exv10w1






Exhibit 10.1




$50,000,000




PENSON WORLDWIDE, INC.




8.0% Convertible Senior Notes due 2014




Purchase Agreement




May 28, 2009




J.P. Morgan Securities Inc.

Morgan Keegan & Company, Inc.

As Initial Purchasers

c/o J.P. Morgan Securities Inc.

383 Madison Avenue

New York, New York 10179



Ladies and Gentlemen:




     Penson Worldwide, Inc., a Delaware corporation (the “Company”), proposes to issue and sell to
J.P. Morgan Securities Inc. and Morgan Keegan & Company, Inc. (the “Initial Purchasers”), as listed
in Schedule 1 hereto, $50,000,000 principal amount of its 8.0% Convertible Senior Notes due 2014
(the “Firm Securities”). The Firm Securities will be issued pursuant to an Indenture to be dated
as of June 3, 2009 (the “Indenture”) among the Company and U.S. Bank National Association, as
trustee (the “Trustee”). The Company also proposes to issue and sell to the Initial Purchasers not
more than an additional $10,000,000 principal amount of its 8.0% Convertible Senior Notes due 2014
(the “Additional Securities”) if and to the extent that the Initial Purchaser shall have determined
to exercise the right to purchase such Additional Securities granted to the Initial Purchasers in
Section 1 hereof. The Firm Securities and the Additional Securities are hereinafter collectively
referred to as the “Securities.” The Securities will be convertible into shares (the “Underlying
Securities”) of common stock of the Company, par value $0.01 per share (the “Common Stock”).



     The Securities will be sold to the Initial Purchasers without being registered under the
Securities Act of 1933, as amended (the “Securities Act”), in reliance upon an exemption therefrom.
The Company has prepared a preliminary offering memorandum dated May 27, 2009 (the “Preliminary
Offering Memorandum”) and will prepare an offering memorandum dated the date hereof (the “Offering
Memorandum”) setting forth information concerning the Company and the Securities. Copies of the
Preliminary Offering Memorandum have been, and copies of the Offering Memorandum will be, delivered
by the Company to the Initial Purchasers pursuant to the terms of this Agreement. The Company
hereby confirms that it has authorized the use of the Preliminary Offering Memorandum, the other
Time of Sale Information (as defined below) and the Offering Memorandum in connection with the
offering and resale of the Securities by the



 









 







Initial Purchasers in the manner contemplated by this Agreement. Capitalized terms used but
not defined herein shall have the meanings given to such terms in the Offering Memorandum.
References herein to the Preliminary Offering Memorandum, the Time of Sale Information and the
Offering Memorandum shall be deemed to refer to and include any document incorporated by reference
therein.



     At or prior to the time when sales of the Securities were first made (the “Time of Sale”), the
following information shall have been prepared: the Preliminary Offering Memorandum, as
supplemented and amended by the written communications listed on Annex A hereto (collectively, the
“Time of Sale Information”).



     The offering and sale of the Securities being issued hereby and the payment of transaction
costs are referred to herein collectively, as the “Transactions.”



     The Company hereby confirms its agreement with the several Initial Purchasers concerning the
purchase and resale of the Securities, as follows:



     1. Purchase and Resale of the Securities.



     (a) The Company agrees to issue and sell the Securities to the several Initial Purchasers as
provided in this Agreement, and each Initial Purchaser, on the basis of the representations,
warranties and agreements set forth herein and subject to the conditions set forth herein, agrees,
severally and not jointly, to purchase from the Company the respective principal amount of Firm
Securities set forth opposite such Initial Purchaser’s name in Schedule 1 hereto at a price equal
to 95.25% of the principal amount thereof (the “Purchase Price”) plus accrued interest, if any,
from June 3, 2009 to the Closing Date.



     On the basis of the representations and warranties contained in this Agreement, and subject to
its terms and conditions, the Company agrees to sell to the Initial Purchasers the Additional
Securities, and the Initial Purchasers shall have the right to purchase, in the same proportion as
the Securities are purchased as set forth in Schedule 1, in whole, or from time to time in part, up
to $10,000,000 principal amount of Additional Securities, solely to cover over-allotments, at the
Purchase Price plus accrued interest, if any, from the Closing Date (as defined below) to the date
of payment and delivery.



     If J.P. Morgan Securities Inc., on behalf of the Initial Purchasers, exercises such option,
J.P. Morgan Securities Inc. shall so notify the Company in writing, which notice shall specify the
principal amount of Additional Securities to be purchased by the Initial Purchasers and the date on
which such Additional Securities are to be purchased. Such date on which Additional Securities are
to be purchased must be within a 12-day period from, and including, the Closing Date.



     The Company will not be obligated to deliver any of the Securities except upon payment for all
the Securities to be purchased as provided herein.



     (b) The Company understands that the Initial Purchasers intend to offer the Securities for
resale on the terms set forth in the Time of Sale Information. Each Initial Purchaser, severally
and not jointly, represents, warrants and agrees that:



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     (i) it is a qualified institutional buyer within the meaning of Rule 144A under the
Securities Act (a “QIB”) and an accredited investor within the meaning of Rule 501(a) under
the Securities Act;




     (ii) it has not solicited offers for, or offered or sold, and will not solicit offers
for, or offer or sell, the Securities by means of any form of general solicitation or
general advertising within the meaning of Rule 502(c) of Regulation D under the Securities
Act (“Regulation D”) or in any manner involving a public offering within the meaning of
Section 4(2) of the Securities Act; and




     (iii) it has not solicited offers for, or offered or sold, and will not solicit offers
for, or offer or sell, the Securities as part of their initial offering except within the
United States to persons whom it reasonably believes to be QIBs in transactions pursuant to
Rule 144A under the Securities Act (“Rule 144A”) and in connection with each such sale, it
has taken or will take reasonable steps to ensure that the purchaser of the Securities is
aware that such sale is being made in reliance on Rule 144A.



     (c) Each Initial Purchaser acknowledges and agrees that the Company and, for purposes of the
opinions to be delivered to the Initial Purchasers pursuant to Sections 6(f) and 6(g), Morgan &
Lewis Bockius LLP and Cahill Gordon & Reindel LLP, respectively, may rely upon the accuracy of the
representations and warranties of the Initial Purchasers, and compliance by the Initial Purchasers
with their agreements, contained in paragraph (b) above, and each Initial Purchaser hereby consents
to such reliance.



     (d) The Company acknowledges and agrees that the Initial Purchasers may offer and sell
Securities to or through any affiliate of an Initial Purchaser and that any such affiliate may
offer and sell Securities purchased by it to or through any Initial Purchaser so long as (i) such
offers and sales are consistent with Section 1(b) and (ii) the Initial Purchaser remain liable for
the actions or omissions of any such authorized affiliate to the same extent as if such actions or
omissions were performed by the Initial Purchaser.



     (e) The Company acknowledges and agrees that the Initial Purchasers are acting solely in the
capacity of an arm’s length contractual counterparty to the Company with respect to the offering of
Securities contemplated hereby (including in connection with determining the terms of the offering)
and not as financial advisors or fiduciaries to, or agents of, the Company or any other person.
Additionally, no Initial Purchaser is advising the Company or any other person as to any legal,
tax, investment, accounting or regulatory matters in any jurisdiction. The Company shall consult
with its own advisors concerning such matters and shall be responsible for making its own
independent investigation and appraisal of the transactions contemplated hereby, and the Initial
Purchasers shall not, either jointly or severally, have any responsibility or liability to the
Company with respect thereto. Any review by any Initial Purchaser of the Company and the
transactions contemplated hereby or other matters relating to such transactions
will be performed solely for the benefit of such Initial Purchaser, and shall not be on behalf
of the Company or any other person.



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     2. Payment and Delivery.



     (a) Payment for and delivery of the Firm Securities will be made at the offices of Cahill
Gordon & Reindel llp, 80 Pine Street, New York, New York 10005 at 10:00 A.M., New York
City time, on June 3, 2009, or at such other time or place on the same or such other date, not
later than the fifth business day thereafter, as the Initial Purchasers and the Company may agree
upon in writing. The time and date of such payment and delivery is referred to herein as the
“Closing Date”.



     Payment for and delivery of the Additional Securities will be made at the offices of Cahill
Gordon & Reindel LLP at 10:00 A.M., New York City time, on the date specified in the notice
described in Section 1 or at such other time or place on the same or such other date, not later
than June 15, 2009, as the Initial Purchasers and the Company may agree upon in writing. The time
and date of such payment and delivery is referred to herein as the “Optional Closing Date.”



     (b) Payment for the Firm Securities and Additional Securities shall be made by wire transfer
in immediately available funds to the account(s) specified by the Company to the Initial Purchasers
against delivery to the nominee of The Depository Trust Company (“DTC”), for the account of the
Initial Purchasers, of one or more global notes representing the Firm Securities and Additional
Securities (collectively, the “Global Note”), with any transfer taxes payable in connection with
the sale of the Securities duly paid by the Company. The Global Note will be made available for
inspection by the Initial Purchasers not later than 1:00 P.M., New York City time, on the business
day prior to the Closing Date or the Optional Closing Date, as the case may be.



     3. Representations and Warranties of the Company. The Company represents and warrants
to each Initial Purchaser that:




     (a) Preliminary Offering Memorandum, Time of Sale Information and Offering Memorandum.
The Preliminary Offering Memorandum, as of its date, did not, the Time of Sale Information,
at the Time of Sale, did not, and at the Closing Date, will not, and the Offering
Memorandum, in the form first used by the Initial Purchasers to confirm sales of the
Securities and as of the Closing Date, will not, contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading; provided
that the Company makes no representation or warranty with respect to any statements or
omissions made in reliance upon and in conformity with information relating to any Initial
Purchaser furnished to the Company in writing by such Initial Purchaser expressly for use in
the Preliminary Offering Memorandum, the Time of Sale Information or the Offering
Memorandum.




