Document:

exv10w1

 

Exhibit
10.1

VNUS MEDICAL TECHNOLOGIES, INC.

AMENDED AND RESTATED 2000 EQUITY INCENTIVE PLAN

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	1.

	 	PURPOSES OF THE PLAN
	 	 	1	 
	2.

	 	DEFINITIONS
	 	 	1	 
	3.

	 	STOCK SUBJECT TO THE PLAN
	 	 	4	 
	4.

	 	ADMINISTRATION OF THE PLAN
	 	 	4	 
	5.

	 	ELIGIBILITY
	 	 	6	 
	6.

	 	LIMITATIONS
	 	 	6	 
	7.

	 	TERM OF PLAN
	 	 	7	 
	8.

	 	TERM OF AWARDS
	 	 	7	 
	9.

	 	OPTION EXERCISE PRICE AND CONSIDERATION
	 	 	7	 
	10.

	 	EXERCISE OF OPTION
	 	 	8	 
	11.

	 	NON-TRANSFERABILITY OF AWARDS
	 	 	10	 
	12.

	 	GRANTING OF OPTIONS TO INDEPENDENT DIRECTORS
	 	 	10	 
	13.

	 	TERMS OF OPTIONS GRANTED TO INDEPENDENT DIRECTORS
	 	 	11	 
	14.

	 	STOCK PURCHASE RIGHTS
	 	 	11	 
	15.

	 	RESTRICTED STOCK UNITS
	 	 	12	 
	16.

	 	ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR ASSET SALE
	 	 	12	 
	17.

	 	TIME OF GRANTING AWARDS
	 	 	15	 
	18.

	 	AMENDMENT AND TERMINATION OF THE PLAN
	 	 	15	 
	19.

	 	INABILITY TO OBTAIN AUTHORITY
	 	 	16	 
	20.

	 	RESERVATION OF SHARES
	 	 	16	 
	21.

	 	REPURCHASE PROVISIONS
	 	 	16	 
	22.

	 	INVESTMENT INTENT
	 	 	16	 
	23.

	 	GOVERNING LAW
	 	 	16	 

i

 

VNUS MEDICAL TECHNOLOGIES, INC.

AMENDED AND RESTATED 2000 EQUITY INCENTIVE PLAN

     1. Purposes of the Plan. The purposes of the VNUS Medical Technologies, Inc. Amended
and Restated 2000 Equity Incentive Plan are to attract and retain the best available personnel for
positions of substantial responsibility, to provide additional incentive to Employees, Directors
and Consultants and to promote the success of the Company’s business. Options granted under the
Plan may be Incentive Stock Options or Non-Qualified Stock Options, as determined by the
Administrator at the time of grant. Stock Purchase Rights and Restricted Stock Units may also be
granted under the Plan.

     2. Definitions. As used herein, the following definitions shall apply:

     (a) “Acquisition” means (i) any consolidation or merger of the Company with or into
any other corporation or other entity or person in which the stockholders of the Company prior to
such consolidation or merger own less than fifty percent (50%) of the Company’s voting power
immediately after such consolidation or merger, excluding any consolidation or merger effected
exclusively to change the domicile of the Company; or (ii) a sale of all or substantially all of
the assets of the Company.

     (b) “Administrator” means the Board or the Committee responsible for conducting the
general administration of the Plan, as applicable, in accordance with Section 4 hereof.

     (c) “Applicable Laws” means the requirements relating to the administration of equity
compensation plans under U.S. state corporate laws, U.S. federal and state securities laws, the
Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the
applicable laws of any foreign country or jurisdiction where Options, Stock Purchase Rights or
Restricted Stock Units are granted under the Plan.

     (d) “Award” means an Option, a Stock Purchase Right or a Restricted Stock Unit award
granted to an eligible individual under the Plan.

     (e) “Award Agreement” means any written agreement, contract, or other instrument or
document evidencing an Award.

     (f) “Board” means the Board of Directors of the Company.

     (g) “Code” means the Internal Revenue Code of 1986, as amended, or any successor
statute or statutes thereto. Reference to any particular Code section shall include any successor
section.

     (h) “Committee” means a committee appointed by the Board in accordance with Section 4
hereof.

     (i) “Common Stock” means the Common Stock of the Company, par value $0.001 per share.

 

 

     (j) “Company” means VNUS Medical Technologies, Inc., a Delaware corporation.

     (k) “Consultant” means any consultant or adviser if: (i) the consultant or adviser
renders bona fide services to the Company or any Parent or Subsidiary of the Company; (ii) the
services rendered by the consultant or adviser are not in connection with the offer or sale of
securities in a capital-raising transaction and do not directly or indirectly promote or maintain a
market for the Company’s securities; and (iii) the consultant or adviser is a natural person who
has contracted directly with the Company or any Parent or Subsidiary of the Company to render such
services.

     (l) “Director” means a member of the Board.

     (m) “Employee” means any person, including an Officer or Director, who is an employee
(as defined in accordance with Section 3401(c) of the Code) of the Company or any Parent or
Subsidiary of the Company. A Service Provider shall not cease to be an Employee in the case of (i)
any leave of absence approved by the Company or (ii) transfers between locations of the Company or
between the Company, its Parent, any Subsidiary, or any successor. For purposes of Incentive Stock
Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such
leave is guaranteed by statute or contract. Neither service as a Director nor payment of a
director’s fee by the Company shall be sufficient, by itself, to constitute “employment” by the
Company.

     (n) “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute or statutes thereto. Reference to any particular Exchange Act section shall
include any successor section.

     (o) “Fair Market Value” means, as of any date, the value of a share of Common Stock
determined as follows:

     (i) If the Common Stock is listed on any established stock exchange or a national market
system, including, without limitation, The Nasdaq National Market or The Nasdaq SmallCap Market of
The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for a share of such
stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the
last market trading day prior to the time of determination, as reported in The Wall Street Journal
or such other source as the Administrator deems reliable;

     (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling
prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked
prices for a share of the Common Stock on the last market trading day prior to the day of
determination; or

     (iii) In the absence of an established market for the Common Stock, the Fair Market Value
thereof shall be determined in good faith by the Administrator.

     (p) “Holder” means a person who has been granted or awarded an Award or who holds
Shares acquired pursuant to an Award.

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     (q) “Incentive Stock Option” means an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code and which is designated as an Incentive Stock
Option by the Administrator.

     (r) “Independent Director” means a Director who is not an Employee of the Company.

     (s) “Non-Qualified Stock Option” means an Option (or portion thereof) that is not
designated as an Incentive Stock Option by the Administrator, or which is designated as an
Incentive Stock Option by the Administrator but fails to qualify as an incentive stock option
within the meaning of Section 422 of the Code.

     (t) “Officer” means a person who is an officer of the Company within the meaning of
Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

     (u) “Option” means a stock option granted pursuant to the Plan.

     (v) “Parent” means any corporation, whether now or hereafter existing (other than the
Company), in an unbroken chain of corporations ending with the Company if each of the corporations
other than the last corporation in the unbroken chain owns stock possessing more than fifty percent
of the total combined voting power of all classes of stock in one of the other corporations in such
chain.

     (w) “Plan” means the VNUS Medical Technologies, Inc. Amended and Restated 2000 Equity
Incentive Plan.

     (x) “Restricted Stock” means Shares acquired pursuant to the exercise of an unvested
Option in accordance with Section 10(h) below or pursuant to a Stock Purchase Right granted under
Section 14 below.

     (y) “Restricted Stock Unit” means a right to receive a specified number of Shares
awarded pursuant to Section 15 below.

     (z) “Rule 16b-3” means that certain Rule 16b-3 under the Exchange Act, as such Rule
may be amended from time to time.

     (aa) “Section 16(b)” means Section 16(b) of the Exchange Act, as such Section may be
amended from time to time.

     (bb) “Securities Act” means the Securities Act of 1933, as amended, or any successor
statute or statutes thereto. Reference to any particular Securities Act section shall include any
successor section.

     (cc) “Service Provider” means an Employee, Director or Consultant.

     (dd) “Share” means a share of Common Stock, as adjusted in accordance with Section 16
below.

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     (ee) “Stock Purchase Right” means a right to purchase Common Stock pursuant to Section
14 below.

     (ff) “Subsidiary” means any corporation, whether now or hereafter existing (other than
the Company), in an unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock possessing more than
fifty percent of the total combined voting power of all classes of stock in one of the other
corporations in such chain.

     3. Stock Subject to the Plan. Subject to the provisions of Section 16 of the Plan,
the shares of stock subject to Awards shall be Common Stock, initially shares of the Company’s
Common Stock, par value $.001 per share. Subject to the provisions of Section 16 of the Plan, the
maximum aggregate number of Shares which may be issued pursuant to Awards is 2,378,666 Shares;
provided, however, that, during the term of the Plan, on each December 31 (commencing with December
31, 2005), such maximum aggregate number of Shares shall be increased by the lower of (i) 800,000
Shares, (ii) 4% of the then-outstanding shares of the Company’s Common Stock, and (iii) such other
number of Shares as determined by the Administrator; and provided further that the maximum
aggregate number of Shares which may be issued pursuant to Awards during the term of the Plan shall
not exceed 6,378,666; and provided further, that the maximum aggregate number of Shares that may be
issued upon the exercise of Incentive Stock Options during the term of the Plan shall not exceed
6,378,666. Shares issued pursuant to Awards may be authorized but unissued, or reacquired Common
Stock. To the extent that an Award terminates, expires, or lapses for any reason, any shares of
Common Stock then subject to such Award shall again be available for the grant of an Award pursuant
to the Plan (unless the Plan has terminated). Shares which are delivered by the Holder or withheld
by the Company in payment of the exercise price of an Award or tax withholding with respect to an
Award, may again be optioned, granted or awarded hereunder, subject to the limitations of this
Section 3. If Shares of Restricted Stock are repurchased by the Company at their original purchase
price, such Shares shall become available for future grant under the Plan. Notwithstanding the
provisions of this Section 3, no Shares may again be optioned, granted or awarded if such action
would cause an Incentive Stock Option to fail to qualify as an Incentive Stock Option under Code
Section 422.

