Exhibit 10.1


 


NONQUALIFIED
STOCK OPTION AGREEMENT


 


THIS NONQUALIFIED STOCK
OPTION AGREEMENT (this “Agreement”)
dated as of October 27, 2005 (“Grant Date”),
is between Advance America, Cash Advance Centers, Inc., a Delaware
corporation (the “Company”), and Kenneth
E. Compton (the “Recipient”).


 


WHEREAS, the Board of
Directors of the Company (the “Board”) has
approved the grant of the Option (defined below) to the Recipient as set forth
below.


 


WHEREAS,
the Option is intended to induce the Recipient to join the Company as its Chief
Executive Officer and President, to motivate him to achieve long-term Company
goals, and to further align his interests with those of the Company’s
stockholders.


 


NOW, THEREFORE, in
consideration of the covenants and agreements herein contained, and intending
to be legally bound hereby, the parties agree as follows:


 


1.                                      Grant
of Option, Option Price, and Term.


 


(a)                                  The
Company hereby grants to the Recipient a Nonqualified Stock Option (the “Option”) to purchase 700,000 shares (the “Option Shares”) of the common stock of the Company, par
value $.01 per share (the “Company Stock”)
during the Option Period (as defined below) at a price of $12.11 per share (the
“Option Price”), subject to the terms
and conditions herein.


 


(b)                                 The
term of this Option shall be for a period of ten (10) years from the Grant
Date (the “Option Period”).  During the Option Period, the Option shall be
vested as of the date set forth below for the cumulative percentage of the
Option set forth opposite such date, and shall be exercisable upon such dates
and in such amounts:


 


	
   

  	
   

  	
  Cumulative

  	
   

  
	
  Date

  	
   

  	
  Percentage Exercisable

  	
   

  
	
  First
  anniversary of Grant Date

  	
   

  	
   

  	
  12

  	
  1/2%

  	
   

  
	
  Second
  anniversary of Grant Date

  	
   

  	
   

  	
  25

  	
  %

  	
   

  
	
  Third
  anniversary of Grant Date

  	
   

  	
   

  	
  37

  	
  1/2%

  	
   

  
	
  Fourth
  anniversary of Grant Date

  	
   

  	
   

  	
  50

  	
  %

  	
   

  
	
  Fifth
  anniversary of Grant Date

  	
   

  	
   

  	
  62

  	
  1/2%

  	
   

  
	
  Sixth
  anniversary of Grant Date

  	
   

  	
   

  	
  75

  	
  %

  	
   

  
	
  Seventh
  anniversary of Grant Date

  	
   

  	
   

  	
  87

  	
  1/2%

  	
   

  
	
  Eighth
  anniversary of Grant Date

  	
   

  	
   

  	
  100

  	
  %

  	
   

  
							



 


Notwithstanding
the foregoing, in the event that the employment of the Recipient with the
Company or its subsidiaries (or the Recipient’s service to the Company or its
subsidiaries) shall terminate for any reason other than (i) cause (as
defined below), (ii) death, or (iii) disability or retirement, each
Option granted to the Recipient, to the extent that it is exercisable at the
time of such termination, shall remain exercisable for the 90 day period
following such termination (or for such other period as may be provided by the
Compensation Committee (the “Committee”) of
the Board), but in no event following the expiration of its term.  Each
Option that remains


 





















 


unvested
and unexercisable as of the date of such a termination shall be terminated at
the time of such termination (except as may be otherwise determined by the
Committee).  In the event that the employment of the Recipient with the
Company or its subsidiaries (or the Recipient’s service to the Company or its
subsidiaries) shall terminate on account of the death of the Recipient, each
Option granted to the Recipient that is outstanding as of the date of death
shall become fully exercisable and shall remain exercisable, by the Recipient’s
legal representatives, heirs or legatees for the one year period following such
termination (or for such other period as may be provided by the Committee), but
in no event following the expiration of its term.  In the event of the
termination of the Recipient’s employment for cause (as defined below), each
outstanding Option granted to the Recipient, whether or not vested or
exercisable, shall terminate at the commencement of business on the date of
such termination.  In the event that the employment of the Recipient with
the Company or its subsidiaries (or the Recipient’s service to the Company or
its subsidiaries) shall terminate on account of the disability or retirement of
the Recipient (in each case as determined by the Committee), each Option
granted to the Recipient that is outstanding and vested as of the date of such
termination shall remain exercisable by the Recipient (or the Recipient’s legal
representatives) for the one year period following such termination (or for
such other period as may be provided by the Committee), but in no event
following the expiration of its term.  Each Option that remains unvested
and unexercisable as of the date of a termination due to disability or
retirement shall be terminated at the time of such termination (except as may
be otherwise determined by the Committee). 
In the event that the Recipient is employed by the Company or one of its
subsidiaries upon the occurrence of a Change in Control (as defined below), all
outstanding and unvested Options granted under this Agreement shall become
fully vested and exercisable immediately upon consummation of such Change in
Control.


