Common use of Events of Default Remedies Clause in Contracts

Events of Default Remedies. (a) Each of the following shall constitute an "Event of Default" under this Note: (i) The failure of Maker to pay when due any part of the Principal Sum, interest or other payment required to be made pursuant to this Note. (ii) The failure of Maker to observe or perform any other obligation set forth in this Note or that certain Stock Purchase Agreement between SWS Group, Inc. ("SWS") and Maker, dated as of December 14, 2001 (the "SPA"); (iii) Any transfer of the Collateral by Maker to SWS as a result of an exercise (A) by SWS of any call right, or (B) by Maker of any put right, pursuant to the terms of the SPA; or (iv) If Maker (a) makes a transfer in fraud of creditors, or makes an assignment for the benefit of creditors, of a substantial part of Maker's property; (b) admits in writing Maker's inability to pay his or her debts as they become due; (c) has a receiver, trustee or custodian appointed for, or take possession of, all or substantially all of Maker's assets, either in a proceeding brought by Maker or in a proceeding brought against Maker and such appointment is not discharged or such possession is not terminated within sixty (60) days after the effective date thereof or he or she consents to or acquiesces in such appointment or possession; (d) files a petition for relief under the United States Bankruptcy Code or any other present or future federal or state insolvency, bankruptcy or similar laws (all of the foregoing hereinafter collectively called "Applicable Bankruptcy Law") or an involuntary petition for relief is filed against Maker under any Applicable Bankruptcy Law and such involuntary petition is not dismissed within sixty (60) days after the filing thereof, or an order for relief naming Maker is entered under any Applicable Bankruptcy Law, or any composition, rearrangement, extension, reorganization or other relief of debtors now or hereafter existing is requested or consented to by Maker; (e) fails to have discharged within a period of thirty (30) days any attachment, sequestration or similar writ levied upon a substantial part of Maker's property; or (f) fails to pay within thirty (30) days any final money judgment against Maker. (b) Upon the occurrence and during the continuance of an Event of Default under this Note, Payee may declare the entire unpaid Principal Sum and accrued and unpaid interest on this Note immediately due and payable, without further notice, demand, or presentment, foreclose any liens or security interests securing all or any part hereof, or exercise any other right or remedy to which Payee may be entitled by agreement, at law, or in equity; provided, however, that no Event of Default shall be deemed to have -------- ------- occurred unless notice of the event giving rise to a potential Event of Default shall have been delivered to Maker and Maker shall have failed to correct or cure such event within fifteen (15) days following his receipt of such notice; provided further, however, that upon any Event of Default ---------------- ------- under Section 3(a)(iii) and (iv) hereof, this Note shall automatically become due and payable without necessity of any notice or action on the part of Payee and without the ability of Maker to cure such event. Payee shall have all rights and remedies available to it under the Uniform Commercial Code as adopted in the State of Texas.

Events of Default Remedies. If any of the following events shall occur and be continuing: (a) Each the Borrower shall fail to pay any principal of any Loan or Reimbursement Obligation when due in accordance with the terms hereof; or the Borrower shall fail to pay any interest on any Loan, Reimbursement Obligation, any fees hereunder or any other amount payable hereunder or under any other Loan Document within five Business Days after any such interest, fees or other amounts becomes due in accordance with the terms hereof; or (b) any representation or warranty made or deemed made by any Loan Party herein or in any other Loan Document or that is contained in any certificate, document or financial or other statement furnished by it at any time under or in connection with this Agreement or any such other Loan Document when made which shall be false or misleading in any material respect when made; or (c) any Loan Party shall default in the observance or performance of any covenant contained in Sections 6.3 (as it relates to the existence of the following Parent or the Borrower), 6.5, 6.6 or 6.9, or Section 7; or (d) any Loan Party shall default in the observance or performance of any other covenant contained in this Agreement or any other Loan Document (other than as provided in paragraphs (a) through (c) of this Section 8), and such default shall continue unremedied for a period of 30 days after the earlier of the date such Loan Party obtains knowledge of such default or the date on which written notice thereof is given to the Borrower by the Administrative Agent; or (e) any Loan Party shall (i) default in making any payment of any principal of or interest on any Indebtedness (including any Contingent Obligation, but excluding the Loans and Non-Recourse Indebtedness) beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created, or (ii) default in the observance or performance of any other agreement or condition relating to any such Indebtedness or Contingent Obligations or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or beneficiary of such Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to cause, with the giving of notice if required, such Indebtedness to become due prior to its stated maturity or (in the case of any such Indebtedness constituting a Contingent Obligation) to become payable; provided, that a default, event or condition described in clause (i), (ii) or (iii) of this paragraph (e) shall not at any time constitute an "Event of Default" under Default unless, at such time, one or more defaults, events or conditions of the type described in clauses (i), (ii) and (iii) of this Note:paragraph (e) shall have occurred and be continuing with respect to Indebtedness or Contingent Obligations the aggregate outstanding principal amount of which is $10,000,000 or more; or (i) The failure of Maker to pay when due Borrower or any part of the Principal Sumother Loan Party shall commence any case, interest proceeding or other payment required to be made pursuant to this Note. (ii) The failure of Maker to observe or perform any other obligation set forth in this Note or that certain Stock Purchase Agreement between SWS Group, Inc. ("SWS") and Maker, dated as of December 14, 2001 (the "SPA"); (iii) Any transfer of the Collateral by Maker to SWS as a result of an exercise action (A) by SWS under any existing or future law of any call rightjurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) by Maker seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any put rightsubstantial part of its assets; or (ii) there shall be commenced against Borrower or any other Loan Party any case, pursuant proceeding or other action of a nature referred to in clause (i) above that (A) results in the terms entry of an order for relief or any such adjudication or appointment or (B) remains undismissed or undischarged for a period of 60 days; or (iii) there shall be commenced against Borrower or any other Loan Party any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets that results in the SPAentry of an order for any such relief that shall not have been vacated, discharged, or stayed or bonded pending appeal for a period of 30 consecutive days following the entry thereof; or or (iv) If Maker (a) makes a transfer Borrower or any other Loan Party shall take any formal action in fraud of creditorsfurtherance of, or makes an assignment for indicating its consent to, approval of, or acquiescence in, any of the benefit of creditorsacts set forth in clause (i), of a substantial part of Maker's property(ii), or (iii) above; or (bv) admits Borrower or any other Loan Party shall generally not, or shall be unable to, or shall admit in writing Maker's its inability to to, pay his or her its debts as they become due; or (cvi) or Borrower or any other Loan Party shall make a general assignment for the benefit of its creditors; or (g) (i) an ERISA Event shall have occurred, (ii) a trustee shall be appointed by a United States district court to administer any Pension Plan, (iii) the PBGC shall institute proceedings to terminate any Pension Plan(s), (iv) any Loan Party or any of their respective ERISA Affiliates shall have been notified by the sponsor of a Multiemployer Plan that it has a receiver, trustee incurred or custodian appointed for, will be assessed Withdrawal Liability to such Multiemployer Plan and such entity does not have reasonable grounds for contesting such Withdrawal Liability or take possession of, all or substantially all of Maker's assets, either is not contesting such Withdrawal Liability in a proceeding brought by Maker timely and appropriate manner or (v) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (v) above, such event or condition, together with all other such events or conditions, if any, which could reasonably be expected to result in a proceeding brought Material Adverse Effect; or (h) one or more final non-appealable judgments or decrees shall be entered against Maker any Loan Party involving in the aggregate a liability of more than $10,000,000, and all such appointment is judgments or decrees shall not discharged have been paid, vacated, discharged, stayed or such possession is not terminated within sixty (60) bonded pending appeal for a period of 30 consecutive days after the effective date thereof or he or she consents to or acquiesces in such appointment or possessionentry thereof; or (di) files a petition any Loan Party shall be found responsible for relief under (A) the United States Bankruptcy Code release by any Loan Party, any of its Subsidiaries or any other present Person of any Hazardous Substance into the environment, or future federal (B) any violation of any Environmental Law or any Federal, state insolvencyor local health or safety law or regulation, bankruptcy or similar laws which, in either case of clause (all of the foregoing hereinafter collectively called "Applicable Bankruptcy Law"A) or an involuntary petition (B), could reasonably be expected to have a Material Adverse Effect; or (j) any guarantee under the Guarantee and Pledge Agreement shall cease, for relief is filed against Maker under any Applicable Bankruptcy Law reason, to be in full force and such involuntary petition is not dismissed within sixty effect (60) days after the filing thereof, or an order for relief naming Maker is entered under any Applicable Bankruptcy Lawother than in accordance with its terms), or any composition, rearrangement, extension, reorganization or other relief Loan Party shall deny in writing that it has any further liability under the Guarantee and Pledge Agreement (excluding release of debtors now or hereafter existing is requested or consented to by Makerany Loan Party in accordance with the Loan Documents); (e) fails to have discharged within a period of thirty (30) days any attachment, sequestration or similar writ levied upon a substantial part of Maker's property; or (f) fails to pay within thirty (30) days any final money judgment against Maker.or (bk) Upon any security interest purported to be created by any Security Document shall cease to be, or shall be asserted by the occurrence Borrower or any other Loan Party not to be, a valid, perfected, first priority (except as otherwise expressly provided in this Agreement or such Security Document) security interest in the securities, assets or properties covered thereby, except to the extent that any such loss of perfection or priority results from the failure of the Administrative Agent to maintain possession of certificates representing securities pledged under the Guarantee and during the continuance Pledge Agreement; or (l) there shall occur any Change of Control of Parent; then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (f) above with respect to Parent or the Borrower, automatically the Commitments shall immediately terminate and the Loans (with accrued interest thereon) and all other amounts owing under this NoteAgreement and the other Loan Documents (including all amounts of L/C Obligations, Payee may declare whether or not the entire unpaid Principal Sum and accrued and unpaid interest on this Note beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) shall immediately become due and payable, without further noticeand (B) if such event is any other Event of Default, either or both of the following actions may be taken: (i) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower declare the Commitments to be terminated forthwith, whereupon the Commitments shall immediately terminate; and (ii) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Loans (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents (including all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) to be due and payable forthwith, whereupon the same shall immediately become due and payable. With respect to all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to this paragraph, the Borrower shall at such time deposit in a cash collateral account opened by the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts held in such cash collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay other obligations of the Borrower hereunder and under the other Loan Documents. After all such Letters of Credit shall have expired or been fully drawn upon, all Reimbursement Obligations shall have been satisfied and all other obligations of the Borrower hereunder and under the other Loan Documents shall have been paid in full, the balance, if any, in such cash collateral account shall be returned to the Borrower (or such other Person as may be lawfully entitled thereto). Except as expressly provided above in this Section, presentment, demand, or presentment, foreclose any liens or security interests securing protest and all or any part hereof, or exercise any other right or remedy to which Payee may be entitled by agreement, at law, or in equity; provided, however, that no Event of Default shall be deemed to have -------- ------- occurred unless notice of the event giving rise to a potential Event of Default shall have been delivered to Maker and Maker shall have failed to correct or cure such event within fifteen (15) days following his receipt of such notice; provided further, however, that upon any Event of Default ---------------- ------- under Section 3(a)(iii) and (iv) hereof, this Note shall automatically become due and payable without necessity notices of any notice or action on kind are hereby expressly waived by the part of Payee and without the ability of Maker to cure such event. Payee shall have all rights and remedies available to it under the Uniform Commercial Code as adopted in the State of TexasBorrower.

Events of Default Remedies. (a) Each The occurrence of any of the following shall constitute an "“Event of Default" under this Note” hereunder: (i) The failure of Maker Borrower fails to pay when due any part of principal or interest payable under the Principal Sum, interest or other payment required Notes in accordance with their terms and such failure to be made pursuant to this Note.pay is not cured within ten (10) days after written notice from Lender; (ii) The failure of Maker Borrower fails to observe or perform any other obligation set forth in term of the Notes, this Note Agreement or that certain Stock Purchase Agreement between SWS Groupany other Loan Document, Inc. ("SWS") and Maker, dated as such failure to observe or perform continues for more than 30 days after such failure shall first become known to any Authorized Officer of December 14, 2001 (the "SPA")Borrower; (iii) Any transfer of the Collateral by Maker to SWS as a result of an exercise Borrower (A) by SWS of intentionally makes any call rightmaterially incorrect or misleading representation, warranty, or certificate to Lender; or (B) by Maker of intentionally makes any put right, pursuant materially incorrect or misleading representation in any financial statement or other information delivered to the terms of the SPA; orLender; (iv) If Maker Borrower becomes insolvent or unable to pay its debts as they become due; (av) makes a transfer in fraud of creditors, or Borrower (A) makes an assignment for the benefit of creditors; (B) consents to the appointment of a custodian, of receiver, or trustee for itself or for a substantial part of Maker's propertyits assets; or (bC) admits in writing Maker's inability to pay his commences or her debts as they become due; (c) has a receiver, trustee or custodian appointed for, or take possession of, all or substantially all of Maker's assets, either in a proceeding brought by Maker or in a proceeding brought against Maker and such appointment is not discharged or such possession is not terminated within sixty (60) days after the effective date thereof or he or she consents to or acquiesces in such appointment or possession; (d) files a petition for relief any proceeding under the United States Bankruptcy Code or any other present or future federal or state insolvencybankruptcy, bankruptcy reorganization, liquidation, insolvency or similar laws of any jurisdiction; (all of the foregoing hereinafter collectively called "Applicable Bankruptcy Law"vi) a custodian, receiver or an involuntary petition trustee is appointed for relief is filed against Maker under any Applicable Bankruptcy Law and such involuntary petition is not dismissed within sixty (60) days after the filing thereofBorrower, or an order for relief naming Maker is entered under any Applicable Bankruptcy Law, or any composition, rearrangement, extension, reorganization or other relief of debtors now or hereafter existing is requested or consented to by Maker; (e) fails to have discharged within a period of thirty (30) days any attachment, sequestration or similar writ levied upon a substantial part of Makerits assets, without its consent and is not removed within 60 days after such appointment; (vii) proceedings are commenced against Borrower under any bankruptcy, reorganization, liquidation, or similar laws of any jurisdiction, and such proceedings remain undismissed for 60 days after commencement; (viii) any judgment is entered against Borrower, or any attachment, levy or garnishment is issued against any property of Borrower, in excess of $25,000, individually or in the aggregate, and which judgment, attachment, levy or garnishment has not been discharged, vacated, bonded or stayed within 60 days of being so entered or after such issuance; (ix) other than with respect to this Agreement or the other Loan Documents, Borrower defaults under any agreement, obligation or instrument between Borrower and Lender, including without limitation the Plan of Merger and any agreements contemplated thereby and such default continues past the applicable cure periods, if any; or (x) the lien on and security interest in the Collateral in favor of Lender pursuant to the Security Agreement ceases to remain a valid lien on and first priority security interest in the Collateral as a result of Borrower's property; action or (f) fails to pay within thirty (30) days any final money judgment against Makerinaction. (b) Upon the occurrence happening of any of the foregoing Events of Default, Lender may, in its sole discretion by notice to Borrower, (x) terminate Lender’s Commitment to make further Advances, and during (y) declare all amounts owing under the continuance of an Event of Default under Notes, this NoteAgreement and all other Loan Documents to be, Payee may declare and the entire unpaid Principal Sum and accrued and unpaid interest on this Note same shall thereupon become, immediately due and payable, payable without further noticepresentment, demand, or presentment, foreclose any liens or security interests securing all or any part hereofprotest, or exercise other notice of any other right or remedy to kind, all of which Payee may be entitled are hereby waived by agreement, at law, or in equityBorrower; provided, however, that no Event in the case of any of the Events of Default shall be deemed to have -------- ------- occurred unless notice of the event giving rise to a potential Event of Default shall have been delivered to Maker and Maker shall have failed to correct or cure such event within fifteen specified in clauses 8.1(a)(iv), (15) days following his receipt of such notice; provided furtherv), however, that upon any Event of Default ---------------- ------- under Section 3(a)(iii(vi) and (ivvii) hereofabove with respect to Borrower, without any notice to Borrower or any other act by Lender, the Commitment of Lender to make further Advances shall thereupon terminate and all amounts owing under the Notes, this Note Agreement and all other Loan Documents shall automatically become immediately due and payable without necessity presentment, demand, protest, or other notice of any notice or action on kind, all of which are hereby waived by Borrower. (c) Upon the part happening of Payee and without any of the ability foregoing Events of Maker to cure such event. Payee Default, Lender shall have all of the rights and remedies available provided by any law or agreement, including the Loan Documents. Borrower shall be liable to it Lender for all reasonable costs and expenses of every kind incurred in the making or collection of amounts due hereunder and under the Uniform Commercial Code as adopted Notes and the other Loan Documents, including, without limitation, reasonable attorneys’ fees and court costs, and for any deficiency remaining after disposition of the Collateral. These costs and expenses shall include, without limitation, any costs or expenses incurred by Lender in the State of Texasany bankruptcy, reorganization, insolvency or other similar proceeding.