     (b) Additional Written Communications. The Company (including its agents and
representatives, other than the Initial Purchasers in their capacity as such) has not
prepared, made, used, authorized, approved or referred to and will not prepare, make,
use, authorize, approve or refer to any written communication that constitutes an offer to
sell or solicitation of an offer to buy the Securities (each such communication by the



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Company or its agents and representatives (other than a communication referred to in clauses
(i), (ii) and (iii) below) an “Issuer Written Communication”) other than (i) the Preliminary
Offering Memorandum, (ii) the Offering Memorandum, (iii) the documents listed on Annex A
hereto, including a term sheet substantially in the form of Annex B hereto, which constitute
part of the Time of Sale Information, and (iv) any electronic road show or other written
communications, in each case used in accordance with Section 4(c). Each such Issuer Written
Communication, when taken together with the Time of Sale Information, did not, and at the
Closing Date will not, contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that the Company
makes no representation and warranty with respect to any statements or omissions made in
each such Issuer Written Communication in reliance upon and in conformity with information
relating to any Initial Purchaser furnished to the Company in writing by such Initial
Purchaser expressly for use in any Issuer Written Communication.




     (c) Incorporated Documents. The documents incorporated by reference in each of the
Time of Sale Information and the Offering Memorandum, when filed with the Commission,
conformed or will conform, as the case may be, in all material respects to the requirements
of the Exchange Act and the rules and regulations of the Commission thereunder.




     (d) Financial Statements. The financial statements, including the related notes
thereto included or incorporated by reference in each of the Time of Sale Information and
the Offering Memorandum, present fairly in all material respects the consolidated financial
position of the Company and its subsidiaries as of the dates indicated and the consolidated
results of their operations and the changes in their consolidated cash flows for the periods
specified; such financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis throughout the periods covered
thereby; and the other financial information included or incorporated by reference in each
of the Time of Sale Information and the Offering Memorandum has been fairly and accurately
presented in all material respects and prepared on a basis consistent with such financial
statements and the books and records of the Company.




     (e) No Material Adverse Change. Except as disclosed in the Time of Sale Information
and the Offering Memorandum, since the date of the most recent financial statements of the
Company included or incorporated by reference in each of the Time of Sale Information and
the Offering Memorandum (i) there has not been any material change in the capital stock,
increase in long-term debt or any decreases in consolidated net current assets or
stockholders’ equity of the Company or any of its subsidiaries, or any dividend or
distribution of any kind declared, set aside for payment, paid or made by the Company on any
class of capital stock, or any material adverse change, or any
development involving an anticipated prospective material adverse change, in or
affecting the business, properties, management, financial position, results of operations of
the Company and its subsidiaries taken as a whole; (ii) neither the Company nor any of its
subsidiaries has entered into any transaction or agreement that is material to the



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Company
and its subsidiaries taken as a whole or incurred any liability or obligation, direct or
contingent, that is material to the Company and its subsidiaries taken as a whole; and (iii)
neither the Company nor any of its subsidiaries has sustained any material loss or
interference with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor disturbance or dispute or any action, order or
decree of any court or arbitrator or governmental or regulatory authority, except in each
case as otherwise disclosed, or incorporated by reference, in the Time of Sale Information
and the Offering Memorandum.




     (f) Organization and Good Standing. The Company and each of its Significant
Subsidiaries (as defined below) have been duly organized and are validly existing and in
good standing under the laws of their respective jurisdictions of organization, are duly
qualified to do business and are in good standing in each jurisdiction in which their
respective ownership or lease of property or the conduct of their respective businesses
requires such qualification, and have all power and authority necessary to own or hold their
respective properties and to conduct the businesses in which they are engaged, except where
the failure to be so qualified, in good standing or have such power or authority would not,
individually or in the aggregate, have a material adverse effect on the business,
properties, management, financial position or results of operations of the Company and its
subsidiaries taken as a whole or on the performance by the Company of its obligations under
the Securities (a “Material Adverse Effect”). The Company does not own or control, directly
or indirectly, any corporation, association or other entity other than the subsidiaries
listed on Schedule 2 to this Agreement. The subsidiaries designated as “significant” in
Schedule 2 to this Agreement include any subsidiary that, on a consolidated basis with its
subsidiaries, accounted for more than (x) 10% of the Company’s consolidated revenues for the
twelve months ended March 31, 2009 or (y) 10% of the Company’s consolidated total assets as
of March 31, 2009 (the “Significant Subsidiaries”).




     (g) Capitalization. The Company has an authorized capitalization as set forth in each
of the Time of Sale Information and the Offering Memorandum under the heading
“Capitalization”; such authorized capital stock of the Company conforms as to legal matters
in all material respects to the description thereof set forth in the Time of Sale
Information and the Offering Memorandum; there are no outstanding options to purchase, or
any rights or warrants to subscribe for, or any securities or obligations convertible into,
or any contracts or commitments to issue or sell, any shares of Common Stock, any shares of
capital stock of any subsidiary, or any such warrants, convertible securities or
obligations, except as set forth in the Time of Sale Information and the Offering Memorandum
and except for options granted under, or contracts or commitments pursuant to, the Company’s
previous or currently existing stock option and other similar officer, director or employee
benefit plans described in the Time of Sale Information and the Offering Memorandum; except
for this Agreement, or stock purchase
plans, there are no contracts, commitments, agreements, arrangements, understandings or
undertakings of any kind to which the Company is a party, or by which it is bound, granting
to any person the right to require either the Company to file a registration statement under
the Securities Act with respect to any securities of the Company or requiring the Company to
include such securities with the Securities registered pursuant



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to any registration
statement; the shares of Common Stock outstanding on the date hereof have been duly
authorized and are validly issued, fully paid and non-assessable; and all the outstanding
 shares of capital stock or other equity interests of each subsidiary of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable and, except
for shares of “joint back office” preferred stock issued in the ordinary course of business
and except as set forth in the Time of Sale Information and the Offering Memorandum, are
owned directly or indirectly by the Company free and clear of any lien, charge, encumbrance,
security interest, restriction on voting or transfer or any other claim of any third party.




     (h) Due Authorization. The Company has the corporate right, power and authority to
execute and deliver this Agreement, the Securities and the Indenture (collectively, the
“Transaction Documents”) and to perform its obligations hereunder and thereunder; and all
action required to be taken for the due and proper authorization, execution and delivery of
each of the Transaction Documents and the consummation of the transactions contemplated
thereby has been duly and validly taken.




     (i) The Indenture. The Indenture has been duly authorized by the Company and, when
duly executed and delivered in accordance with its terms, will constitute a valid and
legally binding agreement of the Company enforceable against the Company in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy, insolvency or
similar laws affecting the enforcement of creditors’ rights generally or by equitable
principles relating to enforceability (collectively, the “Enforceability Exceptions”); and
on the Closing Date, the Indenture will conform in all material respects to the requirements
of the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”), and the rules
and regulations of the Commission applicable to an indenture that is qualified thereunder.




     (j) The Securities. On the Closing Date, the Securities will have been duly authorized
by the Company and, when duly executed, authenticated, issued and delivered as provided in
the Indenture and paid for as provided herein, will be duly and validly issued and
outstanding and will constitute valid and legally binding obligations of the Company
enforceable against the Company in accordance with their terms, subject to the
Enforceability Exceptions, and will be entitled to the benefits of the Indenture.




     (k) Underlying Securities. Upon issuance and delivery of the Securities in accordance
with the Agreement and the Indenture, the Securities will be convertible at the option of
the holder thereof into of the Underlying Securities, to the extent set forth in the terms
of the Securities; the Underlying Securities reserved for issuance upon conversion of the
Securities have been duly authorized and reserved and, when and if issued upon conversion of
the Securities in accordance with the terms of the Securities,
will be validly issued, fully paid and non-assessable, and the issuance of any
Underlying Securities will not be subject to any preemptive or similar rights.




     (l) Purchase Agreement. This Agreement has been duly authorized, executed and
delivered by the Company; and, when duly executed and delivered in accordance with its terms
by each of the other parties thereto, will constitute a valid and legally



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binding agreement
of the Company enforceable against the Company in accordance with its terms, subject to the
Enforceability Exceptions, and except that rights to indemnity and contribution thereunder
may be limited by applicable law and public policy.




     (m) Descriptions of the Transaction Documents. Each Transaction Document conforms in
all material respects to the description thereof contained in each of the Time of Sale
Information and the Offering Memorandum.




     (n) No Violation or Default. Neither the Company nor any of its Significant
Subsidiaries is (i) in violation of its charter or by-laws or similar organizational
documents; (ii) in default, and no event has occurred that, with notice or lapse of time or
both, would constitute such a default by the Company or any of its Significant Subsidiaries,
in the due performance or observance of any term, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which
the Company or any of its Significant Subsidiaries is a party or by which the Company or any
of its Significant Subsidiaries is bound or to which any of the property or assets of the
Company or any of its Significant Subsidiaries is subject; or (iii) in violation of any law
or statute or any judgment, order, rule or regulation of any court or arbitrator or
governmental or regulatory authority, except, in the case of clauses (ii) and (iii) above,
for any such default or violation that would not, individually or in the aggregate, have a
Material Adverse Effect.




     (o) No Conflicts. The execution, delivery and performance by the Company of each of
the Transaction Documents to which it is a party, the issuance and sale of the Securities
(including the issuance of any Underlying Securities upon conversion thereof) and compliance
by the Company with the terms thereof and the consummation of the transactions contemplated
by the Transaction Documents will not (i) conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its Significant Subsidiaries pursuant to, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or any of its
Significant Subsidiaries is a party or by which the Company or any of its Significant
Subsidiaries is bound or to which any of the property or assets of the Company or any of its
Significant Subsidiaries is subject, (ii) result in any violation of the provisions of the
charter or by-laws or similar organizational documents of the Company or any of its
Significant Subsidiaries or (iii) result in the violation of any law or statute or any
judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory
authority, except, in the case of clauses (i) and (iii) above, for any such conflict,
breach, violation or default that would not, individually or in the aggregate, have a
Material Adverse Effect.




     (p) No Consents Required. No consent, approval, authorization, order, registration or
qualification of or with any court or arbitrator or governmental or regulatory authority is
required for the execution, delivery and performance by the Company of each of the
Transaction Documents, the issuance and sale of the Securities (including the issuance of
any Underlying Securities upon conversion thereof ) and compliance by the Company with the
terms thereof and the consummation of the



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transactions contemplated by the Transaction
Documents, except for such consents, approvals, authorizations, orders and registrations or
qualifications as may be required (i) under applicable state securities laws in connection
with the purchase and resale of the Securities by the Initial Purchasers and (ii) where the
failure to obtain any such consent, approval, authorization, order, registration or
qualification would not reasonably be expected to have a Material Adverse Effect or impair
the issuance and sale of the Securities as contemplated by the Time of Sale Information and
the Offering Memorandum.




