridge/Penson Proprietary and Confidential


8









 






	 	 	 	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 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.




Broadridge/Penson Proprietary and Confidential


9









 






	 	 	 	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;
	 
	 	(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




Broadridge/Penson Proprietary and Confidential


10









 






	 	(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.




Broadridge/Penson Proprietary and Confidential


11









 












	 	 	 	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 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




Broadridge/Penson Proprietary and Confidential


12









 






	 	 	 	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 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





Broadridge/Penson Proprietary and Confidential


13









 





	 	 	 	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.










Broadridge/Penson Proprietary and Confidential


14









 












	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;




Broadridge/Penson Proprietary and Confidential


15









 












	 	(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.






	 	A.	 	Errors and Omissions. Broadridge’s and Ridge’s sole and exclusive liability to
Penson and Client and Penson’s and Client’s sole and exclusive remedy, for any claims
arising out of errors or omissions in the processing of data by Ridge pursuant to the
Existing Technology Services, Transferred Technology Services and Additional Technology
Services (each, as defined in the applicable Schedule), notwithstanding the form of such
claims (including, without limitation, breach, negligence, misrepresentation, or other
contract or tort claim), shall be: (i) to re-perform the applicable Services and (ii) to
provide Client with any applicable Service Level credits, or termination rights, as
applicable, to which Client is entitled under the Service Level Agreement. For the
avoidance of doubt, this provision shall not apply to the actual conversion services (prior
to Client going live on the Services) to be agreed to by the parties in the
Statement-of-Work relating to the conversion services.




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	 	B.	 	[****]
	 
	 	C.	 	Damages Cap. In no event shall either Broadridge’s (for any breach by
Broadridge or Ridge) or Penson’s (for any breach by Penson or Client) entire aggregate
liability under this Agreement arising from or relating to any and all claims and causes of
actions arising under this Agreement exceed the applicable Damages Cap (defined below),
regardless of the basis on which such party is entitled to claim damages (including,
without limitation, breach, negligence, misrepresentation, or other contract or tort
claim); provided, however, that the limitation set forth in this Section 15.C (Damages Cap)
shall not apply to:






	 	(i)	 	Errors and omissions covered by Section 15.A (Errors and Omissions) above (for
which the limitation of liabilities are set forth in such Section 15.A above);
	 
	 	(ii)	 	[****]
	 
	 	(iii)	 	Indemnification obligations of Broadridge and Ridge in Section 14 (Indemnity)
(for which there is no Damages Cap);
	 
	 	(iv)	 	The failure of Penson, Client, Broadridge or Ridge to make payments (including,
without limitation, taxes) or apply credits due under this Agreement (for which there
is no Damages Cap);
	 
	 	(v)	 	Any claims relating to a party’s (including, without limitation, its
contractors’ and agents’) fraud, gross negligence or willful misconduct (for which
there is no Damages Cap);
	 
	 	(vi)	 	[****]
	 
	 	(vii)	 	A party’s intentional repudiation of this Agreement including, without
limitation, Broadridge’s or Ridge’s intentional repudiation of its obligation to
perform the Services or Transition Services (for which there is no Damages Cap).






	 	 	 	As used herein, “Damages Cap” means:






	 	 	 	          (a)     for all claims and breaches, other than those referenced in the following clause,
the sum of all of the fees paid and payable by Client (excluding pass-through expenses, if
any) under this Agreement in the aggregate during the [****] prior to the date of the first
event, act or omission giving rise to or the basis for the claim; provided, however, that
until the end of the first Contract Year, the Damages Cap shall not be less than [****]; or
	 
	 	 	 	          (b)     an amount equal to the product determined by multiplying (i) [****] by (ii) the
amount of the Damages Cap determined under the preceding clause (a), for breaches of Section
7.A (Use of the Services) or Section 17 (Non-Competition and Non-Solicitation) by either
party hereto.






	 	 	 	FOR THE AVOIDANCE OF DOUBT, THE LIMITATIONS SET FORTH ABOVE ARE CUMULATIVE, WITH ALL
APPLICABLE LIABILITIES BEING AGGREGATED TO DETERMINE SATISFACTION OF THE APPLICABLE DAMAGES
CAP. THE EXISTENCE OF MULTIPLE CLAIMS, WHETHER BROUGHT CONCURRENTLY OR SEPARATELY, SHALL NOT
ENLARGE THE APPLICABLE DAMAGES CAP.
	 
