exv10w7






Exhibit 10.7




SENIOR SECURED PROMISSORY NOTE




			
	 	 	 
	 
	 	Made and payable in
	 
	 	New York, New York
	                 February 25, 2010
	 	$13,922,000





Call Now, Inc. a Nevada corporation (the “Company”), hereby promises to pay to the order of
Penson Worldwide, Inc., a Delaware corporation (together with its successors and assigns, the
“Lender”) the principal amount of $13,922,000 on the Maturity Date (as defined below)
together with all accrued but unpaid interest thereon and other amounts payable pursuant hereto,
all in accordance with the provisions of this Senior Secured Promissory Note (this “Note”).



WHEREAS: The Company is indebted to the Lender and certain of its Affiliates, including with
respect to certain margin debits in the Margin Accounts (the “Existing Obligations”). The
Company has requested that the Lender facilitate the restructuring of certain of the Existing
Obligations in the amount of approximately $13,334,823 and make certain additional advances to the
Company. The Lender has agreed to so restructure the Existing Obligations and to provide certain
additional financing upon the terms of this Note and the other Loan Documents. This Note
represents, among other things, a restructuring of the Existing Obligations and is not an accord
and satisfaction, or an extinguishment of the Existing Obligations, which obligations have not been
repaid but continue as represented by this Note and continue to be secured by, among other things,
the property in the Margin Accounts. This Note is secured by certain collateral more specifically
described in the Security Agreement.





	1.	 	Payment of Interest.






	 	a.	 	Interest shall accrue at the rate of ten percent (10.0%) per annum on the unpaid
principal amount of this Note outstanding from time to time, from and including the date
hereof (the “Issuance Date”) until paid. Interest shall be computed on the basis
of a year of 360 days and twelve 30 day months, and the actual number of days elapsed. The
Company shall pay to the Lender all accrued interest on the Maturity Date or at the time it
makes an Optional Prepayment as defined in paragraph 2 below.
	 
	 	b.	 	Upon and during the continuation of a Default or Event of Default, the Company shall
pay interest on the amounts payable hereunder, payable on demand, at a rate per annum equal
to fifteen percent (15%).






	2.	 	Payment of Principal on the Note.






	 	a.	 	Payment at Maturity. The Company shall repay the outstanding principal amount
of this Note together with all interest accrued thereon and any other amounts payable
hereunder to the Lender on the earlier of: (i) February 25, 2012 (the “Maturity
Date”), and (ii) the date on which the maturity of this Note accelerates.






	 	b.	 	Mandatory Payments.






	 	i.	 	In the event that the Company receives any Bond Proceeds, the Bond
Proceeds shall be paid to the Lender and (except for any Carried Interest) shall be
applied to the amounts outstanding pursuant to this Note.






	 	ii.	 	If the Company or any of its Subsidiaries, in any transaction or series
of related transactions:






	 	1.	 	sells or issues any equity or debt securities, equity interests or
ownership interests including, but not limited to, any sale or issuance
undertaken in connection with or as part of a public offering;






	 	2.	 	receives any insurance award or any other insurance proceeds of any
kind;






	 	3.	 	incurs any Indebtedness except for Permitted Indebtedness;




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	 	 	 	then, within one Business Day of the Company’s or such Subsidiary’s receipt of the
proceeds thereof, the Company shall pay to the Lender, for application to the amounts
outstanding under this Note, 100% of the Net Cash Proceeds thereof.






	 	iii.	 	in addition to and notwithstanding any other provision of this Note, one
hundred percent (100%) of Company’s Excess Cash Flow for each fiscal quarter
(commencing with the first fiscal quarter ending after the date hereof) shall be
paid to the Lender within 3 Business Days of the end of each fiscal quarter, for
application to the amounts outstanding under this Note.






	 	c.	 	Optional Prepayment. The Company may upon five Business Days’ prior written notice
prepay (an “Optional Prepayment”), without penalty or premium, all or any portion of
the outstanding principal amount hereof. Together with any such prepayment the Company shall
pay 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, and
is 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 Date
and is non refundable. To the extent not previously transferred, the Company hereby
assigns and transfers to the Lender, free and clear of all Liens, all of its right title
and interest in the Carried Interest. The Carried Interest shall be payable before Bond
Proceeds are paid to the Company.






	 	b.	 	The Carried Interest shall equal 8% of Bond Proceeds provided, however, that Lender
agrees that, provided there is no Default or Event of Default, if the Company irrevocably
makes one or more Optional Prepayments in an amount equal to the full amount of this Note
prior to the second anniversary of the Issuance Date the Carried Interest shall be reduced
to 4% of Bond Proceeds, provided, further, that if the Company irrevocably makes one or
more Optional Prepayments in an amount equal to the full amount of this Note prior to the
first anniversary of the Issuance Date, the Carried Interest will be reduced to 0% of Bond
Proceeds.






	 	c.	 	The provisions of this Section 3 shall survive the repayment of this Note and the
termination of this Note.






