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INDEMNITY AGREEMENT
AGREEMENT, dated effective as of _________, 199_ by and between
PawnMart, Inc., a Delaware corporation (and with any affiliated entity to which
indemnitee is named, appointed or elected a director, officer or fiduciary, the
"CORPORATION"), and the undersigned ______________________, (collectively with
______________________'s estate, heirs, executors, administrators and other
personal representatives, the "INDEMNITEE").
Indemnitee is a director on the Board of Directors (the "Board") or
officer of the Corporation and in such capacity is performing a valuable
service for Corporation. The stockholders of the Corporation have adopted the
Second Amended and Restated By-laws (the "By-laws") providing for the
indemnification of a director or officer of the Corporation to the maximum
extent authorized by Section 145 of the General Corporation Law of the State of
Delaware (the "State Statute"). Such By-laws and the State Statute
specifically provide that they are not exclusive, and thereby contemplate that
contracts may be entered into between the Corporation and the directors or
officers with respect to indemnification of such directors or officers.
In accordance with the authorization provided by the State Statute,
the Corporation has purchased and presently maintains a policy or policies of
Directors and Officers Liability Insurance ("D & O Insurance"), covering
certain liabilities which may be incurred by its directors and officers in the
performance of their services for the Corporation. Recent developments with
respect to the terms and availability of D & O Insurance and with respect to
the application, amendment and enforcement of statutory and bylaw
indemnification provisions generally have raised questions concerning the
adequacy and reliability of the protection afforded to directors and officers
thereby.
In order to resolve such questions and thereby induce Indemnitee to
continue to serve as a director or officer of the Corporation, the Corporation
has determined and agreed to enter into this contract with Indemnitee.
In view of the substantial increase in directors' and officers'
litigation costs and risks and the limitations on the availability and coverage
of liability insurance, and in view of the mutual desire of the parties that
the Indemnitee render valuable services to the Corporation as a director or
officer, this Agreement is entered into in order to provide assurance to the
Indemnitee that the Corporation will indemnify the Indemnitee against such
costs and risks to the full extent permitted by the laws of the State of
Delaware. In consideration of Indemnitee's continued service as a director or
officer after the date hereof the parties hereto agree as follows:
1. INDEMNIFICATION
(a) To the full extent permitted by the laws of the State of
Delaware as from time to time in effect, the Corporation, which for
purposes of this Agreement shall mean PawnMart, Inc. and any
affiliated entity to which Indemnitee is named, appointed or elected a
director or officer, whether or not such entity executes this
Agreement or
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an agreement equivalent to this Agreement, the naming, appointing or
electing of Indemnitee as director or officer being deemed equivalent
to execution of this Agreement by such entity, jointly and severally
shall indemnify the Indemnitee against any judgments, penalties,
fines, amounts paid in settlement and Expenses (as hereinafter
defined) incurred in connection with any actual or threatened
Proceeding (as hereinafter defined) to which Indemnitee is a party by
reason of the fact that the Indemnitee then is or was a director or
officer of the Corporation or then serves or has served any other
corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise in any capacity at the request of the Corporation
to the fullest extent permitted by the Corporation's Amended and
Restated Certificate of Incorporation (the "Certificate of
Incorporation"), By-laws and applicable law in effect on the date
hereof and to such greater extent as applicable law may hereafter from
time to time permit and to advance to Indemnitee Expenses incurred in
connection therewith.
(b) "EXPENSES" means all attorneys' fees and expenses, retainers,
court costs, transcript costs, duplicating costs, printing and binding
costs, telephone charges, postage and delivery fees, service fees, all
other costs and expenses of the types customarily incurred in
connection with prosecuting, defending, preparing to prosecute or
defend, investigating or being or preparing to be a witness in a
Proceeding, and per diem payments to Indemnitee in an amount equal to
the last annual base salary amount payable under any employment
agreement between the Corporation and Indemnitee divided by 365 for
each day spent by Indemnitee in connection with prosecuting,
defending, preparing to prosecute or defend, investigating or being or
preparing to be a witness in a Proceeding.
