29

 
   then, within one Business Day of the Company’s or such Subsidiary’s receipt of theproceeds thereof, the Company shall pay to the Lender, for application to the amountsoutstanding under this Note, 100% of the Net Cash Proceeds thereof. iii. in addition to and notwithstanding any other provision of this Note, onehundred percent (100%) of Company’s Excess Cash Flow for each fiscal quarter(commencing with the first fiscal quarter ending after the date hereof) shall bepaid to the Lender within 3 Business Days of the end of each fiscal quarter, forapplication to the amounts outstanding under this Note. c. Optional Prepayment. The Company may upon five Business Days’ prior written noticeprepay (an “Optional Prepayment”), without penalty or premium, all or any portion ofthe outstanding principal amount hereof. Together with any such prepayment the Company shallpay all accrued interest and other amounts then payable hereunder.3. **Carry Interest in Bonds**. a. The Company unconditionally acknowledges and agrees that the Lender is entitled to, andis the legal and beneficial owner of, a carried interest in all Bond Proceeds (the“Carried Interest”). The Carried Interest is fully earned as of the Issuance Dateand is non refundable. To the extent not previously transferred, the Company herebyassigns and transfers to the Lender, free and clear of all Liens, all of its right titleand interest in the Carried Interest. The Carried Interest shall be payable before BondProceeds are paid to the Company. b. The Carried Interest shall equal 8% of Bond Proceeds provided, however, that Lenderagrees that, provided there is no Default or Event of Default, if the Company irrevocablymakes one or more Optional Prepayments in an amount equal to the full amount of this Noteprior to the second anniversary of the Issuance Date the Carried Interest shall be reducedto 4% of Bond Proceeds, provided, further, that if the Company irrevocably makes one ormore Optional Prepayments in an amount equal to the full amount of this Note prior to thefirst anniversary of the Issuance Date, the Carried Interest will be reduced to 0% of BondProceeds. c. The provisions of this Section 3 shall survive the repayment of this Note and thetermination of this Note.4. **Payment Terms**. a. Time of Payment. If any scheduled payment date is not a Business Day, suchpayment shall be made on the next succeeding Business Day and such extension of time shallin such case be included in computing interest hereunder. b. Method and Place of Payment. The Company shall make all payments hereunder forthe account of Lender at its offices at One Penn Plaza, 51st Floor, New YorkCity, New York 10119 Attention: Daniel Weingarten, Manager of Office. Any payment to bemade hereunder shall be made in lawful money of the United States of America and in sameday or immediately available funds and shall be sent so as to be received not later than 12noon Eastern Standard Time on the date on which such payment is due. All payments pursuantto this Note shall be made unconditionally in full without any deduction, setoff,counterclaim or other defense or withholding. c. Application of Payments. Except as expressly set forth herein to the contrary,any payments made by the Company shall be deemed to be applied first to fees, costsand expenses payable hereunder, second in respect of any accrued but unpaidinterest due hereunder and third in respect of the outstanding principal amount duehereunder.5. **Maximum Interest Rate**.   Anything herein to the contrary notwithstanding, if during any period for which interest iscomputed hereunder, the amount of interest computed on the basis provided for in this Note,together with all fees, charges and other payments which are treated as interest underapplicable law, as provided for herein or in any other document executed in connection herewith,would exceed the amount of such interest computed on the basis of the Highest Lawful Rate, theCompany shall not be obligated to pay, and the Lender shall not be entitled to charge, collect,receive, reserve or take, interest in excess of the Highest Lawful Rate, and during any suchperiod the interest payable hereunder shall be computed on the basis of the Highest Lawful Rate.As used herein, “Highest Lawful Rate” means the maximum non-usurious rate of interest,as in effect from time to time,
30

 
  which may be charged, contracted for, reserved, received or collected by the Lender inconnection with this Note under applicable law. In the event that, contrary to the intent ofLender and Company, the Company pays interest under this Note and it is determined that suchinterest rate was in excess of the Highest Lawful Rate, then that portion of the interestpayment representing an amount in excess of the Highest Lawful Rate shall be deemed a payment ofprincipal and applied against the principal then due under this Note. 6. **Definitions**.   For purposes of this Note, the following terms shall have the following meanings:     “Affiliate” means any Person which, directly or indirectly, controls, is controlledby or is under common control with another Person (“control,” “controlled by” and “under commoncontrol with” with respect to any Person meaning for the purposes of the foregoing thepossession, directly or indirectly, of the power to direct or cause the direction of themanagement and policies of such Person, whether through the ownership of voting securities or bycontract or otherwise).     “Bonds” means the Retama Development Corporation Special Facilities RevenueRefunding Bonds (Retama Park Racetrack Project) Series 1997B Bonds (and any replacement orrefinancing thereof including, without limitation, any Converted Series 1997B Bonds asreferenced in that certain Indenture of Trust and Security Agreement dated as of March 1, 1997among Retama Development Corporation, City of Selma, TX and Bank One, TX, N.A.).     “Bond Proceeds” means any and all income, principal and other Proceeds (in whateverform) from or in respect of the Bonds of any kind (whether on account of interest, redemption ofprincipal, proceeds of sale, pledge or other transfer or disposition of the Bonds, insuranceproceeds, tax refunds, or otherwise made or payable in respect of any Bonds).     “Budget” means those certain forecasts, prepared by management of the Company andsatisfactory to the Lender, of the Company’s consolidated statements of income or operations ona monthly basis for the immediately following two fiscal years (commencing with the 2010 fiscalyear).     “Business Day” means any day other than Saturday or Sunday or a public holidayunder the laws of the State of New York or other day on which banking institutions areauthorized or obligated to close in the State of New York.     “Carried Interest” means the carried interest of the Lender in the Bond Proceedsdescribed in Section 3 of this Note.     “Change of Control” means that (i) any person or group of persons (as defined inSubsections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”))is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) directlyor indirectly of securities of Company representing 20% or more of Company’s then outstandingvoting securities, (ii) a direct or indirect sale, transfer or other conveyance or disposition,in any single transaction or series of transactions, of all or substantially all of theCompany’s assets, or (iii) during any period of 12 consecutive calendar months, commencing onthe date of this Note, the ceasing of those individuals (the “Continuing Directors”) who(i) were directors of the Company on the first day of each such period or (ii) subsequentlybecame directors of the Company and whose initial election or initial nomination for electionsubsequent to that date was approved by a majority of the Continuing Directors then on the boardof directors of the Company, to constitute a majority of the board of directors of the Company.     “Default” means any event or circumstance which with the giving of notice orpassage of time or both would result in an Event of Default.     “Environmental Laws” means all federal, state or local laws, statutes, common lawduties, rules, regulations, ordinances and codes, together with all administrative orders,directives, requests, licenses, authorizations and permits of, and agreements with (includingconsent decrees), any governmental authorities, in each case relating to or imposing liabilityor standards of conduct concerning public health, safety and environmental protection matters,including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, theClean Air Act, the Federal Water Pollution Control Act of 1972, the Solid Waste Disposal Act,the Federal Resource Conservation and Recovery Act, the Toxic Substances Control Act and theEmergency Planning and Community Right-to-Know Act.     “Event of Default” has the meaning set forth in Section 12.
31

 
     “Excess Cash Flow” shall mean, for each fiscal quarter, without duplication, anamount equal to the sum of total revenues plus gains on sales of securities andinvestments plus other net income less actual cash tax expense lessoperating expenses (not to exceed operating expenses set forth in the Budget) all as determinedin accordance with GAAP less prepayments of this Note actually made.     “Existing Indebtedness” has the meaning set forth in Section 10.a.     “GAAP” means generally accepted accounting principles in the United States as ineffect from time to time.     “Gaming Regulations” means all federal, state or local laws, statutes, common lawduties, rules, regulations, ordinances and codes, together with all administrative orders,directives, requests, licenses, authorizations and permits of, and agreements with anygovernmental authorities, in each case relating to or imposing liability or standards of conductconcerning gaming or gambling, the ownership or operation of a racetrack or gamingestablishment, or the Project.     “Hazardous Substances” means any toxic or hazardous substances, materials, wastes,contaminants or pollutants, including asbestos, PCBs, petroleum products and byproducts, and anysubstances defined or listed as “hazardous substances,” “hazardous materials,” “hazardouswastes” or “toxic substances” (or similarly identified), regulated under or forming the basisfor liability under any applicable Environmental Law.     “Indebtedness” means, for any Person: (i) all indebtedness or other obligations ofsuch Person for borrowed money or for the deferred purchase price of property or services andall obligations evidenced by notes, bonds, debentures or similar instruments, includingobligations so evidenced incurred in connection with the acquisition of property, assets orbusinesses; (ii) all indebtedness created or arising under any conditional sale or other titleretention agreement with respect to property acquired by such Person; (iii) all obligationsunder any lease of property (whether real, personal or mixed) which, in accordance with GAAP,would, at the time a determination is made, be required to be recorded as a capital lease inrespect of which such Person is liable as lessee; (iv) all reimbursement or other obligations ofsuch Person under or in respect of letters of credit, bankers acceptances, interest rate swaps,caps, floors and collars, currency swaps, or other similar financial products; (v) allindebtedness of another Person of the types referred to in clause (i), (ii), (iii) or (iv)above, guaranteed directly or indirectly in any manner by the Person for whom Indebtedness isbeing determined, or in effect guaranteed directly or indirectly by such Person; and (vi) allindebtedness of another Person of the types referred to in clause (i), (ii), (iii) or (iv) abovesecured by (or for which the holder of such indebtedness has an existing right, contingent orotherwise, to be secured by) any Lien upon or in property owned by the Person for whomIndebtedness is being determined, even though such Person has not assumed or become liable forthe payment of such indebtedness of such other Person.     “Loan Document” means this Note, the Security Documents and all other certificates,documents, agreement and instruments delivered to Lender or any Affiliate of the Lender under orin connection with this Note or any Loan Document.     “Lien” means any mortgage, deed of trust, pledge, security interest, assignment,deposit arrangement, charge or encumbrance, lien (statutory or other), or other preferentialarrangement (including, without limitation, any conditional sale or other title retentionagreement, any financing lease having substantially the same economic effect as any of theforegoing or any agreement to give any Lien).     “Margin Accounts” means those certain margin accounts of Company with PensonFinancial Services, Inc. and its Affiliates from time to time.     “Material Adverse Change” means a material adverse change (i) in the business,assets, operations, condition (financial or otherwise) or prospects of Company or the Project,or (ii) in the facts and information regarding the Company or the Premises or the Project asrepresented prior to the Issuance Date (without limitation to the generality of (i) ands (ii), aloss, liability, expense or cost of $200,000 or more shall be considered material), providedthat a change in the market value of a share of Penson Worldwide, Inc. shall not, in and ofitself, be considered as resulting in a Material Adverse Change.     “Net Cash Proceeds” means when used in respect of any sale or disposition of assetsor properties of the Company or any of its Subsidiaries, the gross proceeds received by theCompany or such Subsidiary from such disposition less all direct costs and expenses incurred andall federal, state, local and foreign taxes assessed or to be assessed in connection with suchsale or disposition and in the case of sales of assets held in margin accounts, the payment ofmargin debits on such accounts.