	4.	 	Payment Terms.






	 	a.	 	Time of Payment. If any scheduled payment date is not a Business Day, such
payment shall be made on the next succeeding Business Day and such extension of time shall
in such case be included in computing interest hereunder.






	 	b.	 	Method and Place of Payment. The Company shall make all payments hereunder for
the account of Lender at its offices at One Penn Plaza, 51st Floor, New York
City, New York 10119 Attention: Daniel Weingarten, Manager of Office. Any payment to be
made hereunder shall be made in lawful money of the United States of America and in same
day or immediately available funds and shall be sent so as to be received not later than 12
noon Eastern Standard Time on the date on which such payment is due. All payments pursuant
to 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, costs
and expenses payable hereunder, second in respect of any accrued but unpaid
interest due hereunder and third in respect of the outstanding principal amount due
hereunder.






	5.	 	Maximum Interest Rate.
	 
	 	 	Anything herein to the contrary notwithstanding, if during any period for which interest is
computed 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 under
applicable 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, the
Company 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 such
period 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,




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	 	 	which may be charged, contracted for, reserved, received or collected by the Lender in
connection with this Note under applicable law. In the event that, contrary to the intent of
Lender and Company, the Company pays interest under this Note and it is determined that such
interest rate was in excess of the Highest Lawful Rate, then that portion of the interest
payment representing an amount in excess of the Highest Lawful Rate shall be deemed a payment of
principal 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 controlled
by or is under common control with another Person (“control,” “controlled by” and “under common
control with” with respect to any Person meaning for the purposes of the foregoing the
possession, directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting securities or by
contract or otherwise).




     “Bonds” means the Retama Development Corporation Special Facilities Revenue
Refunding Bonds (Retama Park Racetrack Project) Series 1997B Bonds (and any replacement or
refinancing thereof including, without limitation, any Converted Series 1997B Bonds as
referenced in that certain Indenture of Trust and Security Agreement dated as of March 1, 1997
among 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 whatever
form) from or in respect of the Bonds of any kind (whether on account of interest, redemption of
principal, proceeds of sale, pledge or other transfer or disposition of the Bonds, insurance
proceeds, tax refunds, or otherwise made or payable in respect of any Bonds).




     “Budget” means those certain forecasts, prepared by management of the Company and
satisfactory to the Lender, of the Company’s consolidated statements of income or operations on
a monthly basis for the immediately following two fiscal years (commencing with the 2010 fiscal
year).




     “Business Day” means any day other than Saturday or Sunday or a public holiday
under the laws of the State of New York or other day on which banking institutions are
authorized or obligated to close in the State of New York.




     “Carried Interest” means the carried interest of the Lender in the Bond Proceeds
described in Section 3 of this Note.




     “Change of Control” means that (i) any person or group of persons (as defined in
Subsections 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) directly
or indirectly of securities of Company representing 20% or more of Company’s then outstanding
voting 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 the
Company’s assets, or (iii) during any period of 12 consecutive calendar months, commencing on
the 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) subsequently
became directors of the Company and whose initial election or initial nomination for election
subsequent to that date was approved by a majority of the Continuing Directors then on the board
of 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 or
passage of time or both would result in an Event of Default.




     “Environmental Laws” means all federal, state or local laws, statutes, common law
duties, rules, regulations, ordinances and codes, together with all administrative orders,
directives, requests, licenses, authorizations and permits of, and agreements with (including
consent decrees), any governmental authorities, in each case relating to or imposing liability
or standards of conduct concerning public health, safety and environmental protection matters,
including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the
Clean 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 the
Emergency Planning and Community Right-to-Know Act.




     “Event of Default” has the meaning set forth in Section 12.



