Document:

Exhibit 4.1

 

XPONENTIAL, INC.

 

ISSUER

 

TO

 

THE BANK OF NEW YORK TRUST COMPANY, N.A.

 

TRUSTEE

 

 

INDENTURE

 

Dated as of October 8, 2004

 

 

8% LIMITED RECOURSE SECURED

CONVERTIBLE SUBORDINATED NOTES

DUE DECEMBER 31, 2014

 

 

INDENTURE, dated as of October
8, 2004, between XPONENTIAL, INC., a corporation duly organized and existing
under the laws of the State of Delaware, having its principal office at 2175
Old Concord Road SE, Suite 200, Smyrna, Georgia 
30080 (the “Company”), and THE BANK OF NEW YORK TRUST COMPANY, N.A., a
national banking association, as Trustee hereunder (the “Trustee”).

RECITALS OF THE COMPANY

 

The Company has duly
authorized the creation of an issue of its 8% Limited Recourse Secured
Convertible Subordinated Notes due December 31, 2014 (the “Securities”) of
substantially the tenor and amount hereinafter set forth, and to provide
therefor the Company has duly authorized the execution and delivery of this
Indenture.

 

All things necessary to make
the Securities, when the Securities are executed by the Company and
authenticated and delivered hereunder, the valid obligations of the Company,
and to make this Indenture a valid agreement of the Company, in accordance with
their and its terms, have been done. 
Further, all things necessary to duly authorize the issuance of the
Common Stock of the Company issuable upon the conversion of the Securities, and
to duly reserve for issuance the number of shares of Common Stock issuable upon
such conversion, have been done.

 

NOW, THEREFORE, THIS
INDENTURE WITNESSETH:

 

For and in consideration of
the premises and the purchase of the Securities by the Holders thereof, it is
mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders of the Securities, as follows:

 

ARTICLE I 

DEFINITIONS AND OTHER PROVISIONS

OF GENERAL APPLICATION

 

SECTION 1.1.                      Definitions.

 

For all purposes of this
Indenture, except as otherwise expressly provided or unless the context
otherwise requires:

 

(1)           the
terms defined in this Article I
have the meanings assigned to them in this Article
I and include the plural as well as the singular;

 

(2)           all
accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with GAAP, and, except as otherwise herein expressly
provided, the term “generally accepted 
accounting principles” with respect to any computation required or
permitted hereunder shall mean such accounting principles as are generally
accepted at the date of such computation; and

 

 

(3)           the
words “herein,” “hereof” and “hereunder” and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section
or other subdivision.

 

“Act,” when used with
respect to any Holder of a Security, has the meaning specified in Section 1.4.

 

“Affiliate” of any
specified Person means any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such specified
Person.  For the purposes of this
definition, “control,” when used with respect to any specified Person, means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms “controlling” and “controlled” have meanings
correlative to the foregoing.

 

“Authenticating Agent”
means any Person authorized pursuant to Section
7.12 to act on behalf of the Trustee to authenticate Securities.

 

“Bankruptcy Code” means
Title 11, United States Code, as may be amended from time to time, or any similar
federal or state law for the relief of debtors.

 

“Board of Directors”
means either the board of directors of the Company or any duly authorized
committee of that board.

 

“Board Resolution” means
a resolution duly adopted by the Board of Directors, a copy of which, certified
by the Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on the
date of such certification, shall have been delivered to the Trustee.

 

“Business Day,” when
used with respect to any Place of Payment, Place of Conversion or any other
place, as the case may be, means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in such Place of
Payment, Place of Conversion or other place, as the case may be, are authorized
or obligated by law or executive order to close; provided, however, that a day
on which banking institutions in New York, New York are authorized or obligated
by law or executive order to close shall not be a Business Day for purposes of Section 14.9.

 

“Capital Stock of
PawnMart” means any and all shares (both common and preferred shares, including
the Common Stock of PawnMart), interests (including partnership interests),
rights to purchase, warrants, options, participations or other equivalents of
or interests in (however designated) equity of PawnMart, and any debt
securities convertible into or exchangeable for such equity.

 

“Closing Price Per Share”
means, with respect to the Common Stock, for any day, (i) the last reported
sale price regular way per share on a Stock Exchange or, in case no such
reported sale takes place on such day, the average of the reported closing bid
and asked prices regular way; or (ii) if the Common Stock is not listed on a 

 

2

 

Stock
Exchange, the average of the closing bid prices in the over-the-counter market
as furnished by any Stock Exchange member firm selected from time to time by
the Company for that purpose; or (iii) if the Common Stock is not publicly
traded, the determination of the Closing Price Per Share shall be made by the
Board of Directors in its discretion exercised in good faith.  In this respect, the Board of Directors  may rely on such financial data, valuations,
experts, and other sources, in its discretion, as it deems advisable under the
circumstances.

 

“Code” has the meaning
specified in Section 2.l.

 

“Collateral” has the
meaning specified in Section 4.1.

 

“Commission” means the
United States Securities and Exchange Commission, as from time to time
constituted, created under the Exchange Act, or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.

 

“Common Stock” means the
common stock, par value $0.01 per share, of the Company authorized at the date
of this instrument as originally executed.

 

“Common Stock of
PawnMart” means the common stock, $0.01 par value, of PawnMart.

 

“common stock” includes
any stock of any class of capital stock which has no preference in respect of
dividends or of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the issuer thereof and which is not
subject to redemption by the issuer thereof.

 

“Company” means the
Person named as the “Company” in the first paragraph of this instrument until a
successor Person shall have become such pursuant to the applicable provisions
of this Indenture, and thereafter “Company” shall mean such successor Person.

“Company Request” or “Company
Order” means a written request or order signed in the name of the Company by
its Chairman of the Board, its Vice Chairman of the Board, its Chief Executive
Officer, its President, an Executive Vice President or a Vice President, and by
its Chief Financial Officer, Treasurer, an Assistant Treasurer, its Secretary
or an Assistant Secretary, and delivered to the Trustee.

 

“Conversion Agent” means
any Person authorized by the Company to convert Securities in accordance with Article XIII.  The Company has initially appointed the
Trustee as its Conversion Agent pursuant to Section
11.2 hereof.

 

“Conversion Rate” has
the meaning specified in Section 13.1.

 

3

 

“Corporate Trust Office”
means the office of the Trustee at which at any particular time its corporate
trust business shall be principally administered (which at the date of this
Indenture is located at 600 North Pearl Street, Suite 420, Dallas, Texas
75201).

 

“Credit Agreement” means
that certain Loan and Security Agreement dated as of June 17, 2004, as amended,
between the Company and FCC, LLC, d/b/a First Capital, Kennesaw, Georgia, for a
$4,500,000 revolving credit facility, as the same may be amended or restated
from time to time.

 

“Defaulted Interest” has
the meaning specified in Section 3.6.

 

“Depositary” means, with
respect to any Securities, a clearing agency that is registered as such under
the Exchange Act and is designated by the Company to act as Depositary for such
Securities (or any successor securities clearing agency so registered).

 

“Dollar” or “U.S. $”
means a dollar or other equivalent unit in such coin or currency of the United
States as at the time shall be legal tender for the payment of public and
private debts.

 

“Event of Default” has
the meaning specified in Section 6.1.

 

“Exchange Act” means the
United States Securities Exchange Act of 1934 (or any successor statute), as
amended from time to time.

 

“GAAP” means generally
accepted accounting principles in the United States of America in effect from
time to time.

 

“Holder” means the
Person in whose name the Security is registered in the Security Register.

 

“Indenture” means this
instrument as originally executed or as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof, including, for all purposes
of this instrument and any such supplemental indenture, the provisions of the
Trust Indenture Act that are deemed to be a part of and govern this instrument
and any such supplemental indenture, respectively.

 

“Interest Payment Date”
means the Stated Maturity of an installment of interest on the Securities.

 

“Issue Date” means the
date of issuance of a particular Security.

 

“Lien” means any
mortgage, pledge, security interest, conditional sale or other title retention
agreement or other similar lien.

 

4

 

“Maturity,” when used
with respect to any Security, means the date on which the principal of such
Security becomes due and payable as therein or herein provided, whether at the
Stated Maturity or by declaration of acceleration, or call for redemption.

 

“Measurement Date” has
the meaning specified in Section 11.10.

 

“Net Worth” at a
particular date means all amounts which would be included under shareholders’
equity on a balance sheet of an entity in accordance with GAAP as at such date.

 

“Notice of Default” has
the meaning specified in Section 6.1.

 

“Obligations” means (a)
the full and punctual payment of principal of, and interest, if any, on the
Securities when due, whether at Maturity, by acceleration, by redemption or
otherwise, and all other monetary obligations of the Company under this
Indenture and the Securities; (b) the full and punctual performance of all the
obligations of the Company under this Indenture and the Securities; (c) all
costs and expenses, including, without limitation, all reasonable attorneys’
fees and legal expenses, actually incurred by the Trustee to preserve and
maintain the Collateral, collect the obligations herein described, and enforce
the provisions of this Indenture and the Securities; (d) all amounts owed under
any extension, renewal, or modification of any of the foregoing; and (e) any of
the foregoing that arises after the filing of a petition by or against the
Company under the Bankruptcy Code, even if the indebtedness due does not accrue
because of the automatic stay under Bankruptcy Code § 362 or otherwise.

 

“Offering Document” has
the meaning specified in Section 7.4.

 

“Officer” means the
Chairman of the Board, a Vice Chairman of the Board, the Chief Executive
Officer, the President, an Executive Vice President or Vice President, the
Chief Financial Officer, the Treasurer, an Assistant Treasurer or the Secretary
or an Assistant Secretary of the Company.

 

“Officers’ Certificate”
means a certificate signed by the Chairman of the Board, a Vice Chairman of the
Board, the Chief Executive Officer, the President, an Executive Vice President
or a Vice President and by the Chief Financial Officer, the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary of the Company,
and delivered to the Trustee.

 

“Opinion of Counsel”
means a written opinion of counsel, who may be counsel for the Company and who
shall be acceptable to the Trustee.

 

“Outstanding,” when used
with respect to Securities, means, as of the date of determination, all
Securities theretofore authenticated and delivered under this Indenture, except:

 

5

 

(i)            Securities
theretofore canceled by the Trustee or delivered to the Trustee for
cancellation;

 

(ii)           Securities
for the payment or redemption of which money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent (other than the
Company) in trust or set aside and segregated in trust by the Company (if the
Company shall act as its own Paying Agent) for the Holders of such Securities,
provided that if such Securities are to be redeemed, notice of such redemption
has been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made;

 

(iii)         Securities
which have been paid pursuant to Section 3.5
or in exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof satisfactory
to it that such Securities are held by a bona fide purchaser in whose hands
such Securities are valid obligations of the Company; and

 

(iv)          Securities
converted into Common Stock pursuant to Article
XIII;

 

provided, however, that in
determining whether the Holders of the requisite principal amount of
Outstanding Securities are present at a meeting of Holders of Securities for
quorum purposes or have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, Securities owned by the Company or any
other obligor upon the Securities or any Affiliate of the Company or such other
obligor shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
determination as to the presence of a quorum or upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which a
Responsible Officer of the Trustee has been notified in writing to be so owned
shall be so disregarded.  Securities so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or such other obligor, and the Trustee shall be protected
in relying upon an Officers’ Certificate to such effect.

 

“PawnMart” means
PawnMart, Inc., a Nevada corporation, a wholly-owned Subsidiary of the Company.

 

“Paying Agent” means any
Person authorized by the Company to pay the principal of or interest on any
Securities on behalf of the Company and, except as otherwise specifically set
forth herein, such term shall include the Company if it shall act as its own
Paying Agent.  The Company has initially
appointed the Trustee as its Paying Agent pursuant to Section 11.2 hereof.

 

“Person” means any
individual, corporation, company, association, joint-stock company, business
trust, limited liability company, partnership, joint venture, 

 

6

 

trust,
estate, unincorporated organization or government or any agency or political
subdivision thereof.

 

“Place of Conversion”
has the meaning specified in Section 3.1.

 

“Place of Payment” has
the meaning specified in Section 3.1.

 

“Pledged Shares” has the
meaning specified in Section 4.1.

 

“Predecessor Security”
of any particular Security means every previous Security evidencing all or a
portion of the same debt as that evidenced by such particular Security; and,
for the purposes of this definition, any Security authenticated and delivered
under Section 3.5 in exchange for
or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed
to evidence the same debt as the mutilated, destroyed, lost or stolen Security.

 

“Record Date” means any
Regular Record Date or Special Record Date.

 

“Record Date Period”
means the period from the close of business of any Regular Record Date next
preceding any Interest Payment Date to the opening of business on such Interest
Payment Date.

 

“Redemption Date,” when
used with respect to any Security to be redeemed, means the date fixed for such
redemption by or pursuant to this Indenture.

 

“Redemption Price,” when
used with respect to any Security to be redeemed, means the price at which it
is to be redeemed pursuant to this Indenture.

 

“Regular Record Date”
for interest payable in respect of any Security on any Interest Payment Date
means the fifteenth day of the month (whether or not a Business Day), next
preceding the month in which such Interest Payment Date occurs.

 

“Representative” means
the (a) indenture trustee or other trustee, agent or representative for any
Senior Indebtedness or (b) with respect to any Senior Indebtedness that does
not have any such trustee, agent or other representative, (i) in the case of
such Senior Indebtedness issued pursuant to an agreement providing for voting
arrangements as among the holders or owners of such Senior Indebtedness, any
holder or owner of such Senior Indebtedness acting with the consent of the
required persons necessary to bind such holders or owners of such Senior
Indebtedness and (ii) in the case of all other such Senior Indebtedness,
the holder or owner of such Senior Indebtedness.

 

“Responsible Officer,”
when used with respect to the Trustee, means any officer within the Corporate
Trust Office of the Trustee with direct responsibility for the administration
of this Indenture and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge and familiarity with the particular subject.

 

7

 

“Restricted Payments”
has the meaning specified in Section 11.9.

 

“Restricted Securities”
means all Securities required pursuant to Section 3.4(2)
to bear the Restricted Securities Legend.

 

“Restricted Securities
Legend” means the legend substantially in the form of the legend required in
the form of Security set forth in Section 2.2
to be placed upon each Restricted Security.

 

“Rule 144” means Rule
144 under the Securities Act (or any successor provision), as it may be amended
from time to time.

 

“Sale of PawnMart” means
the occurrence of any one of the following events: (i) the sale or other
transfer of fifty percent or more of the Pledged Shares; (ii) the sale of
all or substantially all of the assets of PawnMart; (iii) the merger,
consolidation or other reorganization of PawnMart with and into another entity,
whether or not PawnMart is the surviving entity, in which the Pledged Shares
are converted into shares of the successor entity or a holding company thereof
(representing fifty percent or less of the voting power of all capital stock
thereof immediately after the merger or consolidation); or (iv) the approval of
a plan of complete liquidation of PawnMart.

 

“Securities” has the
meaning ascribed to it in the first paragraph under the caption “Recitals of
the Company.”

 

“Securities Act” means
the United States Securities Act of 1933 (or any successor statute), as amended
from time to time.

 

“Security Register” and “Security
Registrar” have the respective meanings specified in Section 3.4.

 

“Senior Indebtedness”
means the principal of and interest (including all interest accruing subsequent
to the commencement of any bankruptcy or similar proceeding, whether or not a
claim for post-petition interest is allowable as a claim in any such
proceeding) on, and all fees and other amounts payable in connection with, the
following, whether absolute or contingent, secured or unsecured, due or to
become due, outstanding on the date of this Indenture or thereafter created,
incurred or assumed: (a) indebtedness of the Company to banks, commercial
finance lenders, insurance companies or other financial institutions engaged in
the business of lending money, which is for money borrowed from the Company,
and (b) any such indebtedness issued in exchange for or to refinance such
indebtedness.

 

“Significant Subsidiary”
means, with respect to any Person, a Subsidiary of such Person that would
constitute a “significant subsidiary” as such term is defined under Rule 1-02
of Regulation S-X under the Securities Act.

 

“Special Record Date”
for the payment of any Defaulted Interest means a date fixed by the Company
pursuant to Section 3.6.

 

8

 

“Stated Maturity,” when
used with respect to any Security or any installment of interest thereon, means
the date specified in such Security as the fixed date on which the principal of
such Security or such installment of interest is due and payable.

 

“Stock Exchange” means
any national or regional stock exchange or quotation service such as the NASDAQ
National Quotation System or similar quotation service maintained by the
National Quotation Bureau or successor thereto.

 

“Subsidiary” means a
corporation more than 50% of the outstanding voting stock of which is owned,
directly or indirectly, by the Company or by one or more other Subsidiaries, or
by the Company and one or more other Subsidiaries.  For the purposes of this definition, “voting
stock” means stock or other similar interests in the corporation which
ordinarily has or have voting power for the election of directors, or persons
performing similar functions, whether at all times or only so long as no senior
class of stock or other interests has or have such voting power by reason of
any contingency.

 

“Successor Security” of
any particular Security means every Security issued after, and evidencing all
or a portion of the same debt as that evidenced by, such particular Security;
and, for the purposes of this definition, any Security authenticated and
delivered under Section 3.5 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security
shall be deemed to evidence the same debt as the mutilated, destroyed, lost or
stolen Security.

 

“Temporary Cash
Investments” means any of the following: (i) any investment in direct
obligations of the United States of America or any agency thereof or
obligations guaranteed by the United States of America or any agency thereof,
in each case, maturing within 360 days of the date of acquisition thereof, (ii)
investments in time deposit accounts, certificates of deposit and money market
deposits maturing within 180 days of the date of acquisition thereof issued by
a bank or trust company (including the Trustee and Affiliates of the Trustee)
which is organized under the laws of the United States of America, any state
thereof or any foreign country recognized by the United States having capital,
surplus and undivided profits aggregating in excess of $250,000,000 and whose
debt is rated “A” (or such similar equivalent rating) or higher by at least one
nationally recognized statistical rating organization (as defined for purposes
of Rule 436 under the Securities Act) or any money-market fund sponsored by any
registered broker dealer or mutual fund distributor, (iii) repurchase
obligations with a term of not more than 30 days for underlying securities of
the types described in clause (i) above entered into with a bank meeting the
qualifications described in clause (ii) above, (iv) investments in commercial
paper, maturing not more than 90 days after the date of the acquisition, issued
by a corporation (other than an Affiliate or Subsidiary of the Company)
organized and in existence under the laws of the United States of America or
any foreign country recognized by the United States of America with a rating at
the time as of which any investment therein is made of “P-2” (or higher)
according to Moody’s Investors Service, Inc, or “A-2” (or higher) according to
Standard and Poor’s Corporation and (v) securities with maturities of six
months or less from the 

 

9

 

date
of acquisition backed by standby or direct pay letters of credit issued by any
bank satisfying the requirements of clause (ii) above.

 

“Trust Indenture Act”
means the Trust Indenture Act of 1939, and the rules and regulations
thereunder, as in force at the date as of which this instrument was executed,
provided, however, that in the event the Trust Indenture Act of 1939 is amended
after such date, “Trust Indenture Act” means, to the extent required by any
such amendment, the Trust Indenture Act of 1939, and the rules and regulations
thereunder, as so amended.

 

“Trustee” means the
Person named as the “Trustee” in the first paragraph of this instrument until a
successor Trustee shall have become such pursuant to the applicable provisions
of this Indenture, and thereafter “Trustee” shall mean such successor Trustee.

 

“Uniform Commercial Code”
means the New York Uniform Commercial Code as in effect from time to time.

 

“United States” means
the United States of America (including the States and the District of
Columbia), its territories, its possessions and other areas subject to its
jurisdiction (its “possessions” including Puerto Rico, the U.S. Virgin Islands,
Guam, American Samoa, Wake Island and the Northern Mariana Islands).

 

SECTION 1.2.                      Compliance
Certificates and Opinions.

 

Upon any application or
request by the Company to the Trustee to take any action under any provision of
this Indenture, the Company shall furnish to the Trustee an Officers’
Certificate stating that all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with and an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.

 

Every certificate or opinion
with respect to compliance with a condition or covenant provided for in this
Indenture (including certificates provided for in Section 11.8)
shall include:

 

(1)           a
statement that each individual signing such certificate or opinion has read
such covenant or condition and the definitions herein relating thereto;

 

(2)           a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion
are based;

 

10

 

(3)           a
statement that, in the opinion of such individual, he has made such examination
or investigation as is necessary to enable him to express an informed opinion
as to whether or not such covenant or condition has been complied with; and

 

(4)           a
statement as to whether, in the opinion of each such individual, such condition
or covenant has been complied with.

 

The Company shall deliver to
the Trustee from time to time a written incumbency certificate naming each
Officer who has authority to act on behalf of the Company containing the
specimen signature of each such Officer and signed on behalf of the Company by
an Officer.  The Trustee may rely on such
certificate until it is given written notice to the contrary.

 

SECTION 1.3.                      Form
of Documents Delivered to the Trustee.

 

In any case where several
matters are required to be certified by, or covered by an opinion of, any
specified Person, it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.

 

Any certificate or opinion
of an officer of the Company may be based, insofar as it relates to legal
matters, upon a certificate or opinion of, or representations by, counsel,
unless such officer knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to the matters
upon which such certificate or opinion is based are erroneous.  Any such certificate or opinion of counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company or any
other Person stating that the information with respect to such factual matters
is in the possession of the Company or such other Person, unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.

 

Where any Person is required
to make, give or execute two or more applications, requests, consents,
certificates, statements, opinions or other instruments under this Indenture,
they may, but need not, be consolidated and form one instrument.

 

SECTION 1.4.                      Acts
of Holders of Securities.

 

(1)           Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given or taken by Holders
of Securities may be embodied in and evidenced by (A) one or more instruments
of substantially similar tenor signed by such Holders in person or by an agent
or proxy duly appointed in writing by such Holders or (B) the record of Holders
of Securities voting in favor thereof, either in person or by proxies duly
appointed in writing, at any meeting of Holders of Securities duly called and
held in accordance with the provisions 

 

11

 

of Article X. 
Such action shall become effective when such instrument or instruments
or record is or are delivered to the Trustee and, where it is hereby expressly
required, to the Company.  The Trustee
shall promptly deliver to the Company copies of all such instruments and
records delivered to the Trustee.  Such
instrument or instruments and record (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the “Act” of the Holders
of Securities signing such instrument or instruments and so voting at such
meeting.  Proof of execution of any such
instrument or of a writing appointing any such agent or proxy, or of the
holding by any Person of a Security, shall be sufficient for any purpose of
this Indenture and (subject to Section 7.1)
conclusive in favor of the Trustee and the Company if made in the manner
provided in this Section 1.4.  The record of any meeting of Holders of
Securities shall be proved in the manner provided in Section 10.6.

 

(2)           The
fact and date of the execution by any Person of any such instrument or writing
may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof.  Where such execution is by a signer acting in
a capacity other than his individual capacity, such certificate or affidavit
shall also constitute sufficient proof of his authority.

 

(3)           The
principal amount and serial number of any Security held by any Person, and the
date of his holding the same, shall be proved by the Security Register.

 

(4)           The
fact and date of execution of any such instrument or writing and the authority
of the Person executing the same may also be proved in any other manner which
the Trustee deems sufficient; and the Trustee may in any instance require
further proof with respect to any of the matters referred to in this Section 1.4.

 

(5)           The
Company may set any day as the record date for the purpose of determining the
Holders entitled to give or take any request, demand, authorization, direction,
notice, consent, waiver or other action, or to vote on any action, authorized
or permitted by this Indenture to be given or taken by Holders.  Promptly and in any case not later than ten
(10) days after setting a record date, the Company shall notify the Trustee and
the Holders of such record date.  If not
set by the Company prior to the first solicitation of a Holder made by any
Person in respect of any such action, or, in the case of any such vote, prior
to such vote, the record date for any such action or vote shall be the
thirtieth (30th) day (or, if later, the date of the most recent list of Holders
required to be provided pursuant to Section
15.1) prior to such first solicitation or vote, as the case may
be.  With regard to any record date, the
Holders on such date (or their duly appointed agents or proxies), and only such
Persons, shall be entitled to give or take, or vote on, the relevant action,
whether or not such Holders remain Holders after such record date.  Notwithstanding the foregoing, the Company
shall not set a record date for, and the provisions of this paragraph shall not
apply with respect to, any notice, declaration or direction referred to in the
next paragraph.

 

12

 

Upon receipt by the
Trustee from any Holder of (i) any notice of default or breach referred to in Section 6.1(3), if such default or breach
has occurred and is continuing and the Trustee shall not have given such a
notice to the Company, (ii) any declaration of acceleration referred to in Section 6.2, if an Event of Default has
occurred and is continuing and the Trustee shall not have given such a
declaration to the Company, or (iii) any direction referred to in Section 6.9, if the Trustee shall not have
taken the action specified in such direction, then, with respect to clauses
(ii) and (iii), a record date shall automatically and without any action by the
Company or the Trustee be set for determining the Holders entitled to join in
such declaration or direction, which record date shall be the close of business
on the tenth (10th) day (or, if such day is not a Business Day, the first
Business Day thereafter) following the day on which the Trustee receives such
declaration or direction, and, with respect to clause (i), the Trustee may set
any day as a record date for the purpose of determining the Holders entitled to
join in such notice of default.  Promptly
after such receipt by the Trustee of any such declaration or direction referred
to in clause (ii) or (iii), and promptly after setting any record date with
respect to clause (i), and as soon as practicable thereafter, the Trustee shall
notify the Company and the Holders of any such record date so fixed.  The Holders on such record date (or their
duly appointed agents or proxies), and only such Persons, shall be entitled to
join in such notice, declaration or direction, whether or not such Holders
remain Holders after such record date; provided that, unless such notice,
declaration or direction shall have become effective by virtue of Holders of
the requisite principal amount of Securities on such record date (or their duly
appointed agents or proxies) having joined therein on or prior to the ninetieth
(90th) day after such record date, such notice, declaration or direction shall
automatically and without any action by any Person be canceled and of no
further effect.  Nothing in this
paragraph shall be construed to prevent a Holder (or a duly appointed agent or
proxy thereof) from giving, before or after the expiration of such 90-day
period, a notice, declaration or direction contrary to or different from, or,
after the expiration of such period, identical to, the notice, declaration or
direction to which such record date relates, in which event a new record date
in respect thereof shall be set pursuant to this paragraph.  In addition, nothing in this paragraph shall
be construed to render ineffective any notice, declaration or direction of the
type referred to in this paragraph given at any time to the Trustee and the
Company by Holders (or their duly appointed agents or proxies) of the requisite
principal amount of Securities on the date such notice, declaration or
direction is so given.

 

(6)           Except
as provided in Sections 6.14 and 6.15, any request, demand, authorization,
direction, notice, consent, election, waiver or other Act of the Holder of any
Security shall bind every future Holder of the same Security and the Holder of
every Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered to
be done by the Trustee or the Company in reliance thereon, whether or not
notation of such action is made upon such Security.

 

(7)           The
provisions of this Section 1.4 are
subject to the provisions of Section 10.5.

 

13

 

SECTION 1.5.                      Notices,
etc. to Trustee and Company.

 

Any request, demand, authorization,
direction, notice, consent, election, waiver or other Act of Holders of
Securities or other document provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with,

 

(1)           the
Trustee by any Holder of Securities or by the Company shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or
with a Responsible Officer of the Trustee and received at its Corporate Trust
Office.

 

(2)           the
Company by the Trustee or by any Holder of Securities shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if in
writing, mailed, first-class postage prepaid, or telecopied and confirmed by
mail, first-class postage prepaid, or delivered by hand or overnight courier,
addressed to the Company at 2175 Old Concord Road SE, Suite 200, Smyrna,
Georgia  30080, Attention: Robert W.
Schleizer, or at any other address previously furnished in writing to the
Trustee by the Company.

 

SECTION 1.6.                      Notice
to Holders of Securities; Waiver.

 

Except as otherwise
expressly provided herein, where this Indenture provides for notice to Holders
of Securities of any event, such notice shall be sufficiently given to Holders
if in writing and mailed, first-class postage prepaid, to each Holder of a
Security affected by such event, at the address of such Holder as it appears in
the Security Register, not earlier than the earliest date and not later than
the latest date prescribed for the giving of such notice.

 

Neither the failure to mail
such notice, nor any defect in any notice so mailed, to any particular Holder
of a Security shall affect the sufficiency of such notice with respect to other
Holders of Securities.  In case by reason
of the suspension of regular mail service or by reason of any other cause it
shall be impracticable to give such notice by mail, then such notification to
Holders of Securities as shall be made with the approval of the Trustee, which
approval shall not be unreasonably withheld, shall constitute a sufficient notification
to such Holders for every purpose hereunder.

