Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS AGREEMENT (this “Agreement”) is entered into as of the 12th day of
December, 2017 by NICHOLAS FINANCIAL, INC., a British Columbia, Canada
corporation (the “Company”), and DOUGLAS MAROHN (the “Employee”).

W I T N E S S E T H:

WHEREAS, the Employee desires to be employed by the Company on the terms and
conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants and agreements of the
parties contained herein, and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto covenant and
agree as follows:

1.    EMPLOYMENT AND DUTIES. Subject to the terms and conditions of this
Agreement, the Company agrees to employ the Employee, and the Employee hereby
agrees to serve the Company, as President and Chief Executive Officer. The
Employee shall report directly to the Company’s Board of Directors and shall
render to the Company such management and policy-making services of the type
customarily performed by persons serving in similar capacities with other
employers that are similar to the Company, together with such other duties with
which he is charged by the Company’s Articles or Notice of Articles (or any
similar governance instruments) and subject to the overall direction and control
of the Company’s Board of Directors. The Employee accepts such employment and
agrees to devote his best efforts and substantially all of his business time,
skill, labor and attention to the performance of such duties. The Employee
agrees not to engage in or be concerned with any other commercial duties or
pursuits during the Term (as hereinafter defined); provided, however, that the
Employee may be involved in a passive capacity in a non-competitive business
subject to the prior written approval of the Company’s Board of Directors.
Furthermore, the Employee shall assume and competently perform such reasonable
responsibilities and duties as may be assigned to him from time to time by the
Board of Directors of the Company. To the extent that the Company shall have any
parent, subsidiary, affiliated corporations, partnerships, or joint venture
(collectively “Related Entities”), the Employee shall perform such duties to
promote these entities and their respective interests to the same extent as the
interests of the Company without additional compensation. At all times, Employee
agrees that he has read and will abide by, and prospectively will read and abide
by, any employee handbook, policy, or practice that the Company or Related
Entities has or hereafter adopts with respect to its executive officers or its
employees generally, including without limitation, the Company’s Insider Trading
Policy, Code of Conduct, and Code of Ethics.

2.    TERM. The employment of the Employee under this Agreement commences on the
date hereof and will continue through and including the close of business on
June 12, 2019 (the “Initial Term”), unless earlier terminated pursuant to the
terms of this Agreement. After the end of the Initial Term, this Agreement shall
continue to renew automatically on the anniversary of the last day of the
Initial Term for successive one (1)-year terms (each such one (1)-year term, a
“Renewal Term,” and the Initial Term and any and all Renewal Terms collectively,
the “Term”) unless the Company provides to the Employee, at least sixty
(60) days prior to the

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expiration of any renewal Term, written notification that it intends not to
renew this Agreement. Notwithstanding anything to the contrary herein, this
Agreement may be terminated in accordance with Section 5 hereof (with the
exception of the obligations of the parties hereunder that shall survive any
such termination). Notwithstanding the foregoing, if a Change of Control (as
defined in Appendix A hereto) occurs prior to the end of the Initial Term or any
Renewal Term, this Agreement shall be extended automatically for a one year
renewal period beginning on the date of the Change of Control (a “Post-Change of
Control Renewal Period”). Expiration of this Agreement will not affect the
rights or obligations of the parties hereunder arising out of, or relating to,
circumstances occurring prior to the expiration of this Agreement, which rights
and obligations will survive the expiration of this Agreement.

3.    COMPENSATION.

(a)    Annual Base Salary. The Employee shall receive, and the Company shall
pay, an annual base salary of such amount as shall be determined by the
Compensation Committee of the Company’s Board of Directors (or other committee
performing similar functions) (the “Committee”), but not less than $350,000 (the
“Base Salary”). The Base Salary shall be payable in equal installments in
accordance with the policy then prevailing for the Company’s
Employees.    Following a Change of Control, the Employee’s annual base salary
shall not be decreased and, during the Post-Change of Control Renewal Period,
the Employee’s base salary shall be increased on an annual basis by an amount at
least equal to the average base salary increase, expressed as a percentage,
provided to executives of the Company of comparable status and position to the
Employee. The Employee also shall be entitled, during the Term, to participate
in and receive payments from all other incentive compensation plans as may be
adopted by the Company as are made available to other Employees of the Company.

(b)    Bonus. The Employee shall receive, and the Company shall pay, such
bonuses as shall be determined by or on behalf of the Committee in accordance
with the following terms and conditions:

(i)    2018 Fiscal Year. With respect to the fiscal year ending March 31, 2018,
provided that the Employee is employed by the Company on the last day of such
fiscal year, the Employee shall be entitled to a cash bonus equal to $30,000.

(ii)    2019 Fiscal Year. With respect to the fiscal year ending March 31, 2019,
provided that the Employee is employed by the Company on the last day of such
fiscal year, the Employee shall be entitled to a cash bonus equal to the greater
of (A) $50,000 and (B) the Milestone Bonus (as defined below) calculated with
respect to such fiscal year in accordance with Section 2(b)(vii) hereof.

(iii)    2020 Fiscal Year. With respect to the fiscal year ending March 31,
2020, provided that the Employee is employed by the Company on the last day of
such fiscal year, the Employee shall be entitled to a cash bonus equal to the
Milestone Bonus calculated with respect to such fiscal year in accordance with
Section 2(b)(vii) hereof.

 

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(iv)    2021 Fiscal Year. With respect to the fiscal year ending March 31, 2021,
provided that the Employee is employed by the Company on the last day of such
fiscal year, the Employee shall be entitled to a cash bonus equal to the greater
of (A) the Milestone Bonus calculated with respect to such fiscal year in
accordance with Section 2(b)(vii) hereof and (B) the sum of the Cash Component
and the Restricted Stock Component of the Long-Term Bonus (with all terms as
defined below) calculated with respect to such fiscal year in accordance with
Section 2(b)(viii) hereof.

