Document:

exv10w4

 

Exhibit 10.4

UNCONDITIONAL GUARANTY AGREEMENT

     This Unconditional Guaranty Agreement (this “Guaranty”) is made as of the 20th day of
November, 2006, by Schonfeld Group Holdings LLC, a Delaware limited liability company (“Group”),
Schonfeld Securities, LLC, a New York limited liability company (“SSLLC”), and Steven B. Schonfeld,
in his individual capacity (“Schonfeld”, and together with Group and SSLLC, “Guarantors”), in favor
of Penson Financial Services, Inc., a North Carolina corporation (“PFSI”).

RECITALS:

     (A) Schonfeld & Company LLC, a New York limited liability company (“SchonCo”), is entering
into concurrently herewith a Fully Disclosed Clearing Agreement by and between SchonCo and PFSI
dated as of even date hereof (the “SchonCo Clearing Agreement”).

     (B) Schonfeld Securities, LLC, a New York limited liability company (“SSLLC”), is entering
into concurrently herewith a Fully Disclosed Clearing Agreement by and between SSLLC and PFSI dated
as of even date hereof (the “SSLLC Clearing Agreement”).

     (C) Opus Trading Fund LLC, a Delaware limited liability company (“Opus”), and Quantitative
Trading Strategies LLC, Delaware limited liability company (“QTS”, and together with Opus,
"Payors”), each affiliates of SchonCo, SSLLC and Guarantors, are entering into concurrently
herewith a Termination / Compensation Payment Agreement by and among Payors and PFSI dated as of
the date hereof (the “Termination / Compensation Payment Agreement”), pursuant to which Payors have
agreed to make certain payments to PFSI in the event that SchonCo terminates the SchonCo Clearing
Agreement at any time after the fourth anniversary of the Conversion Date and prior to the end of
the Initial Term of the SchonCo Clearing Agreement or SSLLC sells certain of its assets prior to
the end of the Initial Term of the SSLLC Clearing Agreement.

     (D) Guarantors, affiliates and/or equity holders of each of SchonCo, SSLLC and Payors, will
receive a substantial benefit from the right granted to SchonCo by PFSI to terminate the SchonCo
Clearing Agreement prior to the expiration of the Initial Term and the right granted to SSLLC by
PFSI to sell certain of its assets prior to the expiration of the Initial Term and PFSI would not
grant such rights to SchonCo or SSLLC but for the commitments made by Payors as set forth in the
Termination / Compensation Payment Agreement and the guaranty of Guarantors set forth in this
Guaranty.

     (E) Unless the context indicates otherwise, any capitalized term used and not defined in this
Guaranty has the meaning ascribed to such term in the SchonCo Clearing Agreement or the SSLLC
Clearing Agreement, as applicable.

     For good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and as a material inducement to cause PFSI to enter into the SchonCo Clearing
Agreement, the SSLLC Clearing Agreement and the Termination / Compensation Payment Agreement,
Guarantors hereby jointly and severally, absolutely, unconditionally and irrevocably guarantee to
PFSI the full and complete payment of the obligations of Payors pursuant to the

 

 

Termination / Compensation Payment Agreement (the “Guaranteed Obligations”), upon the
following terms and conditions:

AGREEMENT:

     1. Guaranty of Payment. Guarantors hereby, jointly and severally, absolutely, unconditionally
and irrevocably guarantee to PFSI the full, complete and timely payment of the Guaranteed
Obligations. This Guaranty is a continuing and unconditional guaranty of payment and not of
collection. This Guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment of the Guaranteed Obligations is rescinded, avoided or for any other reason
invalidates any previous satisfaction of such obligations of Payors and such payment shall remain
unsatisfied as though such obligation had never been satisfied. Except to the extent the
provisions of this Guaranty give PFSI additional rights, this Guaranty shall not be deemed to
supersede or replace any other guaranties given to PFSI by Guarantors.

     2. Primary Liability of Guarantors.

     (a) This Guaranty is an absolute, irrevocable and unconditional guaranty of payment.
Guarantors shall be liable for the payment of the Guaranteed Obligations, as set forth in this
Guaranty, as primary obligors. This Guaranty shall be effective as a waiver of, and Guarantors
hereby expressly waive, any and all rights to which Guarantors may otherwise have been entitled
under any suretyship laws in effect from time to time.

     (b) In the event of a default by Payors in payment of the Guaranteed Obligations, or any part
thereof, when such payment becomes due, Guarantors shall, on demand and without presentment,
protest, notice of protest, further notice of nonpayment or of dishonor or of default or
nonperformance, or any other notice whatsoever, without any notice having been given to Guarantors
previous to such demand of the acceptance by PFSI of this Guaranty, and without any notice having
been given to Guarantors previous to such demand, all such notices being hereby waived by
Guarantors, perform its/his obligation to make payment hereunder and it shall not be necessary for
PFSI in order to enforce such payment by Guarantors, first to institute suit or pursue or exhaust
any rights or remedies against Payors or others liable for such payment, or to enforce any rights
against any security that shall ever have been given to secure such payment or to join Payors or
any others liable for the payment of the Guaranteed Obligations or any part thereof in any action
to enforce this Guaranty, or to resort to any other means of obtaining payment or performance of
the Guaranteed Obligations.

     3. Waiver and Acknowledgments. Guarantors hereby waive and release the following rights,
demands and defenses Guarantors may have with respect to PFSI and collection of the Guaranteed
Obligations: (i) promptness and diligence in collection/enforcement of the Guaranteed Obligations
from Payors or any other person liable thereon, and in foreclosure of any security interest and
sale of any property serving as collateral for the Guaranteed Obligations, (ii) any law or statute
that requires that PFSI may make demand upon, assert claims against, or collect from Payors or any
other persons or entities prior to making demand upon, collecting from or taking action against
Guarantors with respect to the Guaranteed Obligations, (iii) any law or statute that requires that
Payors or any other person be joined in, notified of or made part of any action against Guarantors,
(iv) notice of extensions, modifications, renewals, or novations