 

Such notice shall be deemed
to have been given when such notice is mailed.

 

Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice.  Waivers of notice by Holders of Securities
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.

 

SECTION 1.7.                      Effect
of Headings.

 

The Article and Section
headings herein are for convenience only and shall not affect the construction
hereof.

 

14

 

SECTION 1.8.                      Successors
and Assigns.

 

All covenants and agreements
in this Indenture by the Company shall bind its successors and assigns, whether
so expressed or not.

 

SECTION 1.9.                      Separability
Clause.

 

In case any provision in
this Indenture or the Securities shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.

 

SECTION 1.10.                    Benefits
of Indenture.

 

Except as provided in the
next sentence, nothing in this Indenture or in the Securities, express or
implied, shall give to any Person, other than the parties hereto and their
successors and assigns hereunder and the Holders of Securities, any benefit or
legal or equitable right, remedy or claim under this Indenture.  The provisions of Article XIV
are intended to be for the benefit of, and shall be enforceable directly by,
the holders of Senior Indebtedness.

 

SECTION 1.11.                    Governing
Law.

 

THIS
INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, THE UNITED STATES OF AMERICA.

 

SECTION 1.12.                    Legal
Holidays.

 

In any case where any
Interest Payment Date, Redemption Date, or Stated Maturity of any Security or
the last day on which a Holder of a Security has a right to convert his
Security shall not be a Business Day at a Place of Payment or Place of
Conversion, as the case may be, then (notwithstanding any other provision of
this Indenture or of the Securities) payment of principal of, or interest on, or
the payment of the Redemption Price with respect to, or delivery for conversion
of, such Security need not be made at such Place of Payment or Place of
Conversion, as the case may be, on or by such day, but may be made on or by the
next succeeding Business Day at such Place of Payment or Place of Conversion,
as the case may be, with the same force and effect as if made on the Interest
Payment Date, Redemption Date, or at the Stated Maturity or by such last day
for conversion; provided, however, that in the case that payment is made on
such succeeding Business Day, no interest shall accrue on the amount so payable
for the period from and after such Interest Payment Date, Redemption Date,
Stated Maturity or last day for conversion, as the case may be.

 

SECTION 1.13.                    Conflict
with Trust Indenture Act.

 

While this Indenture is
qualified under the Trust Indenture Act: (i) if any provision hereof limits,
qualifies or conflicts with a provision of the Trust Indenture Act that is
required under such act to be a part of and govern this Indenture, the latter 

 

15

 

provision
shall control; and (ii) if any provision of this Indenture modifies or excludes
any provision of the Trust Indenture Act that may be so modified or excluded,
the latter provision shall be deemed to apply to this Indenture as so modified
or to be excluded, as the case may be. 
Until such time as this Indenture shall be qualified under the Trust
Indenture Act, this Indenture, the Company and the Trustee shall be deemed for
all purposes hereof, except as expressly provided to the contrary herein, to be
subject to and governed by the Trust Indenture Act to the same extent as would
be the case if this Indenture were so qualified on the date hereof.  The Company is under no obligation to qualify
this Indenture under the Trust Indenture Act.

 

ARTICLE II 

SECURITY FORMS

 

SECTION 2.1.                      Form
Generally.

 

The Securities shall be in
substantially the form set forth in this Article II,
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture, and may have such letters,
numbers or other marks of identification and such legends or endorsements
placed thereon as may be required to comply with the rules of any securities
exchange, the Internal Revenue Code of 1986, as amended, and regulations
thereunder (the “Code”), or as may, consistent herewith, be determined by the
officers executing such Securities, as evidenced by their execution
thereof.  All Securities shall be in
fully registered form.

 

The Trustee’s certificates
of authentication shall be in substantially the form set forth in Section 2.3.

 

Conversion notices shall be
in substantially the form set forth in Section 2.4.

 

The Securities shall be printed,
lithographed, typewritten or engraved or produced by any combination of these
methods or may be produced in any other manner permitted by the rules of any
automated quotation system or securities exchange (including on steel engraved
borders if so required by any securities exchange upon which the Securities may
be listed) on which the Securities may be quoted or listed, as the case may be,
all as determined by the officers executing such Securities, as evidenced by
their execution thereof.

 

SECTION 2.2.                      Form
of Security.

 

[FORM OF FACE]

 

THE FOLLOWING LEGEND SHALL
APPEAR ON THE FACE OF EACH SECURITY:

 

THIS SECURITY AND ANY COMMON
STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAWS IN RELIANCE ON EXEMPTIONS FROM REGISTRATION PROVIDED
THEREBY.  THIS SECURITY AND ANY COMMON 

 

16

 

STOCK
ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND OTHER APPLICABLE STATE SECURITIES LAWS
OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED.

 

XPONENTIAL, INC.

 

8% LIMITED RECOURSE SECURED

CONVERTIBLE SUBORDINATED NOTE

DUE DECEMBER 31, 2014

 

	
  No.          

  	
   

  	
  $                  

  	
   

  	
  CUSIP NO.            

  

 

XPONENTIAL, INC., a
corporation duly organized and existing under the laws of the State of Delaware
(the “Company,” which term includes any successor Person under the Indenture
referred to on the reverse hereof), for value received, hereby promises to pay
to                    ,
or registered assigns, the principal sum of                      
United States Dollars (U.S. $                  )
(which, taken together with the principal amounts of all other Outstanding
Securities, shall not exceed U.S. $20,000,000 in the aggregate at any time) on
December 31, 2014 and to pay interest thereon, from                       
(the “Issue Date”) or from the most recent Interest Payment Date (as defined
below) to which interest has been paid or duly provided for, monthly in arrears
on the first day of each month (each, an “Interest Payment Date”), commencing
the second full month following the Issue Date, at the 8% per annum, until the
principal hereof is due, and at the rate of 10% per annum on any overdue
principal and, to the extent permitted by law, on any overdue interest.  The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the fifteenth day of the month
(whether or not a Business Day) next preceding such Interest Payment Date.  Except as otherwise provided in the
Indenture, any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest to be fixed by the Company,
notice whereof shall be given to Holders of Securities not less than ten (10)
days prior to the Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any automated quotation
system or securities exchange on which the Securities may be quoted or listed,
and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture.  Payments of
principal shall be made upon the surrender of this Security at the option of
the Holder at the Corporate Trust Office of the Trustee, or at such other
office or agency of the Company as may be designated by it for such purpose in
the Borough of Manhattan, The City of New York, in such coin or currency of the
United States of America as at the time of payment shall 

 

17

 

be
legal tender for the payment of public and private debts.  Payment of interest on this Security may be
made by United States Dollar check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register.  Holders will be entitled to receive interest
payments by wire transfer in immediately available funds to accounts in the
United States of America if written wire transfer instructions acceptable to
the Trustee have been received by the Trustee not less than fifteen (15) days
prior to the applicable Interest Payment Date. 
Such written instructions shall remain in effect until the Trustee
receives written instructions to the contrary.

 

The principal of, and
accrued interest on, the Securities and all other amounts payable by the
Company under the Indenture and the Securities and the performance by the Company
of its covenants and agreements under the Securities and the Indenture, are
secured by a pledge of all of the Pledged Shares as provided in the Indenture.

 

Except for interest that
accrues on the Securities from their respective Issue Dates to December 31,
2008, any acts of fraud or misrepresentation by the Company in connection with
the issuance of the Securities, and any violations of the covenants and
agreements of the Company set forth in Sections 11.9, 11.10
and 11.11 of Article XI
of the Indenture, the Company shall not have any corporate liability for
payment of the principal of, or interest that accrues on, the Securities, or
for any other sums due under the Securities or the Indenture as a result of an
Event of Default thereunder, the Trustee’s and the Holders’ recourse being
limited to the enforcement of their rights and remedies regarding the
Collateral set forth in the Securities and the Indenture.

 

Except as specifically
provided herein and in the Indenture, the Company shall not be required to make
any payment with respect to any tax, assessment or other governmental charge
imposed by any government or any political subdivision or taxing authority
thereof or therein.

 

Reference is hereby made to
the further provisions of this Security set forth on the reverse hereof, which
further provisions shall for all purposes have the same effect as if set forth
at this place.

 

Unless the certificate of
authentication hereon has been executed by the Trustee referred to on the
reverse hereof or an Authenticating Agent by the manual signature of one of
their respective authorized signatories, this Security shall not be entitled to
any benefit under the Indenture or be valid or obligatory for any purpose.

 

18

 

IN WITNESS WHEREOF, the
Company has caused this Security to be duly executed under its corporate seal
this           day of               ,
200        .

 

	
   

  	
  XPONENTIAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  [Corporate Seal]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
				

 

[FORM OF REVERSE]

 

This Security is one of a
duly authorized issue of securities of the Company designated as its “8%
Limited Recourse Secured Convertible Subordinated Notes due December 31, 2014”
(the “Securities”), limited in aggregate principal amount to U.S. $20,000,000,
issued and to be issued under an Indenture dated as of October 8, 2004 (the “Indenture”),
between the Company and The Bank of New York Trust Company, N.A., as Trustee
(the “Trustee,” which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Company, the Trustee, the holders of Senior
Indebtedness and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered.  As provided in the Indenture and subject to
certain limitations therein set forth, Securities are exchangeable for a like
aggregate principal amount of Securities of any authorized denominations as
requested by the Holder surrendering the same upon surrender of the Security or
Securities to be exchanged, at the Corporate Trust Office of the Trustee.  The Trustee upon such surrender by the Holder
will issue the new Securities in the requested denominations.

 

The Securities are issuable
in registered form without coupons in denominations of $1,000 and integral
multiples of $1,000.

 

No sinking fund is provided
for the Securities.

 

To secure the due and
punctual payment of the principal of, and interest, if any, on the Securities
and all other amounts payable by the Company under the Securities and the
Indenture and the performance by the Company of its covenants and agreements
under the Securities and the Indenture, when and as the same shall be due 

 

19

 

and
payable or performable, whether at Maturity, by acceleration, or otherwise,
according to the terms of the Securities and the Indenture, the Company has
granted a security interest in all of the Pledged Shares held by the Company to
the Trustee for the benefit of the Holders of Securities pursuant to the
Indenture.

 

The Securities are subject
to redemption at the option of the Company at any time on or after the earlier
to occur of (i) December 31, 2008 and (ii) the Sale of PawnMart, in whole or in
part, upon not less than thirty (30) nor more than sixty (60) days’ notice to
the Holders prior to the Redemption Date at a Redemption Price equal to 100% of
the principal amount, together, in each case, with accrued interest to the
Redemption Date; provided, however, that interest installments on Securities
whose Stated Maturity is on or prior to such Redemption Date will be payable to
the Holders of such Securities, or one or more Predecessor Securities, of
record at the close of business on the relevant Record Dates referred to on the
face hereof, all as provided in the Indenture.

 

In the event of a redemption
of the Securities, the Company will not be required (a) to register the
transfer or exchange of Securities for a period of fifteen (15) days
immediately preceding the date notice is given identifying the serial numbers
of the Securities called for such redemption or (b) to register the transfer or
exchange of any Security, or portion thereof, called for redemption.

 

In any case where the due
date for the payment of the principal of, or interest on, any Security or the
last day on which a Holder of a Security has a right to convert his Security
shall be, at any Place of Payment or Place of Conversion as the case may be, a
day on which banking institutions at such Place of Payment or Place of
Conversion are authorized or obligated by law or executive order to close, then
payment of principal, or interest, or delivery for conversion of such Security
need not be made on or by such date at such place but may be made on or by the
next succeeding day at such place which is not a day on which banking
institutions are authorized or obligated by law or executive order to close,
with the same force and effect as if made on the date for such payment or the
date fixed for redemption, or by such last day for conversion, and no interest
shall accrue on the amount so payable for the period after such date.

 

Subject to and upon
compliance with the provisions of the Indenture, the Holder of this Security is
entitled, at his option, at any time on or before the close of business on
December 31, 2014, or in case this Security or a portion hereof is called for
redemption, then in respect of this Security until and including, but (unless
the Company defaults in making the payment due upon redemption) not after, the
close of business on the Business Day prior to the Redemption Date to convert
this Security (or any portion of the principal amount hereof that is an
integral multiple of U.S. $1,000, provided that the unconverted portion of such
principal amount is U.S. $1,000 or any integral multiple of U.S. $1,000 in
excess thereof) into fully paid and nonassessable shares of Common Stock of the
Company at an initial Conversion Rate of 100 shares of Common Stock for each
U.S. $1,000 principal amount of Securities (or at the current adjusted
Conversion Rate if an adjustment has been made as provided in the Indenture) by
surrender of this Security, duly endorsed or assigned to the Company or 

 

20

 

in
blank and, in case such surrender shall be made during the period from the
close of business on any Regular Record Date next preceding any Interest
Payment Date to the opening of business on such Interest Payment Date (except
if this Security or portion thereof has been called for redemption on a
Redemption Date occurring during such period and is surrendered for such
conversion during such period (including any Securities or portions thereof
called for redemption on a Redemption Date that is a Regular Record Date or an
Interest Payment Date, as the case may be)), also accompanied by payment in New
York Clearing House or other funds acceptable to the Company of an amount equal
to the interest payable on such Interest Payment Date on the principal amount
of this Security then being converted, and also the conversion notice hereon
duly executed, to the Company at the Corporate Trust Office of the Trustee, or
at such other office or agency of the Company, subject to any laws or
regulations applicable thereto and subject to the right of the Company to
terminate the appointment of any Conversion Agent (as defined below) as may be
designated by it for such purpose in the Borough of Manhattan, The City of New
York, or at such other offices or agencies as the Company may designate (each a
“Conversion Agent”), provided, further, that if this Security or
portion hereof has been called for redemption on a Redemption Date occurring
during the period from the close of business on any Regular Record Date next
preceding any Interest Payment Date to the opening of business on such
succeeding Interest Payment Date (including any Securities or portions thereof
called for redemption on a Redemption Date that is a Regular Record Date or an
Interest Payment Date, as the case may be) and is surrendered for conversion
during such period (or on the last Business Day prior to the Regular Record Date
or Interest Payment Date in case of any Security (or portion thereof) called
for redemption on a Redemption Date on a Regular Record Date or Interest
Payment Date, as the case may be), then the Holder of this Security on such
Regular Record Date will be entitled to receive the interest accruing hereon
from the Interest Payment Date next preceding the date of such conversion to
such succeeding Interest Payment Date and the Holder of this Security who
converts this Security or a portion hereof during such period shall not be
required to pay such interest upon surrender of this Security for
conversion.  Subject to the provisions of
the preceding sentence and, in the case of a conversion after the close of
business on the Regular Record Date next preceding any Interest Payment Date
and on or before the close of business on such Interest Payment Date, to the
right of the Holder of this Security (or any Predecessor Security of record as
of such Regular Record Date) to receive the related installment of interest to
the extent and under the circumstances provided in the Indenture, no cash
payment or adjustment is to be made on conversion for interest accrued hereon
from the Interest Payment Date next preceding the day of conversion, or for
dividends on the Common Stock issued on conversion hereof.  The Company shall thereafter deliver to the
Holder the fixed number of shares of Common Stock (together with any cash
adjustment, as provided in the Indenture) into which this Security is
convertible and such delivery will be deemed to satisfy the Company’s
obligation to pay the principal amount of this Security.  No fractions of shares or scrip representing
fractions of shares will be issued on conversion, but instead of any fractional
interest (calculated to the nearest 1/100th of a share) the Company shall pay a
cash adjustment as provided in the Indenture. 
The Conversion Rate is subject to adjustment as provided in the
Indenture.  In addition, the Indenture
provides that in case of certain consolidations or mergers to which the 

 

21

 

Company
is a party (other than a consolidation or merger that does not result in any
reclassification, conversion, exchange or cancellation of the Common Stock) or
the conveyance, transfer, sale or lease of all or substantially all of the
property and assets of the Company, the Indenture shall be amended, without the
consent of any Holders of Securities, so that this Security, if then
Outstanding, will be convertible thereafter, during the period this Security
shall be convertible as specified above, only into the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
conveyance, transfer, sale or lease by a holder of the number of shares of
Common Stock of the Company into which this Security could have been converted
immediately prior to such consolidation, merger, conveyance, transfer, sale or
lease.  No adjustment in the Conversion
Rate will be made until such adjustment would require an increase or decrease
of at least one percent of such rate, provided that any adjustment that would
otherwise be made will be carried forward and taken into account in the
computation of any subsequent adjustment.

 

If a Holder converts all or
any part of such Holder’s Securities following a notice of redemption from the
Company with respect to a date of redemption that is prior to December 31, 2008
in connection with the Sale of PawnMart, and the Sale of PawnMart is not
consummated on or before the Redemption Date, the Company will (i) promptly
provide notice to the Trustee and to each of the Holders of Securities that
converted all or any part of such Holder’s Securities following notice of
redemption from the Company that the Sale of PawnMart was not consummated and (ii)
permit such Holders to rescind such conversion, by delivering a rescission form
accompanying the notice from the Company to the Trustee and such Holders to any
office or agency of the Company maintained for that purpose and specified in
the notice for a period of ten (10) days immediately following the delivery of
such notice.  Any such Holders of
Securities who fail to so deliver a properly completed and executed rescission
notice on or before the expiration of such ten (10) day period will be deemed to
have elected to convert such Securities.

 

In the event of redemption
or conversion of this Security in part only, a new Security or Securities for
the unredeemed or unconverted portion hereof will be issued in the name of the
Holder hereof.

 

The indebtedness evidenced
by this Security is, to the extent and in the manner provided in the Indenture,
subordinate and subject in right of payment to the prior payment in full of all
Senior Indebtedness of the Company, and this Security is issued subject to such
provisions of the Indenture with respect thereto.  Each Holder of this Security, by accepting
the same, (a) agrees to and shall be bound by such provisions,
(b) authorizes and directs the Trustee on his behalf to take such action
as may be necessary or appropriate to effect the subordination so provided and
(c) appoints the Trustee his attorney-in-fact for any and all such purposes.

 

If an Event of Default shall
occur and be continuing, the principal of all the Securities, together with
accrued interest to the date of declaration, may be declared due and payable in
the manner and with the effect provided in the Indenture.  Upon payment (i) of the amount of principal
so declared due and payable, together with 

 

22

 

accrued
interest to the date of declaration, and (ii) of interest on any overdue
principal and, to the extent permitted by applicable law, overdue interest, all
of the Company’s obligations in respect of the payment of the principal of and
interest on the Securities shall terminate.

 

Notwithstanding anything to
the contrary contained herein, but without in any manner releasing, impairing,
or otherwise affecting the Securities, the Indenture, or any Lien securing
payment of the Securities, or the validity thereof, neither the Trustee nor any
Holder of the Securities will hold the Company personally liable for the
repayment of the indebtedness evidenced by the Securities or for any other sums
due as a result of any Event of Default under the Securities or the Indenture
or for the payment of any deficiency established after foreclosure of the
security interest in the Collateral or the exercise of any other rights and
remedies granted in the Indenture for the benefit of the Holders with respect
to the Collateral, except to the extent of the Company’s interest in the
Collateral, and the recourse of the Trustee and the Holders of the Securities
for any and all such Events of Default shall be limited to the enforcement of
such rights and remedies with respect to the Collateral as are set forth in the
Securities and the Indenture; provided, however, notwithstanding the foregoing
limitation of liability, the Company shall be fully liable to the same extent
that the Company would be liable absent the limitation of liability set forth
in this paragraph for: (i) interest that accrues on the Securities from their
respective Issue Dates to December 31, 2008, including interest on overdue
principal and, to the extent permitted by law, on overdue interest; (ii) fraud
or misrepresentation by the Company in connection with the issuance of the
Securities; (iii) the violation of any covenant or agreement of the Company set
forth in Sections 11.9, 11.10 and 11.11 of Article XI of
the Indenture, and (iv) all fees and expenses due to, and the indemnification
of, the Trustee under Sections 5.2
and 7.7 of this Indenture and all court
costs, attorney’s fees and expenses incurred by the Trustee and the Holders to
collect any of the foregoing amounts. 
The limitation on liability set forth herein is not intended as a
release or discharge of the indebtedness evidenced by the Securities, or any
portion thereof, but is a limited covenant not to sue, and such indebtedness
shall remain in full force and effect.

 

The Indenture permits, with
certain exceptions as therein provided, the amendment thereof and the
modification of the rights and obligations of the Company and the rights of the
Holders of the Securities under the Indenture at any time by the Company and
the Trustee with either (a) the written consent of the Holders of not less than
a majority in principal amount of the Securities at the time Outstanding, or
(b) by the adoption of a resolution, at a meeting of Holders of the Outstanding
Securities at which a quorum is present, by the Holders of at least 66-2/3% in
aggregate principal amount of the Outstanding Securities represented and
entitled to vote at such meeting.  The
Indenture also contains provisions permitting the Holders of specified percentages
in principal amount of the Securities at the time Outstanding, on behalf of the
Holders of all the Securities, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences.  Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security 

 

23

 

issued
in exchange herefore or in lieu hereof whether or not notation of such consent
or waiver is made upon this Security or such other Security.

 

As provided in and subject
to the provisions of the Indenture, the Holder of this Security shall not have
the right to institute any proceeding with respect to the Indenture or for the
appointment of a receiver or trustee or for any other remedy thereunder, unless
such Holder shall have previously given the Trustee written notice of a
continuing Event of Default, the Holders of not less than 25% in principal
amount of the Outstanding Securities shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default as Trustee
and offered the Trustee reasonable indemnity and the Trustee shall not have
received from the Holders of a majority in principal amount of the Securities
Outstanding a direction inconsistent with such request, and shall have failed
to institute any such proceeding, for sixty (60) days after receipt of such
notice, request and offer of indemnity. 
The foregoing shall not apply to any suit instituted by the Holder of
this Security for the enforcement of the right to convert this Security as
provided in the Indenture.

 

As provided in the Indenture
and subject to certain limitations therein set forth, the transfer of this
Security is registrable on the Security Register upon surrender of this
Security for registration of transfer at the Corporate Trust Office of the
Trustee or at such other office or agency of the Company as may be designated
by it for such purpose in the Borough of Manhattan, The City of New York (which
shall initially be an office or agency of the Trustee), or at such other
offices or agencies as the Company may designate, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder thereof or his
attorney duly authorized in writing, and thereupon one or more new Securities,
of authorized denominations and for the same aggregate principal amount, will
be issued to the designated transferee or transferees by the Security
Registrar.  No service charge shall be
made for any such registration of transfer or exchange, but the Company may
require payment of a sum sufficient to recover any tax or other governmental charge
payable in connection therewith.

 

Prior to due presentation of
this Security for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in whose name Security
is registered as the owner thereof for all purposes, whether or not such
Security shall be overdue, and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.

 

No recourse for the payment
of the principal or interest on this Security and no recourse under or upon any
obligation, covenant or agreement of the Company in the Indenture or  any indenture supplemental thereto or in any
Security, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, stockholder, employee, agent, officer or
director or subsidiary, as such, past, present or future, of the Company or of
any successor corporation, either directly or through the Company or any
successor corporation, whether by virtue of any constitution, statute or rule
of law or by the enforcement of any assessment or penalty 

 

24

 

or
otherwise, all such liability being, by the acceptance hereof and as part of
consideration for the issue hereof, expressly waived and released.

 

THE INDENTURE AND THIS
SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, UNITED STATES OF AMERICA.

 

All terms used in this
Security which are defined in the Indenture shall have the meanings assigned to
them in the Indenture.

 

ABBREVIATIONS

 

The following abbreviations,
when used in the inscription of the face of this Security, shall be construed
as though they were written out in full according to applicable laws or
regulations:

 

	
  TEN COM -

  	
   

  	
  as tenants in common

  
	
   

  	
   

  	
   

  
	
  TEN ENT -

  	
   

  	
  as tenants by the entireties

  
	
   

  	
   

  	
   

  
	
  JT TEN -

  	
   

  	
  as joint tenants with right of

  
	
   

  	
   

  	
  survivorship and not as tenants

  
	
   

  	
   

  	
  in common

  

 

 

	
  UNIF GIFT MIN ACT -

  	
   

  	
   

  
	
   

  	
  (Cust)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Custodian

  	
   

  	
  under Uniform

  
	
   

  	
  (Minor)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Gifts to Minors Act

  	
   

  	
   

  
	
   

  	
   

  	
  (State)

  	
   

  
								

 

Additional abbreviations may
also be used though not in the above list.

 

SECTION 2.3.                      Form
of Certificate of Authentication.

 

The Trustee’s certificate of
authentication shall be in substantially the following form:

 

This is one of the
Securities referred to in the within-mentioned Indenture.

 

	
   

  	
  The Bank of New York Trust Company, N.A.,

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  
					

 

25

 

SECTION 2.4.                      Form
of Conversion Notice.

 

CONVERSION NOTICE

 

The undersigned Holder of
this Security hereby irrevocably exercises the option to convert this Security,
or any portion of the principal amount hereof (which is U.S. $1,000 or an
integral multiple of U.S. $1,000 in excess thereof, provided that the
unconverted portion of such principal amount is U.S. $1,000 or any integral
multiple of U.S. $1,000 in excess thereof) below designated, into shares of
Common Stock in accordance with the terms of the Indenture referred to in this
Security, and directs that such shares, together with a check in payment for
any fractional share and any Securities representing any unconverted principal
amount hereof, be delivered to and be registered in the name of the undersigned
unless a different name has been indicated below.  If shares of Common Stock or Securities are
to be registered in the name of a Person other than the undersigned, (a) the
undersigned will pay all transfer taxes payable with respect thereto and (b)
signature(s) must be guaranteed by an Eligible Guarantor Institution with
membership in an approved signature guarantee program pursuant to Rule 17Ad-15
under the Securities Exchange Act of 1934. 
Any amount required to be paid by the undersigned on account of interest
accompanies this Security.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature(s)

  

 

26

 

	
  If shares or Securities are to be registered in the name of a Person
  other than the Holder, please print such Person’s name and address:

  	
   

  	
  If only a portion of the Securities is to be converted, please
  indicate:

  

  1.             Principal amount to be converted:

  U.S. $                          

  
	
   

  	
   

  	
   

  	
  2.             Principal amount and denomination of
  Securities representing unconverted principal amount to be issued:

  

  Amount U.S. $                          

   

  
	
  Name

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Social Security or other Identification

  Number, if any

  	
   

  	
  (U.S. $1,000 or any integral multiple of U.S. $1,000 in excess
  thereof, provided that the unconverted portion of such principal amount is
  U.S. $1,000 or any integral multiple of U.S. $1,000 in excess thereof)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [Signature Guaranteed]*

  	
   

  

 

SECTION 2.5.                      Form
of Assignment.

 

For value received                   
hereby sell(s), assign(s) and transfer(s) unto                          
(Please insert social security or other identifying number of assignee) the
within Security, and hereby irrevocably constitutes and appoints                        
as attorney to transfer the said Security on the books of the Company, with
full power of substitution in the premises.

 

	
  Dated:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature(s)

  
	
   

  	
   

  
	
   

  	
  *Signature(s) must be guaranteed by an Eligible Guarantor Institution
  with membership in an approved signature guarantee program pursuant to Rule
  17Ad – 15 under the Securities Exchange Act of 1934.

  

 

27

 

ARTICLE III 

THE SECURITIES

SECTION 3.1.                      Title
and Terms.

 

The aggregate principal
amount of Securities which may be authenticated and delivered under this
Indenture is limited to U.S. $20,000,000, except for Securities authenticated
and delivered pursuant to Sections 3.4, 3.5, 9.5
or 13.2 in exchange for, or in lieu of,
other Securities previously authenticated and delivered under this Indenture.

 

The Securities shall be
known and designated as the “8% Limited Recourse Secured Convertible
Subordinated Notes due December 31, 2014” of the Company.  Their Stated Maturity shall be December 31,
2014 and they shall bear interest on their principal amount from the Issue
Date, payable monthly in arrears on the first date of each month, commencing
the second full month following the Issue Date, at the rate of 8% per annum until
the principal thereof is due and at the rate of 10% per annum on any overdue
principal and, to the extent permitted by law, on any overdue interest;
provided, however, that payments shall only be made on a Business Day as
provided in Section 1.12.

 

The principal of and
interest on the Securities shall be payable as provided in the form of
Securities set forth in Section 2.2.

 

The Securities shall be
redeemable at the option of the Company at any time on or after December 31,
2008, in whole or in part, as provided in Article XII and
in the form of Security set forth in Section 2.2.