(v)    2022 Fiscal Year. With respect to the fiscal year ending March 31, 2022,
provided that the Employee is employed by the Company on the last day of such
fiscal year, the Employee shall be entitled to a cash bonus equal to the greater
of (A) the Milestone Bonus calculated with respect to such fiscal year in
accordance with Section 2(b)(vii) hereof and (B) the sum of the Cash Component
and the Restricted Stock Component of the Long-Term Bonus calculated with
respect to such fiscal year in accordance with Section 2(b)(viii) hereof.

(vi)    Discretionary Bonus. With respect to each fiscal year beginning with the
fiscal year ending March 31, 2018 and ending with the fiscal year ending
March 31, 2022, the Committee shall have sole discretion to award an additional
bonus to the Employee, provided, however, that in no event shall any such
additional bonus with respect to such fiscal year exceed 50% of the Employee’s
Base Salary actually earned with respect to such fiscal year.

(vii)    Milestone Bonus. Beginning with the fiscal year ending March 31, 2019
and ending with the fiscal year ending March 31, 2022, the milestone bonus (the
“Milestone Bonus”) earned with respect to a given fiscal year, provided that the
Employee is employed by the Company on the last day of such fiscal year, is
based on the Pre-Tax Yield (as defined below) actually achieved by the Company
for such fiscal year (the “Actual Yield”) compared to the relevant target
Pre-Tax Yield for such fiscal year set forth below (the “Target Yield”). For
these purposes, “Pre-Tax Yield” is defined as operating income before income
taxes divided by interest and fee income on finance receivables, adjusted in the
sole discretion of the Committee, including without limitation for the following
items: 1) changes resulting from a Financial Accounting Standards Board (“FASB”)
Accounting Pronouncement, 2) dividends, 3) gain on sale and 4) provision for
credit losses if less than charge-offs.

 

Fiscal Year Ending March 31,

  

Target Yield

2019

   7.5%

2020

   12.5%

2021

   20.0%

2022

   30.0%

The percentage obtained for a fiscal year by dividing (x) the Actual Yield for
such fiscal year by (y) the Target Yield for such fiscal year shall be defined
as the “Performance Percentage.” If the Performance Percentage is less than 80%,
no Milestone Bonus is earned with respect to such fiscal year. If the
Performance Percentage is 80% or higher, the Milestone Bonus with respect to
such fiscal year shall be equal to the amount obtained by multiplying the
Performance Percentage by $150,000. By way of example, if the Actual Yield for
the fiscal year ending March 31, 2019 is 9.0%, the Milestone Bonus with respect
to such fiscal year will be $180,000, representing 120% multiplied by $150,000.

 

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(viii)    Long-Term Bonus. Beginning with the fiscal year ending March 31, 2021
and ending with the fiscal year ending March 31, 2022, the long-term bonus (the
“Long-Term Bonus”) earned with respect to a given fiscal year (the
“Determination Year”), provided that the Employee is employed by the Company on
the last day of the Determination Year, is based on (A) the three-year rolling
average annual growth in tangible book value per share of the Company’s common
stock over the three successive fiscal years ending on the last day of the
Determination Year, adjusted in the sole discretion of the Compensation
Committee, including without limitation for the following items: 1) changes
resulting from a FASB Accounting Pronouncement, 2) share buy-backs, 3)
dividends, 4) stock splits, 5) gain on sale and 6) provision for credit losses
if less than charge-offs, and (B) the Employee’s Base Salary for the
Determination Year. The Long-Term Bonus earned with respect to a Determination
Year shall consist of a cash component (the “Cash Component”) and a restricted
stock component (the “Restricted Stock Component”) and shall be calculated as
follows:

 

3-Year Rolling Average Annual Growth
In Tangible Book Value Per Share

  

Cash Component (as % of Base Salary
for Determination Year)

  

Restricted Stock Component (as % of
Base Salary for Determination Year)

Below 6%

   0%    0%

6-8%

   40%    40%

8-10%

   60%    60%

10-12%

   100%    100%

12-14%

   150%    150%

15-18%

   200%    200%

Above 18%

   Discretionary    Discretionary

The number of shares of restricted stock earned as part of the Restricted Stock
Component shall be equal to (I) the product of (x) the Base Salary for the
Determination Year and (y) the relevant percentage set forth in the table above
under the heading “Restricted Stock Component” (or otherwise determined by the
Committee in case such growth is higher than 18%), divided by (II) the average
closing price of the Company’s common stock on the principal exchange on which
it is then traded or quoted over the 90 calendar days ending on the last day of
the Determination Year. Any shares of restricted stock so earned shall vest on
the third anniversary of the last day of the Determination Year. By way of
example, if the three-year rolling average annual growth in tangible book value
per share of the Company’s common stock is 15%, the Cash Component would be
equal to 200% of the Employee’s Base Salary for the Determination Year and the
Restricted Stock Component would be equal to 200% of the Employee’s Base Salary
for the Determination Year.

(ix)    Short-Term Deferral. Any bonus payable pursuant to Section 3(b)(i) shall
be paid to the Employee no later than the first business day following March 31,
2018. Any bonus payable pursuant to Sections 3(b)(ii), 3(b)(iii), 3(b)(iv) or
3(b)(v) shall be paid to the Employee within a reasonable time, but in no event
later than 60 calendar days, after the last day of the applicable fiscal year or
Determination Year to which the bonus relates.

 

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(c)    Payments. All amounts paid pursuant to this Agreement shall be subject to
withholding or deduction by reason of the Federal Insurance Contribution Act,
Federal income tax, state and local income tax, if any, and comparable laws and
regulations.

