Document:

exv10w1

 

Exhibit 10.1

AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT

This Amended and Restated Executive Employment Agreement (“Agreement”), dated as of January
23, 2006 (the “Effective Date”), is between Ace Cash Express, Inc., a Texas corporation
(the “Company”), and Jay B. Shipowitz, an individual resident of the State of Texas
(“Executive”). The Company and Executive are collectively referred to in this Agreement as
the “Parties.”

WHEREAS, the Parties are parties to the Executive Employment Agreement dated as of July 1, 2004
(the “Original Agreement”) under which the Company employs Executive; and

WHEREAS, the Parties desire to amend and restate the Original Agreement, and provide for the
Company’s continued employment of Executive (without any interruption), as set forth in this
Agreement.

In consideration of the mutual covenants expressed below and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

	1.	 	Employment. As of the Effective Date, Executive shall be employed by the Company,
and the Company shall employ Executive, on the terms and conditions expressed in this
Agreement.

	 	(a)	 	Duties. Executive’s title and position shall be Chief Executive
Officer of the Company. Executive’s duties shall be those that are described in the
Company’s Bylaws in effect from time to time, those customarily performed by an
executive acting in that capacity, and those that may be designated or assigned to him
from time to time by the Board of Directors of the Company (the “Board”)
consistent with that title and position. Executive’s office shall be at the Company’s
principal place of business in the Dallas-Fort Worth metropolitan area.
	 
	 	(b)	 	Full-Time Employee. Executive shall devote his full business time
(except for permitted time off and absence for any illness or disability), attention,
skills, and best efforts to advance the Company’s business, interests, and affairs,
subject to the direction of the Board, and perform his duties under this Agreement.
Executive may, however, engage in civic, charitable, and professional or trade
activities and serve on the board of directors or board of managers of other entities
if (i) none of those activities or those other entities’ businesses is adverse to the
Company’s interest and (ii) none of those activities or service materially interferes
with the performance of his duties under this Agreement and his other duties to the
Company and its shareholders.

	2.	 	Term. The term of Executive’s employment under this Agreement (the “Term”)
shall be as follows:

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	 	(a)	 	Initial Term. The Term commences on the Effective Date and shall
expire at 11:59 p.m. (Central time) on June 30, 2008, subject to the extension provided
in Section 2(b), unless terminated earlier under Section 5.

	 	(b)	 	Extended Term. On each July 1 during the initial term described in
Section 2(a) or on each July 1 during any subsequent extended term described
below in this Section 2(b), the Term shall be extended, without the need for
any action by either Party, for an additional consecutive 12 months, unless (i)
terminated under Section 5 or (ii) either Party gives written notice to the
other, at least 90 days before the end of that initial term or extended term, that the
notifying Party does not wish to extend the Term. If such a notice of non-extension is
timely given, the Term will expire at the end of the initial term or extended term in
effect at the time of that notice (unless terminated earlier under Section 5).

	3.	 	Compensation.

	 	(a)	 	Base Salary. During the Term the Company shall pay Executive for his
services and performance of his obligations hereunder a base salary, payable in
accordance with the Company’s normal payroll procedures, at the annual rate of
$500,000. Executive’s base salary in effect from time to time, exclusive of any other
compensation under this Agreement, is hereinafter called the “Base Salary.”
The Base Salary will be adjusted from time to time during the Term as necessary to
reflect any increases in Base Salary that are determined by the Compensation Committee
of the Board (the “Committee”) in its sole discretion. The Committee will
review the Base Salary at least annually, no later than the beginning of each fiscal
year of the Company (“Fiscal Year”), during the Term.
	 
	 	(b)	 	Annual Bonus Opportunity. The Company shall afford Executive an
opportunity to receive additional cash compensation, as an incentive bonus, relating to
Executive’s employment under this Agreement for each Fiscal Year during the Term
(“Annual Bonus Opportunity”). The Annual Bonus Opportunity will include a
“target” bonus, based on Executive’s achievement of the objectives or goals established
by the Committee for the applicable Fiscal Year, of an amount equal to 75% of the Base
Salary. The Committee will discuss proposed performance objectives or goals with
Executive, but may establish those objectives or goals in its sole discretion. The
additional cash compensation, however, will not be guaranteed, and the amount of
additional cash compensation earned by Executive (if any) under the terms of the
Annual Bonus Opportunity will depend upon Executive’s level of performance, as
determined by the Committee.

	 	(c)	 	Participation in Benefit Plans; Additional Benefit.

	 	(i)	 	Executive shall be entitled to participate in all employee
benefit plans and arrangements offered generally to active senior executives of
the Company as of the Effective Date, or any other health and insurance,

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	 	 	 	disability, and other welfare benefit plans, or savings, deferred
competition, retirement or pension, or death benefit plans or arrangements
provided or available generally to active executives of the Company with the
title or position of at least Senior Vice President of the Company in effect
from time to time during the Term (collectively, the “Benefit
Plans”). Executive’s participation in any or all of the Benefit Plans,
however, shall be subject to the terms and conditions of the Benefit Plans
as they may hereafter be amended or restated (or replaced or discontinued)
by the Company, including his satisfaction of all applicable eligibility
requirements and vesting provisions of the Benefit Plans and including the
discretion of the Committee or other authorized person or persons
administering any of the Benefit Plans as to the scope of Executive’s
participation; except that (A) Executive’s participation will be on terms no
less favorable than the participation of any other active executive officer
of the Company with the title or position of at least Senior Vice President,
other than as provided in the following clauses (B) and (C), (B) the
exercise of such discretion cannot impair Executive’s benefits described in
clauses (1) and (2) below, and (C) such discretion can extend even to
providing no benefit to Executive under any Benefit Plan described in clause
(3) below. The benefits to Executive under the Benefit Plans shall include
the following, or comparable benefits, from the Company: (1) an annual
automobile allowance equal to $9,000, (2) the payment of all insurance
premiums for participation by Executive and his immediate family named as
dependents in the Company’s medical, dental, vision, disability, and life
insurance Benefit Plans, which includes one or more term life insurance
policies covering Executive, for the benefit of Executive’s designated
beneficiaries, in an amount equal to three times Executive’s Base Salary,
and (3) participation in the Company’s equity-incentive plans for its
employees. Except as necessary for the Company to provide the particular
benefits described in the preceding sentence (or comparable benefits), the
Company shall not have any obligation under this Agreement to continue any
or all of the Benefit Plans. Executive hereby acknowledges receipt of
written plan materials distributed to participants or prospective
participants in the currently effective Benefit Plans.

	 	(ii)	 	Without duplication of the benefits to Executive under
subsection (i) of this Section 3(c), during the Term, Executive shall
also be entitled to the monthly payment of up to $250 in dues for membership in
or use of a local health or social club selected by Executive, or a comparable
personal benefit from the Company.

	 	(d)	 	Special Restricted Stock Compensation.

	 	(i)	 	As of the effective date of the Original Agreement, the Parties
entered into a Restricted Stock Agreement in accordance with and subject to the
terms of the Company’s 1997 Stock Incentive Plan, as amended (the
“Plan”),

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	 	 	 	under which the Company issued and sold to Executive, for $0.01 per share,
50,000 shares of the Company’s Common Stock, $0.01 par value (“Common
Stock”), as a Restricted Stock Award (as defined in the Plan). That
Restricted Stock Agreement was generally in the form approved by the
Committee for annual incentive grants of Restricted Stock Awards, and had
the other terms described in subsection (iii) of this Section 3(d).

	 	(ii)	 	Each time (if ever) during the Term that a Trading Price
Thresholds (as defined below) is first satisfied, the Company will enter into a
Restricted Stock Agreement in accordance with and subject to the Plan, or any
successor employee stock incentive plan (the “Successor Plan”), under
which the Company will issue and sell to Executive, if Executive desires, for
$0.01 per share, (A) 26,000 shares of Common Stock as a Restricted Stock Award
with respect to each of the first three Trading Price Thresholds stated below
and (B) 40,000 shares of Common Stock as a Restricted Stock Award with respect
to each of the last three Trading Price Thresholds stated below. Each such
Restricted Stock Agreement will generally be in the form approved by the
Committee for annual incentive grants of Restricted Stock Awards and will have
the other terms described in subsection (iii) of this Section 3(d).
For this purpose, a “Trading Price Threshold” means the closing price
of a share of Common Stock on The Nasdaq Stock Market (or on a national
securities exchange if the Common Stock is then so listed) first remaining at
or above each of $29.00, $33.00, $37.00, $41.00, $45.00, or $49.00 for any 30
consecutive trading days or any 30 trading days within a
45-consecutive-trading-day period. In addition, unless a Restricted Stock
Award has already been granted because the $49.00 Trading Price Threshold has
been satisfied, upon the earlier of either (x) a change in control or change of
control of the Company as defined in the Restricted Stock Agreement (a
“Change of Control”), or (y) the Company’s entering into a binding
written agreement to effect a transaction that, when consummated, would be a
Change of Control (a “Control Transaction Agreement”), an additional
(i.e., the next) Trading Price Threshold shall be deemed to have been satisfied
for the purpose of the first sentence of this subsection (ii) of this
Section 3(d).

	 	(iii)	 	The Restricted Stock Agreements described above in this
Section 3(d) provided or will provide that (A) if entered into before
July 1, 2006, 15% of the shares subject to the Restricted Stock Award will be
released from forfeiture and transfer restrictions under the Restricted Stock
Agreement (“Vest”) one month after the date of grant, and an additional
17% of those shares will Vest on each anniversary of the date of grant so long
as the conditions set forth therein are satisfied, (B) if entered into on or
after July 1, 2006, the shares subject to the Restricted Stock Awards shall
Vest in equal installments on the date that is one month after the date of
grant and on each July 1 thereafter to (and including) July 1, 2011 (except
that if the date of grant is between June 2 and July 1, the Vesting will occur
on the date that is one month after the date of grant instead of the next July
1) (so

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	 	 	 	that, for example, if a Restricted Stock Award were granted on September 1,
2008, 25% of the shares subject to the Restricted Stock Award would Vest on
October 1, 2008, and an additional 25% of those shares would Vest on each of
July 1, 2009, 2010, and 2011; and, for another example, if a Restricted
Stock Award were granted on June 15, 2009, 50% of the shares subject to the
Restricted Stock Award would Vest on July 15, 2009, and an additional 25% of
those shares would Vest on each of July 1, 2010 and 2011) so long as the
conditions set forth in the Restricted Stock Agreement are satisfied, (C) in
addition to any other events on which the shares subject to the Restricted
Stock Award will or may Vest, if a Change of Control occurs, all of
the shares subject thereto that have not yet Vested shall Vest upon the
occurrence of that Change of Control, (D) if entered into upon a Change of
Control in accordance with clause (x) of the last sentence of subsection
(ii) of this Section 3(d), all of the shares subject to that
Restricted Stock Award will Vest one month after the date of grant, instead
of the maximum five-year period of Vesting that would otherwise apply, or
(E) if entered into upon a Control Transaction Agreement in accordance with
clause (y) of the last sentence of subsection (ii) of this Section
3(d), all of the shares subject to that Restricted Stock Award will Vest
upon the occurrence of the Change of Control contemplated by that Control
Transaction Agreement (as originally entered into or as may be amended or
supplemented), instead of the maximum five-year period of Vesting that would
otherwise apply, but all of the shares subject to that Restricted Stock
Award will be forfeited to the Company if the Change of Control contemplated
by that Control Transaction Agreement (as originally entered into or as may
be amended or supplemented) does not occur within one year after the date of
grant.

	 	(iv)	 	The Company will reserve the 198,000 shares of Common Stock
issuable under subsection (ii) of this Section 3(d) for issuance as
Restricted Stock Awards under the Plan or the Successor Plan.

	 	(v)	 	The numbers of shares of Common Stock to be issued and sold as
one or more Restricted Stock Awards and the Trading Price Threshholds shall be
adjusted to reflect or correspond with any changes in the Common Stock after
the Effective Date by stock split or subdivision, reverse stock split, or stock
combination.

	 	(vi)	 	Nothing in Section 3(c) or this Section 3(d) is
intended to limit the Company’s right to grant options or Restricted Stock
Awards under the Plan or the Successor Plan to Executive. The Committee or the
Board may make such additional grants to Executive under the Plan or the
Successor Plan as it, in its sole discretion, may determine.

	 	(e)	 	Paid Time Off. Executive shall be entitled to at least 20 business
days of paid vacation and time off, in accordance with the Company’s applicable
policies, practices, and procedures in effect from time to time during the Term
(“PTO”),

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	 	 	 	for each Fiscal Year. PTO shall, however, be prorated in any Fiscal Year during
which Executive is employed under this Agreement for less than the entire Fiscal
Year, in accordance with the number of days in that Fiscal Year during which
Executive is so employed.