 

The Securities shall be
convertible as provided in Article XIII
(any city in which any Conversion Agent is located being herein called a “Place
of Conversion”).

 

The Securities shall be
subordinated in right of payment to Senior Indebtedness of the Company as
provided in Article XIV.

 

The principal of, and
accrued interest on, the Securities and all other amounts payable by the
Company under the Indenture and the Securities and the performance by the
Company of its covenants and agreements under the Securities and the Indenture,
shall be secured by the Collateral as provided in Article IV.

 

Certain non-recourse
provisions with respect to the obligations of the Company under this Indenture
and the Securities are contained in Section 6.5, to
which reference is hereby made.

 

SECTION 3.2.                      Denominations.

 

The Securities shall be
issuable only in registered form, without coupons, in denominations of U.S.
$1,000 and integral multiples of U.S. $1,000 in excess thereof.

 

28

 

SECTION 3.3.                      Execution,
Authentication, Delivery and Dating.

 

The Securities shall be
executed on behalf of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its Chief Executive Officer, its President, one of its
Executive Vice Presidents or one of its Vice Presidents, under a facsimile of
its corporate seal reproduced thereon attested by its Chief Financial Officer,
Secretary or one of its Assistant Secretaries. 
Any such signature may be manual or facsimile.

 

Securities bearing the
manual or facsimile signature of individuals who were at any time the proper
officers of the Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Securities or did not hold such offices at
the date of such Securities.

 

At any time and from time to
time after the execution and delivery of this Indenture, the Company may
deliver Securities executed by the Company to the Trustee or to its order for
authentication, together with a Company Order for the authentication and
delivery of such Securities, and the Trustee in accordance with such Company
Order shall authenticate and make available for delivery such Securities as in
this Indenture provided; provided, however that only $20,000,000 in aggregate
principal amount of Securities may be Outstanding at any one time.

 

Each Security shall be dated
the date of its authentication.

 

No Security shall be
entitled to any benefit under this Indenture or be valid or obligatory for any
purpose unless there appears on such Security a certificate of authentication
substantially in the form provided for herein executed by the Trustee by manual
signature of an authorized signatory, and such certificate upon any Security
shall be conclusive evidence, and the only evidence, that such Security has
been duly authenticated and delivered hereunder.

 

Each Security shall bear the
Restricted Securities Legend as required by this Indenture.

 

SECTION 3.4.                      Registration;
Restrictions on Transfer.

 

(1)           The
Company shall cause to be kept at the Corporate Trust Office of the Trustee a
register (the register maintained in such office referred to as the “Security
Register”) in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Securities and of
transfers of Securities.  The Trustee is
hereby appointed “Security Registrar” for the purpose of registering Securities
and transfers and exchanges of Securities as herein provided.

 

Upon surrender for
registration of transfer of any Security at an office or agency of the Company
designated pursuant to Section 11.2
for such purpose, the Company shall execute, and the Trustee shall authenticate
and deliver, in the name of the designated transferee or transferees, one or
more new Securities of any authorized 

 

29

 

denominations
and of a like aggregate principal amount and bearing such restrictive legends
as required by this Indenture.

 

At the option of the Holder,
and subject to the other provisions of this Section 3.4,
Securities may be exchanged for other Securities of any authorized denomination
and of a like aggregate principal amount, upon surrender of the Securities to
be exchanged at any such office or agency. 
Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive.  Every Security presented or surrendered for
registration of transfer or for exchange shall (if so required by the Company
or the Security Registrar) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company, the Trustee and the
Security Registrar duly executed, by the Holder thereof or his attorney duly
authorized in writing.

 

All Securities issued upon
any registration of transfer or exchange of Securities shall be the valid
obligations of the Company, evidencing the same debt and entitled to the same
benefits under this Indenture as the Securities surrendered upon such
registration of transfer or exchange.

 

No service charge shall be made
to a Holder for any registration of transfer or exchange of Securities except
as provided in Section 3.5, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Securities, other than exchanges pursuant to Sections 9.5
or 13.2 (other than where the shares of
Common Stock are to be issued or delivered in a name other than that of the
Holder of the Security) not involving any transfer and other than any stamp and
other duties, if any, which may be imposed in connection with any such transfer
or exchange by the United States or any political subdivision thereof or
therein, which shall be paid by the Company.

 

In the event of a redemption
of the Securities, neither the Company nor the Securities Registrar will be
required (a) to register the transfer of or exchange Securities for a period of
fifteen (15) days immediately preceding the date notice is given identifying
the serial numbers of the Securities called for such redemption or (b) to
register the transfer of or exchange any Security, or portion thereof, called
for redemption.

 

(2)           All
Securities issued pursuant to this Indenture, and all Successor Securities,
shall bear the Restricted Securities Legend, subject to the following:

 

(i)            except
as otherwise provided in this Section 3.4(2),
a new Security which is issued in exchange for another Security or any portion
thereof, upon transfer or otherwise, shall bear the Restricted Securities
Legend for which the Security was exchanged;

 

30

 

(ii)           any
Securities which are sold or otherwise disposed of pursuant to an effective
registration statement under the Securities Act, together with their Successor
Securities, shall not bear the Restricted Securities Legend; the Company shall
inform the Trustee in writing of the effective date of any such registration
statement registering the Securities under the Securities Act and shall deliver
such written instructions to the Trustee in regard to the removal of the
Restrictive Securities Legend as the Trustee may reasonably require.  The Trustee shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
aforementioned registration statement and instructions given to it with respect
thereto;

 

(iii)         at
any time after the Securities may be freely transferred without registration
under the Securities Act or without being subject to transfer restrictions pursuant
to the Securities Act, a new Security which does not bear the Restricted
Securities Legend may be issued in exchange for or in lieu of a Security or any
portion thereof which bears such a legend, in which case, the Trustee, pursuant
to the written instructions of the Company, and upon delivery to the Trustee of
an Opinion of Counsel addressed to the Company and the Trustee to the effect
that the Security may be transferred without registration under the Securities
Act, the Trustee shall authenticate and deliver such new Security in exchange
for or in lieu of such other Security as provided in this Article III;

 

(iv)          a
new Security which does not bear a Restricted Securities Legend may be issued
in exchange for or in lieu of a Security or any portion thereof which bears
such a legend if, in the Company’s judgment, placing such a legend upon such
new Security is not necessary to ensure compliance with the registration
requirements of the Securities Act, and the Trustee, at the written direction
of the Company, and the delivery of an Opinion of Counsel addressed to the
Company and to the Trustee to the effect that the new Security be transferred
without registration under the Securities Act, the Trustee shall authenticate
and deliver such a new Security as provided in this Article III; and

 

(v)            notwithstanding
the foregoing provisions of this Section 3.4(2),
a Successor Security of a Security that does not bear the Restricted Securities
Legend shall not bear such legend unless the Company has reasonable cause to
believe that such Successor Security is a “restricted security” within the
meaning of Rule 144, in which case the Trustee, at the written direction of the
Company, shall authenticate and deliver a new Security bearing the Restricted
Securities Legend in exchange for such Successor Security as provided in this Article III.

 

(3)           The
Company shall instruct its Common Stock registrar/transfer agent that any stock
certificate representing shares of Common Stock issued upon conversion of the
Securities shall bear the Restricted Securities Legend borne by such
Securities, to the extent required by this Indenture, unless such shares of
Common Stock have been sold pursuant to a registration statement that has been
declared effective under the Securities Act (and which continues to be
effective at the time of such transfer) or sold pursuant to Rule 144(k) of the
Securities Act, or unless otherwise 

 

31

 

agreed by the Company in
writing with written notice thereof to the transfer agent for the Common
Stock.  With respect to the transfer of
shares of Common Stock issued upon conversion of the Securities that are
restricted hereunder, any deliveries of certificates, legal opinions or other
instruments that would be required to be made to the Security Registrar in the
case of a transfer of Securities, as described above, shall instead be made to
the transfer agent for the Common Stock. 
For the avoidance of doubt, the Trustee has not been appointed the
registrar/transfer agent of the Common Stock pursuant to the terms hereof.

 

(4)           Neither
the Trustee, the Paying Agent nor any of their agents shall (i) have any duty
to monitor the Company’s compliance with or with respect to any federal or
state or other securities or tax laws or (ii) have any duty to obtain
documentation on any transfers or exchanges other than as specifically required
hereunder.

 

SECTION 3.5.                      Mutilated,
Destroyed, Lost or Stolen Securities.

 

If any mutilated Security is
surrendered to the Trustee, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security of like tenor and
principal amount and bearing a number not contemporaneously outstanding.

 

If there be delivered to the
Company and to the Trustee:

 

(1)           evidence
to their satisfaction of the destruction, loss or theft of any Security, and

 

(2)           such
security or indemnity as may be satisfactory to the Company and the Trustee to
save each of them and any agent of either of them harmless, then, in the
absence of actual notice to the Company or the Trustee that such Security has
been acquired by a bona fide purchaser, the Company shall execute and the
Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or
stolen Security, a new Security of like tenor and principal amount and bearing
a number not contemporaneously outstanding.

 

In case any such mutilated,
destroyed, lost or stolen Security has become or is about to become due and
payable, the Company in its discretion, but subject to any conversion rights,
may, instead of issuing a new Security, pay such Security, upon satisfaction of
the conditions set forth in the preceding paragraph.

 

Upon the issuance of any new
Security under this Section 3.5,
the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto (other than
any stamp and other duties, if any, which may be imposed in connection
therewith by the United States or any political subdivision thereof or therein,
which shall be paid by the Company) and any other expenses (including the fees
and expenses of the Trustee) connected therewith.

 

32

 

Every new Security issued
pursuant to this Section 3.5 in lieu of any mutilated,
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the mutilated, destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and such
new Security shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Securities duly issued hereunder.

 

The provisions of this Section 3.5 are exclusive and shall preclude (to the extent
lawful) all other rights and remedies of any Holder with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.

 

SECTION 3.6.                      Payment
of Interest; Interest Rights Preserved.

 

Interest on any Security
which is payable, and is punctually paid or duly provided for, on any Interest
Payment Date shall be paid to the Person in whose name that Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest.

 

Any interest on any Security
which is payable, but is not punctually paid or duly provided for, on any
Interest Payment Date (“Defaulted Interest”) shall forthwith cease to be
payable to the Holder on the relevant Regular Record Date by virtue of having
been such Holder, and such Defaulted Interest may be paid by the Company, at
its election in each case, as provided in clauses (1) or (2) below:

 

(1)           The
Company may elect to make payment of any Defaulted Interest to the Persons in
whose names the Securities (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest, which shall be fixed in the following manner.  The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Security, the date of the proposed payment and the Special Record Date, and at
the same time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such
deposit prior to the date of the proposed payment, such money when deposited to
be held in trust for the benefit of the Persons entitled to such Defaulted
Interest as in this clause provided.  The
Special Record Date for the payment of such Defaulted Interest shall be not
more than fifteen (15) days and not less than ten (10) days prior to the date
of the proposed payment and not less than ten (10) days after the receipt by
the Trustee of the notice of the proposed payment.  The Trustee, in the name and at the expense
of the Company, shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first-class postage
prepaid, to each Holder at such Holder’s address as it appears in the Security
Register, not less than ten (10) days prior to such Special Record Date.  Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been so mailed,
such Defaulted Interest shall be paid to the Persons in whose names the
Securities (or their respective Predecessor Securities) are registered at the
close of business on such Special Record Date and shall no longer be payable
pursuant to the following clause (2).

 

33

 

(2)           The
Company may make payment of any Defaulted Interest in any other lawful manner
not inconsistent with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required by such
exchange, if, after notice given by the Company to the Trustee of the proposed
payment pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.

 

Subject to the foregoing
provisions of this Section 3.6 and
Section 3.4, each Security delivered
under this Indenture upon registration of transfer of or in exchange for or in
lieu of any other Security shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Security.

 

Interest on any Security
which is converted in accordance with Section 13.2
during a Record Date Period shall be payable in accordance with the provisions
of Section 13.2.

 

SECTION 3.7.                      Persons
Deemed Owners.

 

Prior to due presentment of
a Security for registration of transfer, the Company, the Trustee, any Paying
Agent and any agent of the Company, the Trustee or any Paying Agent may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and (subject to Section 3.6) interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee, any Paying Agent nor any agent of the Company, the
Trustee or any Paying Agent shall be affected by notice to the contrary.

 

SECTION 3.8.                      Cancellation.

 

All Securities surrendered
for payment, redemption, registration of transfer or exchange or conversion
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee.  All Securities so delivered to
the Trustee shall be canceled promptly by the Trustee (or its agent).  No Securities shall be authenticated in lieu
of or in exchange for any Securities canceled as provided in this Section 3.8.  The
Trustee shall dispose of all canceled Securities in accordance with applicable
law and its customary practices in effect from time to time.

 

SECTION 3.9.                      Computation
of Interest.

 

Interest on the
Securities  shall be computed on the
basis of a 360-day year of twelve 30-day months.

 

SECTION 3.10.                    CUSIP
Numbers.

 

The Company in issuing
Securities may use “CUSIP” numbers (if then generally in use) in addition to
serial numbers; if so, the Trustee shall 
use such CUSIP numbers in addition to serial numbers in notices of
redemption as a convenience to Holders; provided that any such notice may state
that no representation is made as to the 

 

34

 

correctness
of such CUSIP numbers either as printed on the Securities or as contained in
any notice of a redemption and that reliance may be placed only on the serial
or other identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of such CUSIP
numbers.

 

ARTICLE IV 

SECURITY AND PLEDGE OF COLLATERAL

 

SECTION 4.1.                      Grant
of Security Interest.

 

To secure the full and
punctual payment when due and the full and punctual performance of the
Obligations, the Company hereby grants to the Trustee, for the benefit of the
Trustee and the Holders, a security interest in all its right, title and
interest in and to the following (the “Collateral”):

 

(1)           all
the shares of Common Stock of PawnMart now owned or hereafter acquired by the
Company, which on the date hereof are identified on Schedule I hereto (the “Pledged Shares”);

 

(2)           all
certificates representing any of the Pledged Shares; and

 

(3)           all
dividends, cash, instruments and other property and proceeds from time to time
received, receivable or otherwise distributed in respect of or in an exchange
for any of the Pledged Shares in excess of the annual Restricted Payments
(except that upon the occurrence and during the continuance of an Event of
Default, the excess of the annual Restricted Payments shall be subject to the
security interest granted herein), and any securities, any right to receive
securities and any right to receive earnings, in which the Company now has or
hereafter acquires any right with respect to the Pledged Shares.

 

SECTION 4.2.                      Delivery
of Collateral.

 

(1)           The
Company will (i) deliver to the Trustee immediately upon execution of this
Indenture the originals of all Pledged Shares identified in Schedule I, along with stock transfer
powers executed in blank with respect thereto, (ii) hold in trust for the
Trustee upon receipt and immediately thereafter deliver to the Trustee any
future securities instruments, and cash representing, evidencing, or
constituting Collateral, and (iii) at the Trustee’s request, deliver to the Trustee
(and thereafter hold in trust for the Trustee upon receipt and immediately
deliver to the Trustee) any document evidencing or constituting Collateral.

 

(2)           The
Trustee shall have the right, at any time after the occurrence and during the
continuance of an Event of Default, in its discretion and without notice to the
Company, to transfer to or to register in the name of the Trustee or any of its
nominees any or all the Collateral.  In
addition, the Trustee shall have the right at any time to exchange certificates
or instruments representing or evidencing Collateral for certificates or
instruments of different denominations.

 

35

 

SECTION 4.3.                      Representations
and Warranties Regarding Collateral.

 

The Company hereby
represents and warrants as of the date of this Indenture as follows:

 

(1)           It
has good and valid rights in and title to the Collateral and is the record and
beneficial owner of the Pledged Shares, free and clear of any Lien, except for
the Lien created by this Indenture.

 

(2)           It
has full corporate power, authority and legal right to pledge and grant a
security interest in all the Collateral and all other Collateral pledged by it
pursuant to this Indenture.

 

(3)           The
Pledged Shares have been duly authorized and are validly issued, fully paid and
non-assessable.

 

(4)           This
Indenture creates a legal, valid and perfected first priority Lien on, and
security interest in, the Collateral, which Lien and security interest is
enforceable against the Company in all now owned and hereafter acquired
Collateral.

 

(5)           The
Pledged Shares constitute one hundred percent of the Common Stock of PawnMart.

 

(6)           At
the date of this Indenture, there are no existing options, warrants, calls or
commitments of any character relating to any authorized and unissued Pledged
Shares.

 

(7)           No
financing statement describing all or any portion of the Collateral which has
not lapsed or been terminated naming the Company as debtor has been filed in
any jurisdiction except financing statements naming the Trustee as the secured
party.

 

SECTION 4.4.                      Further
Assurances.

 

The Company agrees that at
any time and from time to time, at the expense of the Company, the Company will
promptly execute and deliver all further instruments and documents and take all
further action that may be necessary or that the Trustee may reasonably request
in order to perfect and protect any Lien granted or purported to be granted
hereby or to enable the Trustee to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. 
Without limiting the foregoing, the Company shall, at the time of the
acquisition by the Company of any Common Stock of PawnMart after the date of
the Indenture, provide to the Trustee a revised Schedule I
to reflect any changes made necessary by such acquisition, at which time the
Company shall be deemed to make its representations and warranties set forth in
Section 4.3(1)-(6) with respect to Schedule I, as so revised.

 

The Company hereby
irrevocably authorizes the Trustee at any time and from time to time to file in
any appropriate jurisdiction any initial financing statements and 

 

36

 

amendments
thereto that (a) describe the Collateral and (b) contain any other information required
by subchapter E of Chapter 9 of the Uniform Commercial Code for the sufficiency
or filing office acceptance of any financing statement or amendment, including
whether the Company is an organization, the type of organization and any
organization identification number issued to the Company.

 

SECTION 4.5.                      Dividends;
Voting Rights; Substitution and Release of Collateral.

 

(1)           The
Company shall promptly deliver to the Trustee all dividends and other
distributions paid in respect of the Pledged Shares in excess of the annual
Restricted Payments.  All such dividends
and other distributions shall be held by the Trustee as Collateral and shall,
if received by the Company, be received in trust for the benefit of the Trustee,
be segregated from the other property or funds of the Company and be forthwith
delivered to the Trustee as Collateral in the same form as so received (with
any necessary endorsement).  Any cash
dividends or distributions delivered to or otherwise held by the Trustee
pursuant to this Section 4.5, and
any other cash constituting Collateral delivered to the Trustee, shall be
invested, at the written direction of the Company, by the Trustee in Temporary
Cash Investments.

 

(2)           As
long as no Event of Default shall have occurred and be continuing, the Company
shall be entitled to exercise any and all voting and other consensual rights
relating to the Pledged Shares or any part thereof for any purpose; provided,
however that no vote shall be cast, and no consent, waiver or ratification
given or action taken, which would be inconsistent with or violate any
provision of this Indenture or the Securities.

 

(3)           Upon
the occurrence and during the continuance of an Event of Default, all rights of
the Company to exercise the voting and other consensual rights that it would
otherwise be entitled to exercise pursuant to Section
4.5(2) shall cease and all such rights shall thereupon be vested in
the Trustee who shall then have the sole right to exercise such voting and
other consensual rights as if it were the absolute owner of the Collateral.

 

(4)           In
order to permit the Trustee to exercise the voting and other consensual rights
which it may be entitled to exercise pursuant to Section 4.5(3), and to receive all dividends and distributions
which it may be entitled to receive under Section
4.5(1), the Company shall, upon written notice of the Trustee, from
time to tine execute and deliver to the Trustee such instruments as the Trustee
may reasonably request.

 

(5)           Upon
satisfaction and discharge of this Indenture by the Company, the Lien of this
Indenture on all the Collateral shall terminate and all the Collateral shall be
released without any further action on the part of the Trustee or any other
Person.  Upon the release of any
Collateral pursuant to this Article IV,
the Trustee shall execute and deliver to the Company an instrument or
instruments acknowledging the release of such Collateral from this Indenture
and the discharge of the Lien on such 

 

37

 

Collateral created by
this Article IV, and will duly
assign, transfer and deliver to the Company (without recourse and without any
representation or warranty) such Collateral.

 

SECTION 4.6.                      Trustee
Appointed Attorney Fact.

 

The Company irrevocably
authorizes the Trustee at any time and from time to time in the sole discretion
of the Trustee and appoints the Trustee as its attorney in fact, coupled with
an interest, (i) to file financing statements necessary or desirable in the
Trustee’s sole discretion to perfect and to maintain the perfection and
priority of the Trustee’s security interest in the Collateral, (ii) to indorse
and collect any cash proceeds of the Collateral, (iii) to file a photographic
or other reproduction of this Indenture or any financing statement with respect
to the Collateral as a financing statement in such offices as the Trustee in
its sole discretion deems necessary or desirable to perfect and to maintain the
perfection and priority of the Trustee’s security interest in the Collateral,
(iv) to apply the proceeds of any Collateral received by Trustee to the
Obligations as provided in Section 6.4,
and (v) to discharge past due taxes, assessments, charges, fees or Liens on the
Collateral and the Company agrees to reimburse the Trustee on demand for any
payment made or any reasonable expense actually incurred by the Trustee in
connection therewith, provided that this authorization shall not relieve the
Company of any of its Obligations.  After
the occurrence and the continuance of an Event of Default, the Company hereby
appoints the Trustee as the Company attorney-in-fact, with full authority in
the place and stead of the Company and in the name of the Company or otherwise,
from time to time in the Trustee’s discretion to take any action and to execute
any instrument which the Trustee may deem necessary or advisable in order to
accomplish the purposes of this Article IV,
including to receive, endorse and collect all instruments made payable to the
Company representing any dividend, interest payment or other distribution in
respect of the Collateral or any part thereof and to give full discharge for
the same. This power, being coupled with an interest, is irrevocable.

 

SECTION 4.7.                      Trustee
May Perform.

 

If the Company fails to
perform any agreement contained in this Article IV, the
Trustee may, but shall not be obligated or have a duty to, itself perform, or
cause performance of, such agreement, and the expenses of the Trustee incurred
in connection therewith shall be payable by the Company under Section 7.7.

 

SECTION 4.8.                      Trustee’s
Duties.

 

The powers conferred on the
Trustee under this Article IV are
solely to protect its interest in the Collateral and shall not impose any duty
upon it to exercise any such powers. Except for the safe custody of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, the Trustee shall have no duty as to any Collateral or as to the
taking of any necessary steps to preserve rights against prior parties or any
other rights pertaining to any Collateral.

 

38

 

SECTION 4.9.                      Continuing
Lien; Security Agreement.

 

This Indenture shall create
a continuing Lien on the Collateral that shall (i) remain in full force
and effect until payment in full of the Securities, (ii) be binding upon the
Company and its successors and assigns and (iii) inure to the benefit of the
Trustee and its successors, transferees and assigns.  This Indenture is a “security agreement” as
that term is defined in the Uniform Commercial Code.  The Trustee is a “secured party” as that term
is defined in the Uniform Commercial Code.

 

SECTION 4.10.                    Certificates
and Opinions.

 

The Company shall comply
with Section 314(b) of the Trust Indenture Act relating to Opinions of Counsel
regarding the Lien of this Indenture to the extent such provisions are
applicable.  Any certificate or opinion
required by Section 314(d) of the Trust Indenture Act may be executed and
delivered by an Officer of the Company to the extent permitted by Section 314(d) of the Trust Indenture Act.

 

ARTICLE V 

SATISFACTION AND DISCHARGE

 

SECTION 5.1.                      Satisfaction
and Discharge of Indenture.

 

This Indenture shall upon
Company Request cease to be of further effect (except as to any surviving
rights of conversion, or registration of transfer or exchange, or replacement
of Securities herein expressly provided for and in the form of Securities set
forth in Section 2.2 and the Company’s
obligations to the Trustee pursuant to Section 7.7),
and the Trustee, at the expense of the Company, shall execute proper
instruments in form and substance satisfactory to the Trustee acknowledging
satisfaction and discharge of this Indenture, when

 

(1)           either

 

(i)            all
Securities theretofore authenticated and delivered (other than (A) Securities
which have been destroyed, lost or stolen and which have been replaced or paid
as provided in Section 3.5 and (B)
Securities for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust, as provided in Section 11.3) have been delivered to the
Trustee for cancellation; or

 

(ii)           all
such Securities not theretofore delivered to the Trustee or its agent for
cancellation (other than Securities referred to in clauses (A) and (B) of
clause (1)(i) above)

 

(A)          have
become due and payable, or

 

(B)          will
have become due and payable at their Stated Maturity within one year, or

 

39

 

(C)          are
to be called for redemption within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption by the Trustee in the name,
and at the expense, of the Company,

 

and the Company, in the case
of clause (a), (b) or (c) above, has deposited or caused to be deposited with
the Trustee as trust funds (immediately available to the Holders in the case of
clause (a)) in trust for the purpose an amount in cash sufficient to pay and
discharge the entire indebtedness on such Securities not theretofore delivered
to the Trustee for cancellation, for principal and interest to the date of such
deposit (in the case of Securities which have become due and payable) or to the
Stated Maturity or Redemption Date, as the case may be;

 

(2)           the
Company has paid or caused to be paid all other sums payable hereunder by the
Company; and

 

(3)           the
Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that all conditions precedent herein provided for
relating to the satisfaction and discharge of this Indenture have been complied
with.

 

Notwithstanding the
satisfaction and discharge of this Indenture, the obligations of the Company to
the Trustee under Section 7.7 and
the last paragraph of Section 5.2,
the obligations of the Company to any Authenticating Agent under Section 7.12, if money shall have been deposited with the
Trustee pursuant to clause (1)(ii) of this Section 5.1,
the obligations of the Trustee under Section 5.2 and
the last paragraph of Section 11.3
and the obligations of the Company and the Trustee under Section 3.4
and Article XIII shall survive.  Funds held in trust pursuant to this Section 5.1 are not subject to the provisions of Article XIV.

 

SECTION 5.2.                      Application
of Trust Money.

 

Subject to the provisions of
the last paragraph of Section 11.3,
all money deposited with the Trustee pursuant to Section 5.1
and in accordance with the provisions of Article XIV
shall be held in trust for the sole benefit of the Holders and not be subject
to the subordination provisions of Article XIV,
and such monies shall be applied by the Trustee, in accordance with the
provisions of the Securities and this Indenture, to the payment, either
directly or through any Paying Agent, to the Persons entitled thereto, of the
principal and interest for whose payment such money has been deposited with the
Trustee.

 

All moneys deposited with
the Trustee pursuant to Section 5.1
(and held by it or any Paying Agent) for the payment of Securities subsequently
converted shall be returned to the Company upon Company Request.

 

The Company shall pay and
indemnify the Trustee against any tax, fee or other charge imposed or assessed
against all money deposited with the Trustee pursuant to Section 5.1
(other than income taxes and franchise taxes incurred or payable by the 

 

40

 

Trustee
and such other taxes, fees or charges incurred or payable by the Trustee that
are not directly the result of the deposit of such money with the Trustee).

 

ARTICLE VI 

REMEDIES

 

SECTION 6.1.                      Events
of Default.

 

“Event of Default,” wherever
used herein, means any one of the following events (whatever the reason for
such Event of Default and whether it shall be occasioned by the provisions of Article XIV or be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):

 

(1)           default
in the payment of the principal of any Security at its Maturity, whether or not
such payment is prohibited by the subordination provisions of the Securities or
of this Indenture; or

 

(2)           default
in the payment of any interest upon any Security when it becomes due and
payable, and continuance of such default for a period of thirty (30) days,
whether or not such payment is prohibited by the subordination provisions of
the Securities or of this Indenture; or

 

(3)           default
in the performance, or breach, of any covenant or warranty of the Company in
this Indenture (other than a covenant or warranty a default in the performance
or breach of which is specifically dealt with elsewhere in this Section 6.1), and continuance of such
default or breach for a period of sixty (60) days after there has been given,
by registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in principal amount of
the Outstanding Securities a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice is a “Notice of
Default;” or

 

(4)           any
indebtedness under any bonds, debentures, notes or other evidences of
indebtedness for money borrowed by the Company or under any mortgage, indenture
or instrument under which there may be issued or by which there may be secured
or evidenced any indebtedness for money borrowed by the Company (an “Instrument”),
or any guaranty by the Company for indebtedness for money borrowed by any
Subsidiary of the Company, with a principal amount then outstanding in excess
of U.S. $500,000, whether such indebtedness now exists or shall hereafter be
created, is not paid at final maturity of any Instrument (either at its stated
maturity or upon acceleration thereof), and such indebtedness is not
discharged, or such acceleration is not rescinded or annulled, within a period
of thirty (30) days after there shall have been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the Trustee
by the Holders of at least 25% in principal amount of the Outstanding
Securities a written notice specifying such default and requiring the  Company to cause such indebtedness to be
discharged or cause such default to be cured or waived or such 

 

41

 

acceleration to be
rescinded or annulled and stating that such notice is a “Notice of Default”
hereunder; or

 

(5)           the
entry by a court having jurisdiction in the premises of (A) a decree or order
for relief in respect of the Company in an involuntary case or proceeding under
any applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or (B) a decree or order adjudging the  Company a bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company under any applicable Federal or
State law, or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial
part of its property, or ordering the winding up or liquidation of its affairs,
and the continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of sixty (60) consecutive
days; or

 

(6)           the
commencement by the Company of a voluntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by it to the entry of a decree or order for relief in
respect of the Company in an involuntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or proceeding
against it, or the filing by it of a petition or answer or consent seeking
reorganization or similar relief under any applicable Federal or State law, or
the consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial
part of its property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its debts
generally as they become due, or the taking of corporate action by the Company
in furtherance of any such action.