32

 
     “Permitted Lien” has the meaning set forth in Section 10.b.     “Person” means an individual, a partnership, a corporation, a limited liabilitycompany, an association, a joint stock company, a trust, a joint venture, an unincorporatedorganization and a governmental entity or any department, agency or political subdivisionthereof.     “Pledged Entity” means a Pledged Venture or Pledged Company as defined in theSecurity Agreement.     “Premises” means, any and all real property, including all buildings andimprovements now or hereafter located thereon and all appurtenances thereto, now or hereafterowned, leased, occupied or used by the Company or any of its Subsidiaries or any Pledged Entityand the real estate and appurtenances thereon acquired, financed or refinanced with proceeds ofthe Bonds located in the City of Selma, Texas for the purposes of the Project.     “Proceeds” means any and all cash and non-cash proceeds (including all proceeds asdefined in the UCC) and products (including all products as defined in the UCC) and proceeds ofproceeds and products of products and all supporting obligations of any of the Collateral, ineach case from time to time received or receivable by, or otherwise paid or distributed to, oracquired by, Company (and in whatever form comprised including, without limitation, cash,investment property, general intangibles, instruments, documents, accounts, deposit accounts andsecurity accounts).     “Project” means the construction, development and operation of a Class 1 horseracing track located in the City of Selma, Texas and financed with the proceeds of the issuanceof the Bonds, commonly known as 1 Retama Parkway.     “Security Agreement” means that certain Security Agreement executed by the Companyin favor of Lender on or about the date hereof, as it may be amended from time to time inwriting in accordance with its terms.     “Security Documents” the Security Agreement and any other agreement providingLender or any of its Affiliates with security for this Note, and any financing statements,assignments, notices or other documents related to any of the foregoing (as they may be amendedfrom time to time in writing in accordance with their terms).     “Solvent” means, as to any Person at any time, that (i) the fair value of theproperty of such Person is greater than the amount of such Person’s liabilities (includingdisputed, contingent and unliquidated liabilities) as such value is established and liabilitiesevaluated for purposes of Section 101(31) of the Bankruptcy Reform Act of 1978, as amended orrecodified from time to time (the “Bankruptcy Code”); (ii) the present fair saleablevalue of the property of such Person is not less than the amount that will be required to paythe probable liability of such Person on its debts as they become absolute and matured; (iii)such Person is able to realize upon its property and pay its debts and other liabilities(including disputed, contingent and unliquidated liabilities) as they mature in the normalcourse of business; (iv) such Person does not intend to, and does not believe that it will,incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities asthey mature; and (v) such Person is not engaged in business or a transaction, and is not aboutto engage in business or a transaction, for which such Person’s property would constituteunreasonably small capital.     “Subsidiary” means any corporation, association, partnership, joint venture orother business entity of which more than 50% of the voting stock or other equity interest isowned directly or indirectly by any Person or one or more of the other Subsidiaries of suchPerson or a combination thereof.7. **Replacement of Lost Note**.   Upon receipt of evidence of the mutilation, destruction, loss, or theft of this Note and, in thecase of any such mutilation, upon surrender and cancellation of this Note, the Company shall,upon the written request of the holder of the Note, execute and deliver in replacement thereof anew Note in the same form, in the same original principal amount dated the same date as thisNote, and such Note so mutilated, destroyed, lost or stolen shall then be deemed no longeroutstanding hereunder. 8. **Representations and Warranties****.**   The Company hereby represents, warrants and covenants that:
33

 
 a. The execution, delivery and performance by the Company of this Note and the other LoanDocuments have been duly authorized by all necessary action. This Note and the other LoanDocuments have been duly executed on behalf of the Company and constitute the legal, validand binding obligations of the Company enforceable in accordance with their respectiveterms except as limited by applicable bankruptcy, insolvency, reorganization, moratorium orlaws of general application relating to the availability of equitable remedies.  b. No consents, authorizations, approvals, licenses or exemptions and no actions orapprovals under any applicable laws or regulations (including any Gaming Regulations) arenecessary for the authorization, execution, delivery or performance of this Note or anyother Loan Documents.  c. The Company and each of its Subsidiaries and each Pledged Entity is a corporation,limited liability company, or limited partnership (as applicable) duly organized, validlyexisting and in good standing under the laws of its jurisdiction of its incorporation andhas all requisite power to perform its obligations under this Note and the other LoanDocuments (as applicable) and to own and operate its assets and conduct its business wherecurrently conducted.  