	 	(f)	 	Directors’ and Officers’ Liability Insurance. The Company will use
commercially reasonable efforts to maintain throughout the Term one or more policies of
directors’ and officers’ liability insurance, in an amount of at least $10 million,
that includes coverage of Executive as an executive officer of the Company.

	 	(g)	 	Tax Withholding. The Company may deduct from any compensation or any
other amount payable to Executive under this Agreement social security (FICA) taxes and
all federal, state, municipal, or other such taxes or governmental charges as may now
be in effect or that may hereafter be enacted or required.

	4.	 	Reimbursement. Executive shall be entitled to reimbursement from the Company, in
accordance with the Company’s relevant policies, practices, and procedures, for all reasonable
business expenses incurred by Executive in performing his duties under this Agreement.

	5.	 	Termination of Employment.

	 	(a)	 	Death. Executive’s employment shall terminate, without the need for
any action by the Company, upon Executive’s death.

	 	(b)	 	Disability. If a Disability (as defined below) of Executive occurs
during the Term, the Company may notify Executive of the Company’s termination of, or
its intention to terminate, Executive’s employment under this Agreement for Disability.
In that event, the Executive’s employment shall terminate effective on the date such
notice of termination is given to Executive or on any later date as may be specified in
such notice (the “Disability Effective Date”). In this Agreement
“Disability” means:

	 	(i)	 	a long-term disability, as defined in the Company’s applicable
Benefit Plan as then in effect; or

	 	(ii)	 	if the Company does not maintain or participate in a disability
plan or policy for the benefit of the Company’s employees, then Executive’s
inability reasonably to perform his duties under this Agreement because of any
medically determinable physical or mental impairment that (A) can reasonably be
expected to result in death or (B) has lasted or can reasonably be expected to
last for at least 90 consecutive days or for at least 90 days in any
120-consecutive-day period. In this circumstance, the existence of a
Disability shall be determined by the Board, in its sole and absolute
discretion, upon receipt of competent medical advice from a

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	 	 	 	qualified physician selected by or acceptable to the Committee or the Board.
In this circumstance, Executive shall, if there is any question about his
Disability, submit to a physical examination by a qualified physician
selected by the Board.

	 	(c)	 	Termination by the Company for Cause. The Company may terminate
Executive’s employment under this Agreement for Cause (as defined below) as follows:

	 	(i)	 	Cause Defined. “Cause” means any of the
following:

	 	(A)	 	Any material breach or violation by Executive
of any of his material obligations under this Agreement or any of the
Company’s material policies (other than as described below in clause
(B), clause (C), or clause (D) of this subsection (i) of Section
5(c) and other than because of a Disability) if that breach or
violation is not cured or remedied within 30 days after the Board’s
written notice to Executive describing that breach or violation;
	 
	 	(B)	 	any act or omission by Executive, other than
one that is inadvertent, that, in the good-faith judgment of the Board,
has had or is having a material adverse impact on the Company’s
business interests or reputation;
	 
	 	(C)	 	Executive is convicted of, or pleads nolo
contendere to any allegation of, fraud, embezzlement, theft, or other
felony (excluding a traffic violation); or
	 
	 	(D)	 	any material breach or violation by Executive
of any of his covenants in Sections 8, 9, and 10 (the
“Restrictive Covenants”); except that if the breach or
violation is or was of any covenant in Section 10, such breach
or violation is also not cured or remedied within 30 days after the
Board’s written notice to Executive describing that breach or
violation.

	 	 	 	“Cause” will not exist, however, solely because of the Company’s
financial performance or results, any decrease in the market price of the
Common Stock, or any general dissatisfaction on the Board’s part with
Executive’s performance.

	 	(ii)	 	Required Notice. A termination for Cause shall be
effective only if the Board gives Executive written notice of termination for
Cause, describing Executive’s acts or omissions that are believed to constitute
Cause.

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	 	(d)	 	Termination by the Company without Cause. The Company may terminate
Executive’s employment under this Agreement without Cause, for any or no reason, before
the expiration of the Term. The expiration of the Term because of the Company’s
written notice of non-extension of the Term under Section 2(b) shall not be
deemed a termination without Cause.
	 
	 	(e)	 	Termination by Executive. Executive may terminate his employment under
this Agreement, for any or no reason, before the expiration of the Term; except that
Executive may not terminate his employment under this Section 5(e) under
circumstances in which the Company:

	 	(i)	 	has given notice of termination of, or notice of its intention
to terminate, Executive’s employment for Cause under Section 5(c), or

	 	(ii)	 	may give notice of termination of, or notice of its intention
to terminate, Executive’s employment for Cause under Section 5(c),
unless (for the purpose of this clause (ii) only) the Company has not given
such notice despite its having had, for over 30 days, actual knowledge of facts
or circumstances that would entitle it to give such notice; provided, however,
that (A) the Company must give notice to Executive of the Company’s
determination to exercise its rights under this clause (ii) within ten days
following Executive’s notice to the Company of Executive’s termination of his
employment under this Agreement, and (B) if Executive challenges the right of
the Company to terminate his employment for Cause under this Agreement pursuant
to this clause (ii), then the Company shall have the burden of proof to show
that the Company only acquired the above actual knowledge during the 30-day
period preceding the date on which Executive’s notice of termination was given.

	 	 	 	Also, the expiration of the Term because of Executive’s written notice of
non-extension of the Term under Section 2(b) shall not be deemed a
termination under this Section 5(e). A termination by Executive under this
Section 5(e) is an “Executive Termination.”

	 	(f)	 	Notice of Termination. Any termination of the Executive’s employment
under this Agreement by the Company or by Executive (other than a termination under
Section 5(a) or a notice of non-extension under Section 2(b)) shall be
communicated by a written notice to the other Party which, in addition to complying
with any other applicable requirement in this Section 5, indicates the specific
termination provision in this Agreement relied upon and specifies the Employment
Termination Date (as defined in Section 5(g)) .

	 	(g)	 	Employment Termination Date. “Employment Termination Date”
means the effective date of termination of the Executive’s employment under this
Agreement, which shall be (i) if Executive’s employment is terminated by his death, the
date of his death, (ii) if the Executive’s employment is terminated

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	 	 	 	because of his Disability, the Disability Effective Date, (iii) if Executive’s
employment is terminated by the Company, the date specified in the notice of
termination, which may in no event be earlier than the date such notice is given,
(iv) if Executive’s employment is terminated by an Executive Termination, the date
specified in the notice of termination, which may not be later than 60 days after
the date on which the notice of termination is given, and (v) if Executive’s
employment is terminated by expiration of the Term because of a notice of
non-extension under Section 2(b), the date on which the Term expires.

	 	(h)	 	Deemed Resignation of Other Positions. Executive agrees that if, upon
termination of his employment under this Agreement, he is a member of the Board or an
officer or a director of any of the Company’s subsidiaries, he will, unless the Parties
otherwise agree, be deemed to have resigned from any or all such other positions
effective as of the Employment Termination Date.

	6.	 	Rights and Obligations upon Termination of Employment.

	 	(a)	 	Termination for Cause. If the Executive’s employment under this
Agreement is terminated by the Company for Cause, then Executive shall be entitled only
to the following:

	 	(i)	 	Any amounts payable to Executive under the terms of any of the
applicable Benefit Plans in effect on the Employment Termination Date; and

	 	(ii)	 	any amounts due but not yet paid to Executive under this
Agreement by the Company.

	 	(b)	 	Termination without Cause; Death; Disability. If Executive’s
employment is terminated by (x) the Company without Cause or as the result of
Executive’s Disability, or (y) Executive’s death, then if Executive is not entitled to
payments or benefits under the Change-in-Control Severance Agreement (as defined below
in Section 6(d)), Executive (or in the case of his death, his estate, heirs, or
legatees) shall be entitled to the following:

	 	(i)	 	The continued payment of an amount equal to Executive’s Base
Salary as of the date immediately preceding the Employment Termination Date for
24 consecutive months following the Employment Termination Date, payable in
accordance with the Company’s normal payroll procedures;

	 	(ii)	 	an amount equal to the annual bonus for the Fiscal Year in
which the employment-termination occurs that the Committee in good faith
determines or estimates (based on Executive’s performance during the Fiscal
Year up to the Employment Termination Date and other factors) that Executive
would have earned (under his Annual Bonus Opportunity), if any, if he had
remained employed for the entire Fiscal Year, prorated for

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the number of days in the Fiscal Year during which Executive was employed,
with such amount to be paid to Executive on the date that the annual bonus
would have otherwise been payable if Executive had remained employed by the
Company;

	 	(iii)	 	either:

	 	(A)	 	except in the case of Executive’s death, if
Executive elects and maintains continued coverage under the
Consolidated Omnibus Benefits Reconciliation Act of 1985 and
corresponding regulations (“COBRA”), then amounts equal to the
premiums paid or payable by Executive for coverage under COBRA for
himself and his eligible covered dependents (if any) for up to 18
consecutive months after the Employment Termination Date and,
thereafter, the continued coverage of Executive under the Company’s
group health or medical plan, or similar coverage arranged for by the
Company, for an additional six consecutive months; except that these
payments and additional coverage shall expire or terminate immediately
upon Executive’s becoming eligible for coverage under another
employer’s benefits plan or policy; or
	 
	 	(B)	 	in the case of Executive’s death, if
Executive’s eligible covered dependents (if any) who are qualified
beneficiaries as the result of his death elect and maintain continued
coverage under COBRA, then amounts equal to the premiums paid or
payable by those dependents for coverage under COBRA for up to 24
consecutive months after the Employment Termination Date;

	 	(iv)	 	except in the case of Executive’s death, the continued payment
to or for the benefit of Executive of amounts equal to (A) the Company’s costs
associated with Executive’s coverage under the Benefit Plans described in
subsection (i) of Section 3(c), except for those benefits to be
continued in accordance with subsection (iii) of this Section 6(b), and
(B) the Company’s payments under subsection (ii) of Section 3(c), in
each case as of the date immediately preceding the Employment Termination Date
for 24 consecutive months following the Employment Termination Date, payable in
accordance with the Company’s normal procedures in effect as of the date
immediately preceding the Employment Termination Date; and
	 
	 	(v)	 	the vesting of all theretofore unvested outstanding stock
options, and the termination of or release from forfeiture and transfer
restrictions on all outstanding restricted stock still subject to such
restrictions, held by Executive on the date immediately preceding the
Employment Termination Date (with this provision being deemed, as necessary, an
amendment to each stock option agreement and restricted stock agreement between
the Parties).

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	 	(c)	 	Executive Termination. If Executive’s employment is terminated by
Executive under an Executive Termination, then if Executive is not entitled to payments
or benefits under the Change-in-Control Severance Agreement, Executive shall be
entitled to the following:

	 	(i)	 	The continued payment of an amount equal to Executive’s Base
Salary as of the date immediately preceding the Employment Termination Date for
18 consecutive months following the Employment Termination Date, payable in
accordance with the Company’s normal payroll procedures;
	 
	 	(ii)	 	if Executive and his eligible covered dependents (if any) who
are qualified beneficiaries as the result of the Executive Termination elect
and maintain continued coverage under COBRA, then amounts equal to the premiums
paid or payable by Executive and those dependents for coverage under COBRA for
up to 18 consecutive months after the Employment Termination Date; except that
these payments shall expire or terminate immediately upon Executive’s becoming
eligible for coverage under another employer’s benefits plan or policy; and
	 
	 	(iii)	 	the continued payment to or for the benefit of Executive of
amounts equal to (A) the Company’s costs associated with Executive’s coverage
under the Benefit Plans described in subsection (i) of Section 3(c),
except for those benefits to be continued in accordance with subsection (ii) of
this Section 6(c), and (B) the Company’s payments under subsection (ii)
of Section 3(c), in each case as of the date immediately preceding the
Employment Termination Date for 18 consecutive months following the Employment
Termination Date, payable in accordance with the Company’s normal procedures in
effect as of the date immediately preceding the Employment Termination Date.

	 	(d)	 	Any payments or reimbursements under Section 6(b) or Section
6(c), whichever is applicable, shall not be deemed the continuation of Executive’s
employment for any purpose. The Company’s obligations under Section 6(b) or
Section 6(c), whichever is applicable, will not negate or reduce (i) any
obligation that the Company may have to Executive or his covered dependents under
COBRA, or (ii) any amounts due but not yet paid to Executive under this Agreement by
the Company. Further, the Company may at any time make a lump-sum payment of all or
any part of the amounts, or the remaining amounts, due to Executive under Section
6(b) or Section 6(c), whichever is applicable. Notwithstanding the
provisions of Section 6(b) or Section 6(c), whichever is applicable, if
Executive is entitled to benefits under the Change-in-Control Executive Severance
Agreement dated as of the effective date of the Original Agreement between the Parties,
as it may hereafter be amended or supplemented and in effect, or any similar
superseding agreement (the “Change-in-Control Severance Agreement”), then
Executive shall be entitled to the benefits under the Change-in-Control Severance

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	 	 	 	Agreement instead of the payments and benefits under Section 6(b) or
Section 6(c), whichever is applicable.
	 