Events of Default Remedies. The occurrence of any of the following events shall constitute an Event of Default hereunder with respect to any particular series of Securities: (a) Each default in the due and punctual payment of any installments of interest upon any of the following Securities of that series as and when the same shall constitute an "Event become due and payable and continuance of Default" under this Note:such default for a period of 30 days: or (ib) The default in the due and punctual payment of the principal of (or premium, if any, on) any of the Securities of that series as and when the same shall become due and payable either at maturity, by declaration as authorized by this Indenture, or otherwise; or (c) failure of Maker to pay when due any on the part of the Principal Sum, interest or other payment required to be made pursuant to this Note. (ii) The failure of Maker Corporation duly to observe or perform any other obligation of the covenants or agreements on the part of the Corporation set forth in the Securities of that series or in this Note or that certain Stock Purchase Agreement between SWS Group, Inc. Indenture ("SWS") and Maker, dated as of December 14, 2001 (the "SPA"); (iii) Any transfer of the Collateral by Maker to SWS as a result of an exercise (A) by SWS of any call right, or (B) by Maker of any put right, pursuant to other than those set forth exclusively in the terms of Securities of any series other than that series) continued for a period of sixty days after there has been given, by registered or certified mail, to the SPACorporation by the Trustee, or to the Corporation and the Trustee by the holders of at least thirty-three percent in principal amount of the Securities of that series at the time outstanding, a written notice specifying such failure and requiring the same to be remedied and stating that such notice is a "Notice of Default" hereunder; or (ivd) If Maker (a) makes the entry of a transfer decree or order by a court having jurisdiction in fraud the premises granting relief in respect of creditorsthe Corporation in an involuntary case under the Federal Bankruptcy Code adjudging the Corporation a bankrupt or insolvent, or makes approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Corporation under the Federal Bankruptcy Code or any other applicable Federal or State law, or appointing a receiver, liquidator, custodian, assignee, trustee, sequestrator (or other similar official) of the Corporation, or of any substantial part of the respective properties of either, or ordering the winding up or liquidation of the affairs of either, and the continuance of any such decree or order unstayed and in effect for a period of 120 days; or (e) the institution by the Corporation of proceedings to be adjudicated a bankrupt or insolvent, or the consent by the Corporation to the institution of bankruptcy or insolvency proceedings against it, or the filing by the Corporation of a petition or answer or consent seeking reorganization or relief under the Federal Bankruptcy Code or any other applicable Federal or State law, or the consent by the Corporation to the filing of any such petition or to the appointment of a receiver, liquidator, custodian, assignee, trustee, sequestrator (or other similar official) of the Corporation, or of any substantial part of the respective properties of either, or the making by the Corporation of an assignment for the benefit of creditors, of a substantial part of Maker's property; (b) admits or the admission by the Corporation in writing Maker's of its inability to pay his or her its debts generally as they become due; (c) has a receiver, trustee or custodian appointed for, or take possession ofthe taking of corporate action by the Corporation in furtherance of any such action. In case one or more of the Events of Default specified above shall have occurred and be continuing with respect to any particular series of Securities, all or substantially all then and in each and every such case, unless the principal of Maker's assets, either in a proceeding brought by Maker or in a proceeding brought against Maker and such appointment is not discharged or such possession is not terminated within sixty (60) days after the effective date thereof or he or she consents to or acquiesces in such appointment or possession; (d) files a petition for relief under the United States Bankruptcy Code or any other present or future federal or state insolvency, bankruptcy or similar laws (all of the foregoing hereinafter collectively called "Applicable Bankruptcy Law") Securities of that series shall have already become due and payable, either the Trustee or an involuntary petition for relief is filed against Maker under any Applicable Bankruptcy Law the holders of not less than thirty-three percent in aggregate principal amount of the Securities of that series then outstanding hereunder, by notice in writing to the Corporation (and such involuntary petition is not dismissed within sixty (60) days after to the filing thereofTrustee if given by Securityholders), or an order for relief naming Maker is entered under any Applicable Bankruptcy Law, or any composition, rearrangement, extension, reorganization or other relief of debtors now or hereafter existing is requested or consented to by Maker; (e) fails to have discharged within a period of thirty (30) days any attachment, sequestration or similar writ levied upon a substantial part of Maker's property; or (f) fails to pay within thirty (30) days any final money judgment against Maker. (b) Upon the occurrence and during the continuance of an Event of Default under this Note, Payee may declare the entire unpaid Principal Sum principal or, in the case of Discounted Securities, such amount of principal as may be provided for in such Securities, of all the Securities of that series to be due and accrued payable immediately, and unpaid interest on this Note upon any such declaration the same shall become and shall be immediately due and payable, without further notice, demand, or presentment, foreclose any liens or security interests securing all or any part hereof, or exercise any other right or remedy to which Payee may be entitled by agreement, at law, anything in this Indenture or in equity; providedthe Securities of that series contained to the contrary notwithstanding. This provision, however, is subject to the condition that no Event if, at any time after such principal or such amount of Default shall be deemed to have -------- ------- occurred unless notice of principal, as the event giving rise to a potential Event of Default case may be, shall have been delivered to Maker so declared due and Maker payable, and before any judgment or decree for the payment of the moneys due shall have failed been obtained or entered as hereinafter provided, the Corporation shall pay or shall deposit with the Trustee a sum sufficient to correct or cure such event within fifteen pay all matured installments of interest upon all Securities of that series and the principal of (15and premium, if any, on) days following his receipt any and all Securities of that series which shall have become due otherwise than by acceleration (with interest on overdue installments of interest (to the extent that payment of such notice; provided further, however, that upon any Event of Default ---------------- ------- interest is enforceable under Section 3(a)(iiiapplicable law) and on such principal (ivand premium, if any) hereofat the rate of interest (or, in the case of Discounted Securities, at the Yield to Maturity) borne by such Securities, to the date of such payment or deposit) and the expenses of the Trustee, and any and all defaults under this Note Indenture with respect to the Securities of the series, other than the nonpayment of principal of (and premium, if any) and accrued interest on the Securities of that series which shall automatically have become due and payable without necessity of any notice or action on the part of Payee and without the ability of Maker to cure such event. Payee by acceleration shall have been remedied-then and in every such case the holder of a majority in aggregate principal amount of the Securities of that series then outstanding, by written notice to the Corporation and to the Trustee, may waive all defaults and rescind and annul such declaration and its consequences; but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default, or shall impair any right consequent thereon. In case the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee, then and in every such case the Corporation and the Trustee shall be restored respectively to their several positions and rights hereunder, and all rights, remedies available to it under and powers of the Uniform Commercial Code Corporation and the Trustee shall continue as adopted in the State of Texasthough no such proceeding had been taken.

Events of Default Remedies. (a) Each of the following shall constitute an "event of default by a Seller hereunder (each a “Event of Default" under this Note:”): (i) The failure of Maker either Seller to pay when due any part of repurchase one or more Purchased Loans on the Principal Sum, interest or other payment required to be made pursuant to this Note.applicable Repurchase Date; or (ii) The failure of Maker either Seller or any Servicer to observe deposit any Income received by it in the applicable Collection Account or perform any other obligation set forth the Remittance Account in this Note accordance with the provisions hereof, the related Servicing Agreement or that certain Stock Purchase Agreement between SWS Groupthe related Servicer Acknowledgment, Inc. as applicable, which failure is not remedied within two ("SWS"2) and Maker, dated as Business Days after notice thereof to such Seller from Buyer or such Seller acquires knowledge of December 14, 2001 (the "SPA");such failure; or (iii) Any transfer of the Collateral by Maker to SWS as a result of an exercise (A) by SWS the Transaction Documents shall for any reason not cause, or shall cease to cause, Buyer to be the owner of, or, if recharacterized as a secured financing, a secured party with respect to, the Repurchase Assets specified in Sections 6(a) hereof and the other collateral specified in Section 6(c) hereof free of any call rightadverse claim, or liens and other rights of others (other than as granted in this Agreement); (B) by Maker if a Transaction is recharacterized as a secured financing, the Transaction Documents with respect to any Transaction shall for any reason cease to create a valid first priority security interest in favor of Buyer in the Repurchase Assets specified in Section 6(a) hereof and the other collateral specified in Section 6(c) hereof; or (C) if the Transaction Documents shall cease to be in full force and effect or if the enforceability of any put rightof them is challenged or repudiated by any Relevant Party, pursuant to the terms of the SPAany Servicer or any respective Affiliate thereof; or (iv) If Maker failure of either Seller to make the payments required under Section 4 or Section 5(c)(i) through (avii) makes a transfer in fraud when due; or (v) failure of creditors, either Seller to make any other payment owing to Buyer or makes an assignment for the benefit of creditors, of a substantial part of Maker's property; (b) admits in writing Maker's inability to pay his or her debts as they Repo Agent which has become due; (c) has a receiver, trustee whether by acceleration or custodian appointed forotherwise, or take possession of, all or substantially all of Maker's assets, either in a proceeding brought by Maker or in a proceeding brought against Maker and such appointment is not discharged or such possession is not terminated within sixty (60) days after the effective date thereof or he or she consents to or acquiesces in such appointment or possession; (d) files a petition for relief under the United States Bankruptcy Code terms of this Agreement or any other present Transaction Document which failure is not remedied within the period specified herein or future federal therein, or state insolvencyif no period is specified, bankruptcy three (3) Business Days after notice thereof to such Seller from Repo Agent; provided, however, that Repo Agent shall not be required to provide notice in the event of a failure by such Seller to repurchase any Purchased Loan on the required Repurchase Date therefor; or (vi) breach by either Seller in the due performance or similar laws observance of any term, covenant or agreement contained in Section 10 or Section 11 of this Agreement which has not been cured within five (all 5) Business Days after written notice thereof from Repo Agent to such Seller; provided, however, that with respect to a breach by such Seller of any term, covenant or agreement contained in Section 11(b), (c), (e), (f), (g)(vi)-(ix), (h), (i), (j), (q), (v), (dd), (ff) or (jj), if such default is susceptible of cure but cannot reasonably be cured within such five (5) Business Day period and such Seller shall have commenced to cure such default within such five (5) Business Day period and thereafter diligently and expeditiously proceeds to cure the same, such five (5) Business Day period shall be extended for such time as is reasonably necessary for such Seller, in the exercise of due diligence, to cure such default, and in no event shall such cure period exceed twenty (20) Business Days after the earlier of (i) receipt of notice by such Seller and (ii) actual knowledge of such Seller of such breach or failure; provided, further, that with respect to a breach by such Seller of the covenant contained in Section 11(oo), there shall be no such cure period; or (vii) a Change of Control shall have occurred without Buyer’s prior written consent; or (viii) any representation, warranty or certification made or deemed made by any Relevant Party herein or in any other Transaction Document, excluding any representation, warranty or certification set forth in Exhibit III, shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated and such breach has not been cured within five (5) Business Days following the earlier of (A) receipt of notice by such Relevant Party and (B) knowledge of any Relevant Party unless, with respect to representations in Section 9(a)(iii), (iv), (v), (ix), (xi), (xii), (xiii), (xv), (xviii), (xix), (xx), (xxi), (xxvii), (xxxiii) or (xxxvi), such incorrect or untrue representation cannot be cured within such five (5) Business Day period in which case such cure period shall be extended by an additional twenty (20) Business Days if the applicable Seller is diligently proceeding in good faith to cure such incorrect or untrue representation; provided, however, that there shall be no cure period in respect of any of the foregoing hereinafter collectively called "Applicable Bankruptcy Law"if (y) such Relevant Party shall have made any such representations and warranties with knowledge that they were false or an involuntary petition for relief is filed against Maker under misleading at the time made or (z) any Applicable Bankruptcy Law such representations and such involuntary petition is not dismissed within sixty warranties have been determined by Repo Agent in its sole discretion exercised in good faith to be false or misleading on a regular basis; or (60ix) days after the filing thereofa final judgment by any court, or an order for relief naming Maker is entered under any Applicable Bankruptcy Law, or any composition, rearrangement, extension, reorganization administrative tribunal or other relief body having jurisdiction for the payment of debtors now money in an amount greater than $1,000,000 shall have been rendered against any Relevant Party and remains undischarged or hereafter existing is requested or consented to by Maker; (e) fails to have discharged within unpaid for a period of thirty (30) days days, during which period execution of such judgment is not effectively stayed; or (x) Any Relevant Party shall have defaulted or failed to perform under any attachmentnote, sequestration indenture, loan agreement, guaranty, swap agreement or any other contract, agreement or transaction (including, without limitation, any repurchase agreement, loan and security agreement or similar writ levied upon credit facility or agreement for borrowed funds) to which it is a substantial part party and which provides for borrowed funds or has a notional amount, as applicable, in an amount equal to or greater than $1,000,000; provided, however, that any such default, failure to perform or breach shall not constitute an Event of Maker's propertyDefault if the applicable Relevant Party, cures such default, failure to perform or breach, as the case may be, within the grace period, if any, provided under the applicable agreement; or (xi) Guarantor breaches a Guarantor Financial Covenant; or (xii) if any Relevant Party shall breach or fail to perform any of the terms, covenants, obligations or conditions of this Agreement or any other Transaction Document, other than as specifically otherwise referred to in this definition of “Event of Default”, and such breach or failure to perform is not remedied within five (f5) fails Business Days following the earlier of (A) receipt of notice by such Relevant Party and (B) knowledge of such Relevant Party; provided, however, that if such default is susceptible of cure but cannot reasonably be cured within such five (5) Business Day period and such Relevant Party shall have commenced to pay cure such default within such five (5) Business Day period and thereafter diligently and expeditiously proceeds in good faith to cure the same, such five (5) Business Day period shall be extended for such time as is reasonably necessary for such Relevant Party, in the exercise of due diligence and good faith, to cure such default, provided, further, that in no event shall such extended cure period exceed twenty (20) Business Days from such Relevant Party’s receipt of Repo Agent’s notice of such breach or failure to perform; or (xiii) an Act of Insolvency shall have occurred with respect to any Relevant Party; or (xiv) Any Relevant Party or any of its respective Operating Affiliates shall default under, or fail to perform as required under, or shall otherwise breach the terms of any repurchase agreement, loan and security agreement or similar credit facility or agreement for borrowed funds or any agreement requiring the payment of money between such Relevant Party, on the one hand, and Buyer or any of Buyer’s Affiliates on the other; or (xv) any of the representations and warranties of Guarantor in any Financial Covenant Compliance Certificate shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated; or (xvi) any assignment or attempted assignment by any Relevant Party of this Agreement or any other Transaction Document or any rights hereunder or thereunder without first obtaining the express written consent of Repo Agent, or the granting by any Relevant Party of any security interest, lien or other encumbrances on any Purchased Loans or any other Repurchase Assets to any Person other than Buyer or nominee approved by Buyer; or (xvii) any Relevant Party shall admit its inability to, or its intention not to, perform any of its obligations hereunder or under any other Transaction Document, or Guarantor shall admit its inability to, or its intention not to, perform any of its obligations under the Guaranty Agreement; or (xviii) any Relevant Party’s audited annual consolidated financial statements shall be qualified or limited by reference to the status of any Relevant Party as a “going concern” or a reference of similar import; or (xix) any Relevant Party shall have become an “investment company”, or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended; or (xx) neither Seller has effected a transfer of servicing with respect to the applicable Purchased Loans to a successor servicer within thirty (30) days any final money judgment against Makerof an uncured Servicer Termination Event; or (xxi) in the event the funds on deposit in the applicable Collection Account maintained by the applicable Servicer are not sufficient to pay Servicing Expenses (as such term is defined in each Servicing Agreement) (including, without limitation, for taxes, homeowners’ association fees, dues and assessments, insurance and property preservation, but excluding principal and interest on such Purchased Loan), the applicable Seller fails to cause the necessary funds to be deposited in such Collection Account (or, in the event such Servicer advanced such funds, fails to reimburse such Servicer) in accordance with the related Servicing Agreement and such Seller’s failure continues for thirty (30) days after such Seller obtains knowledge or receives notice of such insufficiency. (b) Upon the occurrence and during the continuance of If an Event of Default under this Noteshall occur and be continuing, Payee may declare the entire unpaid Principal Sum following rights and accrued and unpaid interest remedies shall be available to Repo Agent: (i) At the option of Majority Buyer (or Repo Agent on this Note immediately due and payableits behalf), without further notice, demand, or presentment, foreclose any liens or security interests securing all or any part hereof, or exercise any other right or remedy exercised by written notice to Sellers (which Payee may be entitled by agreement, at law, or in equity; provided, however, that no Event of Default option shall be deemed to have -------- ------- occurred unless been exercised, even if no notice is given, immediately upon the occurrence of an Act of Insolvency with respect to any Relevant Party), the event giving rise Repurchase Date for each Transaction hereunder shall, if it has not already occurred, be deemed immediately to a potential Event of Default shall occur (the date on which such option is exercised or deemed to have been delivered exercised being referred to Maker hereinafter as the “Accelerated Repurchase Date”) (and Maker any Transaction for which the related Purchase Date has not yet occurred shall be canceled). (ii) If Majority Buyer (or Repo Agent on its behalf) exercises or is deemed to have failed exercised the option referred to correct or cure such event within fifteen in Section 13(b)(i): (15A) days following his receipt of such notice; provided further, however, that upon any Event of Default ---------------- ------- under Section 3(a)(iii) A Seller’s obligations hereunder to repurchase all Purchased Loans and (iv) hereof, this Note to pay all Obligations hereunder shall automatically thereupon become immediately due and payable on and as of the Accelerated Repurchase Date without necessity presentment, demand, protest or notice of any notice kind, all of which are hereby expressly waived, anything contained herein or action on in the part of Payee other Transaction Documents to the contrary notwithstanding, and without the ability of Maker to cure such event. Payee Majority Buyer may exercise and shall have any and all rights and remedies available to it under applicable law, this Agreement and the Uniform Commercial Code other Transaction Documents or otherwise and may take any such action and exercise any such power as adopted it may elect to enforce its rights and remedies under applicable law, this Agreement and the other Transaction Documents, including with respect to the Purchased Loans and the other Repurchase Assets; and all Income deposited in any Collection Account, and all Income deposited in the State Remittance Account, in each case including any such Income paid after such exercise or deemed exercise, shall be remitted to and retained by ▇▇▇▇▇ and applied to the aggregate Repurchase Price and any other amounts owing by a Seller hereunder or under any other Transaction Document. Such Seller shall immediately deliver to Majority Buyer or its designee any and all original papers, records and files relating to the Repurchase Assets subject to such Transactions then in such Seller’s possession and/or control; and all right, title and interest in and entitlement to such Repurchase Assets and any Servicing Rights of Texassuch Seller with respect thereto shall be deemed transferred to Majority Buyer; and (B) the Repurchase Price with respect to each Transaction (determined as of the Accelerated Repurchase Date) shall include the accrued and unpaid Price Differential with respect to each Purchased Loan accrued at the Pricing Rate applicable upon an Event of Default for such Transaction; and (C) Custodian shall, upon the request of Majority Buyer (with simultaneous copy of such request to Sellers), deliver to Majority Buyer all instruments, certificates and other documents then held by Custodian relating to the Purchased Loans. (iii) Majority Buyer (or Repo Agent on its behalf) also shall have the right to (A) sell, on or following the Business Day following the date on which the Repurchase Price became due and payable pursuant to this Section 13(b) without notice or demand of any kind, to the extent permitted by applicable law, at a public or private sale and at such price or prices as Majority Buyer may reasonably deem satisfactory any or all Purchased Loans and any and all other Repurchase Assets or (B) to the extent permitted by applicable law, in its sole discretion, exercised in good faith, elect, in lieu of selling all or a portion of such Purchased Loans and the other Repurchase Assets, to give Sellers credit for such Purchased Loans and the other Repurchase Assets in an amount equal to the Market Value of the Purchased Loans and the other Repurchase Assets, as determined by Majority Buyer in its sole discretion, against the aggregate unpaid Repurchase Price and any other amounts owing by Sellers hereunder. To the extent permitted by applicable law, Sellers shall remain liable to Buyer for any amounts that remain owing thereto following a sale and/or credit under the preceding sentence. The proceeds of any disposition of Purchased Loans and other Repurchase Assets effected pursuant to this Section 13(b)(iii) shall be applied (v) first, to the costs and expenses (including attorneys’ fees and expenses) incurred by Buyer in connection with a Seller’s default, (w) second, to the costs of cover and/or hedging transactions, if any, (x) third, to the Repurchase Price,

Events of Default Remedies. (a) Each of the following shall constitute an "Event of Default" under this Note: Upon (i) The the failure of Maker the applicable Seller to pay when due comply with or perform any part of the Principal Sum, interest agreement or other payment required obligation to be made pursuant complied with or performed by such Seller in accordance with this Agreement, which failure has not been cured within five Business Days (or two Business Days for a failure to this Note. deliver Distributions) of such Seller having been so notified by Buyer; (ii) The failure of Maker a representation made or repeated or deemed to observe have been made or perform any other obligation set forth repeated by such Seller in this Note Agreement proves to have been incorrect or that certain Stock Purchase Agreement between SWS Group, Inc. ("SWS") and Maker, dated as of December 14, 2001 (the "SPA"); misleading in any material respect; (iii) Any transfer of the Collateral by Maker to SWS as a result of an exercise such Seller (A1) by SWS of any call right, becomes insolvent or (B) by Maker of any put right, pursuant to the terms of the SPA; or (iv) If Maker (a) makes a transfer in fraud of creditors, or makes an assignment for the benefit of creditors, of a substantial part of Maker's property; (b) admits in writing Maker's inability is unable to pay his or her its debts as they become due; (c2) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (3) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof; (4) has a resolution passed for its winding-up, official management or liquidation; (5) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee trustee, custodian or custodian appointed for, other similar official for it or take possession of, for all or substantially all of Maker's its assets, either in a proceeding brought by Maker or in a proceeding brought against Maker and such appointment is not discharged or such possession is not terminated within sixty (60) days after the effective date thereof or he or she consents to or acquiesces in such appointment or possession; (d6) files has a petition for relief under secured party (other than the United States Bankruptcy Code Buyer) take possession of all or any other present substantially all its assets or future federal or state insolvencyhas a distress, bankruptcy or similar laws (all of the foregoing hereinafter collectively called "Applicable Bankruptcy Law") or an involuntary petition for relief is filed against Maker under any Applicable Bankruptcy Law and such involuntary petition is not dismissed within sixty (60) days after the filing thereofexecution, or an order for relief naming Maker is entered under any Applicable Bankruptcy Law, or any composition, rearrangement, extension, reorganization or other relief of debtors now or hereafter existing is requested or consented to by Maker; (e) fails to have discharged within a period of thirty (30) days any attachment, sequestration or similar writ levied upon a substantial part other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter; (7) causes or is subject to any event with respect to it which, under the applicable laws of Maker's propertyany jurisdiction, has an analogous effect to any of the events specified in clauses (1) through (6); or (f8) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts; or (iv) fails to pay within thirty such Seller disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, its pledge of Collateral or its other obligations hereunder (30) days any final money judgment against Maker. (b) Upon of the occurrence and during the continuance of foregoing, an “Event of Default Default”), Buyer may exercise (or cause its agents or co-agents, if any, to exercise) any or all of the remedies available to it (or to such agents or co-agents) under this Note, Payee may declare Agreement or applicable law. Without limiting the entire unpaid Principal Sum and accrued and unpaid interest on this Note immediately due and payable, without further notice, demand, or presentment, foreclose any liens or security interests securing all or any part hereof, or exercise any other right or remedy to which Payee may be entitled by agreement, at law, or in equity; provided, however, that no Event of Default shall be deemed to have -------- ------- occurred unless notice generality of the event giving rise to a potential foregoing, if an Event of Default shall have been delivered occurred and be continuing, Buyer may exercise, in addition to Maker and Maker shall have failed to correct or cure such event within fifteen (15) days following his receipt of such notice; provided further, however, that upon any Event of Default ---------------- ------- under Section 3(a)(iii) and (iv) hereof, this Note shall automatically become due and payable without necessity of any notice or action on the part of Payee and without the ability of Maker to cure such event. Payee shall have all other rights and remedies available to it given by law or this Agreement, all the rights and remedies of a secured party under the Uniform Commercial Code as adopted UCC (whether or not in effect in the State of Texasjurisdiction where such rights are exercised and whether or not the UCC applies to the affected Collateral) with respect to any Collateral. The applicable Seller agrees that it will execute and deliver such documents and take such other action as Buyer deems necessary or advisable in order that any such sale or other disposition may be made in compliance with law.