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     “Excess Cash Flow” shall mean, for each fiscal quarter, without duplication, an
amount equal to the sum of total revenues plus gains on sales of securities and
investments plus other net income less actual cash tax expense less
operating expenses (not to exceed operating expenses set forth in the Budget) all as determined
in 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 in
effect from time to time.




     “Gaming Regulations” means all federal, state or local laws, statutes, common law
duties, rules, regulations, ordinances and codes, together with all administrative orders,
directives, requests, licenses, authorizations and permits of, and agreements with any
governmental authorities, in each case relating to or imposing liability or standards of conduct
concerning gaming or gambling, the ownership or operation of a racetrack or gaming
establishment, or the Project.




     “Hazardous Substances” means any toxic or hazardous substances, materials, wastes,
contaminants or pollutants, including asbestos, PCBs, petroleum products and byproducts, and any
substances defined or listed as “hazardous substances,” “hazardous materials,” “hazardous
wastes” or “toxic substances” (or similarly identified), regulated under or forming the basis
for liability under any applicable Environmental Law.




     “Indebtedness” means, for any Person: (i) all indebtedness or other obligations of
such Person for borrowed money or for the deferred purchase price of property or services and
all obligations evidenced by notes, bonds, debentures or similar instruments, including
obligations so evidenced incurred in connection with the acquisition of property, assets or
businesses; (ii) all indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person; (iii) all obligations
under 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 in
respect of which such Person is liable as lessee; (iv) all reimbursement or other obligations of
such 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) all
indebtedness 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 is
being determined, or in effect guaranteed directly or indirectly by such Person; and (vi) all
indebtedness of another Person of the types referred to in clause (i), (ii), (iii) or (iv) above
secured by (or for which the holder of such indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property owned by the Person for whom
Indebtedness is being determined, even though such Person has not assumed or become liable for
the 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 or
in 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 preferential
arrangement (including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as any of the
foregoing or any agreement to give any Lien).




     “Margin Accounts” means those certain margin accounts of Company with Penson
Financial 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 as
represented prior to the Issuance Date (without limitation to the generality of (i) ands (ii), a
loss, liability, expense or cost of $200,000 or more shall be considered material), provided
that a change in the market value of a share of Penson Worldwide, Inc. shall not, in and of
itself, be considered as resulting in a Material Adverse Change.




     “Net Cash Proceeds” means when used in respect of any sale or disposition of assets
or properties of the Company or any of its Subsidiaries, the gross proceeds received by the
Company or such Subsidiary from such disposition less all direct costs and expenses incurred and
all federal, state, local and foreign taxes assessed or to be assessed in connection with such
sale or disposition and in the case of sales of assets held in margin accounts, the payment of
margin debits on such accounts.



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     “Permitted Lien” has the meaning set forth in Section 10.b.




     “Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political subdivision
thereof.




     “Pledged Entity” means a Pledged Venture or Pledged Company as defined in the
Security Agreement.




     “Premises” means, any and all real property, including all buildings and
improvements now or hereafter located thereon and all appurtenances thereto, now or hereafter
owned, leased, occupied or used by the Company or any of its Subsidiaries or any Pledged Entity
and the real estate and appurtenances thereon acquired, financed or refinanced with proceeds of
the 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 as
defined in the UCC) and products (including all products as defined in the UCC) and proceeds of
proceeds and products of products and all supporting obligations of any of the Collateral, in
each case from time to time received or receivable by, or otherwise paid or distributed to, or
acquired by, Company (and in whatever form comprised including, without limitation, cash,
investment property, general intangibles, instruments, documents, accounts, deposit accounts and
security accounts).




     “Project” means the construction, development and operation of a Class 1 horse
racing track located in the City of Selma, Texas and financed with the proceeds of the issuance
of the Bonds, commonly known as 1 Retama Parkway.




     “Security Agreement” means that certain Security Agreement executed by the Company
in favor of Lender on or about the date hereof, as it may be amended from time to time in
writing in accordance with its terms.




     “Security Documents” the Security Agreement and any other agreement providing
Lender 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 amended
from 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 the
property of such Person is greater than the amount of such Person’s liabilities (including
disputed, contingent and unliquidated liabilities) as such value is established and liabilities
evaluated for purposes of Section 101(31) of the Bankruptcy Reform Act of 1978, as amended or
recodified from time to time (the “Bankruptcy Code”); (ii) the present fair saleable
value of the property of such Person is not less than the amount that will be required to pay
the 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 normal
course 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 as
they mature; and (v) such Person is not engaged in business or a transaction, and is not about
to engage in business or a transaction, for which such Person’s property would constitute
unreasonably small capital.