     (q) Legal Proceedings. Except as described in each of the Time of Sale Information and
the Offering Memorandum, there are no legal, governmental or regulatory investigations,
actions, suits or proceedings pending to which the Company or any of it subsidiaries is or
may be a party or to which any property of the Company or any of its subsidiaries is or may
be the subject that, individually or in the aggregate, if determined adversely to the
Company or any of its subsidiaries, would reasonably be expected to have a Material Adverse
Effect; and, to the knowledge of the Company, no such investigations, actions, suits or
proceedings are threatened or, contemplated by any governmental or regulatory authority or
by others.




     (r) Independent Accountants. BDO Seidman, LLP, who has certified certain financial
statements of the Company and its subsidiaries, is an independent registered public
accounting firm with respect to the Company and its subsidiaries within the applicable rules
and regulations adopted by the Commission and the Public Company Accounting Oversight Board
(United States) and as required by the Securities Act.




     (s) Title to Real and Personal Property. The Company and its Significant Subsidiaries
have good and marketable title in fee simple to, or have valid rights to lease or otherwise
use, all items of real and personal property that are material to the business of the
Company and its Significant Subsidiaries, taken together, in each case free and clear of all
liens, encumbrances, claims and defects and imperfections of title except those that (i) do
not materially interfere with the use made and proposed to be made of such property by the
Company and its Significant Subsidiaries or (ii) would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.




     (t) Title to Intellectual Property. The Company and its Significant Subsidiaries own
or possess adequate rights to use all patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service mark registrations, copyrights,
licenses and know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures) that are material to the
conduct of the business of the Company and its
Significant Subsidiaries, taken together; and the conduct of their respective
businesses will not conflict in any material respect with any such rights of others, and the
Company and its Significant Subsidiaries have not received any notice of any claim of
infringement of or conflict with any such rights of others, except as would not reasonably
be expected, individually or in the aggregate, to have a Material Adverse Effect.



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     (u) No Undisclosed Relationships. No relationship, direct or indirect, exists between
or among the Company or any of its subsidiaries, on the one hand, and the directors,
officers, stockholders or other affiliates of the Company or any of its subsidiaries, on the
other, that would be required by the Securities Act to be described in a registration
statement to be filed with the Commission and that is not so described, or incorporated by
reference, in each of the Time of Sale Information and the Offering Memorandum.




     (v) Investment Company Act. Neither the Company nor any of its subsidiaries is, and
after giving effect to the offering and sale of the Securities and the application of the
proceeds thereof as described in each of the Time of Sale Information and the Offering
Memorandum none of them will be, an “investment company” or an entity “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940, as amended,
and the rules and regulations of the Commission thereunder (collectively, the “Investment
Company Act”).




     (w) Taxes. Except as otherwise disclosed in the Time of Sale Information and the
Offering Memorandum or except as would not have a Material Adverse Effect (i) the Company
and its subsidiaries have filed all returns with respect to federal, state, local and
foreign taxes required to be filed through the date hereof, (ii) paid all taxes shown by
such returns to be required to be paid through the date hereof, to the extent such taxes
have become due and are not being contested in good faith and for which the Company has
taken appropriate reserves as required by generally accepted accounting principles in the
United States, and (iii) there is no tax deficiency that has been, or would reasonably be
expected to be, asserted against the Company or any of its subsidiaries or any of their
respective properties or assets.




     (x) Licenses and Permits. The Company and its Significant Subsidiaries possess all
licenses, certificates, permits and other authorizations issued by, and have made all
declarations and filings with, the appropriate federal, state, local or foreign governmental
or regulatory authorities that are necessary for the ownership or lease of their respective
properties or the conduct of the business of the Company and its Significant Subsidiaries as
described in each of the Time of Sale Information and the Offering Memorandum, except where
the failure to possess or make the same would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect; and except as described in each of the
Time of Sale Information and the Offering Memorandum, neither the Company nor any of its
Significant Subsidiaries has received notice of any revocation or adverse modification of
any such license, certificate, permit or authorization or has any reason to believe that any
such license, certificate, permit or authorization will not be renewed in the ordinary
course, except as would not be reasonably expected to have a Material Adverse Effect.




     (y) No Labor Disputes. No labor disturbance by or dispute with employees of the
Company or any of its Significant Subsidiaries exists or, to the knowledge of the Company,
is contemplated or threatened, except as would not be reasonably expected to have a Material
Adverse Effect.



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     (z) Compliance with Environmental Laws. The Company and its subsidiaries (i) are in
compliance with any and all applicable federal, state, local and foreign laws, rules,
regulations, decisions and orders relating to the protection of human health or safety, the
environment, hazardous or toxic substances or wastes, pollutants or contaminants
(collectively, “Environmental Laws”), (ii) have received and are in compliance with all
permits, licenses, or other authorizations or approvals required of them under applicable
Environmental Laws to conduct their respective businesses, (iii) have not received notice of
any actual or potential liability under or relating to any Environmental Laws, including for
the investigation or remediation of any disposal or release of hazardous or toxic substances
or wastes, pollutants or contaminants and have no knowledge of any event or condition that
would reasonably be expected to result in any such notice, except in any such case, for any
such failure to comply, or failure to receive required permits, licenses or approvals, or
liability as would not, individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect and (iv) except as described in each of the Time of Sale Information
and the Offering Memorandum, none of the Company and its subsidiaries anticipates material
capital expenditures relating to any Environmental Laws.




     (aa) Compliance with ERISA. (i) Each employee benefit plan, within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
for which the Company or any member of its “Controlled Group” (defined as any organization
which is a member of a controlled group of corporations within the meaning of Section 414 of
the Internal Revenue Code of 1986, as amended (the “Code”)) would have any liability (each,
a “Plan”) has been maintained in compliance with its terms and the requirements of any
applicable statutes, orders, rules and regulations, including but not limited to ERISA and
the Code; (ii) no prohibited transaction, within the meaning of Section 406 of ERISA or
Section 4975 of the Code, has occurred with respect to any Plan excluding transactions
effected pursuant to a statutory or administrative exemption; (iii) for each Plan that is
subject to the funding rules of Section 412 of the Code or Section 302 of ERISA, no
“accumulated funding deficiency” as defined in Section 412 of the Code, whether or not
waived, has occurred or is reasonably expected to occur; (iv) the fair market value of the
assets of each Plan exceeds the present value of all benefits accrued under such Plan
(determined based on those assumptions used to fund such Plan); (v) no “reportable event”
(within the meaning of Section 4043(c) of ERISA) has occurred or is reasonably expected to
occur; and (vi) neither the Company nor any member of the Controlled Group has incurred, nor
reasonably expects to incur, any liability under Title IV of ERISA (other than contributions
to the Plan or premiums to the PBGC, in the ordinary course and without default) in respect
of a Plan (including a “multiemployer plan”, within the meaning of Section 4001(a)(3) of
ERISA), except in the case of each of (i) through (vi) which would not reasonably be
expected to have a Material Adverse Effect).




     (bb) Disclosure Controls. The Company maintains an effective system of “disclosure
controls and procedures” (as defined in Rule 13a-15(e) of the Exchange Act) that is designed
to ensure that information required to be disclosed by the Company in reports that it files
or submits under the Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the Commission’s rules and



-11-









 







forms, including controls and
procedures designed to ensure that such information is accumulated and communicated to the
Company’s management as reasonably appropriate to allow timely decisions regarding required
disclosure. The Company has carried out evaluations of the effectiveness of its disclosure
controls and procedures as required by Rule 13a-15 of the Exchange Act.




     (cc) Accounting Controls. The Company maintains a systems of “internal control over
financial reporting” (as defined in Rule 13a-15(f) of the Exchange Act) that complies with
the requirements of the Exchange Act and has been designed by, or under the supervision of,
the principal executive and principal financial officers, or persons performing similar
functions, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. The Company and its subsidiaries maintain
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific
authorizations; (ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in accordance with
management’s general or specific authorization; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. Except as disclosed, or incorporated by
reference, in each of the Time of Sale Information and the Offering Memorandum, there are no
material weaknesses or significant deficiencies in the Company’s internal control over
financial reporting.




     (dd) Insurance. The Company and its Significant Subsidiaries have insurance covering
their respective properties, operations, personnel and businesses, including business
interruption insurance, which insurance is in amounts and insures against such losses and
risks as the Company has determined are adequate in all material respects to protect the
Company and its subsidiaries and their businesses, taken as a whole; and neither the Company
nor any of its Significant Subsidiaries has (i) received notice from any insurer or agent of
such insurer that capital improvements or other expenditures are required or necessary to be
made in order to continue such insurance or (ii) any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires or to obtain
similar coverage at reasonable cost from similar insurers as may be necessary to continue
its business, except as would not reasonably be expected to result in a Material Adverse
Effect.




     (ee) No Unlawful Payments. Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company, any director, officer, agent, employee or other person acting on
behalf of the Company or any of its subsidiaries has during the last five
years (i) used any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expense relating to political activity; (ii) made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from corporate
funds; (iii) violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977, as amended; or (iv) made any bribe, rebate, payoff, influence



-12-









 







payment, kickback
or other unlawful payment except as would not reasonably be expected to have a Material
Adverse Effect.




     (ff) Compliance with Anti-Money Laundering Laws. The operations of the Company and its
subsidiaries are and have been conducted at all times in compliance in all material respects
with applicable financial recordkeeping and reporting requirements of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, the anti-money laundering statutes
of all jurisdictions to which the Company and its subsidiaries are subject, the rules and
regulations thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency having authority over the Company and
its subsidiaries (collectively, the “Anti-Money Laundering Laws”) and no action, suit or
proceeding by or before any court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries with respect to the Anti-Money
Laundering Laws is pending or, to the knowledge of the Company, threatened except as would
not reasonably be expected to have a Material Adverse Effect.