Events of Default Remedies. (a) Each of the following shall constitute an "event of default by a Seller hereunder (each a “Event of Default" under this Note:”): (i) The failure of Maker either Seller to pay when due any part of repurchase one or more Purchased Loans on the Principal Sum, interest or other payment required to be made pursuant to this Note.applicable Repurchase Date; or (ii) The failure of Maker either Seller or any Servicer to observe deposit any Income received by it in the applicable Collection Account or perform any other obligation set forth the Remittance Account in this Note accordance with the provisions hereof, the related Servicing Agreement or that certain Stock Purchase Agreement between SWS Groupthe related Servicer Acknowledgment, Inc. as applicable, which failure is not remedied within two ("SWS"2) and Maker, dated as Business Days after notice thereof to such Seller from Buyer or such Seller acquires knowledge of December 14, 2001 (the "SPA");such failure; or (iii) Any transfer of the Collateral by Maker to SWS as a result of an exercise (A) by SWS the Transaction Documents shall for any reason not cause, or shall cease to cause, Buyer to be the owner of, or, if recharacterized as a secured financing, a secured party with respect to, the Repurchase Assets specified in Sections 6(a) hereof and the other collateral specified in Section 6(c) hereof free of any call rightadverse claim, or liens and other rights of others (other than as granted in this Agreement); (B) by Maker if a Transaction is recharacterized as a secured financing, the Transaction Documents with respect to any Transaction shall for any reason cease to create a valid first priority security interest in favor of Buyer in the Repurchase Assets specified in Section 6(a) hereof and the other collateral specified in Section 6(c) hereof; or (C) if the Transaction Documents shall cease to be in full force and effect or if the enforceability of any put rightof them is challenged or repudiated by any Relevant Party, pursuant to the terms of the SPAany Servicer or any respective Affiliate thereof; or (iv) If Maker failure of either Seller to make the payments required under Section 4 or Section 5(c)(i) through (avii) makes a transfer in fraud when due; or (v) failure of creditors, either Seller to make any other payment owing to Buyer or makes an assignment for the benefit of creditors, of a substantial part of Maker's property; (b) admits in writing Maker's inability to pay his or her debts as they Repo Agent which has become due; (c) has a receiver, trustee whether by acceleration or custodian appointed forotherwise, or take possession of, all or substantially all of Maker's assets, either in a proceeding brought by Maker or in a proceeding brought against Maker and such appointment is not discharged or such possession is not terminated within sixty (60) days after the effective date thereof or he or she consents to or acquiesces in such appointment or possession; (d) files a petition for relief under the United States Bankruptcy Code terms of this Agreement or any other present Transaction Document which failure is not remedied within the period specified herein or future federal therein, or state insolvencyif no period is specified, bankruptcy three (3) Business Days after notice thereof to such Seller from Repo Agent; provided, however, that Repo Agent shall not be required to provide notice in the event of a failure by such Seller to repurchase any Purchased Loan on the required Repurchase Date therefor; or (vi) breach by either Seller in the due performance or similar laws observance of any term, covenant or agreement contained in Section 10 or Section 11 of this Agreement which has not been cured within five (all 5) Business Days after written notice thereof from Repo Agent to such Seller; provided, however, that with respect to a breach by such Seller of any term, covenant or agreement contained in Section 11(b), (c), (e), (f), (g)(vi)-(ix), (h), (i), (j), (q), (v), (dd), (ff) or (jj), if such default is susceptible of cure but cannot reasonably be cured within such five (5) Business Day period and such Seller shall have commenced to cure such default within such five (5) Business Day period and thereafter diligently and expeditiously proceeds to cure the same, such five (5) Business Day period shall be extended for such time as is reasonably necessary for such Seller, in the exercise of due diligence, to cure such default, and in no event shall such cure period exceed twenty (20) Business Days after the earlier of (i) receipt of notice by such Seller and (ii) actual knowledge of such Seller of such breach or failure; provided, further, that with respect to a breach by such Seller of the covenant contained in Section 11(oo), there shall be no such cure period; or (vii) a Change of Control shall have occurred without Buyer’s prior written consent; or (viii) any representation, warranty or certification made or deemed made by any Relevant Party herein or in any other Transaction Document, excluding any representation, warranty or certification set forth in Exhibit III, shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated and such breach has not been cured within five (5) Business Days following the earlier of (A) receipt of notice by such Relevant Party and (B) knowledge of any Relevant Party unless, with respect to representations in Section 9(a)(iii), (iv), (v), (ix), (xi), (xii), (xiii), (xv), (xviii), (xix), (xx), (xxi), (xxvii), (xxxiii) or (xxxvi), such incorrect or untrue representation cannot be cured within such five (5) Business Day period in which case such cure period shall be extended by an additional twenty (20) Business Days if the applicable Seller is diligently proceeding in good faith to cure such incorrect or untrue representation; provided, however, that there shall be no cure period in respect of any of the foregoing hereinafter collectively called "Applicable Bankruptcy Law"if (y) such Relevant Party shall have made any such representations and warranties with knowledge that they were false or an involuntary petition for relief is filed against Maker under misleading at the time made or (z) any Applicable Bankruptcy Law such representations and such involuntary petition is not dismissed within sixty warranties have been determined by Repo Agent in its sole discretion exercised in good faith to be false or misleading on a regular basis; or (60ix) days after the filing thereofa final judgment by any court, or an order for relief naming Maker is entered under any Applicable Bankruptcy Law, or any composition, rearrangement, extension, reorganization administrative tribunal or other relief body having jurisdiction for the payment of debtors now money in an amount greater than $1,000,000 shall have been rendered against any Relevant Party and remains undischarged or hereafter existing is requested or consented to by Maker; (e) fails to have discharged within unpaid for a period of thirty (30) days days, during which period execution of such judgment is not effectively stayed; or (x) Any Relevant Party shall have defaulted or failed to perform under any attachmentnote, sequestration indenture, loan agreement, guaranty, swap agreement or any other contract, agreement or transaction (including, without limitation, any repurchase agreement, loan and security agreement or similar writ levied upon credit facility or agreement for borrowed funds) to which it is a substantial part party and which provides for borrowed funds or has a notional amount, as applicable, in an amount equal to or greater than $1,000,000; provided, however, that any such default, failure to perform or breach shall not constitute an Event of Maker's propertyDefault if the applicable Relevant Party, cures such default, failure to perform or breach, as the case may be, within the grace period, if any, provided under the applicable agreement; or (xi) Guarantor breaches a Guarantor Financial Covenant; or (xii) if any Relevant Party shall breach or fail to perform any of the terms, covenants, obligations or conditions of this Agreement or any other Transaction Document, other than as specifically otherwise referred to in this definition of “Event of Default”, and such breach or failure to perform is not remedied within five (f5) fails Business Days following the earlier of (A) receipt of notice by such Relevant Party and (B) knowledge of such Relevant Party; provided, however, that if such default is susceptible of cure but cannot reasonably be cured within such five (5) Business Day period and such Relevant Party shall have commenced to pay cure such default within such five (5) Business Day period and thereafter diligently and expeditiously proceeds in good faith to cure the same, such five (5) Business Day period shall be extended for such time as is reasonably necessary for such Relevant Party, in the exercise of due diligence and good faith, to cure such default, provided, further, that in no event shall such extended cure period exceed twenty (20) Business Days from such Relevant Party’s receipt of Repo Agent’s notice of such breach or failure to perform; or (xiii) an Act of Insolvency shall have occurred with respect to any Relevant Party; or (xiv) Any Relevant Party or any of its respective Operating Affiliates shall default under, or fail to perform as required under, or shall otherwise breach the terms of any repurchase agreement, loan and security agreement or similar credit facility or agreement for borrowed funds or any agreement requiring the payment of money between such Relevant Party, on the one hand, and Buyer or any of Buyer’s Affiliates on the other; or (xv) any of the representations and warranties of Guarantor in any Financial Covenant Compliance Certificate shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated; or (xvi) any assignment or attempted assignment by any Relevant Party of this Agreement or any other Transaction Document or any rights hereunder or thereunder without first obtaining the express written consent of Repo Agent, or the granting by any Relevant Party of any security interest, lien or other encumbrances on any Purchased Loans or any other Repurchase Assets to any Person other than Buyer or nominee approved by Buyer; or (xvii) any Relevant Party shall admit its inability to, or its intention not to, perform any of its obligations hereunder or under any other Transaction Document, or Guarantor shall admit its inability to, or its intention not to, perform any of its obligations under the Guaranty Agreement; or (xviii) any Relevant Party’s audited annual consolidated financial statements shall be qualified or limited by reference to the status of any Relevant Party as a “going concern” or a reference of similar import; or (xix) any Relevant Party shall have become an “investment company”, or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended; or (xx) neither Seller has effected a transfer of servicing with respect to the applicable Purchased Loans to a successor servicer within thirty (30) days any final money judgment against Makerof an uncured Servicer Termination Event; or (xxi) in the event the funds on deposit in the applicable Collection Account maintained by the applicable Servicer are not sufficient to pay Servicing Expenses (as such term is defined in each Servicing Agreement) (including, without limitation, for taxes, homeowners’ association fees, dues and assessments, insurance and property preservation, but excluding principal and interest on such Purchased Loan), the applicable Seller fails to cause the necessary funds to be deposited in such Collection Account (or, in the event such Servicer advanced such funds, fails to reimburse such Servicer) in accordance with the related Servicing Agreement and such Seller’s failure continues for thirty (30) days after such Seller obtains knowledge or receives notice of such insufficiency; or (xxii) the occurrence and continuance of a Level 2 Platform Delinquency Event. (b) Upon the occurrence and during the continuance of If an Event of Default under this Noteshall occur and be continuing, Payee may declare the entire unpaid Principal Sum following rights and accrued and unpaid interest remedies shall be available to Repo Agent: (i) At the option of Majority Buyer (or Repo Agent on this Note immediately due and payableits behalf), without further notice, demand, or presentment, foreclose any liens or security interests securing all or any part hereof, or exercise any other right or remedy exercised by written notice to Sellers (which Payee may be entitled by agreement, at law, or in equity; provided, however, that no Event of Default option shall be deemed to have -------- ------- occurred unless been exercised, even if no notice is given, immediately upon the occurrence of an Act of Insolvency with respect to any Relevant Party), the event giving rise Repurchase Date for each Transaction hereunder shall, if it has not already occurred, be deemed immediately to a potential Event of Default shall occur (the date on which such option is exercised or deemed to have been delivered exercised being referred to Maker hereinafter as the “Accelerated Repurchase Date”) (and Maker any Transaction for which the related Purchase Date has not yet occurred shall be canceled). (ii) If Majority Buyer (or Repo Agent on its behalf) exercises or is deemed to have failed exercised the option referred to correct or cure such event within fifteen in Section 13(b)(i): (15A) days following his receipt of such notice; provided further, however, that upon any Event of Default ---------------- ------- under Section 3(a)(iii) A Seller’s obligations hereunder to repurchase all Purchased Loans and (iv) hereof, this Note to pay all Obligations hereunder shall automatically thereupon become immediately due and payable on and as of the Accelerated Repurchase Date without necessity presentment, demand, protest or notice of any notice kind, all of which are hereby expressly waived, anything contained herein or action on in the part of Payee other Transaction Documents to the contrary notwithstanding, and without the ability of Maker to cure such event. Payee Majority Buyer may exercise and shall have any and all rights and remedies available to it under applicable law, this Agreement and the Uniform Commercial Code other Transaction Documents or otherwise and may take any such action and exercise any such power as adopted it may elect to enforce its rights and remedies under applicable law, this Agreement and the other Transaction Documents, including with respect to the Purchased Loans and the other Repurchase Assets; and all Income deposited in any Collection Account, and all Income deposited in the State Remittance Account, in each case including any such Income paid after such exercise or deemed exercise, shall be remitted to and retained by Buyer and applied to the aggregate Repurchase Price and any other amounts owing by a Seller hereunder or under any other Transaction Document. Such Seller shall immediately deliver to Majority Buyer or its designee any and all original papers, records and files relating to the Repurchase Assets subject to such Transactions then in such Seller’s possession and/or control; and all right, title and interest in and entitlement to such Repurchase Assets and any Servicing Rights of Texassuch Seller with respect thereto shall be deemed transferred to Majority Buyer; and (B) the Repurchase Price with respect to each Transaction (determined as of the Accelerated Repurchase Date) shall include the accrued and unpaid Price Differential with respect to each Purchased Loan accrued at the Pricing Rate applicable upon an Event of Default for such Transaction; and (C) Custodian shall, upon the request of Majority Buyer (with simultaneous copy of such request to Sellers), deliver to Majority Buyer all instruments, certificates and other documents then held by Custodian relating to the Purchased Loans. (iii) Majority Buyer (or Repo Agent on its behalf) also shall have the right to (A) sell, on or following the Business Day following the date on which the Repurchase Price became due and payable pursuant to this Section 13(b) without notice or demand of any kind, to the extent permitted by applicable law, at a public or private sale and at such price or prices as Majority Buyer may reasonably deem satisfactory any or all Purchased Loans and any and all other Repurchase Assets or (B) to the extent permitted by applicable law, in its sole discretion, exercised in good faith, elect, in lieu of selling all or a portion of such Purchased Loans and the other Repurchase Assets, to give Sellers credit for such Purchased Loans and the other Repurchase Assets in an amount equal to the Market Value of the Purchased Loans and the other Repurchase Assets, as determined by Majority Buyer in its sole discretion, against the aggregate unpaid Repurchase Price and any other amounts owing by Sellers hereunder. To the extent permitted by applicable law, Sellers shall remain liable to Buyer for any amounts that remain owing thereto following a sale and/or credit under the preceding sentence. The proceeds of any disposition of Purchased Loans and other Repurchase Assets effected pursuant to this Section 13(b)(iii) shall be applied (v) first, to the costs and expenses (including attorneys’ fees and expenses) incurred by Buyer in connection with a Seller’s default, (w) second, to the costs of cover and/or hedging transactions, if any, (x) third, to the Repurchase Price, (y) fourth, to any other outstanding Obligation owed by a Seller to Buyer or its Affiliates pursuant to the Transaction Documents (including interest which would be payable as post-petition interest in connection with any bankruptcy or similar proceeding) irrespective of whether such obligations are direct or indirect, absolute or contingent, matured or unmatured, and (z) the balance, if any, to Sellers. In the event that Buyer shall not have received repayment in full of the Aggregate Repurchase Price and the other Obligations of Sellers under the Transaction Documents following its liquidation of the Purchased Loans and the other Repurchase Assets, Majority Buyer may, in its sole and absolute discretion, pursue each Seller and Guarantor (to the extent provided in the Guaranty Agreement ) for all or any part of any deficiency. (iv) The parties recognize that it may not be possible to purchase or sell all of the Purchased Loans and the other Repurchase Assets on a particular Business Day, or in a transaction with the same purchaser, or in the same manner because the market for such Purchased Loans and any other Repurchase Assets may not be liquid. In view of the nature of the Purchased Loans and the other Repurchase Assets, the parties agree that, to the extent permitted by applicable law, liquidation of

Events of Default Remedies. (a) Each of the following shall constitute an "Event of Default" under this Note: Upon (i) The the failure of Maker Seller to pay when due comply with or perform any part of the Principal Sum, interest agreement or other payment required obligation to be made pursuant complied with or performed by Seller in accordance with this Agreement, which failure has not been cured within five Business Days (or two Business Days for a failure to this Note. deliver Distributions) of Seller having been so notified by Buyer; (ii) The failure of Maker a representation made or repeated or deemed to observe have been made or perform any other obligation set forth repeated by Seller in this Note Agreement proves to have been incorrect or that certain Stock Purchase Agreement between SWS Group, Inc. ("SWS") and Maker, dated as of December 14, 2001 (the "SPA"); misleading in any material respect; (iii) Any transfer of the Collateral by Maker to SWS as a result of an exercise Seller (A1) by SWS of any call right, becomes insolvent or (B) by Maker of any put right, pursuant to the terms of the SPA; or (iv) If Maker (a) makes a transfer in fraud of creditors, or makes an assignment for the benefit of creditors, of a substantial part of Maker's property; (b) admits in writing Maker's inability is unable to pay his or her its debts as they become due; (c2) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (3) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof; (4) has a resolution passed for its winding-up, official management or liquidation; (5) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee trustee, custodian or custodian appointed for, other similar official for it or take possession of, for all or substantially all of Maker's its assets, either in a proceeding brought by Maker or in a proceeding brought against Maker and such appointment is not discharged or such possession is not terminated within sixty (60) days after the effective date thereof or he or she consents to or acquiesces in such appointment or possession; (d6) files has a petition for relief under secured party (other than the United States Bankruptcy Code Buyer) take possession of all or any other present substantially all its assets or future federal or state insolvencyhas a distress, bankruptcy or similar laws (all of the foregoing hereinafter collectively called "Applicable Bankruptcy Law") or an involuntary petition for relief is filed against Maker under any Applicable Bankruptcy Law and such involuntary petition is not dismissed within sixty (60) days after the filing thereofexecution, or an order for relief naming Maker is entered under any Applicable Bankruptcy Law, or any composition, rearrangement, extension, reorganization or other relief of debtors now or hereafter existing is requested or consented to by Maker; (e) fails to have discharged within a period of thirty (30) days any attachment, sequestration or similar writ levied upon a substantial part other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter; (7) causes or is subject to any event with respect to it which, under the applicable laws of Maker's propertyany jurisdiction, has an analogous effect to any of the events specified in clauses (1) through (6); or (f8) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts; or (iv) fails to pay within thirty Seller disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, its pledge of Collateral or its other obligations hereunder (30) days any final money judgment against Maker. (b) Upon of the occurrence and during the continuance of foregoing, an “Event of Default Default”), Buyer may exercise (or cause its agents or co-agents, if any, to exercise) any or all of the remedies available to it (or to such agents or co-agents) under this Note, Payee may declare Agreement or applicable law. Without limiting the entire unpaid Principal Sum and accrued and unpaid interest on this Note immediately due and payable, without further notice, demand, or presentment, foreclose any liens or security interests securing all or any part hereof, or exercise any other right or remedy to which Payee may be entitled by agreement, at law, or in equity; provided, however, that no Event of Default shall be deemed to have -------- ------- occurred unless notice generality of the event giving rise to a potential foregoing, if an Event of Default shall have been delivered occurred and be continuing, Buyer may exercise, in addition to Maker and Maker shall have failed to correct or cure such event within fifteen (15) days following his receipt of such notice; provided further, however, that upon any Event of Default ---------------- ------- under Section 3(a)(iii) and (iv) hereof, this Note shall automatically become due and payable without necessity of any notice or action on the part of Payee and without the ability of Maker to cure such event. Payee shall have all other rights and remedies available to it given by law or this Agreement, all the rights and remedies of a secured party under the Uniform Commercial Code as adopted UCC (whether or not in effect in the State of Texasjurisdiction where such rights are exercised and whether or not the UCC applies to the affected Collateral) with respect to any Collateral. Seller agrees that it will execute and deliver such documents and take such other action as Buyer deems necessary or advisable in order that any such sale or other disposition may be made in compliance with law.