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of the Guaranteed Obligations, or any new transactions or other relationships between Payors,
PFSI and/or any guarantor and of changes in the financial condition of, ownership of, or business
structure of Payors or any other guarantor, (v) presentment, protest, notice of dishonor, notice of
default, demand for payment, and all other notices of any kind whatsoever to which Guarantor may be
entitled, (vi) the right to assert against PFSI any defense (legal or equitable), set-off,
counterclaim, or claim that any Guarantor may have at any time against PFSI or any other party
liable to PFSI, (vii) all defenses relating to invalidity, insufficiency, unenforceability,
enforcement, release or impairment of the SchonCo Clearing Agreement, the SSLLC Clearing Agreement
or the Termination / Compensation Payment Agreement or of any other guaranties held by PFSI, and
(viii) any right to which Guarantors are or may become entitled to be subrogated to PFSI’s rights
against Payors or any other person or to seek contribution, reimbursement, indemnification, payment
or the like, of participations in any claim, right or remedy of PFSI against Payors or any other
person or any security which PFSI or its affiliates now have or hereafter acquire, until such time
as the Guaranteed Obligations have been fully and finally satisfied beyond the expiration of any
applicable preference period. Each Guarantor acknowledges and represents that such Guarantor has
relied upon Guarantor’s own due diligence in making an independent appraisal of Payors and their
respective businesses and affairs and financial condition; Guarantors will not continue to be
responsible for making an independent appraisal of such matters; and each Guarantor has not relied
upon PFSI for any information regarding Payors or any other person.

     4. Financial Condition of Guarantors. Each Guarantor hereby represents, warrants and
covenants to PFSI that on the date hereof and until the full and final payment of the Guaranteed
Obligations: (a) the fair saleable value of Guarantor’s assets exceeds its/his liabilities,
Guarantor is meeting its/his current liabilities as they mature, and Guarantor is and shall remain
solvent, (b) all financial statements of Guarantor previously provided to PFSI are true and correct
and accurately reflect the financial condition of Guarantor as of the date each such statement
purports to reflect, (c) since the date of such financial statements, there has not occurred any
material adverse change in the financial condition of Guarantor, (d) there are not now pending any
court or administrative proceedings or undischarged judgments against Guarantor, no federal or
state tax liens have been filed or, to Guarantor’s knowledge, threatened against Guarantor, and
Guarantor is not in default or claimed default under any material agreement, (e) Guarantor shall
deliver to PFSI such information in Guarantor’s possession as PFSI may reasonably request from time
to time regarding Guarantor’s financial condition and such information shall be true and correct,
(f) Guarantor shall undertake no action prior to the full and final payment of the Guaranteed
Obligations that could reasonably be expected to materially and adversely affect its ability to
satisfy any of its obligations hereunder, and (g) Guarantor shall cause Payors to make payment of
the Guaranteed Obligations as it shall come due.

     5. Successors and Assigns. This Guaranty is for the benefit of PFSI and its successors and
assigns, and in the event of an assignment of the Guaranteed Obligations, or any part thereof, the
rights and benefits hereunder, to the extent applicable to the Guaranteed Obligations so assigned,
may be transferred with such Guaranteed Obligations. Guarantors waive notice of any transfer or
assignment of the Guaranteed Obligations, or any part thereof, and agree that failure to give
notice will not affect the obligations of any Guarantor hereunder.

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     6. Binding Effect. This Guaranty is binding not only on Guarantors, but also on their
respective heirs, executors, administrators, other legal representatives, successors and permitted
assigns.

     7. Governing Law; Forum.

     (a) This Guaranty shall be governed by and construed in accordance with the laws of the State
of New York.

     (b) To the fullest extent permitted by applicable law, each Guarantor agrees that any claim,
action or proceeding arising out of, or in connection with this Guaranty shall be brought in any
state or federal court of competent jurisdiction sitting in New York County in the State of New
York, and not in any other state or federal court in the United States of America or any court in
any other country.

     (c) EACH GUARANTOR HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS GUARANTY.

     8. Term of Guaranty. This Guaranty shall continue in effect until the Guaranteed Obligations
are fully and finally paid and discharged, except that, and notwithstanding any return of this
Guaranty to Guarantors, this Guaranty shall continue in effect with respect to any of the
Guaranteed Obligations that survive a partial discharge of the Guaranteed Obligations.

     9. Further Assurances. Guarantors will promptly execute and deliver to PFSI upon PFSI’s
request all such other and further documents, agreements and instruments in compliance with or
accomplishment of the agreements of Guarantors under this Guaranty as PFSI may reasonably request
from time to time. Any expenses incurred by Guarantors pursuant to this Section 9 shall be
allocated evenly among Guarantors and PFSI.

     10. No Fiduciary Relationship. The relationship between PFSI and Guarantors, under this
Guaranty, is solely that of a guarantor and a beneficiary of a guaranty. PFSI has no fiduciary or
other special relationship with or duty to Guarantors under this Guaranty, and none is created
hereby.

     11. Amendment. This Guaranty may be amended only by a writing signed by each Guarantor and by
PFSI.

     12. Time of Essence. Time shall be of the essence in this Guaranty with respect to all of
Guarantors’ obligations hereunder.

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     13. Entire Agreement. This Guaranty, the SchonCo Clearing Agreement, the SSLLC Clearing
Agreement, the Termination / Compensation Payment Agreement and the agreements, annexes and
schedules referenced therein or attached thereto embody the entire agreement between PFSI and
Guarantors with respect to the guaranty by Guarantors of the Guaranteed Obligations. This Guaranty
supersedes all prior agreements and understandings, if any, with respect to the guaranty by
Guarantors of the Guaranteed Obligations. No condition or conditions precedent to the
effectiveness of this Guaranty exist. This Guaranty shall be effective upon execution by
Guarantors and delivery to PFSI.

     IN WITNESS WHEREOF, each Guarantor has duly executed this Unconditional Guaranty Agreement as
of the date first written above.

	 	 	 	 	 	 	 	 	 
	 	 	GUARANTORS:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	SCHONFELD GROUP HOLDINGS LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Steven B. Schonfeld
	 	 
	 

	 	 	 	 	 	Steven B. Schonfeld	 	 
	 

	 	 	 	 	 	Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	SCHONFELD SECURITIES, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Schonfeld Group Holdings LLC	 	 
	 	 	 	 	Manager	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Steven B. Schonfeld	 	 
	 

	 	 	 	 	 	Steven B. Schonfeld	 	 
	 

	 	 	 	 	 	Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	/s/ Steven B. Schonfeld	 	 
	 

	 	 	 	 	 	Steven B. Schonfeld	 	 

5exv10w5

 

Exhibit 10.5

Execution Copy

TERMINATION / COMPENSATION PAYMENT AGREEMENT

          AGREEMENT dated as of November 20, 2006 by and among OPUS TRADING FUND LLC, a Delaware limited
liability company (“Opus”), QUANTITATIVE TRADING STRATEGIES LLC, a Delaware limited liability
company (“QTS”, and together with Opus, “Payors”) and PENSON FINANCIAL SERVICES, INC., a North
Carolina corporation (“PFSI”).