     (gg) Compliance with OFAC. None of the Company, any of its subsidiaries or, to the
knowledge of the Company, any director, officer, agent, employee or affiliate of the Company
or any of its subsidiaries is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”); and the
Company will not directly or indirectly use the proceeds of the offering of the Securities
hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary,
joint venture partner or other person or entity, for the purpose of financing the activities
of any person currently subject to any U.S. sanctions administered by OFAC except as would
not reasonably be expected to have a Material Adverse Effect.




     (hh) Solvency. On and immediately after the Closing Date, the Company (after giving
effect to the issuance of the Securities and the other transactions related thereto as
described in each of the Time of Sale Information and the Offering Memorandum) will be
Solvent. As used in this paragraph, the term “Solvent” means, with respect to a particular
date, that on such date (i) the present fair market value (or present fair saleable value)
of the assets of the Company is not less than the total amount required to pay the
liabilities of the Company on its total existing debts and liabilities (including contingent
liabilities) as they become absolute and matured; (ii) the Company is able to realize upon
its assets and pay its debts and other liabilities, contingent obligations and commitments
as they mature and become due in the normal course of business; (iii) assuming consummation
of the issuance of the Securities as contemplated by this Agreement, the Time of Sale
Information and the Offering Memorandum, the Company is not incurring debts or liabilities
beyond its ability to pay as such debts and liabilities mature; (iv) the
Company is not engaged in any business or transaction, and does not propose to engage
in any business or transaction, for which its property would constitute unreasonably small
capital after giving due consideration to the prevailing practice in the industry in which
the Company is engaged; and (v) the Company is not a defendant in any civil action that is
reasonably likely to result in a judgment that the Company is or would become unable to
satisfy.



-13-









 






     (ii) No Restrictions on Subsidiaries. Except for restrictions imposed by the
applicable regulatory authorities and applicable law (including restrictions required to be
included in the constituent documents of Penson Financial Services, Inc. by applicable
regulatory authorities) and described in the Time of Sale Information and the Offering
Memorandum, no Significant Subsidiary of the Company is currently prohibited, directly or
indirectly, under any agreement or other instrument to which it is a party or is subject,
from paying any dividends to the Company, from making any other distribution on such
Significant Subsidiary’s capital stock, from repaying to the Company any loans or advances
to such Significant Subsidiary from the Company or from transferring any of such Significant
Subsidiary’s properties or assets to the Company or any other subsidiary of the Company.




     (jj) No Broker’s Fees. Neither the Company nor any of its subsidiaries is a party to
any contract, agreement or understanding with any person (other than this Agreement) that
would give rise to a valid claim against any of them or any Initial Purchaser for a
brokerage commission, finder’s fee or like payment in connection with the offering and sale
of the Securities (other than as provided in this Agreement).




     (kk) Rule 144A Eligibility. On the Closing Date, the Securities will not be of the
same class as securities listed on a national securities exchange registered under Section 6
of the Exchange Act or quoted in an automated inter-dealer quotation system; and each of the
Preliminary Offering Memorandum and the Offering Memorandum, as of its respective date,
contains or will contain all the information that, if requested by a prospective purchaser
of the Securities, would be required to be provided to such prospective purchaser pursuant
to Rule 144A(d)(4) under the Securities Act.




     (ll) No Integration. Neither the Company nor any of its affiliates (as defined in Rule
501(b) of Regulation D) has, directly or through any agent, sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any security (as defined in
the Securities Act), that is or will be integrated with the sale of the Securities in a
manner that would require registration of the Securities under the Securities Act.




     (mm) No General Solicitation or Directed Selling Efforts. None of the Company or any
of its affiliates or any other person acting on its or their behalf (other than the Initial
Purchasers, as to which no representation is made) has solicited offers for, or offered or
sold, the Securities by means of any form of general solicitation or general advertising
within the meaning of Rule 502(c) of Regulation D or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act.




     (nn) Securities Law Exemptions. Assuming the accuracy of the representations and
warranties of the Initial Purchasers contained in Section 1(b) and their compliance with
their agreements set forth therein, it is not necessary, in connection with the issuance and
sale of the Securities to the Initial Purchasers and the offer, resale and delivery of the
Securities by the Initial Purchasers in the manner contemplated by this Agreement, the Time
of Sale Information and the Offering Memorandum, to register the Securities under the
Securities Act or to qualify the Indenture under the Trust Indenture Act.




-14-












 






     (oo) No Stabilization. The Company has not taken, directly or indirectly, any action
designed to or that could reasonably be expected to cause or result in any stabilization or
manipulation of the price of the Securities.




     (pp) Margin Rules. Neither the issuance, sale and delivery of the Securities nor the
application of the proceeds thereof by the Company as described in each of the Time of Sale
Information and the Offering Memorandum will violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board of Governors.




     (qq) Forward-Looking Statements. No forward-looking statement (within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act) contained in any of
the Time of Sale Information or the Offering Memorandum has been made or reaffirmed without
a reasonable basis or has been disclosed other than in good faith.




     (rr) Statistical and Market Data. Nothing has come to the attention of the Company
that has caused the Company to believe that the statistical and market-related data included
or incorporated by reference in each of the Time of Sale Information and the Offering
Memorandum is not based on or derived from sources that are reliable and accurate in all
material respects.




     (ss) Sarbanes-Oxley Act. There is and has been no failure on the part of the Company
or any of the Company’s directors or officers, in their capacities as such, to comply with
any provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in
connection therewith (the “Sarbanes-Oxley Act”), except for such noncompliance with the
Sarbanes-Oxley Act which would not reasonably be expected to result in a Material Adverse
Effect.



     4. Further Agreements of the Company. The Company covenants and agrees with each
Initial Purchaser that:




     (a) Delivery of Copies. The Company will deliver, without charge, to the Initial
Purchasers as many copies of the Preliminary Offering Memorandum, any other Time of Sale
Information, any Issuer Written Communication and the Offering Memorandum (including all
amendments and supplements thereto) as the Initial Purchasers may reasonably request.




     (b) Offering Memorandum, Amendments or Supplements. Before finalizing the Offering
Memorandum or making or distributing any amendment or supplement to any of the Time of Sale
Information or the Offering Memorandum or filing with the Commission any document that will
be incorporated by reference therein, the Company will furnish to the Initial Purchasers and
counsel for the Initial Purchasers a copy of the proposed Offering Memorandum or such
amendment or supplement or document to be incorporated by reference therein for review, and,
unless advised by counsel that such distribution or filing with the Commission is required
by law, will not distribute any such



-15-









 







proposed Offering Memorandum, amendment or supplement or file any such document with
the Commission to which J.P. Morgan Securities Inc. reasonably objects.




     (c) Additional Written Communications. Before making, preparing, using, authorizing,
approving or referring to any Issuer Written Communication, the Company will furnish to the
Initial Purchasers and counsel for the Initial Purchasers a copy of such written
communication for review and will not make, prepare, use, authorize, approve or refer to any
such written communication to which J.P. Morgan Securities Inc. reasonably objects.




     (d) Notice to the Initial Purchasers. The Company will advise the Initial Purchasers
promptly after it becomes aware, and confirm such advice in writing (including, without
limitation, via email or similar means of electronic communication), (i) of the issuance by
any governmental or regulatory authority of any order preventing or suspending the use of
any of the Time of Sale Information, any Issuer Written Communication or the Offering
Memorandum or the initiation or threatening of any proceeding for that purpose; (ii) of the
occurrence of any event at any time prior to the completion of the initial offering of the
Securities as a result of which any of the Time of Sale Information, any Issuer Written
Communication or the Offering Memorandum as then amended or supplemented would include any
untrue statement of a material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances existing when such Time of
Sale Information, Issuer Written Communication or the Offering Memorandum is delivered to a
purchaser, not misleading; and (iii) of the receipt by the Company of any notice with
respect to any suspension of the qualification of the Securities for offer and sale in any
jurisdiction or the initiation or threatening of any proceeding for such purpose; and the
Company will use its reasonable efforts to prevent the issuance of any such order preventing
or suspending the use of any of the Time of Sale Information, any Issuer Written
Communication or the Offering Memorandum or suspending any such qualification of the
Securities and, if any such order is issued, will use its reasonable efforts to obtain as
soon as possible the withdrawal thereof.




     (e) Time of Sale Information. If at any time prior to the Closing Date the Company
becomes aware that (i) any event has occurred or condition exists as a result of which any
of the Time of Sale Information as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were made, not
misleading or (ii) it is necessary to amend or supplement any of the Time of Sale
Information to comply with law, the Company will promptly notify the Initial Purchasers
thereof and forthwith prepare and, subject to paragraph (b) above, furnish to the Initial
Purchasers such amendments or supplements to any of the Time of Sale Information (or any
document to be filed with the Commission and incorporated by reference therein) as may be
necessary so that the statements in any of the Time of Sale Information as so amended or
supplemented will not, in light of the circumstances under which they were made, be
misleading or so that any of the Time of Sale Information will comply with law.



-16-









 






     (f) Ongoing Compliance of the Offering Memorandum. If at any time prior to the
completion of the initial offering of the Securities the Company becomes aware that (i) any
event has occurred or condition exists as a result of which the Offering Memorandum as then
amended or supplemented would include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in the light of
the circumstances existing when the Offering Memorandum is delivered to a purchaser, not
misleading or (ii) it is necessary to amend or supplement the Offering Memorandum to comply
with law, the Company will promptly notify the Initial Purchasers thereof and forthwith
prepare and, subject to paragraph (b) above, furnish to the Initial Purchasers such
amendments or supplements to the Offering Memorandum (or any document to be filed with the
Commission and incorporated by reference therein) as may be necessary so that the statements
in the Offering Memorandum as so amended or supplemented (including such document to be
incorporated by reference therein) will not, in the light of the circumstances existing when
the Offering Memorandum is delivered to a purchaser, be misleading or so that the Offering
Memorandum will comply with law.




     (g) Blue Sky Compliance. The Company will qualify the Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions as the Initial Purchasers shall
reasonably request and will continue such qualifications in effect so long as required for
the offering and resale of the Securities; provided that the Company shall not be
required to (i) qualify as a foreign corporation or as a dealer in securities in any such
jurisdiction where it would not otherwise be required to so qualify, (ii) file any general
consent to service of process in any such jurisdiction or (iii) subject itself to taxation
in any such jurisdiction if it is not otherwise so subject.