 

SECTION 6.2.                      Acceleration
of Maturity; Rescission and Annulment.

 

If an Event of Default
(other than an Event of Default specified in Section 6.1(5)
or 6.1(6)) occurs and is continuing, then
in every such case the Trustee or the Holders of not less than 25% in principal
amount of the Outstanding Securities may, subject to the provisions of Article XIV, declare the principal of all the Securities to
be due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by the Holders), and upon any such declaration such
principal and all accrued interest thereon shall become immediately due and
payable.  If an Event of Default
specified in Section 6.1(5) or 6.1(6) occurs, the principal of, and accrued interest on,
all the Securities shall, subject to the provisions of Article XIV,
ipso facto become immediately due and payable without any declaration or other
Act of the Holders or any act on the part of the Trustee.

 

At any time after such
declaration of acceleration has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as 

 

42

 

hereinafter
in this Article VI provided, the Holders of a
majority in principal amount of the Outstanding Securities, by written notice
to the Company and the Trustee, may, on behalf of all Holders, rescind and annul
such declaration and its consequences if:

 

(1)           the
Company has paid or deposited with the Trustee a sum sufficient to pay:

 

(i)            all
overdue interest on all Securities,

 

(ii)           the
principal of any Securities which has become due otherwise than by such declaration
of acceleration and any interest thereon at the rate borne by the Securities,

 

(iii)         to
the extent permitted by applicable law, interest upon overdue interest, and

 

(iv)          all
sums paid or advanced by the Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel;

 

(2)           all
Events of Default, other than the nonpayment of the principal of and interest
on, Securities which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 6.15; and

 

(3)           such
rescission and annulment would not conflict with any judgment or decree issued
in appropriate judicial proceedings regarding the payment by the Trustee to the
Holders of the amounts referred to in Section
6.2(1).

 

No rescission or annulment
referred to above shall affect any subsequent default or impair any right
consequent thereon.

 

SECTION 6.3.                      Remedies
Upon Event of Default.

 

If an Event of Default
occurs and is continuing, the Trustee shall have the right, subject to Section 6.5, to exercise all the rights and remedies
provided for in this Indenture, under the Uniform Commercial Code, and at law
or equity generally, including without limitation, the right to (i) recover
judgment, in its own name and as Trustee of an express trust, against the
Company for the whole amount of the unpaid principal and interest on the
Securities, (ii) foreclose the security interests granted herein, (iii) realize
upon the Collateral by any available judicial procedure and/or (iv) take
possession of and sell any or all of the Collateral, with or without judicial
process and without notice except as specified below, in one or more lots at
public or private sale, at any exchange, broker’s board or at any of the Trustee’s
offices or elsewhere, for cash, on credit or for future delivery, upon such
terms as the Trustee may determine to be commercially reasonable, and the
Trustee or any Holder may be the purchaser of any or all of the Collateral so
sold and thereafter hold the same, absolutely, free from any right or claim of
whatsoever kind.  The Company hereby
waives notice of the time and place of any public sale or the time after which
any 

 

43

 

private
sale or other disposition of all or any part of the Collateral may be
made.  To the extent such notice may not
be waived under applicable law, any notice made shall be deemed reasonable if
sent to the Company, addressed as set forth in Section 1.5,
at least ten (10) days prior to (i) the date of any such public sale or (ii)
the time after which any such private sale or other disposition may be
made.  The Trustee shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given.
The Trustee may adjourn any public or private sale from time to time by
announcement at the time and place fixed there for, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. The
Trustee shall incur no liability as a result of the sale of the Collateral, or
any part thereof, at any private sale conducted in a commercially reasonable
manner. The Company hereby waives any claims against the Trustee arising by
reason of the fact that the price at which any Collateral may have been sold at
such a private sale was less than the price which might have been obtained at
the public sale, even if the Trustee accepts the first offer received and does
not offer such Collateral to more than one offeree.

 

The Company recognizes that,
by reason of certain prohibitions contained in the Securities Act and
applicable state securities laws, the Trustee may be compelled, with respect to
any sale of all or any part of the Collateral, to limit purchasers to those who
will agree, among other things, to acquire such securities for their own
account, for investment, and not with a view to the distribution or resale
thereof. The Company acknowledges and agrees that any such sale may result in
prices and other terms less favorable to the seller than if such sale were a
public sale without such restrictions and, notwithstanding such circumstances,
agrees that any such sale shall be deemed to have been made in a commercially
reasonable manner. The Trustee shall be under no obligation to delay the sale
of any of the Pledged Shares for the period of time necessary to permit the
Company to register such securities for public sale under the Securities Act,
or under applicable state securities laws, even if the Company would agree to
do so.

 

SECTION 6.4.                      Application
of Proceeds.

 

Upon the occurrence and
during the continuance of an Event of Default and after the acceleration of the
Securities pursuant to Section 6.2 (so
long as such acceleration has not been rescinded), any cash held by the Trustee
as Collateral and all cash proceeds received by the Trustee in respect of any
sale of, collection from, or other realization upon, all or any part of the
Collateral, shall be applied by the Trustee in the manner specified in Section 6.8.

 

SECTION 6.5.                      Non-Recourse
Obligations of the Company.

 

Notwithstanding anything to
the contrary contained herein, but without in any manner releasing, impairing,
or otherwise affecting the Securities, the Indenture, or the Lien securing
payment of the Securities, or the validity thereof, neither the Trustee nor any
Holder of the Securities will hold the Company personally liable for the
repayment of the indebtedness evidenced by the Securities or for any other sums
due as a result of any Event of Default under the Securities or the Indenture
or for the 

 

44

 

payment
of any deficiency established after foreclosure of the security interest in the
Collateral or the exercise of any other rights and remedies granted in the
Indenture for the benefit of the Holders with respect to the Collateral, except
to the extent of the Company’s interest in the Collateral, and the recourse of
the Trustee and the Holders of the Securities for any and all such Events of
Default shall be limited to the enforcement of such rights and remedies with
respect to the Collateral as are set forth in the Securities and the Indenture;
provided, however, notwithstanding the foregoing limitation of liability, the
Company shall be fully liable to the same extent that the Company would be
liable absent the limitation of liability set forth in this Section 6.5 for: (i) interest that accrues on the Securities
from their respective Issue Dates to December 31, 2008, including interest on
overdue principal and, to the extent permitted by law, on overdue interest;
(ii) fraud or misrepresentation by the Company in connection with the issuance
of the Securities; (iii) the violation of any covenant or agreement of the
Company set forth in Sections 11.9, 11.10 and
11.11 of Article XI
of the Indenture, and (iv) all fees and expenses due to, and the
indemnification of, the Trustee under Sections 5.2
and 7.7 of this Indenture and all court
costs, attorney’s fees and expenses incurred by the Trustee and the Holders to
collect any of the foregoing amounts. 
The limitation on liability set forth herein is not intended as a
release or discharge of the indebtedness evidenced by the Securities, or any
portion thereof, but is a limited covenant not to sue, and such indebtedness
shall remain in full force and effect.

 

SECTION 6.6.                      Trustee
May File Proofs of Claim.

 

In case of the pendency of
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company or any other obligor upon the Securities or the property of the
Company or of such other obligor or the creditors of either, the Trustee
(irrespective of whether the principal of, and any interest on, the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,

 

(1)           to
file and prove a claim for the whole amount of principal and interest owing and
unpaid in respect of the Securities and take such other actions, including
participating as a member, voting or otherwise, of any official committee of
creditors appointed in such matter, and to file such other papers or documents,
in each of the foregoing cases, as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel) and of the Holders of Securities allowed in such judicial
proceeding, and

 

(2)           to
collect and receive any moneys or other property payable or deliverable on any
such claim and to distribute the same;

 

45

 

and any custodian, receiver,
assignee, trustee, liquidator, sequestrator or other similar official in any
such judicial proceeding is hereby authorized by each Holder of Securities to
make such payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders of Securities to
pay to the Trustee any amount due to it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel and
any other amounts due the Trustee under Section 7.7.  To the extent that the payment of any such
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section 7.7 hereof out of the estate in any such proceeding
shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends, money,
securities and other properties that the Holders may be entitled to receive in
such proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise.

 

Nothing contained in Section 6.5 shall be deemed a waiver of any right of the
Trustee or the Holders under Section 506(a), 506(b), 1111(b) or any other
provision of the Bankruptcy Reform Act of 1978, as amended, or any successor
thereto, or similar provisions under applicable state law to file a claim for
the full amount of the indebtedness owing to the Holders in accordance with the
Securities and this Indenture.

 

Furthermore, nothing
contained in this Section 6.6
shall be deemed to authorize the Trustee to authorize or consent to or accept
or adopt on behalf of any Holder of a Security any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or the rights
of any Holder thereof or to authorize the Trustee to vote in respect of the
claim of any Holder of a Security in any such proceeding; provided, however,
that the Trustee may, on behalf of such Holders, vote for the election of a
trustee in bankruptcy or similar official.

 

SECTION 6.7.                      Trustee
May Enforce Claims Without Possession of Securities.

 

All rights of action and
claims under this Indenture or the Securities may be prosecuted and enforced by
the Trustee without the possession of any of the Securities or the production
thereof in any proceeding relating thereto, and any such proceeding instituted
by the Trustee shall be brought in its own name as trustee of an express trust,
and any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, be for the ratable benefit of the Holders of the
Securities in respect of which judgment has been recovered.

 

SECTION 6.8.                      Application
of Money Collected.

 

Subject to Article XIV, any money collected by the Trustee pursuant to
this Article VI shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal or 

 

46

 

interest,
upon presentation of the Securities and the notation thereon of the payment if
only partially paid and upon surrender thereof if fully paid:

 

FIRST: To the payment of all
amounts due the Trustee under Section 7.7;

 

SECOND: To the payment of
the amounts then due and unpaid for principal of, or interest on, the
Securities in respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according to
the amounts due and payable on such Securities for principal and interest,
respectively, for which the Company is not personally liable pursuant to Section 6.5;

 

THIRD: To the payment of any
remaining amounts then due and unpaid for principal of, or interest on, the
Securities in respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according to
the amounts due and payable on such Securities for principal and interest,
respectively;

 

FOURTH: To such other Person
or Persons, if any, to the extent entitled thereto; and

 

FIFTH: Any remaining amounts
shall be repaid to the Company.

 

SECTION 6.9.                      Limitation
on Suits by Holders.

 

No Holder of any Security
shall have any right to institute any proceeding, judicial or otherwise, with
respect to this Indenture, or for the appointment of a receiver or trustee, or
for any other remedy hereunder, unless:

 

(1)           such
Holder has previously given written notice to the Trustee of a continuing Event
of Default;

 

(2)           the
Holders of not less than 25% in principal amount of the Outstanding Securities
shall have made written request to the Trustee to institute proceedings in
respect of such Event of Default in its own name as Trustee hereunder;

 

(3)           such
Holder or Holders have offered to the Trustee, and if requested, shall have
provide, reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;

 

(4)           the
Trustee for sixty (60) days after its receipt of such notice, request and offer
of indemnity (or if requested, receipt of indemnity) has failed to institute
any such proceeding; and

 

(5)           no
direction inconsistent with such written request has been given to the Trustee
during such sixty (60) day period by the Holders of a majority in principal
amount of the Outstanding Securities, it being understood and intended that no
one or more of such Holders shall have any right in any manner whatever by
virtue of, or by availing of, any provision of this Indenture to affect,
disturb or prejudice the 

 

47

 

rights of any other of
such Holders, or to obtain or seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all such
Holders.

 

SECTION 6.10.                    Unconditional
Right of Holders to Convert and to Receive Principal and Interest.

 

(1)           Notwithstanding
any other provision in this Indenture, the Holder of any Security shall have
the right, which is absolute and unconditional, to convert such Security in
accordance with Article XIII and
to institute suit for the enforcement of such right to convert and such right
to convert shall not be impaired without the consent of such Holder.

 

(2)           The
right of any Holder of a Security to receive payment of principal of, and
interest on, the Note, on or after the respective due dates expressed in the
Security, or, subject to Section 6.5,
to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.

 

SECTION 6.11.                    Restoration
of Rights and Remedies.

 

If the Trustee or any Holder
of a Security has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to the Trustee or to such Holder,
then and in every such case, subject to any determination in such proceeding,
the Company, the Trustee and the Holders of Securities shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and such Holders shall continue as
though no such proceeding had been instituted.

 

SECTION 6.12.                    Rights
and Remedies Cumulative.

 

Except as otherwise provided
in Sections 3.5 and 6.5,
no right or remedy herein conferred upon or reserved to the Trustee or to the
Holders of Securities is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.

 

SECTION 6.13.                    Delay
or Omission Not Waiver.

 

No delay or omission of the
Trustee or of any Holder of any Security to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or any acquiescence
therein.  Every right and remedy given by
this Article VI or by law to the Trustee or
to the Holders of Securities may be exercised from time to time, and as often
as may be 

 

48

 

deemed
expedient, by the Trustee or (subject to the limitations contained in this
Indenture) by the Holders of Securities as the case may be.

 

SECTION 6.14.                    Control
by Holders of Securities.

 

The Holders of a majority in
principal amount of the Outstanding Securities shall have the right to direct
the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee, provided that

 

(1)           such
direction shall not be in conflict with any rule of law or with this Indenture;

 

(2)           the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction;

 

(3)           the
Trustee need not take any action which might involve it in personal liability
or be unduly prejudicial to the Holders of Securities not consenting; and

 

(4)           the
Holders have offered the Trustee the indemnity described in Section 7.3(5).

 

SECTION 6.15.                    Waiver
of Past Defaults.

 

The Holders, either (i)
through the written consent of not less than a majority in principal amount of
the Outstanding Securities or (ii) by the adoption of a resolution, at a
meeting of Holders of the Outstanding Securities at which a quorum is present,
by the Holders of at least 66-2/3% in principal amount of the Outstanding
Securities represented at such meeting, may on behalf of the Holders of all the
Securities waive any past default hereunder and its consequences, except a
default (A) in the payment of the principal of or interest on any Security, or (B)
in respect of a covenant or provision hereof which under Article IX
cannot be modified or amended without the consent of the Holder of each
Outstanding Security affected.  The
provisions of this Section 6.15
modify the provisions of Section 316(a)(1) of the Trust Indenture Act.

 

Upon any such waiver, such
default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured, for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon.

 

SECTION 6.16.                    Undertaking
for Costs.

 

All parties to this
Indenture agree, and each Holder of any Security by his acceptance thereof
shall be deemed to have agreed, that any court may in its discretion require,
in any suit for the enforcement of any right or remedy under this Indenture, or
any suit against the Trustee for any action taken, suffered or omitted by it as
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such 

 

49

 

suit,
and that such court may in its discretion assess reasonable costs, including
reasonable attorneys’ fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such
party litigant; but the provisions of this Section 6.16
shall not apply to any suit instituted by the Company, to any suit instituted
by the Trustee, to any suit instituted by any Holder, or group of Holders,
holding in the aggregate more than 10% in principal amount of the Outstanding
Securities, or to any suit instituted by any Holder of any Security for the
enforcement of the payment of the principal of or interest on any Security on
or after the respective Stated Maturity or Maturities expressed in such
Security (or, in the case of redemption on or after the Redemption Date) or for
the enforcement of the right to convert any Security in accordance with Article XIII.

 

SECTION 6.17.                    Waiver
of Stay, Usury or Extension Laws.

 

The Company covenants (to
the extent that it may lawfully do so) that it will not at any time insist
upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay, usury or extension law wherever enacted, now or at any
time hereafter in force, which may affect the covenants or the performance of
this Indenture; and the Company (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law and covenants
that it will not hinder, delay or impede by reason of such law the execution of
any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.

 

ARTICLE VII 

THE TRUSTEE

 

SECTION 7.1.                      Certain
Duties and Responsibilities.

 

(1)           Except
during the continuance of an Event of Default,

 

(i)            the
Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and

 

(ii)           in
the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Trustee and conforming
to the requirements of this Indenture, but in the case of any such certificates
or opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this Indenture,
but not to verify the contents thereof.

 

(2)           In
case an Event of Default has occurred and is continuing, the Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and 

 

50

 

use the same degree of
care and skill in their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.

 

(3)           No
provision of this Indenture shall be construed to relieve the Trustee from
liability for its own negligent action, its own negligent failure to act, or
its own willful misconduct, except that

 

(i)            this
paragraph (3) shall not be construed to limit the effect of paragraph (1) of
this Section 7.1;

 

(ii)           the
Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts;

 

(iii)         the
Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with the direction of (i) the
Holders of a majority in principal amount of the Outstanding Securities or (ii)
by the adoption of a resolution, at a meeting of Holders of the Outstanding
Securities at which a quorum is present, by the Holders of at least 66-2/3% in
principal amount of Outstanding Securities represented at such meeting,
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture; and

 

(4)           No
provision of this Indenture shall require the Trustee to expend or risk its own
funds or incur any liability whatsoever in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers hereunder.  The Trustee shall be under no obligation to
exercise any of its rights and powers under this Indenture at the request of
any Holder unless such Holder shall have offered to the Trustee security and
indemnity satisfactory to it in its sole subjective discretion (which
discretion shall be exercised in good faith) against any loss, liability  or expense.

 

(5)           Whether
or not therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection
to the Trustee shall be subject to the provisions of this Section 7.1.

 

SECTION 7.2.                      Notice
of Defaults.

 

Within ninety (90) days
after the occurrence of any default hereunder as to which the Trustee has
received written notice, the Trustee shall give to all Holders of Securities,
in the manner provided in Section 1.6,
notice of such default, unless such default shall have been cured or waived;
provided, however, that, except in the case of a default in the payment of the
principal of or interest on any Security the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of directors or Responsible Officers of the
Trustee in good faith determines that the withholding of such notice is in the
interest of the Holders; and provided, further, that in the case of any default
of the character specified in Section 6.1(3),
no such notice to Holders of Securities shall be given until 

 

51

 

at
least sixty (60) days after the occurrence thereof or, if applicable, the cure
period specified therein.  For the
purpose of this Section 7.2, the term “default”
means any event which is, or after notice or lapse of time or both would
become, an Event of Default.

 

SECTION 7.3.                      Certain
Rights of Trustee.

 

Subject to the provisions of
Section 7.1:

 

(1)           the
Trustee may rely and shall be protected in acting or refraining from acting
upon any resolution, Officers’ Certificate, other certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, coupon, other evidence of indebtedness or other paper or
document (collectively, the “Documents”) believed by it to be genuine and to
have been signed or presented by the proper party or parties, and the Trustee
need not investigate any fact or matter stated in such Documents;

 

(2)           any
request or direction of the Company mentioned herein shall be sufficiently
evidenced by a Company Request or Company Order and any resolution of the Board
of Directors shall be sufficiently evidenced by a Board Resolution;

 

(3)           whenever
in the administration of this Indenture the Trustee shall deem it desirable that
a matter be proved or established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence be the one specifically
prescribed) may, in the absence of bad faith on its part, request and rely upon
an Officers’ Certificate or Opinion of Counsel;

 

(4)           the
Trustee may consult with counsel of its selection and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;

 

(5)           the
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the
Holders of Securities pursuant to this Indenture, unless such Holders shall
have offered, and, if requested by the Trustee, delivered, to the Trustee
security or indemnity satisfactory to it against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or direction;

 

(6)           the
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, coupon,
other evidence of indebtedness or other paper or document, but the Trustee may
make such further inquiry or investigation into such facts or matters as it may
see fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney;

 

52

 

(7)           the
Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys and the Trustee
shall not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder;

 

(8)           the
Trustee shall not be required to take notice or deemed to have notice of any
Event of Default hereunder, except failure by the Company to make any of the
payments to the Trustee pursuant to Section
6.1(1) or Section 6.1(2)
hereof, unless the Trustee shall be specifically notified in writing of such
Event of Default by the Company or by one or more of the Holders; and

 

(9)           the
permissive right of the Trustee to act hereunder shall not be construed as a
duty.

 

SECTION 7.4.                      Not
Responsible for Recitals or Issuance of Securities.

 

The recitals contained
herein and in the Securities (except the Trustee’s certificates of
authentication) shall be taken as the statements of the Company, and the
Trustee assumes no responsibility for their correctness.  The Trustee makes no representations as to
the validity or sufficiency of this Indenture, of the Securities or of the
Common Stock issuable upon the conversion of the Securities.  The Trustee shall not be accountable for the
use or application by the Company of Securities or the proceeds thereof.  For the avoidance of doubt, the Trustee’s
obligations hereunder and its duties to the Holders as described herein shall
commence upon the execution and delivery of this Indenture by the Trustee.  The Trustee has not reviewed, has not
undertaken to review, and has no obligation or duty to review any private
placement memorandum or any related document (collectively “Offering Document”)
that has been, or may be, delivered, to the Holders, and is not responsible for
the truth or accuracy of the contents of any such Offering Document.  The Trustee has not undertaken to
investigate, has no obligation or duty to the Holders to investigate, and has
not investigated or conducted any “due diligence” in regard to, the validity or
sufficiency of this Indenture, the Securities, the Collateral, or the Common
Stock that may be issued upon the conversion of the Securities, or in regard to
the truth or accuracy of any statements made by the Company in any Offering
Document.

 

SECTION 7.5.                      May
Hold Securities, Act as Trustee Under Other Indentures.

 

The Trustee, any
Authenticating Agent, any Paying Agent, any Conversion Agent or any other agent
of the Company or the Trustee, in its individual or any other capacity, may
become the owner or pledgee of Securities and may otherwise deal with the
Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Conversion Agent or such other agent.

 

53

 

The Trustee may become and
act as trustee under other indentures under which other securities, or
certificates of interest or participation in other securities, of the Company
are outstanding in the same manner as if it were not Trustee hereunder.

 

SECTION 7.6.                      Money
Held in Trust.

 

Money held by the Trustee in
trust hereunder need not be segregated from other funds except to the extent
required by law.  The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company.

 

SECTION 7.7.                      Compensation
and Reimbursement.

 

The Company agrees

 

(1)           to
pay to the Trustee from time to time such reasonable compensation as the
Company and the Trustee shall from time to time agree in writing for its
acceptance of this Indenture and for all services rendered by it hereunder
(which compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);

 

(2)           except
as otherwise expressly provided herein, to reimburse the Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or
made by the Trustee (including costs and expenses of enforcing this Indenture
and defending itself against any claim (whether asserted by the Company, any
Holder of Securities or any other Person) or liability in connection with the
exercise of any of its powers or duties hereunder) in accordance with any
provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith;

 

(3)           to
indemnify the Trustee (and its directors, officers, employees and agents) for,
and to hold it harmless against, any loss, liability or expense incurred
without negligence or bad faith on its part, arising out of or in connection
with the acceptance or administration of this trust, including the reasonable
costs, expenses and reasonable attorneys’ fees of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder; and

 

(4)           as
security for the performance of the Obligations of the Company under this Section 7.7, the Trustee shall have a Lien
prior to the Securities upon all property and funds held or collected by the
Trustee as such, except funds held in trust to pay principal and interest on
particular Securities.  Such Lien shall
survive the satisfaction and discharge of this Indenture.

 

When the Trustee incurs
expenses or renders services in connection with an Event of Default specified
in Section 6.1(5) or Section
6.1(6), the expenses (including the reasonable charges of its
counsel) and the compensation for the services are 

 

54

 

intended
to constitute expenses of the administration under any applicable Federal or
State bankruptcy, insolvency or other similar law.

 

The provisions of this Section 7.7 shall survive the termination of this Indenture
or the earlier resignation or removal of the Trustee.

 

SECTION 7.8.                      Corporate
Trustee Required; Eligibility.

 

There shall at all times be
a Trustee hereunder which shall be a Person that is eligible pursuant to the
Trust Indenture Act to act as such, having (or being part of a holding company
with) a combined capital and surplus of at least U.S. $50,000,000, subject to
supervision or examination by Federal or State authority, and in good
standing.  The Trustee or an Affiliate of
the Trustee shall maintain an established place of business in the Borough of
Manhattan, The City of New York. 
Currently, such place of business is located at 101 Barclay Street, 7th
Floor, New York, New York 10286.  If such
corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of said supervising or examining authority, then for the
purposes of this Section 7.8, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.  If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 7.8,
it shall resign immediately in the manner and with the effect hereinafter
specified in this Article VII and
a successor shall be appointed pursuant to Section 7.9.

 

SECTION 7.9.                      Resignation
and Removal; Appointment of Successor.

 

(1)           No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article VII shall
become effective until the acceptance of appointment by the successor Trustee
in accordance with the applicable requirements of Section 7.10.

 

(2)           The
Trustee may resign at any time by giving written notice thereof to the
Company.  If the instrument of acceptance
by a successor Trustee required by Section
7.10 shall not have been delivered to the Trustee within thirty (30)
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.

 

(3)           The
Trustee may be removed at any time by an Act of the Holders of a majority in
principal amount of the Outstanding Securities, delivered to the Trustee and
the Company.  If the instrument of
acceptance by a successor Trustee required by Section
7.10 shall not have been delivered to the Trustee within thirty (30)
days after the giving of such notice of removal, the removed Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.

 

(4)           If
at any time:

 

55

 

(i)            the
Trustee shall cease to be eligible under Section
7.8 and shall fail to resign after written request therefor by the
Company or by any Holder of a Security who has been a bona fide Holder of a
Security for at least six (6) months, or

 

(ii)           the
Trustee shall become incapable of acting or shall be adjudged a bankrupt or
insolvent or a receiver of the Trustee or of its property shall be appointed or
any public officer shall take charge or control of the Trustee or of its property
or affairs for the purpose of rehabilitation, conservation or liquidation,
then, in any such case (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 6.14,
any Holder of a Security who has been a bona fide Holder of a Security for at
least six (6) months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.

 

(5)           If
the Trustee shall resign, be removed or become incapable of acting, or if a
vacancy shall occur in the office of Trustee for any cause, the Company, by a
Board Resolution, shall promptly appoint a successor Trustee and shall comply
with the applicable requirements of this Section
7.9 and Section 7.10.  If, within one year after such resignation,
removal or incapability, or the occurrence of such vacancy, a successor Trustee
shall be appointed by Act of the Holders of a majority in principal amount of
the Outstanding Securities delivered to the Company and the retiring Trustee,
the successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment in accordance with the applicable requirements of Section 7.10, become the successor Trustee
and supersede the successor Trustee appointed by the Company.  If no successor Trustee shall have been so
appointed by the Company or the Holders of Securities and accepted appointment
in the manner required by this Section 7.9
and Section 7.10, any Holder of a
Security who has been a bona fide Holder of a Security for at least six (6)
months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Trustee.

 

(6)           The
Company shall give notice of each resignation and each removal of the Trustee
and each appointment of a successor Trustee to all Holders of Securities in the
manner provided in Section 1.6.  Each notice shall include the name of the
successor Trustee and the address of its Corporate Trust Office.

 

SECTION
7.10.                    Acceptance of
Appointment by Successor.

 

Every successor Trustee
appointed hereunder shall execute, acknowledge and deliver to the Company and
to the retiring Trustee an instrument accepting such appointment, and thereupon
the resignation or removal of the retiring Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Trustee; but, on the request of the Company or the successor Trustee, such
retiring Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such retiring Trustee
hereunder.  Upon request of any such 

 

56

 

successor
Trustee, the Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts.