	 	(e)	 	General Release; Compliance with Restrictive Covenants. The payment or
provision of any amounts or benefits under this Section 6 shall be conditioned
upon both (i) the Company’s receipt of an irrevocable Settlement Agreement, General
Release, and Covenant Not to Sue, in substantially the form of Addendum A attached to
this Agreement (the “Release”), that is executed and performed by Executive (or
in the case of Executive’s death, his estate, heirs, or legatees), and (ii) Executive’s
compliance with the Release and the Restrictive Covenants during the applicable time
periods set forth therein. The Company may discontinue or reduce the amounts or
benefits under this Section 6 if the Board reasonably believes, or there is
established by arbitration or by any legal or injunctive proceeding permitted by
Section 11, that there is or has been any breach or violation by Executive of
the Release or any of the Restrictive Covenants (except that if the breach or violation
is or was of any covenant in Section 9, such breach or violation is also not
cured or remedied within 30 days after the Board’s written notice to Executive
describing that breach or violation); and Executive shall not be entitled to any such
amounts or benefits that are not so paid or provided. Any such discontinuance or
reduction shall not preclude the Company from seeking any arbitration award for damages
or any legal or injunctive relief permitted by Section 11.
	 
	 	(f)	 	No Mitigation. Executive shall not be obligated to seek or secure new
employment or to become self-employed after the Employment Termination Date, and except
as stated in Section 6(b) or Section 6(c) (whichever is applicable),
Section 6(e), and Section 11(e), there shall be no offset against any
severance payment or other benefit under this Agreement on account of any remuneration
or benefits from any subsequent employment (including self-employment) that Executive
may obtain after the Employment Termination Date.

	7.	 	No Violation of Other Obligation. Each Party represents and warrants that neither
that Party’s execution, delivery, and performance of this Agreement nor that Party’s
execution, delivery, and performance of any agreement, instrument, or other document or
obligation contemplated under this Agreement will result in a violation of any provision of,
or constitute a default under, any contract, agreement, instrument, or obligation to which
that Party is a party or by which that Party is bound.

	8.	 	Confidential Matters. The Company promises to disclose to Executive, and Executive
acknowledges that in and as a result of his employment with the Company he will receive, have
access to, use, acquire, or add to, Confidential Matters (as defined below).

	 	(a)	 	“Confidential Matters” means, collectively, all information that the
Company or any Subsidiary (as defined below) deems or treats as confidential,
proprietary to it, or its trade secret and all information of any other Person having
any business or commercial relationship with the Company or any Subsidiary that the
Company or any Subsidiary has acknowledged as, or agreed or otherwise become

-12-

 

	 	 	 	obligated to treat as, confidential or proprietary to that other Person or that other Person’s
trade secret. “Confidential Matters” includes all of the following of the
Company and the Subsidiaries: unique business methods and strategies,
processes, confidential or proprietary software, product and design development,
programs and programming codes, pricing methods, operating techniques and practices,
corporate financial information, customer and supplier requirements and other
information, customer and potential customer lists and marketing techniques,
systems, procedures, manuals, confidential reports, protected and protectable
intellectual property, equipment and methods used and preferred by customers and the
fees paid by them, personnel and employee records and information, and compilations
of information, records, and specifications. “Subsidiary” means a
corporation or other entity, whether incorporated or unincorporated, of which at
least a majority of the Voting Securities is owned, directly or indirectly, by the
Company (and for this purpose, “Voting Securities” means securities or
other interests having by their terms ordinary voting power to elect members of the
board of directors of a corporation or individuals serving similar functions for a
noncorporate entity).

	 	(b)	 	As a condition of employment and continued employment, Executive (i) shall keep
confidential all Confidential Matters, (ii) shall not directly or indirectly make
known, divulge, furnish, or reveal to any other Person any Confidential Matters or any
knowledge or information with respect thereto, and (iii) shall not use, or cause or
enable the use of, any Confidential Matters for his personal benefit or the benefit of
any other Person; except, in any case during employment, in the course of Executive’s
performance of his duties to, and in furtherance of the interests of, the Company or
with the Company’s prior written consent. During his employment, Executive shall
comply with all policies and procedures established by the Company, and all reasonable
requests of the Company, to protect Confidential Matters and prevent the improper
disclosure or dissemination of Confidential Matters to, or the misuse of Confidential
Matters by, any other Person.
	 
	 	(c)	 	Executive acknowledges that the Company does not voluntarily disclose
Confidential Matters, but takes precautions to prevent their dissemination and use
except pursuant to suitable safeguards. Executive further acknowledges that
Confidential Matters (i) are secret and not known in the industry, except when
disclosed subject to confidentiality agreements, obligations, or safeguards, (ii) have
been and will be entrusted to Executive because Executive is a fiduciary of the
Company, (iii) have been and will be developed by the Company or Executive for and on
behalf of the Company through substantial expenditures of time, effort, and money and
are and will be used in the Company’s business, (iv) give the Company an opportunity to
obtain an advantage over competitors who do not know or use the Confidential Matters,
and (v) are of such value and nature as to make it reasonable and necessary for
Executive and the Company to protect and preserve the confidentiality of the
Confidential Matters.

-13-

 

	 	(d)	 	Executive acknowledges and agrees that the Confidential Matters are valuable,
special, and unique assets of the Company, the disclosure of which could cause
substantial injury and loss of profits and goodwill to the Company. The Confidential
Matters to be prepared or compiled by Executive or the Company or
furnished to Executive during employment shall be the sole and exclusive property of
the Company and shall not be removed from the Company’s premises except in the
course of Executive’s performance of his duties to, and in furtherance of the
interests of, the Company or with the prior written consent of the Company. Upon
the cessation of employment, all Confidential Matters (in any and all forms and
formats), all documents and items related to Confidential Matters, and all other
property of the Company that Executive may then possess or control shall be returned
to the Company as soon as practicable, and none (including any copies) shall be
retained by Executive.
	 
	 	(e)	 	If Executive is served with any subpoena or other legal process or notice, or
is otherwise requested, to produce or divulge, directly or indirectly, any Confidential
Matters by any Person in any formal or informal proceeding, including any interview,
deposition, administrative or judicial hearing, or trial or arbitration, Executive
shall immediately notify and deliver a copy of the subpoena, process, notice, or
request to the Company. Executive further irrevocably nominates, constitutes, and
appoints the Company (including any attorney retained by the Company) as Executive’s
true and lawful attorney-in-fact, to act in Executive’s name, place, and stead, to do
and perform any act which Executive might perform, including to institute, prosecute,
defend, quash, compromise, settle, arbitrate, release, and dispose of any and all
legal, equitable, administrative or arbitral hearings, actions, suits, attachments,
subpoenas, claims, levies, or other proceedings, or otherwise engage in or defend any
and all litigation in connection with or relating to any request to disclose, directly
or indirectly, any Confidential Matters. Nevertheless, the Company shall be under no
obligation to act as Executive’s attorney-in-fact and will not do so without written
notice to Executive.

	9.	 	Covenants Not to Compete, Solicit, or Interfere. As a material inducement for
Executive’s receipt of, and the Company’s agreement to provide to Executive, the Confidential
Matters, Executive agrees that during his employment with the Company and for a period of 24
consecutive months after the date of cessation of employment (unless that cessation of
employment is the result of a termination by the Company for Cause or an Executive
Termination, in which case the time period shall be 18 consecutive months after the date of
cessation of employment), Executive shall not, directly or indirectly:

	 	(a)	 	(i) engage in, work for, conduct, or manage, in any capacity similar or related
(directly or indirectly) to Executive’s Job Responsibilities (as defined below), any
Competitive Business (as defined below) or any Person that owns or conducts a
Competitive Business, or (ii) invest in or own any interest in any Competitive Business
or any Person that owns or conducts a Competitive Business; except that Executive may
acquire or own, solely as a passive investment, less than five

-14-

 

	 	 	 	percent (5%) of the outstanding securities of any issuer registered under Section 12 of the Exchange Act so
long as Executive is not a member of any control group (within the meaning of the
regulations of the Securities and Exchange Commission) of any such issuer;
	 
	 	(b)	 	employ, hire, engage, or retain, or attempt to employ, hire, engage, or retain,
any other Executive of the Company or any Subsidiary or any Person who was an Executive
of the Company or any Subsidiary within the preceding six months, or solicit, persuade,
influence, or induce, or attempt to solicit, persuade, influence, or induce, any other
Executive of the Company or any Subsidiary to cease or leave his or her employment with
the Company or such Subsidiary; or
	 
	 	(c)	 	solicit, persuade, influence, or induce, or attempt to solicit, persuade,
influence, or induce, (i) any Customer (as defined below) to purchase services or
products from any Competitive Business, or (ii) any Customer or any Vendor (as defined
below) to cease or materially alter such Customer’s or such Vendor’s business or
commercial relationship with the Company or any Subsidiary to the Company’s or such
Subsidiary’s detriment.

In this Agreement, “Job Responsibilities” means any and all of those duties and
responsibilities that were part of Executive’s job or position with the Company or any
Subsidiary within the 24 months preceding the cessation of employment, including each and
all kinds of work, job duties, or job responsibilities directly or indirectly received,
accepted, assigned, delegated, directed, supervised, attempted, performed, undertaken,
accomplished, or conducted by or to Executive (as applicable); “Competitive
Business” means any business that is or would in any way be competitive, directly or
indirectly, with any business conducted by the Company or any Subsidiary anywhere in the
Restricted Territory, if such business is the same as, or substantially similar to, business
conducted by the Company or any Subsidiary during employment; “Restricted Territory”
means, collectively, Dallas County, Texas; each county (or equivalent subdivision) of any
state, district, or territory of the United States of America as to which Executive had
employment responsibilities, including supervisory responsibility, for the Company or any
Subsidiary during his employment; and each county (or equivalent territory) adjacent to any
of the preceding counties (or equivalent territories); “Customer” means (a) during
employment, all customers of the Company or any Subsidiary with whom or which Executive has
or has had any contact within the scope of his employment, and (b) after employment, all
customers of the Company or any Subsidiary with whom or which Executive had any contact
within the scope of his employment at any time during the 24 months preceding the cessation
of employment; and “Vendor” means (a) during employment, all suppliers or providers
of services or products to the Company or any Subsidiary (whether for use by the Company or
any Subsidiary or for sale at any retail location of the Company or any Subsidiary) with
whom or which Executive has or has had any contact within the scope of his employment, and
(b) after employment, all suppliers or providers of services or products to Executive or any
Subsidiary (whether for use by the Company or any Subsidiary or for sale at any retail
location of the Company or any Subsidiary) with whom or which Executive had any contact
within the scope of

-15-

 

his employment at any time during the 24 months preceding the cessation
of employment.

	10.	 	Developments.

	 	(a)	 	Disclosure of Developments. Executive shall promptly disclose to the
Company all inventions, discoveries, improvements, processes, formulas, ideas,
know-how, methods, research, compositions, and other developments, whether or not
patentable or copyrightable, that Executive, by himself or with any other person,
conceives, makes, develops, or acquires during the Term that (i) are or relate to the
properties, assets, or existing or contemplated business or research activities of the
Company, (ii) are suggested by, arise out of, or result from, directly or indirectly,
Executive’s association with the Company, or (iii) arise out of or result from,
directly or indirectly, the use of the Company’s time, labor, materials, facilities, or
other resources (collectively, “Developments”).
	 
	 	(b)	 	Assignment and Cooperation. Executive hereby assigns, transfers, and
conveys to the Company, and hereby agrees to assign, transfer, and convey to the
Company (after as well as during the Term), all of his right and title to and interest
in all Developments. Executive shall, from time to time upon the request of the
Company (after as well as during the Term), execute and deliver any and all instruments
and documents and take any and all other actions that, in the judgment of the Company
or its counsel, are or may be necessary or desirable to document any such assignment,
transfer, and conveyance to the Company or to enable the Company to file and process
applications for, and to acquire, maintain, and enforce, any and all patents,
trademarks, registrations, or copyrights with respect to any of the Developments, or to
obtain any extension, validation, re-issue, continuance, or renewal of any such patent,
trademark, registration, or copyright. The Company will be responsible for the
preparation of any such instrument or document and for the implementation of any such
proceedings and will, in accordance with the Company’s policies, practices, and
procedures, reimburse Executive for all reasonable expenses incurred by him in
complying with this Section 10.