	 	D.	 	Indirect Damages Waiver. EXCEPT AS SET FORTH BELOW IN THIS SECTION 15.D
(INDIRECT DAMAGES WAIVER), IN NO EVENT WILL BROADRIDGE (FOR ANY BREACH BY BROADRIDGE OR
RIDGE) OR PENSON (FOR ANY BREACH BY PENSON OR CLIENT) HAVE ANY LIABILITY UNDER THIS
AGREEMENT, REGARDLESS OF THE BASIS ON WHICH SUCH PARTY IS ENTITLED TO CLAIM DAMAGES
(INCLUDING, WITHOUT LIMITATION, BREACH, NEGLIGENCE, MISREPRESENTATION, OR OTHER CONTRACT OR
TORT CLAIM), FOR ANY INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT
LIMITATION, LOST PROFITS OR LOST SAVINGS THAT ARE NOT DIRECT DAMAGES, LOSS OF GOODWILL OR
DAMAGE TO REPUTATION), EVEN IF FORESEEABLE OR EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES.










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	 	 	 	The foregoing disclaimer shall not be applicable to:






	 	(i)	 	Any claims relating to a party’s (including, without limitation, its
contractors’ and agents’) fraud, gross negligence or willful misconduct;
	 
	 	(ii)	 	Any party’s breach of Section 10 (Confidentiality), Section 11 (Personal
Information) or Section 12 (Data Security and Access), which breach results in an
unauthorized access or disclosure of, (a) with respect to Penson and Client, Ridge
Information and (b) with respect to Broadridge and Ridge, Client Information, Personal
Information or Client files; provided, however, that in no event shall either
Broadridge’s (for any breach by Broadridge or Ridge) or Penson’s (for any breach by
Penson or Client) entire liability under this Section 15.D(ii) for all claims and
causes of action arising under this Agreement exceed any amount equal to the sum of all
of the fees paid and payable by Client (excluding pass-through expenses, if any) under
this Agreement in the aggregate during the [****] prior to the date of the first event,
act or omission giving rise to or the basis for the claim; provided, however, that
until the end of the first Contract Year, the liability cap under this Section 15.D(ii)
shall not be less than [****];
	 
	 	(iii)	 	A party’s intentional repudiation of this Agreement including, without
limitation, Broadridge or Ridge’s intentional repudiation of its obligation to perform
the Services or Transition Services;






	 	 	 	provided, however, that in no event shall Broadridge or Penson have any liability under this
Agreement under any circumstances for lost profits or lost savings that are not direct
damages, loss of goodwill or damage to reputation.
	 
	 	 	 	Amounts paid by either party to a third party in connection with an indemnity under this
Agreement shall be deemed to be the direct damages of such party, without regard to the
nature of the claim which gave rise to such obligation to indemnify or the characterization
of such amounts in the applicable third party claim, action or proceeding (provided,
however, that all such liability for the indemnities are not subject to the Damages Cap).
In addition, if a party is obligated to incur costs or expenses in fulfilling its
obligations under Section 11.C (Security Breaches) or Section 12.E (Security Breaches)
above, such party cannot seek to avoid such obligation through a claim or assertion that the
disclaimer set forth above in this Section 15.D (Indirect Damages Waiver) relieves such
party of such obligation.
	 
	 	E.	 	Ridge Subcontractors and Third Party Vendors. Ridge shall notify Client of any
proposed subcontracting of the Services, and obtain Client’s prior consent (which consent
shall not be unreasonably withheld) with respect to any such subcontracting only if such
consent is required by Law. Ridge shall be liable for the acts and omissions of any of its
Affiliates or subcontractors that perform any portion of the Services hereunder to the same
extent Ridge is liable for its own employees hereunder. For the avoidance of doubt, Ridge
shall not be liable to Client for the acts or omissions of non-Affiliated third parties
that are not subcontractors, such as non-Affiliated vendors (e.g., data providers, data
communication carriers and utilities and for the avoidance of doubt, subcontractors shall
not be considered vendors as used in this sentence), that provide services or facilities to
be used in association with the Services or to or from which Ridge sends or receives Client
Information in connection with providing the Services, and which are listed in a Schedule
(or for which Ridge otherwise obtains Client’s prior consent, not to be unreasonably
withheld); provided, however, that Ridge shall use commercially reasonable efforts to enter
into contractual agreements with all of its subcontractors and third party vendors in order
to ensure compliance with the applicable requirements relating to the use and disclosure of
Information and Personal Information.