     (h) Clear Market. Without the prior written consent of J.P. Morgan Securities Inc.,
the Company will not, during the period ending 90 days after the date of the Offering
Memorandum, (i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or exchangeable for Common
Stock, (ii) enter into any swap or other arrangement that transfers to another, in whole or
in part, any of the economic consequences of ownership of the Common Stock, or (iii) file
with the Commission a registration statement under the Securities Act relating to any
additional shares of its Common Stock or securities convertible into, or exchangeable for,
any shares of its Common Stock (other than a registration statement on Form S-8, with
respect to any of the foregoing) or publicly disclose the intention to effect any
transaction described in clause (i), (ii) or (iii), whether any such transaction described
in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise; provided that the foregoing shall not apply to (A) the
sale of the Securities under this Agreement or the issuance of any Underlying Securities,
(B) the issuance of shares of Common Stock pursuant to existing employee benefit plans of
the Company, the grant by the Company of employee or director stock options in the ordinary
course of business, the issuance by the Company of any shares of Common Stock upon the
exercise of an option or warrant or the conversion of a security outstanding on the date
hereof, (C) agreements to issue shares of Common Stock (but not
the issuance of such shares) with respect to any business combination or other
acquisition



-17-









 







of another business and (D) the potential issuance of up to 2,500,000 shares of
Common Stock more than 30 days following the issuance of the Securities for a scheduled
payment of a contingent obligation with respect to a prior acquisition. Notwithstanding the
foregoing, if (1) during the last 17 days of the 90-day restricted period, the Company
issues an earnings release or material news or a material event relating to the Company
occurs; or (2) prior to the expiration of the 90-day restricted period, the Company
announces that it will release earnings results during the 16-day period beginning on the
last day of the 16-day period, the restrictions imposed by this Agreement shall continue to
apply until the expiration of the 18-day period beginning on the issuance of the earnings
release or the occurrence of the material news or material event.




     (i) Use of Proceeds. The Company will apply the net proceeds from the sale of the
Securities as described in each of the Time of Sale Information and the Offering Memorandum
under the heading “Use of proceeds.”




     (j) Underlying Securities. The Company will reserve and keep available at all times,
free of pre-emptive rights, shares of Common Stock for the purpose of enabling the Company
to satisfy all obligations to issue any Underlying Securities upon conversion of the
Securities. The Company will use its best efforts to cause the Underlying Securities to be
listed on NASDAQ.




     (k) Supplying Information. While the Securities remain outstanding and are “restricted
securities” within the meaning of Rule 144(a)(3) under the Securities Act, the Company will,
during any period in which the Company is not subject to and in compliance with Section 13
or 15(d) of the Exchange Act, furnish to holders of the Securities and prospective
purchasers of the Securities designated by such holders, upon the request of such holders or
such prospective purchasers, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.




     (l) DTC. The Company will assist the Initial Purchasers in arranging for the
Securities to be eligible for clearance and settlement through DTC.




     (m) No Resales by the Company. During the period from the Closing Date until one year
after the Closing Date, or the Optional Closing Date, if applicable, the Company will not,
and will not permit any of its affiliates (as defined in Rule 144 under the Securities Act)
to, resell any of the Securities that have been acquired by any of them, except for
Securities purchased by the Company or any of its affiliates and resold in a transaction
registered under the Securities Act.




     (n) No Integration. Neither the Company nor any of its affiliates (as defined in Rule
501(b) of Regulation D) will, directly or through any agent, sell, offer for sale, solicit
offers to buy or otherwise negotiate in respect of, any security (as defined in the
Securities Act), that is or will be integrated with the sale of the Securities in a manner
that would require registration of the Securities under the Securities Act.




     (o) No General Solicitation or Directed Selling Efforts. None of the Company or any of
its affiliates or any other person acting on its or their behalf (other



-18-









 







than the Initial
Purchasers, as to which no covenant is given) will (i) solicit offers for, or offer or sell,
the Securities by means of any form of general solicitation or general advertising within
the meaning of Rule 502(c) of Regulation D or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act or (ii) engage in any directed
selling efforts within the meaning of Regulation S, and all such persons will comply with
the offering restrictions requirement of Regulation S.




     (p) No Stabilization. The Company will not take, directly or indirectly, any action
designed to or that could reasonably be expected to cause or result in any stabilization or
manipulation of the price of the Securities and will not take any action prohibited by
Regulation M under the Exchange Act in connection with the distribution of the Securities
contemplated hereby.



     5. Certain Agreements of the Initial Purchasers. Each Initial Purchaser hereby
represents and agrees that it has not and will not use, authorize use of, refer to, or participate
in the planning for use of, any written communication that constitutes an offer to sell or the
solicitation of an offer to buy the Securities other than (i) the Preliminary Offering Memorandum
and the Offering Memorandum, (ii) a written communication that contains no “issuer information” (as
defined in Rule 433(h)(2) under the Securities Act) that was not included (including through
incorporation by reference) in the Preliminary Offering Memorandum or the Offering Memorandum,
(iii) any written communication listed on Annex A or prepared pursuant to Section 4(c) above
(including any electronic road show), (iv) any written communication prepared by such Initial
Purchaser and approved by the Company in advance in writing or (v) any written communication
relating to or that contains the terms of the Securities and/or other information that was included
(including through incorporation by reference) in the Preliminary Offering Memorandum or the
Offering Memorandum.



     For the purpose of Section 4(d)(ii) and 4(f), the Initial Purchasers will, upon request by the
Company, advise the Company of the completion of the initial offering of the Securities.



     6. Conditions of Initial Purchasers’ Obligations. The obligation of each Initial
Purchaser to purchase Securities on the Closing Date as provided herein is subject to the
performance by the Company of its covenants and other obligations hereunder and to the following
additional conditions:




     (a) Representations and Warranties. The representations and warranties of the Company
contained herein shall be true and correct on the date hereof and on and as of the Closing
Date; and the statements of the Company and its officers made in any certificates delivered
pursuant to this Agreement shall be true and correct on and as of the Closing Date.




     (b) No Downgrade. Subsequent to the earlier of (A) the Time of Sale and (B) the
execution and delivery of this Agreement, (i) no downgrading shall have occurred in the
rating accorded the Securities or any other debt securities or preferred stock issued or
guaranteed by the Company or any of its subsidiaries by any “nationally recognized
statistical rating organization,” as such term is defined by the Commission for
purposes of Rule 436(g)(2) under the Securities Act; and (ii) no such organization shall
have



-19-









 







publicly announced that it has under surveillance or review, or has changed its outlook
with respect to, its rating of the Securities or of any other debt securities or preferred
stock issued or guaranteed by the Company or any of its subsidiaries (other than an
announcement with positive implications of a possible upgrading).




     (c) No Material Adverse Change. No event or condition of a type described in Section
3(e) hereof shall have occurred or shall exist, which event or condition is not described in
each of the Time of Sale Information (excluding any amendment or supplement thereto) and the
Offering Memorandum (excluding any amendment or supplement thereto) the effect of which in
the judgment of J.P. Morgan Securities Inc. makes it impracticable or inadvisable to proceed
with the offering, sale or delivery of the Securities on the terms and in the manner
contemplated by this Agreement, the Time of Sale Information and the Offering Memorandum.




     (d) Officer’s Certificate. The Initial Purchasers shall have received on and as of the
Closing Date a certificate of an executive officer of the Company who has specific knowledge
of the Company’s financial matters and is satisfactory to the Initial Purchasers (i)
confirming that such officer has carefully reviewed the Time of Sale Information and the
Offering Memorandum and, to the knowledge of such officer, the representations set forth in
Sections 3(a) and 3(b) hereof are true and correct, (ii) confirming that the other
representations and warranties of the Company in this Agreement are true and correct and
that the Company has complied with all agreements and satisfied all conditions on its part
to be performed or satisfied hereunder at or prior to the Closing Date and (iii) to the
effect set forth in paragraphs (b) and (c) above.




     (e) Comfort Letters. On the date of this Agreement and on the Closing Date, BDO
Seidman, LLP shall have furnished to the Initial Purchasers, at the request of the Company,
letters, dated the respective dates of delivery thereof and addressed to the Initial
Purchasers, in form and substance reasonably satisfactory to the Initial Purchasers,
containing statements and information of the type customarily included in accountants’
“comfort letters” to underwriters with respect to the financial statements and certain
financial information contained or incorporated by reference in each of the Time of Sale
Information and the Offering Memorandum; provided that the letter delivered on the
Closing Date shall use a “cut-off” date no more than three business days prior to the
Closing Date.




     (f) Opinion and 10b-5 Statement of Counsel for the Company. Morgan, Lewis & Bockius
LLP, counsel for the Company, shall have furnished to the Initial Purchasers, at the request
of the Company, their written opinion and 10b-5 statement, dated the Closing Date and
addressed to the Initial Purchasers, in form and substance reasonably satisfactory to the
Initial Purchasers, to the effect set forth in Annex C-1 hereto and the Company’s in-house
counsel shall have furnished to the Initial Purchasers, a written opinion, dated the Closing
Date and addressed to the Initial Purchasers, in form and substance reasonably satisfactory
to the Initial Purchasers, to the effect set forth in Annex C-2 hereto.



-20-









 






     (g) Opinion and 10b-5 Statement of Counsel for the Initial Purchasers. The Initial
Purchasers shall have received on and as of the Closing Date an opinion and 10b-5 statement
of Cahill Gordon & Reindel llp, counsel for the Initial Purchasers, with respect to
such matters as the Initial Purchasers may reasonably request, and such counsel shall have
received such documents and information as they may reasonably request to enable them to
pass upon such matters.




     (h) No Legal Impediment to Issuance. No action shall have been taken and no statute,
rule, regulation or order shall have been enacted, adopted or issued by any federal, state
or foreign governmental or regulatory authority that would, as of the Closing Date, prevent
the issuance or sale of the Securities; and no injunction or order of any federal, state or
foreign court shall have been issued that would, as of the Closing Date, prevent the
issuance or sale of the Securities.