     4. Administration of the Plan.

     (a) Administrator. A Committee of the Board shall administer the Plan and the
Committee shall consist solely of two or more Independent Directors each of whom is both an
“outside director,” within the meaning of Section 162(m) of the Code, and a “non-employee
director” within the meaning of Rule 16b-3. Within the scope of such authority, the Committee
may (i) delegate to a committee of one or more members of the Board who are not Independent
Directors the authority to grant awards under the Plan to eligible persons who are either (1) not
then “covered employees,” within the meaning of Section 162(m) of the Code and are not expected to
be “covered employees” at the time of recognition of income resulting from such award or (2) not
persons with respect to whom the Company wishes to comply with Section 162(m) of the Code and/or
(ii) delegate to a committee of one or more members of the Board who are not “non-employee
directors,” within the meaning of Rule 16b-3, the authority to grant awards under the Plan to
eligible persons who are not then subject to Section 16 of the Exchange Act. The Board may abolish
the Committee at any time and revest in the Board the

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administration of the Plan. Appointment of
Committee members shall be effective upon acceptance of appointment. Committee members may resign
at any time by delivering written notice to the Board. Vacancies in the Committee may only be
filled by the Board. Notwithstanding the foregoing, the full Board, acting by a majority of its
members in office, shall conduct the general administration of the Plan with respect to Awards
granted to Independent Directors.

     (b) Powers of the Administrator. Subject to the provisions of the Plan and the
specific duties delegated by the Board to such Committee, and subject to the approval of any
relevant authorities, the Administrator shall have the authority in its sole discretion:

     (i) to determine the Fair Market Value;

     (ii) to select the Service Providers to whom Awards may from time to time be granted
hereunder;

     (iii) to determine the number of Shares to be covered by each such Award granted hereunder;

     (iv) to approve forms of agreement for use under the Plan;

     (v) to determine the terms and conditions of any Award granted hereunder (such terms and
conditions include, but are not limited to, the exercise price, the time or times when Awards may
vest or be exercised (which may be based on performance criteria), any vesting acceleration or
waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the
Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole
discretion, shall determine);

     (vi) to determine whether to offer to buyout a previously granted Option as provided in
subsection 10(i) and to determine the terms and conditions of such offer and buyout (including
whether payment is to be made in cash or Shares);

     (vii) to prescribe, amend and rescind rules and regulations relating to the Plan, including
rules and regulations relating to sub-plans established for the purpose of qualifying for preferred
tax treatment under foreign tax laws;

     (viii) to allow Holders to satisfy withholding tax obligations by electing to have the Company
withhold from the Shares to be issued pursuant to an Award that
number of Shares having a Fair Market Value equal to the minimum amount required to be withheld based on
the statutory withholding rates for federal and state tax purposes that apply to supplemental
taxable income. The Fair Market Value of the Shares to be withheld shall be determined on the date
that the amount of tax to be withheld is to be determined. All elections by Holders to have Shares
withheld for this purpose shall be made in such form and under such conditions as the Administrator
may deem necessary or advisable;

     (ix) to amend the Plan or any Award granted under the Plan as provided in Section 18; and

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     (x) to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan
and to exercise such powers and perform such acts as the Administrator deems necessary or desirable
to promote the best interests of the Company which are not in conflict with the provisions of the
Plan.

     (c) Effect of Administrator’s Decision. All decisions, determinations and
interpretations of the Administrator shall be final and binding on all Holders.

     5. Eligibility. Non-Qualified Stock Options, Stock Purchase Rights and Restricted
Stock Units may be granted to Service Providers. Incentive Stock Options may be granted only to
Employees. If otherwise eligible, an Employee or Consultant who has been granted an Award may be
granted additional Awards. Each Independent Director shall be eligible to be granted Options and
Restricted Stock Units at the times and in the manner set forth in Section 12.

     6. Limitations.

     (a) Each Option shall be designated by the Administrator in the Award Agreement as either an
Incentive Stock Option or a Non-Qualified Stock Option. However, notwithstanding such
designations, to the extent that the aggregate Fair Market Value of Shares subject to a Holder’s
Incentive Stock Options and other incentive stock options granted by the Company, any Parent or
Subsidiary, which become exercisable for the first time during any calendar year (under all plans
of the Company or any Parent or Subsidiary) exceeds $100,000, such excess Options or other options
shall be treated as Non-Qualified Stock Options.

     For purposes of this Section 6(a), Incentive Stock Options shall be taken into account in the
order in which they were granted, and the Fair Market Value of the Shares shall be determined as of
the time of grant.

     (b) Neither the Plan nor any Award shall confer upon a Holder any right with respect to
continuing the Holder’s employment or consulting relationship with the Company, nor shall they
interfere in any way with the Holder’s right or the Company’s right to terminate such employment or
consulting relationship at any time, with or without cause.

     (c) No Service Provider shall be granted, in any calendar year, Awards to acquire more than
666,666 Shares; provided, however, that the foregoing limitation shall not apply until the earliest
of: (i) the first material modification of the Plan (including any increase in
the number of shares reserved for issuance under the Plan in accordance with Section 3); (ii)
the issuance of all of the shares of Common Stock reserved for issuance under the Plan; (iii) the
expiration of the Plan; (iv) the first meeting of stockholders at which Directors of the Company
are to be elected that occurs after the close of the third calendar year following the calendar
year in which occurred the first registration of an equity security of the Company under Section 12
of the Exchange Act; or (v) such other date required by Section 162(m) of the Code and the rules
and regulations promulgated thereunder. The foregoing limitation shall be adjusted proportionately
in connection with any change in the Company’s capitalization as described in Section 16. For
purposes of this Section 6(c), if an Award is canceled in the same calendar year it was granted
(other than in connection with a transaction described in Section 16), the canceled Award will be
counted against the limit set forth in this Section 6(c). For this purpose, if the

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exercise price of an Option is reduced, the transaction shall be treated as a cancellation of the Option and the
grant of a new Option.

     7. Term of Plan. The Plan became effective upon its initial adoption by the Board on
May 1, 2000 and shall continue in effect until it is terminated under Section 18 of the Plan. No
Awards may be issued under the Plan on or after April 30, 2010, the tenth (10th) anniversary of the
date upon which the Plan was adopted by the Board.

     8. Term of Awards. The term of each Award shall be stated in the Award Agreement;
provided, however, that the term shall be no more than ten (10) years from the date of grant
thereof. In the case of an Incentive Stock Option granted to a Holder who, at the time the Option
is granted, owns (or is treated as owning under Code Section 424) stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the term of the Option shall be five (5) years from the date of grant or such shorter
term as may be provided in the Award Agreement.

     9. Option Exercise Price and Consideration.

     (a) Except as provided in Section 13, the per share exercise price for the Shares to be issued
upon exercise of an Option shall be such price as is determined by the Administrator, but shall be
subject to the following:

     (i) In the case of an Incentive Stock Option

     (A) granted to an Employee who, at the time of grant of such Option, owns (or is treated as
owning under Code Section 424) stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price
shall be no less than one hundred ten percent (110%) of the Fair Market Value per Share on the date
of grant.

     (B) granted to any other Employee, the per Share exercise price shall be no less than one
hundred percent (100%) of the Fair Market Value per Share on the date of grant.

     (ii) In the case of a Non-Qualified Stock Option the per share exercise price shall be no less
than the par value of the Common Stock on the date of grant.

     (iii) Notwithstanding the foregoing, Options may be granted with a per Share exercise price
other than as required above pursuant to a merger or other corporate transaction.

     (b) The consideration to be paid for the Shares to be issued upon exercise of an Option,
including the method of payment, shall be determined by the Administrator (and, in the case of an
Incentive Stock Option, shall be determined at the time of grant). Such consideration may consist
of (1) cash, (2) check, (3) with the consent of the Administrator, a full recourse promissory note
bearing interest (at no less than such rate as shall then preclude the imputation of interest under
the Code) and payable upon such terms as may be prescribed by the Administrator, (4) with the
consent of the Administrator, other Shares which (x) in the case of

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Shares acquired from the Company, have been owned by the Holder for more than six (6) months on the date of surrender, and
(y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which such Option shall be exercised, (5) with the consent of the Administrator,
surrendered Shares then issuable upon exercise of the Option having a Fair Market Value on the date
of exercise equal to the aggregate exercise price of the Option or exercised portion thereof, (6)
property of any kind which constitutes good and valuable consideration, (7) with the consent of the
Administrator, delivery of a notice that the Holder has placed a market sell order with a broker
with respect to Shares then issuable upon exercise of the Options and that the broker has been
directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction
of the Option exercise price, provided, that payment of such proceeds is then made to the Company
upon settlement of such sale, or (8) with the consent of the Administrator, any combination of the
foregoing methods of payment.

     10. Exercise of Option.

     (a) Vesting; Fractional Exercises. Except as provided in Section 13, Options granted
hereunder shall be vested and exercisable according to the terms hereof at such times and under
such conditions as determined by the Administrator and set forth in the Award Agreement. An Option
may not be exercised for a fraction of a Share.

     (b) Deliveries upon Exercise. All or a portion of an exercisable Option shall be
deemed exercised upon delivery of all of the following to the Secretary of the Company or his or
her office:

     (i) A written or electronic notice complying with the applicable rules established by the
Administrator stating that the Option, or a portion thereof, is exercised. The notice shall be
signed by the Holder or other person then entitled to exercise the Option or such portion of the
Option;

     (ii) Such representations and documents as the Administrator, in its sole discretion, deems
necessary or advisable to effect compliance with Applicable Laws. The Administrator may, in its
sole discretion, also take whatever additional actions it deems
appropriate to effect such compliance, including, without limitation, placing legends on share
certificates and issuing stop transfer notices to agents and registrars;

     (iii) Upon the exercise of all or a portion of an unvested Option pursuant to Section 10(h), a
Restricted Stock purchase agreement in a form determined by the Administrator and signed by the
Holder or other person then entitled to exercise the Option or such portion of the Option; and

     (iv) In the event that the Option shall be exercised pursuant to Section 10(f) by any person
or persons other than the Holder, appropriate proof of the right of such person or persons to
exercise the Option.