     “Subsidiary” means any corporation, association, partnership, joint venture or
other business entity of which more than 50% of the voting stock or other equity interest is
owned directly or indirectly by any Person or one or more of the other Subsidiaries of such
Person 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 the
case 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 a
new Note in the same form, in the same original principal amount dated the same date as this
Note, and such Note so mutilated, destroyed, lost or stolen shall then be deemed no longer
outstanding hereunder.
	 
	8.	 	Representations and Warranties.
	 
	 	 	The Company hereby represents, warrants and covenants that:




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	 	a.	 	The execution, delivery and performance by the Company of this Note and the other Loan
Documents have been duly authorized by all necessary action. This Note and the other Loan
Documents have been duly executed on behalf of the Company and constitute the legal, valid
and binding obligations of the Company enforceable in accordance with their respective
terms except as limited by applicable bankruptcy, insolvency, reorganization, moratorium or
laws of general application relating to the availability of equitable remedies.
	 
	 	b.	 	No consents, authorizations, approvals, licenses or exemptions and no actions or
approvals under any applicable laws or regulations (including any Gaming Regulations) are
necessary for the authorization, execution, delivery or performance of this Note or any
other 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, validly
existing and in good standing under the laws of its jurisdiction of its incorporation and
has all requisite power to perform its obligations under this Note and the other Loan
Documents (as applicable) and to own and operate its assets and conduct its business where
currently conducted.
	 
	 	d.	 	The making and performance of this Note and the other Loan Documents do not contravene
the terms of the articles of incorporation or the bylaws or other organizational documents
of the Company or any of its Subsidiaries or any Pledged Entity and do not violate any
provision of any Gaming Regulations or any other law or administrative regulation, or
result in a breach of or constitute a default under any agreement, indenture or other
instrument to which any of the Company or its Subsidiaries or a Pledged Entity is a party
or by which any of the Company or its Subsidiaries or a Pledged Entity may be bound or
which apply to or affect the Premises or the Project.
	 
	 	e.	 	Neither the Company nor any of its Subsidiaries nor any Pledged Entity is in default
under any contract, lease, agreement, judgment, decree or order which could result in a
Material Adverse Change.
	 
	 	f.	 	The Company and its Subsidiaries and the Pledged Entities have good and marketable
title to, or valid and subsisting leasehold interests in, their properties and assets
subject to no Lien, except for Permitted Liens.
	 
	 	g.	 	No Person other than the Company has any rights, claims or interests in the Bonds or
the Bond Proceeds and the Company is the sole legal and beneficial owner of the Bonds and
the 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 its
Subsidiaries or any Pledged Entity before any court or administrative agency that could
result in a Material Adverse Change.
	 
	 	i.	 	The financial statements for fiscal year ending December 31, 2009 and for the period
ended September 30, 2009 heretofore delivered to Lender have been prepared in accordance
with 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 the
Company or any of its Subsidiaries.
	 
	 	j.	 	Neither the Company nor any of its Subsidiaries has any material liabilities, fixed or
contingent, that are not reflected in the financial statements referred to in subsection
8.i. the notes thereto or otherwise disclosed in writing to the Lender prior to the date
hereof.
	 
	 	k.	 	The Company is Solvent.
	 
	 	l.	 	Neither the obligations of the Company under the Loan Documents nor any other
obligation of the Company to Lender are subordinated in right of payment to any other
obligation of the Company.
	 
	 	m.	 	Neither any Company nor any Subsidiary will use any part of the proceeds of any credit
represented by this Note, directly or indirectly, to purchase or carry any margin
securities or to reduce or retire any indebtedness originally incurred to purchase any such
securities.
	 
	 	n.	 	The Company has not relied upon any statement or representation by Lender or any of its
Affiliates or any of their respective officers, directors, agents, employees or attorneys
in executing this Agreement and the other Loan Documents.