 


(c)                                  For purposes of this Agreement, “cause” means (i) the conviction of the Recipient for
committing a felony under any federal or state law, (ii) dishonesty in the
course of fulfilling the Recipient’s duties as an employee or director of, or
consultant or advisor to, the Company or any Affiliate (defined below), or (iii) willful
and deliberate failure on the part of the Recipient to perform such duties in
any material respect.  The determination
of “cause” shall be made by the Committee, in its sole discretion.  “Affiliate”
means any entity if, at the time of the granting of the Option (i) the
Company, directly or indirectly, owns at least 50% of the combined voting power
of all classes of stock of such entity or at least 50% of the ownership
interests in such entity or (ii) such entity, directly or indirectly, owns
at least 50% of the combined voting power of all classes of stock of the
Company.  “Change in
Control” means a “change in
ownership or effective control of a corporation, or a change in the ownership
of a substantial portion of the assets of a corporation” as defined
for purposes of section 409A of the Internal Revenue Code of 1986, as
amended, with respect to the Company.


 


(d)                                 In the event the Recipient goes on an
approved leave of absence, the Committee may make such provision respecting the
continuance of the Option while the Recipient is in the employ or service of
the Company as it may deem equitable, except that in no event may an Option be
exercised after the expiration of its term.


 


(e)                                  The Option granted hereunder is designated as
a Nonqualified Stock Option, which is not
transferable by the Recipient except by
will or the laws of descent and distribution.


 


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(f)                                    The
Company shall not be required to issue any fractional shares of Company Stock.


 


(g)                                 The
Recipient shall not have any rights as a stockholder with respect to any shares
of Company Stock covered by or relating to the Option until the date of
issuance of a stock certificate with respect to such shares following the
exercise of some or all of the Option.  Except for adjustments provided in
Section 5(b), no adjustment to the Option shall be made for
dividends or other rights for which the record date occurs prior to the date
such stock certificate is issued.


 


2.                                      Exercise.


 


(a)                                  The
Option may not be transferred without the consent of the Committee and shall be
exercisable during the Recipient’s lifetime only by the Recipient (or his or
her legal representative) and after the Recipient’s death only by a
representative as provided in Section 3.


 


(b)                                 The
Option may be exercised only to the extent the Option is vested, unless
otherwise agreed to by the Committee, and may be exercised only by the delivery
to the Company of a properly completed written notice, in form satisfactory to
the Committee, which notice shall specify the number of Option Shares to be
purchased and the aggregate Option Price for such shares, together with payment
in full of such aggregate Option Price.


 


(c)                                  Payment for shares of Company Stock purchased
upon the exercise of an Option shall be made on the effective date of such
exercise by one or a combination of the following means: (i) in cash or by
personal check, certified check, bank cashier’s check, or wire transfer; (ii) in
shares of Company Stock owned by the Recipient for at least six months prior to
the date of exercise and valued at their Fair Market Value (as defined below) on
the effective date of such exercise; or (iii) by any such other methods
(including broker assisted cashless exercise) as the Committee may from time to
time authorize; provided, however, that in the case the Recipient
is subject to Section 16 of the Securities Exchange Act of 1934, as
amended from time to time (the “Exchange Act”),
the method of making such payment shall be in compliance with applicable
law.  Any payment in shares of Company Stock shall be effected by the
delivery of such shares to the Secretary of the Company, duly endorsed in blank
or accompanied by stock powers duly executed in blank, together with any other
documents and evidences as the Secretary of the Company shall require.  If any part of the payment of the Option
Price is made in shares of Company Stock, such shares shall be valued by
using their Fair Market Value (as defined below) as of the date of exercise of
the Option.


 


(d)                                 Certificates for shares of Company Stock
purchased upon the exercise of an Option shall be issued in the name of or for
the account of the Recipient or other person entitled to receive such shares, and
delivered to the Recipient or such other person as soon as practicable
following the effective date on which the Option is exercised.