Events of Default Remedies. (a) Each If any of the following shall constitute events (each such event herein termed an "Event of Default" under ") shall happen, that is to say: 7.1.1. the Borrower shall fail to make any payment of Principal Amount of this NoteNote when due, whether at maturity by acceleration or otherwise; 7.1.2. the Borrower shall fail to perform or observe any of the other covenants, agreements or provisions set forth herein or in the Option Agreement, Stock Purchase Agreement or Pledge Agreement; or 7.1.3. The Borrower shall: (a) commence a voluntary case under Title 11 of the United States Code as from time to time in effect, or authorize, by appropriate proceedings of its board of managers or other governing body, the commencement of such a voluntary case; (b) have filed against it a petition under said Title 11 which shall not have been dismissed within 30 days after the date on which said petition is filed, or file an answer or other pleading within said 30-day period admitting or failing to deny the material allegations of such a petition, or seeking, consenting to or acquiescing in the relief therein provided, or fail to controvert timely the material allegations of any such petition; (c) have entered against it an order for relief in any involuntary case commenced under said Title 11; (d) seek relief as a debtor under any applicable law, other than said Title 11, of any jurisdiction relating to the liquidation or reorganization of debtors or to the modification or alteration of the rights of creditors, or consent to or acquiesce in such relief; (e) have entered against it any order by a court of competent jurisdiction (i) The failure of Maker to pay when due any part of the Principal Sum, interest or other payment required finding it to be made pursuant to this Note. bankrupt or insolvent, (ii) The failure ordering or approving its liquidation, reorganization or any modification or alteration of Maker to observe the rights of its creditors or perform any other obligation set forth in this Note or that certain Stock Purchase Agreement between SWS Group, Inc. ("SWS") and Maker, dated as of December 14, 2001 (the "SPA"); (iii) Any transfer of the Collateral by Maker to SWS as a result of an exercise (A) by SWS of any call rightassuming custody of, or (B) by Maker appointing a receiver or other custodian for, all or a substantial part of any put right, pursuant to the terms of the SPAits property; or (ivf) If Maker (a) makes a transfer in fraud of creditors, or makes make an assignment for the benefit of, or enter into a composition with, its creditors or appoint or consent to the appointment of creditors, of a receiver or other custodian for all or a substantial part of Maker's its property; (b) admits . then and in writing Maker's inability to pay his or her debts as they become due; (c) has a receivereach and every such case, trustee or custodian appointed for▇▇▇▇ shall notify the Borrower of such Event of Default and, or take possession of, all or substantially all in the event such Event of Maker's assets, either in a proceeding brought by Maker or in a proceeding brought against Maker and such appointment Default is not discharged or such possession is not terminated within sixty (60) days after the effective date thereof or he or she consents to or acquiesces in such appointment or possession; (d) files a petition for relief under the United States Bankruptcy Code or any other present or future federal or state insolvency, bankruptcy or similar laws (all of the foregoing hereinafter collectively called "Applicable Bankruptcy Law") or an involuntary petition for relief is filed against Maker under any Applicable Bankruptcy Law and such involuntary petition is not dismissed within sixty (60) days after the filing thereof, or an order for relief naming Maker is entered under any Applicable Bankruptcy Law, or any composition, rearrangement, extension, reorganization or other relief of debtors now or hereafter existing is requested or consented to cured by Maker; (e) fails to have discharged within a period of thirty (30) days any attachment, sequestration or similar writ levied upon a substantial part of Maker's property; or (f) fails to pay Borrower within thirty (30) days of the date of such notice, ▇▇▇▇ may declare all or any final money judgment against Maker. part of the unpaid Principal Amount to be forthwith due and payable (b) Upon the occurrence and during the continuance of unless there shall have occurred an Event of Default under this Note, Payee may declare the entire unpaid Principal Sum and accrued and unpaid interest on this Note immediately due and payable, without further notice, demand, or presentment, foreclose any liens or security interests securing all or any part Section 7.1.3 hereof, or exercise any other right or remedy to in which Payee may be entitled by agreement, at law, or in equity; provided, however, that no Event case the unpaid balance of Default shall be deemed to have -------- ------- occurred unless notice of the event giving rise to a potential Event of Default shall have been delivered to Maker and Maker shall have failed to correct or cure such event within fifteen (15) days following his receipt of such notice; provided further, however, that upon any Event of Default ---------------- ------- under Section 3(a)(iii) and (iv) hereof, this Note shall automatically become due and payable), and thereupon such unpaid Principal Amount or part thereof, together with interest accrued thereon and all other sums, if any, payable under this Note, shall become so due and payable without necessity presentation, presentment, protest or further demand or notice of any notice kind, all of which are hereby expressly waived to the extent not prohibited by applicable law that cannot be waived, and ▇▇▇▇, subject to the Subordination Agreement, may proceed to enforce payment of such amount or part thereof in such manner as it or they may elect, including the transfer the Pledged Shares to its own account, with the Principal Amount and interest due under this Note being reduced by the amount equal to (i) the number of Pledged Shares transferred to ▇▇▇▇, multiplied by (ii) the Second Exercise Price, and if additional Principal Amount and interest remain outstanding under this Note, ▇▇▇▇ may proceed to protect and enforce its or their rights by suit in equity, action on at law and/or other appropriate proceeding either for specific performance of any covenant, provision or condition contained or incorporated by reference in this Note or the part Pledge Agreement, or in aid of Payee the exercise of any power granted in this Note or the Pledge Agreement; provided; however, that it is agreed and without acknowledged that ▇▇▇▇'▇ recourse hereunder shall be limited to the ability of Maker to Pledged Shares and after 269 days Borrower may only cure such event. Payee shall have all rights and remedies available default by exercise of the Borrower Put right referred to it under the Uniform Commercial Code as adopted in the State of TexasSection 5.3 hereof.

Events of Default Remedies. (a) 9.01 Each of the following shall constitute events constitutes an "“Event of Default" under ” for purposes of this NoteAgreement: (ia) The failure of Maker if any Payment is not paid by the Company to pay when the Investor on or prior to the due any part of date, to the Principal Sumextent the delay is not excused, interest or other payment required to be made pursuant to this Note. (ii) The failure of Maker to observe or perform any other obligation set forth as defined in this Note or that certain Stock Purchase Agreement between SWS GroupAgreement, Inc. ("SWS") and Maker, dated as of December 14, 2001 (the "SPA"); (iii) Any transfer of the Collateral by Maker to SWS as a result of an exercise (A) by SWS of any call right, or (B) by Maker of any put right, pursuant to the terms of the SPA; or (iv) If Maker (a) makes a transfer in fraud of creditors, or makes an assignment each such non-payment continues for the benefit of creditors, of a substantial part of Maker's property; (b) admits in writing Maker's inability to pay his or her debts as they become due; (c) has a receiver, trustee or custodian appointed for, or take possession of, all or substantially all of Maker's assets, either in a proceeding brought by Maker or in a proceeding brought against Maker and such appointment is not discharged or such possession is not terminated within sixty (60) days after the effective date thereof or he or she consents to or acquiesces in such appointment or possession; (d) files a petition for relief under the United States Bankruptcy Code or any other present or future federal or state insolvency, bankruptcy or similar laws (all of the foregoing hereinafter collectively called "Applicable Bankruptcy Law") or an involuntary petition for relief is filed against Maker under any Applicable Bankruptcy Law and such involuntary petition is not dismissed within sixty (60) days after the filing thereof, or an order for relief naming Maker is entered under any Applicable Bankruptcy Law, or any composition, rearrangement, extension, reorganization or other relief of debtors now or hereafter existing is requested or consented to by Maker; (e) fails to have discharged within a period of thirty (30) business days thereafter; (b) an involuntary proceeding has been commenced or an involuntary petition has been filed seeking (i) liquidation, reorganization or other relief in respect of the Company or any attachmentof its debts, sequestration or similar writ levied upon of a substantial part of Maker's property; its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (fii) fails the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Company or for a substantial part of its assets, and, in any such case, such proceeding or petition has continued undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing has been entered; (c) the Company has (i) voluntarily commenced any proceeding or filed any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to pay within the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (b) immediately above, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Company or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing; (d) if (i) the Company breaches any other covenant of the Company contained in this Agreement, and such breach continues for a period of thirty (30) business days after the Investor delivers written notice of the breach to the Company, or (ii) any final money judgment against Makerrepresentation or warranty made in this Agreement by the Company shall be materially incorrect when made or deemed made. (b) Upon the occurrence and during the continuance of 9.02 If an Event of Default occurs under this NoteSection 7.01 and is continuing, Payee may declare then the entire unpaid Principal Sum Company agrees to employ, at its own expense, an Intermediary (the “Intermediary”) to determine the proper course of action, based on what is in the best interests of Investors, including, but not limited to, a Forbearance Agreement. Investor agrees to abide by the determination of the Intermediary. If no suitable course of action is agreed upon by the Company, and the Event of Default continues, an amount equal to the outstanding principal and accrued and unpaid interest on this Note shall, at the option of the Investor (as communicated by the Investor) automatically, become immediately due and payablepayable by the Company to the Investor and Investor may employ an attorney to enforce the Investor’s rights and remedies. The rights and remedies of the Investor as provided in this Agreement shall be cumulative and may be pursued singly, without further notice, demandsuccessively, or presentmenttogether against any other funds, foreclose any liens property or security interests securing all held by the Investor for payment or any part hereofsecurity, or in the sole discretion of the Investor. The failure to exercise any other such right or remedy to which Payee may shall not be entitled by agreement, at law, a waiver or in equity; provided, however, that no Event of Default shall be deemed to have -------- ------- occurred unless notice of the event giving rise to a potential Event of Default shall have been delivered to Maker and Maker shall have failed to correct or cure such event within fifteen (15) days following his receipt release of such notice; provided further, however, that upon rights or remedies or the right to exercise any Event of Default ---------------- ------- under Section 3(a)(iii) and (iv) hereof, this Note shall automatically become due and payable without necessity of any notice or action on the part of Payee and without the ability of Maker to cure such event. Payee shall have all rights and remedies available to it under the Uniform Commercial Code as adopted in the State of Texasthem at another time.

Events of Default Remedies. (a) Each of the following shall constitute an "Event of Default" under this Note: (i) The failure of Maker to pay when due any part of the Principal Sum, interest or other payment required to be made pursuant to this Note. (ii) The failure of Maker to observe or perform any other obligation set forth in this Note or that certain Stock Purchase Agreement between SWS Group, Inc. ("SWS") and Maker, dated as of December 14, 2001 (the "SPA"); (iii) Any transfer of the Collateral by Maker to SWS as a result of an exercise (A) by SWS of any call right, or (B) by Maker of any put right, pursuant to the terms of the SPA; or (iv) If Maker (a) makes a transfer in fraud of creditors, or makes an assignment for the benefit of creditors, of a substantial part of Maker's property; (b) admits in writing Maker's inability to pay his or her debts as they become due; (c) has a receiver, trustee or custodian appointed for, or take possession of, all or substantially all of Maker's assets, either in a proceeding brought by Maker or in a proceeding brought against Maker and such appointment is not discharged or such possession is not terminated within sixty (60) days after the effective date thereof or he or she consents to or acquiesces in such appointment or possession; (d) files a petition for relief under the United States Bankruptcy Code or any other present or future federal or state insolvency, bankruptcy or similar laws (all of the foregoing hereinafter collectively called "Applicable Bankruptcy Law") or an involuntary petition for relief is filed against Maker under any Applicable Bankruptcy Law and such involuntary petition is not dismissed within sixty (60) days after the filing thereof, or an order for relief naming Maker is entered under any Applicable Bankruptcy Law, or any composition, rearrangement, extension, reorganization or other relief of debtors now or hereafter existing is requested or consented to by Maker; (e) fails to have discharged within a period of thirty (30) days any attachment, sequestration or similar writ levied upon a substantial part of Maker's property; or (f) fails to pay within thirty (30) days any final money judgment against Maker. (b) Upon After the occurrence and during the continuance of an Event of Default on the part of Seller, Seller hereby appoints Buyer as attorney-in-fact of Seller for the purpose of carrying out the provisions of this Agreement and taking any action and executing or endorsing any instruments that Buyer may deem necessary or advisable to accomplish the purposes hereof, which appointment as attorney-in-fact is irrevocable and coupled with an interest. Furthermore, Paragraph 11 of the Agreement is amended by the deletion of clauses (i) and (vi) in the first paragraph, by the addition of "or Purchased Loans" in clause (ii) of the first paragraph after the term Purchased Securities and by the addition of the following at the end of the first paragraph before the phrase, "(each an `Event of Default')": (i) either (A) the Transaction Documents shall for any reason not cause, or shall cease to cause, Buyer to be the owner free of any adverse claim of any of the Purchased Securities or Purchased Loans, or (B) if a Transaction is recharacterized as a secured financing, the Transaction Documents with respect to any Transaction shall for any reason cease to create a valid first priority security interest in favor of Buyer in any of the Purchased Securities or Purchased Loans; (ii) in the event that the Buyer or any of its Affiliates is a party to an ISDA Master Agreement with Seller and an event occurs which would constitute an Event of Default or an Additional Termination Event under any Transaction between Seller and the Buyer or any of its Affiliates (capitalized terms used in this Note, Payee may declare paragraph (ix) shall have the entire unpaid Principal Sum respective meanings ascribed to them in the ISDA Master Agreement (including respective Schedules and accrued Confirmations) between Seller and unpaid interest the Buyer and/or any of its Affiliates); (iii) failure of the Buyer to receive on this Note immediately due and payableany Remittance Date the accreted value of the Price Differential (less any amount of such Price Differential previously paid by Seller to Buyer) (including, without further noticelimitation, demandin the event the Income paid or distributed on or in respect of the Purchased Securities and Purchased Loans is insufficient to make such payment and the Seller does not make such payment or cause such payment to be made) (except that such failure shall not be an Event of Default by Seller if sufficient Income, other than Principal Payments, is on deposit in the Cash Management Account and the Depository fails to remit such funds to Buyer); (iv) failure of the Seller to make any other payment owing to the Buyer which has become due, whether by acceleration or otherwise under the terms of this Agreement which failure is not remedied within the applicable period (in the case of a failure pursuant to Paragraph 4) or five Business Days (in the case of any other such failure); (v) any governmental, regulatory, or presentmentself-regulatory authority shall have taken any action to remove, foreclose limit, restrict, suspend or terminate the rights, privileges, or operations of Seller, which suspension has a material adverse effect on the financial condition or business operations of Seller; (vi) Buyer shall have determined, in the exercise of its good faith business judgment, (A) that there has been a material adverse change in the business, operations, corporate structure or financial condition, creditworthiness or prospects of Seller or the Sponsor; (B) that Seller or the Sponsor will not meet or has breached any liens of its obligations under any Transaction pursuant to any of the Transaction Documents; or security interests securing all (C) that a material adverse change in the financial or legal condition of Seller or the Sponsor may occur due to the pendency or threatened pendency of a material legal action against Seller or the Sponsor; (vii) a Change of Control or an Act of Insolvency shall have occurred with respect to the Sponsor; (viii) any representation made by Seller or Buyer shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated (other than the representations and warranties set forth in Section 10(a)(viii) or (ix) or (xix) (in the case of (xix), with respect to the affected Purchased Securities or Purchased Loans only) made by the Seller, which shall not be considered an Event of Default if incorrect or untrue in any material respect, provided the Buyer terminates the related Transaction in whole or in part, as applicable, and repurchases the related Purchased Securities or Purchased Loans on an Early Repurchase Date no later than three (3) Business Days after receiving notice of such incorrect or untrue representation; unless the Seller shall have made any such representation with knowledge that it was materially incorrect or untrue at the time made); (ix) the Sponsor shall fail to observe any of the financial covenants set forth in Section 5 of the Guaranty or shall have defaulted or failed to perform under the Guaranty; (x) a final judgment by any competent court in the United States of America for the payment of money in an amount greater than $250,000 (in the case of the Seller) or $1,000,000 (in the case of the Sponsor) shall have been rendered against Seller or the Sponsor, and remained undischarged or unpaid for a period of thirty (30) days, during which period execution of such judgment is not effectively stayed; (xi) Sponsor shall have defaulted or failed to perform under any note, indenture, loan agreement, guaranty, swap agreement or any part hereofother contract, agreement or transaction to which it is a party, which default (A) involves the failure to pay a matured obligation in excess of $1,000,000, or exercise (B) permits the acceleration of the maturity of obligations by any other right party to or remedy to which Payee may be entitled by beneficiary of such note, indenture, loan agreement, at lawguaranty, swap agreement or other contract agreement or transaction, or Sponsor shall breach any covenant or condition, shall fail to perform, admits its inability to perform or state its intention not to perform its obligations under any Transaction or in equityrespect of any repurchase agreement, reverse repurchase agreement, securities contract or derivative transaction with any party; provided, however, that no any such default, failure to perform or breach shall not constitute an Event of Default if Sponsor cures such default, failure to perform or breach, as the case may be, within the grace period, if any, provided under the applicable agreement; or (xii) if Seller or Buyer shall breach or fail to perform any of the terms, covenants, obligations or conditions of this Agreement, other than as specifically otherwise referred to in this definition of "Event of Default", and such breach or failure to perform is not remedied within five (5) Business Days after notice thereof to Seller or Buyer from the applicable party or its successors or assigns; provided, that if such breach or failure to perform is a default other than a default which can be cured by the payment of a sum of money and is susceptible of cure but cannot reasonably be cured within such five (5) Business Days period, such five (5) Business Days period shall be deemed to have -------- ------- occurred unless notice of the event giving rise extended to a potential Event period of Default shall have been delivered to Maker and Maker shall have failed to correct or cure such event within fifteen ten (1510) calendar days following his receipt of such notice; provided further, however, that upon any Event of Default ---------------- ------- under Section 3(a)(iii) and (iv) hereof, this Note shall automatically become due and payable without necessity of any notice or action on the part of Payee and without the ability of Maker to cure such event. Payee shall have all rights and remedies available to it under the Uniform Commercial Code as adopted in the State of Texastotal.