     (c) Conditions to Delivery of Share Certificates. The Company shall not be required
to issue or deliver any certificate or certificates for Shares purchased upon the exercise of any
Option or portion thereof prior to fulfillment of all of the following conditions:

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     (i) The admission of such Shares to listing on all stock exchanges on which such class of
stock is then listed;

     (ii) The completion of any registration or other qualification of such Shares under any state
or federal law, or under the rulings or regulations of the Securities and Exchange Commission or
any other governmental regulatory body which the Administrator shall, in its sole discretion, deem
necessary or advisable;

     (iii) The obtaining of any approval or other clearance from any state or federal governmental
agency which the Administrator shall, in its sole discretion, determine to be necessary or
advisable;

     (iv) The lapse of such reasonable period of time following the exercise of the Option as the
Administrator may establish from time to time for reasons of administrative convenience; and

     (v) The receipt by the Company of full payment for such Shares, including payment of any
applicable withholding tax, which in the sole discretion of the Administrator may be in the form of
consideration used by the Holder to pay for such Shares under Section 9(b).

     (d) Termination of Relationship as a Service Provider. If a Holder ceases to be a
Service Provider other than by reason of the Holder’s disability or death, such Holder may exercise
his or her Option within such period of time as is specified in the Award Agreement to the extent
that the Option is vested on the date of termination (but in no event later than the expiration of
the term of the Option as set forth in the Award Agreement). In the absence of a specified time in
the Award Agreement, the Option shall remain exercisable for three (3) months following the
Holder’s termination. If, on the date of termination, the Holder is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option immediately cease to be
issuable under the Option and shall again become available for issuance under the Plan. If, after
termination, the Holder does not exercise his or her Option within the time period
specified herein, the Option shall terminate, and the Shares covered by such Option shall
again become available for issuance under the Plan.

     (e) Disability of Holder. If a Holder ceases to be a Service Provider as a result of
the Holder’s disability, the Holder may exercise his or her Option within such period of time as is
specified in the Award Agreement to the extent the Option is vested on the date of termination (but
in no event later than the expiration of the term of such Option as set forth in the Award
Agreement). In the absence of a specified time in the Award Agreement, the Option shall remain
exercisable for twelve (12) months following the Holder’s termination. If such disability is not a
“disability” as such term is defined in Section 22(e)(3) of the Code, in the case of an Incentive
Stock Option such Incentive Stock Option shall automatically cease to be treated as an Incentive
Stock Option and shall be treated for tax purposes as a Non-Qualified Stock Option from and after
the day which is three (3) months and one (1) day following such termination. If, on the date of
termination, the Holder is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall immediately cease to be issuable under the Option and shall
again become available for issuance under the Plan. If, after termination, the

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Holder does not exercise his or her Option within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall again become available for issuance under the Plan.

     (f) Death of Holder. If a Holder dies while a Service Provider, the Option may be
exercised within such period of time as is specified in the Award Agreement (but in no event later
than the expiration of the term of such Option as set forth in the Notice of Grant), by the
Holder’s estate or by a person who acquires the right to exercise the Option by bequest or
inheritance, but only to the extent that the Option is vested on the date of death. In the absence
of a specified time in the Award Agreement, the Option shall remain exercisable for twelve (12)
months following the Holder’s termination. If, at the time of death, the Holder is not vested as
to his or her entire Option, the Shares covered by the unvested portion of the Option shall
immediately cease to be issuable under the Option and shall again become available for issuance
under the Plan. The Option may be exercised by the executor or administrator of the Holder’s
estate or, if none, by the person(s) entitled to exercise the Option under the Holder’s will or the
laws of descent or distribution. If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall again become
available for issuance under the Plan.

     (g) Regulatory Extension. A Holder’s Award Agreement may provide that if the exercise
of the Option following the termination of the Holder’s status as a Service Provider (other than
upon the Holder’s death or Disability) would be prohibited at any time solely because the issuance
of shares would violate the registration requirements under the Securities Act, then the Option
shall terminate on the earlier of (i) the expiration of the term of the Option set forth in Section
8 or (ii) the expiration of a period of three (3) months after the termination of the Holder’s
status as a Service Provider during which the exercise of the Option would not be in violation of
such registration requirements.

     (h) Early Exercisability. The Administrator may provide in the terms of a Holder’s
Award Agreement that the Holder may, at any time before the Holder’s status as a Service Provider
terminates, exercise the Option in whole or in part prior to the full vesting of
the Option; provided, however, that Shares acquired upon exercise of an Option which has not
fully vested may be subject to any forfeiture, transfer or other restrictions as the Administrator
may determine in its sole discretion.

     (i) Buyout Provisions. The Administrator may at any time offer to buyout for a
payment in cash or Shares, an Option previously granted, based on such terms and conditions as the
Administrator shall establish and communicate to the Holder at the time that such offer is made.

     11. Non-Transferability of Awards. Awards may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the Holder, only by the
Holder.

     12. Granting of Options to Independent Directors. During the term of the Plan, each
person who first becomes an Independent Director automatically shall be granted an Option to

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purchase eighteen thousand (18,000) shares of Stock (an “Initial Option”) and an award of six
thousand (6,000) Restricted Stock Units (an “Initial RSU”). During the term of the Plan, upon the
date of each annual meeting of stockholders, Independent Directors automatically shall be granted
an Option to purchase nine thousand (9,000) shares of Stock effective as of each annual meeting of
stockholders (an “Annual Option”) and an award of three thousand (3,000) Restricted Stock Units (an
“Annual RSU”); provided, he or she has served as an Independent Director for the six (6) months
prior to such annual meeting of the stockholders and continues to serve as member of the Board upon
such date. For the avoidance of doubt, an Independent Director elected for the first time to the
Board at an annual meeting of stockholders shall only receive an Initial Option and an Initial RSU
in connection with such election, and shall not receive an Annual Option and Annual RSU on the date
following such meeting as well. Members of the Board who are employees of the Company who
subsequently retire from the Company and remain on the Board will not receive an Initial Option
grant or Initial RSU but to the extent they are otherwise eligible, will receive, at each annual
meeting of stockholders after his or her retirement from employment with the Company, an Annual
Option grant and Annual RSU.

     13. Terms of Options Granted to Independent Directors. The per Share price of each
Initial Option and Annual Option granted to an Independent Director shall equal 100% of the Fair
Market Value of a share of Common Stock on the date the Option is granted. Initial Options and
Initial RSUs (as defined in Section 12) will become vested in three (3) equal, consecutive, annual
installments so that the Initial Option and Initial RSU shall become vested in full on the three
year anniversary of the date of the Initial Option and Initial RSU grant date, contingent upon the
director’s continued service on the Board through such date. Annual Options and Annual RSUs (as
defined in Section 12) shall become vested in four (4), equal, consecutive, quarterly installments
so that such Annual Option and Annual RSU shall become vested in full on the one year anniversary
of the date of Annual Option and Annual RSU grant date, contingent upon the director’s continued
service on the Board through such date. Subject to Section 10, the term of each Option granted to an
Independent Director shall be ten (10) years from the date the Option is granted. No portion of an
Option which is unexercisable at the time of an Independent Director’s termination of membership on
the Board shall thereafter become exercisable.

     14. Stock Purchase Rights.

     (a) Rights to Purchase. Stock Purchase Rights may be issued either alone, in addition
to, or in tandem with Options granted under the Plan and/or cash awards made outside of the Plan.
After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it
shall advise the offeree in writing of the terms, conditions and restrictions related to the offer,
including the number of Shares that such person shall be entitled to purchase, the price to be
paid, and the time within which such person must accept such offer. The offer shall be accepted by
execution of a Restricted Stock purchase agreement in the form determined by the Administrator.

     (b) Repurchase Right. Unless the Administrator determines otherwise, the Restricted
Stock purchase agreement shall grant the Company the right to repurchase Shares acquired upon
exercise of a Stock Purchase Right upon the termination of the purchaser’s status as a Service
Provider for any reason. The purchase price for Shares repurchased by the Company pursuant to such
repurchase right and the rate at which such repurchase right shall

11

 

lapse shall be determined by the
Administrator in its sole discretion, and shall be set forth in the Restricted Stock purchase
agreement.

     (c) Other Provisions. The Restricted Stock purchase agreement shall contain such
other terms, provisions and conditions not inconsistent with the Plan as may be determined by the
Administrator in its sole discretion.

     (d) Rights as a Stockholder. Once the Stock Purchase Right is exercised, the
purchaser shall have rights equivalent to those of a stockholder and shall be a stockholder when
his or her purchase is entered upon the records of the duly authorized transfer agent of the
Company. No adjustment shall be made for a dividend or other right for which the record date is
prior to the date the Stock Purchase Right is exercised, except as provided in Section 16 of the
Plan.

     15. Restricted Stock Units.

     Any Holder selected by the Administrator may be granted an award of Restricted Stock Units in
the manner determined from time to time by the Administrator.

     (a) Vesting. The vesting of Restricted Stock Units shall be determined by the
Administrator and may be linked to specific performance criteria determined to be appropriate by
the Administrator, in each case on a specified date or dates or over any period or periods
determined by the Administrator. Common Stock underlying a Restricted Stock Unit award will not be
issued until the Restricted Stock Unit award has vested, pursuant to a vesting schedule or
performance criteria set by the Administrator.

     (b) Other Provisions. All Restricted Stock Units shall be subject to such additional
terms and conditions as determined by the Administrator and shall be evidenced by a written Award
Agreement. Such Award Agreement may also include limitations regarding the distribution of
payments due pursuant to such Restricted Stock Units and may provide that such payments are subject
to an election, by a certain date, of the Holder to whom such payment is to be awarded, to the
extent such limitations and elections are required so as to not cause any Restricted Stock Unit
Award or the shares of Common Stock issuable pursuant to any Restricted Stock Unit Award (or other
amounts issuable or distributable) to be includable in the gross income of the Holder under Section
409A of the Code prior to such times or occurrence of such events, as permitted by the Code and the
regulations and other guidance thereunder (including, without limitation, Section 409A of the Code,
and the regulations and other guidance issued by the Secretary of the Treasury thereunder).

     (c) Rights as a Stockholder. Unless otherwise provided by the Administrator, a Holder
awarded Restricted Stock Units shall have no rights as a Company stockholder with respect to such
Restricted Stock Units until such time as the Restricted Stock Units have vested and the Common
Stock underlying the Restricted Stock Units has been issued.