	11.	 	Stipulations; Reformation; Severability; Injunctive Relief.

	 	(a)	 	Stipulations. Executive stipulates and agrees that:

	 	(i)	 	Adequate consideration exists for the Restrictive Covenants;
	 
	 	(ii)	 	The Restrictive Covenants are necessary to insure the
preservation and continuity of the Company’s business and goodwill;
	 
	 	(iii)	 	The time period(s) of the respective Restrictive Covenants are
reasonable temporal restraints;

-16-

 

	 	(iv)	 	The scope of the activities restricted by the Restrictive
Covenants is reasonable; and
	 
	 	(v)	 	The enforcement of any of the Restrictive Covenants will not
interfere with Executive’s livelihood.

	 	(b)	 	Reformation. The Parties hereto intend all provisions of the
Restrictive Covenants to be enforced to the fullest extent permitted by law.
Accordingly, should a court of competent jurisdiction determine that the scope of any
provision of the Restrictive Covenants is too broad to be enforced as written, based on
their duration, geographic limitations, scope of activities, or otherwise, the Parties
intend that the court reform the provision to such narrower scope as it determines to
be reasonable and enforceable. The Parties agree that each of the agreements set forth
in the Restrictive Covenants constitutes a separate agreement independently supported
by good and adequate consideration, shall be severable from the other provisions of
this Agreement, and (with this Section 11) shall survive the expiration or
termination of this Agreement or Executive’s employment under this Agreement.
	 
	 	(c)	 	Severability. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws, (i) such provision
shall be fully severable, (ii) this Agreement shall be construed and enforced as if
such illegal, invalid, or unenforceable provision never constituted a part of this
Agreement, and (iii) the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal, invalid, or unenforceable
provision or by its severance from this Agreement. Furthermore, in lieu of such
illegal, invalid, or unenforceable provision, there shall be added as part of this
Agreement a provision as similar in its terms to such illegal, invalid, or
unenforceable provision as may be possible and be legal, valid, and enforceable.
	 
	 	(d)	 	Injunctive Relief. Executive acknowledges the difficulty in
forecasting damages arising from the breach of any of the Restrictive Covenants and
that the Company may be irreparably harmed thereby. Therefore, Executive agrees that
the Company shall be entitled to elect to enforce each of the Restrictive Covenants by
means of injunctive relief or an order of specific performance and that such remedy
shall be available in addition to all other remedies available at law or in equity to
the Company, including the recovery of damages from Executive’s agents or affiliates
involved in such breach.
	 
	 	(e)	 	Restoration of Equity Severance. Executive acknowledges and agrees
that the Restrictive Covenants are material terms of his relationship with the Company
under this Agreement, not only during his employment, but also thereafter.
Accordingly, Executive agrees that, after the Employment Termination Date, if he fails
to comply with, or breaches or violates, any of the Restrictive Covenants (and, with
respect to any of the covenants in Section 9 only, such noncompliance or breach
or violation continues after the 30-day notice and cure period provided 

-17-

 

	 	 	 	for in Section 6(e)), in any case as reasonably determined by the Board, irrespective
of whether the Restricted Covenants are enforced or sought to be enforced in an action
or a proceeding between or involving the Parties, then:

	 	(i)	 	all theretofore unexercised Severance-Vested Options (as
defined below) then held by Executive shall be void and non-exercisable;
	 
	 	(ii)	 	all shares of Common Stock acquired by exercise of
Severance-Vested Options then held by Executive, reduced by the Tax Effect (as
defined below), shall be transferred to the Company;
	 
	 	(iii)	 	all shares of Common Stock that were Severance-Vested
Restricted Stock (as defined below) then held by Executive, reduced by the Tax
Effect, shall be transferred to the Company; and
	 
	 	(iv)	 	if Executive has sold, transferred, or otherwise disposed of
any shares of Common Stock acquired by exercise of Severance-Vested Options or
any shares of Common Stock that were Severance-Vested Restricted Stock,
Executive shall pay to the Company an amount equal to (A) in the case of shares
acquired by exercise of Severance-Vested Options, the excess of the fair market
value of those shares on the date of sale, transfer, or other disposition over
the exercise or option price paid by Executive to acquire those shares, reduced
by the Tax Effect, and (B) in the case of shares of Common Stock that were
Severance-Vested Restricted Stock, the fair-market value of the shares of
Common Stock on the Employment Termination Date or the fair market
value of the shares of Common Stock on the date of sale, transfer, or other disposition by
Executive, whichever is greater, reduced by the Tax Effect.

Executive agrees to execute and deliver such documents as may be required to effect
the foregoing. In this Section 11(e), “Severance-Vested Options”
are those outstanding stock options granted to Executive on or after the effective
date of the Original Agreement and held by Executive on the date immediately
preceding the Employment Termination Date the vesting of which is accelerated under
subsection (v) of Section 6(b); “Severance-Vested Restricted Stock”
are those shares of restricted stock granted to Executive on or after the effective
date of the Original Agreement and held by Executive on the date immediately
preceding the Employment Termination Date that are released from forfeiture and
transfer restrictions under subsection (v) of Section 6(b); and the “Tax
Effect” means the excess, if any, of (1) all federal and state income taxes paid
or payable by Executive because of, as applicable, the exercise of Severance-Vested
Options, the lapse or release of forfeiture restrictions on the Severance-Vested
Restricted Stock, the transfer or disposition of shares of Common Stock acquired by
exercise of Severance-Vested Options (including to the Company under this
Section 11(e)), or the transfer or disposition of shares of Common Stock
that were Severance-Vested Restricted Stock (including to the Company under this
Section 11(e)), over (2) all deductions and other federal and state income
tax benefits

-18-

 

realized or realizable by Executive because of, as applicable, the
transfer or disposition of shares of Common Stock acquired by exercise of
Severance-Vested Options (including to the Company under this Section 11(e))
or the transfer or disposition of shares of Common Stock that were Severance-Vested
Restricted Stock (including to the Company under this Section 11(e)), as reasonably
determined (in each case) by the Company’s independent tax accountant or advisor
(and assuming Executive’s timely payment of all required taxes due). For the
purpose of determining any shares of Common Stock that Executive may retain, and not
transfer to the Company under clause (ii) or clause (iii) of this Section
11(e), each share will be valued at the fair-market value of a share of Common
Stock at either the date of Executive’s failure to comply with, or breach or
violation of, the Restrictive Covenant (after the expiration of the notice and cure
period, if applicable) that triggers the obligation to transfer shares to the
Company or the date of the transfer to the Company under this Section 11(e),
whichever is greater.

	12.	 	Dispute Resolution; Arbitration.

	 	(a)	 	Judicial Disputes. Any dispute or question arising out of or relating
to any of the Restrictive Covenants or any claim by Executive for workers’ compensation
benefits or unemployment compensation benefits (a “Judicial Dispute”) shall be
resolved by proceedings before any court of proper jurisdiction in accordance with this
Agreement.
	 
	 	(b)	 	Arbitration Provisions. Any and all disputes or questions arising out
of our relating to this Agreement or any and all rights and obligations hereunder,
other than Judicial Disputes (collectively, “Disputes”), between or involving
the Parties shall be resolved by final and binding arbitration in Dallas, Texas, under
the National Rules for the Resolution of Employment Disputes of the American
Arbitration Association (“AAA”), as modified below in this Section
12(b) (the “Arbitration Procedure”).

	 	(i)	 	Except only for Judicial Disputes, the Arbitration Procedure
covers all legal and equitable claims arising out of or relating to Executive’s
employment or the termination of employment under this Agreement, including
claims for compensation or benefits; claims for breach of any agreement or
covenant, whether expressed or implied; tort claims; claims for wrongful
discharge; claims of discrimination (including race, color, sex, sexual
orientation or preference, religion, national origin, age, marital status,
handicap or disability, veteran or citizenship status); claims of retaliation;
claims of sexual harassment; and claims for violation of any federal, state, or
local government statute, regulation, or ordinance.
	 
	 	(ii)	 	The arbitrator shall be selected by mutual agreement of the
Parties, if possible. If the Parties fail to reach agreement upon appointment
of an arbitrator within 30 days following receipt by one Party of the other

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	 	 	 	Party’s notice of desire to arbitrate, the arbitrator shall be selected from
a panel or panels of persons submitted by the AAA. The selection process
shall be that which is set forth in the applicable rules of the AAA, except
that if the Parties fail to select an arbitrator from one or more panels
within 15 days after the first panel is submitted to the Parties by the AAA,
then the AAA shall have the power to make an appointment.
	 
	 	(iii)	 	Each Party shall share equally the fees and expenses of the
arbitrator and of the AAA.
	 
	 	(iv)	 	At least 30 days before the arbitration hearing, each Party
shall give the other a brief summary of its claims and defenses, and a list of
documents and the names and addresses of witnesses on which it intends to rely,
and shall permit reasonable access to those documents and individuals.
Additional discovery may be available on application to the arbitrator, based
on a showing of substantial need. The Federal Rules of Procedure shall apply
to discovery and evidentiary matters as part of the arbitration.
	 
	 	(v)	 	IN DECIDING THE SUBSTANCE OF THE CLAIMS AND DEFENSES, THE
ARBITRATOR SHALL APPLY THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS (EXCLUDING
ANY CHOICE-OF-LAW PRINCIPLES THAT MIGHT CALL FOR THE APPLICATION OF SOME OTHER
STATE’S LAW). The arbitrator shall have the same power to award damages and to
direct remedies, including equitable remedies like injunctive relief, as a
court sitting in the same jurisdiction.
	 
	 	(vi)	 	The arbitrator’s determination or award shall be final and
binding on the Parties, and judgment upon that determination or award may be
enforced in court. Except as provided in Section 12(a), the
Arbitration Procedure bars litigation in any court by either Party of any claim
that could be arbitrated under this Arbitration Procedure. However, either
Party has the right to move in court to compel arbitration or to confirm and
enforce an arbitrator’s determination or award under this Arbitration
Procedure.
	 
	 	(vii)	 	The implementation of this Arbitration Procedure should not be
construed as preventing, limiting or delaying either the Company from taking
disciplinary action, including immediate discharge, in circumstances that the
Company deems appropriate in its sole discretion or Executive from terminating
his employment in accordance with the terms of this Agreement.

	13.	 	Successors and Assigns; Survival of Rights and Obligations.

	 	(a)	 	Binding Agreement; Executive’s Personal Agreement. This Agreement
shall be binding upon and inure to the benefit of Executive and his heirs and legal

-20-

 

	 	 	 	representatives and the Company and its successors and assigns. Executive’s rights
and obligations under this Agreement are personal and may not be assigned or
transferred in whole or in part by Executive (except that his rights may be
transferred upon his death by will, trust, or the laws of intestacy).
	 
	 	(b)	 	The Company’s Successor. The Company will require any successor to all
or substantially all of the business and assets of the Company (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place; except
that no such assumption and agreement will be required if the successor is bound by
operation of law to perform this Agreement. In this Agreement, the “Company”
shall include any successor to the Company’s business and assets that assumes and
agrees to perform this Agreement (either by agreement or by operation of law).
	 
	 	(c)	 	Survival. The respective rights and obligations of the Parties under
this Agreement (including Sections 6 and 8 through 15) shall survive the
expiration or termination of the Term to the extent necessary to give full effect to
those rights and obligations.

	14.	 	Additional Obligations. During and after the Term, Executive shall, upon reasonable
notice from the Company, furnish the Company with such information as may be in Executive’s
possession, and cooperate with the Company as may reasonably be requested by the Company, in
connection with any legal or governmental proceedings in which the Company or any of its
affiliates is or may become a party. During the Term, the reimbursement of Executive’s
expenses shall be governed by Section 4; after the Term, the Company shall reimburse
Executive for his reasonable expenses in fulfilling his obligations under this Section
14.

	15.	 	Miscellaneous.

	 	(a)	 	Notices. Any notice, consent, demand, request, approval, or other
communication to be given under this Agreement by one Party to the other
(“Notice”) must be in writing and must be either (i) personally delivered, (ii)
mailed by registered or certified mail, postage prepaid with return receipt requested,
(iii) delivered by same-day or overnight courier service, or (iv) delivered by
facsimile transmission, in any event to the address or number set forth below or to
such other address or number as may be designated by either or both of the Parties from
time to time in accordance with this Section 15(a):

	 	 	 
	If to the Company:

	 	Ace Cash Express, Inc.
	 

	 	Attention: General Counsel
	 

	 	1231 Greenway Drive
	 

	 	Suite 600
	 

	 	Irving, Texas 75038

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	 	Facsimile: (972) 582-1426
	 
	 	 
	If to Executive:

	 	At the address beneath Executive’s signature
hereto.