     (i) Good Standing. The Initial Purchasers shall have received on and as of the Closing
Date satisfactory evidence of the good standing of the Company in its jurisdiction of
organization and its good standing in such other jurisdictions as the Initial Purchasers may
reasonably request, in each case in writing or any standard form of telecommunication, from
the appropriate governmental authorities of such jurisdictions.




     (j) Indenture. The Initial Purchasers shall have received a counterpart of the
Indenture that shall have been executed and delivered by a duly authorized officer of the
Company and the Trustee.




     (k) DTC. The Securities shall be eligible for clearance and settlement through DTC.




     (l) Lock-up Agreements. The “lock-up” agreements, each substantially in the form of
Exhibit A hereto, of the officers and directors of the Company identified on Exhibit A
relating to sales and certain other dispositions of shares of Common Stock or certain other
securities, shall have been delivered to the Initial Purchasers on or before the date hereof
and shall be in full force and effect on the Closing Date.




     (m) Listing. An application for the listing of the Underlying Securities shall have
been submitted to the NASDAQ.




     (n) Additional Documents. On or prior to the Closing Date, the Company shall have
furnished to the Initial Purchasers such further certificates and documents as the Initial
Purchasers may reasonably request.



     All opinions, letters, certificates and evidence mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the Initial Purchasers.



     7. Indemnification and Contribution.



     (a) Indemnification of the Initial Purchasers. The Company agrees to indemnify and hold
harmless each Initial Purchaser, its affiliates, directors and officers and each person, if any,



-21-









 







who controls such Initial Purchaser within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, reasonable legal fees and other expenses incurred in
connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are
incurred), joint or several, that arise out of, or are based upon, any untrue statement or alleged
untrue statement of a material fact contained in the Preliminary Offering Memorandum, any of the
other Time of Sale Information, any Issuer Written Communication or the Offering Memorandum (or any
amendment or supplement thereto) or any omission or alleged omission to state therein a material
fact necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, in each case except insofar as such losses, claims, damages
or liabilities arise out of, or are based upon, any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with any information relating to any
Initial Purchaser furnished to the Company in writing by such Initial Purchaser expressly for use
therein, it being understood and agreed that the only such information consists of the following:
the information in the first sentence of the seventh paragraph under the heading “Plan of
Distribution” in the Preliminary Offering Memorandum and the Offering Memorandum.



     (b) Indemnification of the Company. Each Initial Purchaser agrees, severally and not jointly,
to indemnify and hold harmless the Company its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the indemnity set forth in paragraph (a) above, but only with
respect to any losses, claims, damages or liabilities that arise out of, or are based upon, any
untrue statement or omission or alleged untrue statement or omission made in reliance upon and in
conformity with any information relating to such Initial Purchaser furnished to the Company in
writing by such Initial Purchaser expressly for use in the Preliminary Offering Memorandum, any of
the other Time of Sale Information, any Issuer Written Communication or the Offering Memorandum (or
any amendment or supplement thereto), it being understood and agreed that the only such information
consists of the following: the information in the first sentence of the penultimate paragraph
under the heading “Plan of Distribution” in the Preliminary Offering Memorandum and the Offering
Memorandum.



     (c) Notice and Procedures. If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against any person in
respect of which indemnification may be sought pursuant to either paragraph (a) or (b) above, such
person (the “Indemnified Person”) shall promptly notify the person against whom such
indemnification may be sought (the “Indemnifying Person”) in writing; provided that the
failure to notify the Indemnifying Person shall not relieve it from any liability that it may have
under paragraph (a) or (b) above except to the extent that it has been materially prejudiced
(through the forfeiture of substantive rights or defenses) by such failure; and provided,
further, that the failure to notify the Indemnifying Person shall not relieve it from any
liability that it may have to an Indemnified Person otherwise than under paragraph (a) or (b)
above. If any such
proceeding shall be brought or asserted against an Indemnified Person and it shall have
notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably
satisfactory to the Indemnified Person (who shall not, without the consent of the Indemnified
Person, be counsel to the Indemnifying Person) to represent the Indemnified Person and any others
entitled to indemnification pursuant to this Section 7 that the Indemnifying Person may



-22-









 







designate
in such proceeding and shall pay the fees and expenses of such proceeding and shall pay the fees
and expenses of such counsel related to such proceeding, as incurred. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person
and the Indemnified Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person
has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person; (iii) the Indemnified Person shall have reasonably concluded that there may be legal
defenses available to it that are different from or in addition to those available to the
Indemnifying Person; or (iv) the named parties in any such proceeding (including any impleaded
parties) include both the Indemnifying Person and the Indemnified Person and representation of both
parties by the same counsel would be inappropriate due to actual or potential differing interests
between them. It is understood and agreed that the Indemnifying Person shall not, in connection
with any proceeding or related proceeding in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel) for all Indemnified
Persons, and that all such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm for any Initial Purchaser, its affiliates, directors and officers and any control
persons of such Initial Purchaser shall be designated in writing by J.P. Morgan Securities Inc. and
any such separate firm for the Company its directors and officers and any control persons of the
Company shall be designated in writing by the Company. The Indemnifying Person shall not be liable
for any settlement of any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to
indemnify each Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified
Person shall have requested that an Indemnifying Person reimburse the Indemnified Person for fees
and expenses of counsel as contemplated by this paragraph, the Indemnifying Person shall be liable
for any settlement of any proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by the Indemnifying Person of such request and (ii)
the Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such
request prior to the date of such settlement. No Indemnifying Person shall, without the written
consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in
respect of which any Indemnified Person is or could have been a party and indemnification could
have been sought hereunder by such Indemnified Person, unless such settlement (x) includes an
unconditional release of such Indemnified Person, in form and substance reasonably satisfactory to
such Indemnified Person, from all liability or claims that are the subject matter of such
proceeding and (y) does not include any statement as to or any admission of fault, culpability or a
failure to act by or on behalf of any Indemnified Person.



     (d) Contribution. If the indemnification provided for in paragraphs (a) and (b) above is
unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of
indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or
payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (i)
in such proportion as is appropriate to reflect the relative benefits received by the Company on
the one hand and the Initial Purchasers on the other from the offering of the Securities or (ii) if
the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i) but also the
relative



-23-









 







fault of the Company on the one hand and the Initial Purchasers on the other in connection
with the statements or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Initial Purchasers on the other shall be deemed to be in the same
respective proportions as the net proceeds (before deducting expenses) received by the Company from
the sale of the Securities and the total discounts and commissions received by the Initial
Purchasers in connection therewith, as provided in this Agreement, bear to the aggregate offering
price of the Securities. The relative fault of the Company on the one hand and the Initial
Purchasers on the other shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or by the Initial Purchasers and the
parties’ relative intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.



     (e) Limitation on Liability. The Company and the Initial Purchasers agree that it would not
be just and equitable if contribution pursuant to this Section 7
were determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable considerations referred to
in paragraph (d) above. The amount paid or payable by an Indemnified Person as a result of the
losses, claims, damages and liabilities referred to in paragraph (d) above shall be deemed to
include, subject to the limitations set forth above, any legal or other reasonable expenses
incurred by such Indemnified Person in connection with any such action or claim. Notwithstanding
the provisions of this Section 7, in no event shall an Initial Purchaser be required to contribute
any amount in excess of the amount by which the total discounts and commissions received by such
Initial Purchaser with respect to the offering of the Securities exceeds the amount of any damages
that such Initial Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The Initial Purchasers’
obligations to contribute pursuant to this Section 7 are several in proportion to their respective
purchase obligations hereunder and not joint.



     (f) Non-Exclusive Remedies. The remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies that may otherwise be available to any Indemnified Person at
law or in equity.



     8. Termination. This Agreement may be terminated in the absolute discretion of the
J.P. Morgan Securities Inc., by notice to the Company, if after the execution and delivery of this
Agreement and on or prior to the Closing Date (i) trading generally shall have been suspended or
materially limited on the New York Stock Exchange (the “NYSE”) or NASDAQ; (ii) trading of
the Common Stock or any other securities issued or guaranteed by the Company shall have been
suspended on the NYSE or NASDAQ; (iii) a general moratorium on commercial banking activities shall
have been declared by federal or New York State authorities; or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis,
either within or outside the United States, that, in the judgment of J.P. Morgan Securities Inc.,
is material and adverse and makes it impracticable or inadvisable to proceed with



-24-









 







the offering,
sale or delivery, of the Securities on the terms and in the manner contemplated by this Agreement,
the Time of Sale Information and the Offering Memorandum.



     9. Payment of Expenses.



     (a) Whether or not the transactions contemplated by this Agreement are consummated or this
Agreement is terminated, the Company agrees to pay or cause to be paid all costs and expenses
incident to the performance of its obligations hereunder, including without limitation, (i) the
costs incident to the authorization, issuance, sale, preparation and delivery of the Securities and
any taxes payable in that connection; (ii) the costs incident to the preparation and printing of
the Preliminary Offering Memorandum, any other Time of Sale Information, any Issuer Written
Communication and the Offering Memorandum (including any amendment or supplement thereto) and the
distribution thereof; (iii) the costs of reproducing and distributing each of the Transaction
Documents; (iv) the fees and expenses of the Company’s counsel and independent accountants; (v) the
fees and expenses incurred in connection with the registration or qualification and determination
of eligibility for investment of the Securities under the laws of such jurisdictions as the Initial
Purchasers may designate and the preparation, printing and distribution of a Blue Sky Memorandum
(including the related fees and expenses of counsel for the Initial Purchasers); (vi) any fees
charged by rating agencies for rating the Securities; (vii) the fees and expenses of the Trustee
and any paying agent (including related fees and expenses of any counsel to such parties); (viii)
all expenses and application fees incurred in connection with the approval of the Securities for
book-entry transfer by DTC; (ix) any fees or costs incident to listing the Underlying Securities on
the NASDAQ; (x) all expenses incurred by the Company in connection with any “road show”
presentation to potential investors and (xi) up to $150,000 for fees and expenses of counsel to the
Initial Purchasers in connection with the offering of the Securities.