     16. Adjustments upon Changes in Capitalization, Merger or Asset Sale.

     (a) In the event that the Administrator determines that any dividend or other distribution
(whether in the form of cash, Common Stock, other securities, or other property),

12

 

recapitalization, reclassification, stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase, liquidation, dissolution, or sale, transfer, exchange
or other disposition of all or substantially all of the assets of the Company, or exchange of
Common Stock or other securities of the Company, issuance of warrants or other rights to purchase
Common Stock or other securities of the Company, or other similar corporate transaction or event,
in the Administrator’s sole discretion, affects the Common Stock such that an adjustment is
determined by the Administrator to be appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended by the Company to be made available under the Plan or
with respect to any Award, then the Administrator shall, in such manner as it may deem equitable,
adjust any or all of:

     (i) the number and kind of shares of Common Stock (or other securities or property) with
respect to which Awards may be granted or awarded (including, but not limited to, adjustments of
the limitations in Section 3 on the maximum number and kind of shares which may be issued and
adjustments of the maximum number of Shares that may be purchased by any Holder in any calendar
year pursuant to Section 6(c));

     (ii) the number and kind of shares of Common Stock (or other securities or property) subject
to outstanding Awards; and

     (iii) the grant or exercise price with respect to any Award.

     (b) In the event of any transaction or event described in Section 16(a), the Administrator, in
its sole discretion, and on such terms and conditions as it deems appropriate, and to the extent
allowed by Section 409A of the Code and any applicable regulations
thereunder, to the extent applicable, either by the terms of the Award or by action taken
prior to the occurrence of such transaction or event and either automatically or upon the Holder’s
request, is hereby authorized to take any one or more of the following actions whenever the
Administrator determines that such action is appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended by the Company to be made available
under the Plan or with respect to any Award granted or issued under the Plan or to facilitate such
transaction or event:

     (i) To provide for either the purchase of any such Award for an amount of cash equal to the
amount that could have been obtained upon the exercise of such Award or realization of the Holder’s
rights had such Award been currently exercisable or payable or fully vested or the replacement of
such Award with other rights or property selected by the Administrator in its sole discretion;

     (ii) To provide that such Award shall be exercisable as to all shares covered thereby,
notwithstanding anything to the contrary in the Plan or the provisions of such Award;

     (iii) To provide that such Award be assumed by the successor or survivor corporation, or a
parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards
covering the stock of the successor or survivor corporation, or a parent

13

 

or subsidiary thereof,
with appropriate adjustments as to the number and kind of shares and prices;

          (iv) To make adjustments in the number and type of shares of Common Stock (or other securities
or property) subject to outstanding Awards, and/or in the terms and conditions of (including the
grant or exercise price), and the criteria included in, outstanding Awards or Awards which may be
granted in the future; and

          (v) To provide that immediately upon the consummation of such event, such Award shall not be
exercisable and shall terminate; provided, that for a specified period of time prior to such event,
such Award shall be exercisable as to all Shares covered thereby, and the restrictions imposed
under an Award Agreement upon some or all Shares may be terminated and, in the case of Restricted
Stock, some or all shares of such Restricted Stock may cease to be subject to repurchase,
notwithstanding anything to the contrary in the Plan or the provisions of such Award Agreement.

     (c) Subject to Section 3, the Administrator may, in its sole discretion, include such further
provisions and limitations in any Award Agreement or Common Stock certificate, as it may deem
equitable and in the best interests of the Company.

     (d) If the Company undergoes an Acquisition, then any surviving corporation or entity or
acquiring corporation or entity, or affiliate of such corporation or entity, may assume any Awards
outstanding under the Plan or may substitute similar stock awards (including an award to acquire
the same consideration paid to the stockholders in the transaction described in this subsection
16(d)) for those outstanding under the Plan. In the event any surviving corporation or entity or
acquiring corporation or entity in an Acquisition, or affiliate of such
corporation or entity, does not assume such Awards or does not substitute similar stock awards
for those outstanding under the Plan, then with respect to (i) Awards held by participants in the
Plan whose status as a Service Provider has not terminated prior to such event, the vesting of such
Awards (and, if applicable, the time during which such awards may be exercised) shall be
accelerated and made fully exercisable and all restrictions thereon shall lapse at least ten (10)
days prior to the closing of the Acquisition (and the Awards terminated if not exercised prior to
the closing of such Acquisition), and (ii) any other Awards outstanding under the Plan, such Awards
shall be terminated if not exercised prior to the closing of the Acquisition.

     (e) The existence of the Plan or any Award Agreement and the Awards granted hereunder shall
not affect or restrict in any way the right or power of the Company or the stockholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or other change in
the Company’s capital structure or its business, any merger or consolidation of the Company, any
issue of stock or of options, warrants or rights to purchase stock or of bonds, debentures,
preferred or prior preference stocks whose rights are superior to or affect the Common Stock or the
rights thereof or which are convertible into or exchangeable for Common Stock, or the dissolution
or liquidation of the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar character or otherwise.

14

 

     17. Time of Granting Awards. The date of grant of an Award shall, for all purposes,
be the date on which the Administrator makes the determination granting such Award, or such other
date as is determined by the Administrator. Notice of the determination shall be given to each
Employee or Consultant to whom an Award is so granted within a reasonable time after the date of
such grant.

     18. Amendment and Termination of the Plan.

     (a) Amendment and Termination. The Board may at any time wholly or partially amend,
alter, suspend or terminate the Plan. However, without approval of the Company’s stockholders
given within twelve (12) months before or after the action by the Board, no action of the Board
may, except as provided in Section 16, increase the limits imposed in Section 3 on the maximum
number of Shares which may be issued under the Plan or extend the term of the Plan under Section 7.

     (b) Savings Clause. Notwithstanding anything to the contrary in the Plan or any Award
Agreement relating to an outstanding Award, if and to the extent the Administrator shall determine
that the terms of any Award may result in the failure of the such Award to comply with the
requirements of Section 409A of the Code, or any applicable regulations or guidance promulgated by
the Secretary of the Treasury in connection therewith, the Administrator shall have authority to
take such action to amend, modify, cancel or terminate the Plan or any Award as it deems necessary
or advisable, including without limitation:

     (i) any amendment or modification of the Plan or any Award to conform the Plan or such Award
to the requirements of Section 409A of the Code or any regulations or other guidance thereunder
(including, without limitation, any amendment or modification of the terms of any Award regarding vesting, exercise, or the timing or form of
payment);

     (ii) any cancellation or termination of any unvested Award, or portion thereof, without any
payment to the Holder holding such Award; and

     (iii) any cancellation or termination of any vested Award, or portion thereof, with immediate
payment to the Holder holding such Award of the amount otherwise payable upon the immediate
exercise of any such Award, or vested portion thereof, by such Holder.

Any such amendment, modification, cancellation, or termination of the Plan or any Award may
adversely affect the rights of a Holder with respect to such Award without the Holder’s consent.

     (c) Stockholder Approval. The Board shall obtain stockholder approval of any Plan
amendment to the extent necessary and desirable to comply with Applicable Laws.

     (d) Effect of Amendment or Termination. Except as provided in Section 18(b) above, no
amendment, alteration, suspension or termination of the Plan shall impair the rights of any Holder,
unless mutually agreed otherwise between the Holder and the Administrator, which agreement must be
in writing and signed by the Holder and the Company. Termination of the Plan shall not affect the
Administrator’s ability to exercise the powers granted

15

 

to it hereunder with respect to Options, Stock Purchase Rights or Restricted Stock Units granted or awarded under the Plan prior to the date
of such termination.

     19. Inability to Obtain Authority. The inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of
any liability in respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.

     20. Reservation of Shares. The Company, during the term of this Plan, shall at all
times reserve and keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.

     21. Repurchase Provisions. The Administrator in its sole discretion may provide that
the Company may repurchase any unvested Shares acquired upon exercise of an Option or Stock
Purchase Right upon the occurrence of certain specified events, including, without limitation, a
Holder’s termination as a Service Provider, divorce, bankruptcy or insolvency.

     22. Investment Intent. The Company may require a Holder, as a condition of exercising or acquiring stock under any
Award, (i) to give written assurances satisfactory to the Company as to the Holder’s knowledge and
experience in financial and business matters and/or to employ a purchaser representative reasonably
satisfactory to the Company who is knowledgeable and experienced in financial and business matters
and that he or she is capable of evaluating, alone or together with the purchaser representative,
the merits and risks of exercising rights under any Award; and (ii) to give written assurances
satisfactory to the Company stating that the Holder is acquiring the stock subject to the Award for
the participant’s own account and not with any present intention of selling or otherwise
distributing the stock. The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (A) the issuance of the shares upon the exercise or
acquisition of stock under the applicable Award has been registered under a then currently
effective registration statement under the Securities Act or (B) as to any particular requirement,
a determination is made by counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws. The Company may, upon advice of counsel
to the Company, place legends on stock certificates issued under the Plan as such counsel deems
necessary or appropriate in order to comply with applicable securities laws, including, but not
limited to, legends restricting the transfer of the stock.

     23. Governing Law. The validity and enforceability of this Plan shall be governed by
and construed in accordance with the laws of the State of Delaware without regard to otherwise
governing principles of conflicts of law.

16exv10w1

 

Exhibit 10.1

EMPLOYMENT AND RESTRICTIVE COVENANT AGREEMENT

     This Employment And Restrictive Covenant Agreement (the “Agreement”) is made on this
1st day of January, 2007 (“Effective Date”), by and between PawnMart, Inc. (the
“Company”) and Thomas K. Haas (the “Executive”).

     WHEREAS, the Company desires to appoint the Executive to serve as the Company’s Chief
Executive Officer and to employ the Executive on the terms and conditions set forth in this
Agreement; and

     WHEREAS, the Executive desires to be so employed by the Company;

     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and promises
contained herein, and intending to be bound hereby, the parties agree as follows:

     1. Employment.

          1.1. Term. The Company agrees to employ the Executive in accordance with the terms of
this Agreement and the Executive agrees to accept such employment, effective upon the Effective
Date. The employment of the Executive under this Agreement shall begin on the Effective Date and
shall continue through and until December 31, 2007 (the “Initial Period”). Commencing on January
1, 2008, and on each subsequent anniversary thereof, the term of this Agreement shall automatically
renew and extend for an additional consecutive one-year period (each, a “Renewal Period”) unless
one of the parties delivers written notice of that party’s intention not to renew to the other
party at least three (3) months prior to the expiration of the Initial Period or any Renewal
Period, as applicable. The Initial Period and any Renewal Periods are hereinafter collectively
referred to as the “Employment Period.” Notwithstanding anything to the contrary contained herein,
the Employment Period is subject to termination pursuant to Section 3 hereof.