(d)    Other Benefits. The Employee shall be reimbursed by the Company for all
reasonable and customary travel and other business expenses incurred by him in
the performance of his duties hereunder in accordance with the Company’s
standard policy regarding expense verification practices. The Employee shall be
entitled to that number of weeks paid vacation per year that is available to
other Employees of the Company, and shall be eligible to participate in such
pension, life insurance, health insurance, disability insurance and other
employee benefits plans, if any, which the Company may from time to time make
available to its employees generally on such terms as are available to such
employees; provided, however, that premiums for the Employee’s and his spouse’s
health insurance (i.e., medical, dental and vision coverage) shall be paid by
the Company. On and after a Change of Control, the Employee shall be included:
(i) to the extent eligible thereunder (which eligibility shall not be
conditioned on Employee’s salary grade or on any other requirement which
excludes persons of comparable status to Employee unless such exclusion was in
effect for such plan or an equivalent plan immediately prior to the Change of
Control), in any and all plans providing benefits for the Company’s salaried
employees in general (including but not limited to group life insurance,
hospitalization, medical, dental, and long-term disability plans) and (ii) in
plans provided to executives of the Company of comparable status and position to
Employee (including but not limited to deferred compensation, split-dollar life
insurance, supplemental retirement, stock option, stock appreciation, stock
bonus, cash bonus and similar or comparable plans); provided that in no event
shall the aggregate level of benefits under the plans described in clause
(i) and the plans described in clause (ii), respectively, in which Employee is
included be less than the aggregate level of benefits under plans of the Company
of the type referred to in such clause, respectively, in which Employee was
participating immediately prior to the Change of Control.

(e)    Stock Purchase Matching Program. The Company shall match 100% of the
purchases of common stock of the Company that the Employee makes during the time
period commencing on the date hereof and ending on the first anniversary of such
date (so long as the Employee remains employed through the date of such
purchase); provided, however, that (i) such shares of common stock matched by
the Company shall be restricted stock and shall not vest until the third
anniversary of the date on which the Employee purchased the common stock that
triggered the matching obligation (a “Triggering Purchase”), provided, further,
that such shares of restricted stock shall only vest if the Employee is employed
by the Company on such vesting date (subject to accelerated vesting as specified
in Section 5(g) hereof), and (ii) the fair market value of such shares of common
stock matched by the Company shall not exceed $500,000 in the aggregate.

(f)    Relocation Expenses. In connection with his relocation to the Tampa Bay
area, the Company will reimburse the Employee for reasonable relocation expenses
in an amount not to exceed $25,000.

 

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4.    NONCOMPETITION, NON-DISCLOSURE AND STOCK OWNERSHIP REQUIREMENTS.

(a)    Employee acknowledges that his services are of a special, unique,
extraordinary and intellectual character, and his position with the Company
places him in a position of confidence and trust with customers, suppliers and
employees of the Company and other Related Entities. The Employee further
acknowledges that the rendering of services under this Agreement necessarily
requires the disclosure to him of confidential information (as defined below) of
the Company and/or Related Entities. The Employee and the Company agree that
both prior to and during his course of employment with the Company, the Employee
had, has and will continue to develop personal relationships with the Company’s
financiers, customers, suppliers and employees, and that the Employee holds a
position of substantial trust and confidence. As a consequence, the Employee
agrees that it is reasonable and necessary for the protection of goodwill and
legitimate business interests of the Company and Related Entities that the
Employee make the covenants contained herein, that the covenants are a material
inducement for the Company to employ the Employee and to enter into this
Agreement, and that the covenants are given as an integral part of and incident
to this Agreement.

(b)    The Employee covenants and agrees that during his employment by the
Company (whether during the Term hereof or otherwise), and thereafter for a
period of two (2) years following the termination of the Employee’s employment
with the Company, he will not:

(i)    directly or indirectly engage in, continue in or carry on the business of
the Company or any Related Entity, or any business substantially similar
thereto, including owning or controlling any financial interest in, any
corporation, partnership, firm or other form of business organization which
competes with or is engaged in or carries on any aspect of such business or any
business substantially similar thereto;

(ii)    directly or indirectly, assist, promote or encourage any employees or
clients, or potential employees or clients, of the Company or Related Entities
to terminate or discontinue their relationship in order to pursue opportunities
or employment with any competitor of the Company or Related Entities;

(iii)    consult with, advise or assist in any way, whether or not for
consideration, any corporation, partnership, firm or other business organization
which is now, becomes or may become a competitor of the Company or any Related
Entity in any aspect of their respective businesses during the Employee’s
employment with the Company, including, but not limited to: advertising or
otherwise endorsing the products of any such competitor; soliciting customers or
otherwise serving as an intermediary for any such competitor; or loaning money
or rendering any other form of financial assistance to or engaging in any form
of business transaction whether or not on an arms’ length basis with any such
competitor; or

(iv)    engage in any practice the purpose of which is to evade the provisions
of this Agreement or to commit any act which is detrimental to the successful
continuation of, or which adversely affects, the business or the Company;
provided, however, that the foregoing shall not preclude the Employee’s
ownership of not more than 5% of the equity securities of a corporation which
has such securities registered under Section 12 of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”).

 

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(c)    The Employee acknowledges that the inventions, innovations, software,
trade secrets, business plans, financial strategies, finances, and all other
confidential or proprietary information with respect to the business and
operations of the Company and Related Entities are valuable, special and unique
assets of the Company. The Employee agrees not to, at any time during his
employment by the Company (whether during the Term hereof or otherwise),
disclose, directly or indirectly, to any person or entity, or use or authorize
or propose to authorize any person or entity to use any confidential or
proprietary information with respect to the Company or Related Entities without
the prior written consent of the Company including, without limitation,
information as to the financial condition, results of operations, identities of
clients or prospective clients, products under development, acquisition
strategies or acquisitions under consideration, pricing or cost information,
marketing strategies or any other information relating to the Company or any of
the Related Entities which could be reasonably regarded as confidential.
However, this does not include information which is or shall become generally
available to the public other than as a result of disclosure by the Company or
Related Entities or any of their agents, affiliates or representatives or a
person to whom any of them has provided such information.

(d)    The Employee agrees that the geographic scope of this covenant not to
compete shall extend to (i) the states of Alabama, Florida, Georgia, Illinois,
Indiana, Kansas, Kentucky, Maryland, Michigan, Missouri, North Carolina, Ohio,
Pennsylvania, South Carolina, Tennessee, Texas, Virginia and Wisconsin, which
constitute the geographic area in which the Company has operated its business at
some time during the one year preceding the date of this Agreement; and
(ii) such broader geographic area where the Company conducts business at any
time during the Employee’s employment by the Company (whether during the Term
hereof or otherwise).