(c) "PROCEEDING" includes, without limitation, any action, suit,
arbitration, alternate dispute resolution mechanism, investigation,
administrative hearing or any other actual, threatened or completed
proceeding, whether civil, criminal, administrative or investigative,
whether by a third party, by or in the right of the Corporation or by
Indemnitee to enforce any rights under this Agreement or otherwise
against the Corporation or its affiliates.
2. MAINTENANCE OF INSURANCE AND SELF INSURANCE
(a) Corporation represents that it presently has in force and
effect policies of D & O Insurance in insurance companies and amounts
as follows (the "Insurance Policies"):
Insurer Policy No. Amount Deductible
------- ---------- ------ ----------
Wm. Xxxx Xx. 0000000 $1,000,000 limit $150,000
000 X. Xx. Xxxx X #0000
Xxxxxx, Xxxxx 00000
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Subject only to the provisions of Section 2(b) hereof,
Corporation hereby agrees that, so long as Indemnitee shall continue
to serve as a director or officer of the Corporation (or shall
continue at the request of the Corporation to serve as a director or
officer of another corporation, partnership, joint venture, trust or
other enterprise) and thereafter so long as Indemnitee shall be
subject to any possible claim or threatened, pending or completed
action, suit or proceeding, whether civil, criminal or investigative
by reason of the fact that Indemnitee was a director or officer of the
Corporation (or served in any said other capacities), the Corporation
will purchase and maintain in effect for the benefit of Indemnitee one
or more valid, binding and enforceable policy or policies of D & O
Insurance providing, in all respects, coverage at least comparable to
that presently provided pursuant to the Insurance Policies.
(b) Corporation shall not be required to maintain said policy or
policies of D & O Insurance in effect if said insurance is not
reasonably available or if, in the reasonable business judgment of the
then directors of Corporation, either (i) the premium cost for such
insurance is substantially disproportionate to the amount of coverage
or (ii) the coverage provided by such insurance is so limited by
exclusions that there is insufficient benefit from such insurance.
(c) In the event Corporation does not purchase and maintain in
effect said policy or policies of D & O Insurance pursuant to the
provisions of Section 2(b) hereof, Corporation agrees to hold harmless
and indemnify Indemnitee to the full extent of the coverage which
would otherwise have been provided for the benefit of Indemnitee
pursuant to the Insurance Policies.
3. ADDITIONAL INDEMNITY
Subject only to the exclusions set forth in Section 4 hereof, the
Corporation hereby further agrees to hold harmless and indemnify the
Indemnitee:
(a) Against any and all expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by Indemnitee in connection with any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (including any action by or
in the right of the Corporation) to which Indemnitee is, was or at any
time becomes a party, or is threatened to be made a party, by reason
of the fact that Indemnitee is, was or at any time becomes a director
or officer of Corporation, or is or was serving or at any time serves
at the request of Corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise;
and
(b) Otherwise to the fullest extent as may be provided to
Indemnitee by Corporation under the non-exclusivity provisions of
Article X of the Corporation's Certificate of Incorporation and the
State Statute.
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4. LIMITATIONS ON ADDITIONAL INDEMNITY
No indemnity pursuant to Section 3 hereof shall be paid by
Corporation:
(a) except to the extent the aggregate of losses to be indemnified
thereunder exceed the sum of $1,000 plus the amount of such losses for
which the Indemnitee is indemnified either pursuant to Sections 1 or 2
hereof or pursuant to any D & O Insurance purchased and maintained by
the Corporation;
(b) in respect to remuneration paid to Indemnitee if it shall be
determined by a final judgment or other final adjudication that such
remuneration was in violation of law;
(c) on account of any suit in which judgment is rendered against
Indemnitee for an accounting of profits made from the purchase or sale
by Indemnitee of securities of Corporation pursuant to the provisions
of Section 16(b) of the Securities Exchange Act of 1934 and amendments
thereto or similar provisions of any federal, state or local statutory
law;
(d) on account of Indemnitee's conduct which is finally adjudged
to have been knowingly fraudulent, deliberately dishonest or willful
misconduct;
(e) if a final decision by a Court having jurisdiction in the
matter shall determine that such indemnification is not lawful.