	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 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,




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	 	 	 	(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 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;




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	 	(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.
	 
	 	(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.




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	 	(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.






	 	B.	 	No Solicitation.




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	 	(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.	 	Ridge’s Material Breach.






	 	(i)	 	Penson may terminate this Master Services Agreement or any Schedule, in whole
or by service, upon notice to Broadridge if Broadridge or Ridge materially breaches
this Master Services Agreement or the Asset Purchase Agreement and fails to cure such
breach (if such breach is capable of cure) within thirty (30) days following notice
from Penson specifying the nature of such breach in reasonable detail. [****]. If a
Schedule is terminated by service, the pricing under such Schedule shall be adjusted to
account for such terminated service by an amount agreed to in good faith by Broadridge,
Ridge, Penson and Client.
	 
	 	(ii)	 	Penson may terminate this Master Services Agreement or any Schedule, in whole
or by service, upon notice to Broadridge if Ridge materially breaches such Schedule and
fails to cure such breach (if such




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	 	 	 	breach is capable of cure) within thirty (30) days following notice from Penson
specifying the nature of such breach in reasonable detail. Penson may also terminate
this Master Services Agreement or a Schedule, in whole or by service, upon notice to
Broadridge if Ridge commits numerous or repeated breaches of its duties or obligations
under such Schedule, even if individually cured, where the collective impact would
constitute a material breach of such Schedule, and Ridge either (a) fails to
successfully implement corrective actions and give notice of the details of such
corrective actions to Penson within thirty (30) days after notice of the collective
breach from Penson or (b) after implementing such corrective actions, Ridge continues to
commit breaches of the type that were addressed by implementation of such corrective
actions and the collective impact of such continued breaches would constitute a material
breach of such Schedule. If a Schedule is terminated by service, the pricing under such
Schedule shall be adjusted to account for such terminated service by an amount agreed to
in good faith by Broadridge, Ridge, Penson and Client.






	 	B.	 	Client’s Material Breach. Broadridge may terminate this Master Services
Agreement or the applicable Schedule upon notice to Penson if Penson or Client materially
breaches its obligations under this Master Services Agreement or such Schedule with respect
to Sections 3 (Charges), 7.A (Use of Services), 8.A (License Grant), 9 (Ownership and User
of Ridge Products), 10 (Confidentiality) or 11 (Personal Information) and fails to cure
such breach (if such breach is capable of cure) within thirty (30) days following notice
from Broadridge specifying the nature of such breach in reasonable detail. If Broadridge
terminates this Master Services Agreement or a Schedule pursuant to this Section 18.B
(Client’s Material Breach), Broadridge may, in its sole discretion, require Penson or
Client immediately to pay all undisputed amounts then due under this Agreement or the
applicable Schedule in respect of periods to the date of termination.






	 	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.	 	Termination Relating to [****]. If at any time the total aggregate liability
of Broadridge (for any breach by Broadridge or Ridge) for claims that are due and payable
under this Agreement, taken as a whole, exceeds [****] then Penson may terminate this
Master Services Agreement or any Schedule, in whole or by service, by giving Broadridge
notice of termination. If a Schedule is terminated by service, the pricing under such
Schedule shall be adjusted to account for such terminated service by an amount agreed to in
good faith by Broadridge, Ridge, Client and Penson.
	 
	 	F.	 	Termination Relating to [****]. If Ridge fails for any reason to provide any
Service [****] of this Agreement and does not, within [****] after receipt of a notice
from Penson or Client with respect to such failure, cure such failure, then Penson may,
upon notice to Broadridge, terminate this Master Services Agreement or any Schedule, in
whole or by service, effective as of the termination date specified in the





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	 	 	 	notice. If a Schedule is terminated by service, the pricing under such Schedule shall be
adjusted to account for such terminated service by an amount agreed to in good faith by
Broadridge, Ridge, Penson and Client.
	 