(e)    In the event of any breach of the above covenants not to compete, the
Employee recognizes that the remedies at law will be inadequate and that in
addition to any relief at law which may be available to the Company for such
violation or breach and regardless of any other provision contained in this
Agreement, the Company shall be entitled to equitable remedies (including an
injunction) and such other relief as a court may grant after considering the
intent of this Section 4.

(f)    In the event a court of competent jurisdiction determines that the
provisions of the above covenants not to compete are excessively broad as to
duration, geographic scope, prohibited activities or otherwise, the parties
agree that such covenants shall be reduced or curtailed to the extent necessary
to render them enforceable.

(g)    Beginning on March 31, 2023, for so long as he remains employed by the
Company as Chief Executive Officer, the Employee shall maintain ownership of
shares of common stock of the Company (including unvested restricted stock) with
a fair market value equal to at least 500% of his Base Salary then in effect.

 

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5.    TERMINATION.

(a)    Death. The Employee’s employment hereunder shall terminate upon his
death.

(b)    Disability. If, during the Term, the Employee becomes physically or
mentally disabled in accordance with the terms and conditions of any disability
insurance policy covering the Employee or, if due to such physical or mental
disability, the Employee becomes unable for a period of more than one hundred
eighty (180) consecutive days to perform his duties hereunder on substantially a
full-time basis as determined by the Company in its sole reasonable discretion,
the Company may, at its option, terminate the Employee’s employment hereunder
upon not less than thirty (30) days’ written notice of termination.

(c)    Cause. The Company may terminate this Agreement at any time with Cause.
As used in this Agreement, “Cause” shall mean the following: (1) a material
violation of the Company’s policies or practices which reasonably justifies
termination; (2) conviction of a felony, as evidenced by a binding and final
judgment, order or decree of a court of competent jurisdiction; (3) the
commission by the Employee of any act which would reasonably be expected to
materially injure the reputation, business, or business relationships of the
Company or Related Entities; or (4) any material breach by Employee of this
Agreement. The Company may terminate this Agreement with Cause as defined in
clauses (1) and (4) above upon fifteen (15) business days’ prior written notice
(the “Cause Notification Period”) to Employee, but such termination shall only
become effective in the event of Employee’s failure to cure the applicable
breach or violation, to the reasonable satisfaction of Company, prior to the end
of the Cause Notification Period. The Company may terminate this Agreement
without notice at any time with Cause as defined in clause (2) or (3) above.
Notwithstanding anything in the foregoing to the contrary, during a Post-Change
of Control Renewal Period, the Company may terminate this Agreement with Cause
only as defined in clause (2) or (4) above. In the event of a termination with
Cause, the Company shall be relieved of all its obligations to the Employee
provided for by this Agreement, and all payments to the Employees hereunder
shall immediately cease and terminate.

(d)    Involuntary Termination by Employee. The Employee may terminate his
employment hereunder upon (i) a good faith determination by the Employee that
there has been a material breach of the Agreement by the Company, (ii) a
material adverse change in the Employee’s working conditions or status, (iii) a
significant relocation of the Employee’s principal office, or (iv) during a
Post-Change of Control Renewal Period, a good faith determination by the
Employee that there has been any of the following: a breach of the Agreement by
the Company, any adverse change in the Employee’s working conditions, status,
authority, duties, responsibilities (including but not limited to a requirement
that the Employee report to a corporate officer instead of reporting directly to
the board of directors) or any requirement that the Employee relocate his
principal office to a location that is more than ten (10) miles from the
location of the Employee’s principal office immediately prior to the Change of
Control (any one of the preceding constituting “Good Reason”), by delivering
written notice of termination to the Company indicating in reasonable detail the
facts and circumstances alleged to provide a basis for such termination and
shall cease performing the Employee’s duties hereunder on the date which is ten
(10) days after delivery of the notice, which date shall also be the date of
termination of the Employee’s employment and the final day of the ten (10) day
“Good Reason Notification Period”, but such termination shall only become
effective in the event of the Company’s failure to cure the applicable breach or
violation, to the reasonable satisfaction of the Employee, prior to the end of
the Good Reason Notification Period.

 

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(e)    Voluntary Termination by Employee. The Employee agrees to provide the
Company with at least twenty (20) business days’ (“Termination Notice Period”)
prior written notice of his intent to terminate employment voluntarily. Failure
to provide such notice terminates the Employee’s entitlement to payment of
accrued, unused benefits, such as vacation. However, the Company reserves the
right to terminate the Employee before the end of the Termination Notice Period,
provided that the Company pays the Employee the salary that he would have
received from the date of the last payroll payment to the end of the Termination
Notice Period. Such salary shall be paid in accordance with the Company’s normal
payroll procedures applicable to base salary. During the Termination Notice
Period, the Employee agrees to make a good faith effort to perform the duties
described hereunder. If, during the Term, the Employee voluntarily terminates
his employment with the Company, the Company’s obligations, including payment
obligations, under this Agreement shall cease, except that the Company shall pay
the Employee the amount of base salary that he would have received from the date
of the last payroll payment to the end of the Termination Notice Period in
accordance with the Company’s normal payroll procedures applicable to base
salary.

(f)    Regular Severance Payments. In the event of a termination of the
Employee’s employment occurring other than at the end of the Initial Term or a
Renewal Term and other than during a Post-Change of Control Renewal Period
(x) by the Company other than for Cause or (y) by the Employee in a manner which
satisfies Section 5(d):

(i)    The Company shall pay the Employee (subject to the provisions of
Section 6 of this Agreement) a one-time, lump-sum severance payment equal to:
(A) the Employee’s Base Salary in effect at the time of such termination
(“Regular Severance Payment”) multiplied by (B) a fraction, the numerator of
which is the number of days remaining until the end of the Initial Term (if the
termination occurs during the Initial Term) or the end of the then-running
Renewal Term (if the termination occurs during such Renewal Term), and the
denominator of which is the total number of days in the Initial Term or Renewal
Term, as applicable. The Regular Severance Payment shall be paid to the Employee
in cash equivalent on the date that is sixty (60) days after the date of
termination of the Employee’s employment; provided that, to the extent required
to comply with Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), all or a portion of the Regular Severance Payment shall be delayed
until the first day of the seventh (7th) month following the month in which the
termination of the Employee’s employment occurs, without interest thereon.