 

No successor Trustee shall
accept its appointment unless at the time of such acceptance such successor
Trustee shall be eligible under this Article VII.

 

SECTION
7.11.                    Merger,
Conversion, Consolidation or Succession to Business.

 

Any corporation into which
the Trustee may be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Trustee shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of the Trustee (including the
trust created by this Indenture), shall be the successor of the Trustee
hereunder, provided such corporation shall be otherwise eligible under this Article VII, without the execution or filing of any paper or
any further act on the part of any of the parties hereto.  In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.

 

SECTION
7.12.                    Authenticating
Agents.

 

The Trustee may, with the
consent of the Company, appoint an Authenticating Agent or Agents acceptable to
the Company with respect to the Securities which shall be authorized to act on
behalf of the Trustee to authenticate Securities issued upon exchange or
substitution pursuant to this Indenture.

 

Securities authenticated by
an Authenticating Agent shall be entitled to the benefits of this Indenture and
shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder, and every reference in this Indenture to the authentication
and delivery of Securities by the Trustee or the Trustee’s certificate of
authentication shall be deemed to include authentication and delivery on behalf
of the Trustee by an Authenticating Agent and a certificate of authentication
executed on behalf of the Trustee by an Authenticating Agent.  Each Authenticating Agent shall be subject to
acceptance by the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State
thereof or the District of Columbia, authorized under such laws to act as
Authenticating Agent and subject to supervision or examination by government or
other fiscal authority.  If at any time
an Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 7.12,
such Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section 7.12.

 

Any corporation into which
an Authenticating Agent may be merged or converted or with which it may be
consolidated, or any corporation resulting from any

 

57

 

merger,
conversion or consolidation to which such Authenticating Agent shall be a
party, or any corporation succeeding to the corporate agency or corporate trust
business of an Authenticating Agent, shall continue to be an Authenticating
Agent, provided such corporation shall be otherwise eligible under this Section 7.12, without the execution or filing of any paper
or any further act on the part of the Trustee or the Authenticating Agent.

 

An Authenticating Agent may
resign at any time by giving written notice thereof to the Trustee and to the
Company.  The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company.  Upon receiving such a notice of resignation
or upon such a termination, or in case at any time such Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section 7.12, the Trustee may appoint a successor
Authenticating Agent which shall be subject to acceptance by the Company.  Any successor Authenticating Agent upon
acceptance of its appointment hereunder shall become vested with all the
rights, powers and duties of its predecessor hereunder, with like effect as if
originally named as an Authenticating Agent. 
No successor Authenticating Agent shall be appointed unless eligible
under the provisions of this Section 7.12.

 

The Company agrees to pay to
each Authenticating Agent from time to time reasonable compensation for its
services under this Section 7.12.

 

If an Authenticating Agent
is appointed with respect to the Securities pursuant to this Section 7.12, the Securities may have endorsed thereon, in
addition to or in lieu of the Trustee’s certification of authentication, an
alternative certificate of authentication in the following form:

 

This is one of the Securities
referred to in the within-mentioned Indenture.

 

	
   

  	
  THE BANK OF NEW YORK TRUST

  
	
   

  	
  COMPANY, N.A., Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  

 

SECTION
7.13.                    Disqualification;
Conflicting Interests.

 

If the Trustee has or shall
acquire a conflicting interest within the meaning of the Trust Indenture Act,
the Trustee shall either eliminate such interest or resign, to the extent and
in the manner provided by, and subject to the provisions of, the Trust
Indenture Act and this Indenture.

 

SECTION
7.14.                    Preferential
Collection of Claims Against Company.

 

If and when the Trustee
shall be or become a creditor of the Company (or any other obligor upon the
Securities), the Trustee shall be subject to the provisions of the 

 

58

 

Trust
Indenture Act regarding the collection of claims against the Company (or any
such other obligor).

 

ARTICLE VIII 

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

 

SECTION 8.1.                      Company
May Consolidate, Merge and Transfer Assets Only on Certain Terms.

 

The Company shall not
consolidate with or merge into any other Person or convey, transfer or lease
all its properties and assets substantially as an entirety to any Person
unless:

 

(1)           in
case the Company shall consolidate with or merge into another Person or convey,
transfer or lease its properties and assets substantially as an entirety to any
Person, the Person formed by such consolidation or into which the Company is
merged, or the Person which acquires by conveyance or transfer, or which leases
the properties and assets of the Company substantially as an entirety, shall be
a corporation, limited liability company, partnership or trust, shall be
organized and validly existing under the laws of the United States of America,
any State thereof or the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the principal of
and interest on, all of the Securities as applicable, and the performance or
observance of every covenant of this Indenture on the part of the Company to be
performed or observed and shall have provided for conversion rights in
accordance with Article XIII;

 

(2)           immediately
after giving effect to such transaction, no Event of Default, and no event that
after notice or lapse of time or both, would become an Event of Default, shall
have happened and be continuing; and

 

(3)           the
Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, conveyance, transfer or
lease and, if a supplemental indenture is required in connection with such
transaction, such supplemental indenture comply with this Article VIII and that all conditions
precedent herein provided for relating to such transaction have been complied
with, together with any documents required under Section 9.3.

 

SECTION 8.2.                      Successor
Substituted.

 

Upon any consolidation of
the Company with, or merger of the Company into any other Person or any
conveyance, transfer or lease of all or substantially all the properties and
assets of the Company in accordance with Section 8.1,
the successor Person formed by such consolidation or into or with which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein, 

 

59

 

and
thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Indenture and the
Securities.

 

ARTICLE IX 

SUPPLEMENTAL INDENTURES

 

SECTION 9.1.                      Supplemental
Indentures Without Consent of Holders of Securities.

 

Without the consent of any
Holders of Securities the Company, when authorized by a Board Resolution, and
the Trustee, at any time and from time to time, may enter into one or more indentures
supplemental hereto for any of the following purposes:

 

(1)           to
evidence the succession of another Person to the Company and the assumption by
any such successor of the covenants and obligations of the Company herein and
in the Securities as permitted by this Indenture; or

 

(2)           to
add to the covenants of the Company for the benefit of the Holders of
Securities or to surrender any right or power herein conferred upon the
Company; or

 

(3)           to
further secure the Securities; or

 

(4)           to
make provision with respect to the conversion rights of Holders of Securities
pursuant to Section 13.11; or

 

(5)           to
comply with the requirements of the Trust Indenture Act or the rules and
regulations of the Commission thereunder in order to effect or maintain the
qualification of this Indenture under the Trust Indenture Act, as contemplated
by this Indenture or otherwise; or

 

(6)           to
evidence and provide for the acceptance of appointment hereunder by a successor
Trustee; or

 

(7)           subject
to Section 14.12, to make any
change in Article XIV that would
limit or terminate the benefits available to any holder of Senior Indebtedness
under such Article XIV; or

 

(8)           to
cure any ambiguity, to correct or supplement any provision herein which may be
inconsistent with any other provision herein or which is otherwise defective,
or to make any other provisions with respect to matters or questions arising
under this Indenture as the Company and the Trustee may deem necessary or
desirable, provided such action pursuant to this clause (8) shall not adversely
affect the interests of the Holders of Securities in any material respect; or

 

(9)           to
add provisions to this Indenture and to modify existing provisions thereof if
the Company determines that it will be in the best interest of the Company and
the Holders that the Securities be registered in book-entry form.

 

60

 

Upon Company Request,
accompanied by a Board Resolution authorizing the execution of any such
supplemental indenture, and subject to and upon receipt by the Trustee of the
documents described in Section 9.3
hereof, the Trustee shall join with the Company in the execution of any
supplemental indenture authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations which may be
therein contained.

 

SECTION 9.2.                      Supplemental
Indentures With Consent of Holders of Securities.

 

With either (i) the written
consent of the Holders of not less than a majority in principal amount of the
Outstanding Securities, by the Act of said Holders delivered to the Company and
the Trustee, or (ii) by the adoption of a resolution, at a meeting of Holders
of the Outstanding Securities at which a quorum is present, by the Holders of
at least 66-2/3% in principal amount of the Outstanding Securities represented
at such meeting, the Company, when authorized by a Board Resolution, and the
Trustee may enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of modifying in any manner the
rights of the Holders of Securities under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent or affirmative vote
of the Holder of each Outstanding Security affected thereby,

 

(1)           change
the Stated Maturity of the principal of, or any installment of interest on, any
Security, or reduce the principal amount of or the rate of interest payable
thereon, or reduce the amount payable upon a redemption, or change the place or
currency of payment of the principal of, or interest on, any Security
(including any Redemption Price in respect of such Security) or impair the
right to institute suit for the enforcement of any payment in respect of any
Security on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date) or, except as permitted by Section 13.11, adversely affect the right
of Holders to convert any Security as provided in Article XIII, or modify the provisions of this Indenture with
respect to the subordination of the Securities in a manner adverse to the
Holders; or

 

(2)           reduce
the requirements of Section 10.4
for quorum or voting, or reduce the percentage in principal amount of the
Outstanding Securities the consent of whose Holders is required for any such
supplemental indenture or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture; or

 

(3)           modify
the obligation of the Company to maintain an office or agency in the Borough of
Manhattan, The City of New York, pursuant to Section
11.2; or

 

61

 

(4)           modify
any of the provisions of this Section 9.2
or Section 6.13, except to
increase any percentage contained herein or therein or to provide that certain
other provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected thereby.

 

It shall not be
necessary for any Act of Holders of Securities under this Section 9.2 to approve the particular form
of any proposed supplemental indenture, but it shall be sufficient if such Act
shall approve the substance thereof.

 

SECTION 9.3.                      Execution
of Supplemental Indentures.

 

In executing, or accepting
the additional trusts created by, any supplemental indenture permitted by this Article IX or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and shall
be fully protected in relying in good faith upon, an Opinion of Counsel stating
that the execution of such supplemental indenture is authorized or permitted by
this Indenture, and that such supplemental indenture has been duly authorized,
executed and delivered by the Company and constitutes a valid and legally
binding obligation of the Company enforceable against the Company in accordance
with its terms.  The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee’s own rights, duties or immunities under this Indenture or
otherwise.

 

SECTION 9.4.                      Effect
of Supplemental Indentures.

 

Upon the execution of any
supplemental indenture under this Article IX,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every
Holder of Securities theretofore or thereafter authenticated and delivered
hereunder appertaining thereto shall be bound thereby.

 

SECTION 9.5.                      Reference
in Securities to Supplemental Indentures.

 

Securities authenticated and
delivered after the execution of any supplemental indenture pursuant to this Article IX may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture.  If the Company
shall so determine, new Securities so modified as to conform, in the opinion of
the Company and the Trustee, to any such supplemental indenture may be prepared
and executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities.

 

SECTION 9.6.                      Notice
of Supplemental Indentures.

 

Promptly after the execution
by the Company and the Trustee of any supplemental indenture pursuant to the
provisions of Section 9.2, the Company shall
give notice to all Holders of Securities of such fact, setting forth in general
terms the substance of such supplemental indenture, in the manner provided in Section 1.6.  

 

62

 

Any
failure of the Company to give such notice, or any defect therein, shall not in
any way impair or affect the validity of any such supplemental indenture.

 

ARTICLE X 

MEETINGS OF HOLDERS OF SECURITIES

 

SECTION
10.1.                    Purposes for
Which Meetings May Be Called.

 

A meeting of Holders of
Securities may be called at any time and from time to time pursuant to this Article X to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities.

 

SECTION
10.2.                    Call, Notice
and Place of Meetings.

 

(1)           The
Trustee may at any time call a meeting of Holders of Securities for any purpose
specified in Section 10.1, to be
held at such time and at such place in the Borough of Manhattan, The City of
New York, as the Trustee shall determine. 
Notice of every meeting of Holders of Securities, setting forth the time
and the place of such meeting and in general terms the action proposed to be
taken at such meeting, shall be given, in the manner provided in Section 1.6, not less than twenty-one (21)
nor more than one hundred eighty (180) days prior to the date fixed for the
meeting.

 

(2)           In
case at any time the Company, pursuant to a Board Resolution, or the Holders of
at least 10% in principal amount of the Outstanding Securities shall have
requested the Trustee to call a meeting of the Holders of Securities for any
purpose specified in Section 10.1,
by written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have mailed the notice of such
meeting within twenty-one (21) days after receipt of such request or shall not
thereafter proceed to cause the meeting to be held as provided herein, then the
Company or the Holders of Securities in the amount specified, as the case may
be, may determine the time and the place in the Borough of Manhattan, The City
of New York, for such meeting and may call such meeting for such purposes by
giving notice thereof as provided in paragraph (1) of this Section 10.2.

 

SECTION
10.3.                    Persons
Entitled to Vote at Meetings.

 

To be entitled to vote at
any meeting of Holders of Securities, a Person shall be (i) a Holder of one or
more Outstanding Securities, or (ii) a Person appointed by an instrument in
writing as proxy for a Holder or Holders of one or more Outstanding Securities
by such Holder or Holders.  The only
Persons who shall be entitled to be present or to speak at any meeting of
Holders shall be the Persons entitled to vote at such meeting and their
counsel, any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.

 

63

 

SECTION
10.4.                    Quorum;
Action.

 

The Persons entitled to vote
a majority in principal amount of the Outstanding Securities shall constitute a
quorum.  In the absence of a quorum
within thirty (30) minutes of the time appointed for any such meeting, the
meeting shall, if convened at the request of Holders of Securities, be
dissolved.  In any other case, the
meeting may be adjourned for a period of not less than ten (10) days as
determined by the chairman of the meeting prior to the adjournment of such
meeting.  In the absence of a quorum at
any such adjourned meeting, such adjourned meeting may be further adjourned for
a period not less than ten (10) days as determined by the chairman of the meeting
prior to the adjournment of such adjourned meeting (subject to repeated
applications of this sentence).  Notice
of the reconvening of any adjourned meeting shall be given as provided in Section 10.2(1), except that such notice need be given only
once not less than five (5) days prior to the date on which the meeting is
scheduled to be reconvened.  Notice of
the reconvening of an adjourned meeting shall state expressly the percentage of
the principal amount of the Outstanding Securities which shall constitute a
quorum.

 

Subject to the foregoing, at
the reconvening of any meeting adjourned for a lack of a quorum, the Persons
entitled to vote 25% in principal amount of the Outstanding Securities at the
time shall constitute a quorum for the taking of any action set forth in the
notice of the original meeting.

 

At a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as aforesaid, any
resolution and all matters (except as limited by the proviso to Section 9.2 and except to the extent Section
11.11 requires a different vote) shall be effectively passed and
decided if passed or decided by the lesser of (i) the Holders of not less than
a majority in principal amount of Outstanding Securities and (ii) the Persons
entitled to vote not less than 66-2/3% in principal amount of Outstanding
Securities represented and entitled to vote at such meeting.

 

Any resolution passed or
decisions taken at any meeting of Holders of Securities duly held in accordance
with this Section 10.4 shall be binding on all
the Holders of Securities whether or not present or represented at the
meeting.  The Trustee shall, in the name
and at the expense of the Company, notify all the Holders of Securities of any
such resolutions or decisions pursuant to Section 1.6.

 

SECTION
10.5.                    Determination
of Voting Rights; Conduct and Adjournment of Meetings.

 

(1)           Notwithstanding
any other provisions of this Indenture, the Trustee may make such reasonable
regulations as it may deem advisable for any meeting of Holders of Securities
in regard to proof of the holding of Securities and of the appointment of
proxies and in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other evidence of the
right to vote, and such other matters concerning the conduct of the meeting as
it shall deem appropriate.  Except as
otherwise permitted or required by any such regulations, the holding of
Securities shall be proved in the manner specified in Section 1.4 and the 

 

64

 

appointment of any proxy
shall be proved in the manner specified in Section
1.4 or by having the signature of the Person executing the proxy
guaranteed by any bank, broker or other eligible institution participating in a
recognized medallion signature guarantee program.

 

(2)           The
Trustee shall, by an instrument in writing, appoint a temporary chairman (which
may be the Trustee) of the meeting, unless the meeting shall have been called
by the Company or by Holders of Securities as provided in Section 10.2(2), in which case the Company
or the Holders of Securities calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. 
A permanent chairman and a permanent secretary of the meeting shall be
elected by vote of the Persons entitled to vote a majority in principal amount
of the Outstanding Securities represented at the meeting.

 

(3)           At
any meeting, each Holder of a Security or proxy shall be entitled to one vote
for each U.S. $1,000 principal amount of Securities held or represented by him;
provided, however, that no vote shall be cast or counted at any meeting in
respect of any Security challenged as not Outstanding and ruled by the chairman
of the meeting to be not Outstanding. 
The chairman of the meeting shall have no right to vote, except as a
Holder of a Security or proxy.

 

(4)           Any
meeting of Holders of Securities duly called pursuant to Section 10.2 at which a quorum is present
may be adjourned from time to time by Persons entitled to vote a majority in
principal amount of the Outstanding Securities represented at the meeting, and
the meeting may be held as so adjourned without further notice.

 

SECTION
10.6.                    Counting Votes
and Recording Action of Meetings.

 

The vote upon any resolution
submitted to any meeting of Holders of Securities shall be by written ballots
on which shall be subscribed the signatures of the Holders of Securities or of
their representatives by proxy and the principal amounts at Stated Maturity and
serial numbers of the Outstanding Securities held or represented by them.  The permanent chairman of the meeting shall
appoint two inspectors of votes who shall count all votes cast at the meeting
for or against any resolution and who shall make and file with the secretary of
the meeting their verified written reports in duplicate of all votes cast at
the meeting.  A record, at least in
duplicate, of the proceedings of each meeting of Holders of Securities shall be
prepared by the secretary of the meeting and there shall be attached to said
record the original reports of the inspectors of votes on any vote by ballot
taken thereat and affidavits by one or more Persons having knowledge of the
facts setting forth a copy of the notice of the meeting and showing that said
notice was given as provided in Section 10.2 and,
if applicable, Section 10.4.  Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting.  Any record so signed and
verified shall be conclusive evidence of the matters therein stated.

 

65

 

ARTICLE XI 

COVENANTS

 

SECTION
11.1.                    Payment of
Principal and Interest.

 

The Company covenants and
agrees that it will duly and punctually pay the principal of, and interest on,
the Securities in accordance with the terms of the Securities and this
Indenture.  The Company will deposit or cause
to be deposited with the Trustee, no later than the opening of business on the
date of the Stated Maturity of any Security or no later than the opening of
business on the due date for any installment of interest, all payments so due,
which payments shall be in immediately available funds on the date of such
Stated Maturity or due date, as the case may be.

 

SECTION
11.2.                    Maintenance of
Offices or Agencies.

 

The Company will maintain in
the Borough of Manhattan, The City of New York, an office or agency where the
Securities may be surrendered for registration of transfer or exchange or for
presentation for payment or for conversion or redemption and where notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served.  The Company will give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency not designated or appointed by the
Trustee.  If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office or the
office or agency of the Trustee in the Borough of Manhattan, The City of New
York.

 

The Company may at any time
and from time to time vary or terminate the appointment of any such agent or
appoint any additional agents for any or all of such purposes; provided,
however, that until all of the Securities have been delivered to the Trustee
for cancellation, or moneys sufficient to pay the principal of, and interest
on, the Securities have been made available for payment and either paid or
returned to the Company pursuant to the provisions of Section 11.3,
the Company will maintain in the Borough of Manhattan, The City of New York, an
office or agency where Securities may be presented or surrendered for payment
and conversion, where Securities may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served.  The Company will give prompt written notice
to the Trustee, and notice to the Holders in accordance with Section 1.6, of the appointment or termination of any such
agents and of the location and any change in the location of any such office or
agency.

 

The Company hereby initially
designates the Trustee as Paying Agent, Security Registrar and Conversion
Agent, and each of the Corporate Trust Office of the Trustee and the office or
agency of the Trustee in the Borough of Manhattan, The City of New York,
located at 101 Barclay Street, 7th Floor, New York, New York 10286, one such
office or agency of the Company for each of the aforesaid purposes.

 

66

 

SECTION
11.3.                    Money for
Security Payments To Be Held in Trust.

 

If the Company shall act as
its own Paying Agent, it will, on or before each due date of the principal of,
or interest on, any of the Securities, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum sufficient to pay the principal,
or interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and the Company will promptly notify
the Trustee of its action or failure so to act.

 

Whenever the Company shall
have one or more Paying Agents, it will, no later than the opening of business
on each due date of the principal of, or interest on, any Securities, deposit
with the Trustee a sum in funds immediately payable on the payment date
sufficient to pay the principal or interest so becoming due, such sum to be
held for the benefit of the Persons entitled to such principal or interest, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of any failure so to act.

 

The Company will cause each
Paying Agent other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section 11.3,
that such Paying Agent will:

 

(1)           hold
all sums held by it for the payment of the principal of, or interest on,
Securities for the benefit of the Persons entitled thereto until such sums
shall be paid to such Persons or otherwise disposed of as herein provided;

 

(2)           give
the Trustee notice of any default by the Company (or any other obligor upon the
Securities) in the making of any payment of principal or interest; and

 

(3)           at
any time during the continuance of any such default, upon the written request
of the Trustee, forthwith pay to the Trustee all sums so held by such Paying
Agent.

 

The Company may at any time,
for the purpose of obtaining the satisfaction and discharge of this Indenture
or for any other purpose, pay, or by Company Order direct any Paying Agent to
pay, to the Trustee all sums held in trust by the Company or such Paying Agent,
such sums to be held by the Trustee upon the same trusts as those upon which
such sums were held by the Company or such Paying Agent; and, upon such payment
by any Paying Agent to the Trustee, such Paying Agent shall be released from
all further liability with respect to such money.

 

Any money deposited with the
Trustee or any Paying Agent, or then held by the Company, in trust for the
payment of the principal of, or interest on, any Security and remaining
unclaimed for two years after such principal or interest has become due and
payable shall be paid to the Company on Company Request, or (if then held by
the Company) shall be discharged from such trust; and the Holder of such
Security shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease.

 

67

 

SECTION
11.4.                    Existence.

 

Subject to Article VIII, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Company shall not be required to preserve any such right or franchise if the
Company shall determine that the preservation thereof is no longer desirable in
the conduct of the business of the Company and that the loss thereof is not
disadvantageous in any material respect to the Holders.

 

SECTION
11.5.                    Maintenance of
Properties.

 

The Company will cause all
properties used or useful in the conduct of its business or the business of any
Significant Subsidiary to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and will cause to be
made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Company may be necessary so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that nothing in this Section 11.5 shall prevent the Company from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct of
its business or the business of any Significant Subsidiary and not
disadvantageous in any material respect to the Holders.

 

SECTION
11.6.                    Payment of
Taxes and Other Claims.

 

The Company will pay or
discharge, or cause to be paid or discharged, before the same may become
delinquent, (i) all taxes, assessments and governmental charges levied or
imposed upon the Company or any Significant Subsidiary or upon the income,
profits or property of the Company or any Significant Subsidiary, (ii) all
claims for labor, materials and supplies which, if unpaid, might by law become
a lien or charge upon the property of the Company or any Significant
Subsidiary, and (iii) all stamps and other duties, if any, which may be imposed
by the United States or any political subdivision thereof or therein in
connection with the issuance, transfer, exchange or conversion of any
Securities or with respect to this Indenture; provided, however, that, in the
case of clauses (i) and (ii), the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim (A) if the failure to do so will not, in the aggregate, have a material
adverse impact on the Company, or (B) if the amount, applicability or validity
is being contested in good faith by appropriate proceedings.

 

SECTION
11.7.                    Registration
and Listing.

 

The Company will effect all
registrations with, and obtain all approvals by, all governmental authorities
that may be necessary under any federal or state law (including the Securities
Act, the Exchange Act and state securities and blue sky laws) before the shares
of Common Stock issuable upon the conversion of the Securities are 

 

68

 

issued
and delivered and qualified or listed as contemplated in the next
sentence.  If the Common Stock is listed
on a Stock Exchange, the Company will give notice to the Holders and the
Trustee of the listing or quotation of such Common Stock with, and the
delisting or lack of quotation of the Common Stock by a Stock Exchange.  The Company has no duty or obligation to list
the Common Stock on a Stock Exchange.

 

SECTION
11.8.                    Statement by
Officers as to Default.

 

The Company shall deliver to
the Trustee, within one hundred twenty (120) days after the end of each fiscal
year of the Company ending after the date hereof, an Officers’ Certificate,
stating whether or not to the best knowledge of the signers thereof the Company
is in default in the performance and observance of any of the terms, provisions
and conditions of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and, if the Company shall be in
default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.

 

The Company will deliver to
the Trustee, forthwith upon becoming aware of any default in the performance or
observance of any covenant, agreement or condition contained in this Indenture,
or any Event of Default, an Officers’ Certificate specifying with particularity
such default or Event of Default and further stating what action the Company
has taken, is taking or proposes to take with respect thereto.

 

Any notice required to be
given under this Section 11.8 shall be delivered to
the Trustee at its Corporate Trust Office.

 

SECTION
11.9.                    Dividends and
Other Payments.

 

Except for federal income
taxes of PawnMart paid by the Company on behalf of PawnMart, the Company will
not permit PawnMart to (i) declare, pay or make any dividend or distribution on
any of the Capital Stock of PawnMart (other than dividends and other
distributions payable in Capital Stock of PawnMart, or split-ups or
reclassifications of Capital Stock of PawnMart and dividends and distributions
paid to and held by the Trustee as Collateral), (ii) apply any of the funds,
property or assets of PawnMart to the purchase, redemption or other retirement
of any common or preferred stock or of any options to purchase or acquire any
such shares of common or preferred stock of PawnMart, or (iii) pay or otherwise
transfer  to the Company any funds,
property or assets of PawnMart (collectively, “Restricted Payments”); provided,
however, the Company may permit PawnMart to make Restricted Payments in any
calendar year to the extent such Restricted Payments do not exceed in the
aggregate $2,000,000.

 

SECTION 11.10.                 Maintenance of Minimum Net Worth of PawnMart.

 

The Company will cause
PawnMart to maintain as of each March 31, June 30, September 30 and December 31
until the principal of and interest on the Securities shall be paid in full
(each a “Measurement Date”) a minimum Net Worth equal to at 

 

69

 

least
fifty percent (50%) of the principal amount of Outstanding Securities as of the
Measurement Date.

 

SECTION 11.11.                 Additional
Shares of Capital Stock of PawnMart.

 

The Company agrees that it
will not permit PawnMart to issue any Capital Stock of PawnMart other than the
Common Stock of PawnMart.

 

SECTION 11.12.                 Resale
of Certain Securities.

 

During the period beginning
on the last date of original issuance of the Securities and ending on the date
that is two years from such date (or such shortened period under Rule 144(k)
under the Securities Act or any successor rule), the Company will not, and will
not permit any of its subsidiaries or other “affiliates” (as defined under Rule
144 under the Securities Act or any successor provision thereto) to, resell (i)
any Securities which constitute “restricted securities” under Rule 144 or (ii)
any securities into which the Securities have been converted under this
Indenture which constitute “restricted securities” under Rule 144, that in
either case have been reacquired by any of them. The Trustee shall have no
responsibility in respect of the Company’s performance of its agreement in the
preceding sentence.

 

SECTION 11.13.                 Waiver
of Certain Covenants.

 

The Company may omit in any
particular instance to comply with any covenant or condition set forth in Article XI (other than a covenant or condition which under Article IX cannot be modified or amended without the consent
of the Holder of each Outstanding Security affected), if before the time for
such compliance the Holders shall, through the written consent of, or the
adoption of a resolution at a meeting of Holders of the Outstanding Securities
at which a quorum is present by, not less than a majority in principal amount of
the Outstanding Securities, either waive such compliance in such instance or
generally waive compliance with such covenant or condition, but no such waiver
shall extend to or affect such covenant or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee or any Paying or
Conversion Agent in respect of any such covenant or condition shall remain in
full force and effect.

 

ARTICLE XII 

REDEMPTION OF SECURITIES

 

SECTION
12.1.                    Right of
Redemption.

 

The Securities may be
redeemed in accordance with the provisions of the form of Securities set forth
in Section 2.2 at any time on or after the
earlier to occur of (i) December 31, 2008 and (ii) the Sale of PawnMart.

 

70

 

SECTION
12.2.                    Applicability
of Article XI.

 

Redemption of Securities at
the election of the Company or otherwise, as permitted by any provision of the
Securities or this Indenture, shall be made in accordance with such provision
and this Article XII.

 

SECTION
12.3.                    Election to
Redeem; Notice to Trustee.