          WHEREAS, Schonfeld & Company LLC, a New York limited liability company (“SchonCo”), and PFSI
are concurrently herewith entering into a Fully Disclosed Clearing Agreement dated as of the date
hereof with an Initial Term of ten years (the “SchonCo Clearing Agreement”);

          WHEREAS, Schonfeld Securities, LLC, a New York limited liability company (“SSLLC”), and PFSI
are concurrently herewith entering into a Fully Disclosed Clearing Agreement dated as of the date
hereof (the “SSLLC Clearing Agreement”); and

          WHEREAS, Trillium Trading, LLC, a New Jersey limited liability company (“Trillium”), and PFSI
are concurrently herewith entering into a Fully Disclosed Clearing Agreement dated as of the date
hereof with an Initial Term of ten years (the “Trillium Clearing Agreement”);

          WHEREAS, PFSI has agreed to grant (i) SchonCo the right to terminate the SchonCo Clearing
Agreement prior to the end of the Initial Term, (ii) Trillium the right to terminate the Trillium
Clearing Agreement prior to the end of the Initial Term, and (iii) SSLLC the right to sell the
institutional brokerage division of its business (the “IBS Division”), expressly subject to and
conditioned upon Payors entering into this Agreement and agreeing to make (x) a termination payment
to PFSI in the event of a termination of the SchonCo Clearing Agreement by SchonCo prior to the end
of the Initial Term of the SchonCo Clearing Agreement, (y) a termination payment to PFSI in the
event of a termination of the Trillium Clearing Agreement by Trillium prior to the end of the
Initial Term of the Trillium Clearing Agreement, and (z) a compensation payment to PFSI in the
event of a sale of the IBS Division prior to the end of the Initial Term of the SSLLC Clearing
Agreement.

          NOW THEREFORE, in consideration of the premises and the mutual covenants and agreements
hereinafter set forth and other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:

     1. Definitions. Unless otherwise defined herein, capitalized terms used herein shall have
the meanings ascribed to such terms in the SchonCo Clearing Agreement, the SSLLC Clearing
Agreement, and the Trillium Clearing Agreement, as applicable.

 

 

     2. SchonCo Termination Payment.

     (a) At anytime after the fifth (5th) anniversary of the Conversion Date, SchonCo
shall have the right to terminate the SchonCo Clearing Agreement upon not less than thirty (30)
days’ prior written notice to PFSI, notwithstanding anything to the contrary in Section 12(a) of
the SchonCo Clearing Agreement (the date of termination of the SchonCo Clearing Agreement to be
hereinafter referred to as the “SchonCo Termination Date”). In such case, at the option of PFSI to
be exercised by written notice to Payors given within thirty (30) days of the SchonCo Termination
Date:

	 	(i)	 	Within thirty (30) days of receipt by Payors of written demand by PFSI accompanied by
reasonable supporting documentation to enable Payors to verify PFSI’s calculations, Payors
shall pay, or shall cause one or more of their respective affiliates to pay, to PFSI or
any designee of PFSI, a lump sum payment equal to “N” in the calculation set forth below,
an example of which is attached hereto as Schedule A (such number to be hereinafter
referred to as the “SchonCo Deficiency Amount”):

N =
V x (120 - number of months since MPTD)

120

where “V” equals the aggregate value of all of the PWI Stock (as defined in the Asset Purchase
Agreement dated as of the date hereof by and between SSLLC and SAI Holdings, Inc., Texas
corporation (the “APA”)) issued to SSLLC and/or its designee pursuant to Sections 3.01(a) and (b)
of the APA, plus the aggregate amount of any cash payments made in lieu thereof pursuant to
Sections 3.01(a) and (b) of the APA, attributable to the Clearing Pretax Income (as defined on
Exhibit A to Schedule 3.01-1 to the APA (the “CPI”)) generated by SchonCo (ascribing a value of
$1,581,794 with respect to the shares of PWI Stock issued pursuant to Section 3.01(a) and
calculated as of the date of each issuance with respect to the shares of PWI Stock issued pursuant
to Section 3.01(b)), and "MPTD” means the Measurement Period Trigger Date as defined in the APA; or

	 	(ii)	 	The fees payable by Opus to PFSI pursuant to the Fully Disclosed Clearing Agreement
between Opus and PFSI dated as of the date hereof, and the fees payable by QTS to PFSI
pursuant to the Fully Disclosed Clearing Agreement between QTS and PFSI dated as of the
date hereof (collectively, the “Payor Clearing Agreements”), shall be increased in amounts
to be negotiated and agreed upon in good faith by Opus, QTS and PFSI based upon then
current and anticipated trading volume of Payors such that the aggregate amount of the
increase in such fees to be paid to PFSI by Payors over the balance of the Initial Terms
of the Payor Clearing Agreements will equal the SchonCo Deficiency Amount.

     (b) In the event that PFSI elects to increase the clearing fees payable by Opus and QTS
pursuant to Section 2(a)(ii) above and the SchonCo Deficiency Amount is recouped

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by PFSI prior to the expiration of the Initial Terms of the Payor Clearing Agreements, the
fees payable by Payors pursuant to the Payor Clearing Agreements will immediately be reduced to the
amount that would otherwise be contemplated by the applicable Payor Clearing Agreement, without the
foregoing increase. In the event that the full SchonCo Deficiency Amount is not recouped by PFSI
prior to the expiration of the Initial Terms of the Payor Clearing Agreements, upon the end of the
Initial Terms of both Payor Clearing Agreements and within thirty (30) days of receipt by Payors of
written demand by PFSI accompanied by reasonable supporting documentation to enable Payors to
verify PFSI’s calculations, Payors shall pay to PFSI in a lump sum an amount equal to the
difference between the aggregate amount recouped by PFSI pursuant to Section 2(a)(ii) above and the
SchonCo Deficiency Amount.