(ii)    (1) All restrictions on any restricted stock or restricted stock unit
awards made to the Employee by the Company or its affiliates (except for
restricted stock issued to the Employee as part of the stock matching program
set forth in Section 3(e) hereof) shall lapse such that Employee is fully and
immediately vested in such awards upon such termination of employment; (2) any
stock options or stock appreciation rights granted to Employee pursuant to the
Company’s or its affiliate’s equity-based incentive plan(s) shall become fully
and immediately vested upon such termination of employment; (3) any performance
shares, performance units or similar performance-based equity awards granted to
Employee pursuant to the Company’s or its affiliate’s equity-based incentive
plan(s) shall be deemed earned on a pro rated basis according to the portion of
the performance period that has elapsed through the date of the termination of
employment as if all performance requirements had been satisfied at the target
level (or such higher level as would have been achieved if performance through
the date of the termination of employment had continued through the end of the
performance period); and (4) restricted stock delivered or then deliverable by
the Company to the Employee pursuant to the stock matching program set forth in
Section 3(e) hereof (“Matching Stock”) shall become immediately vested in
accordance with the following schedule: one-third (1/3) of the number of shares
of Matching Stock shall immediately vest if the termination occurs less than one
(1) year after the Triggering Purchase, two-thirds (2/3) of the number of shares
of Matching Stock shall immediately vest if the termination occurs less than two
(2) years, but one (1) year or more, after the Triggering Purchase, and one
hundred percent (100%) of the number of shares of Matching Stock shall
immediately vest if the termination occurs more two (2) years or more after the
Triggering Purchase.

 

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(g)    Change of Control Severance Payments. In the event of a termination of
the Employee’s employment occurring other than at the end of the Initial Term or
a Renewal Term during a Post-Change of Control Renewal Period (x) by the Company
other than for Cause or (y) by the Employee in a manner which satisfies
Section 5(d):

(i)    The Company shall pay the Employee (subject to the provisions of
Section 6 of this Agreement) a one-time, lump-sum severance payment equal to
200% of the Employee’s Base Salary in effect at the time of such termination
(“Change of Control Severance Payment”). The Change of Control Severance Payment
shall be paid to the Employee in cash equivalent on the date that is sixty
(60) days after the date of termination of the Employee’s employment; provided
that, to the extent required to comply with Section 409A of the Code, all or a
portion of the Change of Control Severance Payment shall be delayed until the
first day of the seventh (7th) month following the month in which the
termination of the Employee’s employment occurs, without interest thereon.

(ii)    (1) All restrictions on any restricted stock or restricted stock unit
awards made to the Employee by the Company or its affiliates (except for
restricted stock issued to the Employee as part of the stock matching program
set forth in Section 3(e) hereof) shall lapse such that Employee is fully and
immediately vested in such awards upon such termination of employment; (2) any
stock options or stock appreciation rights granted to Employee pursuant to the
Company’s or its affiliate’s equity-based incentive plan(s) shall become fully
and immediately vested upon such termination of employment; (3) any performance
shares, performance units or similar performance-based equity awards granted to
Employee pursuant to the Company’s or its affiliate’s equity-based incentive
plan(s) shall be deemed earned on a pro rated basis according to the portion of
the performance period that has elapsed through the date of the termination of
employment as if all performance requirements had been satisfied at the target
level (or such higher level as would have been achieved if performance through
the date of the termination of employment had continued through the end of the
performance period); and (4) Matching Stock shall become immediately vested in
accordance with the following schedule: one-third (1/3) of the number of shares
of Matching Stock shall immediately vest if the termination occurs less than one
(1) year after the Triggering Purchase, two-thirds (2/3) of the number of shares
of Matching Stock shall immediately vest if the termination occurs less than two
(2) years, but one (1) year or more, after the Triggering Purchase, and one
hundred percent (100%) of the number of shares of Matching Stock shall
immediately vest if the termination occurs more two (2) years or more after the
Triggering Purchase.

 

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(h)    Additional Benefits. In the event of a termination triggering payments
under Sections 5(f) or 5(g) above, the Employee shall be entitled to the
following additional benefits:

(i)    Until the earlier of eighteen (18) months after the date of Employee’s
termination of employment or such time as Employee has obtained new employment
and is covered by benefits which in the aggregate are at least equal in value to
the following benefits, Employee shall continue to be covered, at the expense of
the Company, by the same or equivalent life insurance, hospitalization, medical,
dental and vision coverage as Employee received (or, if higher, as was required
hereunder) immediately prior to Employee’s termination of employment, subject to
the following: After the end of the COBRA continuation period, if such
hospitalization, medical or dental coverage is provided under a health plan that
is subject to Section 105(h) of the Code, benefits payable under such health
plan shall comply with the requirements of Treasury regulation section
1.409A-3(i)(1)(iv) and, if necessary, the Company shall amend such health plan
to comply therewith; and if provision of any such health benefits would subject
the Company or its benefits arrangements to a penalty or adverse tax treatment,
then the Company shall provide a cash payment to Employee in an amount
reasonably determined by the Company to be equivalent to the COBRA premiums for
similar benefits.

(ii)    The Company shall bear up to $15,000 in the aggregate of fees and
expenses of consultants and/or legal or accounting advisors engaged by the
Employee to advise the Employee as to matters relating to the computation of
benefits due and payable under this Section 5.