 

The election of the Company
to redeem any Securities shall be evidenced by a Board Resolution.  In case of any redemption at the election of
the Company of any of the Securities, the Company shall, at least forty-five
(45) days prior to the Redemption Date fixed by the Company (unless a shorter
notice shall be satisfactory to the Trustee), notify the Trustee in writing of
such Redemption Date, the principal amount of 
Securities to be redeemed, and whether the Trustee is to deliver the
notice of redemption in accordance with the last paragraph of Section 12.5.

 

SECTION 12.4.                    Selection
by Trustee of Securities To Be Redeemed.

 

If less than all the Securities
are to be redeemed, the particular Securities to be redeemed shall be selected
by the Trustee from the Outstanding Securities not previously called for
redemption, by lot, at random, or by such other method as the Trustee may deem
fair and appropriate.

 

If any Security selected for
partial redemption is converted in part before termination of the conversion
right with respect to the portion of the Security so selected, the converted
portion of such Security shall be deemed (so far as may be) to be the portion
selected for redemption.  Securities
which have been converted during a selection of Securities to be redeemed may
be treated by the Trustee as Outstanding for the purpose of such selection.  The Trustee shall promptly notify the Company
and each Security Registrar in writing of the securities selected for
redemption and, in the case of any Securities selected for partial redemption,
the principal amount thereof to be redeemed.

 

For all purposes of this
Indenture, unless the context otherwise requires, all provisions relating to
the redemption of Securities shall relate, in the case of any Securities
redeemed or to be redeemed only in part, to the portion of the principal amount
of such Securities which has been or is to be redeemed.

 

SECTION 12.5.                    Notice
of Redemption.

 

Notice of redemption shall
be given in the manner provided in Section 1.6 to
the Holders of Securities to be redeemed not less than thirty (30) nor more
than sixty (60) days prior to the Redemption Date, and such notice shall be
irrevocable, except that a redemption in accordance with Section
12.5(7) may be contingent upon the events described therein.

 

All notices of redemption
shall state:

 

(1)           the
Redemption Date,

 

71

 

(2)           the
Redemption Price, and accrued interest to the Redemption Date,

 

(3)           if
less than all Outstanding Securities are to be redeemed, the aggregate
principal amount of Securities to be redeemed and the aggregate principal
amount of Securities which will be outstanding after such partial redemption,

 

(4)           that
on the Redemption Date the Redemption Price, and accrued interest to the
Redemption Date, will become due and payable upon each such Security to be
redeemed, and that interest thereon shall cease to accrue on and after said
date,

 

(5)           the
Conversion Rate, the date on which the right to convert the Securities to be
redeemed will terminate and the places where such Securities may be surrendered
for conversion,

 

(6)           the
place or places where such Securities are to be surrendered for payment of the
Redemption Price and accrued interest, to the Redemption Date, and

 

(7)           if
the event giving rise to a redemption is a Sale of PawnMart prior to December
31, 2008, that the redemption is contingent on the consummation of the Sale of
PawnMart and that if the Sale of PawnMart is not consummated on or before the
Redemption Date, the redemption will be null and void and the Company, the
Trustee and the Holders will not have any further rights or obligations with
respect to the redemption except that each Holder of Securities that converted
all or any part of such Holder’s Securities following notice of redemption from
the Company will have the right to rescind such conversion pursuant to Section 13.2 upon the failure by the
Company to so consummate the Sale of PawnMart.

 

In case of a partial
redemption, the notice shall specify the serial and CUSIP numbers (if any) and
the portions thereof called for redemption and that transfers and exchanges may
occur on or prior to the Redemption Date.

 

Notice of redemption of
Securities to be redeemed at the election of the Company shall be given by the
Company or, at the Company’s written request, by the Trustee in the name of and
at the expense of the Company.  Notice of
redemption of Securities to be redeemed at the election of the Company received
by the Trustee shall be given by the Trustee to each Paying Agent in the name
of and at the expense of the Company.

 

SECTION 12.6.                    Deposit
of Redemption Price.

 

On or prior to the
Redemption Date, the Company shall deposit with the Trustee (or, if the Company
is acting as its own Paying Agent, segregate and hold in trust as provided in Section 11.3) an amount of money (which shall be in
immediately available funds on such Redemption Date) sufficient to pay the
Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest to the Redemption Date on, all the Securities
which are to be redeemed on that date other than any Securities called for
redemption on that date which have been converted prior to the date of such
deposit.

 

72

 

If any Security called for
redemption is converted, any money deposited with the Trustee or so segregated
and held in trust for the redemption of such Security shall (subject to any
right of the Holder of such Security or any Predecessor Security to receive
interest as provided in the last paragraph of Section 3.6)
be paid to the Company on Company Request or, if then held by the Company, shall
be discharged from such trust.

 

If the event giving rise to
a redemption is a Sale of PawnMart prior to December 1, 2008, and the Sale
of PawnMart is not consummated on or before the Redemption Date, any money
deposited with the Trustee or so segregated and held in trust for the
redemption of Securities shall (subject to any right of the Holders of such
Securities or any Predecessor Securities to receive interest as provided in the
last paragraph of Section 3.6) be
paid to the Company on Company Request or, if then held by the Company, shall
be discharged from such trust.

 

SECTION 12.7.                    Securities
Payable on Redemption Date.

 

Notice of redemption having
been given as aforesaid, the Securities so to be redeemed shall, on the
Redemption Date, become due and payable at the Redemption Price therein
specified and from and after such date (except as otherwise provided in the
second to the last paragraph of this Section 12.7)
such Securities shall cease to bear interest. 
Upon surrender of any Security for redemption in accordance with said
notice such Security shall be paid by the Company at the Redemption Price
together with accrued and unpaid interest to the Redemption Date; provided,
however, that installments of interest on Securities whose Stated Maturity is on
or prior to the Redemption Date shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such on the
relevant Record Date according to their terms and the provisions of Section 3.6.

 

If any Security called for
redemption shall not be so paid upon surrender thereof for redemption, the
principal amount of, and, to the extent permitted by applicable law, accrued
interest on such Security shall, until paid, bear interest from the Redemption
Date at a rate of 10% per annum and such Security shall remain convertible
until the Redemption Price of such Security (or portion thereof, as the case
may be) shall have been paid or duly provided for; provided, however, if the
event giving rise to a redemption is a Sale of PawnMart prior to December 31,
2008, and the Sale of PawnMart is not consummated on or before the Redemption
Date, the redemption will be null and void and, subject to Section 12.8,
the Company, the Trustee and the Holders will not have any further rights or
obligations with respect to the redemption, including under this Section 12.7.

 

Any Security which is to be
redeemed only in part shall be surrendered at the Corporate Trust Office or an
office or agency of the Company designated for that purpose pursuant to Section 11.2 (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing), and the Company shall
execute, and the Trustee shall 

 

73

 

authenticate
and make available for delivery to the Holder of such Security without service
charge, a new Security or Securities, of any authorized denomination as
requested by such Holder, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Security so
surrendered.

 

ARTICLE XIII 

CONVERSION OF SECURITIES

 

SECTION 13.1.                    Conversion
Privilege and Conversion Rate.

 

Subject to and upon
compliance with the provisions of this Article XIII,
at the option of the Holder thereof, any Security may be converted into fully
paid and nonassessable shares (calculated as to each conversion to the nearest
1/100th of a share) of Common Stock of the Company at the Conversion Rate,
determined as hereinafter provided, in effect at the time of conversion.  Such conversion right shall expire at the
close of business on December 13, 2014. 
In case a Security or portion thereof is called for redemption at the
election of the Company, such conversion right in respect of the Security, or
portion thereof so called, shall expire at the close of business on the
Business Day prior to the Redemption Date, unless the Company defaults in
making the payment due upon redemption.

 

The rate at which shares of
Common Stock shall be delivered upon conversion (the “Conversion Rate”) shall
be initially 100 shares of Common Stock for each U.S. $1,000 principal amount
of Securities.  The Conversion Rate shall
be adjusted in certain instances as provided in this Article XIII.

 

SECTION 13.2.                    Exercise
of Conversion Privilege.

 

In order to exercise the
conversion privilege, the Holder of any Security to be converted shall
surrender such Security, duly endorsed in blank, at any office or agency of the
Company maintained for that purpose pursuant to Section 11.2,
accompanied by a duly signed conversion notice substantially in the form set
forth in Section 2.4 stating that the Holder
elects to convert such Security or, if less than the entire principal amount
thereof is to be converted, the portion thereof to be converted.  Each Security surrendered for conversion (in
whole or in part) during the Record Date Period shall (except in the case of
any Security or portion thereof which has been called for redemption on a
Redemption Date occurring within such Record Date Period (including any
Securities or portions thereof called for redemption on a Redemption Date that
is a Regular Record Date or an Interest Payment Date, as the case may be)) be
accompanied by payment in New York Clearing House funds or other funds
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of such Security (or part
thereof, as the case may be) being surrendered for conversion.  The interest so payable on such Interest
Payment Date with respect to any Security (or portion thereof, if applicable)
which has been called for redemption on a Redemption Date occurring during the
Record Date Period (including any Securities or portions thereof called for
redemption on a Redemption Date that is a Regular Record Date or Interest
Payment Date, as the case may be), which Security (or 

 

74

 

portion
thereof, if applicable) is surrendered for conversion during the Record Date
Period (or on the last Business Day prior to the Regular Record Date or
Interest Payment Date in the case of any Security (or portion thereof, as the
case may be) called for redemption on a Redemption Date or on such Regular
Record Date or Interest Payment Date, as the case may be) shall be paid to the
Holder of such Security as of such Regular Record Date in an amount equal to
the interest that would have been payable on such Security if such Security had
been converted as of the close of business on such Interest Payment Date.  The interest so payable on such Interest
Payment Date in respect of any Security (or portion thereof, as the case may
be) which has not been called for redemption on a Redemption Date occurring
during the Record Date Period, which Security (or portion thereof, as the case
may be) is surrendered for conversion during the Record Date Period, shall be
paid to the Holder of such Security as of such Regular Record Date in an amount
equal to the interest that would have been payable on such Security if such
Security had been converted as of the close of business on such Interest
Payment Date.  Interest payable in respect
of any Security surrendered for conversion on or after an Interest Payment Date
shall be paid to the Holder of such Security as of the next preceding Regular
Record Date, notwithstanding the exercise of the right of conversion.  Except as provided in this paragraph and
subject to the last paragraph of Section 3.6, no
cash payment or adjustment shall be made upon any conversion on account of any
interest accrued from the Interest Payment Date next preceding the conversion
date, in respect of any Security (or part thereof, as the case may be) surrendered
for conversion, or on account of any dividends on the Common Stock issued upon
conversion.  The Company’s delivery to
the Holder of the number of shares of Common Stock (and cash in lieu of
fractions thereof, as provided in this Indenture) into which a Security is
convertible will be deemed to satisfy the Company’s obligation to pay the
principal amount of the Security.

 

Subject to this Section 13.2, securities shall be deemed to have been
converted immediately prior to the close of business on the day of surrender of
such Securities for conversion in accordance with the foregoing provisions, and
at such time the rights of the Holders of such Securities as Holders shall
cease, and the Person or Persons entitled to receive the Common Stock issuable
upon conversion shall be treated for all purposes as the record holder or
holders of such Common Stock at such time. 
As promptly as practicable on or after the conversion date, the Company
shall issue and deliver to the Trustee, for delivery to the Holder, a
certificate or certificates for the number of full shares of Common Stock
issuable upon conversion, together with payment in lieu of any fraction of a
share, as provided in Section 13.3.

 

The Company shall instruct
the transfer agent of its Common Stock that all shares of Common Stock
delivered upon such conversion of Restricted Securities shall bear a
restrictive legend substantially in the form of the legend required to be set
forth on the Restricted Securities pursuant to Section
3.4(2) and shall be subject to the restrictions on transfer provided
in such legend. Neither the Trustee nor any agent maintained for the purpose of
such conversion shall have any responsibility for the inclusion or content of
any such restrictive legend on such Common Stock.

 

75

 

If a Holder converts all or
any part of such Holder’s Securities following a notice of redemption pursuant
to Section 12.5 with respect to a date of
redemption that is prior to December 31, 2008 in connection with the Sale of
PawnMart, and the Sale of PawnMart is not consummated on or before the
Redemption Date, the Company will (i) promptly provide notice to the
Trustee and to each of the Holders of Securities that converted all or any part
of such Holder’s Securities following notice of redemption from the Company
that the Sale of PawnMart was not consummated and (ii) permit such Holders to
rescind such conversion, by delivering a rescission form accompanying the
notice from the Company to the Trustee and such Holders to any office or agency
of the Company maintained for that purpose and specified in the notice pursuant
to Section 11.2, for
a period of ten (10) days immediately following the delivery of such
notice.  Any such Holders of Securities who
fail to so deliver a properly completed and executed rescission notice on or
before the expiration of such ten (10) day period will be deemed to have
elected to convert such Securities in accordance with this Article XIII.

 

In the case of any Security which
is converted in part only, upon such conversion the Company shall execute and
the Trustee shall authenticate and deliver to the Holder thereof, at the
expense of the Company, a new Security or Securities of authorized
denominations in an aggregate principal amount equal to the unconverted portion
of the principal amount of such Security. 
A Security may be converted in part, but only if the principal amount of
such Security to be converted is any integral multiple of U.S. $1,000 and the
principal amount of such security to remain Outstanding after such conversion
is equal to U.S. $1,000 or any integral multiple of $1,000 in excess thereof.

 

SECTION 13.3.                                                           Fractions
of Shares.

 

No fractional shares of
Common Stock shall be issued upon conversion of any Security or
Securities.  If more than one Security
shall be surrendered for conversion at one time by the same Holder, the number
of full shares which shall be issuable upon conversion thereof shall be
computed on the basis of the aggregate principal amount of the Securities (or
specified portions thereof) so surrendered. 
Instead of any fractional share of Common Stock which would otherwise be
issuable upon conversion of any Security or Securities (or specified portions
thereof), the Company shall calculate and pay a cash adjustment in respect of
such fraction (calculated to the nearest 1/100th of a share) in an amount equal
to the same fraction of the Closing Price Per Share at the close of business on
the day of conversion.

 

SECTION 13.4.                                                           Adjustment
of Conversion Rate.

 

The Conversion Rate shall be
subject to adjustments from time to time as follows:

 

(1)                                 In
case the Company shall pay or make a dividend or other distribution on shares
of Common Stock payable in shares of Common Stock or in any right to acquire
shares of Common Stock for no consideration, the Conversion Rate in effect at
the opening of business on the day following the date fixed for the
determination of shareholders entitled to receive such dividend or other
distribution 

 

76

 

shall be increased by
dividing such Conversion Rate by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding at the close of business on the
date fixed for such determination and the denominator shall be the sum of such
number of shares and the total number of shares constituting such dividend or
other distribution, such increase to become effective immediately after the
opening of business on the day following the date fixed for such determination.  If, after any such date fixed for
determination, any dividend or distribution is not in fact paid, the Conversion
Rate shall be immediately readjusted, effective as of the date the Board of
Directors determines not to pay such dividend or distribution, to the
Conversion Rate that would have been in effect if such determination date had
not been fixed.  For the purposes of this
paragraph (1), the number of shares of Common Stock at any time outstanding shall
not include shares held in the treasury of the Company.  The Company will not pay any dividend or make
any distribution on shares of Common Stock held in the treasury of the Company.

 

(2)                                 In
case outstanding shares of Common Stock shall be subdivided into a greater
number of shares of Common Stock, the Conversion Rate in effect at the opening
of business on the day following the day upon which such subdivision becomes
effective shall be proportionately increased, and, conversely, in case
outstanding shares of Common Stock shall be combined into a smaller number of
shares of Common Stock, the Conversion Rate in effect at the opening of
business on the day following the day upon which such subdivision or
combination becomes effective shall be proportionately reduced, such increase
or reduction, as the case may be, to become effective immediately after the
opening of business on the day following the day upon which such subdivision or
combination becomes effective.

 

(3)                                 No
adjustment in the Conversion Rate shall be required unless such adjustment
(plus any adjustments not previously made by reason of this paragraph (9))
would require an increase or decrease of at least one percent in such rate;
provided, however, that any adjustments which by reason of this paragraph (9)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment.  All
calculations under this Article XIII
shall be made to the nearest cent or to the nearest one-hundredth of a share,
as the case may be.

 

SECTION 13.5.                                                           Notice
of Adjustments of Conversion Rate.

 

Whenever the Conversion Rate
is adjusted as herein provided:

 

(1)                                 the
Company shall compute the adjusted Conversion Rate in accordance with Section 13.4 and shall prepare a
certificate signed by the Chief Financial Officer of the Company setting forth
the adjusted Conversion Rate and showing in reasonable detail the facts upon
which such adjustment is based, and such certificate shall promptly be filed
with the Trustee and with each Conversion Agent; and

 

(2)                                 upon
each such adjustment, a notice stating that the Conversion Rate has been
adjusted and setting forth the adjusted Conversion Rate shall be 

 

77

 

required, and as soon as
practicable after it is required, such notice shall be provided by the Company
to all Holders in accordance with Section 1.6.

 

Neither the Trustee nor any
Conversion Agent shall be under any duty or responsibility with respect to any
such certificate or the information and calculations contained therein, except
to exhibit the same to any Holder of Securities desiring inspection thereof at
its office during normal business hours.

 

SECTION 13.6.                                                           Notice
of Certain Corporate Action.

 

In case:

 

(1)                                 the
Company shall declare a dividend (or any other distribution) on its Common
Stock payable otherwise than exclusively in cash; or

 

(2)                                 the
Company shall authorize the granting to all or substantially all of the holders
of its Common Stock of rights, options or warrants to subscribe for or purchase
any shares of capital stock of any class or of any other rights; or

 

(3)                                 of
any reclassification of the Common Stock, or of any consolidation, merger or
share exchange to which the Company is a party and for which approval of any
stockholders of the Company is required, or of the conveyance, sale, transfer
or lease of all or substantially all of the assets of the Company; or

 

(4)                                 of
the voluntary or involuntary dissolution, liquidation or winding up of the
Company;

 

then the Company shall cause
to be filed at each office or agency maintained for the purpose of conversion
of Securities pursuant to Section 11.2,
and shall cause to be provided to all Holders in accordance with Section 1.6, at least twenty (20) days (or ten (10) days in
any case specified in clause (1) or (2) above) prior to the applicable record
or effective date hereinafter specified, a notice stating (x) the date on which
a record is to be taken for the purpose of such dividend, distribution, rights,
options or warrants, or, if a record is not to be taken, the date as of which
the holders of Common Stock of record to be entitled to such dividend,
distribution, rights, options or warrants are to be determined or (y) the date
on which such reclassification, consolidation, merger, conveyance, transfer,
sale, lease, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities, cash and other property deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, sale, lease, dissolution,
liquidation or winding up.  Neither the
failure to give such notice nor any defect therein shall affect the legality or
validity of the proceedings described in clauses (1) through (4) of this Section 13.6.  If at
the time the Trustee shall not be the Conversion Agent, a copy of such notice
shall also forthwith be filed by the Company with the Trustee.

 

78

 

SECTION 13.7.                                                           Company
to Reserve Common Stock.

 

The Company shall at all
times reserve and keep available, free from preemptive rights, out of its
authorized but unissued Common Stock, for the purpose of effecting the
conversion of Securities, the full number of shares of Common Stock then
issuable upon the conversion of all Outstanding Securities.

 

SECTION 13.8.                                                           Taxes
on Conversions.

 

Except as provided in the
next sentence, the Company will pay any and all taxes and duties that may be
payable in respect of the issue or delivery of shares of Common Stock on
conversion of Securities pursuant hereto. 
The Company shall not, however, be required to pay any tax or duty which
may be payable in respect of any transfer involved in the issue and delivery of
shares of Common Stock in a name other than that of the Holder of the Security
or Securities to be converted, and no such issue or delivery shall be made
unless and until the Person requesting such issue has paid to the Company the
amount of any such tax or duty, or has established to the satisfaction of the
Company that such tax or duty has been paid.

 

SECTION 13.9.                                                           Covenant
as to Common Stock.

 

The Company agrees that all
shares of Common Stock which may be delivered upon conversion of Securities,
upon such delivery, will have been duly authorized and validly issued and will
be fully paid and nonassessable and, except as provided in Section 12.8,
the Company will pay all taxes, liens and charges with respect to the issue
thereof.

 

SECTION 13.10.                                                    Cancellation
of Converted Securities.

 

All Securities delivered for
conversion shall be delivered to the Trustee or its agent to be canceled by or
at the direction of the Trustee, which shall dispose of the same as provided in
Section 3.8.

 

SECTION 13.11.                                                    Provision
in Case of Consolidation, Merger or Sale of Assets.

 

In case of any consolidation
or merger of the Company with or into any other Person, any merger of another
Person with or into the Company (other than a merger which does not result in
any reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock of the Company) or any conveyance, sale, transfer or
lease of all or substantially all of the assets of the Company, the Person
formed by such consolidation or resulting from such merger or which acquires
such assets, as the case may be, shall execute and deliver to the Trustee a
supplemental indenture providing that the Holder of each Security then
Outstanding shall have the right thereafter, during the period such Security
shall be convertible as specified in Section 13.1,
to convert such Security only into the kind and amount of securities, cash and
other property receivable upon such consolidation, merger, conveyance, sale,
transfer or lease by a holder of the number of shares of Common Stock of the
Company into which such Security might have been converted immediately prior to
such consolidation, merger, conveyance, sale, transfer or lease.  Such supplemental 

 

79

 

indenture
shall provide for adjustments which, for events subsequent to the effective
date of such supplemental indenture, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article XIII.  The above provisions of this Section 13.11 shall similarly apply to successive
consolidations, mergers, conveyances, sales, transfers or leases.  Notice of the execution of such a
supplemental indenture shall be given by the Company to the Holder of each
Security as provided in Section 1.6
promptly upon such execution.

 

Neither the Trustee nor any
Conversion Agent shall be under any responsibility to determine the correctness
of any provisions contained in any such supplemental indenture relating either
to the kind or amount of shares of stock or securities, cash or other property
receivable by Holders of Securities upon the conversion of their Securities
after any such consolidation, merger, conveyance, transfer, sale or lease or to
any such adjustment, but may accept as conclusive evidence of the correctness of
any such provisions, and shall be protected in relying upon, an Opinion of
Counsel with respect thereto, which the Company shall cause to be furnished to
the Trustee upon request.

 

SECTION 13.12.                                                    Responsibility
of Trustee for Conversion Provisions.

 

The Trustee and any
Conversion Agent shall not at any time be under any duty or responsibility to
any Holder of Securities to determine whether any facts exist which may require
any adjustment of the Conversion Rate, or with respect to the nature or extent
of any such adjustment when made, or with respect to the method employed, or
herein or in any supplemental indenture provided to be employed, in making the
same, or whether a supplemental indenture need be entered into.  Neither the Trustee nor any Conversion Agent
shall be accountable with respect to the validity or value (or the kind or
amount) of any Common Stock, or of any other securities, cash or other
property, which may at any time be issued or delivered upon the conversion of
any Security; and it or they do not make any representation with respect
thereto.  Neither the Trustee nor any
Conversion Agent shall be responsible for any failure of the Company to make or
calculate any cash payment or to issue, transfer or deliver any shares of
Common Stock or share certificates or securities, cash or other property upon
the surrender of any Security for the purpose of conversion; and the Trustee
and any Conversion Agent shall not be responsible for any failure of the
Company to comply with any of the covenants of the Company contained in this Article XIII.

 

ARTICLE XIV 

SUBORDINATION OF SECURITIES

 

SECTION 14.1.                                                           Securities
Subordinate to Senior Indebtedness.

 

The Company covenants and
agrees, and each Holder of a Security, by its acceptance thereof, likewise covenants
and agrees, that, to the extent and in the manner hereinafter set forth in this
Article XIV (subject to the provisions
of Article V), the indebtedness
represented by the Securities and the payment of the principal of, or interest
on, each and all of the Securities (including, but not limited to, 

 

80

 

the
Redemption Price with respect to the Securities to be called for redemption in
accordance with Article XII), are hereby expressly
made subordinate and subject in right of payment to the prior payment in full
of all Senior Indebtedness.

 

SECTION 14.2.                                                           No
Payment in Certain Circumstances, Payment Over of Proceeds Upon Dissolution,
etc.

 

No payment shall be made
with respect to the principal of, or interest on, the Securities (including,
but not limited to, the Redemption Price with respect to the Securities to be
called for redemption in accordance with Article XII),
except payments and distributions made by the Trustee as permitted by Section 14.9, if a default in the payment of principal or
interest (including a default under any repurchase or redemption obligation) or
other amounts with respect to any Senior Indebtedness occurs and is continuing
(or, in the case of Senior Indebtedness for which there is a period of grace,
in the event of such a default that continues beyond the period of grace, if
any, specified in the instrument or lease evidencing such Senior Indebtedness)
unless and until such default shall have been cured or waived or shall have ceased
to exist.

 

The Company may and shall
resume payments on and distributions in respect of the Securities upon the date
upon which the default is cured or waived or ceases to exist.

 

In the event of (a) any
insolvency or bankruptcy case or proceeding, or any receivership, liquidation,
reorganization or other similar case or proceeding in connection therewith,
relative to the Company or to its creditors, as such, or to its assets, or (b)
any liquidation, dissolution or other winding up of the Company, whether
voluntary or involuntary and whether or not involving insolvency or bankruptcy,
or (c) any assignment for the benefit of creditors or any other marshaling
of assets and liabilities of the Company, then and in any such event the
holders of Senior Indebtedness shall be entitled to receive payment in full of
all amounts due or to become due on or in respect of all Senior Indebtedness in
cash before the Holders of the Securities are entitled to receive any payment
on account of principal of  or interest
on the Securities or on account of the purchase, redemption or other
acquisition of Securities, and to that end the holders of Senior Indebtedness
shall be entitled to receive, for application to the payment thereof, any
payment or distribution of any kind or character, whether in securities, cash
and other property which may be payable or deliverable in respect of the
Securities in any such case, proceeding, dissolution, liquidation or other
winding up or event.

 

In the event that,
notwithstanding the foregoing provisions of this Section 14.2,
the Trustee or the Holder of any Security shall have received any payment or
distribution of assets of the Company of any kind or character, whether in
securities, cash or other property, before all Senior Indebtedness is paid in
full, and if such fact shall, at or prior to the time of such payment or
distribution, have been made known to the Trustee as provided in Section 14.9 or, as the case may be, such Holder, then and
in such event such payment or distribution shall be paid over or delivered
forthwith to the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or 

 

81

 

other
Person making payment or distribution of assets of the Company for application
to the payment of all Senior Indebtedness remaining unpaid, to the extent
necessary to pay all Senior Indebtedness in full, after giving effect to any
concurrent payment or distribution to or for the holders of Senior
Indebtedness.

 

For purposes of this Article XIV only, the words “securities, cash and other
property” shall not be deemed to include shares of capital stock of the Company
as reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, which
shares of stock or securities are subordinated in right of payment to all then
outstanding Senior Indebtedness to substantially the same extent as, or to a
greater extent than, the Securities are so subordinated as provided in this Article XIV.  The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the
conveyance or transfer of its properties and assets substantially as an
entirety to another Person upon the terms and conditions set forth in Article VIII shall not be deemed a dissolution, winding up,
liquidation, reorganization, assignment for the benefit of creditors or
marshaling of assets and liabilities of the Company for the purposes of this Section 14.2 if the Person formed by such consolidation or
into which the Company is merged or which acquires by conveyance or transfer
such properties and assets substantially as an entirety, as the case may be,
shall, as a part of such consolidation, merger, conveyance or transfer, comply
with the conditions set forth in Article VIII.

 

In the event that,
notwithstanding the foregoing, the Company shall make any payment to the
Trustee or the Holder of any Security prohibited by the foregoing provisions of
this Section 14.2, and if such fact shall,
at or prior to the time of such payment, have been made known to the Trustee
or, as the case may be, such Holder, then and in such event such payment shall
be paid over and delivered forthwith to the Company, in the case of the
Trustee, or the Trustee, in the case of such Holder.

 

SECTION 14.3.                                                           Prior
Payment to Senior Indebtedness Upon Acceleration of Securities.