 


(e)                                  “Fair Market Value”
shall mean, with respect to Company Stock or other property, the fair market
value of such Company Stock or other property determined by such methods or
procedures as shall be established from time to time by the Committee. 
Unless otherwise determined by the Committee in good faith, the per share Fair
Market Value of


 


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Company Stock as of a particular date shall mean (i) the
arithmetic mean between the highest and lowest reported sales price per share
of Company Stock on the national securities exchange on which the Company Stock
is principally traded, for the last preceding date on which there was a sale of
such Company Stock on such exchange, or (ii) if the shares of Company
Stock are then traded in an over-the-counter market, the average of the closing
bid and asked prices for the shares of Company Stock in such over-the-counter
market for the last preceding date on which there was a sale of such Company
Stock in such market, or (iii) the shares of Company Stock are not then
listed on a national securities exchange or traded in an over-the-counter market,
such value as the Committee, in its sole discretion, shall determine.


 


3.                                      Transfers Upon Death; Designation
of Beneficiary.


 


Upon
the death of the Recipient, the Option may be exercised only by the executor or
administrator of the Recipient’s estate or by a person who shall have acquired
the right to such exercise by will or by the laws of descent and
distribution.  No transfer of the Option by will or the laws of descent
and distribution shall be effective to bind the Company unless the Committee shall
have been furnished with (i) written notice thereof and with a copy of the
will and/or such evidence as the Committee may deem necessary to establish the
validity of the transfer and (ii) an agreement by the transferee to comply
with all the terms and conditions of the Option that are or would have been
applicable to the Recipient and to be bound by the acknowledgments made by the
Recipient in connection with the grant of the Option.  The Recipient may file with the Committee a
written designation of a beneficiary on such form as may be prescribed by the
Committee and may, from time to time, amend or revoke such designation. 
If no designated beneficiary survives the Recipient, the executor or
administrator of the Recipient’s estate shall be deemed to be the Recipient’s
beneficiary.


 


4.                                      Payment
of Withholding Taxes.


 


Whenever
shares of Company Stock are to be delivered pursuant to the Option, the Company
shall have the right to require the Recipient to remit to the Company in cash
an amount sufficient to satisfy any federal, state, and local withholding tax
requirements related thereto.  With the approval of the Committee, the Recipient
may satisfy the foregoing requirement by electing to have the Company withhold
from delivery shares of Company Stock having a value equal to the minimum
amount of tax required to be withheld.  Such shares shall be valued at
their Fair Market Value on the date of which the amount of tax to be withheld
is determined.  Fractional share amounts shall be settled in cash. 
Such a withholding election may be made with respect to all or any portion of
the shares to be delivered pursuant to the Option.  The Recipient acknowledges and agrees that he
or she is responsible for the tax consequences associated with the grant of the
Option and its exercise.


 


5.                                      Changes
in Company’s Capital Structure.


 


(a)                                  The
existence of the Option will not affect in any way the right or authority of
the Company or its stockholders to make or authorize (i) any or all
adjustments, recapitalizations, reorganizations, or other changes in the
Company’s capital structure or its business; (ii) any merger or consolidation
of the Company; (iii) any issuance of bonds, debentures, preferred, or
prior preference stock ahead of or affecting the Company Stock or the rights
thereof; (d) the


 


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dissolution or
liquidation of the Company; (iv) any sale or transfer of all or any part
of the Company’s assets or business; or (v) any other corporate act or
proceeding, whether of a similar character or otherwise.


 


(b)                                 In the event that any dividend or other
distribution is declared (whether in the form of cash, Company Stock, or other
property), or there occurs any recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, spin-off, combination,
repurchase, share exchange or other similar corporate transaction or event, the
Committee shall adjust, in its sole and absolute discretion, (i) the
number and kind of shares of stock that may thereafter be issued in connection
with the Option, (ii) the number and kind of shares of stock or other
property issued or issuable in respect of the Option, and (iii) the
exercise price relating to the Option.


 


6.                                      Authority Reserved to the
Committee.


 


The Committee shall have the authority in its sole
discretion, subject to and not inconsistent with the express provisions of this
Agreement, to exercise all the powers and authorities necessary or advisable in
the administration of this Agreement, including, without limitation, the
authority to determine whether, to what extent, and under what circumstances the
Option may be settled, cancelled, forfeited, exchanged, or surrendered; to
construe and interpret this Agreement; and to make all other determinations
deemed necessary or advisable for the administration of this Agreement. 
The Committee may, in its sole and absolute discretion, without amendment to this
Agreement, (i) accelerate the date on which the Option becomes
exercisable, (ii) waive or amend the operation of provisions of this
Agreement respecting exercise after termination of employment (provided that
the term of the Option may not be extended beyond ten years from the date of
grant), (iii) accelerate the vesting date, or waive any condition imposed
hereunder, with respect to the Option, and (iv) otherwise adjust any of
the terms applicable to the Option in a manner consistent with the terms of
this Agreement.