Notwithstanding anything to the contrary in this Agreement, if a Change of
Control occurs and the Employee’s employment with the Company is terminated
(other than a termination due to Employee’s death or as a result of Disability)
during the period of 180 days prior to the date on which the Change of Control
occurs, and if it is reasonably demonstrated by Employee that such termination
of employment (i) was at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control or (ii) otherwise arose in
connection with or in anticipation of a Change of Control, then for all purposes
of this Agreement such termination of employment shall be deemed a termination
following such Change of Control.

(i)    General Release. Notwithstanding anything to the contrary herein, the
payments and benefits specified in Sections 5(f), 5(g) and 5(h) above shall be
in consideration for, contingent on and subject to the Company receiving an
executed general release from the Employee containing terms reasonably
satisfactory to the Company that is effective and non-revocable by the 60th day
after the date of termination of the Employee’s employment.

 

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(j)    Benefits Through Termination Date. The following shall apply upon
termination of the Employee’s employment: Notwithstanding anything to the
contrary herein contained, the Employee shall receive all compensation and other
benefits to which he was entitled under this Agreement or otherwise as an
employee of the Company through the termination date, including payments of base
salary accrued hereunder through the calendar month in which such termination
occurs.

6.    OBLIGATIONS WITH RESPECT TO FORMER EMPLOYER.    Until such time as
otherwise informed by the Chairman of the Board of Directors of the Company,
Employee shall (a) not have control over the Company’s operations in North
Carolina and South Carolina; (b) not directly or indirectly solicit, or attempt
to persuade, influence or induce, or assist any other person in so persuading,
influencing or inducing (i) any customer, vendor or supplier of ML Credit to
cease doing business with ML Credit or to reduce the amount of business it does
with ML Credit, (ii) any landlord of ML Credit to terminate or otherwise impair
any lease agreements or landlord relationship with ML Credit, (iii) any employee
of ML Credit to leave the employ of ML Credit, or to accept any other employment
or position; (c) not disclose to the Company or otherwise use on the Company’s
behalf any of the confidential information of ML Credit.

7.    TAX PROVISIONS.

(a)    Limitation on Parachute Payments. Notwithstanding any other provision of
this Agreement, if any portion of the Severance Payment or any other payment
under this Agreement, or payments to or for the benefit of the Employee under
any other agreement or plan (collectively, the “Change of Control Benefits”),
would constitute an “excess parachute payment,” then the Change of Control
Benefits to be made to the Employee shall be reduced such that the value of the
aggregate Change of Control Benefits that the Employee is entitled to receive
shall be One Dollar ($1) less than the maximum amount which the Employee may
receive without becoming subject to the tax imposed by Section 4999 of the Code
(or any successor provision) or which the Company may pay without loss of
deduction under Section 280G(a) of the Code (or any successor provision);
provided that the foregoing reduction in the amount of Change of Control
Benefits shall not apply if the after-tax value to the Employee of the Change of
Control Benefits prior to reduction in accordance herewith is greater than the
after-tax value to the Employee if the Change of Control Benefits are reduced in
accordance herewith. For purposes of this Agreement, the terms “excess parachute
payment” and “parachute payments” shall have the meanings assigned to them in
Code Section 280G, and such “parachute payments” shall be valued as provided
therein.

(b)    Opinion. For purposes of this Section, within thirty (30) days after
notice by one party to the other of its belief that there is a payment or
benefit due the Employee that will result in an excess parachute payment as
defined in Section 280G of the Code or any successor provision thereto, the
Employee and the Company shall obtain, at the Company’s expense, the opinion
(which need not be unqualified) of nationally recognized tax counsel or tax
accounting firm (“Tax Counsel”) selected by the Company’s independent auditors
and acceptable to the Employee, which sets forth (A) the “base amount” within
the meaning of Section 280G; (B) the aggregate present value of the payments in
the nature of compensation to the Employee as described in Section 280G(b)(2)(A)
(ii); (C) the amount and present value of any “excess parachute payment” within
the meaning of Section 280G(b)(1) without regard to the limitations of this
Section 7; (D) the after-tax value of the Change of Control Benefits if the
reduction in Change of Control Benefits contemplated under this Section 7 did
not apply; and (E) the after-tax value of the Change of Control Benefits taking
into account the reduction in Change of Control Benefits contemplated under this
Section 7. For purposes of determining the after-tax value of the Change of
Control Benefits, the Employee shall be deemed to pay federal income taxes and
employment taxes at the highest marginal rate of federal income and employment
taxation in the calendar year in which the payment is to be made and state and
local income taxes at the highest marginal rates of taxation in the state and
locality of the Employee’s domicile for income tax purposes on the date the
payment is to be made, net of the maximum reduction in federal income taxes that
may be obtained from deduction of such state and local taxes.

 

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In the event that a reduction is to be made under this Section 7, the Change of
Control Benefits shall be reduced or eliminated by applying the following
principles, in order: (i) the payment or benefit with the higher ratio of the
parachute payment value to present economic value (determined using reasonable
actuarial assumptions) shall be reduced or eliminated before a payment or
benefit with a lower ratio; (ii) the payment or benefit with the later possible
payment date shall be reduced or eliminated before a payment or benefit with an
earlier payment date; and (iii) cash payments shall be reduced prior to non-cash
benefits; provided, however, that if the foregoing order of reduction or
elimination would violate Section 409A of the Code, then the reduction shall be
made pro rata among the payments or benefits included in the Change of Control
Benefits (on the basis of the relative present value of the parachute payments).
For purposes of this Agreement, the value of any noncash benefits or any
deferred payment or benefit, and all present economic values, shall be
determined by the Company’s independent auditors in accordance with the
principles of Sections 280G, which determination shall be evidenced in a
certificate of such auditors addressed to the Company and the Employee. Such
opinion shall be dated as of the date of termination of the Employee’s
employment and addressed to the Company and the Employee and shall be binding
upon the Company and the Employee.

The provisions of this Section 7(b), including the calculations, notices and
opinions provided for herein shall be based upon the conclusive presumption that
the compensation earned by the Employee pursuant to the Company’s compensation
programs prior to a change of control is reasonable; provided, however, that in
the event such Tax Counsel so requests in connection with the opinion required
by this Section 7(b), the Company shall obtain at its expense, and Tax Counsel
may rely on in providing the opinion, the advice of a firm of recognized
Employee compensation consultants as to the reasonableness of any item of
compensation to be received by the Employee.