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	 	o.	 	 The Company and each of its Subsidiaries is in material compliance with all
Environmental 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 business
thereon, or otherwise.
	 
	 	p.	 	Neither any Company nor any of its Subsidiaries nor any Pledged Entity nor, to the
Company’s knowledge, any previous owner, tenant, occupant, user or operator of the Premises
or the Project, has used, generated, manufactured, installed, treated, released, stored or
disposed of any Hazardous Substances on, under, or at the Premises or the Project, except
in compliance with all applicable Environmental Laws. No Hazardous Substances have at any
time 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, and
the Premises have not been used by any Person at any time as a landfill or waste disposal
site. There are no actions, suits, claims, notices of violation, hearings, investigations
or proceedings pending or, to the best of any Company’s knowledge, threatened against or
affecting such Company or any of its Subsidiaries or any Pledged Entity or with respect to
the 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 the
Public Utility Holding Company Act of 1935, the Federal Power Act, the Investment Company
Act of 1940, the Interstate Commerce Act, any state public utilities code or any other
federal 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 tax
and information returns required to be filed, and has paid all taxes, fees, assessments and
other governmental charges or levies that have become due and payable, except to the extent
such taxes or other charges are being contested in good faith and are adequately reserved
against in accordance with GAAP.
	 
	 	s.	 	None of the representations or warranties made by the Company or any of its
Subsidiaries in the Loan Documents and none of the statements contained in any other
exhibit, report, certificate or written statement furnished by or on behalf of the Company
or any of its Subsidiaries in connection with the Loan Documents and none of the statements
made by or on behalf of the Company or any of its Subsidiaries to the Lender with respect
to the Bonds, the Premises or the Project, contains any untrue statement of a material fact
or omits any material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they are made, not
misleading.






	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., the
Pledged 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 the
first three fiscal quarters of each fiscal year of the Company or 90 days (in the
case of the fourth fiscal quarter), a consolidated balance sheet of the Company and
its Subsidiaries as of the end of such quarter, and the related consolidated
statements of income, shareholders’ equity and cash flows of the Company and its
Subsidiaries for such quarter and the portion of the fiscal year through the end of
such quarter, prepared in accordance with GAAP consistently applied;
	 
	 	ii.	 	as soon as available and in any event within 90 days after the end of
each fiscal year of the Company, a consolidated balance sheet of the Company and its
Subsidiaries as of the end of such fiscal year, and the related
consolidated statements of income, shareholders’ equity and cash flows of the Company
and its Subsidiaries for such fiscal year, prepared in accordance with GAAP
consistently applied, all in reasonable detail and setting forth in comparative form
the figures for the previous fiscal year, accompanied by a report thereon from a firm
of independent certified public accountants of recognized national standing which
report shall be unqualified as to scope of audit or the status of the Company and its
Subsidiaries as a going concern;
	 
	 	iii.	 	immediately upon receipt thereof, copies of all reports submitted to the
Company by its independent certified public accountants in connection with each
annual, interim or special audit examination of the Company and its




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	 	 	 	Subsidiaries
made by such accountants, including the “management letter” submitted by such
accountants 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 all
press releases and reports, if any, which the Company or any of its Subsidiaries
sends to the holders of its respective capital stock or other securities and of all
reports or filings, if any, by the Company or any of its Subsidiaries with the
Securities and Exchange Commission or any national securities exchange or any
regulatory authority with respect to any Gaming Regulations or otherwise;
	 
	 	vi.	 	immediately after the Company has knowledge or becomes aware of the
occurrence of any Default or Event of Default, a statement of the chief executive
officer of the Company setting forth details of such Default or Event of Default and
the action which the Company proposes to take with respect thereto;
	 
	 	vii.	 	a statement of the chief executive officer of the Company, immediately
after the Company has knowledge or becomes aware of any of the following events of
circumstances, setting forth details of such event or circumstance and the action
which the Company proposes to take with respect thereto: the failure to make any
payments (whether on account of interest, principal or otherwise) on the Bonds after
the date hereof,






	 	1.	 	the occurrence of any event of default under the Bonds or event
that with the passage of time or giving of notice would be an event of default on
the Bonds after the date hereof,
	 
	 	2.	 	any condemnation, or taking by eminent domain of any of the
Premises 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 and
adversely affect the Project, the Premises or the value of the Bonds;






	 	viii.	 	such other information respecting the operations, properties, business
or condition (financial or otherwise) of the Company or its Subsidiaries or the
Pledged Entities or the Premises or the Project as the Lender may from time to time
reasonably request.






