SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): June 25, 2010
Penson Worldwide, Inc.
(Exact name of Registrant as specified in its charter)
(State or other jurisdiction
|1700 Pacific Avenue, Suite 1400, Dallas, Texas
(Address of principal executive offices)
Registrants telephone number, including area code: 214-765-1100
(Former name and former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see General Instruction
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
Item 1.01. Entry into a Material Definitive Agreement.
On June 25, 2010, Penson Worldwide, Inc. (PWI) and Penson Financial Services, Inc., a wholly
owned and indirect subsidiary of PWI (PFSI), closed the purchase of certain assets pursuant to
the terms of an asset purchase agreement, as filed with the Securities and Exchange Commission on
March 5, 2010 (the Asset Purchase Agreement), with Broadridge Financial Solutions, Inc.
(Broadridge) and its wholly owned subsidiary Ridge Clearing & Outsourcing Solutions, Inc.
Under the terms of the Asset Purchase Agreement, PWI paid approximately $35.2 million in total
consideration (the Consideration) to Broadridge consisting of (a) a five-year subordinated note
(the Seller Note) payable by PWI bearing interest at an annual rate equal to 6.0%, based on
90-day LIBOR plus 5.5%, in principal amount of approximately
$20.6 million, and (b) 2,455,627
shares of PWIs common stock. The Consideration will be subject to certain adjustments
post-closing upon the occurrence of agreed upon events, and PWI currently anticipates paying
Broadridge an additional amount of approximately $7 million in 2011 based primarily on certain
recently signed Ridge correspondents that are not yet generating revenue and are included in the
Asset Purchase Agreement. When finalized, such additional amount will be added to the balance of
the Seller Note.
Concurrent with the closing of the transaction, the parties entered into a number of ancillary
agreements, including a Stockholders and Registration Rights Agreement; an Amendment, Assignment
and Assumption Agreement (the Assignment Agreement); and an Amendment Agreement (the Amendment
Agreement and together with the Assignment Agreement, the Amendment Agreements) and agreed to
the principal terms of a Joint Selling Agreement.
The Joint Selling Agreement to be entered into by Broadridge, Ridge, PWI and PFSI is anticipated to
have a term concurrent with the term of the master services agreement entered into between PWI and
Broadridge, as filed with the Securities and Exchange Commission on March 5, 2010 and as amended by
the Amendment Agreements (the Master Services Agreement). Under the Joint Selling Agreement, the
parties will engage in activities to offer, in the case of PFSI, Ridges self-clearing and
securities processing solutions, and in the case of Ridge, PFSI and its affiliates correspondent
clearing solutions, and will mutually agree to fee arrangements with respect to activities
contemplated by the Joint Selling Agreement.
Pursuant to the Assignment Agreement, SAI Holdings, Inc. (SAI), PFSIs parent corporation and
wholly owned subsidiary of PWI, acquired the rights and liabilities under the Asset Purchase
Agreement and transferred to PFSI the right to receive the correspondent clearing contracts
assigned pursuant to the Asset Purchase Agreement at closing.
Pursuant to the Amendment Agreements, PWI, PFSI, SAI, Broadridge and Ridge, among others, agreed to
a number of amendments to the terms of the Asset Purchase Agreement, the Master Services Agreement
and certain related agreements and documents. Amendments include, among others, certain
adjustments to the Consideration and amounts payable pursuant to the Master Services Agreement.
Additionally, the term of the Master Services Agreement was extended by one year, the scope of
services subject to the Master Services Agreement was revised, and PWI is now guaranteed 22%
savings on the technology and services outsourced from Pensons existing securities clearing
operations in the U.S., Canada and the U.K. The parties also made specific provision for the
treatment of certain contracts to take account of changed circumstances not contemplated in the
original Asset Purchase Agreement. The Amendment Agreements also finalized the terms of certain
documents to be delivered at closing and deferred the delivery of certain agreements pending
further discussion among the parties.
The Stockholders and Registration Rights Agreement will restrict the transfer of the PWI Common
Stock received as a portion of the consideration for a period of one year from the closing of the
transaction. Thereafter, Broadridge will be entitled to one demand registration right and piggy
back registration rights, subject to customary terms and conditions. In addition, following
expiration of the one-year restricted period, Broadridge will be entitled to sell the PWI Common
Stock as permitted under SEC Rule 144. In the event PWI redeems or repurchases any of its Common
Stock, if necessary, it will repurchase the PWI Common Stock on a pro rata basis on the same terms
and conditions so that Broadridges beneficial ownership of PWI Common Stock will not exceed 9.9%
of PWIs issued and outstanding Common Stock following any such repurchases or redemptions.
The Seller Note is subordinated to PWI bank debt and $200 million principal amount of PWIs 12.50%
Senior Second Lien Secured Notes due 2017, and is subject to customary subordination provisions.
Therefore, among other things, in the event there is a payment default, or other event of default
that would permit acceleration of PWI bank debt or the bonds, payment on the Seller Note will be
blocked for up to 270 days in any twelve-month period.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth in Item 1.01 of this Current Report on Form 8-K is hereby incorporated by
reference into this Item 3.02. The sale of PWI Common Stock under the Asset Purchase Agreement
was made pursuant to an exemption from the registration requirements of the Securities Exchange Act
of 1933, as amended (the Act) provided under Section 4(2) of the Act and rules and regulations
Item 9.01. Financial Statements and Exhibits.
Press Release dated June 28, 2010.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
||PENSON WORLWIDE, INC.
|Date: June 28, 2010
||/s/ Philip A. Pendergraft
||Philip A. Pendergraft
||Chief Executive Officer