(c)    Effect of Change in Law. In the event that the provisions of Sections
280G and 4999 of the Code (or any successor provisions) are repealed, this
Section 7 shall cease to be effective on the effective date of such repeal. The
parties to this Agreement recognize that final regulations promulgated under
Section 280G of the Code may affect the amounts that may be paid under this
Agreement and agree that, upon issuance of such final regulations, this
Agreement may be modified as the parties hereto may in good faith deem necessary
in light of the provisions of such regulations to achieve the purposes of this
Agreement, and that consent to such modification shall not be unreasonably
withheld.

 

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8.    SUCCESSORS.

(a)    If the Company sells, assigns or transfers all or substantially all of
its business and assets to any Person (as defined in Appendix A hereto) or if
the Company merges into or consolidates or otherwise combines (where the Company
does not survive such combination) with any Person (any such event, a “Sale of
Business”), then the Company shall assign all of its right, title and interest
in this Agreement as of the date of such event to such Person, and the Company
shall cause such Person, by written agreement in form and substance reasonably
satisfactory to the Employee, to expressly assume and agree to perform from and
after the date of such assignment all of the terms, conditions and provisions
imposed by this Agreement upon the Company. Failure of the Company to obtain
such agreement prior to the effective date of such Sale of Business shall be a
material breach of this Agreement. In case of such assignment by the Company and
of assumption and agreement by such Person, as used in this Agreement, “Company”
shall thereafter mean such Person which executes and delivers the agreement
provided for in this Section 8 or which otherwise becomes bound by all the terms
and provisions of this Agreement by operation of law, and this Agreement shall
inure to the benefit of, and be enforceable by, such Person. The Employee shall,
in the Employee’s discretion, be entitled to proceed against any or all of such
Persons, any Person which theretofore was such a successor to the Company (as
defined in the first paragraph of this Agreement) and the Company (as so
defined) in any action to enforce any rights of the Employee hereunder. Except
as provided in this Subsection, this Agreement shall not be assignable by the
Company. This Agreement shall not be terminated by the voluntary or involuntary
dissolution of the Company.

(b)    This Agreement and all rights of the Employee shall inure to the benefit
of and be enforceable by the Employee’s personal or legal representatives,
executors, administrators, heirs and beneficiaries. All amounts payable to the
Employee under Sections 3, 5, and 7 of this Agreement if the Employee had lived
shall be paid, in the event of the Employee’s death, to the Employee’s estate,
heirs and representatives; provided, however, that the foregoing shall not be
construed to modify any terms of any benefit plan of the Company, as such terms
are in effect on the date of the Employee’s death, that expressly govern
benefits under such plan in the event of the Employee’s death.

9.    SEVERABILITY. The provisions of this Agreement shall be regarded as
divisible, and the parties agree that if any of said provisions or any part
hereof shall under any circumstances be deemed or declared invalid, inoperative
or unenforceable, then the validity and enforceability of the remainder of such
provisions or parts hereof and the applicability thereof shall not be affected
thereby.

10.    AMENDMENT. This Agreement may not be amended or modified at any time
except by written instrument executed by the Company and the Employee.

 

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11.    WITHHOLDING. The Company shall be entitled to withhold from amounts to be
paid to the Employee hereunder any federal, state or local withholding or other
taxes or charges which it is from time to time required to withhold; provided,
that the amount so withheld shall not exceed the minimum amount required to be
withheld by law (unless the Employee has otherwise indicated in writing). The
Company shall be entitled to rely on an opinion of nationally recognized tax
counsel if any question as to the amount or requirement of any such withholding
shall arise.

12.    CLAWBACK. The Employee agrees that the compensation and benefits provided
by the Company under this Agreement or otherwise is subject to recoupment
or clawback (a) if the Company is required to file an adverse restatement of
earnings and the Committee determines that the Employee was involved, or had
knowledge of or should have known that the earnings at issue were false or
misleading when originally filed and the false or misleading earnings resulted
in compensation to the Employee that otherwise would not have been earned,
vested or paid, upon any material financial misstatements or omissions, (b) for
loan losses improperly reserved for, (c) under any applicable Company
clawback or recoupment policy that is generally applicable to the
Company’s executives, as may be in effect from time to time, or (d) as required
by law.

13.    NOTICE. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when actually received, whether hand-delivered, sent by
telecopier, facsimile transmission or other electronic means of transmitting
written documents (as long as receipt is acknowledged) or mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
addressed as follows:

If to the Employee, to the Employee at the Employee’s address then reflected in
the records of the Company.

If to the Company, to:

Nicholas Financial, Inc.

2454 McMullen Booth Road

Building C

Clearwater, Florida 33759

Attn: Chairman of the Board of Directors

or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that a notice of change of address shall
be effective only upon receipt.

14.    NO WAIVER; ENTIRE AGREEMENT. No waiver by any party hereto of any breach
of this Agreement by any other party hereto shall be deemed a waiver of any
similar or dissimilar term or condition at the same or at any prior or
subsequent time. This Agreement and any equity award agreements between the
Company and the Employee constitute the entire agreement between the parties
hereto with respect to the Employee’s employment by the Company and there are no
agreements or representations, oral or otherwise, expressed or implied, with
respect to or related to the employment of the Employee which are not set forth
in this Agreement or such equity award agreements.

 

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15.    NO ASSIGNMENT. Except as expressly set forth herein, no party shall
assign any of his or its rights under this Agreement without the prior written
consent of the other party and any attempted assignment without such prior
written consent shall be null and void and without legal effect.

16.    COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This Agreement may
be effective upon the execution and delivery by any party hereto of facsimile
copies of signature pages hereto duly executed by such party; provided, however,
that any party delivering a facsimile signature page covenants and agrees to
deliver promptly after the date hereof two (2) original copies to the other
party hereto.