	 	b.	 	Maintain and preserve its corporate existence, its rights to transact business and all
other rights, franchises and privileges (including all licenses and permits under any
Gaming Regulations and rights under or in respect of the Bonds, the Premises and the
Project) necessary or desirable in the normal course of its business and operations and the
ownership of its properties.
	 
	 	c.	 	Carry and maintain in full force and effect, and ensure that there shall be carried and
maintained in full force and effect with respect to the Project and the Premises, at its
own expense and with financially sound and reputable insurance companies, insurance in such
amounts, with such deductibles and covering such risks as is customarily carried by
companies 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 and
Gaming Regulations) and the terms of any indenture, contract or other instrument to which
it may be a party or under which it or its properties or the Project or the Premises may be
bound.
	 
	 	e.	 	Maintain and preserve all of its properties necessary or useful in the proper conduct
of 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 or
representatives to visit and inspect any of the properties of the Company and its
Subsidiaries and to examine and make copies of and abstracts from the records and books of
account of the Company and its Subsidiaries, and to discuss the business affairs, finances
and accounts of the Company and any such Subsidiary with any of the officers, employees or
accountants of the Company or such Subsidiary.
	 
	 	g.	 	Execute, acknowledge, deliver, file, notarize and register at its own expense all such
further agreements, instruments, certificates, documents and assurances and perform such
acts as the Lender shall deem necessary or appropriate to effectuate the purposes of the
Loan Documents.






	10.	 	Negative Covenants. So long as any amount payable by the Company hereunder shall
remain unpaid, the Company agrees that, unless otherwise expressly authorized by the Lender in
writing, it will not, and will not permit any of its Subsidiaries (and in the case of
paragraphs a., b., f., g., h., and j., the Pledged Entities) to:






	 	a.	 	Create, incur, assume or otherwise become liable for or suffer to exist any
Indebtedness, 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 the
borrowing of money) incurred in the ordinary course of the Company’s or such Subsidiary’s
business in accordance with customary terms and paid within the specified time, unless
contested in good faith by appropriate proceedings and reserved for in accordance with
GAAP; (iii) Indebtedness consisting of guarantees resulting from endorsement of negotiable
instruments for collection by the Company or any such Subsidiary in the ordinary course of
business; and (iv) Indebtedness existing as of the date hereof previously disclosed to the
Lender 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 its
properties, revenues or assets, whether now owned or hereafter acquired except for any of
the 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 not
delinquent or being contested in good faith by appropriate proceedings and which are
adequately reserved for in accordance with GAAP; (iii) Liens of materialmen, mechanics,
warehousemen, carriers or other like Liens arising in the ordinary course of business and
securing obligations either not delinquent or being contested in good faith by appropriate
proceedings which are adequately reserved for in accordance with GAAP and which do not in
the aggregate materially impair the use or value of the property or risk the loss or
forfeiture of title thereto; (iv) Liens consisting of deposits or pledges to secure the
payment of worker’s compensation, unemployment insurance or other social security benefits
or obligations, or to secure the performance of statutory obligations incurred in the
ordinary 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 minor
encumbrances on real property and irregularities in the title to such property which do not
in the aggregate materially impair the use or value of such property or risk the loss or
forfeiture of title thereto; (vi) Liens upon or in any personal property acquired or held
by the Company or any of its Subsidiaries to secure the purchase price of such property or
Indebtedness 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 is
confined solely to the property so acquired and improvements thereon; and (vii) Liens in
respect of the Existing Indebtedness previously disclosed to the Lender in writing and
approved by the Lender.
	 
	 	c.	 	Agree to, authorize or permit any Lien upon or with respect the Premises or the
Project.
	 
	 	d.	 	Engage in any line of business different from those lines of business carried on by it
at 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 hereafter
outstanding, return any capital to its shareholders as such, or make any distribution of
assets 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 Company
may declare and deliver dividends and distributions payable only in common stock of the
Company.




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	 	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 or
in 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 one
transaction or a series of transactions) any interest in the Bonds, the Premises, the
Project 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 term
investments 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 executed
the 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 with
respect of the Bonds, the Premises or the Project or any Pledged Entity (including any
organizational agreement, management agreement or property management agreement), or waive
or forbear the application of any material term thereof, or subordinate any rights in
respect of any of the foregoing.
	 
	 	j.	 	Enter into any transaction, including the purchase, sale or exchange of property or the
rendering of any services, with any Affiliate, officer, director, employee or consultant or
enter into, assume or suffer to exist any employment or consulting contract with any
Affiliate, officer, director, employee or consultant, except a transaction or contract
which is in the ordinary course of business and which is upon fair and reasonable terms not
less favorable than it would obtain in a comparable arm’s length transaction with a Person
not an Affiliate, officer, director, employee or consultant.