     (b) If (i) this Agreement is terminated pursuant to Section 8, (ii) the Company for any reason
fails to tender the Securities for delivery to the Initial Purchasers or (iii) the Initial
Purchasers decline to purchase the Securities for any reason permitted under this Agreement, the
Company agrees to reimburse the Initial Purchasers for all out-of-pocket costs and expenses
(including the reasonable fees and expenses of their counsel) reasonably incurred by the Initial
Purchasers in connection with this Agreement and the offering contemplated hereby.



     10. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective successors and any
controlling persons referred to herein, and the affiliates, officers and directors of each Initial
Purchaser and the Company referred to in Section 7 hereof. Nothing in this Agreement is intended
or shall be construed to give any other person any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision contained herein. No purchaser of
Securities from any Initial Purchaser shall be deemed to be a successor by reason of such
purchase.



     11. Survival. The respective indemnities, rights of contribution, representations,
warranties and agreements of the Company and the Initial Purchasers contained in this Agreement or
made by or on behalf of the Company or the Initial Purchasers pursuant to this Agreement or any
certificate delivered pursuant hereto shall survive the delivery of and payment



-25-









 







for the Securities
and shall remain in full force and effect, regardless of any termination of this Agreement or any
investigation made by or on behalf of the Company or the Initial Purchasers.



     12. Certain Defined Terms. For purposes of this Agreement, (a) except where otherwise
expressly provided, the term “affiliate” has the meaning set forth in Rule 405 under the Securities
Act; (b) the term “business day” means any day other than a day on which banks are permitted or
required to be closed in New York City; (c) the term “Exchange Act” means the Securities Exchange
Act of 1934, as amended; (d) the term “subsidiary” has the meaning set forth in Rule 405 under the
Securities Act; and (e) the term “written communication” has the meaning set forth in Rule 405
under the Securities Act.



     13.  Xtract Research LLC. The Company hereby agrees that the Initial Purchasers may
provide copies of the Preliminary Offering Memorandum and the Final Offering Memorandum relating to
the offering of the Securities and any other agreements or documents relating thereto, including,
without limitation, any trust indentures, to Xtract Research LLC (“Xtract”) following the
completion of the offering for inclusion in an online research service sponsored by Xtract, access
to which is restricted to “qualified institutional buyers” as defined in Rule 144A under the
Securities Act.



     14. Miscellaneous.



     (a) Notices. All notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted and confirmed by any standard form of
telecommunication. Notices to the Initial Purchasers shall be given to the Initial Purchasers c/o
J.P. Morgan Securities Inc., 383 Madison Avenue, New York, New York 10179 (fax: (212) 622-8358);
Attention: Equity Syndicate Desk. Notices to the Company shall be given to 1700 Pacific Avenue,
Suite 1400, Dallas, Texas 75201; Attention: Andrew B. Koslow and Kevin McAleer.



     (b) Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.



     (c) Counterparts. This Agreement may be signed in counterparts (which may include
counterparts delivered by any standard form of telecommunication), each of which shall be an
original and all of which together shall constitute one and the same instrument.



     (d) Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any
consent or approval to any departure therefrom, shall in any event be effective unless the same
shall be in writing and signed by the parties hereto.



     (e) Headings. The headings herein are included for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this Agreement.



     If the foregoing is in accordance with your understanding, please indicate your acceptance of
this Agreement by signing in the space provided below.




-26-












 





	 	 	 	 	 
	 	Very truly yours,



PENSON WORLDWIDE, INC.

 	 
	 	By:  	/s/ Philip A. Pendergraft
 	 
	 	 	Name:  	Philip A. Pendergraft 	 
	 	 	Title:  	Chief Executive Officer 	 



-27-









 






	 	 	 	 	 
	Accepted: May 28, 2009



J.P. MORGAN SECURITIES INC.

 	 	 
	By:  	/s/ Santosh Sreenivasan
 	 	 
	 	Authorized Signatory 	 	 
	 	 	 	 
	 
	MORGAN KEEGAN & COMPANY, INC.

 	 	 
	By:  	/s/ Neal Smith
 	 	 
	 	Authorized Signatory 	 	 
	 	 	 	 
	 




-28-









 








Schedule 1




	 	 	 	 	 
	Initial Purchaser	 	Principal Amount	 
	J.P. Morgan Securities Inc.
	 	$	47,370,000	 
	Morgan Keegan & Company, Inc.
	 	$	2,630,000	 
	 
	 	 	 
	Total
	 	$	50,000,000	 







 









 








Schedule 2




Subsidiaries and Significant Subsidiaries




Penson Financial Services Inc., a North Carolina corporation

Penson GHCO, an Illinois general partnership

Penson Financial Services Canada Inc., a Canadian corporation

Penson Holdings, Inc. a Delaware corporation

SAI Holdings, Inc. a Texas corporation.




 









 





ANNEX A




a. Additional Time of Sale Information




     1. Term sheet, dated May 28, 2009 containing the terms of the securities, substantially in the
form of Annex B.




-2-









 








ANNEX B




Penson Worldwide, Inc.




Pricing Term Sheet




J.P. Morgan




Pricing Term Sheet for 8.00% Convertible Senior Notes due 2014

Issued By Penson Worldwide, Inc.



This pricing term sheet relates to the notes (as such term is defined below) and should be read
together with the preliminary offering memorandum for the notes dated May 27, 2009. This pricing
term sheet supplements, and to the extent inconsistent supersedes, such preliminary offering
memorandum.




	 	 	 
	Issuer:

	 	Penson Worldwide, Inc. (the “Company”)
	 
	 	 
	Ticker:

	 	PNSN
	 
	 	 
	Exchange:

	 	NASDAQ Global Select Market
	 
	 	 
	Title of securities:

	 	8.00% Convertible Senior Notes due 2014 (the “notes”).
	 
	 	 
	Aggregate principal 

amount offered:

	 	$50,000,000 of notes (excluding the initial purchasers’ option to purchase up to
$10,000,000 of additional notes).
	 
	 	 
	Maturity:

	 	The notes will mature on June 1, 2014, subject to earlier repurchase or conversion.
	 
	 	 
	Annual interest 

rate:

	 	8.00% per annum.
	 
	 	 
	Interest payment 

dates:

	 	Interest will accrue from June 3, 2009, and will be payable semi-annually in
arrears on June 1 and December 1 of each year, beginning on December 1, 2009.
	 
	 	 
	Initial conversion 

price:

	 	Approximately $9.81 per share of common stock.
	 
	 	 
	Initial conversion 

rate:

	 	101.9420 shares of common stock per $1,000 aggregate principal amount of notes.
	 
	 	 
	Conversion trigger 

price:

	 	Approximately $11.77 per share of common stock.
	 
	 	 
	Conversion Rate Cap:

	 	Certain listing standards of The NASDAQ Global Select Market limit the amount of
shares of common stock we may issue upon conversion of the notes. These standards
generally require us to obtain the approval of our stockholders before entering
into certain transactions that potentially result in the issuance of 20% or more
of our common stock outstanding at the time the notes are issued unless we obtain
stockholder approval of issuances in excess of such limitations. In accordance
with these listing standards, these restrictions will apply at any time when the
notes are outstanding, regardless of whether we then have a class of securities
listed on The NASDAQ Global Select Market. The initial number of shares of common
stock that would be






 









 






	 	 	 
	 

	 	required to be issued if all notes were converted and settled
by delivering shares of common stock exceeds 19.99% of our common stock
outstanding immediately before the issuance of the notes. However, in no event
will the shares issuable upon conversion of the notes exceed 19.99% of our common
stock outstanding immediately before the issuance of the notes (which is
equivalent to issuing upon conversion approximately 101.3991 shares per $1,000
principal amount of notes (assuming no exercise by the initial purchasers of their
over-allotment option) or approximately 84.4992 shares per $1,000 principal amount
of notes (assuming exercise in full by the initial purchasers of their
over-allotment option) (as applicable, the “conversion rate cap”)) and upon any
conversion of the notes we will deliver cash or cash and shares of our common
stock, as the case may be, in respect of our conversion obligation, based on a
specified dollar amount (as defined in the preliminary offering memorandum) equal
to $1,000 (but with the maximum number of shares required to be issued in
connection with such conversion being subject to the conversion rate cap), unless
at the time of such conversion we have received stockholder approval to issue a
number of additional shares equal to at least the maximum conversion rate (as
defined below) in effect at the time of any such conversion with respect to each
outstanding note (in which case, the “conversion rate cap” shall be increased to
such maximum conversion rate).
	 
	 	 
	Use of proceeds:

	 	The net proceeds of the offering, after deducting the initial purchasers’ discount
and estimated fees and expenses payable by us, will be used to for general
corporate purposes, including investment in subsidiaries and acquisitions. We
additionally intend to use a portion of the proceeds from the offering to pay down
approximately $10.0 million in principal amount of the revolving credit
indebtedness outstanding under our senior secured revolving credit facility.
	 
	 	 
	Trade Date:

	 	May 29, 2009
	 
	 	 
	Settlement:

	 	June 3, 2009
	 
	 	 
	Sole Book running 

manager:

	 	J.P. Morgan
	 
	 	 
	Co-manager:

	 	Morgan Keegan
	 
	 	 
	Issue price:

	 	100% plus accrued interest from June 3, 2009.
	 