	 	 	 	Notices delivered personally or by courier service shall be deemed given and
received as of actual receipt. Notices mailed as described above shall be deemed
given and received three business days after mailing or upon actual receipt,
whichever is earlier. Notices delivered by facsimile transmission shall be deemed
given and received upon receipt by the sender of the transmission confirmation.
	 
	 	(b)	 	Entire Agreement. This Agreement, including Addendum A (which is an
integral part of this Agreement), supersedes the Original Agreement and any and all
other agreements and understandings of any kind, either oral or written, between the
Parties with respect to the subject matter of this Agreement and contains all of the
covenants and agreements between the Parties with respect to the subject matter of this
Agreement; except that this Agreement does not affect or negate any currently effective
stock option agreement or restricted stock agreement between the Parties entered into
under the Plan or the Change-in-Control Severance Agreement.
	 
	 	(c)	 	Modification. Except as stated in the next sentence, no change or
modification of this Agreement shall be valid or binding upon the Parties, nor shall
any waiver of any term or condition be so binding, unless the change or modification or
waiver is in writing and signed by the Parties. Executive acknowledges that the
Company may from time to time establish, maintain, and distribute employee handbooks or
policy manuals, and officers or other representatives of the Company may make written
or oral statements relating to personnel policies and procedures. Such handbooks,
manuals, and statements are intended only for general guidance and shall not be deemed
to change or modify this Agreement or to create any obligations of the Company to
Executive under this Agreement.
	 
	 	(d)	 	GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN NEGOTIATED,
EXECUTED, AND DELIVERED AT, AND SHALL BE DEEMED TO HAVE BEEN MADE IN, DALLAS COUNTY,
TEXAS. THIS AGREEMENT SHALL BE GOVERNED BY, ENFORCED UNDER, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. AS PART OF THE CONSIDERATION FOR THIS
AGREEMENT, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF
BUSINESS OF EXECUTIVE, EXECUTIVE HEREBY CONSENTS AND AGREES THAT THE COURTS IN DALLAS
COUNTY, TEXAS, SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY JUDICIAL DISPUTES
BETWEEN THE PARTIES OR OTHER MATTERS EXPRESSLY PERMITTED BY THIS AGREEMENT TO BE
LITIGATED IN A COURT. EXECUTIVE EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT AND HEREBY WAIVES ANY

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	 	 	 	OBJECTION WHICH EXECUTIVE MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE, OR FORUM NON CONVENIENS.
	 
	 	(e)	 	Counterparts. This Agreement may be executed in counterparts, each of
which constitutes an original, but all of which constitute one document.
	 
	 	(f)	 	Gender. Whenever the context requires, words in this Agreement
denoting gender shall include the masculine, feminine, and neuter.
	 
	 	(g)	 	Estate. If Executive dies during his employment hereunder, any amounts
due him from the Company under this Agreement as of the date of his death shall be paid
to his estate, heirs, or legatees.
	 
	 	(h)	 	Waiver of Breach. Any waiver by a Party of a breach of any provision
of this Agreement by the other Party shall not operate or be construed as a waiver of
any other or any subsequent breach.
	 
	 	(i)	 	Certain Defined Terms. As used in this Agreement, (i) “Person”
means an individual or any corporation, partnership, trust, unincorporated association,
or other legal entity, whether acting in an individual, fiduciary, or other capacity,
and any government, court, or other governmental agency, (ii) “include” and
“including” shall not denote or signify any limitation, (iii) “business
day” means any Monday through Friday other than any such weekday on which the
executive offices of the Company are closed, and (iv) “Section” is a reference
to a Section in this Agreement, unless otherwise stated, and (v) “affiliate” of
a Person means any other Person controlling, controlled by, or under common control
with that first Person (and for this purpose, “control” and correlative terms
mean the power to direct the management of the business and affairs of a Person). In
addition, the use herein of “annual” or “monthly” (or similar terms) to
indicate a measurement period shall not itself be deemed to grant rights to Executive
for employment or compensation for such period.
	 
	 	(j)	 	Captions and Section Headings. Captions and Section or subsection
headings used herein are for convenience only and are not a part of this Agreement and
shall not be used in any construction of this Agreement.

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	 	(k)	 	Expenses. The Company shall bear all of its expenses, including the
fees and expenses of its counsel, incurred in its negotiating and preparing this
Agreement. The Company will pay or reimburse Executive for all of his reasonable
expenses, including the reasonable fees and expenses of his counsel, incurred in
Executive’s negotiating and preparing of this Agreement.

     IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above
written.

	 	 	 	 	 	 	 	 	 
	The Company:	 	ACE CASH EXPRESS, INC.
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ WALTER E. EVANS
	 	 	 	 	 
	 

	 	 	 	Printed Name:
	 	Walter E. Evans	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	Title: Senior Vice President and
General Counsel
	 
	Executive:	 	/s/ JAY B. SHIPOWITZ
	 	 	 
	 	 	JAY B. SHIPOWITZ
	 
	 	 	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 	 	 

	 
	 	 	 	 	 	 	 	 
	 	 	 

	 	 	 	 	         Facsimile:
(            ) -
 

-24-

 

ADDENDUM A

Settlement Agreement, General Release, and Covenant Not to Sue

[See attached]

-25-

 

SETTLEMENT AGREEMENT,

GENERAL RELEASE, AND COVENANT NOT TO SUE

     This Settlement Agreement, General Release, and Covenant Not to Sue (“Agreement”) is
made and entered into as of the                                          day of                                         , 20                                        , by and between Jay B.
Shipowitz (“Executive”) and Ace Cash Express, Inc., a Texas corporation (the
“Company”), both of which are hereinafter collectively referred to as the
“parties.”

Recitals

     WHEREAS, Executive was employed as the Company’s Chief Executive Officer pursuant to the terms
and conditions of that certain Amended and Restated Executive Employment Agreement, dated as of
January                                         , 2006 (the “Employment Agreement”), by and between Executive and the Company;

     WHEREAS,
Executive’s employment under the Employment Agreement
[shall terminate/has terminated]
effective                                         , 20                                         (the “Termination Date”); and

     WHEREAS, the parties desire to settle fully and finally, in the manner set forth herein, all
differences between them which have arisen, or which may arise, prior to, or at the time of, the
execution of this Agreement, including, but in no way limited to, any and all claims and
controversies arising out of the Employment Agreement, the employment relationship between
Executive and the Company, and the cessation or termination thereof;

Agreement

     NOW, THEREFORE, in consideration of the Recitals and the mutual promises, covenants and
agreements set forth herein, the parties covenant and agree as follows:

     1. Executive, for himself and on behalf of his attorneys, heirs, legatees, assigns,
successors, executors, and administrators, IRREVOCABLY AND UNCONDITIONALLY RELEASES, ACQUITS, AND
FOREVER DISCHARGES the Company, its current and former parent, subsidiary, affiliated, and related
corporations, firms, associations, partnerships, limited liability companies, and other entities,
their successors and assigns, and the current and former owners, members, shareholders, managers,
directors, officers, partners, employees, agents, attorneys, representatives, and insurers of said
corporations, firms, associations, partnerships, limited liability companies, and other entities,
and their guardians, successors, assigns, heirs, executors, and administrators (hereinafter
collectively referred to as the “Releasees”), from any and all claims, complaints,
grievances, liabilities, obligations, promises, agreements, damages, causes of action, rights,
debts, demands, controversies, costs, losses, damages, and expenses (including, without limitation,
attorneys’ fees and expenses) whatsoever (collectively, “Claims”) under any municipal,
local, state, or federal law, common or statutory — including, but in no way limited to, Claims
under the Age Discrimination in Employment Act of 1967, 29 U.S.C. § 621,

-1-

 

et seq. — for any actions or omissions whatsoever, whether known or unknown,
that are connected with or related to the Employment Agreement, the employment of Executive by the
Company, or the cessation or termination thereof, which existed or may have existed prior to, or
contemporaneously with, the execution of this Agreement. Executive does not, however, release,
acquit, or discharge the Releasees from any Claim arising out of any nonperformance or failure to
perform by the Company of any of its obligations under this Agreement or any Claim not connected
with or related to the Employment Agreement, the employment of Executive by the Company, or the
cessation or termination thereof. In addition, nothing in this Agreement constitutes any waiver or
release by Executive of any rights under (a) any applicable directors’ and officers’ insurance
policy covering Executive, (b) any applicable exculpation or indemnification provision under the
Company’s governing corporate documents covering Executive, or (c) any applicable equity-incentive
plan of the Company, and corresponding stock option and restricted stock agreements with the
Company, under which Executive continues to have rights or benefits that, by their terms, survive
the cessation or termination of Executive’s employment. Further, nothing in this paragraph 1 or in
paragraph 2 below in any way prohibits or restricts Executive from defending any action brought by
or on behalf of any Releasee against Executive.

     2. Executive, for himself and on behalf of his attorneys, heirs, legatees, assigns,
successors, executors, and administrators, COVENANTS NOT TO SUE OR OTHERWISE CONSENT TO PARTICIPATE
IN ANY ACTION AGAINST, any of the Releasees based upon any of the Claims released in paragraph 1 of
this Agreement.

     3. Executive waives and releases forever any right or rights he might have to employment,
reemployment, or reinstatement with the Company or any of the other Releasees, except as may be
provided under the terms of this Agreement.

     4. Upon the expiration of seven (7) days after Executive’s execution of this Agreement, the
Company agrees to begin to pay or provide Executive the severance payments and benefits under
[Section 6(b)/Section 6(c)] of the Employment Agreement in accordance with the surviving terms of
the Employment Agreement.

     5. The parties hereto recognize that, by entering into this Agreement, the Company and each
other Releasee does not admit, and does specifically deny, any violation of any local, state, or
federal law, common or statutory. The parties further recognize that this Agreement has been
entered into in release and compromise of any claims which might be asserted by Executive in
connection with his employment by the Company, or the termination thereof, and to avoid the expense
and burden of any litigation related thereto.

     6. The parties acknowledge and agree that in the event Executive materially breaches any
provision of this Agreement, (a) Executive will indemnify and hold the Company harmless from and
against any and all resulting damages, expense, or loss incurred by the Company (including, without
limitation, attorneys’ fees and expenses), (b) Executive will immediately repay to the Company in
full any payments made to him under the provisions (including, without limitation, paragraph 4) of
this Agreement, and (c) the Company will be

-2-

 

entitled to file counterclaims against Executive for breach of the covenant not to sue and may
recover from Executive any payment not repaid to the Company, as required by clause (b) of this
paragraph 6, as well as any and all other resulting actual or consequential damages.

     7. One or more waivers of a breach of any covenant, term, or provision of this Agreement by
either party shall not be construed as a waiver of a subsequent breach of the same covenant, term,
or provision, nor shall it be considered a waiver of any other then existing or subsequent breach
of a different covenant, term, or provision.

     8. If any provision or term of this Agreement is held to be illegal, invalid, or
unenforceable, (a) such provision or term shall be fully severable, (b) this Agreement shall be
construed and enforced as if such illegal, invalid, or unenforceable provision had never
constituted part of this Agreement, and (c) the remaining provisions of this Agreement shall remain
in full force and effect and shall not be affected by the illegal, invalid, or unenforceable
provision or by its severance from this Agreement. Furthermore, in lieu of each such illegal,
invalid, or unenforceable provision or term there shall be added automatically as a part of this
Agreement another provision or term as similar to the illegal, invalid, or unenforceable provision
as may be possible and that is legal, valid, and enforceable.

     9. The parties agree that any dispute arising from or attributable to this Agreement shall be
subject to the arbitration provisions (and to the same extent and with the same limitations) set
forth in the Employment Agreement; provided, however, notwithstanding anything set forth herein or
set forth in the Employment Agreement to the contrary, the Company shall have the right to sue for
specific performance of this Agreement and for declaratory and injunctive relief.

     10. Executive may revoke this Agreement, within seven (7) days of the date of its execution by
Executive (the “Revocation Period”), by written notice to the Company. Executive agrees
that if he revokes this Agreement, he shall receive none of the benefits provided for under its
terms or the surviving terms of the Employment Agreement. Executive further understands and agrees
that, unless the Company receives from Executive, prior to the expiration of the Revocation Period,
written notice of his revocation of this Agreement, this Agreement and all of its terms shall have
full force and effect, and Executive shall have forever waived his right to revoke this Agreement.

     11. This Agreement and the terms of the Employment Agreement that survive the cessation or
termination of Executive’s employment thereunder constitute the entire agreement of the parties,
and supersede all prior and contemporaneous negotiations and agreements, oral or written, between
the parties, regarding the subject matter of this Agreement. All prior and contemporaneous
negotiations and agreements are deemed incorporated and merged into this Agreement and are deemed
to have been abandoned if not so incorporated. No representations, oral or written, are being
relied upon by either party in executing this Agreement other than the express representations of
this Agreement and the terms of the Employment Agreement that survive the cessation or termination
of Executive’s employment thereunder. This Agreement cannot be changed or terminated without the
express written consent of the parties.