     (c) Notwithstanding anything to the contrary contained in this Section 2, in the event that
PFSI and SchonCo negotiate a reduction in the clearing fees payable by SchonCo to PFSI pursuant to
the SchonCo Clearing Agreement, within thirty (30) days of receipt by Payors of written demand by
PFSI, which written demand shall be given within ninety (90) days of each anniversary of the MPTD
occurring after the effective date of the reduction in the clearing fees (but only during the
Initial Term) and shall be accompanied by reasonable supporting documentation to enable Payors to
verify PFSI’s calculations, Payors shall pay, or shall cause one or more of their respective
affiliates to pay, to PFSI or any designee of PFSI a lump sum payment equal to “P” in the
calculation set forth below, an example of which is attached hereto as Schedule B:

	 	 	 	 	 	 	 	 	 
	P =

	 	 	V

     	x 	 	CECPI — CACPI
	- 	CCP
	 
	 	 	 	 	 	 
	-	 
	

	 	 	10	 	 	ACPI	 	 

where “V” is as defined in Section 2(a)(i) above, “CCP” equals the cumulative amount of all cash
payments made by Payors (or their respective affiliates) to PFSI (or any designee of PFSI) pursuant
to this Section 2(c), “ACPI” is the quotient obtained by dividing (x) the sum of $1,445,353 plus
the CPI generated by SchonCo during each of the four Measurement Periods (as defined in the APA),
by (y) five (5), “CECPI” is the product of one-twelfth (1/12th) of ACPI multiplied by
the number of months elapsed subsequent to the negotiated reduction in clearing fees, and “CACPI”
is the cumulative amount of CPI generated by SchonCo during the period subsequent to the negotiated
reduction in clearing fees. In addition to the foregoing payment obligation, the supporting
documentation shall be provided by PFSI and the calculation provided for above shall also be
undertaken within thirty (30) days of the termination of the SchonCo Clearing Agreement for the
period from the date of the last such calculation through the date of termination (the “SchonCo
Termination Date Calculation”). In the event that “P” as calculated above is negative with respect
to any period other than with respect to the SchonCo Termination Date Calculation, neither Payors
nor PFSI shall be required to make any payment pursuant to this Section 2(c). In the event that “P”
as calculated above is negative with respect to the SchonCo Termination Date Calculation, within
ninety (90) days of the termination of the SchonCo Clearing Agreement, PFSI shall pay to Payors a
lump sum payment in an amount equal to “P” in the calculation set forth above, provided

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that in no event will PFSI be required to pay an amount in excess of “CCP” (i.e., if “P” is
negative $800,000 with respect to the SchonCo Termination Date Calculation and CCP is $500,000
through the end of the SchonCo Clearing Agreement, PFSI shall pay $500,000 to Payors pursuant to
this sentence).

     (d) All of the obligations of Payors pursuant to this Section 2 shall be joint and several.

     3. SSLLC Compensation Payment.

     (a) SSLLC shall have the right to sell the IBS Division (whether by sale of assets, merger,
consolidation or otherwise and whether in one transaction or a series of related transactions) at
any time upon not less than thirty (30) days’ prior written notice to PFSI, notwithstanding
anything to the contrary in Section 17 of the SSLLC Clearing Agreement (the date of the closing of
such sale to be hereinafter referred to as the “IBS Sale Date”). In such case, at the option of
PFSI to be exercised by written notice to Payors given within thirty (30) days of the IBS Sale
Date:

	 	(i)	 	Within thirty (30) days of receipt by Payors of written demand by PFSI accompanied by
reasonable supporting documentation to enable Payors to verify PFSI’s calculations, Payors
shall pay, or shall cause one or more of their respective affiliates to pay, to PFSI or
any designee of PFSI, a lump sum payment equal to “M” in the calculation set forth below,
an example of which is attached hereto as Schedule A (such number to be hereinafter
referred to as the “SSLLC Deficiency Amount”):

M =
V x (120 - number of months since MPTD)

120

where “V” equals the aggregate value of all of the PWI Stock issued to SSLLC or its designee
pursuant to Sections 3.01 (a) and (b) of the APA, plus the aggregate amount of any cash payments
made in lieu thereof pursuant to Sections 3.01(a) and (b) of the APA, attributable to the CPI
generated by the IBS Division (ascribing a value of $276,631 with respect to the shares of PWI
Stock issued pursuant to Section 3.01(a) and calculated as of the date of each issuance with
respect to the shares of PWI Stock issued pursuant to Section 3.01(b)), and “MPTD” means the
Measurement Period Trigger Date as defined in the APA; or

	 	(ii)	 	The fees payable by Opus to PFSI pursuant to the Fully Disclosed Clearing Agreement
between Opus and PFSI dated as of the date hereof, and the fees payable by QTS to PFSI
pursuant to the Fully Disclosed Clearing Agreement between QTS and PFSI dated as of the
date hereof, shall be increased in amounts to be negotiated and agreed upon in good faith
by Opus, QTS and PFSI based upon then current and anticipated trading volume of Payors
such that the aggregate amount of the increase in such fees to be paid to PFSI by Payors
over the balance of the Initial Terms of the Payor Clearing Agreements will equal the
SSLLC Deficiency Amount.

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     (b) In the event that PFSI elects to increase the clearing fees payable by Opus and QTS
pursuant to Section 3(a)(ii) above and the SSLLC Deficiency Amount is recouped by PFSI prior to the
expiration of the Initial Terms of the Payor Clearing Agreements, the fees payable by Payors
pursuant to the Payor Clearing Agreements will immediately be reduced to the amount that would
otherwise be contemplated by the applicable Payor Clearing Agreement, without the foregoing
increase. In the event that the full SSLLC Deficiency Amount is not recouped by PFSI prior to the
expiration of the Initial Terms of the Payor Clearing Agreements, upon the end of the Initial Terms
of both Payor Clearing Agreements and within thirty (30) days of receipt by Payors of written
demand by PFSI accompanied by reasonable supporting documentation to enable Payors to verify PFSI’s
calculations, Payors shall pay to PFSI in a lump sum an amount equal to the difference between the
aggregate amount recouped by PFSI pursuant to Section 3(a)(ii) above and the SSLLC Deficiency
Amount.

     (c) All of the obligations of Payors pursuant to this Section 3 shall be joint and several.