Events of Default Remedies. (a) Each of the following shall constitute an "event of default by a Seller hereunder (each a “Event of Default" under this Note:”): (i) The failure of Maker either Seller to pay when due any part of repurchase one or more Purchased Loans on the Principal Sum, interest or other payment required to be made pursuant to this Note.applicable Repurchase Date; or (ii) The failure of Maker either Seller or any Servicer to observe deposit any Income received by it in the applicable Collection Account or perform any other obligation set forth the Remittance Account in this Note accordance with the provisions hereof, the related Servicing Agreement or that certain Stock Purchase Agreement between SWS Groupthe related Servicer Acknowledgment, Inc. as applicable, which failure is not remedied within two ("SWS"2) and Maker, dated as Business Days after notice thereof to such Seller from Buyer or such Seller acquires knowledge of December 14, 2001 (the "SPA");such failure; or (iii) Any transfer of the Collateral by Maker to SWS as a result of an exercise (A) by SWS the Transaction Documents shall for any reason not cause, or shall cease to cause, Buyer to be the owner of, or, if recharacterized as a secured financing, a secured party with respect to, the Repurchase Assets specified in Sections 6(a) hereof and the other collateral specified in Section 6(c) hereof free of any call rightadverse claim, or liens and other rights of others (other than as granted in this Agreement); (B) by Maker if a Transaction is recharacterized as a secured financing, the Transaction Documents with respect to any Transaction shall for any reason cease to create a valid first priority security interest in favor of Buyer in the Repurchase Assets specified in Section 6(a) hereof and the other collateral specified in Section 6(c) hereof; or (C) if the Transaction Documents shall cease to be in full force and effect or if the enforceability of any put rightof them is challenged or repudiated by any Relevant Party, pursuant to the terms of the SPAany Servicer or any respective Affiliate thereof; or (iv) If Maker failure of either Seller to make the payments required under Section 4 or Section 5(c)(i) through (avii) makes a transfer in fraud when due; or (v) failure of creditors, either Seller to make any other payment owing to Buyer or makes an assignment for the benefit of creditors, of a substantial part of Maker's property; (b) admits in writing Maker's inability to pay his or her debts as they Repo Agent which has become due; (c) has a receiver, trustee whether by acceleration or custodian appointed forotherwise, or take possession of, all or substantially all of Maker's assets, either in a proceeding brought by Maker or in a proceeding brought against Maker and such appointment is not discharged or such possession is not terminated within sixty (60) days after the effective date thereof or he or she consents to or acquiesces in such appointment or possession; (d) files a petition for relief under the United States Bankruptcy Code terms of this Agreement or any other present Transaction Document which failure is not remedied within the period specified herein or future federal therein, or state insolvencyif no period is specified, bankruptcy three (3) Business Days after notice thereof to such Seller from Repo Agent; provided, however, that Repo Agent shall not be required to provide notice in the event of a failure by such Seller to repurchase any Purchased Loan on the required Repurchase Date therefor; or (vi) breach by either Seller in the due performance or similar laws observance of any term, covenant or agreement contained in Section 10 or Section 11 of this Agreement which has not been cured within five (all 5) Business Days after written notice thereof from Repo Agent to such Seller; provided, however, that with respect to a breach by such Seller of any term, covenant or agreement contained in Section 11(b), (c), (e), (f), (g)(vi)-(ix), (h), (i), (j), (q), (v), (dd), (ff) or (jj), if such default is susceptible of cure but cannot reasonably be cured within such five (5) Business Day period and such Seller shall have commenced to cure such default within such five (5) Business Day period and thereafter diligently and expeditiously proceeds to cure the same, such five (5) Business Day period shall be extended for such time as is reasonably necessary for such Seller, in the exercise of due diligence, to cure such default, and in no event shall such cure period exceed twenty (20) Business Days after the earlier of (i) receipt of notice by such Seller and (ii) actual knowledge of such Seller of such breach or failure; provided, further, that with respect to a breach by such Seller of the covenant contained in Section 11(oo), there shall be no such cure period; or (vii) a Change of Control shall have occurred without Buyer’s prior written consent; or (viii) any representation, warranty or certification made or deemed made by any Relevant Party herein or in any other Transaction Document, excluding any representation, warranty or certification set forth in Exhibit III, shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated and such breach has not been cured within five (5) Business Days following the earlier of (A) receipt of notice by such Relevant Party and (B) knowledge of any Relevant Party unless, with respect to representations in Section 9(a)(iii), (iv), (v), (ix), (xi), (xii), (xiii), (xv), (xviii), (xix), (xx), (xxi), (xxvii), (xxxiii) or (xxxvi), such incorrect or untrue representation cannot be cured within such five (5) Business Day period in which case such cure period shall be extended by an additional twenty (20) Business Days if the applicable Seller is diligently proceeding in good faith to cure such incorrect or untrue representation; provided, however, that there shall be no cure period in respect of any of the foregoing hereinafter collectively called "Applicable Bankruptcy Law"if (y) such Relevant Party shall have made any such representations and warranties with knowledge that they were false or an involuntary petition for relief is filed against Maker under misleading at the time made or (z) any Applicable Bankruptcy Law such representations and such involuntary petition is not dismissed within sixty warranties have been determined by Repo Agent in its sole discretion exercised in good faith to be false or misleading on a regular basis; or (60ix) days after the filing thereofa final judgment by any court, or an order for relief naming Maker is entered under any Applicable Bankruptcy Law, or any composition, rearrangement, extension, reorganization administrative tribunal or other relief body having jurisdiction for the payment of debtors now money in an amount greater than $1,000,000 shall have been rendered against any Relevant Party and remains undischarged or hereafter existing is requested or consented to by Maker; (e) fails to have discharged within unpaid for a period of thirty (30) days days, during which period execution of such judgment is not effectively stayed; or (x) Any Relevant Party shall have defaulted or failed to perform under any attachmentnote, sequestration indenture, loan agreement, guaranty, swap agreement or any other contract, agreement or transaction (including, without limitation, any repurchase agreement, loan and security agreement or similar writ levied upon credit facility or agreement for borrowed funds) to which it is a substantial part party and which provides for borrowed funds or has a notional amount, as applicable, in an amount equal to or greater than $1,000,000; provided, however, that any such default, failure to perform or breach shall not constitute an Event of Maker's propertyDefault if the applicable Relevant Party, cures such default, failure to perform or breach, as the case may be, within the grace period, if any, provided under the applicable agreement; or (xi) Guarantor breaches a Guarantor Financial Covenant; or (xii) if any Relevant Party shall breach or fail to perform any of the terms, covenants, obligations or conditions of this Agreement or any other Transaction Document, other than as specifically otherwise referred to in this definition of “Event of Default”, and such breach or failure to perform is not remedied within five (f5) fails Business Days following the earlier of (A) receipt of notice by such Relevant Party and (B) knowledge of such Relevant Party; provided, however, that if such default is susceptible of cure but cannot reasonably be cured within such five (5) Business Day period and such Relevant Party shall have commenced to pay cure such default within such five (5) Business Day period and thereafter diligently and expeditiously proceeds in good faith to cure the same, such five (5) Business Day period shall be extended for such time as is reasonably necessary for such Relevant Party, in the exercise of due diligence and good faith, to cure such default, provided, further, that in no event shall such extended cure period exceed twenty (20) Business Days from such Relevant Party’s receipt of Repo Agent’s notice of such breach or failure to perform; or (xiii) an Act of Insolvency shall have occurred with respect to any Relevant Party; or (xiv) Any Relevant Party or any of its respective Operating Affiliates shall default under, or fail to perform as required under, or shall otherwise breach the terms of any repurchase agreement, loan and security agreement or similar credit facility or agreement for borrowed funds or any agreement requiring the payment of money between such Relevant Party, on the one hand, and Buyer or any of Buyer’s Affiliates on the other; or (xv) any of the representations and warranties of Guarantor in any Financial Covenant Compliance Certificate shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated; or (xvi) any assignment or attempted assignment by any Relevant Party of this Agreement or any other Transaction Document or any rights hereunder or thereunder without first obtaining the express written consent of Repo Agent, or the granting by any Relevant Party of any security interest, lien or other encumbrances on any Purchased Loans or any other Repurchase Assets to any Person other than Buyer or nominee approved by Buyer; or (xvii) any Relevant Party shall admit its inability to, or its intention not to, perform any of its obligations hereunder or under any other Transaction Document, or Guarantor shall admit its inability to, or its intention not to, perform any of its obligations under the Guaranty Agreement; or (xviii) any Relevant Party’s audited annual consolidated financial statements shall be qualified or limited by reference to the status of any Relevant Party as a “going concern” or a reference of similar import; or (xix) any Relevant Party shall have become an “investment company”, or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended; or (xx) neither Seller has effected a transfer of servicing with respect to the applicable Purchased Loans to a successor servicer within thirty (30) days any final money judgment against Makerof an uncured Servicer Termination Event; or (xxi) in the event the funds on deposit in the applicable Collection Account maintained by the applicable Servicer are not sufficient to pay Servicing Expenses (as such term is defined in each Servicing Agreement) (including, without limitation, for taxes, homeowners’ association fees, dues and assessments, insurance and property preservation, but excluding principal and interest on such Purchased Loan), the applicable Seller fails to cause the necessary funds to be deposited in such Collection Account (or, in the event such Servicer advanced such funds, fails to reimburse such Servicer) in accordance with the related Servicing Agreement and such Seller’s failure continues for thirty (30) days after such Seller obtains knowledge or receives notice of such insufficiency. (b) Upon the occurrence and during the continuance of If an Event of Default under this Noteshall occur and be continuing, Payee may declare the entire unpaid Principal Sum following rights and accrued and unpaid interest remedies shall be available to Repo Agent: (i) At the option of Majority Buyer (or Repo Agent on this Note immediately due and payableits behalf), without further notice, demand, or presentment, foreclose any liens or security interests securing all or any part hereof, or exercise any other right or remedy exercised by written notice to Sellers (which Payee may be entitled by agreement, at law, or in equity; provided, however, that no Event of Default option shall be deemed to have -------- ------- occurred unless been exercised, even if no notice is given, immediately upon the occurrence of an Act of Insolvency with respect to any Relevant Party), the event giving rise Repurchase Date for each Transaction hereunder shall, if it has not already occurred, be deemed immediately to a potential Event of Default shall occur (the date on which such option is exercised or deemed to have been delivered exercised being referred to Maker hereinafter as the “Accelerated Repurchase Date”) (and Maker any Transaction for which the related Purchase Date has not yet occurred shall be canceled). (ii) If Majority Buyer (or Repo Agent on its behalf) exercises or is deemed to have failed exercised the option referred to correct or cure such event within fifteen in Section 13(b)(i): (15A) days following his receipt of such notice; provided further, however, that upon any Event of Default ---------------- ------- under Section 3(a)(iii) A Seller’s obligations hereunder to repurchase all Purchased Loans and (iv) hereof, this Note to pay all Obligations hereunder shall automatically thereupon become immediately due and payable on and as of the Accelerated Repurchase Date without necessity presentment, demand, protest or notice of any notice kind, all of which are hereby expressly waived, anything contained herein or action on in the part of Payee other Transaction Documents to the contrary notwithstanding, and without the ability of Maker to cure such event. Payee Majority Buyer may exercise and shall have any and all rights and remedies available to it under applicable law, this Agreement and the Uniform Commercial Code other Transaction Documents or otherwise and may take any such action and exercise any such power as adopted it may elect to enforce its rights and remedies under applicable law, this Agreement and the other Transaction Documents, including with respect to the Purchased Loans and the other Repurchase Assets; and all Income deposited in any Collection Account, and all Income deposited in the State Remittance Account, in each case including any such Income paid after such exercise or deemed exercise, shall be remitted to and retained by ▇▇▇▇▇ and applied to the aggregate Repurchase Price and any other amounts owing by a Seller hereunder or under any other Transaction Document. Such Seller shall immediately deliver to Majority Buyer or its designee any and all original papers, records and files relating to the Repurchase Assets subject to such Transactions then in such Seller’s possession and/or control; and all right, title and interest in and entitlement to such Repurchase Assets and any Servicing Rights of Texassuch Seller with respect thereto shall be deemed transferred to Majority Buyer; and (B) the Repurchase Price with respect to each Transaction (determined as of the Accelerated Repurchase Date) shall include the accrued and unpaid Price Differential with respect to each Purchased Loan accrued at the Pricing Rate applicable upon an Event of Default for such Transaction; and (C) Custodian shall, upon the request of Majority Buyer (with simultaneous copy of such request to Sellers), deliver to Majority Buyer all instruments, certificates and other documents then held by Custodian relating to the Purchased Loans. (iii) Majority Buyer (or Repo Agent on its behalf) also shall have the right to (A) sell, on or following the Business Day following the date on which the Repurchase Price became due and payable pursuant to this Section 13(b) without notice or demand of any kind, to the extent permitted by applicable law, at a public or private sale and at such price or prices as Majority Buyer may reasonably deem satisfactory any or all Purchased Loans and any and all other Repurchase Assets or (B) to the extent permitted by applicable law, in its sole discretion, exercised in good faith, elect, in lieu of selling all or a portion of such Purchased Loans and the other Repurchase Assets, to give Sellers credit for such Purchased Loans and the other Repurchase Assets in an amount equal to the Market Value of the Purchased Loans and the other Repurchase Assets, as determined by Majority Buyer in its sole discretion, against the aggregate unpaid Repurchase Price and any other amounts owing by Sellers hereunder. To the extent permitted by applicable law, Sellers shall remain liable to Buyer for any amounts that remain owing thereto following a sale and/or credit under the preceding sentence. The proceeds of any disposition of Purchased Loans and other Repurchase Assets effected pursuant to this Section 13(b)(iii) shall be applied (v) first, to the costs and expenses (including attorneys’ fees and expenses) incurred by Buyer in connection with a Seller’s default, (w) second, to the costs of cover and/or hedging transactions, if any, (x) third, to the Repurchase Price, (y) fourth, to any other outstanding Obligation owed by a Seller to Buyer or its Affiliates pursuant to the Transaction Documents (including interest which would be payable as post-petition interest in connection with any bankruptcy or similar proceeding) irrespective of whether such obligations are direct or indirect, absolute or contingent, matured or unmatured, and (z) the balance, if any, to Sellers. In the event that Buyer shall not have received repayment in full of the Aggregate Repurchase Price and the other Obligations of Sellers under the Transaction Documents following its liquidation of the Purchased Loans and the other Repurchase Assets, Majority Buyer may, in its sole and absolute discretion, pursue each Seller and Guarantor (to the extent provided in the Guaranty Agreement ) for all or any part of any deficiency. (iv) The parties recognize that it may not be possible to purchase or sell all of the Purchased Loans and the other Repurchase Assets on a particular Business Day, or in a transaction with the same purchaser, or in the same manner because the market for such Purchased Loans and any other Repurchase Assets may not be liquid. In view of the nature of the Purchased Loans and the other Repurchase Assets, the parties agree that, to the extent permitted by applicable law, liquidation of a Transaction or the Purchased Loans and any other Repurchase Assets shall not re

Events of Default Remedies. (a) 6.1 Each of the following shall constitute events is an "“Event of Default" ” under this Note: Agreement: (ia) The failure of Maker if Buyer fails to pay when due any part installment of the Principal Sum, interest purchase price or other payment required to be made pursuant to this Note. (ii) The failure of Maker to observe or perform any other obligation set forth in amount under this Note or that certain Stock Purchase Agreement between SWS Group, Inc. ("SWS") and Maker, dated as of December 14, 2001 (the "SPA"); (iii) Any transfer of the Collateral by Maker to SWS as a result of an exercise (A) by SWS of any call right, or (B) by Maker of any put right, pursuant to the terms of the SPA; or (iv) If Maker (a) makes a transfer in fraud of creditors, or makes an assignment for the benefit of creditors, of a substantial part of Maker's propertyAgreement; (b) if Buyer defaults in the observance or performance of any other term, covenant, or condition of Buyer under this Agreement and Buyer shall fail to remedy such default within 10 days after notice by Synexis to Buyer of such default; (c) if Buyer's interest or any portion thereof in this Agreement devolve on or pass to any person(s) or entity(ies), whether by operation of law or otherwise; (d) if Buyer: (i) does not, or is unable to, or admits in writing Maker's its inability to to, pay his or her its debts as they become due; (cii) has commences or institutes any case, proceeding or other action seeking relief on its behalf as debtor, or to adjudicate it as bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding up, liquidation, dissolution, composition, or other relief with respect to it or its debts under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, or relief of debtors; (iii) commences or institutes any case, proceeding or other action seeking appointment of a receiver, trustee or custodian appointed fortrustee, custodian, or take possession ofother similar official for it or for all or any substantial part of its property; or (iv) makes a general assignment for the benefit of creditors; (e) if a receiver, trustee, custodian, or other similar official is appointed for any substantial part of the assets of Buyer which appointment is not vacated or stayed within 30 days; (f) if Buyer sells, transfers, or disposes of all or substantially all of Maker's its assets, either in a proceeding brought by Maker or in a proceeding brought against Maker and such appointment is not discharged merges or such possession is not terminated within sixty (60) days after the effective date thereof or he or she consents to or acquiesces in such appointment or possession; (d) files a petition for relief under the United States Bankruptcy Code or consolidates with any other present or future federal or state insolvency, bankruptcy or similar laws (all of the foregoing hereinafter collectively called "Applicable Bankruptcy Law") or an involuntary petition for relief is filed against Maker under any Applicable Bankruptcy Law and such involuntary petition is not dismissed within sixty (60) days after the filing thereof, or an order for relief naming Maker is entered under any Applicable Bankruptcy Law, or any composition, rearrangement, extension, reorganization or other relief of debtors now or hereafter existing is requested or consented to by Maker; (e) fails to have discharged within a period of thirty (30) days any attachment, sequestration or similar writ levied upon a substantial part of Maker's propertyentity; or (fg) fails to pay within thirty (30) days a breach of any final money judgment against Makerrepresentation or warranty of Buyer. (b) Upon the occurrence and during the continuance of 6.2 If an Event of Default under occurs, Synexis may, in its sole discretion, (a) with regard to a payment default, (i) suspend this Note, Payee may declare the entire unpaid Principal Sum and accrued and unpaid interest on this Note immediately due and payable, Agreement without further notice, demandnotice if payment is 30 days in arrears, or presentment(ii) terminate this Agreement without notice if payment is 60 days in arrears, foreclose any liens or security interests securing all (b) terminate in whole or any in part hereof, this Agreement upon written notice to Buyer or exercise any other right or remedy available to which Payee may be entitled by agreement, Synexis at law, law or in equity; provided, however, that no Event of Default shall be deemed to have -------- ------- occurred unless notice of the event giving rise to a potential Event of Default shall have been delivered to Maker and Maker shall have failed to correct or cure such event within fifteen (15) days following his receipt of such notice; provided further, however, that upon any Event of Default ---------------- ------- under Section 3(a)(iii) and (iv) hereof, this Note shall automatically become due and payable without necessity of any notice or action on the part of Payee and without the ability of Maker to cure such event. Payee shall have all rights and remedies available to it under the Uniform Commercial Code as adopted in the State of Texas.