d. The making and performance of this Note and the other Loan Documents do not contravenethe terms of the articles of incorporation or the bylaws or other organizational documentsof the Company or any of its Subsidiaries or any Pledged Entity and do not violate anyprovision of any Gaming Regulations or any other law or administrative regulation, orresult in a breach of or constitute a default under any agreement, indenture or otherinstrument to which any of the Company or its Subsidiaries or a Pledged Entity is a partyor by which any of the Company or its Subsidiaries or a Pledged Entity may be bound orwhich apply to or affect the Premises or the Project.  e. Neither the Company nor any of its Subsidiaries nor any Pledged Entity is in defaultunder any contract, lease, agreement, judgment, decree or order which could result in aMaterial Adverse Change.  f. The Company and its Subsidiaries and the Pledged Entities have good and marketabletitle to, or valid and subsisting leasehold interests in, their properties and assetssubject to no Lien, except for Permitted Liens.  g. No Person other than the Company has any rights, claims or interests in the Bonds orthe Bond Proceeds and the Company is the sole legal and beneficial owner of the Bonds andthe Bond Proceeds (except for the interests of the Lender in the Carried Interest).  h. There are no pending or threatened actions or proceedings against the Company or itsSubsidiaries or any Pledged Entity before any court or administrative agency that couldresult in a Material Adverse Change.  i. The financial statements for fiscal year ending December 31, 2009 and for the periodended September 30, 2009 heretofore delivered to Lender have been prepared in accordancewith GAAP and present fairly the financial condition of the Company and its Subsidiaries.Since September 30, 2009, there has been no Material Adverse Change in respect of theCompany or any of its Subsidiaries.  j. Neither the Company nor any of its Subsidiaries has any material liabilities, fixed orcontingent, that are not reflected in the financial statements referred to in subsection8.i. the notes thereto or otherwise disclosed in writing to the Lender prior to the datehereof.  k. The Company is Solvent.  l. Neither the obligations of the Company under the Loan Documents nor any otherobligation of the Company to Lender are subordinated in right of payment to any otherobligation of the Company.  m. Neither any Company nor any Subsidiary will use any part of the proceeds of any creditrepresented by this Note, directly or indirectly, to purchase or carry any marginsecurities or to reduce or retire any indebtedness originally incurred to purchase any suchsecurities.  n. The Company has not relied upon any statement or representation by Lender or any of itsAffiliates or any of their respective officers, directors, agents, employees or attorneysin executing this Agreement and the other Loan Documents.
34

 
 o.  The Company and each of its Subsidiaries is in material compliance with allEnvironmental Laws and Gaming Regulations, whether in connection with the ownership, use,maintenance or operation of the Project or the Premises or the conduct of any businessthereon, or otherwise.  p. Neither any Company nor any of its Subsidiaries nor any Pledged Entity nor, to theCompany’s knowledge, any previous owner, tenant, occupant, user or operator of the Premisesor the Project, has used, generated, manufactured, installed, treated, released, stored ordisposed of any Hazardous Substances on, under, or at the Premises or the Project, exceptin compliance with all applicable Environmental Laws. No Hazardous Substances have at anytime been spilled, leaked, dumped, deposited, discharged, disposed of or released on,under, at or from the Premises or the Project in violation of any Environmental Law, andthe Premises have not been used by any Person at any time as a landfill or waste disposalsite. There are no actions, suits, claims, notices of violation, hearings, investigationsor proceedings pending or, to the best of any Company’s knowledge, threatened against oraffecting such Company or any of its Subsidiaries or any Pledged Entity or with respect tothe ownership, use, maintenance and operation of the Premises or the Project.  q. Neither the Company nor any of its Subsidiaries is subject to regulation under thePublic Utility Holding Company Act of 1935, the Federal Power Act, the Investment CompanyAct of 1940, the Interstate Commerce Act, any state public utilities code or any otherfederal or state statute or regulation limiting its ability to incur indebtedness.  r. The Company and each of its Subsidiaries and each Pledged Entity has duly filed all taxand information returns required to be filed, and has paid all taxes, fees, assessments andother governmental charges or levies that have become due and payable, except to the extentsuch taxes or other charges are being contested in good faith and are adequately reservedagainst in accordance with GAAP.  s. None of the representations or warranties made by the Company or any of itsSubsidiaries in the Loan Documents and none of the statements contained in any otherexhibit, report, certificate or written statement furnished by or on behalf of the Companyor any of its Subsidiaries in connection with the Loan Documents and none of the statementsmade by or on behalf of the Company or any of its Subsidiaries to the Lender with respectto the Bonds, the Premises or the Project, contains any untrue statement of a material factor omits any material fact required to be stated therein or necessary to make thestatements made therein, in the light of the circumstances under which they are made, notmisleading.9. **Covenants**.   