     4. Trillium Termination Payment.

     (a) In the event that Trillium exercises its right to terminate the Trillium Clearing
Agreement after the fifth (5th) anniversary of the Conversion Date pursuant to Section
12(a) of the Trillium Clearing Agreement (the date of termination of the Trillium Clearing
Agreement to be hereinafter referred to as the “Trillium Termination Date”), and the Trillium
Clearing Agreement is not replaced with a new clearing agreement between Trillium and PFSI as
contemplated by Section 4(c) below, then in such case, at the option of PFSI to be exercised by
written notice to Payors given within thirty (30) days of the Trillium Termination Date:

	 	(i)	 	Within thirty (30) days of receipt by Payors of written demand by PFSI
accompanied by reasonable supporting documentation to enable Payors to verify PFSI’s
calculations, Payors shall pay, or shall cause one or more of their respective
affiliates to pay, to PFSI or any designee of PFSI, a lump sum payment, the form of
which will be determined by Section 4(d), equal to “N” in the calculation set forth
below, an example of which is attached hereto as Schedule A (such number, as the same
may be increased pursuant to Section 4(d) below, to be hereinafter referred to as the
“Trillium Deficiency Amount”):

N =
V x (120 - number of months since MPTD)

120

where “V” equals the aggregate value of all of the PWI Stock issued to SSLLC and/or its
designee pursuant to Sections 3.01(a) and (b) of the APA plus the aggregate amount of any cash
payments made in lieu thereof pursuant to Sections 3.01(a) and (b) of the APA, attributable to the
CPI generated by Trillium (ascribing a value of $2,602,966 with respect to the shares of PWI Stock
issued pursuant to Section 3.01(a) and calculated as of

5

 

the date of each issuance with respect to the shares of PWI Stock issued pursuant to Section
3.01(b)), and “MPTD” means the Measurement Period Trigger Date as defined in the APA; or

	 	(ii)	 	The fees payable by Opus and QTS pursuant to the Payor Clearing Agreements, shall
be increased in amounts to be negotiated and agreed upon in good faith by Opus, QTS and
PFSI based upon then current and anticipated trading volume of Payors such that the
aggregate amount of the increase in such fees to be paid to PFSI by Payors over the
balance of the Initial Terms of the Payor Clearing Agreements will equal the Trillium
Deficiency Amount.

     (b) In the event that PFSI elects to increase the clearing fees payable by Opus and QTS
pursuant to Section 4(a)(ii) above and the Trillium Deficiency Amount is recouped by PFSI prior to
the expiration of the Initial Terms of the Payor Clearing Agreements, the fees payable by Payors
pursuant to the Payor Clearing Agreements will immediately be reduced to the amount that would
otherwise be contemplated by the applicable Payor Clearing Agreement, without the foregoing
increase. In the event that the full Trillium Deficiency Amount is not recouped by PFSI prior to
the expiration of the Initial Terms of the Payor Clearing Agreements, upon the end of the Initial
Terms of both Payor Clearing Agreements and within thirty (30) days of receipt by Payors of written
demand by PFSI accompanied by reasonable supporting documentation to enable Payors to verify PFSI’s
calculations, Payors shall pay to PFSI in a lump sum an amount equal to the difference between the
aggregate amount recouped by PFSI pursuant to Section 4(a)(ii) above and the Trillium Deficiency
Amount.

     (c) Notwithstanding anything to the contrary contained in this Section 4, in the event that at
any time after the fifth (5th) anniversary of the Conversion Date PFSI and Trillium
negotiate a reduction in the clearing fees payable by Trillium to PFSI pursuant to the Trillium
Clearing Agreement (including, for purposes of this Section 4(c), a termination of the Trillium
Clearing Agreement and replacement with a new clearing agreement at reduced clearing fees), within
thirty (30) days of receipt by Payors of written demand by PFSI, which written demand shall be
given within ninety (90) days of each anniversary of the MPTD occurring after the effective date of
the reduction in the clearing fees (but only during the Initial Term) and shall be accompanied by
reasonable supporting documentation to enable Payors to verify PFSI’s calculations, Payors shall
pay, or shall cause one or more of their respective affiliates to pay, to PFSI or any designee of
PFSI a lump sum payment equal to “P” in the calculation set forth below (the (“Renegotiation
Deficiency”), an example of which is attached hereto as Schedule B:

	 	 	 	 	 	 	 	 	 
	P =

	 	 	V

     	x 	 	CECPI — CACPI
	- 	CCP
	 

	 	 	 	 	 	 
	-	 
	

	 	 	10	 	 	ACPI	 	 

     where “V” is as defined in Section 4(a)(i) above, “CCP” equals the cumulative amount of all
cash payments made by Payors (or their respective affiliates) to PFSI (or any designee of PFSI)
pursuant to this Section 4(c), “ACPI” is the quotient obtained by

6

 

dividing (x) the sum of $2,378,441 plus the CPI generated by Trillium during each of the four
Measurement Periods (as defined in the APA), by (y) five (5), “CECPI” is the product of one-twelfth
(1/12th) of ACPI multiplied by the number of months elapsed subsequent to the negotiated
reduction in clearing fees, and “CACPI” is the cumulative amount of CPI generated by Trillium
during the period subsequent to the negotiated reduction in clearing fees. In addition to the
foregoing payment obligation, the supporting documentation shall be provided by PFSI and the
calculation provided for above shall also be undertaken within thirty (30) days of the termination
of the Trillium Clearing Agreement for the period from the date of the last such calculation
through the date of termination (the “Trillium Termination Date Calculation”). In the event that
“P” as calculated above is negative with respect to any period other than with respect to the
Trillium Termination Date Calculation, neither Payors nor PFSI shall be required to make any
payment pursuant to this Section 4(c). In the event that “P” as calculated above is negative with
respect to the Trillium Termination Date Calculation, within ninety (90) days of the termination of
the Trillium Clearing Agreement, PFSI shall pay to Payors a lump sum payment in an amount equal to
“P” in the calculation set forth above, provided that in no event will PFSI be required to pay an
amount in excess of “CCP” (i.e., if “P” is negative $800,000 with respect to the Trillium
Termination Date Calculation and CCP is $500,000 through the end of the Trillium Clearing
Agreement, PFSI shall pay $500,000 to Payors pursuant to this sentence). For purposes of
clarification, it is agreed and understood that: (x) Trillium’s election to terminate the Trillium
Clearing Agreement and enter into a new clearing agreement with PFSI or an affiliate of PFSI in
lieu of the Trillium Clearing Agreement, will be governed by this Section 4(c) and will not trigger
any obligation by Payors under Section 4(a) above unless and until any such replacement clearing
agreement is terminated prior to the expiration of the Initial Term; and (y) in no event will the
obligation of Payors under this Section 4(c) exceed the amount that would otherwise be due pursuant
to Section 4(a) had Trillium elected to terminate the Trillium Clearing Agreement on the date of
renegotiation.