Events of Default Remedies. (a) Each Factor may terminate this Agreement without notice if any of the following shall constitute events (each, an "Event of Default" under this Note:") shall occur: (a) Client shall default in the payment of any of the Obligations on the due date thereof (whether due at stated maturity, on demand, upon acceleration or otherwise); (b) any representation or warranty made by Client to Factor shall prove incorrect or misleading in any material respect when made or furnished; (c) (i) The failure Client shall breach any covenant or agreement contained in Sections 1-2, 6-9, 11-12 or 27 of Maker to pay when due any part this Agreement or Sections 5 or 11 of the Principal SumFactoring Agreement - Inventory Supplement of even date, interest or other payment required to be made pursuant to this Note. (ii) The failure of Maker to observe Client shall breach any covenant or perform any agreement contained in the Agreement (other obligation than those set forth in this Note the Sections referred to in clause (i) immediately above) or that certain Stock Purchase Agreement any supplement hereto or any other agreement between SWS GroupClient and Factor, Inc. and such covenant or agreement is not remediable or, if remediable, continues unremedied for a period of ten ("SWS"10) days after the earlier to occur of (x) the date on which such breach is known or reasonably should have become known to any officer of Client and Maker, dated as (y) the date on which Factor shall have notified Client of December 14, 2001 such breach; (the "SPA"); (iiid) Any transfer Client or any guarantor of the Collateral by Maker to SWS Obligations shall file or have filed against it a petition, answer or consent seeking relief under Title 11 of the United States Bankruptcy Code, as a result of an exercise (A) by SWS of any call rightnow constituted or hereafter amended, or any other applicable Federal or state bankruptcy law or other similar law (Bexcept that with respect to any of such actions filed against Client or any guarantor, Client shall have up through the earlier to occur of (i) by Maker of any put right, pursuant to the terms of the SPA; or (iv) If Maker (a) makes a transfer in fraud of creditors, or makes an assignment for the benefit of creditors, of a substantial part of Maker's property; (b) admits in writing Maker's inability to pay his or her debts as they become due; (c) has a receiver, trustee or custodian appointed for, or take possession of, all or substantially all of Maker's assets, either in a proceeding brought by Maker or in a proceeding brought against Maker and such appointment is not discharged or such possession is not terminated within sixty (60) days after following such filing or (ii) the effective date thereof or he or she consents to or acquiesces entry of an order granting the relief sought in such appointment action, to cause such action to be dismissed), or possession; (d) files a petition receiver, liquidator, assignee, trustee or similar official shall be appointed for relief under the United States Bankruptcy Code Client or any other present or future federal or state insolvency, bankruptcy or similar laws (all guarantor of the foregoing hereinafter collectively called "Applicable Bankruptcy Law") or an involuntary petition for relief is filed against Maker under any Applicable Bankruptcy Law and such involuntary petition is not dismissed within sixty (60) days after the filing thereof, or an order for relief naming Maker is entered under any Applicable Bankruptcy Law, Obligations or any composition, rearrangement, extension, reorganization substantial part of its or other relief of debtors now or hereafter existing is requested or consented to by Makerhis property; (e) fails to have discharged within a period Client fails, closes, suspends, or goes out of thirty (30) days any attachment, sequestration or similar writ levied upon a substantial part of Maker's propertybusiness; or (f) fails to pay within thirty there is a change (30by death or otherwise) days in Client's principal stockholders or owners. At any final money judgment against Maker. (b) Upon time after the occurrence and during the continuance of an Event of Default that is not waived by Factor, Factor shall have, in addition to all of the rights and remedies of a secured party under this NoteArticle 9 of the UCC and other applicable law, Payee the right to remove from any of Client's premises any and all books and records that may declare pertain to the entire unpaid Principal Sum and accrued and unpaid interest on this Note immediately due and payable, without further notice, demand, or presentment, foreclose any liens or security interests securing all Accounts Receivable or any part hereofother collateral hereunder, or exercise any other and the right or remedy to which Payee receive, open and dispose of all mail addressed to Client and notify postal authorities to change the address for delivery of Client's mail to such address as Factor may be entitled by agreementdesignate, at law, or in equity; provided, howeverthat Factor, that no upon Client's request, agrees to provide copies of any of the foregoing to Client at Client's expense. Client hereby appoints Factor or such persons as Factor designates as Client's attorney-in-fact to do all acts and things necessary, in Factor's determination after an Event of Default shall be deemed that is not waived by Factor, to have -------- ------- occurred unless notice of the event giving rise to a potential Event of Default shall have been delivered to Maker and Maker shall have failed to correct or cure such event within fifteen (15) days following his receipt of such notice; provided further, however, that upon any Event of Default ---------------- ------- fulfill Client's obligations under Section 3(a)(iii) and (iv) hereof, this Note shall automatically become due and payable without necessity of any notice or action on the part of Payee and without the ability of Maker to cure such event. Payee shall have all rights and remedies available to it under the Uniform Commercial Code as adopted in the State of TexasAgreement.

Events of Default Remedies. (a) Each of the 9.1 The following shall constitute an "Event “Events of Default" ” under this NoteAgreement with respect to the Borrower: (i) The failure of Maker by the Borrower to pay when due make any part of the Principal Sum, interest or other payment required to be made pursuant to under this Note. Agreement when the same becomes due and payable (ii) The failure of Maker to observe whether at maturity, by acceleration or perform any other obligation set forth in this Note or that certain Stock Purchase Agreement between SWS Group, Inc. ("SWS"otherwise) and Maker, dated as the continuation of December 14, 2001 (the "SPA"); (iii) Any transfer of the Collateral by Maker to SWS as a result of an exercise (A) by SWS of any call right, or (B) by Maker of any put right, pursuant to the terms of the SPA; or (iv) If Maker (a) makes a transfer in fraud of creditors, or makes an assignment such failure for the benefit of creditors, of a substantial part of Maker's property; (b) admits in writing Maker's inability to pay his or her debts as they become due; (c) has a receiver, trustee or custodian appointed for, or take possession of, all or substantially all of Maker's assets, either in a proceeding brought by Maker or in a proceeding brought against Maker and such appointment is not discharged or such possession is not terminated within sixty (60) days after the effective date thereof or he or she consents to or acquiesces in such appointment or possession; (d) files a petition for relief under the United States Bankruptcy Code or any other present or future federal or state insolvency, bankruptcy or similar laws (all of the foregoing hereinafter collectively called "Applicable Bankruptcy Law") or an involuntary petition for relief is filed against Maker under any Applicable Bankruptcy Law and such involuntary petition is not dismissed within sixty (60) days after the filing thereof, or an order for relief naming Maker is entered under any Applicable Bankruptcy Law, or any composition, rearrangement, extension, reorganization or other relief of debtors now or hereafter existing is requested or consented to by Maker; (e) fails to have discharged within a period of thirty (30) days thereafter; (ii) the Borrower voluntarily liquidates; (iii) the Borrower pursuant to or within the meaning of any attachmentinsolvency law: (a) commences a voluntary case or proceeding; (b) consents to the entry of an order for relief against it in an involuntary case or proceeding; (c) consents to the appointment of any receiver, sequestration trustee, assignee, liquidator or similar writ levied upon office under any insolvency law (“Custodian”) of it or for all or substantially all of its property; (d) makes general assignment for the benefit of its creditors; (e) generally is unable to pay its debts as they become due; (iv) a substantial part court of Maker's competent jurisdiction enters an order or decree (that remains unstayed and in effect for sixty (60) days) under any applicable law that: (a) appoints a Custodian of the Borrower or for all or substantially all of its property; or (fb) fails orders the liquidation of Borrower; (v) the Borrower uses an Advance or any portion thereof for any purpose other than a Permitted Use; or (vi) there occurs a Change of Ownership in the Borrower. For the purposes of this Agreement, “Change of Ownership” means; (a) the addition of any new Material Shareholders to pay within thirty (30) days the Borrower, beyond such Material Shareholders set forth in the Register of Shareholders of the Borrower attached hereto in Schedule 9.1(vi)(a), whether by issuance of new shares by the Borrower, transfer of shares by shareholders of the Borrower, court order or any final money judgment against Maker. other action which will serve as cause to require the Borrower to amend its Register of Shareholders to such effect as to create a new Material Shareholder in the Borrower; or (b) Upon a change to the occurrence Means of Control of the Borrower as set forth in Schedule 9.1(vi)(b). The terms “Material Shareholder” and during “Means of Control” as used in this Agreement have the continuance meanings ascribed to such terms in Section 88 of an Event the Israeli Tax Ordinance [New Version] (“Section 88”); provided however that the meaning ascribed to Means of Default under Control as used in this Note, Payee may declare the entire unpaid Principal Sum and accrued and unpaid interest on this Note immediately due and payable, without further notice, demand, or presentment, foreclose any liens or security interests securing all or any part hereof, or exercise any other right or remedy to which Payee may be entitled by agreement, at law, or in equity; provided, however, that no Event of Default Agreement shall be deemed limited solely to have -------- ------- occurred unless notice of the event giving rise to a potential Event of Default shall have been delivered to Maker and Maker shall have failed to correct or cure item number (2) under such event within fifteen (15) days following his receipt of such notice; provided further, however, that upon any Event of Default ---------------- ------- under definition in Section 3(a)(iii) and (iv) hereof, this Note shall automatically become due and payable without necessity of any notice or action on the part of Payee and without the ability of Maker to cure such event. Payee shall have all rights and remedies available to it under the Uniform Commercial Code as adopted in the State of Texas88.

Events of Default Remedies. (a) After the occurrence and during the continuance of an Event of Default, Seller hereby appoints Buyer as attorney-in-fact of Seller for the purpose of carrying out the provisions of this Agreement and taking any action and executing or endorsing any instruments that Buyer may deem necessary or advisable to accomplish the purposes hereof, which appointment as attorney-in-fact is irrevocable and coupled with an interest. (I) Each of the following shall constitute an "a “Facility Event of Default" under this Note”: (i) The failure an Act of Maker Insolvency occurs with respect to pay when due Seller, Sponsor, Member or Manager; (ii) Seller, Sponsor, Member or Manager shall admit in writing its inability to, or its intention not to, perform any part of its obligations hereunder or under any of the Principal SumTransaction Documents, (iii) either (A) the Transaction Documents shall for any reason not cause, interest or other payment required shall cease to cause, Buyer to be made the owner free of any adverse claim (other than the rights of Seller pursuant to this NoteAgreement) of any of the Purchased Loans, or (B) the Transaction Documents with respect to any Transaction shall for any reason cease to create a valid first priority security interest in favor of Buyer in any of the Purchased Loans (except to the extent resulting from the actions of Buyer); (iv) failure of Master Seller to make any payment owing to Buyer which has become due and payable under this Agreement or any other Transaction Document (other than any monetary Transaction Event of Default by any Series Seller under Sections 13(a)(II)(i)-(iv) of this Agreement), whether by acceleration or otherwise under the terms of this Agreement or the other Transaction Documents, which failure is not remedied within five (5) Business Days; (v) any governmental, regulatory, or self-regulatory authority shall have taken any action to remove, limit, restrict, suspend or terminate the rights, privileges, or operations of Seller, which suspension results in a Material Adverse Effect; (vi) a Change of Control shall have occurred that has not been consented to by Buyer in writing; (vii) any representation made by Seller or Sponsor in this Agreement or the other Transaction Documents shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated, which incorrect or untrue representation, to the extent such breach is reasonably susceptible to cure, is not cured within five (5) Business Days after the earlier of notice thereof from Buyer or Seller obtaining actual knowledge of such breach (unless Seller shall have made any such representation with actual knowledge that it was materially incorrect or untrue at the time made, in which case such breach shall constitute an immediate Facility Event of Default); provided, however, that the breach of any Purchased Loan Representation made by Seller with respect to any Purchased Loan in any Transaction Document shall not be considered a Facility Event of Default if incorrect or untrue (but such breach may be a Transaction Event of Default as and to the extent provided in Section 13(a)(II)(vi)), unless Seller shall have made any such representation with knowledge that it was materially incorrect or untrue at the time made, in which case such breach shall constitute an immediate Facility Event of Default); (viii) either (A) the Sponsor (1) shall fail to observe any of the financial covenants set forth in the Guaranty or (2) shall have defaulted or failed to perform any other covenant under the Guaranty in any material respect, or (B) Member shall have defaulted or failed to perform under the Member Guaranty, or (C) the Guaranty or Member Guaranty shall have been revoked, rescinded or otherwise cease to be in full force and effect; (ix) a final non-appealable judgment by any competent court in the United States of America having jurisdiction over Seller or Sponsor, as applicable for the payment of money in an amount greater than $100,000 (in the case of Seller) or $5,000,000 (in the case of the Sponsor) shall have been rendered against Seller or the Sponsor, and remained undischarged or unpaid for a period of sixty (60) days, during which period execution of such judgment is not effectively stayed by bonding over or other means reasonably acceptable to Buyer; (x) Sponsor shall have defaulted or failed to perform under any note, indenture, loan agreement, guaranty, repurchase agreement, short sale, futures contract (including Eurodollar futures) or options contract or any interest rate swap, cap or collar agreement or derivatives transaction to which it is a party (other than a Transaction Document or any Affiliated Hedging Transaction), which default (A) involves the failure to pay a monetary obligation of $5,000,000 or more, or (B) permits the acceleration of the maturity of obligations, or the declaration of a mandatory early repurchase date or termination date with respect to indebtedness or obligations of $5,000,000 or more, by any other party to or beneficiary of such note, indenture, loan agreement, guaranty, repurchase agreement, swap agreement or other contract agreement or transaction due to the failure to observe the financial covenants, if any, set forth therein; provided, however, that any such default, failure to perform or breach shall not constitute a Facility Event of Default if Sponsor cures such default, failure to perform or breach, as the case may be, within the grace period, if any, provided under the applicable agreement; (xi) Seller shall have defaulted or failed to perform under any note, indenture, loan agreement, guaranty, repurchase agreement, short sale, futures contract (including Eurodollar futures) or options contract or any interest rate swap, cap or collar agreement or derivatives transaction to which it is a party (other than a Transaction Document or any Affiliated Hedging Transaction), which default (A) involves the failure to pay a monetary obligation of $100,000 or more, or (B) permits the acceleration of the maturity of obligations, or the declaration of a mandatory early repurchase date or termination date with respect to indebtedness or obligations of $100,000 or more, by any other party to or beneficiary of such note, indenture, loan agreement, guaranty, repurchase agreement, swap agreement or other contract agreement or transaction due to the failure to observe the financial covenants, if any, set forth therein; provided, however, that any such default, failure to perform or breach shall not constitute a Facility Event of Default if Sponsor cures such default, failure to perform or breach, as the case may be, within the grace period, if any, provided under the applicable agreement; (xii) if (A) Seller, Sponsor or any Affiliate of Seller or Sponsor defaults beyond any applicable grace period in paying any amount or performing any obligation due to an Affiliated Hedge Counterparty under any Affiliated Hedging Transaction or (B) Seller or Sponsor defaults beyond any applicable grace period in paying any amount or performing any obligation due to Buyer or any Affiliate of Buyer under any other financing, swap, hedging, security or credit agreement between Seller or Sponsor and Buyer or any Affiliate of Buyer; or (xiii) if Seller or Sponsor shall breach or fail to perform any of the terms, covenants, obligations or conditions of this Agreement or any other Transaction Document, other than as specifically otherwise referred to in this definition of “Facility Event of Default”, and such breach or failure to perform is not remedied within ten (10) Business Days after written notice thereof to Seller by Buyer, or its successors or assigns, or such other (shorter or longer) cure period (if any) as may be expressly provided herein or in such Transaction Document (unless this Agreement or such other Transaction Document expressly provides that such breach or failure constitutes an immediate Facility Event of Default, in which case no notice or cure period shall apply); or (xiv) prior to an internalization of management of NS Income II, Manager resigns or is removed, terminated or otherwise no longer serves or is unable to serve as the asset manager and investment advisor of NS Income II pursuant to the Asset Management Agreement or Manager is in material breach of its duties or obligations under the Asset Management Agreement, which breach would give rise to a right to terminate the Asset Management Agreement pursuant to the terms thereof, beyond any applicable notice and cure period and Manager is not replaced with a successor manager reasonably acceptable to Buyer pursuant to a replacement Asset Management acceptable to Buyer within sixty (60) days. (II) Each of the following shall constitute a “Transaction Event of Default”: (i) the applicable Series Seller fails to repurchase a Purchased Loan upon the applicable Repurchase Date therefor; (ii) the applicable Series Seller fails to pay any Mandatory Amortization Amount with respect to a Purchased Loan when required pursuant to Section 4 hereof; (iii) the applicable Series Seller fails to repurchase a Purchased Loan which is the subject of a Mandatory Early Repurchase, as and when required pursuant to Section 3(l); (iv) subject to the provisions of Section 5(e), the failure of Buyer to receive on any Remittance Date the accrued and unpaid Price Differential for a Transaction; (v) subject to the provisions of Sections 5(e), the failure of any Affiliated Hedge Counterparty to receive on any Remittance Date, on the Repurchase Date or any other applicable due date under any Affiliated Hedging Transaction, the accrued and unpaid amounts due under any such Affiliated Hedging Transaction and such failure is not remedied within the applicable cure period (if any) set forth in the related Affiliated Hedging Transaction documents; or (vi) any Purchased Loan Representation with respect to any Purchased Loan in any Transaction Document shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated and such incorrect or untrue Purchased Loan Representation, to the extent such breach is reasonably susceptible to cure, continues unremedied for five (5) Business Days after the earlier of notice thereof from Buyer or Seller obtaining actual knowledge of such breach (unless Seller shall have made any such representation with actual knowledge that it was materially incorrect or untrue at the time made, in which case such breach shall constitute an immediate Transaction Event of Default); provided that a Transaction Event of Default shall not be deemed to have occurred if the applicable Series Seller terminates the related Transaction and repurchases the related Purchased Loan(s) on an Early Repurchase Date no later than five (5) Business Days after notice from Buyer to the applicable Series Seller that such Purchased Loan Representation is incorrect or untrue. (b) If a Facility Event of Default shall occur and be continuing, the following rights and remedies shall be available to Buyer: (i) At the option of Buyer, exercised by written notice to Seller (which option shall be deemed to have been exercised, even if no written notice is given, immediately upon the occurrence of an Act of Insolvency), the Repurchase Date for each Transaction hereunder shall, if it has not already occurred, be deemed immediately to occur (the date on which such option is exercised or deemed to have been exercised being referred to hereinafter as the “Accelerated Repurchase Date”). (ii) The failure If Buyer exercises or is deemed to have exercised the option referred to in Section 13(b)(i) of Maker this Agreement: (A) Seller’s obligations hereunder to observe or perform any other obligation set forth in this Note or that certain Stock Purchase Agreement between SWS Group, Inc. ("SWS") repurchase all Purchased Loans shall become immediately due and Maker, dated payable on and as of December 14the Accelerated Repurchase Date; and (B) the Repurchase Price with respect to each Transaction (determined as of the Accelerated Repurchase Date) shall include the accrued and unpaid Price Differential with respect to each Purchased Loan accrued at the Pricing Rate applicable upon the occurrence of an Event of Default; and (C) the Custodian shall, 2001 (upon the "SPA");request of Buyer, deliver to Buyer all Purchased Loan Documents, instruments, certificates and other documents then held by the Custodian relating to the Purchased Loans. (iii) Any transfer Upon the occurrence of the Collateral by Maker a Facility Event of Default, Buyer may, following one (1) Business Day’s prior notice to SWS as a result of an exercise Seller, (A) by SWS immediately sell, at a public or private sale in a commercially reasonable manner and at such price or prices as Buyer may deem satisfactory in its sole and absolute discretion any or all of any call right, the Purchased Loans or (B) in its sole and absolute discretion elect, in lieu of selling all or a portion of such Purchased Loans, to give Seller credit for such Purchased Loans in an amount equal to the Market Value of such Purchased Loans against the aggregate unpaid Repurchase Price for such Purchased Loans and any other amounts owing by Maker Seller under this Agreement or the Transaction Documents. The proceeds of any put right, disposition of Purchased Loans effected pursuant to this Section 13(b)(iii) shall be applied, (v) first, to the terms actual, out-of-pocket costs and expenses incurred by Buyer in connection with Seller’s default; (w) second, without duplication, to any and all amounts due under Section 3(h), including, without limitation, costs of cover, if any; (x) third, to the SPARepurchase Price; orand (y) fourth, to return any excess to Seller. (iv) If Maker The parties acknowledge and agree that (a1) makes the Purchased Loans subject to Transactions hereunder are not instruments traded in a transfer recognized market, and, in fraud of creditors, or makes an assignment for the benefit of creditors, absence of a substantial part of Maker's property; generally recognized source for prices or bid or offer quotations for any Purchased Loans, Buyer may establish the source therefor in its sole and absolute discretion and (b2) admits in writing Maker's inability all prices, bids and offers shall be determined together with accrued Available Income (except to pay his the extent contrary to market practice with respect to the relevant Purchased Loans). The parties recognize that it may not be possible to purchase or her debts as they become due; (c) has a receiver, trustee or custodian appointed for, or take possession of, all or substantially sell all of Maker's assetsthe Purchased Loans on a particular Business Day, either in a proceeding brought by Maker or in a proceeding brought against Maker and transaction with the same purchaser, or in the same manner because the market for such appointment is Purchased Loans may not discharged or be liquid at such possession is not terminated within sixty (60) days after the effective date thereof or he or she consents to or acquiesces in such appointment or possession; (d) files a petition for relief under the United States Bankruptcy Code or any other present or future federal or state insolvency, bankruptcy or similar laws (all time. In view of the foregoing hereinafter collectively called "Applicable Bankruptcy Law"nature of the Purchased Loans, the parties agree that liquidation of a Transaction or the Purchased Loans pursuant to this Section 13(b) or an involuntary petition for relief is filed against Maker under any Applicable Bankruptcy Law Section 13(c) does not require a public purchase or sale and such involuntary petition is not dismissed within sixty (60) days after the filing thereof, that a good faith private purchase or an order for relief naming Maker is entered under any Applicable Bankruptcy Law, or any composition, rearrangement, extension, reorganization or other relief of debtors now or hereafter existing is requested or consented to by Maker; (e) fails sale shall be deemed to have discharged within been made in a period commercially reasonable manner. Accordingly, Buyer may elect, in its sole and absolute discretion (but upon not less than one (1) Business Day’s prior notice to Seller), the time and manner of thirty liquidating any Purchased Loans pursuant to this Section 13(b) or Section 13(c), and nothing contained herein shall (30A) days obligate Buyer to liquidate any attachment, sequestration or similar writ levied upon a substantial part of Maker's property; or (f) fails to pay within thirty (30) days any final money judgment against Maker. (b) Upon Purchased Loans on the occurrence and during the continuance of an Event of Default under this Note, Payee may declare or to liquidate all of the entire unpaid Principal Sum and accrued and unpaid interest Purchased Loans in the same manner or on this Note immediately due and payable, without further notice, demand, the same Business Day or presentment, foreclose (B) constitute a waiver of any liens or security interests securing all or any part hereof, or exercise any other right or remedy of Buyer. (v) Seller shall be liable to which Payee may be entitled Buyer for (A) the amount of all out-of-pocket expenses, including reasonable legal fees and expenses, actually incurred by agreement, at law, Buyer in connection with or in equity; provided, however, that no as a consequence of an Event of Default shall be deemed to have -------- ------- occurred unless notice Default, (B) all costs actually incurred in connection with covering transactions, and (C) any other actual out-of-pocket loss, damage, cost or expense directly arising or resulting from the occurrence of the event giving rise to a potential an Event of Default Default. (vi) Buyer shall have been delivered have, in addition to Maker and Maker shall have failed to correct or cure such event within fifteen (15) days following his receipt of such notice; provided further, however, that upon any Event of Default ---------------- ------- under Section 3(a)(iii) and (iv) hereof, this Note shall automatically become due and payable without necessity of any notice or action on the part of Payee and without the ability of Maker to cure such event. Payee shall have all its rights and remedies available to it under the Uniform Commercial Code Transaction Documents, all of the rights and remedies provided by applicable federal, state and local laws (including, without limitation, if the Transactions are characterized as adopted in secured financings, the rights and remedies of a secured party under the UCC of the State of Texas.New York, to the extent that the UCC is applicable, and the right to offset any mutual debt and claim), in equity, and under any other agreement between Buyer and Seller. Without limiting the generality of the foregoing, Buyer shall be entitled to set off the proceeds of the liquidation of the Purchased Loans against all of Seller’s obligations to Buyer under this Agreement, whether or not such obligations are then due, without prejudice to