	11.	 	Board Observer Rights. So long as any amount payable by the Company hereunder shall
remain unpaid, the Lender shall have the right to attend all meetings of the Board of
Directors 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 in
connection with any such meeting, to receive (at the same time distributed to members of the
Board of Directors of the Company) any written consent in lieu of a board meeting proposed to
be 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 other
amount payable hereunder.
	 
	 	b.	 	Any representation or warranty by the Company under or in connection with this Note or
any Loan Document shall prove to have been incorrect in any material respect when made or
deemed made.
	 
	 	c.	 	The Company shall fail to perform or observe any term, covenant or agreement contained
in paragraphs 9, 10 or 11 above.
	 
	 	d.	 	The Company shall fail to perform or observe any other term, covenant or agreement
contained in this Note or any Loan Document on its part to be performed or observed and any
such 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 its
inability to, or shall fail generally or be generally unable to, pay its debts (including
its payrolls) as such debts become due, or shall make a general assignment for the benefit
of creditors; or the Company or any such Subsidiary or any Pledged Entity shall file a
voluntary petition in bankruptcy or a petition or answer seeking reorganization, to effect
a plan or other arrangement with creditors or any other relief under the Bankruptcy Reform
Act of 1978, as amended or recodified from time to time (the “Bankruptcy Code”) or
under any other state or federal law relating to bankruptcy or reorganization granting
relief to
debtors, whether now or hereafter in effect, or shall file an answer admitting the
jurisdiction of the court and the material allegations of any involuntary petition filed
against the




38









 






	 	 	 	Company or any such Subsidiary pursuant to the Bankruptcy Code or any other state
or federal law; or the Company or any such Subsidiary shall be adjudicated a bankrupt, or
shall apply for or consent to the appointment of any custodian, receiver or trustee for all
or any substantial part of the Company’s or any such Subsidiary’s property, or shall take any
action to authorize any of the actions or events set forth above in this paragraph; or an
involuntary petition seeking any of the relief specified in this paragraph shall be filed
against the Company or any such Subsidiary and shall not be dismissed within 30 days; or any
order for relief shall be entered against the Company or any such Subsidiary in any
involuntary proceeding under the Bankruptcy Code or any such other state or federal law
referred to in this paragraph (e).
	 
	 	f.	 	The Company or any of its Subsidiaries shall (i) liquidate, wind up or dissolve (or
suffer any liquidation, winding-up or dissolution), (ii) suspend its operations other than
in the ordinary course of business, or (iii) take any corporate action to authorize any of
the 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 payment
of any principal of, or interest or premium on, any Indebtedness in an aggregate principal
amount outstanding of at least $50,000 when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument relating to such
Indebtedness 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 or
instrument 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 in
such agreement or instrument, if the effect of such failure to perform or observe is to
accelerate, or to permit the acceleration of, the maturity of such Indebtedness; or any
such Indebtedness shall be declared to be due and payable, or required to be prepaid (other
than 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 be
rendered against the Company or any of its Subsidiaries or any Pledged Entity; or any
non-monetary judgment or order shall be rendered against the Company or any such Subsidiary
which has or could result in a Material Adverse Change; and in each case there shall be any
period of 20 consecutive days during which such judgment continues unsatisfied or during
which a stay of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, 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 unpaid
principal amount of this Note and all other Loan Documents, all
interest accrued and unpaid hereon and all other amounts payable
hereunder to be forthwith due and payable, whereupon all unpaid
principal under this Note, all such accrued interest and all such
other amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of
which are hereby expressly waived by the Company, provided that if an
event described in paragraph (e) or (f) above shall occur, the result
which would otherwise occur only upon giving of notice by the Lender
to the Company as specified above shall occur automatically, without
the giving of any such notice; and (ii) whether or not the actions
referred to in clause (i) have been taken, proceed to enforce all
other rights and remedies available to the Lender under applicable law
	 
	14.	 	Remedies Cumulative. No remedy conferred under this Note or any other
Loan Document is intended to be exclusive of any other remedy, and
each and every such remedy shall be cumulative and shall be in
addition to every other remedy now or hereafter existing at law or in
equity or by statute or otherwise. No course of dealing between the
Company and the Lender or any delay on the part of the Lender in
exercising any rights hereunder shall operate as a waiver of any right
of the Lender.
	 