          1.2. Positions and Duties. The Executive will serve as the Chief Executive Officer
(“CEO”) of the Company, reporting directly to the Company’s Board of Directors (the “Board”). The
Executive will be responsible for the overall performance of the Company. The Executive’s duties
hereunder shall be those customarily incident to the position of CEO and as may reasonably be
assigned from time to time by the Board. The Executive will devote substantially all of his
business time and services to the Company and shall use his best efforts, judgment and energy in
the discharge of his duties to the Company; provided, however, that the Company acknowledges that
the Executive has some other business interests (i.e. Estancia and King Pawn) that could take an
insignificant portion of his business time and which will not materially interfere with the
performance of his duties to the Company.

          1.3. Place of Performance. The Executive shall perform his services hereunder at the
principal executive offices of the Company located in or near Norcross, Georgia; provided, however, that the Executive may be required to travel from time to time for
business purposes.

 

 

     2. Compensation and Benefits.

          2.1. Base Salary. The Executive shall receive an initial annual salary of $200,000
(the “Base Salary”), paid in accordance with the Company’s payroll practices as in effect from time
to time. The Base Salary shall be reviewed on an annual basis by the Board and may be increased
from time to time by the Board.

          2.2. Bonuses.

               2.2.1. The Executive will be eligible to receive bonuses in an amount established by the Board
for the applicable measurement period as determined by the Board, if specified corporate and/or
individual performance goals are met for that measurement period. Any such bonuses shall be
communicated to the Executive in writing.

               2.2.2. For purposes of this Section 2.2, the performance goals for any given
measurement period will be established not later than the end of the first quarter of that year by
the Board after consultation with the Executive.

               2.2.3. For purposes of determining any bonus payable to the Executive, the measurement of
corporate and/or individual performance will be performed by the Board in good faith. From time to
time, the Board may make adjustments to those goals, so that required departures from the Company’s
operating budget, changes in accounting principles, acquisitions, dispositions, mergers,
consolidations and other corporate transactions, and other factors influencing the achievement or
calculation of such goals do not affect the operation of this provision in a manner inconsistent
with the achievement of its intended purposes. Any such adjustments shall be communicated to the
Executive in writing.

          2.3. Employee Benefits. The Executive will be eligible to participate in
retirement/savings, health insurance, term life insurance, long term disability insurance and other
employee benefit plans, policies or arrangements maintained by the Company for its employees,
including its executives, generally, subject to the terms and conditions of such plans, policies or
arrangements; provided, however, that this Agreement will not limit the Company’s ability to amend,
modify or terminate such plans, policies or arrangements at any time for any reason.

          2.4. Vacations. In addition to holidays observed by the Company, the Executive shall
be entitled to three (3) weeks paid vacation time during the Initial Period and to four (4) weeks
paid vacation time during each Renewal Period.

          2.5. Supplemental Life Insurance. In addition to life insurance coverage provided
under any group plan applicable to the Company employees generally, the Company will reimburse the
Executive for the cost incurred by him for purchasing a $500,000 supplemental term life insurance
policy on the Executive’s life upon submission of proper invoices, provided, however, that such
reimbursement will not exceed $10,000 in any calendar year.

-2-

 

          2.6. Reimbursement of Expenses. The Executive will be reimbursed by the Company for
all reasonable business expenses incurred by him in accordance with the Company’s customary expense
reimbursement policies as in effect from time to time.

          2.7. Car Allowance. The Executive will be provided with a Company-paid vehicle
satisfactory to the Executive or will receive a car allowance of $750 per month.

          2.8. Housing Allowance and Moving Expenses. The Executive will be provided with a
$2,500 per month allowance for housing expenses. Additionally, the Executive will be reimbursed
for moving expenses not to exceed $10,000 to be paid upon receipt of documentation satisfactory to
the Company.

     3. Termination. Upon any cessation of his employment with the Company, the Executive
will be entitled only to such compensation and benefits as described in this Section 3.

          3.1. Termination Without Cause or for Good Reason Other Than In Connection With a Change
in Control. If the Executive’s employment by the Company ceases due to a termination by the
Company without Cause (as defined below) or by the Executive for Good Reason (as defined below)
other than in connection with a Change in Control, the Executive will be entitled to:

               3.1.1. payment of all accrued and unpaid Base Salary through the cessation of the Initial
Period or the then current Renewal Period (as applicable);

               3.1.2. if the termination occurs in the interval between the end of the applicable measurement
period and the date a bonus (if any) for such measurement period is due, payment of such bonus (if
any);

               3.1.3. any reimbursable expenses, and earned but unpaid vacation pay will be paid within
thirty (30) days of termination; and

               3.1.4. waiver of the applicable premium otherwise payable for COBRA continuation coverage for
the Executive (and, to the extent covered immediately prior to the date of such cessation, his
eligible dependents) for a period of twelve (12) months.

          3.2. Termination Upon a Change in Control. If the Executive’s employment by the
Company ceases for any reason whatsoever, whether with or without Cause and whether with or without
Good Reason, at any time within one (1) month immediately following a Change in Control, the
Executive will be entitled to:

               3.2.1. payment of all accrued and unpaid Base Salary through the date of termination of
employment;

-3-

 

               3.2.2. if the termination occurs in the interval between the end of the applicable measurement
period and the date a bonus (if any) for such measurement period is due, payment of such bonus (if
any);

               3.2.3. any reimbursable expenses, and earned but unpaid vacation pay will be paid within
thirty (30) days of termination; and

               3.2.4. payment of an amount equal to the greater of $250,000 or ten percent (10%) of the Net
Cash Proceeds in excess of $6,000,000 in connection with the Change in Control. Net Cash Proceeds
for purposes of calculating the payment upon the Change in Control shall be defined as follows:

Gross Sales Proceeds

Less: Closing Costs and related fees

Less: Liabilities associated with the Pawn

Operations including but not limited to trade

payables, accrued liabilities, lines of credit,

capital leases and other liabilities not assumed

by Purchaser

Less: Capital invested in and loans made to

PawnMart, Inc. by Xponential, Inc. or related

parties

Equals: Net Cash Proceeds

               Anything herein to contrary notwithstanding, if the Change in Control occurs in connection
with any acquiring entity in which the Executive acquires an ownership interest in the acquiring
entity or any Affiliate thereof or in the acquired assets of the Company in connection with the
Change in Control, the Executive shall not be entitled to any payments under this Section
3.2 but shall instead be entitled to payments under Sections 3.1 or 3.3, as applicable.

          3.3. Other Terminations Other Than in Connection With a Change in Control. If the
Executive’s employment with the Company ceases for any reason other than as described in
Section 3.2, above (including, but not limited to, termination (a) by the Company for
Cause, (b) as a result of the Executive’s death, (c) as a result of the Executive’s Disability, or
(d) by the Executive without Good Reason), the Executive (or his estate) will be entitled to
payment of all accrued and unpaid Base Salary through the date of termination of employment.

          3.4. No Further Payments. Except as otherwise provided in Sections 3.1, 3.2 or
3.3 (as applicable), all compensation and benefits will cease at the time of such cessation,
subject to the terms of any benefits or compensation plans then in force and applicable to the
Executive, and the Company shall have no further liability or obligation by reason of such cessation. The payments and benefits described in Sections
3.1, 3.2 or 3.3 (as applicable) are in lieu of, and not in addition to, any other

-4-

 

severance arrangement maintained by the Company. Notwithstanding any provision of this Agreement,
the payments and benefits described in Sections 3.1, 3.2 or 3.3 (as applicable) are
conditioned on the Executive’s execution and delivery to the Company of a release substantially in
the form attached hereto as Exhibit A in a manner consistent with the requirements of the
Older Workers Benefit Protection Act (the “Release”). The severance benefits described in
Sections 3.1, 3.2 or 3.3 (as applicable) will begin to be paid or provided as soon as the
Release becomes irrevocable.

          3.5. Maximum Payment Limit. If any payment or benefit due under this Agreement,
together with all other payments and benefits that the Executive receives or is entitled to receive
from the Company or any of its subsidiaries, affiliates or related entities, would (if paid or
provided) constitute an Excess Parachute Payment (as defined below), the amounts otherwise payable
and benefits otherwise due under this Agreement will be limited to the minimum extent necessary to
ensure that no portion thereof will fail to be tax-deductible to the Company by reason of Section
280G of the Internal Revenue Code of 1986, as amended (the “Code”). The determination of whether
any payment or benefit would (if paid or provided) constitute an Excess Parachute Payment will be
made by the Board, in its sole discretion, based on the advice of the Company’s auditors. If,
notwithstanding the initial application of Section 2.3, the Internal Revenue Service
determines that any amount paid or benefit provided to the Executive would constitute an Excess
Parachute Payment, Section 2.3 will be reapplied based on the Internal Revenue Service’s
determination and the Executive will be required to repay to the Company any Overpayment (as
defined below) immediately upon receipt of written notice of the applicability of this section.

          3.6. Definitions. For purposes of this Agreement:

               3.6.1. “Affiliate” means (a) any Person which, directly or indirectly, is in control of, is
controlled by, or is under common control with such Person, or (b) any Person who is a director or
officer (i) of such Person, (ii) of any subsidiary of such Person or (iii) of any Person described
in clause (a) above. For purposes of this definition, control of a Person shall mean the power,
direct or indirect, (x) to vote five percent (5%) or more of the securities having ordinary voting
power for the election of directors of such Person, or (y) to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.

               3.6.2. “Cause” means:

                    (a) commits a felony or any crime involving moral turpitude;

                    (b) dishonesty in the course of employment that has a material, adverse effect on the
reputation or business activities of the Company;

                    (c) misconduct in the course of employment that has a material, adverse effect on the
reputation or business activities of the Company and that continues more than twenty (20) days
following written notice from the Company;

-5-

 

                    (d) misappropriation of funds or property of the Company;

                    (e) substance abuse, including abuse of alcohol or use of controlled drugs (other than in
accordance with a physician’s prescription) for which the Executive fails to undertake treatment
within twenty (20) days after requested by the Company;

                    (f) a finding by the Board, after written notice and opportunity for the Executive to be
heard, that the Executive has continued to refuse to perform his duties under the Agreement or to
carry out the lawful directives of the Board in some material respect; or

                    (g) any other material breach by the Executive of this Agreement, which breach is not cured
within twenty (20) days after delivery of notice thereof.