Events of Default Remedies. (a) Each of the following shall constitute events constitutes an "Event of Default" under for purposes of this Note: Agreement: if three (3) consecutive payments of the Monthly Revenue Share Amount due to the Investor are not paid by the Company into the Holding Account for further distribution to the Investor on or prior to the due date, to the extent the delay is not excused, as defined in this Agreement, and each such non-payment continues for a period of five (5) business days thereafter, regardless of whether any previous payments remain outstanding; if any one (1) payment of the Monthly Revenue Share Amount due to the Investor is not paid by the Company into the Holding Account for further distribution to the Investor on or prior to the due date, to the extent the delay is not excused, as defined in this Agreement, and the non-payment continues for a period of sixty (60) days thereafter; an involuntary proceeding has been commenced or an involuntary petition has been filed seeking (i) The failure liquidation, reorganization or other relief in respect of Maker to pay when due the Company or any of its debts, or of a substantial part of the Principal Sumits assets, interest under any federal, state or other payment required to be made pursuant to this Note. foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) The failure the appointment of Maker a receiver, trustee, custodian, sequestrator, conservator or similar official for the Company or for a substantial part of its assets, and, in any such case, such proceeding or petition has continued undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing has been entered; the Company has (i) voluntarily commenced any proceeding or filed any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to observe the institution of, or perform fail to contest in a timely and appropriate manner, any other obligation set forth proceeding or petition described in this Note or that certain Stock Purchase Agreement between SWS Groupclause (c) immediately above, Inc. ("SWS") and Maker, dated as of December 14, 2001 (the "SPA"); (iii) Any transfer of the Collateral by Maker to SWS as a result of an exercise (A) by SWS of any call right, apply for or (B) by Maker of any put right, pursuant consent to the terms appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the SPA; or Company or for a substantial part of its assets, (iv) If Maker file an answer admitting the material allegations of a petition filed against it in any such proceeding, (av) makes make a transfer in fraud of creditors, or makes an general assignment for the benefit of creditorscreditors or (vi) take any action for the purpose of effecting any of the foregoing; if (i) the Company breaches any other covenant of the Company contained in this Agreement, of a substantial part of Maker's property; (b) admits in writing Maker's inability to pay his or her debts as they become due; (c) has a receiver, trustee or custodian appointed for, or take possession of, all or substantially all of Maker's assets, either in a proceeding brought by Maker or in a proceeding brought against Maker and such appointment is not discharged or such possession is not terminated within sixty breach continues for a period of five (605) business days after the effective date thereof Investor, or he or she consents to or acquiesces in such appointment or possession; (d) files a petition for relief under the United States Bankruptcy Code or any other present or future federal or state insolvencyAdministrative Agent on the Investor’s behalf, bankruptcy or similar laws (all delivers written notice of the foregoing hereinafter collectively called "Applicable Bankruptcy Law") or an involuntary petition for relief is filed against Maker under any Applicable Bankruptcy Law and such involuntary petition is not dismissed within sixty (60) days after breach to the filing thereofCompany, or (ii) any representation or warranty made in this Agreement by the Company shall be materially incorrect when made or deemed made. If an order for relief naming Maker is entered Event of Default occurs under any Applicable Bankruptcy LawSection 9(a), Section 9(b), or any compositionSection 9(e) and is continuing, rearrangementthen an amount equal to the Outstanding Debt shall, extensionat the option of the Investor (as communicated by the Investor or the Administrative Agent on its behalf) and, reorganization or other relief of debtors now or hereafter existing is requested or consented to by Maker; (e) fails to have discharged within a period of thirty (30) days any attachment, sequestration or similar writ levied upon a substantial part of Maker's property; or (f) fails to pay within thirty (30) days any final money judgment against Maker. (b) Upon in the occurrence and during the continuance case of an Event of Default under this Notepursuant to Section 9(c) or Section 9(d), Payee may declare the entire unpaid Principal Sum and accrued and unpaid interest on this Note automatically, become immediately due and payable, without further notice, demand, or presentment, foreclose any liens or security interests securing all or any part hereof, or exercise any other right or remedy payable by the Company to which Payee may be entitled by agreement, at law, or in equity; provided, however, that no Event of Default shall be deemed to have -------- ------- occurred unless notice of the event giving rise to a potential Event of Default shall have been delivered to Maker and Maker shall have failed to correct or cure such event within fifteen (15) days following his receipt of such notice; provided further, however, that upon any Event of Default ---------------- ------- under Section 3(a)(iii) and (iv) hereof, this Note shall automatically become due and payable without necessity of any notice or action on the part of Payee and without the ability of Maker to cure such event. Payee shall have all rights and remedies available to it under the Uniform Commercial Code as adopted in the State of TexasInvestor.

Events of Default Remedies. (a) Each of the following shall constitute an "Event of Default" under this Note: (i) The failure of Maker to pay when due any part of the Principal Sum, interest or other payment required to be made pursuant to this Note. (ii) The failure of Maker to observe or perform any other obligation set forth in this Note or that certain Stock Purchase Agreement between SWS Group, Inc. ("SWS") and Maker, dated as of December 14, 2001 (the "SPA"); (iii) Any transfer of the Collateral by Maker to SWS as a result of an exercise (A) by SWS of any call right, or (B) by Maker of any put right, pursuant to the terms of the SPA; or (iv) If Maker (a) makes a transfer in fraud of creditors, or makes an assignment for the benefit of creditors, of a substantial part of Maker's property; (b) admits in writing Maker's inability to pay his or her debts as they become due; (c) has a receiver, trustee or custodian appointed for, or take possession of, all or substantially all of Maker's assets, either in a proceeding brought by Maker or in a proceeding brought against Maker and such appointment is not discharged or such possession is not terminated within sixty (60) days after the effective date thereof or he or she consents to or acquiesces in such appointment or possession; (d) files a petition for relief under the United States Bankruptcy Code or any other present or future federal or state insolvency, bankruptcy or similar laws (all of the foregoing hereinafter collectively called "Applicable Bankruptcy Law") or an involuntary petition for relief is filed against Maker under any Applicable Bankruptcy Law and such involuntary petition is not dismissed within sixty (60) days after the filing thereof, or an order for relief naming Maker is entered under any Applicable Bankruptcy Law, or any composition, rearrangement, extension, reorganization or other relief of debtors now or hereafter existing is requested or consented to by Maker; (e) fails to have discharged within a period of thirty (30) days any attachment, sequestration or similar writ levied upon a substantial part of Maker's property; or (f) fails to pay within thirty (30) days any final money judgment against Maker. (b) Upon the occurrence and during the continuance of an Event of Default under this Note, Payee may declare the entire unpaid Principal Sum and accrued and unpaid interest on this Note immediately due and payable, without further notice, demand, or presentment, foreclose any liens or security interests securing all or any part hereof, or exercise any other right or remedy to which Payee may be entitled by agreement, at law, or in equity; provided, however, that no Event of -------- ------- Default shall be deemed to have -------- ------- occurred unless notice of the event giving rise to a potential Event of Default shall have been delivered to Maker and Maker shall have failed to correct or cure such event within fifteen (15) days following his receipt of such notice; provided further, however, that upon any Event of Default under ---------------- ------- under Section 3(a)(iii) and (iv) hereof, this Note shall automatically become due and payable without necessity of any notice or action on the part of Payee and without the ability of Maker to cure such event. Payee shall have all rights and remedies available to it under the Uniform Commercial Code as adopted in the State of Texas.

Events of Default Remedies. (a) Each of the following shall constitute events constitutes an "“Event of Default" under ” for purposes of this NoteAgreement: (a) if two (2) consecutive payments of the Monthly Revenue Share Amount due to GSRX are not paid by the Company to GSRX on or prior to the due date, to the extent the delay is not excused pursuant to Section 5, regardless of whether any previous payments remain outstanding; (b) an involuntary proceeding has been commenced or an involuntary petition has been filed seeking (i) The failure liquidation, reorganization or other relief in respect of Maker to pay when due the Company or any of its debts, or of a substantial part of the Principal Sumits assets, interest under any federal, state or other payment required to be made pursuant to this Note. foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) The failure the appointment of Maker to observe a receiver, trustee, custodian, conservator or perform similar official for the Company or for a substantial part of its assets, and, in any other obligation set forth in this Note such case, such proceeding or that certain Stock Purchase Agreement between SWS Group, Inc. petition has continued un-dismissed for sixty ("SWS"60) and Maker, dated as days or an order or decree approving or ordering any of December 14, 2001 (the "SPA")foregoing has been entered; (c) the Company has (i) voluntarily commenced any proceeding or filed any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (c) immediately above, (iii) Any transfer of the Collateral by Maker to SWS as a result of an exercise (A) by SWS of any call right, apply for or (B) by Maker of any put right, pursuant consent to the terms appointment of a receiver, trustee, custodian, conservator or similar official for the SPA; or Company or for a substantial part of its assets, (iv) If Maker file an answer admitting the material allegations of a petition filed against it in any such proceeding, (av) makes make a transfer in fraud of creditors, or makes an general assignment for the benefit of creditors, creditors or (vi) take any action for the purpose of a substantial part effecting any of Maker's property; (b) admits in writing Maker's inability to pay his or her debts as they become due; (c) has a receiver, trustee or custodian appointed for, or take possession of, all or substantially all of Maker's assets, either in a proceeding brought by Maker or in a proceeding brought against Maker and such appointment is not discharged or such possession is not terminated within sixty (60) days after the effective date thereof or he or she consents to or acquiesces in such appointment or possession; foregoing; (d) files a petition for relief under if (i) the United States Bankruptcy Code or Company breaches any other present or future federal or state insolvency, bankruptcy or similar laws (all covenant of the foregoing hereinafter collectively called "Applicable Bankruptcy Law") or an involuntary petition for relief is filed against Maker under any Applicable Bankruptcy Law Company contained in this Agreement, and such involuntary petition is not dismissed within sixty (60) days after the filing thereof, or an order breach continues for relief naming Maker is entered under any Applicable Bankruptcy Law, or any composition, rearrangement, extension, reorganization or other relief of debtors now or hereafter existing is requested or consented to by Maker; (e) fails to have discharged within a period of thirty fifteen (3015) business days any attachmentafter GSRX delivers written notice of the breach to the Company, sequestration or similar writ levied upon a substantial part of Maker's property; or (fii) fails any representation or warranty made in this Agreement by the Company shall be materially incorrect when made or deemed made. If an Event of Default occurs under Section 7(a), Section 7(b), or Section 7(d) and is continuing, then an amount equal to pay within thirty (30) days any final money judgment against Maker. (b) Upon the occurrence outstanding and during unpaid Monthly Revenue Share including all applicable interest shall, at the continuance option of GSRX and, in the case of an Event of Default under this Notepursuant to Section 7(c) automatically, Payee may declare the entire unpaid Principal Sum and accrued and unpaid interest on this Note become immediately due and payable, without further notice, demand, or presentment, foreclose any liens or security interests securing all or any part hereof, or exercise any other right or remedy payable by the Company to which Payee may be entitled by agreement, at law, or in equity; provided, however, that no Event of Default shall be deemed to have -------- ------- occurred unless notice of the event giving rise to a potential Event of Default shall have been delivered to Maker and Maker shall have failed to correct or cure such event within fifteen (15) days following his receipt of such notice; provided further, however, that upon any Event of Default ---------------- ------- under Section 3(a)(iii) and (iv) hereof, this Note shall automatically become due and payable without necessity of any notice or action on the part of Payee and without the ability of Maker to cure such event. Payee shall have all rights and remedies available to it under the Uniform Commercial Code as adopted in the State of TexasGSRX.

Events of Default Remedies. The occurrence of any of the following events shall constitute an Event of Default hereunder with respect to any particular series of Securities: (a) Each default in the due and punctual payment of any installment of interest upon any of the following Securities of that series as and when the same shall constitute an "Event become due and payable and continuance of Default" under this Note:such default for a period of 30 days; or (ib) The default in the due and punctual payment of the principal of (or premium, if any, on) any of the Securities of that series as and when the same shall become due and payable either at maturity, by declaration as authorized by this Indenture, or otherwise; or (c) failure of Maker to pay when due any on the part of the Principal Sum, interest or other payment required to be made pursuant to this Note. (ii) The failure of Maker Corporation duly to observe or perform any other obligation of the covenants or agreements on the part of the Corporation set forth in the Securities of that series or in this Note or that certain Stock Purchase Agreement between SWS Group, Inc. Indenture ("SWS") and Maker, dated as of December 14, 2001 (the "SPA"); (iii) Any transfer of the Collateral by Maker to SWS as a result of an exercise (A) by SWS of any call right, or (B) by Maker of any put right, pursuant to other than those set forth exclusively in the terms of Securities of any series other than that series) continued for a period of sixty days after there has been given, by registered or certified mail, to the SPACorporation by the Trustee, or to the Corporation and the Trustee by the holders of at least twenty-five percent in principal amount of the Securities of that series at the time outstanding, a written notice specifying such failure and requiring the same to be remedied and stating that such notice is a "Notice of Default" hereunder; or (ivd) If Maker (a) makes the entry of a transfer decree or order by a court having jurisdiction in fraud the premises granting relief in respect of creditorsthe Corporation in an involuntary case under the Federal Bankruptcy Code adjudging the Corporation a bankrupt or insolvent, or makes approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Corporation under the Federal Bankruptcy Code or any other applicable Federal or State law, or appointing a receiver, liquidator, custodian, assignee, trustee, sequestrator (or other similar official) of the Corporation, or of any substantial part of the respective properties of either, or ordering the winding up or liquidation of the affairs of either, and the continuance of any such decree or order unstayed and in effect for a period of 120 days; or (e) the institution by the Corporation of proceedings to be adjudicated a bankrupt or insolvent, or the consent by the Corporation to the institution of bankruptcy or insolvency proceedings against it, or the filing by the Corporation of a petition or answer or consent seeking reorganization or relief under the Federal Bankruptcy Code or any other applicable Federal or State law, or the consent by the Corporation to the filing of any such petition or to the appointment of a receiver, liquidator, custodian, assignee, trustee, sequestrator (or other similar official) of the Corporation, or of any substantial part of the respective properties of either, or the making by the Corporation of an assignment for the benefit of creditors, of a substantial part of Maker's property; (b) admits or the admission by the Corporation in writing Maker's of its inability to pay his or her its debts generally as they become due; (c) has a receiver, trustee or custodian appointed for, or take possession ofthe taking of corporate action by the Corporation in furtherance of any such action. In case one or more of the Events of Default specified above shall have occurred and be continuing with respect to any particular series of Securities, all or substantially all then and in each and every such case, unless the principal of Maker's assets, either in a proceeding brought by Maker or in a proceeding brought against Maker and such appointment is not discharged or such possession is not terminated within sixty (60) days after the effective date thereof or he or she consents to or acquiesces in such appointment or possession; (d) files a petition for relief under the United States Bankruptcy Code or any other present or future federal or state insolvency, bankruptcy or similar laws (all of the foregoing hereinafter collectively called "Applicable Bankruptcy Law") Securities of that series shall have already become due and payable, either the Trustee or an involuntary petition for relief is filed against Maker under any Applicable Bankruptcy Law the holders of not less than twenty-five percent in aggregate principal amount of the Securities of that series then outstanding hereunder, by notice in writing to the Corporation (and such involuntary petition is not dismissed within sixty (60) days after to the filing thereofTrustee if given by Securityholders), or an order for relief naming Maker is entered under any Applicable Bankruptcy Law, or any composition, rearrangement, extension, reorganization or other relief of debtors now or hereafter existing is requested or consented to by Maker; (e) fails to have discharged within a period of thirty (30) days any attachment, sequestration or similar writ levied upon a substantial part of Maker's property; or (f) fails to pay within thirty (30) days any final money judgment against Maker. (b) Upon the occurrence and during the continuance of an Event of Default under this Note, Payee may declare the entire unpaid Principal Sum principal or, in the case of Discounted Securities, such amount of principal as may be provided for in such Securities, of all the Securities of that series to be due and accrued payable immediately, and unpaid interest on this Note upon any such declaration the same shall become and shall be immediately due and payable, without further notice, demand, or presentment, foreclose any liens or security interests securing all or any part hereof, or exercise any other right or remedy to which Payee may be entitled by agreement, at law, anything in this Indenture or in equity; providedthe Securities of that series contained to the contrary notwithstanding. This provision, however, is subject to the condition that no Event if, at any time after such principal or such amount of Default shall be deemed to have -------- ------- occurred unless notice of principal, as the event giving rise to a potential Event of Default case may be, shall have been delivered to Maker so declared due and Maker payable, and before any judgment or decree for the payment of the moneys due shall have failed been obtained or entered as hereinafter provided, the Corporation shall pay or shall deposit with the Trustee a sum sufficient to correct or cure such event within fifteen pay all matured installments of interest upon all Securities of that series and the principal of (15and premium, if any, on) days following his receipt any and all Securities of that series which shall have become due otherwise than by acceleration (with interest on overdue installments of interest (to the extent that payment of such notice; provided further, however, that upon any Event of Default ---------------- ------- interest is enforceable under Section 3(a)(iiiapplicable law) and on such principal (ivand premium, if any) hereofat the rate of interest (or, in the case of Discounted Securities at the Yield to Maturity) borne by such Securities, to the date of such payment or deposit) and the expenses of the Trustee, and any and all defaults under this Note Indenture with respect to the Securities of the series, other than the nonpayment of principal of (and premium, if any) and accrued interest on the Securities of that series which shall automatically have become due and payable without necessity of any notice or action on the part of Payee and without the ability of Maker to cure such event. Payee by acceleration shall have been remedied-then and in every such case the holders of a majority in aggregate principal amount of the Securities of that series then outstanding, by written notice to the Corporation and to the Trustee, may waive all defaults and rescind and annul such declaration and its consequences; but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default, or shall impair any right consequent thereon. In case the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee, then and in every such case the Corporation and the Trustee shall be restored respectively to their several positions and rights hereunder, and all rights, remedies available to it under and powers of the Uniform Commercial Code Corporation and the Trustee shall continue as adopted in the State of Texasthough no such proceeding had been taken.

