Support, Development And Enhancement Agreement

EXHIBIT 10. 4


SUPPORT, DEVELOPMENT AND ENHANCEMENT AGREEMENT


AGREEMENT, dated as of January 7, 1999 (the " Effective Date" ), by and between ARCHIPELAGO HOLDINGS, L.L.C., a Delaware limited liability company with its principal offices located at 100 South Wacker Drive, Suite 2060, Chicago, IL 60606, and TOWNSEND ANALYTICS, LTD., an Illinois corporation with its principal offices located at 100 South Wacker Drive, Suite 2040, Chicago, Illinois 60606 (" TAL" ).


WITNESSETH:


WHEREAS, Archipelago Holdings, L.L.C., through its Affiliates, will operate an electronic communications network (" ECN" ) as contemplated by the Limited Liability Company Agreement of Archipelago Holdings, L.L.C.;


WHEREAS, TAL has developed certain software for operating an ECN and has licensed the Software to Archipelago;


WHEREAS, TAL is willing to provide certain services for such software, and if necessary train employees of Archipelago to do so, and Archipelago is willing to accept such services, pursuant to the terms and subject to the conditions set forth below;


NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein, Archipelago Holdings, L.L.C. and TAL hereby agree and contract with one another as follows:


ARTICLE I


DEFINITIONS


1.1 DEFINITIONS. For the purpose of this Support Agreement, the following terms shall have the following meanings:


" Affiliate" shall mean with respect to any Person (i) any other Person that directly or indirectly through one or more intermediaries controls or is controlled by or is under common control with such Person, (ii) any other Person owning or controlling 25% or more of the outstanding voting securities of or other ownership interests in such Person or (iii) any officer, director, manager or partner of such Person.


" Archipelago" means Archipelago Holdings, L.L.C., a Delaware limited liability company that is the signatory to this Support Agreement and all Affiliates of Archipelago Holdings, L.L.C. existing as of the Effective Date or any entity that shall in the future become an Affiliate of Archipelago Holdings, L.L.C.


" Business Day" means any day other than a Saturday, a Sunday or a day on which banking institutions in Chicago, Illinois are authorized or obligated by law, regulation or executive order to be closed.


" Development" means any fix, update, upgrade, development, improvement or modification of the Software, including new versions and new releases, resulting from a request from Archipelago pursuant to this Support Agreement.


" Development Team" means the then-current TAL employees who from time to time produce Enhancements or Developments and maintain and support the Software pursuant to the terms herein.


" Documentation" means all written or electronically recorded materials prepared by or on behalf of TAL relating to the Software, including all Functional Specifications and Technical Specifications.


" Enhancements" means fixes, updates, upgrades, developments, improvements or modifications of the Software, including new versions and new releases, or any part thereof, developed by TAL or it Affiliates independently of any request by Archipelago for a Development under this Support Agreement or otherwise acquired by TAL or its Affiliates during the term of this Support Agreement.


" Functional Specifications" means the operational capabilities of the Software and the Enhancements thereto.


" Governmental Body" means any supranational body or organization, country or government (federal, state, local or foreign), any governmental or regulatory body thereof, any political subdivision thereof, any agency, instrumentality or authority thereof, any self-regulatory organization the rules and regulations of which are enforceable by law(including any such securities, futures or commodity exchange), or any court of competent jurisdiction.


" License Agreement" means the license agreement dated as of the Effective Date between Archipelago and TAL for use of the Software.


" Software" shall have the meaning ascribed to it in the License Agreement.


" Source Code" means the form of code for the Software, which is human readable and which can be translated by a compiler for execution on Archipelago' s computer.


" Support Agreement" means this Support, Development and Enhancement Agreement.


" Technical Specifications" means the technical specifications developed, licensed or acquired by or on behalf of TAL or its Affiliates for or in connection with the Software.


" Termination Date" means the date which is the earlier to occur of the dates for termination set forth in Article IX.


2


ARTICLE II


SUPPORT AND MAINTENANCE


2.1 SUPPORT. Between the hours of 7:30 AM and 4:30 PM CST on Business Days, TAL shall provide to Archipelago maintenance and support services for the Software. TAL will cause at least one (1) employee to be available to maintain a log of and respond to inquiries concerning the Software during those hours. TAL will perform all maintenance and support services, including the correction of problems noted by Archipelago, on a " best efforts" basis. TAL will attempt to resolve either the problem or provide a plan for resolution of problems for critical problems, as reasonably described by Archipelago, within twenty-four (24) hours during a business week, and for noncritical problems within seven (7) Business Days.


2.2 ENHANCEMENTS TO THE SOFTWARE. TAL agrees to provide, or offer to provide, to Archipelago, any and all Enhancements to the Software prior to the Termination Date. All Enhancements completed prior to the Termination Date shall be considered Software under the License Agreement, and Archipelago shall have the rights to such Software specified in the License Agreement.