     (d) (1) Notwithstanding anything to the contrary contained in Section 4(a), the Trillium
Deficiency Amount will be increased by the product of the aggregate net gain, if any, on all shares
of PWI Stock that were issued to SSLLC and/or its designee pursuant to the APA (the “Aggregate Net
Gain”), multiplied by a percentage based upon the number of such shares of PWI Stock that were
attributable to the CPI generated by Trillium (the “Trillium Percentage”), in each case calculated
as provided in this Section 4(d), an example of which is attached hereto as Schedule C (the “TDC
Supplemental Amount").

     (2) For purposes of calculating the TDC Supplemental Amount, the Trillium Percentage
will be calculated by dividing (x) N (as calculated pursuant to the formula set forth in Section
4(a)(i) above), by (y) the aggregate value of all of the PWI Stock issued to SSLLC and/or its
designee pursuant to Sections 3.01(a) and (b) of the APA (calculated as of the date of each
issuance pursuant to Section 3.01(b) of the APA) plus the aggregate amount of any cash payments
made in lieu thereof pursuant to Sections 3.01(a) and (b) of the APA. For purposes of the
immediately preceding sentence, the aggregate value of all of the PWI Stock issued to SSLLC and/or
its designee pursuant to Sections 3.01(a) (i.e.,

7

 

the Initial Consideration of 1,085,294) will be deemed to be $18,449,998 (the “Original
Issuance Value”).

     (3) For purposes of the TDC Supplemental Amount, the Aggregate Net Gain will be
calculated by subtracting the aggregate “cost” of all of the shares of PWI Stock issued to SSLLC
and/or its designee pursuant to Sections 3.01(a) and (b) of the APA, from the aggregate “value” of
such shares of PWI Stock based upon the following:

	 	(i)	 	the “cost” of each share of PWI Stock issued pursuant to Sections 3.01(a) and 3.01(b)
will be equal to the quotient of (x) $18,449,998 plus the aggregate value, as determined
pursuant to the first paragraph of Section 3.01(b) of the APA on each Anniversary Payment
Date (as defined in the APA), of all shares of PWI Stock issued pursuant to Section
3.01(b) of the APA, divided by the aggregate number of shares of PWI Stock issued to SSLLC
and/or its designee pursuant to Sections 3.01(a) and 3.01(b) of the APA (the “Average Cost
Per Share”);
	 
	 	(ii)	 	the “value” of each share of PWI Stock that is owned by SSLLC and/or its designee as
of the Trillium Termination Date will be deemed to be equal to the volume-weighted average
closing price of PWI Stock as quoted in the Wall Street Journal for the twenty (20)
business days immediately preceding the Trillium Termination Date, provided that such
value will be reduced by $.05 per share in the event, and only in the event, that PFSI
elects to receive payment pursuant to Section 4(a)(ii); and
	 
	 	(iii)	 	the “value” of each share of PWI Stock that is sold by SSLLC and/or its designee on
or before the Trillium Termination Date will be deemed to be equal to the amount realized
on such sale by SSLLC and/or its designee, net of all third party brokerage and execution
fees, underwriting discounts and/or commissions paid in connection with such sale.

     (4) In the event that PFSI elects to receive a lump sum payment of the Trillium Deficiency
Amount (as increased pursuant to this Section 4(d)) pursuant to Section 4(a)(i), then in such event
Payors will satisfy a percentage of the Trillium Deficiency Amount (as increased pursuant to this
Section 4(d)) by transferring shares of PWI Stock to PFSI or any designee of PFSI. For purposes of
this Section 4(d)(4), any PWI Stock to be transferred shall be equal in value to the
volume-weighted average closing price of PWI Stock as quoted in the Wall Street Journal for the
twenty (20) business days immediately preceding the date that is ten (10) business days prior to
the Trillium Termination Date. The percentage of the Trillium Deficiency Amount (as increased
pursuant to this Section 4(d)) that Payors will satisfy by transfer of shares of PWI Stock will be
equal to the percentage of the shares of PWI Stock issued pursuant to Sections 3.01(a) and (b) of
the APA that have not been sold by SSLLC and/or its designee as of the Trillium Termination Date.
Thus, by way of example, in the event that 5,000,000 shares of PWI Stock are issued to SSLLC and/or
its designee pursuant to the APA and as of the Trillium Termination Date SSLLC and/or its designee
continue to own 4,000,000 of such shares, Payors would satisfy 80% of the Trillium Deficiency
Amount (as increased pursuant to this Section 4(d)) by transfer of shares of PWI Stock.

8

 

     (e) (1) Notwithstanding anything to the contrary contained in Section 4(c), in the event that
the net amount paid by Payors to PFSI thereunder is positive (including, for purposes of
clarification, the payment to be made, if any, based upon the Trillium Termination Date
Calculation) (such net amount, the “Renegotiation Make-up Amount), in addition to the payments
required pursuant to Section 4(c), within ninety (90) days of the termination of the Trillium
Clearing Agreement, Payors shall pay to PFSI an amount equal to the product of the Aggregate Net
Gain multiplied by a percentage based upon the Renegotiation Make-up Amount (the “Renegotiation
Percentage”), in each case calculated as provided in this Section 4(e) (the “Renegotiation
Supplemental Payment").

     (2) For purposes of calculating the Renegotiation Supplemental Payment, the Renegotiation
Percentage will be calculated by dividing (x) Renegotiation Make-up Amount, by (y) the Original
Issuance Value.

     (3) For purposes of the Renegotiation Supplemental Payment, the Aggregate Net Gain
will be calculated as of the date of the Trillium Termination Calculation Date and as set forth in
Section 4(d)(3).

     (4) In the event that Payors are required to make a Renegotiation Supplemental Payment to
Payors pursuant to this Section 4(e), then in such event Payors will satisfy a percentage of the
Renegotiation Supplemental Payment by transferring shares of PWI Stock to PFSI or any designee of
PFSI. For purposes of this Section 4(e)(4), any PWI Stock to be transferred shall be equal in value
to the volume-weighted average closing price of PWI Stock as quoted in the Wall Street Journal for
the twenty (20) business days immediately preceding the date that is ten (10) business days prior
to the Trillium Termination Calculation Date. The percentage of the Renegotiation Supplemental
Payment that Payors will satisfy by transfer of shares of PWI Stock will be equal to the percentage
of the shares of PWI Stock issued pursuant to Sections 3.01(a) and (b) of the APA that have not
been sold by SSLLC and/or its designee as of the Trillium Termination Calculation Date. Thus, by
way of example, in the event that 5,000,000 shares of PWI Stock are issued to SSLLC and/or its
designee pursuant to the APA and as of the Trillium Termination Calculation Date SSLLC and/or its
designee continue to own 2,500,000 of such shares, Payors would satisfy 50% of the Renegotiation
Supplemental Payment by transfer of shares of PWI Stock.