	 	 
	CUSIP Number:

	 	709600 AA8
	 
	 	 
	ISIN:

	 	US709600AA81
	 
	 	 
	Adjustment to
conversion rate upon a make-whole
fundamental change:

	 	The following table sets forth the hypothetical stock price and the number of
additional shares to be received per $1,000 principal amount of notes:






-2-









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Stock price
	Effective date	 	$8.53	 	$9.50	 	$10.00	 	$11.00	 	$12.00	 	$13.00	 	$14.00	 	$15.00	 	$17.50	 	$20.00	 	$25.00	 	$30.00
	June 3, 2009
	 	 	15.2913	 	 	 	14.1618	 	 	 	12.9625	 	 	 	10.9026	 	 	 	9.2520	 	 	 	7.9045	 	 	 	6.7876	 	 	 	5.8500	 	 	 	4.0722	 	 	 	2.8413	 	 	 	1.3276	 	 	 	0.5179	 
	June 1, 2010
	 	 	15.2913	 	 	 	13.5800	 	 	 	12.3560	 	 	 	10.3364	 	 	 	8.7420	 	 	 	7.4551	 	 	 	6.3971	 	 	 	5.5141	 	 	 	3.8481	 	 	 	2.6970	 	 	 	1.2752	 	 	 	0.5096	 
	June 1, 2011
	 	 	15.2913	 	 	 	12.6474	 	 	 	11.3865	 	 	 	9.3662	 	 	 	7.8279	 	 	 	6.6222	 	 	 	5.6534	 	 	 	4.8587	 	 	 	3.3853	 	 	 	2.3782	 	 	 	1.1305	 	 	 	0.4498	 
	June 1, 2012
	 	 	15.2913	 	 	 	11.0908	 	 	 	9.7237	 	 	 	7.6507	 	 	 	6.1848	 	 	 	5.1111	 	 	 	4.2970	 	 	 	3.6597	 	 	 	2.5369	 	 	 	1.7948	 	 	 	0.8687	 	 	 	0.3434	 
	June 1, 2013
	 	 	15.2913	 	 	 	8.5050	 	 	 	6.8242	 	 	 	4.5324	 	 	 	3.1701	 	 	 	2.3478	 	 	 	1.8349	 	 	 	1.4985	 	 	 	1.0151	 	 	 	0.7341	 	 	 	0.3722	 	 	 	0.1344	 
	June 1, 2014
	 	 	15.2913	 	 	 	3.0570	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 






     The exact stock prices and effective dates may not be set forth in the table above, in which
case:




	 	•	 	if the stock price is between two stock prices in the table or the effective date is
between two effective dates in the table, the number of additional shares will be
determined by a straight-line interpolation between the number of additional shares set
forth for the higher and lower stock prices and the earlier and later effective dates,
based on a 365-day year, as applicable;
	 
	 	•	 	if the stock price is greater than $30.00 per share (subject to adjustment), no
additional shares will be issued upon conversion; and
	 
	 	•	 	if the stock price is less than $8.53 per share (subject to adjustment), no
additional shares will be issued upon conversion.





     In no event will the total number of shares of common stock issuable upon conversion of the
notes exceed 117.2333 per $1,000 principal amount of notes, subject to adjustments in the same
manner as the applicable conversion rate (the “maximum conversion ratio”).



Other Amendments:




     The Capitalization section in the preliminary offering memorandum for the notes dated May 27,
2009 is hereby amended by replacing it in its entirety with the following:



-3-









 





Capitalization



The following table sets forth our cash and cash equivalents and capitalization as of March 31,
2009 on an actual basis and on an as adjusted basis to give effect to the offering, the use of
proceeds and the replacement in May, 2009 of our $75.0 million revolving credit facility with our
$70.0 million senior secured revolving credit facility. The information in this table should be
read in conjunction with our consolidated financial statements and related notes incorporated by
reference herein, “Use of proceeds,” and other financial information, in each case, included
elsewhere herein. The table excludes $8.5 million of capitalized leases and our subsidiaries’
approximately $141.5 million of outstanding debt.




	 	 	 	 	 	 	 	 	 
	 	 	As of March 31, 2009	 
	(in millions)	 	Actual	 	 	As Adjusted(2)	 
	 
	 
	 	 	 	 	 	 	 	 
	Revolving credit facility(1)
	 	$	75.0	 	 	$	60.0	 
	New indebtedness:
	 	 	 	 	 	 	 	 
	8.00% Senior Convertible Notes due 2014 offered hereby
	 	 	—	 	 	 	35.6	 
	 
	 	 	 	 	 	 
	Total long-term debt
	 	 	75.0	 	 	 	95.6	 
	 
	 	 	 	 	 	 	 	 
	Stockholders’ equity
	 	 	266.6	 	 	 	274.0	 
	 
	 	 	 	 	 	 
	Total capitalization
	 	$	341.6	 	 	$	369.6	 
	 
	 	 	 	 	 	 








 




			
	(1)	 	Reflects $75.0 million outstanding as of March 31, 2009 under our previous line of credit. In
May, 2009, we replaced the previous $75.0 million revolving credit facility with a new $70.0
million senior secured revolving credit facility, all of which is currently outstanding. Our $70.0
million senior secured revolving credit facility includes a sublimit of $10.0 million for the
issuance of standby and commercial letters of credit. The total commitments under our $70.0 million
revolving credit facility can be increased by $30.0 million to $100.0 million, with the approval of
the participating lenders. See “Description of senior secured revolving credit facility.” The
credit agreement will be amended concurrently with the closing of the offering to among other
things, permit the issuance and conversion of the notes. Concurrently, with the closing of the
offering, a portion of the proceeds from the offering will be used to pay down approximately $10.0
million in principal amount of the revolving credit indebtedness outstanding under our senior
secured revolving credit facility.
	 
	(2)	 	We adopted FSP APB 14-1, “ Accounting for Convertible Debt Instruments That May Be Settled in
Cash Upon Conversion (Including Partial Cash Settlements)” (“FSP APB 14-1”). Proceeds from this
offering will be allocated between debt and equity based on FSP APB 14-1. The debt component will
have a discount of $12.0 million, reducing the outstanding debt balance and increasing “Additional
paid-in capital” by $7.4 million, net of tax. The amount of the notes reflected in the “as
adjusted” column is further reduced by the initial purchasers’ discount of $2.4 million.





     This communication is intended for the sole use of the person to whom it is provided by the
sender.



     These notes have not been registered under the Securities Act of 1933, as amended, and may
only be sold to qualified institutional buyers pursuant to Rule 144A or pursuant to another
applicable exemption.



     ANY DISCLAIMER OR OTHER NOTICES THAT MAY APPEAR BELOW ARE NOT APPLICABLE TO THIS COMMUNICATION
AND SHOULD BE DISREGARDED. SUCH DISCLAIMERS OR OTHER NOTICES WERE AUTOMATICALLY GENERATED AS A
RESULT OF THIS COMMUNICATION BEING SENT VIA BLOOMBERG OR ANOTHER EMAIL SYSTEM.




-4-









 








Exhibit A




[FORM OF LOCK-UP LETTER FOR

ROGER J. ENGEMOEN, JR.

PHILIP A. PENDERGRAF

DANIEL P. SON]




May 28, 2009




J.P. Morgan Securities Inc.

Morgan Keegan & Company, Inc.

As Initial Purchasers

383 Madison Avenue

New York, New York 10179



Dear Ladies and Gentlemen:




     The undersigned understands that J.P. Morgan Securities Inc. (“J.P. Morgan”) and Morgan Keegan
& Company, Inc. (with J.P. Morgan, the “Initial Purchasers”) propose to enter into a Purchase
Agreement (“Purchase Agreement”) with Penson Worldwide, Inc., a Delaware corporation (the
“Company”), providing for the offering (the “Offering”) by the Initial Purchasers of 8.0%
Convertible Senior Notes due 2014 (the “Securities”). The Securities will be convertible into
cash, shares of common stock of the company, par value $0.01 per share (the “Common Stock”), or a
combination thereof.



     To induce the Initial Purchasers that may participate in the Offering to continue their
efforts in connection with the Offering, the undersigned hereby agrees that, without the prior
written consent of JP Morgan, it will not, during the period commencing on the date hereof and
ending 90 days after the date of the final offering memorandum relating to the Offering (the
“Offering Memorandum”), (1) offer, pledge, sell contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase,
lend, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock or (2) enter into
any swap or other arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction described in clause (1)
or (2) above is to be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to transfers of Common Stock or securities
convertible into or exercisable or exchangeable for Common Stock (a) by gift, will or intestacy,
including without limitation transfers by gift, will or intestacy to family members of the
undersigned or to a settlement or trust established under the laws of any country;(b) to any
corporation, trust, partnership or other entity for the direct or indirect benefit of the
undersigned or one or more members of the immediate family of the undersigned; (c) to an immediate
family member of the undersigned; (d) to an entity controlled by, or under common investment with,
the undersigned or an immediate family member or a partner, member, stockholder or affiliate of the
undersigned; or (e) pursuant to plans in effect as of the date hereof complying with Rule 10b5-1 of
the Securities Exchange Act of 1934; provided that any such



 









 




transfer pursuant to clauses (a) through (d) shall not involve a disposition for value and
transferee must agree to be subject; provided that in the event of any transfer pursuant to clauses
(a), and (b), the transferee shall enter into a lock-up agreement substantially in the form of this
Letter Agreement covering the remainder of the 90-day period referred to herein. In addition, the
undersigned agrees that, without the prior consent of J.P. Morgan, it will not, during the period
commencing on the date hereof and ending 90 days after the date of the Final Memorandum, make any
demand for or exercise any right with respect to, the registration of any shares of Common Stock or
any security convertible into or exercisable or exchangeable for Common Stock. The undersigned
also agrees and consents to the entry of stop transfer instructions with the Company’s transfer
agent and registrar against the transfer of the undersigned’s shares of Common Stock except in
compliance with the foregoing restrictions.




     Further, notwithstanding anything prior, if (1) during the last 17 days of the 90-day
restricted period, the Company issues an earnings release or material news or a material event
relating to the Company occurs; or (2) prior to the expiration of the 90-day restricted period, the
Company announces that it will release earnings results during the 16-day period beginning on the
last day of the 90-day period, the restrictions imposed by this Letter Agreement shall continue to
apply until the expiration of the 18-day period beginning on the issuance of the earnings release
or the occurrence of the material news or material event unless J.P. Morgan waives, in writing,
such extension.



     The undersigned understands that the Company and the Initial Purchasers are relying upon this
Letter Agreement in proceeding toward consummation of the Offering. The undersigned further
understands that this Letter Agreement is irrevocable and shall be binding upon the undersigned’s
heirs, legal representatives, successors and assigns.



     The undersigned understands that, if the Purchase Agreement does not become effective on or
prior to June 15, 2009, or if the Purchase Agreement (other than the provisions thereof which
survive termination) shall terminate or be terminated prior to payment for and delivery of the
Securities to be sold thereunder, the undersigned shall be released from all obligations under this
Letter Agreement and this Letter Agreement shall be terminated.



     Whether or not the Offering actually occurs depends on a number of factors, including market
conditions. Any offering will only be made pursuant to a Purchase Agreement, the terms of which
are subject to negotiation between the Company and the Initial Purchasers.



Very truly yours,




(Name)




(Address)





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