5. CONTINUATION OF INDEMNITY
All agreements and obligations of Corporation contained herein shall
continue during the period Indemnitee if the director or officer of the
Corporation (or is or was serving at the request of Corporation as a director
or officer of another corporation, partnership, joint venture, trust or other
enterprise) and shall continue thereafter so long as Indemnitee shall be
subject to any possible claim or threatened, pending or completed action, suit
or proceeding, whether civil, criminal or investigative, by reason or the fact
that Indemnitee was a director or Corporation or serving in any other capacity
referred to herein.
6. NOTIFICATION AND DEFENSE OF CLAIM
Promptly after receipt by Indemnitee of notice of commencement of any
action, suit or proceeding, Indemnitee will, if a claim in respect thereof is
to be made against Corporation under this Agreement, notify Corporation of the
commencement thereof; but the omission so to notify Corporation will not
relieve it from any liability which it may have to Indemnitee otherwise than
under this Agreement. With respect to any such action, suit or proceeding as
to which Indemnitee notifies Corporation of the commencement thereof:
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(a) Corporation will be entitled to participate therein at its own
expense; and,
(b) Except as otherwise provided below, to the extent that it may
wish, Corporation jointly with any other indemnifying party similarly
notified will be entitled to assume the defense thereof, with counsel
satisfactory to Indemnitee. After notice from Corporation to
Indemnitee of its election so to assume the defense thereof,
Corporation will not be liable to Indemnitee under this Agreement for
any legal or other expenses subsequently incurred by Indemnitee in
connection with the defense thereof other than reasonable costs of
investigation or as otherwise provided below. Indemnitee shall have
the right to employ its counsel in such action, suit or proceeding but
the fees and expenses of such counsel incurred after notice from
Corporation of its assumption of the defense thereof shall be at the
expense of Indemnitee unless (i) the employment of counsel by
Indemnitee has been authorized by Corporation; (ii) Indemnitee shall
have reasonably concluded that there may be a conflict of interest
between Corporation and Indemnitee in the conduct of the defense of
such action or (iii) Corporation shall not in fact have employed
counsel to assume the defense of such action, in each of which cases
the fees and expenses of counsel shall be at the expense of the
Corporation. Corporation shall not be entitled to assume the defense
of such action, suit or proceeding brought by or on behalf of
Corporation or as to which Indemnitee shall have made the conclusion
provided from in (ii) above.
(c) Corporation shall not be liable to indemnify Indemnitee under
this Agreement for any amounts paid in settlement of any action or
claim effected without its written consent. Corporation shall not
settle any action or claim in any manner which would impose any
penalty or limitation on Indemnitee without Indemnitee's written
consent. Neither Corporation nor Indemnitee will unreasonably
withhold their consent to any proposed settlement.
7. AUTHORIZATION OF INDEMNIFICATION
(a) Any indemnification under Sections 1, 2 and 3 hereof (unless
ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination (the
"Determination") that indemnification of the Indemnitee is proper in
the circumstances because the Indemnitee has met the applicable
standard or conduct set forth in the State Statute. Subject to
Sections 8(e), 8(f) and 10 of this Agreement, the Determination shall
be made (i) by the Board by a majority vote or consent of a quorum
consisting of directors who are not, at the time of the Determination,
parties to the action, suit or proceeding for which indemnification is
sought (the "Proceeding"), or (ii) whether such a quorum is or is not
obtainable, if a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (iii) by vote or
consent of the holders of a majority of the outstanding shares of the
Corporation that are entitled to vote generally for the election of
directors and are represented in person or by proxy at a meeting
called for such
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purpose, or (iv) if a quorum cannot be obtained under subdivision (i),
by majority vote or consent of a committee duly designated by the
Board (in which designation directors who are parties may
participate), consisting solely of two or more directors who are not,
at the time of the Determination, parties to the Proceeding.