So long as any amount payable by the Company hereunder shall remain unpaid, the Company will,and shall cause each of its Subsidiaries (and in the case of paragraphs b., d. and e., thePledged Entities) to, unless otherwise expressly authorized by the Lender in writing: a. Furnish to the Lender: i. as soon as available and in any event within 45 days after the end of thefirst three fiscal quarters of each fiscal year of the Company or 90 days (in thecase of the fourth fiscal quarter), a consolidated balance sheet of the Company andits Subsidiaries as of the end of such quarter, and the related consolidatedstatements of income, shareholders’ equity and cash flows of the Company and itsSubsidiaries for such quarter and the portion of the fiscal year through the end ofsuch quarter, prepared in accordance with GAAP consistently applied;  ii. as soon as available and in any event within 90 days after the end ofeach fiscal year of the Company, a consolidated balance sheet of the Company and itsSubsidiaries as of the end of such fiscal year, and the relatedconsolidated statements of income, shareholders’ equity and cash flows of the Companyand its Subsidiaries for such fiscal year, prepared in accordance with GAAPconsistently applied, all in reasonable detail and setting forth in comparative formthe figures for the previous fiscal year, accompanied by a report thereon from a firmof independent certified public accountants of recognized national standing whichreport shall be unqualified as to scope of audit or the status of the Company and itsSubsidiaries as a going concern;  iii. immediately upon receipt thereof, copies of all reports submitted to theCompany by its independent certified public accountants in connection with eachannual, interim or special audit examination of the Company and its
35

 
   Subsidiariesmade by such accountants, including the “management letter” submitted by suchaccountants to the Company in connection with their annual audit  iv. immediately upon receipt thereof, copies of all financial statements,reports, notices and other communications with respect of the Pledged Entities,Bonds, Project and the Premises;  v. immediately after the giving, sending or filing thereof, copies of allpress releases and reports, if any, which the Company or any of its Subsidiariessends to the holders of its respective capital stock or other securities and of allreports or filings, if any, by the Company or any of its Subsidiaries with theSecurities and Exchange Commission or any national securities exchange or anyregulatory authority with respect to any Gaming Regulations or otherwise;  vi. immediately after the Company has knowledge or becomes aware of theoccurrence of any Default or Event of Default, a statement of the chief executiveofficer of the Company setting forth details of such Default or Event of Default andthe action which the Company proposes to take with respect thereto;  vii. a statement of the chief executive officer of the Company, immediatelyafter the Company has knowledge or becomes aware of any of the following events ofcircumstances, setting forth details of such event or circumstance and the actionwhich the Company proposes to take with respect thereto: the failure to make anypayments (whether on account of interest, principal or otherwise) on the Bonds afterthe date hereof, 1. the occurrence of any event of default under the Bonds or eventthat with the passage of time or giving of notice would be an event of default onthe Bonds after the date hereof,  2. any condemnation, or taking by eminent domain of any of thePremises or the Bonds,  3. any redemption or proposed redemption of any Bonds,  4. any payment, declaration or other notice of any Bond Proceeds,  5. any other event or circumstance that could be materially andadversely affect the Project, the Premises or the value of the Bonds; viii. such other information respecting the operations, properties, businessor condition (financial or otherwise) of the Company or its Subsidiaries or thePledged Entities or the Premises or the Project as the Lender may from time to timereasonably request. b. Maintain and preserve its corporate existence, its rights to transact business and allother rights, franchises and privileges (including all licenses and permits under anyGaming Regulations and rights under or in respect of the Bonds, the Premises and theProject) necessary or desirable in the normal course of its business and operations and theownership of its properties.  c. Carry and maintain in full force and effect, and ensure that there shall be carried andmaintained in full force and effect with respect to the Project and the Premises, at itsown expense and with financially sound and reputable insurance companies, insurance in suchamounts, with such deductibles and covering such risks as is customarily carried bycompanies engaged in the same or similar businesses or owning similar properties.  d. Comply in all material respects with the requirements of all applicable laws, rules,regulations and orders of any governmental authority (including all Environmental Laws andGaming Regulations) and the terms of any indenture, contract or other instrument to whichit may be a party or under which it or its properties or the Project or the Premises may bebound*.*  e. Maintain and preserve all of its properties necessary or useful in the proper conductof its business in good working order and condition, ordinary wear and tear excepted.