               3.6.3. “Change in Control” means the occurrence of any one of the following events: (i) a
Person (other than an existing shareholder as of the date of this Agreement or an Affiliate
thereof) becomes the beneficial owner, directly or indirectly, of more than fifty percent (50%) of
the outstanding common stock of the Company; or (ii) a merger or consolidation occurs involving the
Company, whether or not the Company is the surviving corporation, in which the outstanding common
stock is converted into shares of the successor corporation or a holding company thereof
(representing fifty percent (50%) or less of the voting power of all capital stock thereof
outstanding immediately after the merger or consolidation); or (iii) the sale of all, or
substantially all, of the Company’s assets.

               3.6.4. “Disability” means a condition entitling the Executive to benefits under the Company’s
long term disability plan, policy or arrangement; provided, however, that if no such plan, policy
or arrangement is then maintained by the Company and applicable to the Executive, “Disability” will
mean the Executive’s inability to perform his duties under this Agreement due to a mental or
physical condition that can be expected to result in death or that can be expected to last (or has
already lasted) for a continuous period of ninety (90) days or more, or for one hundred twenty
(120) days in any one hundred eighty (180) consecutive day period.

               3.6.5. “Excess Parachute Payment” has the same meaning as used in Section 280G(b)(1) of the
Code.

               3.6.6. “Good Reason” means any of the following, without the Executive’s prior consent: (a) a
material, adverse change in the Executive’s title, authority or duties (including the assignment of
duties materially inconsistent with the Executive’s position), (b) a failure to pay compensation
due pursuant to the terms of this Agreement, (c) any other material breach by the Company of this
Agreement, which breach is not cured within twenty (20) days after delivery of notice thereof; or
(d) relocation of the Company’s headquarters and principal place of business out of, or the
requirement by the Company that the Executive relocate out of, the greater Atlanta, Georgia area.
However, none of the foregoing events or conditions will

-6-

 

constitute Good Reason unless: (x) the Executive provides the Company with written objection to the
event or condition within thirty (30) days following the occurrence thereof, (y) the Company does
not reverse or otherwise cure the event or condition within thirty (30) days of receiving that
written objection, and (z) the Executive resigns his employment within ninety (90) days following
the expiration of that cure period.

               3.6.7. “Net Cash Proceeds” means an amount equal to (i) the sum of cash and cash equivalents
received in connection with such transaction (including any cash or cash equivalents received by
way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but
only as and when so received) minus (ii) the sum of (A) the principal amount of any indebtedness
that is required to be repaid in connection with such transaction, (B) the reasonable and customary
out-of-pocket expenses incurred in connection with such transaction, and (C) income taxes
reasonably estimated to be actually payable within two (2) years of the date of the relevant
transaction as a result of any gain recognized in connection therewith; provided that, if the
amount of any estimated taxes pursuant to subclause (C) exceeds the amount of taxes actually
required to be paid in cash in respect of such transaction, the aggregate amount of such excess
shall constitute Net Cash Proceeds.

               3.6.8. “Overpayment” means any amount paid to the Executive in excess of the maximum payment
limit of Section 3.4 of this Agreement.

               3.6.9. “Person” means any individual, sole proprietorship, partnership, corporation, business
trust, joint stock company, trust, unincorporated organization, association, limited liability
company, institution, public benefit corporation, joint venture, entity or government (whether
federal, state, county, city, municipal or otherwise, including any instrumentality, division,
agency, body or department thereof).

     4. Restrictive Covenants. As consideration for all the compensation to be paid to the
Executive pursuant to Sections 2 and 3 of this Agreement, the Executive agrees to be bound
by the provisions of this Section 4 (the “Restrictive Covenants”). These Restrictive
Covenants will apply without regard to whether any termination or cessation of the Executive’s
employment is initiated by the Company or the Executive, and without regard to the reason for that
termination or cessation.

          4.1. Covenant Not to Compete. The Executive covenants that, during his employment by
the Company and for a period of one (1) year immediately thereafter (the “Restricted Period”), the
Executive will not (except in his capacity as an employee or director of the Company) do any of the
following, directly or indirectly:

               4.1.1. engage or participate in any Competing Business (as defined below) in the United
States;

               4.1.2. solicit for employment or employ or retain (or arrange to have any other person or
entity employ or retain) any person who has been employed or retained by the Company within the
preceding six (6) months;

-7-

 

               4.1.3. become interested in (as owner, stockholder, lender, partner, co-venturer, director,
officer, employee, agent or consultant) any person, firm, corporation, association or other entity
engaged in a Competing Business. Notwithstanding the foregoing, the Executive may hold up to two
percent (2%) of the outstanding securities of any class of any publicly-traded securities of any
company; or

               4.1.4. influence or attempt to influence any employee, consultant, supplier, licensor,
licensee, contractor, agent, strategic partner, distributor, customer or other person to terminate
or modify any written or oral agreement, arrangement or course of dealing with the Company.

          4.2. Confidentiality. The Executive recognizes and acknowledges that the Proprietary
Information (as defined below) is a valuable, special and unique asset of the business of the
Company. As a result, both during the Employment Period and thereafter, the Executive will not,
without the prior written consent of the Company, for any reason divulge to any third party or use
for his own benefit, or for any purpose other than the exclusive benefit of the Company, any
Proprietary Information. Notwithstanding the foregoing, if the Executive is compelled to disclose
Proprietary Information by court order or other legal process, to the extent permitted by
applicable law, he shall promptly so notify the Company so that it may seek a protective order or
other assurance that confidential treatment of such Proprietary Information shall be afforded, and
the Executive shall reasonably cooperate with the Company in connection therewith. If the
Executive is so obligated by court order or other legal process to disclose Proprietary Information
he will disclose only the minimum amount of such Proprietary Information as is necessary for the
Executive to comply with such court order or other legal process.

          4.3. Property of the Company.

               4.3.1. Proprietary Information. All right, title and interest in and to Proprietary
Information will be and remain the sole and exclusive property of the Company. The Executive will
not remove from the Company’s offices or premises any documents, records, notebooks, files,
correspondence, reports, memoranda or similar materials of or containing Proprietary Information,
or other materials or property of any kind belonging to the Company unless necessary or appropriate
in the performance of his duties to the Company. If the Executive removes such materials or
property in the performance of his duties, he will return such materials or property promptly after
the removal has served its purpose. The Executive will not make, retain, remove and/or distribute
any copies of any such materials or property, or divulge to any third person the nature of and/or
contents of such materials or property, except to the extent necessary to perform his duties on
behalf of the Company. Upon termination of the Executive’s employment with the Company, he will
leave with the Company or promptly return to the Company all originals and copies of such materials
or property then in his possession.

               4.3.2. Intellectual Property. The Executive agrees that all the Intellectual Property
(as defined below) will be considered “works made for hire” as that term is defined in Section 101
of the Copyright Act (17 U.S.C. § 101) and that all right,

-8-

 

title and interest in such Intellectual Property will be the sole and exclusive property of the
Company. To the extent that any of the Intellectual Property may not by law be considered a work
made for hire, or to the extent that, notwithstanding the foregoing, the Executive retains any
interest in the Intellectual Property, the Executive hereby irrevocably assigns and transfers to
the Company any and all right, title, or interest that the Executive may now or in the future have
in the Intellectual Property under patent, copyright, trade secret, trademark or other law, in
perpetuity or for the longest period otherwise permitted by law, without the necessity of further
consideration. The Company will be entitled to obtain and hold in its own name all copyrights,
patents, trade secrets, trademarks and other similar registrations with respect to such
Intellectual Property. The Executive further agrees to execute any and all documents and provide
any further cooperation or assistance reasonably required by the Company to perfect, maintain or
otherwise protect its rights in the Intellectual Property. If the Company is unable after
reasonable efforts to secure the Executive’s signature, cooperation or assistance in accordance
with the preceding sentence, whether because of the Executive’s incapacity or any other reason
whatsoever, the Executive hereby designates and appoints the Company or its designee as the
Executive’s agent and attorney in fact, to act on his behalf, to execute and file documents and to
do all other lawfully permitted acts necessary or desirable to perfect, maintain or otherwise
protect the Company’s rights in the Intellectual Property. The Executive acknowledges and agrees
that such appointment is coupled with an interest and is therefore irrevocable.

          4.4. Definitions. For purposes of this Agreement:

               4.4.1. “Competing Business” means the operation of (a) more than three (3) pawnshops within
any 50-mile radius or (b) a pawnshop within ten (10) miles of a pawnshop owned by the Company.

               4.4.2. “Intellectual Property” means (a) all inventions (whether patentable or unpatentable
and whether or not reduced to practice), all improvements thereto, and all patents and patent
applications claiming such inventions, (b) all trademarks, service marks, trade dress, logos, trade
names, fictitious names, brand names, brand marks and corporate names, together with all
translations, adaptations, derivations, and combinations thereof and including all goodwill
associated therewith, and all applications, registrations, and renewals in connection therewith,
(c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications, registrations, and renewals in
connection therewith, (e) all trade secrets (including research and development, know how,
formulas, compositions, manufacturing and production processes and techniques, methodologies,
technical data, designs, drawings and specifications), (f) all computer software (including data,
source and object codes and related documentation), (g) all other proprietary rights, (h) all
copies and tangible embodiments thereof (in whatever form or medium), or (i) similar intangible
personal property which have been or are developed or created in whole or in part by the Executive
(1) at any time and at any place while the Executive is employed by Company and which, in the case
of any or all of the foregoing, are related to and used in connection with the business of the
Company, or (2) as a result of tasks assigned to the Executive by the Company.