(b) For purposes of any Determination hereunder, the Indemnitee
shall be deemed to have acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of
the Corporation, or, with respect to any criminal action or
proceeding, to have had reasonable cause to believe his conduct was
unlawful, if his action is based on the records or books of account of
the Corporation or another enterprise, including financial statements,
or on information supplied to him by the officers of the Corporation
or another enterprise in the course of their duties, or on the advice
of legal counsel for the Corporation or another enterprise or on
information or records given or reports made to the Corporation or
another enterprise by an independent certified public accountant or by
an appraiser or other expert selected with reasonable care by the
Corporation or another enterprise. The term "another enterprise" as
used in Section 7(b) shall mean any other corporation or any
partnership, joint venture, trust, employee benefit plan or other
enterprise of which the Indemnitee is or was serving at the request of
the Corporation as a director or officer. The provisions of this
Section 7(b) shall not be deemed to be exclusive or to limit in any
way the other circumstances in which the Indemnitee may be deemed to
have met the applicable standard of conduct set forth in the State
Statute.
(c) For purposes of any Determination hereunder, the termination
of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall
not, of itself, create a presumption that the Indemnitee did not act
in good faith and in a manner which he reasonably believed to be in or
not opposed to be in the best interests of the Corporation , and with
respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
(d) For purposes of any Determination hereunder, the Indemnitee's
conduct with respect to an employee benefit plan for a purpose he
reasonably believed to be in the best interests of the participants in
and beneficiaries of the plan shall be deemed to be conduct that the
Indemnitee reasonably believed to be not opposed to the best interest
of the Corporation.
(e) Notwithstanding any other provision of this Agreement, to the
extent that the Indemnitee has been successful on the merits or
otherwise in defense of any action, suit or proceeding described in
this Agreement, or in defense of any claim, issue or matter herein, he
shall be indemnified against expenses (including attorney's fees)
actually and reasonably incurred by him in connection therewith. For
purposes of this Section 7(e), the term "successful on the merits or
otherwise" shall include, but not
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be limited to, (i) any termination, withdrawal, or dismissal (with or
without prejudice) of any claim, action, suit or proceeding against
the Indemnitee without any express finding of liability or guilt
against him, or (ii) the expiration of a reasonable period of time
after making any claim or threat of action, suit or proceeding without
the institution of the same and without any promise or payment made to
induce a settlement.
8. PROCEDURES FOR DETERMINATION OF WHETHER STANDARDS HAVE BEEN
SATISFIED
(a) All costs of making the Determination required by Section 7
hereof shall be borne solely by the Corporation, including, but not
limited to, the costs of legal counsel, proxy solicitations and
judicial determination. The Corporation shall also be solely
responsible for paying (i) all reasonable expenses incurred by the
Indemnitee to enforce this Agreement, including, but not limited to,
the costs incurred by the Indemnitee to obtain court-ordered
indemnification pursuant to Section 10 hereof, regardless of the
outcome of any such application or proceeding, and (ii) all costs of
defending any suits or proceedings challenging payments to the
Indemnitee under this Agreement.
(b) The Corporation shall use its best efforts to make the
Determination contemplated by Section 7 hereof promptly. In addition,
the Corporation agrees: (i) if the Determination is to be made by the
Board or a committee thereof, such Determination shall be made not
later than fifteen (15) days after a written request for a
Determination (a "Request") is delivered to the Corporation by the
Indemnitee; (ii) if the Determination is to be made by independent
legal counsel, such Determination shall be made not later than twenty
(20) days after a request is delivered to the Corporation by the
Indemnitee; and (iii) if the Determination is to be made by the
stockholders of the Corporation, such Determination shall be made not
later than ninety (90) days after a request is delivered to the
Corporation by the Indemnitee.