     (f) All of the obligations of Payors pursuant to this Section 4 shall be joint and several.

     5. Guaranty. The obligations of Payors pursuant to Sections 2, 3 and 4 hereof shall be
guaranteed by Steven B. Schonfeld, Schonfeld Securities, LLC and Schonfeld Group Holdings LLC, a
Delaware limited liability company (collectively the “Guarantors”). Simultaneously with the
execution and delivery of this Agreement, the Guarantors shall execute and deliver to PFSI an
Unconditional Guaranty Agreement.

9

 

     6. Notices. All notices to be given pursuant to this Agreement to any party must be in
writing and will be deemed to have been validly given if delivered personally, sent by confirmed
facsimile transmission or sent by overnight courier (providing proof of delivery), to such party at
its address given below. Notices shall be deemed given (i) if delivered personally or by overnight
courier, upon delivery or (ii) if sent by facsimile transmission, upon confirmation of transmission
thereof. The address of each party for the purposes of this Agreement is as follows:

If to Payors:

Opus Trading Fund LLC

Quantitative Trading Strategies LLC

460 Park Avenue — 19th Floor

New York, New York 10022

Attn.: Mark H. Peckman, Esq.

with a copy to:

Berkowitz, Trager & Trager, LLC

275 Madison Avenue — 36th Floor

New York, New York 10016

Attn.: Steven T. Gersh, Esq.

If to PFSI:

C/O

Penson Worldwide, Inc.

1700 Pacific Avenue

Suite 1400

Dallas, TX 75201

Attention: Chief Executive Officer

General Counsel

     7. Governing Law. This Agreement shall be governed and construed in accordance with the laws
of the State of New York without regard to conflict of law principles.

     8. Assignments, Successors. This Agreement shall not be assigned by any party hereto without
the prior written consent of all of the other parties. This Agreement shall inure to the benefit
of, and be binding upon and enforceable against, the successors, representatives and permitted
assigns of the parties hereto.

     9. Counterparts; Facsimile Signatures. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which taken together
shall constitute one and the same instrument. Facsimile signatures shall be acceptable and
binding.

10

 

[Balance of page intentionally left blank.]

11

 

     IN WITNESS WHEREOF, this Termination / Compensation Payment Agreement has been executed on
behalf of the parties hereto as of the date first written above.

	 	 	 	 	 
	 	OPUS TRADING FUND LLC

 	 
	 	By:  	Amity Management Company II, LLC
 	 
	 	 	Manager 	 

	 	 	 	 	 
	 	By:  	/s/ William Vidro
 	 
	 	 	Name:  	William Vidro 	 
	 	 	Title:  	Managing Member 	 
	 

	 	 	 	 	 
	 	QUANTITATIVE TRADING STRATEGIES LLC

 	 
	 	By:  	Wavefront Capital Group II LLC
 	 
	 	 	Manager 	 

	 	 	 	 	 
	 	By:  	/s/ Nick Greenfield
 	 
	 	 	Name:  	Nick Greenfield 	 
	 	 	Title:  	Managing Member 	 
	 

	 	 	 	 	 
	 	PENSON FINANCIAL SERVICES, INC.

 	 
	 	By:  	/s/ Philip A. Pendergraft
 	 
	 	 	Name:  	Philip A. Pendergraft	 
	 	 	Title:  	Executive Vice President 	 
	 

	 	 	 	 	 
	ACCEPTED AND AGREED:	 	 
	 
	 	 	 	 
	SCHONFELD & COMPANY LLC	 	 
	 
	 	 	 	 
	By:

	 	/s/ Steven B. Schonfeld
 

Name: Steven B. Schonfeld

Title: Chief Executive Officer
	 	 
	 
	 	 	 	 
	SCHONFELD SECURITIES, LLC	 	 
	 
	 	 	 	 
	By:

	 	SCHONFELD GROUP HOLDING LLC,

Manager	 	 
	 
	 	 	 	 
	By:

	 	/s/ Steven B. Schonfeld
 

Steven B. Schonfeld

Chief Executive Officer
	 	 

12

 

SCHEDULE A

Example of Calculation of the SchonCo Deficiency Amount 1

     Assuming (i) the value of all of the PWI Stock issued to SSLLC and/or its designee pursuant to
Sections 3.01(a) and (b) of the APA (calculated as of the date of each issuance pursuant to Section
3.01(b) of the APA) plus the aggregate amount of any cash payments made in lieu thereof pursuant to
Sections 3.01(a) and (b) of the APA, attributable to the CPI generated by SchonCo equals
$10,944,000, and (ii) SchonCo elects to terminate the SchonCo Clearing Agreement at the end of the
seventh year of the Initial Term (i.e., 84 months from the Conversion Date), the SchonCo Deficiency
Amount would be $3,283,200, calculated as follow:

     $10,944,000
x (120 - 84 = 36)  ̧ 120 = $3,283,200

     For all purposes of this Agreement, the value of all of the PWI Stock issued to SSLLC and/or
its designee pursuant to Sections 3.01(a) and (b) of the APA (calculated as of the date of each
issuance pursuant to Section 3.01(b) of the APA) plus the aggregate amount of any cash payments
made in lieu thereof pursuant to Sections 3.01(a) and (b) of the APA, attributable to the CPI
generated by SchonCo shall be the sum of (i) $1,581,794, plus (ii) the product of:

     (w) the aggregate amount of CPI generated by SchonCo over the four Measurement Periods;
multiplied by

     (x) nine (the assumed multiple); multiplied by

     (y) 20%; multiplied by

     (z) 60.8% (one minus the assumed tax rate of 39.2%).

     [See footnote #2 below for example.]

 

			
	1	 	For all purposes of this Agreement, the formula
for the calculation of the SSLLC Deficiency Amount pursuant to Section 3 will
be the same as for the calculation of the SchonCo Deficiency Amount as set
forth on this Schedule A, provided that for purposes of calculating the SSLLC
Deficiency Amount, the number $276,631 will be inserted in place of the amount
of $1,581,794 as set forth in the above example. In addition, for all purposes
of this Agreement, the formula for the calculation of the Trillium Deficiency
Amount pursuant to Section 4 will be the same as for the calculation of the
SchonCo Deficiency Amount as set forth on this Schedule A, provided that for
purposes of calculating the Trillium Deficiency Amount, the number $2,602,966
will be inserted in place of the amount of $1,581,794 as set forth in the above
example.