 

In the event of the
acceleration of the Securities because of an Event of Default, no payment or
distribution shall be made to the Trustee or any holder of Securities in
respect of the principal of, or interest on, the Securities (including, but not
limited to, the Redemption Price with respect to the Securities called for
redemption in accordance with Article XII,
except payments and distributions made by the Trustee as permitted by Section 14.9, until all Senior Indebtedness has been paid in
full in cash or other payment satisfactory to the holders of Senior
Indebtedness or such acceleration is rescinded in accordance with the terms of
this Indenture.  If payment of the
Securities is accelerated because of an Event of Default, the Company shall
promptly notify holders of Senior Indebtedness of the acceleration, and the
Trustee shall promptly notify Comerica Bank, as lender under the Credit
Agreement of such acceleration, at the address set forth in the notice from
such lender as being the address to which the Trustee should send its notice
pursuant to this Section 14.3, unless, in each
case, there 

 

82

 

are
no payment obligations of the Company thereunder and all obligations thereunder
to extend credit have been terminated or expired.

 

SECTION 14.4.                                                           Payment
Permitted If No Default.

 

Nothing contained in this Article XIV or elsewhere in this Indenture or in any of the
Securities shall prevent (a) the Company, at any time except during the
pendency of any case, proceeding, dissolution, liquidation or other winding up,
assignment for the benefit of creditors or other marshaling of assets and
liabilities of the Company referred to in Section 14.2,
or during the circumstances referred to in the first paragraph of Section 14.2, or under the conditions described in Section 14.3, from making payments at any time of principal
of or interest on the Securities, or (b) the application by the Trustee of any
money deposited with it hereunder to the payment of or on account of the
principal of or interest on the Securities or the retention of such payment by
the Holders, if, at the time of such application by the Trustee, it did not
have knowledge that such payment would have been prohibited by the provisions
of this Article XIV.

 

SECTION 14.5.                                                           Subrogation
to Rights of Holders of Senior Indebtedness.

 

Subject to the payment in
full of all Senior Indebtedness, the Holders of the Securities shall be
subrogated to the extent of the payments or distributions made to the holders
of such Senior Indebtedness pursuant to the provisions of this Article XIV to the rights of the holders of such Senior
Indebtedness to receive payments and distributions of securities, cash and
other property applicable to the Senior Indebtedness until the principal of and
interest on the Securities shall be paid in full.  For purposes of such subrogation, no payments
or distributions to the holders of the Senior Indebtedness of any securities,
cash or other property to which the Holders of the Securities or the Trustee
would be entitled except for the provisions of this Article XIV,
and no payments over pursuant to the provisions of this Article XIV
to the holders of Senior Indebtedness by Holders of the Securities or the
Trustee, shall, as among the Company, its creditors other than holders of
Senior Indebtedness and the Holders of the Securities, be deemed to be a
payment or distribution by the Company to or on account of the Senior
Indebtedness.

 

SECTION 14.6.                                                           Provisions
Solely to Define Relative Rights.

 

The provisions of this Article XIV are intended solely for the purpose of defining
the relative rights of the Holders of the Securities on the one hand and the
holders of Senior Indebtedness on the other hand.  Nothing contained in this Article XIV or elsewhere in this Indenture or in the
Securities is intended to or shall (i) impair, as among the Company, its
creditors other than holders of Senior Indebtedness and the Holders of the
Securities, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders of the Securities the principal of and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms; or (ii) affect the relative rights against the Company of the
Holders of the Securities and creditors of the Company other than the holders
of Senior Indebtedness; 

 

83

 

or
(iii) prevent the Trustee or the Holder of any Security from exercising all
remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article XIV
of the holders of Senior Indebtedness to receive securities, cash and other
property otherwise payable or deliverable to the Trustee or such Holder.

 

SECTION 14.7.                                                           Trustee
to Effect Subordination.

 

Each Holder of a Security by
its acceptance thereof authorizes and directs the Trustee on its behalf to take
such action as may be necessary or appropriate to effect the subordination
provided in this Article XIV and appoints the
Trustee its attorney-in-fact for any and all such purposes.

 

SECTION 14.8.                                                           No
Waiver of Subordination Provisions.

 

No right of any present or
future holder of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act, in
good faith, by any such holder of any Senior Indebtedness, or by any
non-compliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.

 

Without in any way limiting
the generality of the foregoing paragraph, the holders of Senior Indebtedness
may, at any time and from time to time, without the consent of or notice to the
Trustee or the Holders of the Securities, without incurring responsibility to
the Holders of the Securities and without impairing or releasing the
subordination provided in this Article XIV or
the obligations hereunder of the Holders of the Securities to the holders of
Senior Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Senior Indebtedness, or otherwise amend or supplement in any manner
Senior Indebtedness or any instrument evidencing the same or any agreement
under which Senior Indebtedness is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing
Senior Indebtedness; (iii) release any Person liable in any manner for the collection
of Senior Indebtedness; and (iv) exercise or refrain from exercising any rights
against the Company and any other Person.

 

SECTION 14.9.                                                           Notice
to Trustee.

 

The Company shall give
prompt written notice to the Trustee of any fact known to the Company which
would prohibit the making of any payment to or by the Trustee in respect of the
Securities.  Notwithstanding the
provisions of this Article XIV or
any other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts which would prohibit the making of any
payment to or by the Trustee in respect of the Securities, unless and until the
Trustee shall have received written notice thereof from the Company or a
Representative or a holder of Senior 

 

84

 

Indebtedness
and, prior to the receipt of any such written notice, the Trustee shall be
entitled in all respects to assume that no such facts exist; provided, however,
that if the Trustee shall not have received the notice provided for in this Section 14.9 prior to the date upon which by the terms
hereof any money may become payable for any purpose (including, without
limitation, the payment of the principal of or interest on any Security), then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such money and to apply the same to
the purpose for which such money was received and shall not be affected by any
notice to the contrary which may be received by it at least five (5) Business
Days prior to such date.  Only the
Company or a Representative may give the notice.

 

Notwithstanding anything in
this Article XIV to the contrary, nothing
shall prevent any payment by the Trustee to the Holders of monies deposited
with it pursuant to Section 5.1,
and any such payment shall not be subject to the provisions of Section 14.2 or 14.3.

 

The Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a Representative or a holder of Senior Indebtedness
to establish that such notice has been given by a Representative or a holder of
Senior Indebtedness.  In the event that
the Trustee determines in good faith that further evidence is required with
respect to the right of any Person as a holder of Senior Indebtedness to
participate in any payment or distribution pursuant to this Article XIV, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article XIV,
and if such evidence is not furnished, the Trustee may defer any payment to
such Person pending judicial determination as to the right of such Person to
receive such payment.

 

SECTION 14.10.                                                    Reliance
on Judicial Order or Certificate of Liquidating Agent.

 

Upon any payment or
distribution of assets of the Company referred to in this Article XIV,
the Trustee and the Holders of the Securities shall be entitled to rely upon
any order or decree entered by any court of competent jurisdiction in which
such insolvency, bankruptcy, receivership, liquidation, reorganization,
dissolution, winding up or similar case or proceeding is pending, or a
certificate of the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee for the benefit of creditors, agent or other Person making
such payment or distribution, delivered to the Trustee or to the Holders of
Securities, for the purpose of ascertaining the Persons entitled to participate
in such payment or distribution, the holders of the Senior Indebtedness and
other indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article XIV.

 

85

 

SECTION 14.11.                                                    Trustee
Not Fiduciary for Holders of Senior Indebtedness.

 

The Trustee shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness and
shall not be liable to any such holders if it shall in good faith mistakenly
pay over or distribute to Holders of Securities or to the Company or to any
other Person securities, cash or other property to which any holders of Senior
Indebtedness shall be entitled by virtue of this Article XIV
or otherwise.

 

SECTION 14.12.                                                    Reliance
by Holders of Senior Indebtedness on Subordination Provisions.

 

Each Holder by accepting a
Security acknowledges and agrees that the foregoing subordination provisions
are, and are intended to be, an inducement and a consideration to each holder
of any Senior Indebtedness, whether such Senior Indebtedness was created or
acquired before or after the issuance of the Securities, to acquire and
continue to hold, or to continue to hold, such Senior Indebtedness and such
holder of Senior Indebtedness shall be deemed conclusively to have relied on
such subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Indebtedness, and no amendment or modification
of the provisions contained herein shall diminish the rights of such holders of
Senior Indebtedness unless such holders shall have agreed in writing thereto.

 

SECTION 14.13.                                                    Rights
of Trustee as Holder of Senior Indebtedness; Preservation of Trustee’s Rights.

 

The Trustee in its
individual capacity shall be entitled to all the rights set forth in this Article XIV with respect to any Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.

 

Nothing in this Article XIV shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.7 and
the last paragraph of Section 5.2.

 

SECTION 14.14.                                                    Article
XIII Applicable to Paying Agents.

 

In case at any time any
Paying Agent other than the Trustee shall have been appointed by the Company
and be then acting hereunder, the term “Trustee” as used in this Article XIV shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article XIV in addition to or in
place of the Trustee; provided, however, that Section
14.13 shall not apply to the Company or any Affiliate of the Company
if it or such Affiliate acts as Paying Agent.

 

SECTION 14.15.                                                    Certain
Conversions and Repurchases Deemed Payment.

 

For the purposes of this Article XIV only, (i) the issuance and delivery of junior
securities upon conversion of Securities in accordance with Article XIII shall not be deemed to constitute a payment or
distribution on account of the principal of or interest 

 

86

 

on
Securities or on account of the redemption of Securities and (ii) the payment,
issuance or delivery of cash (except in satisfaction of fractional shares
pursuant to Section 13.3), property or
securities (other than junior securities) upon conversion of a Security shall
be deemed to constitute payment on account of the principal of such
Security.  For the purposes of this Section 14.15, the term “junior securities” means
(a) shares of any stock of any class of the Company and securities into
which the Securities are convertible pursuant to Article XIII
and (b) securities of the Company which are subordinated in right of payment to
all Senior Indebtedness which may be outstanding at the time of issuance or
delivery of such securities to substantially the same extent as, or to a
greater extent than, the Securities are so subordinated as provided in this Article XIV.  Nothing
contained in this Article XIV or
elsewhere in this Indenture or in the Securities is intended to or shall
impair, as among the Company, its creditors other than holders of Senior
Indebtedness and the Holders of the Securities, the right, which is absolute
and unconditional, of the Holder of any Security to convert such Security in
accordance with Article XIII.

 

ARTICLE XV 

HOLDERS LISTS AND REPORTS BY TRUSTEE

AND COMPANY; NON-RECOURSE

 

SECTION 15.1.                                                           Company
to Furnish Trustee Names and Addresses of Holders.

 

The Company will furnish or
cause to be furnished to the Trustee:

 

(1)                                 semi-annually,
not more than fifteen (15) days after the Regular Record Date, a list, in such
form as the Trustee may reasonably require, of the names and addresses of the
Holders of Securities as of such Regular Record Date, and

 

(2)                                 at
such other times as the Trustee may reasonably request in writing, within
thirty (30) days after the receipt by the Company of any such request, a list
of similar form and content as of a date not more than fifteen (15) days prior
to the time such list is furnished; provided, however, that no such list need
be furnished so long as the Trustee is acting as Security Registrar.

 

SECTION 15.2.                                                           Preservation
of Information.

 

(1)                                 The
Trustee shall preserve, in as current a form as is reasonably practicable, the
names and addresses of Holders contained in the most recent list furnished to
the Trustee as provided in Section 15.1
and the names and addresses of Holders received by the Trustee in its capacity
as Security Registrar.  The Trustee may
destroy any list, if any, furnished to it as provided in Section 15.1 upon receipt of a new list so
furnished.

 

(2)                                 After
this Indenture has been qualified under the Trust Indenture Act, the rights of
Holders to communicate with other Holders with respect to their 

 

87

 

rights under this
Indenture or under the Securities, and the corresponding rights, and duties of
the Trustee, shall be as provided by the Trust Indenture Act.

 

(3)                                 Every
Holder of Securities, by receiving and holding the same, agrees with the
Company and the Trustee that neither the Company nor the Trustee nor any agent
of either of them shall be held accountable by reason of any disclosure of
information as to names and addresses of Holders made pursuant to the Trust
Indenture Act.

 

SECTION 15.3.                                                           No
Recourse Against Others.

 

An incorporator or any past,
present or future director, officer, employee or stockholder, as such, of the
Company or any subsidiary shall not have any liability for any obligations of
the Company under the Securities or this Indenture or for any claim based on,
in respect of or by reason of such obligations or their creation.  By accepting a Security, each Holder shall
waive and release all such liability. 
Such waiver and release shall be part of the consideration for the issue
of the Securities.

 

SECTION 15.4.                                                           Reports
by Trustee.

 

(1)                                 After
this Indenture has been qualified under the Trust Indenture Act, the Trustee
shall transmit to Holders such reports concerning the Trustee and its actions
under this Indenture as may be required pursuant to the Trust Indenture Act at
the times and in the manner provided pursuant thereto.

 

(2)                                 After
this Indenture has been qualified under the Trust Indenture Act a copy of each
such report shall, at the time of such transmission to Holders, be filed by the
Trustee with each stock exchange upon which the Securities are listed, with the
Commission and with the Company.  The
Company will notify the Trustee when the Securities are listed on any stock
exchange.

 

SECTION 15.5.                                                           Reports
by Company.

 

After this Indenture has
been qualified under the Trust Indenture Act, the Company shall file with the
Trustee and the Commission, and transmit to Holders, such information, documents
and other reports, and such summaries thereof, as may be required pursuant to
the Trust Indenture Act at the times and in the manner provided pursuant to
such act; provided that any such information, documents or reports required to
be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange
Act shall be filed with the Trustee within fifteen (15) days after the same is
so required to be filed with the Commission.

 

88

 

ARTICLE XVI 

IMMUNITY OF INCORPORATORS, STOCKHOLDERS,

OFFICERS AND DIRECTORS

 

SECTION 16.1.                                                           Indenture
and Securities Solely Corporate Obligations.

 

No recourse for the payment
of the principal of or interest on any Security and no recourse under or upon
any obligation, covenant or agreement of the Company in this Indenture or in
any supplemental indenture or in any Security, or because of the creation of
any indebtedness represented thereby, shall be had against any incorporator,
stockholder, employee, agent, officer, or director or subsidiary, as such,
past, present or future, of the Company or of any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby waived and released as a condition
of, and as a consideration for, the execution of this Indenture and the issue
of the Securities.

 

This instrument may be
executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.

 

IN WITNESS WHEREOF, the
parties hereto have caused this Indenture to be duly executed on December 20,
2004, but effective all as of the day and year first above written.

 

	
   

  	
  XPONENTIAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Dwayne A. Moyers

  
	
   

  	
   

  	
   Dwayne A. Moyers,

  
	
   

  	
   

  	
   Chief Executive Officer

  

 

	
  Attest:

  
	
   

  
	
   

  
	
  Robert W. Schleizer

  	
   

  
	
  Robert W. Schleizer,

  
	
  Chief Financial Officer

  

 

 

	
   

  	
  THE BANK OF NEW YORK TRUST

  
	
   

  	
  COMPANY, N.A.,

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ John C. Stohlmann

  
	
   

  	
   

  	
  John C. Stohlmann, Vice President

  

 

89

 

SCHEDULE I

 

1,000 shares of PawnMart Common StockExhibit 4.2

 

XPONENTIAL, INC.

 

AND

 

THE BANK OF NEW YORK TRUST COMPANY, N.A.,

 

as Trustee

 

 

SUPPLEMENTAL INDENTURE

 

Dated as of October 8, 2004

 

to

 

Indenture

 

Dated as of October 8, 2004

 

 

8% LIMITED RECOURSE SECURED

CONVERTIBLE SUBORDINATED NOTES

DUE DECEMBER 31, 2014

 

 

SUPPLEMENTAL INDENTURE dated as of October 8,
2004, by and between XPONENTIAL INC., a Delaware corporation (the “Company”),
and THE BANK OF NEW YORK TRUST COMPANY, N.A., a national banking association,
as trustee (the “Trustee”).

 

WHEREAS, the
Company has proposed to execute and deliver to the Trustee an Indenture dated
as of October 8, 2004, as it may be amended or supplemented (the “Indenture”),
providing for the issuance by the Company of its 8% Limited Recourse Secured
Convertible Subordinated Notes due December 31, 2014 (the “Notes”); and

 

WHEREAS, the
Indenture will be executed and delivered at such time as the Company delivers
Securities, executed by the Company, to the Trustee, together with a Company
Order for the authentication and delivery of such Securities and other
documentation required to be delivered to the Trustee in accordance with the
Indenture; and

 

WHEREAS, the
Company desires to supplement the Indenture to add the definitions of “Redemption
Notice,” “Sale of Assets of PawnMart” and “Stock Exchange Business Day” to
Section 1.1, to modify the definitions of “Sale of PawnMart” and “‘Uniform
Commercial Code” in Section 1.1, to modify Sections 1.5, 2.2, 3.1, 3.3, 11.10,
and 11.11, to add Section 11.12, to renumber Section 11.12 as Section 11.13,
and to renumber Section 11.13 as Section 11.14, as provided herein; and

 

WHEREAS, this
Supplemental Indenture is being executed and delivered simultaneously with the
execution and delivery of the Indenture; and

 

WHEREAS, the
execution and delivery of this Supplemental Indenture has been authorized by
resolutions of the Board of Directors of the Company; and

 

WHEREAS, all
conditions and requirements necessary to make this Supplemental Indenture a
valid, legal, binding and enforceable instrument in accordance with its terms
have been performed and fulfilled by the parties hereto and the execution and
delivery thereof have been in all respects duly authorized by the parties
hereto.

 

NOW,
THEREFORE, in consideration of the above premises, each party hereby agrees,
for the benefit of the others and for the equal and ratable benefit of the
holders of the Notes, as follows:

 

ARTICLE I 

AMENDMENT

 

Section 1.1.                                Amendment to the
Indenture

 

(1)                                 The first paragraph of the Indenture is
amended in its entirety to read as follows:

 

“INDENTURE
dated as of October 8, 2004, between XPONENTIAL, INC., a corporation duly
organized and existing under the laws of 

 

 

the State of
Delaware, having its principal office at 6400 Atlantic Blvd., Suite 190, Norcross,
Georgia 30071 (the “Company”), and THE BANK OF NEW YORK TRUST COMPANY, N.A., a
national banking association, as Trustee hereunder (the “Trustee”).”

 

(2)                                 Section 1.1 of the Indenture is amended
by the addition of the following definitions:

 

“‘Sale of
Assets of PawnMart’ means the sale of all or substantially all of the assets of
PawnMart.”

 

 “‘Redemption Notice’ has the meaning specified
in Section 2.2.”

 

“‘Stock
Exchange Business Day’ means any day (other than a Saturday or Sunday) on which
a national or other stock exchange or quotation service, such as the NASDAQ
National Market System, the National Association of Securities Dealers’ OTC
Bulletin Board or any similar quotation service maintained by the National
Quotation Bureau, or successor, as the case may be, is open for business.”

 

(3)                                 The definition of “Sale of PawnMart” in
Section 1.1 of the Indenture is amended in its entirety to read as follows:

 

“‘Sale of
PawnMart’ means the occurrence of any one of the following events: (i) the sale
or other transfer of fifty percent or more of the Pledged Shares; (ii) the Sale
of Assets of PawnMart; (iii) the merger, consolidation or other reorganization
of PawnMart with and into another entity, whether or not PawnMart is the
surviving entity, in which the Pledged Shares are converted into shares of the
successor entity or a holding company thereof (representing fifty percent or
less of the voting power of all capital stock thereof immediately after the
merger or consolidation); or (iv) the approval of a plan of complete
liquidation of PawnMart.”

 

(4)                                 The definition of “Uniform Commercial
Code” in Section 1.1 of the Indenture is amended in its entirety to read as
follows:

 

“‘Uniform
Commercial Code’ means the Delaware Uniform Commercial Code as in effect from
time to time.”

 

(5)                                 Section 1.5 of the Indenture is amended
in its entirety to read as follows:

 

“Section 1.5                             Notices,
etc. to Trustee and Company.

 

“Any request,
demand, authorization, direction, notice, consent, election, waiver or other
Act of Holders of Securities or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,

 

2

 

“(1)                           the
Trustee by any Holder of Securities or by the Company shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or
with a Responsible Officer of the Trustee and received at its Corporate Trust
Office.

 

“(2)                           the
Company by the Trustee or by any Holder of Securities shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if in
writing, mailed, first-class postage prepaid, or telecopied and confirmed by
mail, first-class postage prepaid, or delivered by hand or overnight courier,
addressed to the Company at 6400 Atlantic Blvd., Suite 190, Norcross,
Georgia  30071, Attention: Robert W.
Schleizer, or at any other address previously furnished in writing to the
Trustee by the Company.”

 

(6)                                 Section 2.2 of the Indenture is amended
to read in full as follows:

 

“Section 2.2                             Form
of Security.

 

“[FORM OF
FACE]

 

“THE FOLLOWING
LEGEND SHALL APPEAR ON THE FACE OF EACH SECURITY:

 

“THIS SECURITY
AND ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR ANY STATE SECURITIES LAWS IN RELIANCE ON EXEMPTIONS FROM REGISTRATION
PROVIDED THEREBY.  THIS SECURITY AND ANY
COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND OTHER APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

 

“XPONENTIAL, INC.

 

“8% LIMITED RECOURSE SECURED

“CONVERTIBLE SUBORDINATED NOTE

“DUE DECEMBER 31, 2014

 

	
  “$                      

  	
   

  	
  No.                    

  

 

 

“XPONENTIAL,
INC., a corporation duly organized and existing under the laws of the State of
Delaware (the “Company,” which term includes any successor Person under the
Indenture referred to on the 

 

3

 

reverse
hereof), for value received, hereby promises to pay to                              ,
or registered assigns, the principal sum of                     United
States Dollars (U.S. $                  )
(which, taken together with the principal amounts of all other Outstanding
Securities, shall not exceed U.S. $20,000,000 in the aggregate at any time) on
December 31, 2014 and to pay interest thereon, from                    
(the “Issue Date”) or from the most recent Interest Payment Date (as defined
below) to which interest has been paid or duly provided for, monthly in arrears
on the first day of each month (each, an “Interest Payment Date”), commencing
the second full month following the Issue Date, at the 8% per annum, until the
principal hereof is due, and at the rate of 10% per annum on any overdue
principal and, to the extent permitted by law, on any overdue interest.  The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the fifteenth day of the month
(whether or not a Business Day) next preceding such Interest Payment Date.  Except as otherwise provided in the
Indenture, any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Company, notice whereof shall be given to Holders of Securities not less than
ten (10) days prior to the Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any automated
quotation system or securities exchange on which the Securities may be quoted
or listed, and upon such notice as may be required by such exchange, all as
more fully provided in the Indenture. 
Payments of principal shall be made upon the surrender of this Security
at the option of the Holder at the Corporate Trust Office of the Trustee, or at
such other office or agency of the Company as may be designated by it for such
purpose in the Borough of Manhattan, The City of New York, in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts.  Payment of interest on this Security may be
made by United States Dollar check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register.  Holders will be entitled to receive interest
payments by wire transfer in immediately available funds to accounts in the
United States of America if written wire transfer instructions acceptable to
the Trustee have been received by the Trustee not less than fifteen (15) days
prior to the applicable Interest Payment Date. 
Such written instructions shall remain in effect until the Trustee receives
written instructions to the contrary.

 

“The principal
of, and accrued interest on, the Securities and all other amounts payable by
the Company under the Indenture and the 

 

4

 

Securities and
the performance by the Company of its covenants and agreements under the
Securities and the Indenture, are secured by a pledge of all of the Pledged
Shares as provided in the Indenture.

 

“Except for
interest that accrues on the Securities from their respective Issue Dates to
December 31, 2008, any acts of fraud or misrepresentation by the Company in
connection with the issuance of the Securities, and any violations of the
covenants and agreements of the Company set forth in Sections
11.9, 11.10 and 11.11 of Article XI of the Indenture, the Company shall not have any
corporate liability for payment of the principal of, or interest that accrues
on, the Securities, or for any other sums due under the Securities or the
Indenture as a result of an Event of Default thereunder, the Trustee’s and the
Holders’ recourse being limited to the enforcement of their rights and remedies
regarding the Collateral set forth in the Securities and the Indenture.

 

“Except as
specifically provided herein and in the Indenture, the Company shall not be
required to make any payment with respect to any tax, assessment or other
governmental charge imposed by any government or any political subdivision or
taxing authority thereof or therein.

 

“Reference is
hereby made to the further provisions of this Security set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as
if set forth at this place.

 

“Unless the
certificate of authentication hereon has been executed by the Trustee referred
to on the reverse hereof or an Authenticating Agent by the manual signature of
one of their respective authorized signatories, this Security shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.

 

“IN WITNESS
WHEREOF, the Company has caused this Security to be duly executed this                 day
of                   ,
20      .

 

	
   

  	
  XPONENTIAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
					

 

5

 

“[FORM OF
REVERSE]

 

“This Security
is one of a duly authorized issue of securities of the Company designated as
its “8% Limited Recourse Secured Convertible Subordinated Notes due December
31, 2014” (the “Securities”), limited in aggregate principal amount to U.S.
$20,000,000, issued and to be issued under an Indenture dated as of October 8,
2004 and Supplemental Indenture dated as of October 8, 2004 (collectively, the “Indenture”),
between the Company and The Bank of New York Trust Company, N.A., as Trustee (the
“Trustee,” which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Company, the Trustee, the holders of Senior
Indebtedness and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered.  As provided in the Indenture and subject to
certain limitations therein set forth, Securities are exchangeable for a like
aggregate principal amount of Securities of any authorized denominations as
requested by the Holder surrendering the same upon surrender of the Security or
Securities to be exchanged, at the Corporate Trust Office of the Trustee.  The Trustee upon such surrender by the Holder
will issue the new Securities in the requested denominations.

 

“The
Securities are issuable in registered form without coupons in denominations of
$1,000 and integral multiples of $1,000.

 

“No sinking
fund is provided for the Securities.

 

“To secure the
due and punctual payment of the principal of, and interest, if any, on the
Securities and all other amounts payable by the Company under the Securities
and the Indenture and the performance by the Company of its covenants and
agreements under the Securities and the Indenture, when and as the same shall
be due and payable or performable, whether at Maturity, by acceleration, or
otherwise, according to the terms of the Securities and the Indenture, the
Company has granted a security interest in all of the Pledged Shares held by
the Company to the Trustee for the benefit of the Holders of Securities
pursuant to the Indenture.

 

“The
Securities are subject to redemption, in whole or in part, at the option of the
Company at any time on or after the earlier to occur of (i) December 31, 2008
and (ii) the Sale of PawnMart, upon not less than thirty (30) nor more than
sixty (60) days’ notice to the Holders (the “Redemption Notice”) prior to the
Redemption Date at a Redemption Price equal to 100% of the principal amount,
together, in each case, with accrued interest to the Redemption Date; provided,
however, that interest installments on Securities whose Stated Maturity is on
or prior to such 

 

6

 

Redemption
Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture;
provided further, however, if the Closing Price Per Share on the Stock Exchange
Business Day immediately preceding the date of the Redemption Notice is less
than $15.00, the Company will, in connection with such redemption, issue to
each Holder of Securities a warrant to purchase that number of shares of Common
Stock into which the Securities of such Holder are convertible on the
Redemption Date at an exercise price of $10.00 per share, exercisable on or
before the fifth anniversary date of the Redemption Date and otherwise in the
form attached hereto as Exhibit A and by reference made a part hereof.

 

“In the event
of a redemption of the Securities, the Company will not be required (a) to
register the transfer or exchange of Securities for a period of fifteen (15)
days immediately preceding the date notice is given identifying the serial
numbers of the Securities called for such redemption or (b) to register the
transfer or exchange of any Security, or portion thereof, called for
redemption.

 

“In any case
where the due date for the payment of the principal of, or interest on, any
Security or the last day on which a Holder of a Security has a right to convert
his Security shall be, at any Place of Payment or Place of Conversion as the
case may be, a day on which banking institutions at such Place of Payment or
Place of Conversion are authorized or obligated by law or executive order to
close, then payment of principal, or interest, or delivery for conversion of
such Security need not be made on or by such date at such place but may be made
on or by the next succeeding day at such place which is not a day on which
banking institutions are authorized or obligated by law or executive order to
close, with the same force and effect as if made on the date for such payment
or the date fixed for redemption, or by such last day for conversion, and no
interest shall accrue on the amount so payable for the period after such date.