-9-

 

               4.4.3. “Proprietary Information” means any and all proprietary information developed or
acquired by the Company or any of its subsidiaries or affiliates that has not been specifically
authorized to be disclosed. Such Proprietary Information shall include, but shall not be limited
to, the following items and information relating to the following items: (a) all intellectual
property and proprietary rights of the Company (including, without limitation, the Intellectual
Property), (b) computer codes and instructions, processing systems and techniques, inputs and
outputs (regardless of the media on which stored or located) and hardware and software
configurations, designs, architecture and interfaces, (c) business research, studies, procedures
and costs, (d) financial data, (e) distribution methods, (f) marketing data, methods, plans and
efforts, (g) the identities of actual and prospective suppliers, (h) the terms of contracts and
agreements with, the needs and requirements of, and the Company’s course of dealing with, actual or
prospective suppliers, (i) personnel information, (j) customer and vendor credit information, and
(k) information received from third parties subject to obligations of non-disclosure or non-use.
Failure by the Company to mark any of the Proprietary Information as confidential or proprietary
shall not affect its status as Proprietary Information. Notwithstanding the foregoing,
“Proprietary Information” shall not include information which: (1) is now or hereafter becomes,
through no act or omission on the part of the Executive, generally known or available, or is now or
later enters the public domain through no act or omission on the part of the Executive, (2) is
hereafter rightfully furnished to the Executive by a third party, without restriction as to use or
disclosure, or (3) was acquired or developed by the Executive prior to the date of this Agreement,
as evidenced by written records maintained or provided by the Executive.

          4.5. Acknowledgements. The Executive acknowledges that the Restrictive Covenants are
reasonable and necessary to protect the legitimate interests of the Company and its affiliates,
that the duration and geographic scope of the Restrictive Covenants are reasonable given the nature
of this Agreement and the position the Executive holds within the Company, and that the Company
would not enter into this Agreement or otherwise hire the Executive unless the Executive agrees to
be bound by the Restrictive Covenants set forth in this Section 4.

          4.6. Remedies and Enforcement Upon Breach.

               4.6.1. Specific Enforcement. The Executive acknowledges that any breach by him,
willfully or otherwise, of the Restrictive Covenants will cause continuing and irreparable injury
to the Company for which monetary damages would not be an adequate remedy. In the event of any
such breach by the Executive of any of the Restrictive Covenants, the Company shall be entitled to
injunctive or other similar equitable relief in any court, without any requirement that a bond or
other security be posted, and this Agreement shall not in any way limit remedies of law or in
equity otherwise available to the Company.

               4.6.2. Judicial Modification. If any court determines that any of the Restrictive
Covenants, or any part thereof, is unenforceable because of the duration or geographical scope of
such provision, such court shall have the power to modify such provision and, in its modified form,
such provision shall then be enforceable.

-10-

 

               4.6.3. Accounting. If the Executive breaches any of the Restrictive Covenants, the
Company will have the right and remedy to require the Executive to account for and pay over to the
Company all compensation, profits, monies, accruals, increments or other benefits derived or
received by the Executive as the result of such breach. This right and remedy will be in addition
to, and not in lieu of, any other rights and remedies available to the Company under law or in
equity.

               4.6.4. Enforceability. If any court holds the Restrictive Covenants unenforceable by
reason of their breadth or scope or otherwise, it is the intention of the parties hereto that such
determination not bar or in any way affect the right of the Company to the relief provided above in
the courts of any other jurisdiction within the geographic scope of such Restrictive Covenants.

               4.6.5. Disclosure of Restrictive Covenants. The Executive agrees to disclose the
existence and terms of the Restrictive Covenants to any employer that the Executive may work for
during the Restricted Period.

               4.6.6. Extension of Restricted Period. If the Executive breaches Section 4.1
in any material respect, the restrictions contained in that section will be extended for a period
equal to the period that the Executive was in breach.

     5. Miscellaneous.

          5.1. No Liability of Officers and Directors for Severance Upon Insolvency.
Notwithstanding any other provision of the Agreement and intending to be bound by this provision,
the Executive hereby (a) waives any right to claim payment of amounts owed to him, now or in the
future, pursuant to this Agreement from directors or officers of the Company if the Company becomes
insolvent, and (b) fully and forever releases and discharges the Company’s officers and directors
from any and all claims, demands, liens, actions, suits, causes of action or judgments arising out
of any present or future claim for such amounts.

          5.2. Other Agreements. The Executive represents and warrants to the Company that
there are no restrictions, agreements or understandings whatsoever to which he is a party that
would prevent or make unlawful his execution of this Agreement, that would be inconsistent or in
conflict with this Agreement or the Executive’s obligations hereunder, or that would otherwise
prevent, limit or impair the performance by the Executive of his duties under this Agreement.

          5.3. Successors and Assigns. The Company may assign this Agreement to any successor
to all or substantially all of its assets and business by means of liquidation, dissolution,
merger, consolidation, transfer of assets, sale of stock or otherwise. The duties of the Executive
hereunder are personal to the Executive and may not be assigned by him.

          5.4. Governing Law and Enforcement. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas, without regard to the principles of conflicts of
laws. Any legal proceeding arising out of or

-11-

 

relating to this Agreement will be instituted in a state or federal court in the State of Texas,
and the Executive and the Company hereby consent to the personal and exclusive jurisdiction of such
court(s) and hereby waive any objection(s) that they may have to personal jurisdiction, the laying
of venue of any such proceeding and any claim or defense of inconvenient forum.

          5.5. Waivers. The waiver by either party of any right hereunder or of any breach by
the other party will not be deemed a waiver of any other right hereunder or of any other breach by
the other party. No waiver will be deemed to have occurred unless set forth in a writing. No
waiver will constitute a continuing waiver unless specifically stated, and any waiver will operate
only as to the specific term or condition waived.

          5.6. Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law. However, if any
provision of this Agreement is held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability will not affect any other provision, and this Agreement
will be reformed, construed and enforced as though the invalid, illegal or unenforceable provision
had never been herein contained.

          5.7. Survival. Section 4 of this Agreement will survive expiration or
termination of this Agreement and/or the termination of the Executive’s employment by the Company.

          5.8. Notices. Any notice or communication required or permitted under this Agreement
shall be made in writing and (a) sent by overnight courier, (b) mailed by overnight United States
express mail, return receipt requested or (c) sent by telecopier, addressed as follows:

	 	 	 
	If to the Executive:

	 	Thomas K. Haas
	 

	 	116 Courtside Way
	 

	 	Spicewood, Texas 78669
	 

	 	Telecopy:                                        
	 
	 	 
	with copies to:

	 	Munsch Hardt Kopf & Harr, P.C.
	 

	 	One American Center
	 

	 	600 Congress Avenue, Suite 2900
	 

	 	Austin, Texas                     
	 

	 	Attention: Greg A. Young
	 

	 	Telecopy:                    
	 
	 	 
	If to the Company:

	 	PawnMart, Inc.
	 

	 	6400 Atlantic Boulevard., Suite 190
	 

	 	Norcross, Georgia 30071
	 

	 	Attn: Robert W. Schleizer

-12-

 

	 	 	 
	 

	 	Telecopy: 678-720-0671
	 
	 	 
	with copies to:

	 	Holland, Johns, Schwartz & Penny, L.L.P.
	 

	 	306 West Seventh Street, Suite 500
	 

	 	Fort Worth, Texas 76102
	 

	 	Attn: Margaret E. Holland
	 

	 	Telecopy: 817-332-3140

or to such other address as either party may from time to time duly specify by notice given to the
other party in the manner specified above.

          5.9. Entire Agreement; Amendments. This Agreement and the attached exhibits, together
with that certain letter dated November                     , 2006 from the Company to the Executive relating to the
bonuses for the Initial Period only, contain the entire agreement and understanding of the parties
hereto relating to the subject matter hereof, and merges and supersedes all prior and
contemporaneous discussions, agreements and understandings of every nature relating to the subject
matter. This Agreement may not be changed or modified, except by an agreement in writing signed by
each of the parties hereto.

          5.10. Withholding. All payments (or transfers of property) to the Executive will be
subject to tax withholding to the extent required by applicable law.

          5.11. Section Headings. The headings of sections and paragraphs of this Agreement are
inserted for convenience only and shall not in any way affect the meaning or construction of any
provision of this Agreement.

          5.12. Counterparts; Facsimile. This Agreement may be executed in multiple
counterparts (including by facsimile signature), each of which will be deemed to be an original,
but all of which together will constitute but one and the same instrument.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized officer, and the Executive has executed this Agreement, in each case as of the date
first above written.

	 	 	 	 	 
	Company:	PAWNMART, INC.

 	 
	 	By:  	/s/ Robert W. Schleizer
 	 
	 	 	Robert W. Schleizer 	 
	 	 	Chief Financial Officer 	 
	 
	 	 	 
	Executive:	/s/ Thomas K. Haas
 	 
	 	Thomas K. Haas 	 
	 	 	 
	 

-13-

 

EXHIBIT A

RELEASE AND NON-DISPARAGEMENT AGREEMENT

     THIS RELEASE AND NON-DISPARAGEMENT AGREEMENT (this “Release”) is made as of the                      day of
                    , 20                     by and between Thomas K. Haas (the “Executive”) and PawnMart, Inc. (the
“Company”).

     WHEREAS, the Executive’s employment as an executive of the Company has terminated; and

     WHEREAS, pursuant to Section 3.1 of the Employment and Restrictive Covenant Agreement
by and between the Company and the Executive dated                     , 2007 (the “Agreement”), the Company
has agreed to pay the Executive certain amounts and to provide him with certain rights and
benefits, subject to the execution of this Release.

     NOW THEREFORE, in consideration of these premises and the mutual promises contained herein,
and intending to be legally bound hereby, the parties agree as follows:

     1. Consideration. The Executive acknowledges that: (a) the payments, rights and
benefits set forth in Section 3.1 of the Agreement constitute full settlement of all his
rights under the Employment Agreement, (b) he has no entitlement under any other severance or
similar arrangement maintained by the Company, and (c) except as otherwise provided specifically in
this Release, the Company does not and will not have any other liability or obligation to the
Executive. The Executive further acknowledges that, in the absence of his execution of this
Release, the benefits and payments specified in Section 3.1 of the Employment Agreement
would not otherwise be due to him.