(c) The evaluation as to the reasonableness of expenses incurred
by the Indemnitee for purposes of this Agreement shall be made within
fifteen (15) days of the Indemnitee's delivery to the Corporation of a
Request that includes a reasonable accounting and documentation of
expenses incurred. All expenses shall be considered reasonable for
purposes of this Agreement if the finding contemplated by this Section
8(c) is not made within the prescribed time. Payment shall be made to
the Indemnitee immediately following the determination that the
expenses submitted are reasonable and properly documented.
(d) The Indemnitee and each other stockholder who is party to the
proceeding for which indemnification is sought shall be entitled to
vote on any Determination to be made by the Corporations's
stockholders, including a determination made pursuant to Section 8(e)
hereof. In addition, in connection with each meeting at which a
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stockholder Determination will be made, the Corporation shall solicit
proxies that expressly include a proposal to indemnify the Indemnitee.
The Corporation proxy statement relating to the proposal to indemnify
the Indemnitee shall not include a recommendation against
indemnification.
(e) If a Determination is made by the Board or a committee thereof
that the Indemnitee did not meet the applicable standard of conduct
set forth in the State Statute, upon written request of the Indemnitee
and the Indemnitee's delivery of $500 to the Corporation, the
Corporation shall cause a new Determination to be made by the
Corporation's stockholders at the next regular or special meeting of
Stockholders. Subject or Section 10 hereof, such Determination by the
Corporation's stockholders shall be binding and conclusive for all
purposes of this Agreement.
(f) If, at any time subsequent to the date of this Agreement,
"Continuing Directors" do not constitute a majority of members of the
Board, or there is otherwise a change in control of the Corporation
[as contemplated by item 403(c) of Regulation S-K], then upon the
request of Indemnitee, the Corporation shall cause the Determination
required by Section 7 hereof to be made by independent legal counsel.
The fees and expenses incurred by the independent counsel in making
the Determination shall be borne solely by the Corporation. If such
legal counsel is unwilling and/or unable to make the Determination,
then the Corporation shall cause the Determination to be made by a
majority vote or consent of a Board committee consisting solely of
Continuing Directors. For purposes of this Agreement, a "Continuing
Director" means either a member of the Board at the date of this
Agreement or a person nominated to serve as a member of the Board by a
majority of the then Continuing Directors.
(g) The Corporation shall afford to the Indemnitee and his
representative ample opportunity to present evidence of the facts upon
which the Indemnitee relies for indemnification, together with other
information relating to any requested Determination. The Corporation
shall also afford the Indemnitee the reasonable opportunity to include
such evidence and information in any Corporation proxy statement
relating to a stockholder Determination.
9. PAYMENT OF EXPENSES
(a) Expenses (including attorneys' fees) incurred by the
Indemnitee in defending any action, suit or proceeding described in
this Agreement shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding. The Corporation
shall promptly pay the amount of such expenses to the Indemnitee, but
in no event later than fifteen (15) days following the Indemnitee's
delivery to the Corporation of a written request for payment pursuant
to this Section 9, together with a reasonable accounting of such
expenses.
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(b) Indemnitee agrees that Indemnitee will reimburse Corporation
for all reasonable expenses paid by the Corporation in defending any
civil or criminal action, suit or proceeding against Indemnitee in the
event and only to the extent that it shall be ultimately determined
that Indemnitee is not entitled to be indemnified by Corporation for
such expenses under the provisions of the State Statute, By-laws, this
Agreement or otherwise.
(c) The Corporation shall pay the expenses contemplated by this
Section 9 regardless of the Indemnitee's financial ability to make
repayment, and regardless whether indemnification of the Indemnitee by
the Corporation will ultimately be required. Any payments and
undertakings to repay pursuant to this Section 9 shall be unsecured
and interest-free.
10. COURT-ORDERED INDEMNIFICATION
Regardless whether the Indemnitee has met the standard of conduct set
forth herein, and notwithstanding the presence or absence of any Determination
whether such standards have been satisfied, the Indemnitee may apply for
indemnification to the court conducting any proceeding to which the Indemnitee
is a party or to any other court of competent jurisdiction. On receipt of an
application, the court, after giving any notice the court considers necessary,
may order indemnification if it determines that Indemnitee is fairly and
reasonably entitled to indemnification in view of all the relevant
circumstances (including this Agreement).