13

 

SCHEDULE B

Example of Calculation of the Renegotiation Payment

Pursuant to Sections 2(c) and 4(c)

     Assuming (i) SchonCo renegotiates lower clearing fees under the SchonCo Clearing Agreement
effective as of the eighth anniversary of the MPTD (two years remaining on the term of the SchonCo
Clearing Agreement), (ii) SchonCo generates an aggregate of $8,554,647 of CPI over the four
Measurement Periods,2 and (iii) SchonCo generates an aggregate of $1,500,000 of CPI
during the one year period immediately subsequent to renegotiation, the amount payable to PFSI
pursuant to Section 2(c) for the one year period immediately subsequent to renegotiation would be
$273,600, calculated as follows:

V  ̧ 10 = $10,944,000  ̧ 10 = $1,094,400

CECPI = ($2,000,000  ̧ 12) x 12 = $2,000,000

CACPI = $1,500,000

CECPI - CACPI = $2,000,000 - $1,500,000 = $500,000

ACPI = $10,000,000  ̧ 5 = $2,000,000

(CECPI - CACPI)  ̧ ACPI = $500,000  ̧ $2,000,000 = 25%

CCP = 0

P = $1,094,400 x 25% = $273,600 - 0 = $273,600

 

			
	2	 	In this example, the value of all of the PWI Stock
issued to SSLLC and/or its designee pursuant to Sections 3.01(a) and (b) of the
APA (calculated as of the date of each issuance pursuant to Section 3.01(b) of
the APA) plus the aggregate amount of any cash payments made in lieu thereof
pursuant to Sections 3.01(a) and (b) of the APA, attributable to the CPI
generated by SchonCo would be calculated as follows:

$1,445,353 + $8,554,647 = $10,000,000

$10,000,000 x 9 = $90,000,000

$90,000,000 x .20 = $18,000,000

$18,000,000 x .608 = $10,944,000

For all purposes of this Agreement, the formula for the calculation of the
lump sum payment to be made pursuant to Sections 2(c) and 4(c) will be the
same, provided that in the above example the amount $2,378,441 would be
substituted for the highlighted amount of $1,445,353.

14

 

     By way of further example, if SchonCo then generates an aggregate of $3,000,000 of CPI during
the one year period commencing 12 months after renegotiation (the tenth and final year of the
SchonCo Clearing Agreement), no payment would be due by SchonCo with respect to such one year
period and PFSI would be required to make a payment to SchonCo in the amount of $273,600 (the
lesser of the aggregate amount of the CCP and the negative amount of “P” as reflected in the
calculation below). The calculation of such payment is as follows:

V  ̧ 10 = $10,944,000  ̧ 10 = $1,094,400

CECPI = ($2,000,000  ̧ 12) x 24 = $4,000,000

CACPI = $1,500,000 + $3,000,000 = $4,500,000

CECPI - CACPI = $4,000,000 - $4,500,000 = -$500,000

ACPI = $10,000,000  ̧ 5 = $2,000,000

(CECPI - CACPI)  ̧ ACPI = -$500,000  ̧ $2,000,000 = -25%

CCP = $273,600

P = $1,094,400 x -25% = -$273,600 - $273,600 = -$547,200

15

 

SCHEDULE C

Example of Calculation of the TDC Supplemental Amount Pursuant to Section 4(d)

     Assuming the issuance pursuant to Sections 3.01(a) and (b) of the APA of:

	 	(i)	 	1,085,294 shares valued at $17.00 per share as the Initial Consideration
($18,449,998);
	 
	 	(ii)	 	1,000,000 shares valued $20.00 per share on the date of issuance
($20,000,000);
	 
	 	(iii)	 	1,200,000 shares valued at $18.00 on the date of issuance ($21,600,000);
	 
	 	(iv)	 	800,000 shares valued at $25.00 on the date of issuance ($20,000,000); and
	 
	 	(v)	 	1,000,000 shares valued at $22.00 on the date of issuance ($22,000,000).

     For purposes of calculating the Trillium Percentage, the aggregate value of all of the PWI
Stock issued pursuant to the APA (5,085,294 shares) would be $102,049,99 at a weighted average
“cost” per share of $20.06767.3 Assuming “N”, as calculated pursuant to the formula set
forth in Section 4(a)(i) equals $7,500,000, the Trillium Percentage would equal 7.349% ($7,500,000
 ̧ $102,049,998 = 7.349%).

     Assuming that prior to the Trillium Termination Date, SSLLC sold 1,000,000 shares of PWI Stock
in a single transaction and received net proceeds (i.e., net of third party brokerage and execution
fees, underwriting discounts and/or commissions) of $26.00 per share, the net gain on such
transaction would be $5,932,330 ($26.00 - $20.06767 = $5.93233)

($5.93233 x 1,000,000 = $5,932,330)

     Assuming that the value of the PWI Stock as of the Trillium Termination Date (calculated
pursuant to the volume weighted average method set forth in Section 4(d)(3)(ii)) equals $28.00 per
share. The net gain on such shares would be $32,405,900.16

($28.00 - $20.06767 = $7.93233)

(5,085,294 - 1,000,000 = 4,085,294)

(4,085,294 x $7.93233 = $32,405,900.16)

     The Aggregate Net Gain would be $38,338,230.16 ($5,932,330 + $32,405,900.16 = $38,338,230.16).

     Thus, the TDC Supplemental Amount would be $2,817,476.53($38,338,230.16x 7.349% =
$2,817,476.53).

 

			
	3	 	This example assumes that no cash was substituted
for any portion of the Purchase Price (as defined in the APA). In the event
that cash were substituted, the amount of such cash would be added to the
aggregate value of all PWI Stock for purposes of this calculation.

16

 

The sum of the Trillium Deficiency Amount and the TDC Supplemental Amount would be $10,317,476.53
($ 7,500,000 + $ 2,817,476.53 = $10,317,476.53)

The percentage of the shares of PWI Stock issued pursuant to Sections 3.01(a) and (b) of the APA
that have not been sold by SSLLC and/or its designee as of the Trillium Termination Date would be
80.335% (4,085,294  ̧ 5,085,294 = .80335).

Thus, the lump sum payment to be made pursuant to Section 4(a)(i), as determined pursuant to
Section 4(d)(4), would be 296,019 shares of PWI Stock (80.335% x $10,317,476.53 = $8,288,544.77
 ̧ 28.00 = 296,019) and $2,028,931.76 in cash ( (1-80.335%) x $10,317,476.53 = $2,028,931.76)

17

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