     2. Release and Covenant Not to Sue.

          2.1. The Executive hereby fully and forever releases and discharges the Company, its parent
and subsidiary corporations and each of their, predecessors, successors, assigns, stockholders,
affiliates, officers, directors, trustees, employees, agents and attorneys, past and present (the
Company and each such person or entity is referred to as a “Released Person”) from any and all
claims, demands, liens, agreements, contracts, covenants, actions, suits, causes of action,
obligations, controversies, debts, costs, expenses, damages, judgments, orders and liabilities, of
whatever kind or nature, direct or indirect, in law, equity or otherwise, whether known or unknown,
arising through the date of this Release out of the Executive’s employment by the Company or the
termination thereof, including, but not limited to, any claims for relief or causes of action under
the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq., or any other federal, state or
local statute, ordinance or regulation regarding discrimination in employment and any claims,
demands or actions based upon alleged wrongful or retaliatory discharge or breach of contract under
any state or federal law.

          2.2. The Executive expressly represents that he has not filed a lawsuit or initiated any other
administrative proceeding against a Released Person and that he has not assigned any claim against
a Released Person. The Executive further promises

 

 

not to initiate a lawsuit or to bring any other claim against the other arising out of or in any
way related to the Executive’s employment by the Company or the termination of that employment.
This Release will not prevent the Executive from filing a charge with the Equal Employment
Opportunity Commission (or similar state agency) or participating in any investigation conducted by
the Equal Employment Opportunity Commission (or similar state agency); provided, however, that any
claims by the Executive for personal relief in connection with such a charge or investigation (such
as reinstatement or monetary damages) would be barred.

          2.3. The foregoing will not be deemed to release the Company from claims solely to enforce
Section 3.1 of the Agreement.

     3. Restrictive Covenants. The Executive acknowledges that restrictive covenants
contained in Section 4 of the Agreement will survive the termination of his employment.
The Executive affirms that those restrictive covenants are reasonable and necessary to protect the
legitimate interests of the Company, that he received adequate consideration in exchange for
agreeing to those restrictions and that he will abide by those restrictions.

     4. Non-Disparagement. The Executive will not disparage any Released Person or
otherwise take any action that could reasonably be expected to adversely affect the personal or
professional reputation of any Released Person.

     5. Cooperation. The Executive further agrees that, subject to reimbursement of his
reasonable expenses, he will cooperate fully with the Company and its counsel with respect to any
matter (including litigation, investigations, or governmental proceedings) in which the Executive
was in any way involved during his employment with the Company. The Executive shall render such
cooperation in a timely manner on reasonable notice from the Company.

     6. Rescission Right. The Executive expressly acknowledges and recites that (a) he has
read and understands the terms of this Release in its entirety; (b) he has entered into this
Release knowingly and voluntarily, without any duress or coercion; (c) he has been advised orally
and is hereby advised in writing to consult with an attorney with respect to this Release before
signing it; (d) he was provided twenty-one (21) calendar days after receipt of the Release to
consider its terms before signing it; and (e) he is provided seven (7) calendar days from the date
of signing to terminate and revoke this Release, in which case this Release shall be unenforceable,
null and void. The Executive may revoke this Release during those seven (7) days by providing
written notice of revocation to the Company at the address specified in Section 5.8 of the
Agreement.

     7. Challenge. If the Executive violates or challenges the enforceability of any
provisions of the Restrictive Covenants or this Release, no further payments, rights or benefits
under Section 3 of the Agreement will be due to the Executive.

-2-

 

     8. Miscellaneous.

          8.1. No Admission of Liability. This Release is not to be construed as an admission
of any violation of any federal, state or local statute, ordinance or regulation or of any duty
owed by the Company to the Executive. There have been no such violations, and the Company
specifically denies any such violations.

          8.2. No Reinstatement. The Executive agrees that he will not apply for reinstatement
with the Company or seek in any way to be reinstated, re-employed or re-hired by the Company in the
future.

          8.3. Successors and Assigns. This Release shall inure to the benefit of and be
binding upon the Company and the Executive and their respective successors, permitted assigns,
executors, administrators and heirs. The Executive not may make any assignment of this Release or
any interest herein, by operation of law or otherwise. The Company may assign this Release to any
successor to all or substantially all of its assets and business by means of liquidation,
dissolution, merger, consolidation, transfer of assets, or otherwise.

          8.4. Severability. Whenever possible, each provision of this Release will be
interpreted in such manner as to be effective and valid under applicable law. However, if any
provision of this Release is held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability will not affect any other provision, and this Release
will be reformed, construed and enforced as though the invalid, illegal or unenforceable provision
had never been herein contained.

          8.5. Entire Agreement; Amendments. Except as otherwise provided herein, this Release
contains the entire agreement and understanding of the parties hereto relating to the subject
matter hereof, and merges and supersedes all prior and contemporaneous discussions, agreements and
understandings of every nature relating to the subject matter hereof. This Release may not be
changed or modified, except by an agreement in writing signed by each of the parties hereto.

          8.6. Governing Law. This Release shall be governed by, and enforced in accordance
with, the laws of the State of Texas, without regard to the application of the principles of
conflicts of laws. Any legal proceeding arising out of or relating to this Release will be
instituted in a state or federal court in the State of Texas, and the Executive and the Company
hereby consent to the personal and exclusive jurisdiction of such court(s) and hereby waive any
objection(s) that they may have to personal jurisdiction, the laying of venue of any such
proceeding and any claim or defense of inconvenient forum.

          8.7. Counterparts and Facsimiles. This Release may be executed, including execution
by facsimile signature, in multiple counterparts, each of which shall be deemed an original, and
all of which together shall be deemed to be one and the same instrument.

-3-

 

     IN WITNESS WHEREOF, the Company has caused this Release to be executed by its duly authorized
officer, and the Executive has executed this Release, in each case as of the date first above
written.

	 	 	 	 	 
	Company:	PAWNMART, INC.

 	 
	 	By:  	 	 
	 	 	Robert W. Schleizer 	 
	 	 	Chief Financial Officer 	 
	 
	Executive:	 
	 	Thomas K. Haas
	 	 	 
	 	 	 
	 	 	 
	 

-4-

 

March 5, 2007

Mr. Thomas K. Haas

King Pawn

4103 North IH 35

Austin, TX 78722

Re: Calendar year 2007 Bonuses

Dear Tom:

     Per our discussion and agreement, PawnMart, Inc. (“PawnMart”) agrees to pay you performance
bonuses as follows for the Initial Period of your employment by PawnMart pursuant to your
employment agreement (“Agreement”):

	 	1.	 	You will be eligible to receive a bonus equal to 10% of Net Income Before Taxes in
excess of $300,000 on Pawn Operating Assets (as defined on Exhibit 1 attached hereto) for
the calendar year ended December 31, 2007 (“Net Income Bonus”). The Net Income Bonus is
payable upon completion of Xponential, Inc.’s filing of its Form 10-QSB for the fiscal
quarter ended December 31, 2007, but in no event later than March 15, 2008.
	 
	 	2.	 	A $50,000 bonus (“Jewelry Bonus”) will be payable on March 31, 2007 provided PawnMart
reduces its gross jewelry inventory through sales (exclusive of any reserves) to
$3,000,000 on terms acceptable to the Board of the Company by March 31, 2007. The Jewelry
Bonus will be earned based on PawnMart’s maintaining its pawn forfeiture policy consistent
with its current practices in effect as of the date of this letter. If earned, the
Jewelry Bonus will be deducted from the Net Income Bonus. In other words, if the Net
Income Bonus for the twelve months ended December 31, 2007 totals $75,000, you will be
entitled to $25,000 if the $50,000 Jewelry Bonus is earned and paid.

     Words not otherwise defined in this letter or the attached Exhibit shall have the meanings set
forth in the Agreement.

     Sincerely,

     PAWNMART, INC.

     /s/ Robert Schleizer

     Robert Schleizer

     Chief Financial Officer

6400 Atlantic Blvd. Suite 190, Norcross, GA 30071

Phone (678) 720-0660 Fax (678) 720-0671

 

 

Exhibit 1

For purposes of the bonus calculations, the following terms will have the following meanings:

Pawn Operating Assets: Pawn Operating Assets include all assets owned by PawnMart
excluding the following:

	 	•	 	Investments in assets other than operating assets utilized in the operation of the
pawn business. Excluded assets shall include but not be limited to the $950,000
convertible promissory note purchased by PawnMart from Integrity Mutual Funds, Inc.
(“Integrity”) and related interest receivables.
	 
	 	•	 	Integrity Preferred Stock and related accrued dividends
	 
	 	•	 	Any additional investments made by PawnMart in assets other than pawn loans,
inventory, computer hardware and software, property improvements, equipment, vehicles
and other operating assets necessary to operate the pawn business.
	 
	 	•	 	Gold futures contracts and related funds required to meet margin requirements.

PawnMart Net Income Before Taxes: PawnMart Net Income Before Taxes is defined as
follows:

Total Revenue

Less:

Revenue other than from Merchandise Sales, Scrap Sales, Car Sales, Layaway
Income, Pawn Service Charges and any fee related income from pawn or inventory
assets.

Less:

Cost of Sales including all costs associated with Merchandise Sales, Scrap Sales,
Car Sales, Layaway Income, Pawn Service Charges and any fee related income from
pawn or inventory assets

Less:

Store Operating Expenses

Less:

General and Administrative Expenses directly related to the pawn operations
including travel and related expenses for PawnMart and Xponential, Inc. personnel

Less:

Interest income earned from investments including money market accounts,
dividends on Integrity and other preferred or common stocks, interest income on
Integrity convertible promissory note or other notes purchased by PawnMart

Less:

Depreciation and Amortization for pawn operating assets

Less: Interest expense for bank line of credit

Less:

Gains or losses on investments including but not limited to gold futures contracts

Less:

Cost of capital calculated at 12% per annum on capital invested by Xponential,
Inc. in PawnMart defined as permanent capital (common stock and additional paid
in capital) net of/in addition to any intercompany loans from or to PawnMart by
Xponential, Inc. or any other subsidiaries

Equals: PawnMart net income before taxes

 

 

Exhibit 1

The Net Income Bonus calculations for the Initial Period of the Agreement shall be computed as
follows:

PawnMart Net Income Before Taxes

Less: $300,000

Net Income eligible for bonus

Multiply by 10%

Net Income Bonus earned

Less: Jewelry Bonus Paid, if any

Net Income Bonus payable (if amount exceeds Jewelry Bonus Paid

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