17.    GOVERNING LAW.

(a)    The validity, interpretation, construction and performance of this
Agreement shall be governed by the internal laws of the State of Florida, except
that Section 16(b) shall be construed in accordance with the Federal Arbitration
Act if arbitration is chosen by the Employee as the method of dispute
resolution.

(b)    Any dispute arising out of this Agreement shall, at the Employee’s
election, be determined by either (i) arbitration under the rules of the
American Arbitration Association then in effect (but subject to any evidentiary
standards set forth in this Agreement), in which both parties shall be bound by
the arbitration award, or (ii) by litigation. Whether the dispute is to be
settled by arbitration or litigation, the venue for such arbitration or
litigation, as the case may be, shall be Tampa, Florida. The parties consent to
personal jurisdiction in each trial court in the selected venue having subject
matter jurisdiction notwithstanding their residence or situs, and each party
irrevocably consents to service of process in the manner provided hereunder for
the giving of notices.

18.    CERTAIN RULES OF CONSTRUCTION; CODE SECTION 409A.

(a)    No party shall be considered as being responsible for the drafting of
this Agreement for the purpose of applying any rule construing ambiguities
against the drafter or otherwise. No draft of this Agreement shall be taken into
account in construing this Agreement. Any provision of this Agreement which
requires an agreement in writing shall be deemed to require that the writing in
question be signed by the Employee and an authorized representative of the
Company.

(b)    The Company and the Employee intend the terms of this Agreement to be in
compliance with Section 409A of the Code and the regulations promulgated
thereunder. To the maximum extent permissible, any ambiguous terms of this
Agreement shall be interpreted in a manner that avoids a violation of
Section 409A of the Code. The phrase “termination of the Employee’s employment”
and similar phrases in this Agreement shall mean the Employee’s “separation from
service” as defined in Section 409A of the Code.    With respect to any
reimbursement or in-kind benefit arrangements of the Company provided for herein
that constitute deferred compensation for purposes of Section 409A of the Code,
the following conditions shall be applicable: (i) the amount eligible for
reimbursement, or in-kind benefits provided, under any such arrangement in one
calendar year may not affect the amount eligible for reimbursement, or in-kind
benefits to be provided, under such arrangement in any other calendar year
(except that the health and dental plans may impose a limit on the amount that
may be reimbursed or paid if such limit is imposed on all participants),
(ii) any reimbursement must be made on or before the last day of the calendar
year following the calendar year in which the expense was incurred (or such
earlier deadline as may be imposed by the Company’s applicable generally
applicable policies and procedures), and (iii) the right to reimbursement or
in-kind benefits is not subject to liquidation or exchange for another benefit.

 

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(c)    The Company does not guarantee the tax treatment or tax consequences
associated with any payment or benefit, including but not limited to
consequences related to Section 409A of the Code.

(d)    If, after the date of a Change of Control of the Company, any payment
amount or the value of any benefit under this Agreement is required to be
included in the Employee’s income prior to the date such amount is actually paid
or the benefit provided as a result of the failure of this Agreement (or any
other arrangement that is required to be aggregated with this Agreement under
Code Section 409A) to comply with Code Section 409A, then the Employee shall
receive a distribution, in a lump sum, within 90 days after the date it is
finally determined that the Agreement (or such other arrangement that is
required to be aggregated with this Agreement) fails to meet the requirements of
Section 409A of the Code; such distribution shall equal the lesser of (i) the
amount required to be included in the Employee’s income as a result of such
failure and (ii) the benefits otherwise due hereunder, and shall in any event
reduce the amount of payments or benefits otherwise due hereunder.

19.    DOLLAR AMOUNTS. All dollar amounts set forth herein refer to U.S.
dollars.

20.    HEADINGS. The headings herein contained are for reference only and shall
not affect the meaning or interpretation of any provision of this Agreement.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

 

    NICHOLAS FINANCIAL, INC.     By:   /s/ Robin Hastings         Name:   Robin
J. Hastings         Title:   Chairman of the Board     EMPLOYEE:     /s/ Douglas
Marohn       Douglas Marohn      

 

[Signature Page: Nicholas Financial, Inc. – Douglas Marohn Employment Agreement]

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APPENDIX A

For purposes of this Agreement, a Change of Control shall be deemed to have
occurred upon the earlier of:

(i) The acquisition, without prior approval by the Board, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of one hundred percent (100%) of either:

(A) The then outstanding shares of common stock of the Company (the “Outstanding
Company Common Stock”) or

(B) The combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the “Company
Voting Securities”); or

(ii) All individuals who, as of the date of this Agreement, constituted the
Board (the “Incumbent Board”) cease for any reason to constitute the Board,
provided that any individual becoming a director subsequent to the date of this
Agreement, whose election or nomination for election by the Company’s
shareholders was approved by a unanimous vote of the directors then comprising
the Incumbent Board, shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the directors of the Company (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act); or

(iii) Consummation of a reorganization, merger, amalgamation, arrangement,
consolidation or other business combination (a “Business Combination”), in each
case, with respect to which none of the individuals and entities who were the
respective beneficial owners of the Outstanding Company Common Stock and Company
Voting Securities immediately prior to such Business Combination, following such
Business Combination beneficially own, directly or indirectly, any of the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination; or

(iv) A complete liquidation or dissolution of the Company or sale or other
disposition of all or substantially all of the assets of the Company other than
to a corporation with respect to which, following such sale or disposition, any
of the then outstanding shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in the
election of directors are then owned beneficially, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to such sale or disposition in substantially the
same proportion as their ownership of the Outstanding Company Common Stock and
Company Voting Securities, as the case may be, immediately prior to such sale or
disposition; or

 

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(v) a determination by the Board of Directors of the Company, in view of the
then current circumstances or impending events, that a change of control of the
Company has occurred or is imminent, which determination shall be made for the
specific purpose of triggering the operative provisions of this Agreement.

If a payment is considered deferred compensation subject to the provisions of
Code Section 409A, then the foregoing definition shall be deemed amended to the
minimum extent necessary to comply with Code Section 409A.