 

“Subject to
and upon compliance with the provisions of the Indenture, the Holder of this
Security is entitled, at his option, at any time on or before the close of
business on December 31, 2014, or in case this Security or a portion hereof is
called for redemption, then in respect of this Security until and including,
but (unless the Company defaults in making the payment due upon redemption) not
after, the close of business on the Business Day prior to the Redemption Date
to convert this Security (or any portion of the principal amount hereof that is
an integral multiple of U.S. $1,000, provided that the unconverted portion of
such principal amount is U.S. $1,000 or any integral multiple of U.S. $1,000 in
excess thereof) into fully paid and nonassessable shares of Common Stock of the
Company at an initial Conversion Rate of 100 shares of Common Stock for each
U.S. $1,000 principal amount of Securities (or at the current 

 

7

 

adjusted
Conversion Rate if an adjustment has been made as provided in the Indenture) by
surrender of this Security, duly endorsed or assigned to the Company or in
blank and, in case such surrender shall be made during the period from the
close of business on any Regular Record Date next preceding any Interest
Payment Date to the opening of business on such Interest Payment Date (except
if this Security or portion thereof has been called for redemption on a
Redemption Date occurring during such period and is surrendered for such
conversion during such period (including any Securities or portions thereof
called for redemption on a Redemption Date that is a Regular Record Date or an
Interest Payment Date, as the case may be)), also accompanied by payment in New
York Clearing House or other funds acceptable to the Company of an amount equal
to the interest payable on such Interest Payment Date on the principal amount
of this Security then being converted, and also the conversion notice hereon
duly executed, to the Company at the Corporate Trust Office of the Trustee, or
at such other office or agency of the Company, subject to any laws or
regulations applicable thereto and subject to the right of the Company to
terminate the appointment of any Conversion Agent (as defined below) as may be
designated by it for such purpose in the Borough of Manhattan, The City of New
York, or at such other offices or agencies as the Company may designate (each a
“Conversion Agent”), provided, further, that if this Security or portion hereof
has been called for redemption on a Redemption Date occurring during the period
from the close of business on any Regular Record Date next preceding any
Interest Payment Date to the opening of business on such succeeding Interest
Payment Date (including any Securities or portions thereof called for
redemption on a Redemption Date that is a Regular Record Date or an Interest
Payment Date, as the case may be) and is surrendered for conversion during such
period (or on the last Business Day prior to the Regular Record Date or
Interest Payment Date in case of any Security (or portion thereof) called for
redemption on a Redemption Date on a Regular Record Date or Interest Payment
Date, as the case may be), then the Holder of this Security on such Regular
Record Date will be entitled to receive the interest accruing hereon from the
Interest Payment Date next preceding the date of such conversion to such
succeeding Interest Payment Date and the Holder of this Security who converts
this Security or a portion hereof during such period shall not be required to
pay such interest upon surrender of this Security for conversion.  Subject to the provisions of the preceding
sentence and, in the case of a conversion after the close of business on the
Regular Record Date next preceding any Interest Payment Date and on or before
the close of business on such Interest Payment Date, to the right of the Holder
of this Security (or any Predecessor Security of record as of such Regular
Record Date) to receive the related installment of interest to the extent and
under the circumstances provided in the Indenture, no cash payment or
adjustment is to be made on conversion for interest accrued hereon from the
Interest Payment Date next preceding the day of conversion, or for dividends on
the Common Stock issued on conversion hereof. 
The 

 

8

 

Company shall
thereafter deliver to the Holder the fixed number of shares of Common Stock
(together with any cash adjustment, as provided in the Indenture) into which
this Security is convertible and such delivery will be deemed to satisfy the
Company’s obligation to pay the principal amount of this Security.  No fractions of shares or scrip representing
fractions of shares will be issued on conversion, but instead of any fractional
interest (calculated to the nearest 1/100th of a share) the Company shall pay a
cash adjustment as provided in the Indenture. 
The Conversion Rate is subject to adjustment as provided in the
Indenture.  In addition, the Indenture
provides that in case of certain consolidations or mergers to which the Company
is a party (other than a consolidation or merger that does not result in any
reclassification, conversion, exchange or cancellation of the Common Stock) or
the conveyance, transfer, sale or lease of all or substantially all of the
property and assets of the Company, the Indenture shall be amended, without the
consent of any Holders of Securities, so that this Security, if then
Outstanding, will be convertible thereafter, during the period this Security
shall be convertible as specified above, only into the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
conveyance, transfer, sale or lease by a holder of the number of shares of
Common Stock of the Company into which this Security could have been converted
immediately prior to such consolidation, merger, conveyance, transfer, sale or
lease.  No adjustment in the Conversion
Rate will be made until such adjustment would require an increase or decrease
of at least one percent of such rate, provided that any adjustment that would
otherwise be made will be carried forward and taken into account in the
computation of any subsequent adjustment.

 

“If a Holder
converts all or any part of such Holder’s Securities following a notice of
redemption from the Company with respect to a date of redemption that is prior
to December 31, 2008 in connection with the Sale of PawnMart, and the Sale of
PawnMart is not consummated on or before the Redemption Date, the Company will
(i) promptly provide notice to the Trustee and to each of the Holders of
Securities that converted all or any part of such Holder’s Securities following
notice of redemption from the Company that the Sale of PawnMart was not
consummated and (ii) permit such Holders to rescind such conversion, by
delivering a rescission form accompanying the notice from the Company to the
Trustee and such Holders to any office or agency of the Company maintained for
that purpose and specified in the notice for a period of ten (10) days
immediately following the delivery of such notice.  Any such Holders of Securities who fail to so
deliver a properly completed and executed rescission notice on or before the
expiration of such ten (10) day period will be deemed to have elected to
convert such Securities.

 

“In the event
of redemption or conversion of this Security in part only, a new Security or
Securities for the unredeemed or unconverted portion hereof will be issued in
the name of the Holder hereof.

 

9

 

“The
indebtedness evidenced by this Security is, to the extent and in the manner
provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness of the Company, and this
Security is issued subject to such provisions of the Indenture with respect
thereto.  Each Holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effect the subordination so provided and (c)
appoints the Trustee his attorney-in-fact for any and all such purposes.

 

“If an Event
of Default shall occur and be continuing, the principal of all the Securities,
together with accrued interest to the date of declaration, may be declared due
and payable in the manner and with the effect provided in the Indenture.  Upon payment (i) of the amount of principal
so declared due and payable, together with accrued interest to the date of
declaration, and (ii) of interest on any overdue principal and, to the extent
permitted by applicable law, overdue interest, all of the Company’s obligations
in respect of the payment of the principal of and interest on the Securities
shall terminate.

 

“Notwithstanding
anything to the contrary contained herein, but without in any manner releasing,
impairing, or otherwise affecting the Securities, the Indenture, or any Lien
securing payment of the Securities, or the validity thereof, neither the
Trustee nor any Holder of the Securities will hold the Company personally
liable for the repayment of the indebtedness evidenced by the Securities or for
any other sums due as a result of any Event of Default under the Securities or
the Indenture or for the payment of any deficiency established after foreclosure
of the security interest in the Collateral or the exercise of any other rights
and remedies granted in the Indenture for the benefit of the Holders with
respect to the Collateral, except to the extent of the Company’s interest in
the Collateral, and the recourse of the Trustee and the Holders of the
Securities for any and all such Events of Default shall be limited to the
enforcement of such rights and remedies with respect to the Collateral as are
set forth in the Securities and the Indenture; provided, however,
notwithstanding the foregoing limitation of liability, the Company shall be
fully liable to the same extent that the Company would be liable absent the
limitation of liability set forth in this paragraph for: (i) interest that
accrues on the Securities from their respective Issue Dates to December 31,
2008, including interest on overdue principal and, to the extent permitted by
law, on overdue interest; (ii) fraud or misrepresentation by the Company in
connection with the issuance of the Securities; (iii) the violation of any
covenant or agreement of the Company set forth in Sections
11.9, 11.10 and 11.11 of Article XI of the Indenture, and (iv) all fees and
expenses due to, and the indemnification of, the Trustee under Sections 5.2 and 7.7 of this
Indenture and all court costs, attorney’s fees and expenses incurred by the
Trustee and the Holders to collect any of the 

 

10

 

foregoing
amounts.  The limitation on liability set
forth herein is not intended as a release or discharge of the indebtedness
evidenced by the Securities, or any portion thereof, but is a limited covenant
not to sue, and such indebtedness shall remain in full force and effect.

 

“The Indenture
permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of
the Holders of the Securities under the Indenture at any time by the Company
and the Trustee with either (a) the written consent of the Holders of not less
than a majority in principal amount of the Securities at the time Outstanding,
or (b) by the adoption of a resolution, at a meeting of Holders of the
Outstanding Securities at which a quorum is present, by the Holders of at least
66-2/3% in aggregate principal amount of the Outstanding Securities represented
and entitled to vote at such meeting. 
The Indenture also contains provisions permitting the Holders of
specified percentages in principal amount of the Securities at the time Outstanding,
on behalf of the Holders of all the Securities, to waive compliance by the
Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. 
Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued in exchange herefore or in lieu hereof
whether or not notation of such consent or waiver is made upon this Security or
such other Security.

 

“As provided
in and subject to the provisions of the Indenture, the Holder of this Security
shall not have the right to institute any proceeding with respect to the
Indenture or for the appointment of a receiver or trustee or for any other remedy
thereunder, unless such Holder shall have previously given the Trustee written
notice of a continuing Event of Default, the Holders of not less than 25% in
principal amount of the Outstanding Securities shall have made written request
to the Trustee to institute proceedings in respect of such Event of Default as
Trustee and offered the Trustee reasonable indemnity and the Trustee shall not
have received from the Holders of a majority in principal amount of the
Securities Outstanding a direction inconsistent with such request, and shall
have failed to institute any such proceeding, for sixty (60) days after receipt
of such notice, request and offer of indemnity. 
The foregoing shall not apply to any suit instituted by the Holder of
this Security for the enforcement of the right to convert this Security as
provided in the Indenture.

 

“As provided
in the Indenture and subject to certain limitations therein set forth, the
transfer of this Security is registrable on the Security Register upon
surrender of this Security for registration of transfer at the Corporate Trust
Office of the Trustee or at such other office or agency of the Company as may
be designated by it for such purpose in the Borough of Manhattan, The City of
New York (which shall 

 

11

 

initially be
an office or agency of the Trustee), or at such other offices or agencies as
the Company may designate, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar duly executed by, the Holder thereof or his attorney duly authorized
in writing, and thereupon one or more new Securities, of authorized
denominations and for the same aggregate principal amount, will be issued to
the designated transferee or transferees by the Security Registrar.  No service charge shall be made for any such
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to recover any tax or other governmental charge payable in
connection therewith.

 

“Prior to due
presentation of this Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in
whose name Security is registered as the owner thereof for all purposes,
whether or not such Security shall be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

 

“No recourse
for the payment of the principal or interest on this Security and no recourse
under or upon any obligation, covenant or agreement of the Company in the
Indenture or  any indenture supplemental
thereto or in any Security, or because of the creation of any indebtedness
represented thereby, shall be had against any incorporator, stockholder, employee,
agent, officer or director or subsidiary, as such, past, present or future, of
the Company or of any successor corporation, either directly or through the
Company or any successor corporation, whether by virtue of any constitution,
statute or rule of law or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of
consideration for the issue hereof, expressly waived and released.

 

“THE INDENTURE
AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA.

 

“All terms
used in this Security which are defined in the Indenture shall have the
meanings assigned to them in the Indenture.

 

“ABBREVIATIONS

 

“The following
abbreviations, when used in the inscription of the face of this Security, shall
be construed as though they were written out in full according to applicable
laws or regulations:

 

12

 

	
  “TEN COM -

  	
   

  	
  as tenants in common

  
	
   

  	
   

  	
   

  
	
  “TEN ENT -

  	
   

  	
  as tenants by the entireties

  
	
   

  	
   

  	
   

  
	
  “JT TEN -

  	
   

  	
  as joint tenants with right of

  
	
   

  	
   

  	
  survivorship and not as tenants

  
	
   

  	
   

  	
  in common

  

 

	
  “UNIF GIFT MIN ACT -

  	
   

  	
   

  
	
   

  	
  (Cust)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Custodian

  	
   

  	
  under Uniform

  
	
   

  	
  (Minor)

  	
   

  
	
   

  	
  Gifts to Minors Act

  	
   

  	
   

  
	
   

  	
   

  	
  (State)

  	
   

  
								

 

“Additional
abbreviations may also be used though not in the above list.

 

 “[FORM OF EXHIBIT A]

 

“EXHIBIT A

 

“THE
SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THESE SECURITIES MAY NOT BE SOLD, MORTGAGED,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY
THAT REGISTRATION IS NOT REQUIRED UNDER APPLICABLE SECURITIES LAWS.

 

	
   

  	
  “WARRANT

  	
   

  	
  NO.
  1000-           

  

 

“To Purchase Shares of Common Stock of

“Xponential, Inc.

“Incorporated Under the Laws of the State of
Delaware

 

“This certifies
that, for value received,                             
(“Holder”), is entitled, subject to the terms and conditions of this warrant
(the “Warrant”), to purchase                    
shares of common stock, par value $0.01 per share (the “Common Stock”), of
Xponential, Inc. (the “Company”), subject to adjustment as provided in this
Warrant, from the Company at the Exercise Price (as defined below) on delivery
of this Warrant to the Company with the exercise form duly executed and payment
of the Exercise Price, in cash or by check payable to the order of the Company,
for all shares of Common Stock purchased.

 

13

 

“The purchase
price per share of Common Stock (the “Exercise Price”) shall be Ten Dollars ($10.00)
per share, as may be adjusted pursuant to the terms of this Warrant.

 

“This Warrant
may be exercised at any time or from time to time, in whole or in part, but not
for less than 1,000 shares of Common Stock at a time (or such lesser number of
shares of Common Stock which may then constitute the maximum number
purchasable, such number being subject to adjustment as provided in this
Warrant) on or after the date of issuance until                        
(the “Expiration Date”).  Such exercise
may occur on any day that is a business day, unless otherwise extended pursuant
to the terms of the Agreement.

 

“In order to
exercise this Warrant, in whole or in part, Holder shall deliver to the Company
at its principal office at 6400 Atlantic Blvd., Suite 190, Norcross, Georgia
30071, or at such other office as shall be designated by the Company pursuant
to this Warrant, (i) a written notice of Holder’s election to exercise this
Warrant which notice shall specify the number of shares of Common Stock to be
purchased pursuant to such exercise, (ii) either cash or a check payable to the
order of the Company in an amount equal to the aggregate purchase price for all
shares of Common Stock to be purchased pursuant to such exercise, and (iii)
this Warrant, properly endorsed.  Upon
receipt thereof, the Company shall, as promptly as practicable, and in any
event within five (5) days thereafter, execute or cause to be executed and
deliver to Holder a certificate or certificates representing the aggregate
number of full shares of Common Stock issuable upon such exercise.  The stock certificate or certificates so
delivered shall be registered in the name of Holder, or such other name as
shall be designated in said notice.

 

“This Warrant
shall be deemed to have been exercised and such certificate or certificates
shall be deemed to have been issued, and Holder or any other person designated
in the notice of exercise shall be deemed to have become a holder of record of
such shares of Common Stock for all purposes, as of the date said notice,
together with said payment and this Warrant, is received by the Company.  Holder shall not, solely by virtue of Holder’s
ownership of this Warrant, be entitled to any rights of a shareholder in the
Company, either at law or in equity; provided, however, Holder shall, for all
purposes, be deemed to have become the holder of record of such shares of
Common Stock on the date on which this Warrant is surrendered to the Company in
accordance with the immediately preceding sentence.  If the exercise is for less than all of the
shares of Common Stock issuable as provided in this Warrant, the Company will
issue a new Warrant of like tenor and date for the balance of such shares of
Common Stock issuable hereunder to Holder. 
Holder, by Holder’s acceptance hereof, consents to and agrees to be
bound by and to comply with all of the provisions of this Warrant.

 

14

 

“This Warrant
and all options and rights hereunder are transferable, as to all or any part of
the number of shares of Common Stock purchasable upon its exercise, by Holder
in person or by a duly authorized attorney on the books of the Company upon
surrender of this Warrant at the principal offices of the Company, together
with the form of transfer authorization attached hereto duly executed, provided
that such transfer complies with all applicable securities laws.  The Company shall deem and treat the
registered Holder of this Warrant at any time as the absolute owner hereof for
all purposes and shall not be affected by any notice to the contrary.  If this Warrant is transferred in part, the
Company shall at the time of surrender of this Warrant issue to the transferee
a Warrant covering the number of shares of Common Stock transferred and to the
transferor a Warrant covering the number of shares not transferred.

 

“In the event
the Company should at any time or from time to time after the date hereof fix a
record date for the split or subdivision of the outstanding shares of Common
Stock or the determination of holders of Common Stock to receive dividends or
other distributions payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (“Common
Stock Equivalents”) without payment of any consideration by such holder for the
additional shares of Common Stock or the Common Stock Equivalents, then, as of
such record date (or the date of such dividend, distribution, split or subdivision
if no record date is fixed), the Exercise Price of this Warrant shall be
appropriately decreased so that the number of shares of Common Stock issuable
upon exercise of this Warrant shall be increased in proportion to such increase
or potential increase of outstanding shares of Common Stock.

 

“If the number
of shares of Common Stock outstanding at any time after the date hereof is
decreased by a combination of the outstanding shares of Common Stock, then,
following the record date of such combination, the Exercise Price for this
Warrant shall be appropriately increased so that the number of shares of Common
stock issuable on exercise hereof shall be decreased in proportion to such
decrease in outstanding shares of Common Stock.

 

“If there is a
capital reorganization, reclassification of the capital stock of the Company,
or any consolidation or merger of the Company with any other corporation or
entity, or if there is a sale or distribution of all or substantially all of
the Company’s property and assets, the Company shall make adequate provision so
that there shall remain and be substituted under this Warrant with respect to
each share issuable upon exercise of this Warrant the stock, securities and/or
assets which would have been issuable or payable in respect of or in exchange
for such issuable shares if Holder had been the owner of such share on the 

 

15

 

applicable
record date.  All other provisions of
this Warrant shall remain in full force and effect.

 

“On the
happening of any event requiring an adjustment of the Exercise Price or the
shares purchasable hereunder, the Company shall immediately give written notice
to Holder stating the adjusted Exercise Price and the adjusted number and kind
of securities or other property purchasable hereunder resulting from the event
and setting forth in reasonable detail the method of calculation and the facts
upon which the calculation is based.

 

“In case at
any time the Company shall propose to: declare any cash dividend upon the
Common Stock, declare any dividend upon the Common Stock payable in stock or
make any special dividend or other distribution to the holders of the Common
Stock, reorganize, or reclassify the capital stock of the Company, or
consolidate, merge or otherwise combine with, or sell all or substantially all
of its assets to, another corporation or entity, or voluntarily or
involuntarily dissolve, liquidate or wind up the affairs of the Company, then,
in any one or more of said cases, the Company shall give to Holder, by
certified mail, (i) at least twenty (20) days’ prior written notice of the date
on which the books of the Company shall close or a record shall be taken for
such dividend or distribution or for determining rights to vote in respect of
any such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, and (ii) in the case of such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, or winding up, at least twenty (20) days’ prior written notice of
the date when the same shall take place. 
Any notice required by clause (i) shall also specify, in the case of any
such dividend or distribution, the date on which the holders of Common Stock
shall be entitled thereto, and any notice required by clause (ii) shall also
specify the date on which the holders of Common Stock shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation, or winding up, as the case may be.

 

“Any notice
required or permitted in this Warrant shall be in writing and may be delivered
personally to the party being given notice or to the person in charge of the
office of the party being given notice or by facsimile, national overnight
courier service or by mail, at the party’s address indicated below, and any
notice will be effective only upon actual receipt by the party.  The addresses of the parties are as follows:

 

	
  “Company:

  	
   

  	
  Xponential, Inc.

  
	
   

  	
   

  	
  6400 Atlantic Blvd., Suite 190

  
	
   

  	
   

  	
  Norcross, Georgia30071

  
	
   

  	
   

  	
  Attention:

  

 

16

 

 

“Holder:

 

 

 

“The names and
addresses of persons to receive notice as stated herein may be changed by
notice given in accordance with this paragraph.

 

“On receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and, in the case of loss, theft or destruction,
on delivery of an indemnity agreement reasonably satisfactory in form and
substance to the Company or, in the case of mutilation, on surrender and
cancellation of this Warrant, the Company at its expense shall execute and
deliver, in lieu of this Warrant, a new warrant of like tenor and amount.

 

“The Company
will not, by amendment of its charter or certificate or articles of
incorporation, through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, through any Board of Director
action or inaction, or any other action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Company, but will at all times in good faith carry out all of the provisions of
this Warrant and take all such action as may be necessary or appropriate in
order to protect against impairment of the rights of Holder herein.

 

“This Warrant
shall bind the respective successors and assigns of the parties.

 

“This Warrant
represents the entire agreement of the parties with respect to the subject
matter hereof and supersedes any prior or contemporaneous oral or written
agreements or understandings.  The terms
of this Warrant may be amended only a written instrument executed by the
Company and Holder.

 

	
  “Dated:

  	
   

  	
   

  	
  XPONENTIAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name

  
	
   

  	
   

  	
   

  	
  Title

  

 

17

 

“Assignment Form

“(To be executed by Holder in order to
transfer the Warrant)

 

“For value
received the undersigned hereby sells, assigns, and transfers to:

 

“Name 

 

Address 

 

Taxpayer ID
No.

 

this Warrant
and irrevocably appoints                            attorney
(with full power of substitution) to transfer this Warrant on the books of the
Company.

 

	
  “Date:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Please sign exactly as name

  
	
   

  	
   

  	
  appears on Warrant)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Taxpayer ID No.

  
	
   

  	
   

  	
   

  
	
  “In the Presence of

  	
   

  	
  Signature guaranteed by

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
						

 

18

 

“Exercise Form

“(To be executed by Holder to purchase

“Common Stock pursuant to the Warrant)

 

“Xponential,
Inc.

“Attention: 

“6400 Atlantic
Blvd., Suite 190

“Norcross,
Georgia   30071

 

“The
undersigned hereby:  (1) irrevocably
subscribes for                    
shares of the Company’s Common Stock pursuant to this Warrant, and encloses
payment of $                
therefor; (2) requests that a certificate for the shares be issued in the name
of the undersigned and delivered to the undersigned at the address below; and
(3) if such number of shares is not all of the shares purchasable hereunder,
that a new Warrant of like tenor for the balance of the remaining shares
purchasable hereunder be issued in the name of the undersigned and delivered to
the undersigned at the address below.

 

	
  “Date:

  	
   

  	
   

  	
   

  
	
   

  	
  (Please sign exactly as name

  
	
   

  	
  appears on Warrant)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address”

  

 

(7)                                 The fourth paragraph of Section 3.1 of
the Indenture is amended to read in full as follows:

 

“The Securities shall be redeemable at the option of the Company as
provided in Article XII and in the form of Security as set forth in Section
2.2.”

 

(8)                                 The first paragraph of Section 3.3 of the
Indenture is amended to read in full as follows:

 

“The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its Chief Executive
Officer, its President, one of its Executive Vice Presidents or one of its Vice
Presidents attested by its Chief Financial Officer, Secretary or one of its
Assistant Secretaries.  Any such
signature may be manual or facsimile.”

 

19

 

(9)                                 Section 11.10 of the Indenture is amended
to read in full as follows:

 

“Section 11.10               Maintenance of Minimum Net Worth of PawnMart.

 

“The Company
will cause PawnMart to maintain as of each March 31, June 30, September 30
and December 31 until the principal of and interest on the Securities shall be
paid in full (each a “Measurement Date”) a minimum Net Worth equal to at least
fifty percent (50%) of the principal amount of Outstanding Securities as of the
Measurement Date; provided, however, following a Sale of Assets of PawnMart, in
connection with which the Convertible Notes are not redeemed by us, the Company
will cause PawnMart to maintain as of each subsequent Measurement Date until
the principal of and interest on the Securities shall be paid in full a minimum
Net Worth equal to the greater of (i) fifty percent (50%) of the principal
amount of Outstanding Securities as of the Measurement Date or (ii) the
proceeds received by the Company from the Sale of Assets of PawnMart, net of
all expenses related to the Sale of Assets of PawnMart.”

 

(10)                          Section 11.11 of the Indenture is amended
to read in full as follows:

 

“Section
11.11               Additional Shares of Capital Stock of PawnMart.

 

“The Company
agrees that it will not permit PawnMart to issue any Capital Stock of PawnMart
other than the issuance of additional Capital Stock of PawnMart to the Company,
and in the event that any such additional Capital Stock is issued to the
Company, such additional Capital Stock shall be deposited and pledged to the
Trustee simultaneously with such issuance as provided in Section 4.1 and such
additional Capital Stock shall constitute Pledged Shares.

 

(11)                          The following Section 11.12 is added to
the Indenture:

 

“Section 11.12              Restrictions on Sales
and Other Transfers.

 

“The Company
will not sell, convey or otherwise dispose of any of the Pledged Shares, nor
will the Company create, incur or permit to exist any pledge, mortgage, lien,
charge, encumbrance or any security interest whatsoever with respect to any of
the Pledged Shares or the proceeds thereof, other than liens on and security
interests in the Pledged Shares created under this Indenture, nor will the
Company permit PawnMart to merge, consolidate or otherwise reorganize with and
into another entity, whether or not PawnMart is the surviving entity, in which
the Pledged Shares are converted into shares of the successor entity or a
holding company thereof.”

 

(12)                          Section 11.12 of the Indenture is
renumbered as Section 11.13.

 

(13)                          Section 11.13 of the Indenture is
renumbered as Section 11.14.

 

20

 

ARTICLE II 

MISCELLANEOUS PROVISIONS

 

Section 2.1.                                Defined Terms

 

For all
purposes of this Supplemental Indenture, except as otherwise defined or unless
the context otherwise requires, terms used in capitalized form in this
Supplemental Indenture and defined in the Indenture have the meanings specified
in the Indenture.

 

Section 2.2.                                Governing Law

 

THIS
SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF
LAWS.

 

Section 2.3.                                Successors

 

This
Supplemental Indenture shall bind the Company and the Trustee and their
respective permitted successors and assigns to the Indenture.

 

Section 2.4.                                Duplicate Originals

 

The parties
may sign any number of copies of this Supplemental Indenture.  Each signed copy shall be an original, but
all of them together shall represent the same agreement.

 

Section 2.5.                                Severability

 

In case any
one or more of the provisions in this Supplemental Indenture or in the Notes
shall be held invalid, illegal or unenforceable, in any respect for any reason,
the validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions shall not in any way be affected or
impaired thereby, it being intended that all of the provisions hereof shall be
enforceable to the full extent permitted by law.

 

Section 2.6.                                Trustee Disclaimer

 

The Trustee
accepts the amendment of the Indenture effected by this Supplemental Indenture,
but on the terms and conditions set forth in the Indenture, including the terms
and provisions defining and limiting the liabilities and responsibilities of
the Trustee, and without limiting the generality of the foregoing, the Trustee
shall not be responsible in any manner whatsoever for or with respect to any of
the recitals or statements contained herein, all of which recitals or
statements are made solely by the Company, or for or with respect to (i) the
validity or sufficiency of this Supplemental Indenture or any of the terms or
provisions hereof, (ii) the proper authorization hereof by the Company by
corporate action or otherwise, (iii) the due execution hereof by the or (iv)
the consequences (direct or indirect and whether deliberate or inadvertent) of
any amendment herein provided for, and the Trustee 

 

21

 

makes no representation with respect to any such matters.  The Trustee shall have no duties or
obligations to either the Company or the Holders of the Notes until the
Indenture and this Supplemental Indenture have been executed and delivered in
accordance with the terms and conditions of the Indenture.  For the avoidance of doubt, although this
Supplemental Indenture and the Indenture are both dated as of October 8,
2004, this Supplemental Indenture and the Indenture are being executed
simultaneously on the date herein below written, which is the first date the
Company has delivered Securities executed by it to the Trustee for
authentication and has delivered a Company Order for the authentication and
deliver of such Securities.

 

 

[The Remainder of This Page is Intentionally
Left Blank]

 

22

 

IN WITNESS
WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly
executed on December 20, 2004 but effective as of the day and year written
above.

 

	
   

  	
  XPONENTIAL, INC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Dwayne A. Moyers

  
	
   

  	
   

  	
   Dwayne A. Moyers,

  
	
   

  	
   

  	
   Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK TRUST

  
	
   

  	
  COMPANY, N.A., as
  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ John C. Stohlmann

  
	
   

  	
   

  	
   John C. Stohlmann, Vice President

  
				

 

23

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00078-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00078-of-00352.parquet"}]]