36

 
 f. At any reasonable time and from time to time permit the Lender or any of its agents orrepresentatives to visit and inspect any of the properties of the Company and itsSubsidiaries and to examine and make copies of and abstracts from the records and books ofaccount of the Company and its Subsidiaries, and to discuss the business affairs, financesand accounts of the Company and any such Subsidiary with any of the officers, employees oraccountants of the Company or such Subsidiary.  g. Execute, acknowledge, deliver, file, notarize and register at its own expense all suchfurther agreements, instruments, certificates, documents and assurances and perform suchacts as the Lender shall deem necessary or appropriate to effectuate the purposes of theLoan Documents.10. **Negative Covenants**. So long as any amount payable by the Company hereunder shallremain unpaid, the Company agrees that, unless otherwise expressly authorized by the Lender inwriting, it will not, and will not permit any of its Subsidiaries (and in the case ofparagraphs a., b., f., g., h., and j., the Pledged Entities) to: a. Create, incur, assume or otherwise become liable for or suffer to exist anyIndebtedness, other than: (i) Indebtedness of the Company to the Lender or its Affiliates;(ii) accounts payable to trade creditors for goods and services (not the result of theborrowing of money) incurred in the ordinary course of the Company’s or such Subsidiary’sbusiness in accordance with customary terms and paid within the specified time, unlesscontested in good faith by appropriate proceedings and reserved for in accordance withGAAP; (iii) Indebtedness consisting of guarantees resulting from endorsement of negotiableinstruments for collection by the Company or any such Subsidiary in the ordinary course ofbusiness; and (iv) Indebtedness existing as of the date hereof previously disclosed to theLender in writing and approved by the Lender (“Existing Indebtedness”);  b. Create, incur, assume or suffer to exist any Lien upon or with respect to any of itsproperties, revenues or assets, whether now owned or hereafter acquired except for any ofthe following (“Permitted Liens”), (i) Liens in favor of Lender or its Affiliates:(ii) Liens for taxes, fees, assessments or other governmental charges or levies, either notdelinquent or being contested in good faith by appropriate proceedings and which areadequately reserved for in accordance with GAAP; (iii) Liens of materialmen, mechanics,warehousemen, carriers or other like Liens arising in the ordinary course of business andsecuring obligations either not delinquent or being contested in good faith by appropriateproceedings which are adequately reserved for in accordance with GAAP and which do not inthe aggregate materially impair the use or value of the property or risk the loss orforfeiture of title thereto; (iv) Liens consisting of deposits or pledges to secure thepayment of worker’s compensation, unemployment insurance or other social security benefitsor obligations, or to secure the performance of statutory obligations incurred in theordinary course of business (other than for Indebtedness or any Liens arising under ERISA);(v) easements, rights of way, servitudes or zoning or building restrictions and other minorencumbrances on real property and irregularities in the title to such property which do notin the aggregate materially impair the use or value of such property or risk the loss orforfeiture of title thereto; (vi) Liens upon or in any personal property acquired or heldby the Company or any of its Subsidiaries to secure the purchase price of such property orIndebtedness incurred solely for the purpose of financing the acquisition of such property,or existing on such property at the time of its acquisition, provided that the Lien isconfined solely to the property so acquired and improvements thereon; and (vii) Liens inrespect of the Existing Indebtedness previously disclosed to the Lender in writing andapproved by the Lender.  c. Agree to, authorize or permit any Lien upon or with respect the Premises or theProject.  d. Engage in any line of business different from those lines of business carried on by itat the date hereof.  e. Declare or pay any dividends in respect of the Company’s capital stock, or purchase,redeem, retire or otherwise acquire for value any of its capital stock now or hereafteroutstanding, return any capital to its shareholders as such, or make any distribution ofassets to its shareholders as such, or permit any of its Subsidiaries to purchase, redeem,retire, or otherwise acquire for value any stock of the Company, except that the Companymay declare and deliver dividends and distributions payable only in common stock of theCompany.
37

 
 f. Merge with or consolidate into, or acquire all or substantially all of the assets of,any Person, or sell, transfer, lease or otherwise dispose of (whether in one transaction orin a series of transactions) all or substantially all of its assets.  g. Sell, lease, transfer, or otherwise dispose of, or part with control of (whether in onetransaction or a series of transactions) any interest in the Bonds, the Premises, theProject or any license or rights in respect of any Gaming Regulations.  h. Make any loans, advances, or investments in any Person, other than (a) short terminvestments in prime commercial paper or certificates of deposit issued by major banks, (b)loans, advances to or investments in a Subsidiary (provided such Subsidiary has executedthe Security Documents and the shares in such Subsidiary have been pledged to Lender).  i. Amend or otherwise modify the Bonds or any agreement, license or understanding withrespect of the Bonds, the Premises or the Project or any Pledged Entity (including anyorganizational agreement, management agreement or property management agreement), or waiveor forbear the application of any material term thereof, or subordinate any rights inrespect of any of the foregoing.  j. Enter into any transaction, including the purchase, sale or exchange of property or therendering of any services, with any Affiliate, officer, director, employee or consultant orenter into, assume or suffer to exist any employment or consulting contract with anyAffiliate, officer, director, employee or consultant, except a transaction or contractwhich is in the ordinary course of business and which is upon fair and reasonable terms notless favorable than it would obtain in a comparable arm’s length transaction with a Personnot an Affiliate, officer, director, employee or consultant.11. **Board Observer Rights**. So long as any amount payable by the Company hereunder shallremain unpaid, the Lender shall have the right to attend all meetings of the Board ofDirectors of the Company in a nonvoting observer capacity, to receive notice of such meetings,to receive any information provided to members of the Board of Directors of the Company inconnection with any such meeting, to receive (at the same time distributed to members of theBoard of Directors of the Company) any written consent in lieu of a board meeting proposed tobe adopted by the Company. 