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     12. This Agreement shall be governed by, enforced under, and construed in accordance with the
laws of the State of Texas, except where preempted by federal law.

     13. By executing this Agreement, Executive acknowledges that (a) this Agreement has been
reviewed with him by a representative of the Company, and incorporated herein by reference), (b) he
has had at least twenty-one (21) days to consider the terms of the Agreement and has considered its
terms for that period of time or has knowingly and voluntarily waived his right to do so, (c) he
has been advised by the Company in writing to consult with an attorney regarding the terms of the
Agreement, (d) he has consulted with, or has had sufficient opportunity to consult with, an
attorney of his own choosing regarding the terms of this Agreement, (e) any and all questions
regarding the terms of this Agreement have been asked and answered to his complete satisfaction,
(f) he has read this Agreement and fully understands its terms and their import, (g) except as
provided by this Agreement, he has no contractual right or claim to the benefits described herein,
(h) the consideration provided for herein is good and valuable,
and (i) he is entering into this
Agreement voluntarily, of his own free will, and without any coercion, undue influence, threat, or
intimidation of any kind or type whatsoever.

     EXECUTED in                     
                    ,
Texas, this                                         
 day of                     
                    , 20                                        .

	 	 	 	 	 
	 	EXECUTIVE:

 	 
	 	
 	 
	 	JAY B. SHIPOWITZ 	 
	 	 	 
	 

     EXECUTED in                                         ,                     
                    , this                                         
 day of                                         , 20                    
                    .

	 	 	 	 	 
	 	ACE CASH EXPRESS, INC.

 	 
	 	By:  	 	 
	 	 	 	 
	 	Its:	 	 	 
	 

-4-exv10w2

 

Exhibit 10.2

CHANGE-IN-CONTROL EXECUTIVE SEVERANCE AGREEMENT

This Change-in-Control Executive Severance Agreement (this “Agreement”), dated and
effective January 23, 2006, is between Ace Cash Express, Inc., a Texas corporation (the
“Company”), and Jay B. Shipowitz (the “Executive”).

Statement of Purpose

The Company desires, for its continued success, to have the benefit of services of experienced
management personnel like the Executive. The Board of Directors of the Company therefore believes
that it is in the best interest of the Company that, in the event of any prospective change in
control of the Company, the Executive be reasonably secure in his employment and position with the
Company, so that the Executive can exercise independent judgment as to the best interest of the
Company and its shareholders, without distraction by any personal uncertainties or risks regarding
the Executive’s continued employment with the Company created by the possibility of a change in
control of the Company. Therefore, the Company and the Executive entered into a Change-in-Control
Executive Severance Agreement dated August 20, 1998, which was amended and superseded by a
Change-in-Control Executive Severance Agreement dated July 1, 2004 (the “Previous Severance
Agreement”), to assure severance benefits to the Executive in connection with certain
terminations of employment upon or after a change in control of the Company, and they now wish to
amend and supersede the Previous Severance Agreement with this Agreement to effect the same
purpose.

Agreement

In consideration of the statements made in the Statement of Purpose and the mutual agreements set
forth below, the Company and the Executive agree as follows:

	1.	 	Definitions and Interpretation. Various terms used in this Agreement are defined in
Exhibit A; each of the defined terms used in this Agreement begins with a capital letter.
Various interpretative matters for this Agreement are also set forth in Exhibit A. Exhibit A
is an integral part of this Agreement and is incorporated in this Agreement by reference.
	 
	2.	 	Term of Agreement. This Agreement will continue in effect until the earlier of:

	 	(a)	 	The termination or cessation of the Executive’s employment with the Company
under the Employment Agreement, or the termination of the Employment Agreement, before
a Change in Control.
	 
	 	(b)	 	The Company’s performance of all of its obligations, and the Executive’s
receipt of all of the payments and benefits to which he is entitled, under this
Agreement after a Severance Payment Event.

	3.	 	Severance Benefits. Upon a Severance Payment Event, in addition to any other

-1-

 

	 	 	severance or employment-termination compensation or benefits to which the Executive may be
entitled from the Company or any Subsidiary under the terms of any Plan of which the
Executive was a participant or a beneficiary immediately before the Severance Payment Event,
the Company shall:

	 	(a)	 	Pay the Executive in cash, within five Business Days after the Severance
Payment Event, all of his Base Salary and all other earned but unpaid cash compensation
or entitlements due to the Executive through (and including) the date of the Severance
Payment Event, including unused earned and accrued vacation pay and unreimbursed
reimbursable business expenses.
	 
	 	(b)	 	Make the Severance Payment in cash within five Business Days after the
Severance Payment Event.
	 
	 	(c)	 	Provide or arrange to provide the Executive (whether or not under any Welfare
Benefit Plan then maintained), at the Company’s sole expense and for the Benefit
Continuation Period, Welfare Benefits that are substantially the same the Welfare
Benefits provided to the Executive (and the Executive’s dependents and beneficiaries)
immediately before the Severance Payment Event, except that the Welfare Benefits to
which the Executive is entitled under this subsection (c) will be subject to the
Executive’s compliance with Section 4 and will be reduced to the extent that comparable
welfare benefits are received by the Executive from an employer other than the Company
or any Subsidiary during the Benefit Continuation Period. (The fact that the cost of
the participation by the Executive, or the Executive’s dependents or beneficiaries, in
any Welfare Benefit Plan was paid indirectly by the Company, as a reimbursement or a
credit to the Executive, before the Severance Payment Event does not mean that the
corresponding Welfare Benefits were not “provided to the Executive” by the Company for
the purpose of this subsection (c).)

	(d)	 	In addition, each Stock Award outstanding immediately before the Severance Payment Event and
not yet exercised or forfeited (as the case may be) will accelerate and become fully vested,
exercisable, or nonforfeitable upon the Severance Payment Event, as though all requisite time
had passed to vest the Stock Award or cause it to become exercisable or nonforfeitable.

	4.	 	Nondisclosure and Noncompetition. As an inducement to the Company to enter into this
Agreement, the Executive represents to and covenants with or in favor of the Company as
follows:

	 	(a)	 	The Executive has acquired and will acquire during his employment with the
Company knowledge or awareness of various Trade Secrets. All of the Trade Secrets are
valuable, special, and unique assets of the Company, and the disclosure of any of them,
or their use in any manner, other than on behalf of the Company would cause substantial
injury, loss of profits, and loss of goodwill to the Company.
	 
	 	(b)	 	During his employment with the Company and at all times thereafter, the
Executive shall not, directly or indirectly, disclose or disseminate any Trade

-2-

 

	 	 	 	Secret to any other Person or lecture upon, publish articles concerning, or
otherwise use or employ any Trade Secret, except (in any case) to the extent
required in the course of his employment with the Company or by applicable law,
rule, or regulation (including legal process). In addition, all Trade Secrets and
materials containing Trade Secrets prepared or compiled by the Executive or
furnished or made available to him during his employment with the Company are the
sole and exclusive property of the Company, and none of those Trade Secrets or
materials containing Trade Secrets may be retained by the Executive upon or
following any termination of his employment with the Company.
	 
	 	(c)	 	If the Executive’s employment with the Company terminates (other than because
of the Executive’s death or Disability) upon or before the termination of this
Agreement, the Executive shall not, at any time during the first year after that
termination of employment anywhere in the Restricted Territory, directly or indirectly
engage in any activity which, or any activity for any enterprise or entity a material
part of the business of which, is competitive with the business conducted, or proposed
during his employment with the Company to be conducted, by the Company. The activity
prohibited by the preceding sentence includes any kind of ownership (other than
ownership of securities of a publicly held entity of which the Executive owns less than
1% of a class of outstanding securities) in or of, or acting as a director, officer,
agent, employee, or consultant of or for, any enterprise or entity referred to in the
preceding sentence.
	 
	 	(d)	 	The Executive acknowledges and agrees that the restrictions in this Section 4
are reasonable and not unduly burdensome to him under the circumstances.
	 
	 	(e)	 	The Executive’s compliance with this Section 4 and with the post-employment
restrictive covenants in the Employment Agreement is a condition to the Company’s
obligation to continue to provide Welfare Benefits to the Executive under subsection
(c) of Section 3 and to make one or more Gross-Up Payments to the Executive under
Section 5; the Company may refuse to continue providing those Welfare Benefits or to
make all or any Gross-Up Payment if there is any such noncompliance, as reasonably
determined by the Board. For the purpose of this Agreement only, the Company shall
have the burden of proof regarding any question of the Executive’s compliance or
noncompliance with this Section 4 or to make all or any Gross-Up Payment.

     5. Excise Taxes.

	 	(a)	 	If all or any portion of the Total Severance Benefits, determined without
regard to any additional payments required under this Section 5 (a “Payment”),
would be subject to the Excise Tax, then the Executive shall be entitled to receive an
additional payment (“Gross-Up Payment”) in an amount such that after payment by
the Executive of all taxes (including any interest or penalties imposed with respect to
such taxes), including any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax, imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payment, multiplied by the percentage set forth

-3-

 

	 	 	 	below corresponding to the Per Share Change-in-Control Price:

	 	 	 	 	 
	Per Share Change-in-Control Price	 	Percentage
	Less than $29
	 	 	0	%
	$29 to less than $33
	 	 	25	%
	$33 to less than $37
	 	 	50	%
	$37 to less than $41
	 	 	75	%
	$41 or more
	 	 	100	%

	 	(b)	 	Subject to subsection (c) of this Section 5, all determinations required to be
made under this Section 5, including whether and when a Gross-Up Payment is required,
the amount of any Gross-Up Payment, and the assumptions to be used in arriving at such
determination, shall be made by the Accounting Firm, which shall be retained to provide
detailed supporting calculations to the Parties within 15 Business Days of the
Accounting Firm’s receipt of written notice from the Company or the Executive that
there has been a Payment or such earlier time as is requested by the Company. All fees
and expenses of the Accounting Firm shall be paid solely by the Company. Each
determination by the Accounting Firm shall be binding upon the Parties. Any Gross-Up
Payment determined to be due to the Executive shall be paid by the Company within five
Business Days of the Company’s receipt of the Accounting Firm’s determination. As a
result of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm, it is possible that Gross-Up Payments
which will not have been made by the Company should have been made consistent with the
calculations required to be made under this Section 5 (“Underpayment”). If the
Company exhausts its remedies under subsection (c) of this Section 5 and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred, and any such Underpayment
shall be promptly paid by the Company to or for the benefit of the Executive.
	 
	 	(c)	 	The Executive shall Notify the Company of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of the Gross-Up
Payment. That Notice shall be given as soon as practicable, but no later than ten
Business Days, after the Executive is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such claim is
requested to be paid or appealed. The Executive shall not pay any amount required by
such claim before the expiration of the 30-day period following the date on which he
gives such Notice (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company Notifies the Executive before the
expiration of such period that it desires to contest such claim, the Executive shall:

-4-

 

	 	(i)	 	give the Company any information reasonably requested by the
Company relating to such claim,
	 
	 	(ii)	 	take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time, including
accepting representation with respect to such claim by counsel or accountants
(or both) selected by the Company and reasonably acceptable to the Executive,
	 
	 	(iii)	 	cooperate with the Company in good faith in order to
effectively contest such claim, and
	 
	 	(iv)	 	permit the Company to participate in any proceedings relating
to such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection with
such contest and shall indemnify the Executive, on an after-tax basis, for any
Excise Tax or income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and expenses.
Without limiting the foregoing provisions of this subsection (c), the Company shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals, proceedings,
hearings, and conferences with the taxing authority in respect of such claim and
may, at its sole option, direct the Executive either to pay the tax claimed and sue
for a refund or to contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction, and in one or more appellate courts,
as the Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis, and shall
indemnify the Executive, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to such
advance or with respect to any imputed income with respect to such advance; and
provided further, however, that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested amount.
Further, the Company’s control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable under this Section 5, and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.

	 	(d)	 	If, after the Executive’s receipt of an amount advanced by the Company under
subsection (c) of this Section 5, the Executive becomes entitled to receive any refund
with respect to such claim, the Executive shall (subject to the Company’s

-5-

 

	 	 	 	complying with the requirements of subsection (c) of this Section 5) promptly pay to
the Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the Executive’s receipt of an
amount advanced by the Company under subsection (c) of this Section 5, a
determination is made that the Executive is not entitled to any refund with respect
to such claim and the Company does not notify the Executive in writing of its intent
to contest such denial of refund within 30 days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount of
such advance shall offset, to the extent thereof, the amount of the Gross-Up Payment
required to be paid.