 


7.                                      Employment
Rights.


 


No provision of this
Agreement or of the Option granted hereunder shall give the Recipient any right
with respect to the continuation of employment by or the provision of services
to the Company or any Affiliate; create any inference as to the length of
employment of the Recipient; create any inference as to the length of
employment of or service by the Recipient; interfere in any way with the right
of the Company to at any time terminate such employment or service or to
increase or decrease the compensation of the Recipient; or give the Recipient
any right to participate in any employee welfare or benefit plan or other
program of the Company or any Affiliate.


 


8.                                      Securities
Laws Requirements.


 


Notwithstanding
anything herein to the contrary, the Company shall not be obligated to cause to
be issued or delivered any certificates evidencing shares of Company Stock
pursuant to this Agreement unless and until the Company is advised by its
counsel that the issuance and delivery of such certificates is in compliance
with all applicable laws, regulations of governmental authority, and the requirements
of any securities exchange on which shares of


 


5





















 


Company Stock are traded.  The Committee may require, as a
condition of the issuance and delivery of certificates evidencing shares of
Company Stock pursuant to the terms hereof, that the recipient of such shares
make such agreements and representations, and that such certificates bear such
legends, as the Committee, in its sole discretion, deems necessary or
advisable.


 


The transfer of any
shares of Company Stock hereunder shall be effective only at such time as
counsel to the Company shall have determined that the issuance and delivery of
such shares is in compliance with all applicable laws, regulations of
governmental authority and the requirements of any securities exchange on which
shares of Company Stock are traded.  The Committee may, in its sole
discretion, defer the effectiveness of any transfer of shares of Company Stock
hereunder in order to allow the issuance of such shares to be made pursuant to
registration or an exemption from registration or other methods for compliance
available under federal or state securities laws.  The Committee shall
inform the Recipient in writing of its decision to defer the effectiveness of a
transfer.  During the period of such deferral in connection with the
exercise of an Option, the Recipient may, by written notice, withdraw such
exercise and obtain the refund of any amount paid with respect thereto.


 


9.                                      Governing
Law.


 


This Agreement and the
Option granted hereunder shall be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware without reference to its
principles of conflicts of law, except to the extent federal laws would be
mandatorily applicable.


 


10.                               Waiver;
Cumulative Rights.


 


The failure or delay of
either party to require performance by the other party of any provision hereof
shall not affect its right to require performance of such provision unless and
until such performance has been waived in writing.  Each and every right hereunder is cumulative
and may be exercised in part or in whole from time to time.


 


11.                               Notices.


 


Any notice that either
party hereto may be required or permitted to give the other shall be in writing
and may be delivered personally or by mail, postage prepaid, addressed to the
Secretary of the Company, at its then corporate headquarters, and the Recipient
at the Recipient’s address as shown on the Company’s payroll records, or to
such other address as the Recipient, by notice to the Company, may designate in
writing from time to time.


 


12.                               Conditional
Grant.


 


If the Recipient is a
resident of a community property state, this Option is granted upon the
condition that, and the Option Shares shall be forfeited unless, each and any
person who is a spouse of the Recipient at any time on or after the Grant Date
(including any person who becomes a spouse after the Grant Date) executes a
Consent of Spouse form provided by the Committee, unless the Committee shall
waive either such condition.


 


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13.                               Counterparts.


 


This Agreement may be
executed in one or more counterparts, each of which will be deemed to be an
original copy of this Agreement and all of which, when taken together, will be
deemed to constitute one and the same agreement.


 


[Remainder of the page intentionally left blank;

signature page follows.]


 


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IN WITNESS WHEREOF,
the Company has caused this Agreement to be duly executed by an officer
thereunto duly authorized, and the Recipient hereby acknowledges that he/she
has read carefully and understands this Agreement and agrees to be bound by all
of the provisions set forth in such document and has hereunto set his hand, all
as of the day and year first above written.


 


	
   

  	
  ADVANCE
  AMERICA, CASH ADVANCE CENTERS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
  /s/ John I. Hill

  
	
   

  	
  Name:

  	
  John I. Hill

  
	
   

  	
  Title:

  	
  Chief Financial
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Recipient:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ Kenneth E.
  Compton

  
	
   

  	
   

  	
  Kenneth E.
  Compton

  



 


 


Nonqualified Stock Option Agreement