Events of Default Remedies. (a) After the occurrence and during the continuance of an Event of Default, Seller hereby appoints Buyer as attorney-in-fact of Seller for the purpose of carrying out the provisions of this Agreement and taking any action and executing or endorsing any instruments that Buyer may deem necessary or advisable to accomplish the purposes hereof, which appointment as attorney-in-fact is irrevocable and coupled with an interest. (I) Each of the following shall constitute an "a “Facility Event of Default" under this Note”: (i) The failure an Act of Maker Insolvency occurs with respect to pay when due Seller, Sponsor, Member or any part of their respective Affiliates; (ii) Seller, Sponsor or Member shall admit its inability to, or its intention not to, perform any of its obligations hereunder or under any of the Principal SumTransaction Documents, (iii) either (A) the Transaction Documents shall for any reason not cause, interest or other payment required shall cease to cause, Buyer to be made the owner free of any adverse claim (other than the rights of Seller pursuant to this NoteAgreement) of any of the Purchased Loans, or (B) the Transaction Documents with respect to any Transaction shall for any reason cease to create a valid first priority security interest in favor of Buyer in any of the Purchased Loans; (iv) failure of Master Seller to make any payment owing to Buyer which has become due under this Agreement or any other Transaction Document (other than any monetary Transaction Event of Default by any Series Seller under Sections 13(a)(II)(i)-(iv) of this Agreement), whether by acceleration or otherwise under the terms of this Agreement or the other Transaction Documents, which failure is not remedied within five (5) Business Days; (v) any governmental, regulatory, or self-regulatory authority shall have taken any action to remove, limit, restrict, suspend or terminate the rights, privileges, or operations of Seller, which suspension results in or is reasonably likely to result in a Material Adverse Effect; (vi) a Change of Control shall have occurred that has not been consented to by Buyer in writing; (vii) any representation made by Seller or Sponsor in this Agreement or the other Transaction Documents shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated, which incorrect or untrue representation, to the extent such breach is reasonably susceptible to cure, is not cured within five (5) Business Days after the earlier of notice thereof from Buyer or Seller obtaining actual knowledge of such breach (unless Seller shall have made any such representation with actual knowledge that it was materially incorrect or untrue at the time made, in which case such breach shall constitute an immediate Facility Event of Default); provided, however, that the breach of any Purchased Loan Representations made by Seller with respect to any Purchased Loan in any Transaction Document shall not be considered a Facility Event of Default if incorrect or untrue (but such breach may be a Transaction Event of Default as and to the extent provided in Section 13(a)(II)(vi)), unless Seller shall have made any such representation with knowledge that it was materially incorrect or untrue at the time made, in which case such breach shall constitute an immediate Facility Event of Default; (viii) either (A) the Sponsor shall fail to observe any of the financial covenants set forth in Section 5 of the Guaranty or shall have defaulted or failed to perform under the Guaranty or (B) Member shall have defaulted or failed to perform under the Member Guaranty or (C) the Guaranty or Member Guaranty shall have been revoked, rescinded or otherwise cease to be in full force and effect; (ix) a final non-appealable judgment by any competent court in the United States of America for the payment of money in an amount greater than $250,000 (in the case of Seller) or $20,000,000 (in the case of the Sponsor) (as such amount may be adjusted pursuant to the last sentence of this Section 13(a)(I)) shall have been rendered against Seller or the Sponsor, and remained undischarged or unpaid for a period of sixty (60) days, during which period execution of such judgment is not effectively stayed by bonding over or other means acceptable to Buyer; (x) Sponsor shall have defaulted or failed to perform under any note, indenture, loan agreement, guaranty, repurchase agreement, short sale, futures contract (including Eurodollar futures) or options contract or any interest rate swap, cap or collar agreement or derivatives transaction to which it is a party (other than a Transaction Document), which default (A) involves the failure to pay a monetary obligation of $20,000,000 (as such amount may be adjusted pursuant to the last sentence of this Section 13(a)(I)) or more, or (B) permits the acceleration of the maturity of obligations, or the declaration of a mandatory early repurchase date or termination date with respect to indebtedness or obligations of $20,000,000 (as such amount may be adjusted pursuant to the last sentence of this Section 13(a)(I)) or more, by any other party to or beneficiary of such note, indenture, loan agreement, guaranty, repurchase agreement, swap agreement or other contract agreement or transaction due to the failure to observe the financial covenants, if any, set forth therein; provided, however, that any such default, failure to perform or breach shall not constitute a Facility Event of Default if Sponsor cures such default, failure to perform or breach, as the case may be, within the grace period, if any, provided under the applicable agreement; (xi) Seller shall have defaulted or failed to perform under any note, indenture, loan agreement, guaranty, repurchase agreement, swap agreement or any other contract, agreement or transaction to which it is a party, which default (A) involves the failure to pay a monetary obligation of $250,000 or more, or (B) permits the acceleration of the maturity of obligations, or the declaration of a mandatory early repurchase date or termination date with respect to indebtedness or obligations of $250,000 or more, by any other party to or beneficiary of such note, indenture, loan agreement, guaranty, repurchase agreement, swap agreement or any other contract, agreement or transaction; provided, however, that any such default, failure to perform or breach shall not constitute a Facility Event of Default if Seller cures such default, failure to perform or breach, as the case may be, within the grace period, if any, provided under the applicable agreement; (xii) if (A) Seller, Sponsor or any Affiliate of Seller or Sponsor defaults beyond any applicable grace period in paying any amount or performing any obligation due to an Affiliated Hedge Counterparty under any Affiliated Hedging Transaction or (B) Seller or Sponsor defaults beyond any applicable grace period in paying any amount or performing any obligation due to Buyer or any Affiliate of Buyer under any other financing, swap, hedging, security or credit agreement between Seller or Sponsor and Buyer or any Affiliate of Buyer; (xiii) if Seller or Sponsor or shall breach or fail to perform any of the terms, covenants, obligations or conditions of this Agreement or any other Transaction Document, other than as specifically otherwise referred to in this definition of “Facility Event of Default”, and such breach or failure to perform is not remedied within ten (10) Business Days after written notice thereof to Seller by Buyer, or its successors or assigns , or such other (shorter or longer) cure period (if any) as may be expressly provided herein or in such Transaction Document (unless this Agreement or such other Transaction Document expressly provides that such breach or failure constitutes an immediate Facility Event of Default, in which case no notice or cure period shall apply); or (xiv) prior to an internalization of management of Sponsor, Manager resigns or is removed, terminated or otherwise no longer serves or is unable to serve as the asset manager and investment advisor of Sponsor pursuant to the Asset Management Agreement or Manager is in material breach of its duties or obligations under the Asset Management Agreement, which breach would give rise to a right to terminate the Asset Management Agreement pursuant to the terms thereof, beyond any applicable notice and cure period and Manager is not replaced with a successor manager reasonably acceptable to Buyer pursuant to a replacement Asset Management acceptable to Buyer within thirty (30) days. Seller represents and warrants that each Other Financing Agreement to which Sponsor or any Affiliate thereof is a party as of the date hereof (or which Sponsor or an Affiliate of Sponsor intend to enter into as of the date hereof) provide (or will provide) for events of default similar to those set forth in Sections 13(a)(I)(ix) and (x) upon a judgment against Sponsor and/or such Affiliate in an amount not less than $20,000,000 and upon default by Sponsor and/or Affiliate under any loan agreement or other agreement referenced in paragraph (x) above involving any obligation of not less than $20,000,000. In the event that, after the date hereof, Sponsor and/or any direct or indirect subsidiary of Sponsor shall (1) enter into any Other Financing Agreement which includes a judgment or cross-default event of default similar to those in Sections 13(a)(I)(ix) and/or (x) above that is triggered by a judgment or cross-default with respect to any obligation in an amount less than $20,000,000 or (2) no longer be party to any Other Financing Agreement, then Seller shall deliver written notice thereof to Buyer and each reference to “$20,000,000” in Sections 13(a)(I)(ix) and (x) shall automatically be deemed amended to refer to $10,000,000 or, in the case of clause (1) above, the greater of $10,000,000 and the default trigger amount in such Other Financing Agreement (but in no event greater than $20,000,000). (II) Each of the following shall constitute a “Transaction Event of Default”: (i) the applicable Series Seller fails to repurchase a Purchased Loan upon the applicable Repurchase Date therefor (ii) the applicable Series Seller fails to pay any Margin Deficit with respect to a Purchased Loan when required pursuant to Section 4 hereof; (iii) the applicable Series Seller fails to repurchase a Purchased Loan which is the subject of a Mandatory Early Repurchase, as and when required pursuant to Section 3(l); (iv) subject to the provisions of Section 5(e), the failure of Buyer to receive on any Remittance Date the accrued and unpaid Price Differential for a Transaction; (v) subject to the provisions of Section 5(e), the failure of any Affiliated Hedge Counterparty to receive on any Remittance Date or on the Repurchase Date the accrued and unpaid amounts due under any applicable Affiliated Hedging Transaction and such failure is not remedied within the applicable cure period (if any) set forth in the related Affiliated Hedging Transaction documents; or (vi) any Purchased Loan Representation with respect to any Purchased Loan in any Transaction Document shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated and such incorrect or untrue Purchased Loan Representation, to the extent such breach is reasonably susceptible to cure, continues unremedied for five (5) Business Days after the earlier of notice thereof from Buyer or Seller obtaining actual knowledge of such breach (unless Seller shall have made any such representation with actual knowledge that it was materially incorrect or untrue at the time made, in which case such breach shall constitute an immediate Transaction Event of Default); provided that a Transaction Event of Default shall not be deemed to have occurred if the applicable Series Seller terminates the related Transaction and repurchases the related Purchased Loan(s) on an Early Repurchase Date no later than five (5) Business Days after notice from Buyer to the applicable Series Seller that such Purchased Loan Representation is incorrect or untrue. (b) If a Facility Event of Default shall occur and be continuing, the following rights and remedies shall be available to Buyer: (i) At the option of Buyer, exercised by written notice to Seller (which option shall be deemed to have been exercised, even if no notice is given, immediately upon the occurrence of an Act of Insolvency), the Repurchase Date for each Transaction hereunder shall, if it has not already occurred, be deemed immediately to occur (the date on which such option is exercised or deemed to have been exercised being referred to hereinafter as the “Accelerated Repurchase Date”). (ii) The failure If Buyer exercises or is deemed to have exercised the option referred to in Section 13(b)(i) of Maker this Agreement: (A) Seller’s obligations hereunder to observe or perform any other obligation set forth in this Note or that certain Stock Purchase Agreement between SWS Group, Inc. ("SWS") repurchase all Purchased Loans shall become immediately due and Maker, dated payable on and as of December 14the Accelerated Repurchase Date; and (B) the Repurchase Price with respect to each Transaction (determined as of the Accelerated Repurchase Date) shall include the accrued and unpaid Price Differential with respect to each Purchased Loan accrued at the Pricing Rate applicable upon the occurrence of an Event of Default; and (C) the Custodian shall, 2001 (upon the "SPA");request of Buyer, deliver to Buyer all Purchased Loan Documents, instruments, certificates and other documents then held by the Custodian relating to the Purchased Loans. (iii) Any transfer Upon the occurrence of the Collateral by Maker to SWS as a result Facility Event of an exercise Default, Buyer may (A) by SWS immediately sell, at a public or private sale in a commercially reasonable manner and at such price or prices as Buyer may deem satisfactory in its sole and absolute discretion any or all of any call right, the Purchased Loans or (B) in its sole and absolute discretion elect, in lieu of selling all or a portion of such Purchased Loans, to give Seller credit for such Purchased Loans in an amount equal to the Market Value of such Purchased Loans against the aggregate unpaid Repurchase Price for such Purchased Loans and any other amounts owing by Maker Seller under this Agreement or the Transaction Documents. The proceeds of any put right, disposition of Purchased Loans effected pursuant to this Section 13(b)(iii) shall be applied, (v) first, to the terms costs and expenses incurred by Buyer in connection with Seller’s default; (w) second, to consequential damages, including, but not limited to, costs of cover, if any; (x) third, to the SPARepurchase Price; orand (y) fourth, to return any excess to Seller. (iv) If Maker The parties acknowledge and agree that (a1) makes the Purchased Loans subject to Transactions hereunder are not instruments traded in a transfer recognized market, and, in fraud of creditors, or makes an assignment for the benefit of creditors, absence of a substantial part of Maker's property; generally recognized source for prices or bid or offer quotations for any Purchased Loans, Buyer may establish the source therefor in its sole and absolute discretion and (b2) admits in writing Maker's inability all prices, bids and offers shall be determined together with accrued Available Income (except to pay his the extent contrary to market practice with respect to the relevant Purchased Loans). The parties recognize that it may not be possible to purchase or her debts as they become due; (c) has a receiver, trustee or custodian appointed for, or take possession of, all or substantially sell all of Maker's assetsthe Purchased Loans on a particular Business Day, either in a proceeding brought by Maker or in a proceeding brought against Maker and transaction with the same purchaser, or in the same manner because the market for such appointment is Purchased Loans may not discharged or be liquid at such possession is not terminated within sixty (60) days after the effective date thereof or he or she consents to or acquiesces in such appointment or possession; (d) files a petition for relief under the United States Bankruptcy Code or any other present or future federal or state insolvency, bankruptcy or similar laws (all time. In view of the foregoing hereinafter collectively called "Applicable Bankruptcy Law"nature of the Purchased Loans, the parties agree that liquidation of a Transaction or the Purchased Loans pursuant to this Section 13(b) or an involuntary petition for relief is filed against Maker under any Applicable Bankruptcy Law Section 13(c) does not require a public purchase or sale and such involuntary petition is not dismissed within sixty (60) days after the filing thereof, that a good faith private purchase or an order for relief naming Maker is entered under any Applicable Bankruptcy Law, or any composition, rearrangement, extension, reorganization or other relief of debtors now or hereafter existing is requested or consented to by Maker; (e) fails sale shall be deemed to have discharged within been made in a period commercially reasonable manner. Accordingly, Buyer may elect, in its sole and absolute discretion, the time and manner of thirty liquidating any Purchased Loans pursuant to this Section 13(b) or Section 13(c), and nothing contained herein shall (30A) days obligate Buyer to liquidate any attachment, sequestration or similar writ levied upon a substantial part of Maker's property; or (f) fails to pay within thirty (30) days any final money judgment against Maker. (b) Upon Purchased Loans on the occurrence and during the continuance of an Event of Default under this Note, Payee may declare or to liquidate all of the entire unpaid Principal Sum and accrued and unpaid interest Purchased Loans in the same manner or on this Note immediately due and payable, without further notice, demand, the same Business Day or presentment, foreclose (B) constitute a waiver of any liens or security interests securing all or any part hereof, or exercise any other right or remedy of Buyer. (v) Seller shall be liable to which Payee may be entitled Buyer for (A) the amount of all expenses, including reasonable legal fees and expenses, actually incurred by agreement, at law, Buyer in connection with or in equity; provided, however, that no as a consequence of an Event of Default shall be deemed to have -------- ------- occurred unless notice of the event giving rise to a potential Event of Default shall have been delivered to Maker and Maker shall have failed to correct or cure such event within fifteen Default, (15B) days following his receipt of such notice; provided further, however, that upon any Event of Default ---------------- ------- under Section 3(a)(iii) and (iv) hereof, this Note shall automatically become due and payable without necessity of any notice or action on the part of Payee and without the ability of Maker to cure such event. Payee shall have all rights and remedies available to it under the Uniform Commercial Code as adopted costs incurred in the State of Texas.connection with cover

Events of Default Remedies. (a) Each of the following shall constitute an "Event of Default" under this Note: (i) The failure of Maker to pay when due any part of the Principal Sum, interest or other payment required to be made pursuant to this Note. (ii) The failure of Maker to observe or perform any other obligation set forth in this Note or that certain Stock Purchase Agreement between SWS Group, Inc. ("SWS") and Maker, dated as of December 14, 2001 (the "SPA"); (iii) Any transfer of the Collateral by Maker to SWS as a result of an exercise (A) by SWS of any call right, or (B) by Maker of any put right, pursuant to the terms of the SPA; or (iv) If Maker (a) makes a transfer in fraud of creditors, or makes an assignment for the benefit of creditors, of a substantial part of Maker's property; (b) admits in writing Maker's inability to pay his or her debts as they become due; (c) has a receiver, trustee or custodian appointed for, or take possession of, all or substantially all of Maker's assets, either in a proceeding brought by Maker or in a proceeding brought against Maker and such appointment is not discharged or such possession is not terminated within sixty (60) days after the effective date thereof or he or she consents to or acquiesces in such appointment or possession; (d) files a petition for relief under the United States Bankruptcy Code or any other present or future federal or state insolvency, bankruptcy or similar laws (all of the foregoing hereinafter collectively called "Applicable Bankruptcy Law") or an involuntary petition for relief is filed against Maker under any Applicable Bankruptcy Law and such involuntary petition is not dismissed within sixty (60) days after the filing thereof, or an order for relief naming Maker is entered under any Applicable Bankruptcy Law, or any composition, rearrangement, extension, reorganization or other relief of debtors now or hereafter existing is requested or consented to by Maker; (e) fails to have discharged within a period of thirty (30) days any attachment, sequestration or similar writ levied upon a substantial part of Maker's property; or (f) fails to pay within thirty (30) days any final money judgment against Maker. (b) Upon the occurrence and during the continuance of an Event of Default under this Note, Payee may declare the entire unpaid Principal Sum and accrued and unpaid interest on this Note immediately due and payable, without further notice, demand, or presentment, foreclose any liens or security interests securing all or any part hereof, or exercise any other right or remedy to which Payee may be entitled by agreement, at law, or in equity; provided, however, that -------- ------- no Event of Default shall be deemed to have -------- ------- occurred unless notice of the event giving rise to a potential Event of Default shall have been delivered to Maker and Maker shall have failed to correct or cure such event within fifteen (15) days following his receipt of such notice; provided further, however, that upon any Event of Default under ---------------- ------- under Section 3(a)(iii) and (iv) hereof, this Note shall automatically become due and payable without necessity of any notice or action on the part of Payee and without the ability of Maker to cure such event. Payee shall have all rights and remedies available to it under the Uniform Commercial Code as adopted in the State of Texas.