	6.	 	Executive’s Legal Expenses. The Company shall pay the Executive an amount equal to
the reasonable legal fees and other expenses incurred in good faith by him in obtaining or
retaining payments and benefits under this Agreement, including all such fees and expenses (if
any) in enforcing, in good faith, any right or benefit provided by this Agreement or in
connection with the contest or defense of any tax audit or proceeding by the Internal Revenue
Service to the extent that Section 4999 of the Code is alleged or claimed to apply to any
payment or benefit provided under this Agreement. The Company will be obligated under the
preceding sentence even if the Executive is not successful in any enforcement claim or
counterclaim by him, or in any such tax contest or defense, so long as he acted in good faith.
The Company shall make any payment required by this Section 6 within five Business Days after
Notice from the Executive requesting payment and providing such evidence of the incurrence of
those fees and expenses as the Company may reasonably request.

	7.	 	No Mitigation. If a Severance Payment Event occurs, the Executive need not seek
other employment or attempt in any way to reduce the amount of any payments or benefits to the
Executive by the Company under this Agreement. The amount of the Severance Payment and,
except as stated in subsection (c) of Section 3 and in subsection (e) of Section 4, any other
severance benefit provided or to be provided to the Executive by the Company under Section 3
or under Section 5 shall not be reduced by any compensation earned by the Executive as the
result of any other employment, consulting relationship, or other business activity.

	8.	 	No Set-off. The Company’s obligations under this Agreement are absolute and
unconditional, and not subject to any set-off, counterclaim, recoupment, defense, or other
right that the Company or any Subsidiary may have against the Executive, except as stated in
subsection (c) of Section 3 and in subsection (e) of Section 4.

	9.	 	Tax Withholding. The Company shall withhold from any payments or benefits under this
Agreement (whether or not otherwise acknowledged under this Agreement) all federal, state,
local, or other taxes as may be legally required to be withheld.

	10.	 	Employment Status. Nothing in this Agreement provides the Executive with any
continued employment with the Company or any Subsidiary or shall interfere with the Company’s
right to terminate the Executive’s employment at any time and for any (or no) reason (subject
to the Company’s obligations under the Employment Agreement).

-6-

 

	11.	 	No Exclusivity. Nothing in this Agreement prevents or limits the Executive’s
participation in any Plan for which the Executive may qualify or shall impair any rights that
the Executive may have under any other contract or agreement with the Company or any
Subsidiary.

	12.	 	Governing Law; Jurisdiction. All matters or issues relating to the interpretation,
construction, validity, and enforcement of this Agreement shall be governed by the laws of
Texas, without giving effect to any choice-of-law principle that would cause the application
of the laws of any jurisdiction other than Texas. Jurisdiction and venue of any action or
proceeding relating to this Agreement or any Dispute (to the extent arbitration is not
required under Section 13) shall be exclusively in Dallas County, Texas.

	13.	 	Arbitration. Except as provided in subsection (h) of this Section 13, any Dispute
must be resolved by binding arbitration in accordance with the following:

	 	(a)	 	A Party may begin arbitration by filing a demand for arbitration in accordance
with the Arbitration Rules and concurrently Notifying the other Party of that demand.
If the Parties are unable to agree upon a panel of three arbitrators within ten days
after the demand for arbitration was filed (and do not agree to an extension of that
ten-day period), either Party may request the Dallas office of the American Arbitration
Association to appoint the arbitrator or arbitrators necessary to complete the panel in
accordance with the Arbitration Rules. Each arbitrator so appointed shall be deemed
accepted by the Parties as part of the panel.
	 
	 	(b)	 	The arbitration shall be conducted in the Dallas-Fort Worth, Texas metropolitan
area at a place and time agreed upon by the Parties with the panel, or if the Parties
cannot agree, as designated by the panel. The panel may, however, call and conduct
hearings and meetings at such other places as the Parties may agree or as the panel
may, on the motion of one Party, determine to be necessary to obtain significant
testimony or evidence.
	 
	 	(c)	 	The panel may authorize any and all forms of discovery upon a Party’s showing
of need that the requested discovery is likely to lead to material evidence needed to
resolve the Dispute and is not excessive in scope, timing, or cost.
	 
	 	(d)	 	The arbitration shall be subject to the Federal Arbitration Act and conducted
in accordance with the Arbitration Rules to the extent that they do not conflict with
this Section 13. The Parties and the panel may, however, agree to vary to provisions
of this Section 13 or the matters otherwise governed by the Arbitration Rules.
	 
	 	(e)	 	The arbitration hearing shall be held within 30 days after the appointment of
the panel. The panel’s final decision or award shall be made within 30 days after the
hearing. That final decision or award shall be made by unanimous or majority vote or
consent of the arbitrators constituting the panel, and shall be deemed issued at the
place of arbitration. The panel’s final decision or award shall be based on this
Agreement and applicable law; the panel may not act according to equity and conscience
or apply the law merchant.

-7-

 

	 	(f)	 	The panel’s final decision or award may include injunctive relief in response
to any actual or impending breach of this Agreement or any other actual or impending
action or omission of a Party under or in connection with this Agreement.
	 
	 	(g)	 	The panel’s final decision or award shall be final and binding upon the
Parties, and judgment upon that decision or award may be entered in any court having
jurisdiction. The Parties waive any right to apply or appeal to any court for relief
from the preceding sentence or from any decision of the panel made before the final
decision or award.
	 
	 	(h)	 	Nothing in this Section 13 limits the right of either Party to apply to a court
having jurisdiction to (i) enforce the agreement to arbitrate in accordance with this
Section 13, (ii) seek provisional or temporary injunctive relief, in response to an
actual or impending breach of the Agreement or otherwise so as to avoid a irrevocable
damage or maintain the status quo, until a final arbitration decision or award is
rendered or the Dispute is otherwise resolved, or (iii) challenge or vacate any final
arbitration decision or award that does not comply with this Section 13. In addition,
nothing in this Section 13 prohibits the Parties from resolving any Dispute (in whole
or in part) by agreement.

	14.	 	Company’s Successor. In addition to any obligations imposed by law upon any
successor to the Company, the Company shall require any successor to all or substantially all
of the Company’s business or assets (whether direct or indirect and whether by purchase,
reorganization, merger, share exchange, consolidation, or otherwise) to expressly assume and
agree to perform the Company’s obligations under this Agreement to the same extent, and in the
same manner, as the Company would be required to perform if no such succession had occurred.
This Agreement shall be binding upon, and inure to the benefit of, any successor to the
Company.

	15.	 	Executive’s Successor. This Agreement shall inure to the benefit of, and be
enforceable by, the Executive’s personal or legal representatives, administrators, successors,
executors, heirs, distributees, devisees, and legatees. If the Executive should die after a
Severance Payment Event, but before any payment or benefit to which the Executive is entitled
under this Agreement has been received by the Executive, all payments or benefits to which the
Executive would have been entitled had he continued to live (other than any such Welfare
Benefits that, by their terms, terminate upon the Executive’s death) shall be made or provided
in accordance with this Agreement to the representatives, executors, or administrators of the
Executive’s estate.

	16.	 	Restricted Assignment. Except as expressly provided in Sections 14 and 15, neither
Party may assign, transfer, or delegate this Agreement or any of its or his rights or
obligations under this Agreement without the prior written consent of the other Party. Any
attempted assignment, transfer, or delegation in violation of the preceding sentence shall be
void and of no effect.

	17.	 	Waiver and Amendment. No term or condition of this Agreement shall be deemed

-8-

 

	 	 	waived other than by a writing signed by the Party against whom or which enforcement of the
waiver is sought. Without limiting the generality of the preceding sentence, a Party’s
failure to insist upon the other Party’s strict compliance with any provision of this
Agreement or to assert any right that a Party may have under this Agreement shall not be
deemed a waiver of that provision or that right. Any written waiver shall operate only as
to the specific term or condition waived under the specific circumstances and shall not
constitute a waiver of that term or condition for the future or a waiver of any other term
or condition. No amendment or modification of this Agreement shall be deemed effective
unless stated in a writing signed by the Parties.

	18.	 	Entire Agreement. This Agreement, including the Statement of Purpose, contains the
Parties’ entire agreement regarding the subject matter of this Agreement and supersedes all
prior agreements and understandings between them regarding that subject matter, including the
Previous Severance Agreement. The Parties have made no agreements, representations, or
warranties regarding the subject matter of this Agreement that are not set forth in this
Agreement.

	19.	 	Notice. Each notice or other communication required or permitted under this
Agreement shall be in writing and transmitted, delivered, or sent by personal delivery,
prepaid courier or messenger service (whether overnight or same-day), prepaid telecopy or
facsimile, or prepaid certified United States mail (with return receipt requested), addressed
(in any case) to the other Party at the address or number for that Party set forth below that
Party’s signature on this Agreement, or at such other address or number as the recipient has
designated by Notice to the other Party. Each notice or communication so transmitted,
delivered, or sent:

	 	(a)	 	in person, by courier or messenger service, or by certified United States mail
shall be deemed given, received, and effective on the date delivered to or refused by
the intended recipient (with the return receipt, or the equivalent record of the
courier or messenger, being deemed conclusive evidence of delivery or refusal), or
	 
	 	(b)	 	by telecopy or facsimile shall be deemed given, received, and effective on the
date of actual receipt (with the confirmation of transmission being deemed conclusive
evidence of receipt, except where the intended recipient has promptly Notified the
other Party that the transmission is illegible).

Nevertheless, if the date of delivery or transmission is not a Business Day, or if the
delivery or transmission is after 5:00 p.m. on a Business Day, the notice or other
communication shall be deemed given, received, and effective on the next Business Day.

-9-

 

	20.	 	Severability. If any provision of this Agreement is or becomes invalid or
unenforceable, that provision (to the extent invalid or unenforceable) shall be deemed amended
or reformed to the extent required to render it valid and enforceable, and the remainder of
this Agreement shall be unaffected and shall continue in effect.

	21.	 	Counterparts. This Agreement may be signed in counterparts, with the same effect as
if both Parties had signed the same document. All counterparts shall be construed together to
constitute one, and the same, document.

The Parties have signed this Agreement to be effective as of the date set forth in the first
paragraph.

	 	 	 	 	 	 	 	 	 
	Company:	 	 	 	Executive:	 	 
	 
	 	 	 	 	 	 	 	 
	ACE CASH EXPRESS, INC.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 	/s/ WALTER E. EVANS	 	 	 	/s/ JAY B. SHIPOWITZ	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	JAY B. SHIPOWITZ	 	 
	 
	 	 	 	 	 	 	 	 
	Address for Notice:	 	 	 	Address for Notice:	 	 
	1231 Greenway Drive	 	 	 	 	 	 
	Suite 600	 	 	 	 ,
Texas  	 	 
	Irving, Texas 75038	 	 	 	Telecopy no. ( ) -
 	 	 
	Telecopy no. (972) 550-5150	 	 	 	 	 	 
	Attention: Chairman of the Board	 	 	 	 	 	 

-10-

 

Exhibit A

to

Change-in-Control Executive Severance Agreement

Defined Terms. In the Agreement, the following terms have the corresponding meanings:

“Accounting Firm” means an independent certified public accounting firm selected by the
Company and reasonably acceptable to the Executive.

“Acquiring Person” means any Person (other than an Excluded Person) who or which, alone or
together with all Affiliates and Associates of that Person, is the Beneficial Owner of 25% or more
of the Voting Securities of the Company then outstanding.

“Affiliate” and “Associate” have the respective meanings ascribed to them in Rule
12b-2 under the Exchange Act.

“Agreement” means the Change-in-Control Executive Severance Agreement between the Parties,
as may hereafter be amended or supplemented, of which this Exhibit A is a part.

“Arbitration Rules” means the Rules for Commercial Arbitration of the American Arbitration
Association in effect at the time of an arbitration of a Dispute.

“Base Salary” means the Executive’s annual Base Salary under, and as defined in, the
Employment Agreement.

“Beneficial Owner” means beneficial owner as defined in Rule 13d-3 under the Exchange Act.
(“Beneficially Owns” has the correlative meaning.) Any calculation of the number of Voting
Securities outstanding at any particular time, including for purposes of determining the particular
percentage of such outstanding Voting Securities of which any Person is the Beneficial Owner, shall
be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) under the Exchange Act.

“Benefit Continuation Period” means 30 consecutive months after a Severance Payment Event.

“Board” means the Board of Directors of the Company.

“Business Day” means any Monday through Friday, excluding any such day on which banks are
authorized to be closed in Texas.