ARTICLE III


DEVELOPMENTS


3.1 DEVELOPMENTS. Upon Archipelago' s reasonable request, TAL agrees to use its reasonable best efforts to create Developments to the Software according to an agreed-upon Development Schedule. Any Development that is not substantially complete at (x) in the case this Support Agreement is terminated other than pursuant to Section 9.4(a), the Termination Date or (y) in the case this Support Agreement is terminated pursuant to Section 9.4(g), the date for termination provided in TAL' s notice to Archipelago pursuant to Section 9.4(a), shall be delivered to Archipelago in its work-in-progress form on or promptly following the Termination Date. Any such incomplete Development delivered to Archipelago in its work-in-progress form shall be the property of TAL in accordance with Section 4.1 unless Archipelago and TAL shall have otherwise agreed with respect to such Development.


3.2 Development Schedule. Following receipt of a request for an Development, TAL shall promptly provide Archipelago with a Development Schedule. If Archipelago approves of the Development Schedule, TAL shall use its reasonable best efforts to develop the Development pursuant to the Development Schedule.


3.3 Acceptance of Developments and Enhancements. Unless Archipelago notifies TAL in writing within sixty (60) days of its receipt of any Development or Enhancement that there are deficiencies in, or that further work is required with respect to, such Development or Enhancement, such Development or Enhancement shall be deemed to have been accepted by Archipelago and shall be installed without liability to either party. If Archipelago accepts such Development or Enhancement, it shall upgrade its installation of Software within a reasonable period of time.


3


ARTICLE IV


OWNERSHIP


4.1 SOFTWARE DEVELOPED BY PARTIES. Any modification or enhancement of, or derivative work relating to, the Software developed by Archipelago or any third party consultants hired by Archipelago, will be the property of Archipelago. Any Enhancements developed or acquired by TAL will be property of TAL and shall be considered Software under the License Agreement, and Archipelago shall have the rights to such Software specified in the License Agreement. Unless otherwise agreed to at the time of a request for a Development or thereafter, any Development (including incomplete Developments delivered to Archipelago pursuant to Section 3.2) shall be the property of TAL and shall be considered Software under the License Agreement, and Archipelago shall have rights to such Software as specified in the License Agreement.


ARTICLE V


PAYMENT FOR SUPPORT, MAINTENANCE AND DEVELOPMENT


5.1 TERMS OF PAYMENT. In consideration of the services to be provided to Archipelago by TAL pursuant to this Support Agreement, Archipelago will pay to TAL a fee of $83,333 for each month during the term of this Support Agreement, with the first payment being made on the date of this Support Agreement and each subsequent payment being made on or before the tenth (10th) day of each subsequent month (a " Payment Date" ). In the event of any early termination of this Support Agreement by mutual agreement of the parties or pursuant to Article IX hereof on a date that is not the last day of a month, TAL shall return to Archipelago a pro rata portion of the fee paid with respect to the final month of this Support Agreement, based on the number of days during such month in which this Support Agreement remains in effect and the actual number of days in such month.


5.2 REVIEW OF TERMS. Six (6) months from the Effective Date , and thereafter upon sixty (60) days notice from either party, representatives of both TAL and Archipelago shall meet to review the terms of this Support Agreement. Specifically, the parties shall discuss whether the fee paid hereunder is reasonable, or whether the basis for the fee should be restructured to reflect ECN transactions and whether TAL' s response to Archipelago' s Development requests have been adequate. Upon mutual agreement the parties may amend the Support Agreement. In the event that the parties are unable to mutually agree upon any such terms, either party may terminate this Support Agreement pursuant to the terms of Section 9.3 or 9.4, as appropriate.


ARTICLE VI


TRAINING


6.1 INSTALLATION AND OPERATION OF SOFTWARE. As reasonably requested by Archipelago from time to time, TAL shall train persons designated by Archipelago in the installation and operation of the Software. Training shall occur at TAL' s principal office location, or at any other location reasonably requested by Archipelago. Archipelago shall reimburse TAL for reasonable out-of-pocket expenses for travel required for such training.


4


6.2 USE OF SOURCE CODE. TAL shall, if requested by Archipelago, provide personnel from the Development Team, or other TAL employees assigned to assist the Development Team, to train persons designated by Archipelago in the use of the Source Code, provided that any such training in the use of the Source Code shall not exceed four (4) months in length unless mutually agreed by Archipelago and TAL. Training shall occur at TAL' s principal office location, or at any other location reasonably requested by Archipelago. If training is at any other location, Archipelago shall reimburse TAL for reasonable out-of-pocket expenses for travel and living required for such training. The training period shall begin as soon as reasonably possible after request by Archipelago and shall last as long as reasonably requested by Archipelago and for so long as this Support Agreement is in effect and Archipelago continues to pay the fees required under this Support Agreement.


ARTICLE VII


TAL PERSONNEL


7.1 DEVELOPMENT TEAM.


(a) TAL shall periodically identify certain employees as part of the Development Team and shall cause these employees to dedicate substantial efforts to provide the services described in Sections 2.2 and 3.1 above, and to the training described in Article VI above, if necessary. TAL shall use its reasonable best efforts to ensure that the Dev ...