	15.	 	Indemnification. Whether or not the transactions contemplated
hereby shall be consummated, the Company
hereby agrees to indemnify the Lender and
its Affiliates, directors, officers,
employees, agents, counsel and other
advisors (each an “Indemnified Person”)
against, and hold each of them harmless
from, any and all liabilities, obligations,
losses, claims,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever, including the reasonable fees and
disbursements of counsel to an Indemnified Person (including allocated costs of
internal counsel), which may be imposed on, incurred by, or asserted against
any Indemnified Person, (i) by any governmental authority or other third party
in any way relating to or arising out of any of the Loan Documents, the use or
intended use of the proceeds of this Note, or the transactions contemplated
hereby or thereby, (ii) with respect to any investigation, litigation or other
proceeding relating to any of the foregoing, irrespective of whether the
Indemnified 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 the
proceeds of this Note or the transactions contemplated hereby or thereby or any
action 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 a
court of competent jurisdiction to have been caused by the gross negligence or
willful misconduct of Lender.
	 
	16.	 	Amendment Waiver. No amendment or waiver of any
provision of this Note or any
other Loan Document, nor any
consent to any departure by
the Company therefrom, shall
in any event be effective
unless the same shall be in
writing and signed by the
Lender and then such
amendment, waiver or consent
shall be effective only in the
specific instance and for the
specific purpose for which
given.
	 
	17.	 	Successors and Assigns. This Note shall be binding on and inure to the benefit of
and 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 the
domestic laws of the State of New York, without giving effect to any choice of law or conflict
of law provision or rule (whether of the State of New York or any other jurisdiction) that
would 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 the
courts of the State of New York and the Federal courts of the United States sitting in the
Southern District of the State of New York for the purpose of any action or proceeding arising
out 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 and
determined in such courts, (iii) irrevocably waives (to the extent permitted by applicable
law) any objection which it now or hereafter may have to the laying of venue of any such
action or proceeding brought in any of the foregoing courts, and any objection on the ground
that any such action or proceeding in any such court has been brought in an inconvenient
forum, and (iv) agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner permitted by law.
	 
	20.	 	Headings. The headings of the sections and subsections of this Note are inserted
for convenience only and do not constitute a part of this Note.
	 
	21.	 	Severance. Whenever possible, each provision of this Note shall be interpreted in
such 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 or
regulation in any jurisdiction, it shall, as to such jurisdiction, be deemed modified to
conform to the minimum requirements of such law or regulation, or, if for any reason it is not
deemed so modified, it shall be ineffective and invalid only to the extent of such prohibition
or invalidity without affecting the remaining provisions of this Note, or the validity or
effectiveness of such provision in any other jurisdiction.
	 
	22.	 	Expenses. The Company agrees to pay on demand all costs and expenses of the Lender
and its Affiliates, and the fees and disbursements of counsel (including the allocated costs
of internal counsel), in connection with (i) any amendments, modifications or waivers of the
terms 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) any
out-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 Lender
or its Affiliates as a result of any failure by the Company to perform or observe its
obligations contained of this Note or any Loan Document. In addition, the Company agrees to
indemnify the Lender and its Affiliates against and hold them harmless from any and all
present and future stamp, transfer, documentary and other taxes, levies, fees, assessments and
other charges made by any jurisdiction by reason of the execution, delivery, performance and
enforcement of this Note or any other Loan Document.




40









 






	23.	 	Notices. All notices and other communications provided for hereunder shall, unless
otherwise stated herein, be in writing (including by facsimile) and mailed, sent or delivered
to the respective parties hereto at or to the following addresses or facsimile numbers (or at
or to such other address or facsimile number as shall be designated by any party in a written
notice 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 Officer





All 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 deposit
in the mail, first class (or air mail, with respect to communications to be sent to or from the
United 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 stated
above.




	 	 	 	 	 
	 	Call Now, Inc.

 	 
	 	By:  	/s/   Thomas R. Johnson
 	 
	 	Title: 	 President 	 
	 	 	 	 



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