11. ENFORCEMENT
(a) Corporation expressly confirms and agrees that it has entered
into this Agreement and assumed the obligations imposed on
Corporation hereby in order to induce Indemnitee to continue as a
director or officer of Corporation, and acknowledges that Indemnitee
is relying upon this Agreement in continuing in such capacity. The
Corporation shall cooperate in good faith with the Indemnitee and use
its best efforts to insure that the Indemnitee is indemnified for
liabilities described herein to the fullest extent permitted by law.
(b) In the event Indemnitee is required to bring any action to
enforce rights or to collect monies due under this Agreement and is
successful in such action, Corporation shall reimburse Indemnitee for
all of Indemnitee's reasonable fees and expenses in bringing and
pursuing such action.
12. SEPARABILITY
Each of the provisions of this Agreement is a separate and distinct
agreement and independent of the others, so that if any provision hereof shall
be held to be invalid or unenforceable for any
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reason, such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
13. NON-EXCLUSIVITY
The rights of indemnification and insurance provided in this Agreement
shall be in addition to any rights to which the Indemnitee may otherwise be
entitled by statute, bylaw, agreement, vote of stockholders or otherwise.
14. GOVERNING LAW; BINDING EFFECT; AMENDMENT AND TERMINATION
(a) This Agreement shall be interpreted and enforced in accordance
with the laws of the State of Delaware.
(b) This Agreement shall be binding upon Indemnitee and upon
Corporation, its successors and assigns, and shall inure to the
benefit of Indemnitee, his heirs, personal representatives and assigns
and to the benefit of Corporation, its successors and assigns.
(c) No amendment, modification, termination or cancellation of
this Agreement shall be effective unless in writing signed by both
parties hereto.
15. EFFECTIVE DATE
The provisions of this Agreement shall cover claims, actions, sits and
proceedings whether now pending or hereafter commenced and shall be retroactive
to cover acts or omissions or alleged acts or omissions which heretofore have
taken place. By way of example but not of limitation, this Agreement shall
apply to all liabilities, known or unknown, contingent or otherwise, that
presently exist or arise in the future, regardless whether the liabilities
relate to activities of the Indemnitee and/or the Corporation preceding or
subsequent to the date of this Agreement.
16. VOLUNTARY PROCEEDINGS
Notwithstanding anything in this Agreement to the contrary, prior to a
Change in Control, the Indemnitee shall not be entitled to indemnification or
any advance pursuant to this Agreement in connection with any claim, action, or
proceeding initiated by the Indemnitee against the Corporation or any director
or officer of the Corporation except to enforce Indemnitee's rights under this
Agreement or any other written agreement between Indemnitee and the Corporation
unless the institution of such claim, action or proceeding was authorized prior
to its commencement by a majority vote of the Board of Directors or the
Indemnitee is successful, in whole or in part, on the merits in such claim,
action or proceeding.
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17. SURVIVAL CLAUSE
The Corporation acknowledges that, in providing services to the
Corporation, the Indemnitee is relying on this Agreement. Accordingly, the
Corporation agrees that its obligations hereunder will survive (i) any actual
or purported termination of this Agreement by the Corporation or its successors
or assigns whether by operation or law or otherwise, (ii) any change in the
Corporation's Certificate of Incorporation or By-laws and (iii) termination of
the Indemnitee's services to the Corporation (whether such services were
terminated by the Corporation or the Indemnitee), whether or not a claim is
made or an action or proceeding is threatened or commenced before or after the
actual or purported termination of this Agreement, change in the certificate of
incorporation or by-laws or termination of the Indemnitee's services.
18. SUCCESSORS AND ASSIGNS OF THE CORPORATION
This Agreement shall be binding on the successors and assigns of the
Corporation whether by operation of law or otherwise.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
effective as of the date first above written.
PAWNMART, INC.
By:
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Title:
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INDEMNITEE
By:
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Name:
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