Exhibit 10.1

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT (this “Agreement”) is entered into as of the _7_ day of July 2020
by NICHOLAS FINANCIAL, INC., a British Columbia, Canada corporation (the
“Company”), and IRINA NASHTATIK (the “Employee”).

 

WITNESSETH:

 

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 Chief Financial Officer.  The Employee’s employment
hereunder shall begin on or around July _8_, 2020 (the “Placement Date”).  The
Employee shall report directly to the Company’s President and Chief Executive
Officer 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 she 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 her best efforts and substantially all of
her 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 her 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 she 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 and Code of Ethics and Business Conduct.  

 

2.TERM. The employment of the Employee under this Agreement commences on the
Placement Date and will continue for a period of approximately twenty-four (24)
months (the “Initial Term”) expiring on June 30, 2022, unless earlier terminated
pursuant to the terms of this Agreement. At and 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

 

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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 expiration of the Initial
Term or Renewal Term, as applicable, 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 Company’s Board
of Directors or its Compensation Committee (or other committee performing
similar functions) (the “Committee”) from time to time, but not less than
$180,000 (the “Base Salary”).   The Base Salary may be increased by the
Committee in its sole discretion.  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)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 (A) discretionary cash bonus
between $0 and $25,000, the amount of which is to be determined and awarded at
the sole discretion of the Board of Directors, and (B) cash bonus equal to the
Milestone Bonus calculated with respect to such fiscal year in accordance with
Section 3(b)(iii) hereof.

 

(ii)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 (A) discretionary cash bonus
between $0 and $25,000, the amount of which is to be determined and awarded at
the sole discretion of the Board of

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Directors, and (B) cash bonus equal to the Milestone Bonus calculated with
respect to such fiscal year in accordance with Section 3(b)(iii) hereof.

 

(iii)Milestone Bonus.  Beginning with the fiscal year ending March 31, 2021 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”), with a
target payout of $75,000 at 100% of goal.  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

2021

12.5%

2022

20.0%

 

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.”  At a Performance Percentage of 100%, the
Milestone Bonus equals $75,000. 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 $75,000.  By way of example, if the Actual Yield for
the fiscal year ending March 31, 2021 is 15.0%, the Milestone Bonus with respect
to such fiscal year will be $90,000, representing 120% multiplied by $75,000.  

 

(iv)Short-Term Deferral.  Any bonus payable pursuant to Sections 3(b)(i)(B) or
3(b)(ii)(B) 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 to which the bonus relates.

 

(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 her in
the performance of her 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

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generally on such terms as are available to such employees.  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 Placement Date and ending on June 30, 2022 (the “Stock
Purchase Matching Period”) (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(f) hereof), and (ii) the fair market value of such shares
of common stock matched by the Company shall not exceed $100,000 in the
aggregate.  [In the event any annual or quarterly trading Window (as defined in
the Company’s Insider Trading Policy) is closed during the Stock Purchase
Matching Period (or during any extension of the Stock Purchase Matching Period),
or Employee is otherwise prohibited by the Company’s Insider Trading Policy or
applicable law from purchasing common stock of the Company during such trading
Window, the Company shall, for each trading Window so closed to Employee,
(x) extend the end date of the Stock Purchase Matching Period for an additional
three months.]

 

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

 

(a)Employee acknowledges that her services are of a special, unique,
extraordinary and intellectual character, and her position with the Company
places her 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 her 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 her 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

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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 an incident to this Agreement.

 

(b)The Employee covenants and agrees that during the Term of her employment by
the Company, and thereafter for a period of one (1) year following the
termination of the Employee’s employment with the Company, she 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 Employee knows or should know will
likely be 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”).

 

(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 her
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

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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, Arizona, Florida, Georgia, Idaho,
Illinois, Indiana, Iowa, Kansas, Kentucky, Maryland, Michigan, Missouri, Nevada,
North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Utah,
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 she remains employed by the
Company as Chief Financial 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 200% of her Base Salary then in effect
(the “Stock Ownership Threshold”).  If the Employee’s Base Salary is increased
at any time after March 31, 2023, the Employee shall attain the new Stock
Ownership Threshold created by such increase in Base Salary by no later than the
first anniversary of the effective date of such increase in Base Salary.  If at
any time after March 31, 2023 the fair market value of Employee’s shares of
common stock of the Company falls below the Stock Ownership Threshold due solely
to a decline in the fair market value of the Company’s common stock, the
Employee will not be required to acquire additional shares to meet the Stock
Ownership Threshold, but she will be required to retain all shares then held
(except for shares withheld to pay withholding taxes or the exercise price of
options) until such time as the Employee again attains the Stock Ownership
Threshold.    

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5.TERMINATION.

 

(a)Death. The Employee’s employment hereunder shall terminate upon her 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 her duties hereunder on substantially a full-time
basis as determined by a medical professional reasonably agreed upon by the
Employee and the Company, 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. Should the Company choose to relieve the
Employee of her duties during the Cause Notification Period, the Company shall
continue to pay the Employee her salary through the end of the Cause
Notification Period.  Such Salary shall be paid in accordance with the Company’s
normal payroll procedures applicable to base salary.  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 Employee
hereunder shall immediately cease and terminate except as set forth above with
respect to the 15-day Cause Notification Period in the case of termination with
Cause as defined in clause (1) and (4).

 

(d)Involuntary Termination by Employee. The Employee may terminate her
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 (“significant
relocation” being defined as 50 miles from the current 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,

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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 her 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.

 

(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 her 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 she 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
her 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 she 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 365 days. 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.

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(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.  

 

(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 100% 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,

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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.

 

(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 twelve (12) 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 $7,500 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.

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(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.

 

(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 she 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.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 6; (D)
the after-tax value of the Change of Control Benefits if the reduction in Change
of Control Benefits contemplated under this Section 6 did not apply; and (E) the
after-tax value of the Change of Control Benefits taking into account the
reduction in Change

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of Control Benefits contemplated under this Section 6. 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.

 

In the event that a reduction is to be made under this Section 6, 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 6(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 6(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 6
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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7.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 7 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 and 5 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.

 

8.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.

 

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

 

10.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

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recognized tax counsel if any question as to the amount or requirement of any
such withholding shall arise.

 

11.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 claw
back 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.  

 

12.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: Chief Executive Officer

 

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.

 

13.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.

 

14.NO ASSIGNMENT. Except as expressly set forth herein, no party shall assign
any of his, her or its rights under this Agreement without the prior written
consent of the other

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party and any attempted assignment without such prior written consent shall be
null and void and without legal effect.

 

15.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.

 

16.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 15(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.

 

17.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

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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.

 

(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.

 

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

 

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

 

20.ATTORNEYS’ FEES AND COSTS.  In the event a dispute arises between the parties
under this Agreement and legal action is instituted, the prevailing party shall
be intitled to recover its reasonable costs and attorney fees (including
paralegal fees) from the non-prevailing party.  As used herein, costs and
attorneys’ fees (including paralegal fees) include, but are not limited to, any
costs and attorneys’ fees incurred in any trial court, appellate court and/or
bankruptcy proceeding.

 

[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/ Douglas Marohn

 

 

Douglas Marohn

 

 

President and CEO

 

 

 

EMPLOYEE:

 

 

/s/ Irina Nashtatik

 

 

Irina Nashtatik

 

 

 

[Signature Page: Nicholas Financial, Inc. – Irina Nashtatik 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

 

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Company Common Stock and Company Voting Securities, as the case may be,
immediately prior to such sale or disposition; or

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.

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