A-11

 

“Cause” means:

	(i)	 	the Executive’s willful failure to substantially perform his employment duties to the
Company, as such duties may exist from time to time, or comply with the written policies of
the Company (other than any such failure resulting from Disability or the Executive’s
termination for Good Reason) which continues for a reasonable time after a Notice to the
Executive from the Board that (A) identifies the manner in which the Board believes that the
Executive has not substantially performed the Executive’s duties or complied with written
policies and (B) demands substantial performance or compliance within a specified reasonable
time; or

	(ii)	 	the Executive’s willful engaging in conduct (including any illegal conduct) that is
demonstrably and materially injurious to the Company or any Subsidiary, monetarily or
otherwise.

For purposes of this definition, no act, or failure to act, by the Executive shall be deemed
“willful” unless done, or omitted to be done, by the Executive not in good faith and without
reasonable belief that the Executive’s act, or failure to act, was in the best interest of the
Company and its Subsidiaries. For the purpose of clause (i) of this definition, a “reasonable
time” shall be a time period determined by the Board, acting in good faith, to be sufficient under
normal circumstances to correct the deficient performance or compliance described in the Notice to
the Executive.

“Change in Control” means the occurrence of any one or more of the following:

	(i)	 	Any Person becomes an Acquiring Person, except as the result of (A) any acquisition of Voting
Securities of the Company by the Company or (B) any acquisition of Voting Securities of the
Company directly from the Company (as authorized by the Board).

	(ii)	 	Individuals who constitute the Incumbent Board cease for any reason to constitute at least a
majority of the Board; and for this purpose, any individual who becomes a member of the Board
after the date of this Agreement whose election, or nomination for election by holders of the
Company’s Voting Securities, was approved by the vote of at least a majority of the
individuals then constituting the Incumbent Board shall be considered a member of the
Incumbent Board (except that any such individual whose initial election as director occurs as
the result of an actual or threatened election contest, within the meaning of Rule 14a-11
under the Exchange Act, or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board shall not be so considered).

	(iii)	 	The consummation of a reorganization, merger, share exchange, consolidation, or sale or
disposition of all or substantially all of the assets of the Company unless, in any case, the
Persons who or which Beneficially Own the Voting Securities of the Company immediately before
that transaction Beneficially Own, directly or indirectly, immediately after the transaction,
at least 75% of the Voting Securities of the Company or any other corporation or other entity
resulting from or surviving the transaction (including a corporation or other entity which, as
the result of the transaction, owns all or substantially

A-12

 

	 	 	all of Voting Securities of the Company or all or substantially all of the Company’s assets,
either directly or indirectly through one or more subsidiaries) in substantially the same
proportion as their respective ownership of the Voting Securities of the Company immediately
before that transaction.
	 
	(iv)	 	The Company’s shareholders approve a complete liquidation or dissolution of the Company.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Common Stock” means the common stock, $0.01 par value per share, of the Company.

“Company” means Ace Cash Express, Inc., a Texas corporation.

“Disability” means the Executive’s Disability under, and as defined in, the Employment
Agreement.

“Dispute” means any dispute, disagreement, claim, or controversy arising in connection with
or relating to the Agreement or the validity, interpretation, performance, breach, or termination
of the Agreement.

“Employment Agreement” means the Amended and Restated Executive Employment Agreement
between the Parties dated as of January 23, 2006, as may hereafter be amended or supplemented.

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.

“Excise Tax” means the excise tax imposed by Section 4999 of the Code, with all interest
and penalties, if any, incurred with respect to such excise tax.

“Excluded Person” means:

	(i)	 	the Executive or any group (within the meaning of Section 13(d)(3) of the Exchange Act) of
which the Executive is a member;

	(ii)	 	any Person that controls (as defined in Rule 12b-2 under the Exchange Act) the Company as of
the date of the Agreement or any group of which any such Person is a member;

	(iii)	 	any employee-benefit plan, or related trust, sponsored or maintained by the Company or any
of its Subsidiaries, or any trustee or other fiduciary thereof; or

	(iv)	 	any corporation or other entity owned directly or indirectly by the shareholders of the
Company in substantially the same proportions as their ownership of the Voting Securities of
the Company.

“Executive” means Jay B. Shipowitz.

“Good Reason” means:

A-13

 

	(i)	 	the assignment to the Executive of any duties inconsistent in any material respect with the
Executive’s position (which, in this definition, includes status, office, title, and reporting
requirements), duties, or responsibilities as an officer of the Company or any Subsidiary, or
any other material diminution in the Executive’s position, authority, duties, or
responsibilities from those in effect as of three months before a Change in Control, other
than (in any case) an isolated and inadvertent action not taken in bad faith that is remedied
by the Company promptly after Notice thereof to the Company by the Executive;

	(ii)	 	the Company’s requiring the Executive to be based at any office or location farther than 50
miles from the Executive’s office or principal job location immediately before a Change in
Control, except for required business travel to an extent substantially consistent with the
Executive’s travel obligations immediately before the Change in Control;

	(iii)	 	any failure to comply with and satisfy Section 14, if the Company’s successor has received
at least ten days’ prior written notice from the Company or the Executive of the requirements
of Section 14;

	(iv)	 	a material reduction in the Executive’s Base Salary from the highest amount in effect at any
time within three months before a Change in Control;

	(v)	 	the failure by the Company or any Subsidiary to continue to provide the Executive with
compensation that is equal or comparable to the Executive’s total compensation under the
Employment Agreement as in effect immediately before the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative Plan or arrangement)
has been made with respect to that compensation or any component thereof, or the failure by
the Company or any Subsidiary to continue the Executive’s participation in any compensation
Plan in which the Executive participates immediately before the Change in Control (or in any
substitute or alternative Plan or arrangement) on a basis not materially less favorable to the
Executive, both in terms of the amount of benefits provided and the level of the Executive’s
participation relative to other participants, than existed at any time within three months
before the Change in Control; or

	(vi)	 	the failure by the Company or any Subsidiary to continue to provide the Executive with
benefits similar in all material respects to those enjoyed by the Executive under the
Employment Agreement and under any Plan in which the Executive was participating at any time
within three months before the Change in Control, the taking of action by the Company or any
Subsidiary which would directly or indirectly materially reduce any of such benefits or
deprive the Executive of any material fringe benefit enjoyed by the Executive at any time
three months before the Change in Control, or the failure by the Company or any Subsidiary to
provide the Executive with the number of paid vacation days to which the Executive is entitled
on the basis of years of service with the Company and its Subsidiary in accordance with the
Company’s or a Subsidiary’s normal vacation policy in effect at any time within three months
before the Change in Control.

A-14

 

“Incumbent Board” means the members of the Board on the effective date of the Agreement
(subject, however, to clause (ii) of the definition of “Change in Control”).

“Notice” means a written communication complying with Section 19. (“Notify” has
the correlative meaning.)

“Parties” means, collectively, the Company and the Executive. (“Party” means
either the Company or the Executive.)

“Per Share Change-in-Control Price” means:

	(i)	 	the closing price of a share of Common Stock on The Nasdaq Stock Market (or on a national
securities exchange if the Common Stock is then so listed) upon the occurrence of an event
described in clause (i), clause (ii), or clause (iv) of the definition of “Change in Control”
or upon the occurrence of a sale or disposition of assets described in clause (iii) of the
definition of “Change in Control,” or

	(ii)	 	the price per share at which the Common Stock is sold, exchanged, or transferred in a
transaction, other than a sale or disposition of assets, described in clause (iii) of the
definition of “Change in Control.”

“Person” means any individual, firm, corporation, partnership, limited liability company,
trust, or other entity, including any successor (by merger or otherwise) of such entity.

“Plan” means any bonus, incentive compensation, savings, retirement, stock option, stock
appreciation, stock ownership or purchase, pension, deferred compensation, or Welfare Benefits
plan, policy, practice, program, or arrangement of (including any separate contract or agreement
with) the Company or any Subsidiary for its employees, but does not include the Employment
Agreement.

“Restricted Territory” means, collectively, Dallas County, Texas; each county (or
equivalent subdivision) of any state, district, or territory of the United States of America as to
which the Executive had supervisory responsibility for the Company during his employment with the
Company; and each county (or equivalent territory) adjacent to any of the preceding counties (or
equivalent territories).

“Severance Payment” means an amount equal to two and one-half times the sum of:

	(i)	 	the Executive’s highest Base Salary in effect at any time within three months before the
Change in Control;

	(ii)	 	the highest amount of the annual automobile allowance payable to the Executive within three
months before the Change in Control; and

	(iii)	 	an amount equal to the average of the annual bonuses or incentive cash compensation paid or
payable to the Executive by the Company and any Subsidiary for the three fiscal years of the
Company preceding the fiscal year in which the Change in Control occurs, but in

A-15

 

	 	 	any event no less than the Executive’s targeted bonus or amount of incentive cash
compensation for the fiscal year in which the Change in Control occurs (or if not yet
determined for that fiscal year before the Change in Control occurs, the Executive’s targeted
bonus or amount of incentive compensation for the preceding fiscal year).

For clause (iii) of this definition: (a) the calculation of the average of the annual bonuses or
incentive cash compensation of the Executive shall include a fiscal year during which the Executive
was employed by the Company and a participant in a bonus or incentive cash compensation Plan even
if the Executive did not earn any bonus or incentive cash compensation for that fiscal year; (b)
the bonus or incentive cash compensation paid or payable to the Executive for only part of a fiscal
year of the Company shall be annualized (on the same basis as the one on which the bonus or
compensation was prorated) for that fiscal year to calculate the average; and (c) the “targeted”
bonus or incentive cash compensation for the fiscal year of the Company in which the Change in
Control occurs shall be the amount identified as a “target” by the Board (or its compensation
committee that administers the bonus or incentive cash compensation Plan) for the Executive in
accordance with the Employment Agreement.

“Severance Payment Event” means the occurrence of a Change in Control coincident with
or followed, at any time before the end of the 24th month immediately following the month in which
the Change in Control occurred, by the termination of the Executive’s employment with the Company
for any reason other than (a) by the Executive without Good Reason, (b) by the Company because of
Disability or for Cause, or (c) by the death of the Executive. Any transfer of the Executive’s
employment from the Company to a Subsidiary, from a Subsidiary to the Company, or from one
Subsidiary to another Subsidiary is not a termination of the Executive’s employment by the Company
for purposes of the Agreement (though any such transfer might, depending on the circumstances,
constitute or result in a termination of employment by the Executive for Good Reason).

“Stock Award” means a stock option, stock appreciation right, restricted stock grant,
performance share plan, or any other agreement in which the Executive has, or will (by the passage
of time only, not based on the Executive’s performance) have, (a) an interest in capital stock of
the Company or a right to obtain capital stock or an interest in capital stock of the Company, or
(b) an interest or right the economic value of which depends solely on the performance of the
capital stock of the Company.

“Subsidiary” means a corporation or other entity, whether incorporated or unincorporated,
of which at least a majority of the Voting Securities is owned, directly or indirectly, by the
Company.

“Total Severance Benefits” means the Severance Payment; all other payments and benefits
received or to be received by the Executive under the Agreement; and all payments, awards,
distributions, and benefits (and accelerations of any payment, award, distribution, or benefit), if
any, to which the Executive may be entitled, under any Plan or any other contract or agreement,
upon or as the result of a Change in Control or the termination of his employment with the Company,
or both.

A-16

 

“Trade Secrets” means any and all information and materials (in any medium) that are
proprietary to the Company or are treated as confidential by the Company as part of or relating to
all or any portion of the Company’s business, including information and materials about the
products and services offered, or the needs of customers served, by the Company; compilations of
information, records and specifications, processes, programs, and systems of the Company; research
of or for the Company; and methods of doing business of the Company.

“Voting Securities” means securities or other interests having by their terms ordinary
voting power to elect members of the board of directors of a corporation or individuals serving
similar functions for a noncorporate entity.

“Welfare Benefits” means medical, prescription, dental, disability, employee life, group
life, accidental death, and travel accident insurance (whether funded by insurance policy or
self-insured by the Company or any Subsidiary) provided or arranged by the Company or any
Subsidiary to be provided to its employees.

“Welfare Benefit Plan” means any Plan that provides any Welfare Benefits.

Interpretive Matters. In the interpretation of the Agreement, except where the context
otherwise requires:

	(a)	 	“including” or “include” does not denote or imply any limitation;
	 
	(b)	 	“or” has the inclusive meaning “and/or”;
	 
	(c)	 	the singular includes the plural, and visa a versa, and each gender includes each of the
others;
	 
	(d)	 	captions or headings are only for reference and are not to be considered in interpreting the
Agreement;
	 
	(e)	 	“Section” refers to a Section of the Agreement, unless otherwise stated in the Agreement;
	 
	(f)	 	“month” refers to a calendar month; and
	 
	(g)	 	a reference to any statute, rule, or regulation includes any amendment thereto or any
statute, rule, or regulation enacted or promulgated in replacement thereof.

A-17

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