	 	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.	 	Timely Exercise of Termination Rights. Subject to other provisions of this
Agreement, if a party is entitled to terminate this Master Services Agreement or a Schedule
pursuant to this Section 18 (Termination), such party shall exercise its right to terminate
this Master Services Agreement or the Schedule within [****] after the executive officers
(as defined in Section 16 of the Exchange Act) of such party have actual knowledge of such
breach or such party shall be deemed to have waived its right to terminate this Master
Services Agreement or the Schedule; provided, however, that upon notice from the party that
is seeking to terminate this Master Services Agreement or the Schedule to the other party,
such [****] period may be stayed for up to [****] (or such longer period as may be agreed
by the parties) during which time the parties shall use good faith efforts to resolve any
issue giving rise to the alleged termination right.
	 
	 	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.
	 
	 	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.




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	 	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.
	 
	 	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.




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	 	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.
	 
	 	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





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	 	 	 	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 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 15th 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).




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	 	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:





	o	 	Set forth the procedure for reporting by Ridge, and the related monitoring of the performance of the Services.
	 
	o	 	Maintain current knowledge of business direction and strategy.
	 
	o	 	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.
	 
	o	 	Maintain disciplined management regarding cost, quality and each party’s compliance with its contractual commitments and
the Laws and Rules.
	 
	o	 	Provide general oversight and consolidated performance reporting.
	 
	o	 	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:





	 	o	 	Executive Governance Committee
	 
	 	o	 	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:





	o	 	To monitor and direct the strategic relationship between Penson and Client and Broadridge and Ridge.
	 
	o	 	To provide an “interface” to the executive teams of the parties by providing regular feedback on progress and achievements
to executive meetings.
	 
	o	 	To review long term plans, business trends and directions.
	 
	o	 	To oversee compliance with terms and conditions of this Agreement and monitor that regulatory developments are addressed.
	 
	o	 	To consult on specified material industrial or public relations matters in connection with the Services.
	 
	o	 	To review overall performance of the Services including, without limitation, financial performance investments and the
effectiveness of gain/risk share arrangements.
	 
	o	 	To resolve issues and/or disagreements escalated by the Business Governance Committees.
	 
	o	 	To examine and authorize Changes.
	 
	o	 	To examine and authorize proposals for amendments to the Schedules.
	 
	o	 	To review new policies or changes to existing policies.
	 
	2.2.2	 	Specific Functions
	 
	o	 	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.
	 
	o	 	Review of the results of select, completed SRO examinations and
audit reports of Broadridge and Ridge and Penson and Client
business units.
	 
	o	 	Review of the feedback provided by key business stakeholders
within Penson and Client and Penson’s and Client’s introducing
brokers.
	 
	o	 	The EGC will also address:






	 	o	 	The Service Levels being provided by Ridge
	 
	 	o	 	Broadridge’s and Ridge’s and Penson’s and Client’s adherence to existing polices,
procedures and the Laws and Rules
	 
	 	o	 	The resolution of any unresolved disputes and controversies between the parties
	 
	 	o	 	The results of all audits conducted by Penson and Client as well as all SRO examinations
	 
	 	o	 	Broadridge’s, Ridge’s and Penson’s and Client’s readiness in preparing for new
regulations and/or industry mandates
	 
	 	o	 	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:





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





2.3.2 Purpose:





	o	 	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:





	o	 	Regularly establish audit and review responsibilities of Broadridge and Ridge, in accordance with the applicable Schedule.
	 
	o	 	Draft and update template Certification Reports, and Corrective Action Certifications.
	 
	o	 	Approve Services plans and guide overall activities.
	 
	o	 	Review and approve business and technical proposals that impact the business case for the Services.
	 
	o	 	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.
	 
	o	 	Review dependencies between Service areas.
	 
	o	 	Assess operational and financial risk.
	 
	o	 	Identify certain material current or future events that may affect Services.
	 
	o	 	Resolve conflicts relating to Services where these are escalated by management of the parties.
	 
	o	 	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.
	 
	o	 	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).





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	o	 	Monitor compliance with the Laws and Rules and address routine compliance issues.
	 
	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).






	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





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	 	 	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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	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.



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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.





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