12. **Events of Default**.   Any of the following events which shall occur shall constitute an “Event of Default”:  a. The Company shall fail to pay when due any amount of principal or interest or otheramount payable hereunder.  b. Any representation or warranty by the Company under or in connection with this Note orany Loan Document shall prove to have been incorrect in any material respect when made ordeemed made.  c. The Company shall fail to perform or observe any term, covenant or agreement containedin paragraphs 9, 10 or 11 above.  d. The Company shall fail to perform or observe any other term, covenant or agreementcontained in this Note or any Loan Document on its part to be performed or observed and anysuch failure shall remain unremedied for a period of 30 days from the occurrence thereof.  e. The Company or any of its Subsidiaries or any Pledged Entity shall admit in writing itsinability to, or shall fail generally or be generally unable to, pay its debts (includingits payrolls) as such debts become due, or shall make a general assignment for the benefitof creditors; or the Company or any such Subsidiary or any Pledged Entity shall file avoluntary petition in bankruptcy or a petition or answer seeking reorganization, to effecta plan or other arrangement with creditors or any other relief under the Bankruptcy ReformAct of 1978, as amended or recodified from time to time (the “Bankruptcy Code”) orunder any other state or federal law relating to bankruptcy or reorganization grantingrelief todebtors, whether now or hereafter in effect, or shall file an answer admitting thejurisdiction of the court and the material allegations of any involuntary petition filedagainst the
38

 
   Company or any such Subsidiary pursuant to the Bankruptcy Code or any other stateor federal law; or the Company or any such Subsidiary shall be adjudicated a bankrupt, orshall apply for or consent to the appointment of any custodian, receiver or trustee for allor any substantial part of the Company’s or any such Subsidiary’s property, or shall take anyaction to authorize any of the actions or events set forth above in this paragraph; or aninvoluntary petition seeking any of the relief specified in this paragraph shall be filedagainst the Company or any such Subsidiary and shall not be dismissed within 30 days; or anyorder for relief shall be entered against the Company or any such Subsidiary in anyinvoluntary proceeding under the Bankruptcy Code or any such other state or federal lawreferred to in this paragraph (e).  f. The Company or any of its Subsidiaries shall (i) liquidate, wind up or dissolve (orsuffer any liquidation, winding-up or dissolution), (ii) suspend its operations other thanin the ordinary course of business, or (iii) take any corporate action to authorize any ofthe actions or events set forth above in this paragraph (f).  g. The Company or any Subsidiary or any Pledged Entity shall fail (i) to make any paymentof any principal of, or interest or premium on, any Indebtedness in an aggregate principalamount outstanding of at least $50,000 when due (whether by scheduled maturity, requiredprepayment, acceleration, demand or otherwise) and such failure shall continue after theapplicable grace period, if any, specified in the agreement or instrument relating to suchIndebtedness as of the date of such failure, or (ii) to perform or observe any term,covenant or condition on its part to be performed or observed under any agreement orinstrument relating to any such Indebtedness, when required to be performed or observed,and such failure shall continue after the applicable grace period, if any, specified insuch agreement or instrument, if the effect of such failure to perform or observe is toaccelerate, or to permit the acceleration of, the maturity of such Indebtedness; or anysuch Indebtedness shall be declared to be due and payable, or required to be prepaid (otherthan by a regularly scheduled required prepayment), prior to the stated maturity thereof.  h. A final judgment or order for the payment of money in excess of $50,000 shall berendered against the Company or any of its Subsidiaries or any Pledged Entity; or anynon-monetary judgment or order shall be rendered against the Company or any such Subsidiarywhich has or could result in a Material Adverse Change; and in each case there shall be anyperiod of 20 consecutive days during which such judgment continues unsatisfied or duringwhich a stay of enforcement of such judgment or order, by reason of a pending appeal orotherwise, shall not be in effect.  i. There shall occur any Change of Control.  j. There shall occur any “Event of Default” as defined in any other Loan Document.  k. A Material Adverse Change shall occur.13. **Consequences of Event of Default**. If any Event of Default shall occur,the Lender may (i) by notice to the Company, declare the entire unpaidprincipal amount of this Note and all other Loan Documents, allinterest accrued and unpaid hereon and all other amounts payablehereunder to be forthwith due and payable, whereupon all unpaidprincipal under this Note, all such accrued interest and all suchother amounts shall become and be forthwith due and payable, withoutpresentment, demand, protest or further notice of any kind, all ofwhich are hereby expressly waived by the Company, provided that if anevent described in paragraph (e) or (f) above shall occur, the resultwhich would otherwise occur only upon giving of notice by the Lenderto the Company as specified above shall occur automatically, withoutthe giving of any such notice; and (ii) whether or not the actionsreferred to in clause (i) have been taken, proceed to enforce allother rights and remedies available to the Lender under applicable law 14. **Remedies Cumulative**. No remedy conferred under this Note or any otherLoan Document is intended to be exclusive of any other remedy, andeach and every such remedy shall be cumulative and shall be inaddition to every other remedy now or hereafter existing at law or inequity or by statute or otherwise. No course of dealing between theCompany and the Lender or any delay on the part of the Lender inexercising any rights hereunder shall operate as a waiver of any rightof the Lender. 15. **Indemnification**. Whether or not the transactions contemplatedhereby shall be consummated, the Companyhereby agrees to indemnify the Lender andits Affiliates, directors, officers,employees, agents, counsel and otheradvisors (each an “Indemnified Person”)against, and hold each of them harmlessfrom, any and all liabilities, obligations,losses, claims,damages, penalties, actions, judgments, suits, costs, expenses or disbursementsof any kind or nature whatsoever, including the reasonable fees anddisbursements of counsel to an Indemnified Person (including allocated costs ofinternal counsel), which may be imposed on, incurred by, or asserted againstany Indemnified Person, (i) by any governmental authority or other third partyin any way relating to or arising out of any of the Loan Documents, the use orintended use of the proceeds of this Note, or the transactions contemplatedhereby or thereby, (ii) with respect to any investigation, litigation or otherproceeding relating to any of the foregoing, irrespective of whether theIndemnified Person shall be designated a party thereto, or (iii) in any way
39

 
  relating to or arising out of any Loan Document, the use or intended use of theproceeds of this Note or the transactions contemplated hereby or thereby or anyaction taken or omitted by Lender in connection with any of the foregoing;provided that Company shall not be liable for any portion of such liabilities,obligations, losses, damages, penalties, actions, judgments, suits, costs,expenses or disbursements to the extent they are found by a final decision of acourt of competent jurisdiction to have been caused by the gross negligence orwillful misconduct of Lender. 16. **Amendment Waiver**. No amendment or waiver of anyprovision of this Note or anyother Loan Document, nor anyconsent to any departure bythe Company therefrom, shallin any event be effectiveunless the same shall be inwriting and signed by theLender and then suchamendment, waiver or consentshall be effective only in thespecific instance and for thespecific purpose for whichgiven. 17. **Successors and Assigns**. This Note shall be binding on and inure to the benefit ofand be enforceable by the Company, the Lender and their respective successors and assigns. 18. **Governing Law**. This Note shall be governed by and construed in accordance with thedomestic laws of the State of New York, without giving effect to any choice of law or conflictof law provision or rule (whether of the State of New York or any other jurisdiction) thatwould cause the application of the laws of any jurisdiction other than the State of New York. 19. **Jurisdiction**. The Company hereby (i) submits to the exclusive jurisdiction of thecourts of the State of New York and the Federal courts of the United States sitting in theSouthern District of the State of New York for the purpose of any action or proceeding arisingout of or relating to this Note and any other Loan Documents and instruments relating hereto,(ii) agrees that all claims in respect of any such action or proceeding may be heard anddetermined in such courts, (iii) irrevocably waives (to the extent permitted by applicablelaw) any objection which it now or hereafter may have to the laying of venue of any suchaction or proceeding brought in any of the foregoing courts, and any objection on the groundthat any such action or proceeding in any such court has been brought in an inconvenientforum, and (iv) agrees that a final judgment in any such action or proceeding shall beconclusive and may be enforced in other jurisdictions by suit on the judgment or in any othermanner permitted by law. 20. **Headings**. The headings of the sections and subsections of this Note are insertedfor convenience only and do not constitute a part of this Note. 21. **Severance**. Whenever possible, each provision of this Note shall be interpreted insuch manner as to be effective and valid under all applicable laws and regulations. If,however, any provision of this Note shall be prohibited by or invalid under any such law orregulation in any jurisdiction, it shall, as to such jurisdiction, be deemed modified toconform to the minimum requirements of such law or regulation, or, if for any reason it is notdeemed so modified, it shall be ineffective and invalid only to the extent of such prohibitionor invalidity without affecting the remaining provisions of this Note, or the validity oreffectiveness of such provision in any other jurisdiction. 22. **Expenses**. The Company agrees to pay on demand all costs and expenses of the Lenderand its Affiliates, and the fees and disbursements of counsel (including the allocated costsof internal counsel), in connection with (i) any amendments, modifications or waivers of theterms of this Note or any other Loan Document, (ii) enforcement or attempted enforcement of,and preservation of any rights under, this Note or any other Loan Document, and (iv) anyout-of-court workout or other refinancing or restructuring or in any bankruptcy case,including, without limitation, any and all losses, costs and expenses sustained by the Lenderor its Affiliates as a result of any failure by the Company to perform or observe itsobligations contained of this Note or any Loan Document. In addition, the Company agrees toindemnify the Lender and its Affiliates against and hold them harmless from any and allpresent and future stamp, transfer, documentary and other taxes, levies, fees, assessments andother charges made by any jurisdiction by reason of the execution, delivery, performance andenforcement of this Note or any other Loan Document.
40

 
23. **Notices**. All notices and other communications provided for hereunder shall, unlessotherwise stated herein, be in writing (including by facsimile) and mailed, sent or deliveredto the respective parties hereto at or to the following addresses or facsimile numbers (or ator to such other address or facsimile number as shall be designated by any party in a writtennotice to the other parties hereto):   If to the Lender: Penson Worldwide, Inc.  One Penn Plaza, 51st Floor,  New York City, New York 10119     Attn: Daniel Weingarten, Head of Office   With a copy to Penson Worldwide, Inc.  1700 Pacific Avenue, Suite 1400  Dallas TX 75201  Attn: General Counsel and Chief Executive Officer   If to the Company: Call Now, Inc.     Mailing Address:  P.O. Box 47535  San Antonio, TX 78265     Physical Address:  1 Retama Parkway,  Selma, TX 78154     Attn: Chief Executive OfficerAll such notices and communications shall be effective (i) if delivered by hand, upon delivery;(ii) if sent by mail, upon the earlier of the date of receipt or five Business Days after depositin the mail, first class (or air mail, with respect to communications to be sent to or from theUnited States), postage prepaid; and (iii) if sent by facsimile, when sent.[signature page follows]
41

 
IN WITNESS WHEREOF, the Company has executed and delivered this Note on the date first statedabove.      **Call Now, Inc.**