Employment Agreement By And Between World Acceptance Corporation And Effective May 21, 2007
By
And Between
World
Acceptance Corporation
And
A.
Xxxxxxxxx XxXxxx III
Effective
May
21, 2007
This
Agreement is effective as of May 21, 2007, by and between World Acceptance
Corporation (the "Company"), a South Carolina corporation and A. Xxxxxxxxx
XxXxxx III (the "Executive").
The
Compensation Committee of the Board of the Company (the "Committee"), acting
on
behalf of and pursuant to authority granted by the Board of Directors of the
Company (the “Board”) at its meeting on May 21, 2007, determined that it would
be in the best interests of the Company and its shareholders to retain the
services of the Executive for the Period of Employment (as defined in Section
III 3.1 below) and upon the terms provided in this Agreement. The Executive
is
willing to be employed by the Company on a full time basis for said Period
of
Employment and upon such other terms and conditions as provided in this
Agreement.
In
consideration of the mutual covenants and promises contained in this Agreement,
the parties hereby agree as follows:
SECTION
I
EMPLOYMENT
The
Company agrees to employ the Executive and the Executive agrees to be employed
by the Company, for the Period of Employment, and based upon the other terms
and
conditions provided in the Agreement.
SECTION
II
POSITION
AND RESPONSIBILITIES
The
Executive agrees to serve as the Company's Chief Executive Officer and to be
responsible for the duties and responsibilities traditionally attributed to
such
position, reporting to the Board during the Period of Employment. The Executive
agrees to continue to serve as a member of the Board. The Executive also agrees
to continue to serve during the Period of Employment as an Officer and Director
of any subsidiary, affiliate, or parent corporation ("Affiliates") of the
Company which the Board feels is appropriate.
SECTION
III
TERMS
AND DUTIES
3.1 Period
of Employment
For
purposes of this Agreement, the Period of Employment will commence on May 21,
2007 and shall continue for a period of three (3) years, subject to extension
or
termination as provided in this Agreement. At the end of the three year period
commencing from the effective date of this Agreement, the Board shall review
the
performance of the Executive, and this Agreement shall be deemed to be approved
and extended automatically for an additional one (1) year period on the same
terms and conditions, unless either the Company or the Executive gives contrary
written notice to the other no less than ninety (90) days prior to the date
on
which this Agreement would otherwise be extended. At the end of each subsequent
one year term, the Board shall review the performance of the Executive, and
this
Agreement shall be deemed to be approved and extended automatically for an
additional one (1) year period on the same terms and conditions, unless either
the Company or the Executive gives contrary written notice to the other no
less
than ninety (90) days prior to the date on which this Agreement would otherwise
be extended. Non-renewal shall be deemed a termination of employment as of
the
end of the Period of Employment. Non-renewal by the Company shall be subject
to
the severance provisions set forth in Section VIII.8.1, and non-renewal by
the
Executive shall be subject to the severance provisions of Section
VIII.8.3.
3.2 Duties
During
the Period of Employment and except for illness, incapacity and reasonable
vacation and holiday periods, the Executive shall devote all of his business
time, attention and skill exclusively to the business and affairs of the Company
and its Affiliates. The Executive will not engage in any other business
activity, and will perform faithfully the duties which may be assigned to him
from time to time by the Board of the Company. Notwithstanding the above,
nothing in this Agreement shall preclude the Executive from devoting time during
reasonable periods required for:
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3.2i.
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Serving,
with prior approval of the Board of the Company, as a Director or
member
of a committee or organization involving no actual or potential conflict
of interest with the Company;
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3.2.ii.
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Delivering
lectures and fulfilling speaking
engagements;
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3.2.iii.
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Engaging
in charitable and community activities;
or
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3.2.iv.
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Investing
his personal assets in investments or business entities in such form
or
manner that will not violate this Agreement or require services on
the
part of the Executive in the operation of affairs of the business
entities
in which those investments are made. These activities will be allowed
as
long as they do not materially affect or interfere with the performance
of
the Executive's duties and obligations to the
Company.
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SECTION
IV
COMPENSATION,
BENEFITS, AND PERQUISITES
For
all
services rendered by the Executive in any capacity during the Period of
Employment, including services as an Executive, Officer, Director or Committee
Member, the Executive shall be compensated as follows:
4.1 BASE
SALARY
The
Company shall pay the Executive a fixed base salary ("Base Salary") at such
annual rate as the Compensation Committee deems appropriate; provided, however,
that the Base Salary may not be less than $268,108.00 per year. Increases in
Base Salary, once granted by the Committee, shall not be subject to reduction.
Base Salary shall be payable according to the customary payroll practices of
the
Company. In no event shall Base Salary be payable less frequently than once
per
calendar month.
4.2 ANNUAL
INCENTIVE AWARDS
The
Company may, in its sole discretion, pay the Executive annual cash incentive
compensation payments. At the beginning of each fiscal year, the Board or
Committee may establish appropriate criteria for making such payments following
the end of such fiscal year.
4.3 LONG-TERM
INCENTIVE AWARDS
The
Company may, in its sole discretion, pay the Executive long-term incentive
compensation payments. The Committee may establish appropriate criteria for
making such payments following the end of the performance period. Payments
may,
at the discretion of the Committee, take the form of cash, restricted stock
and,
stock options; provided, however, that any grants of restricted stock or stock
options must also be approved in advance by the Company's Compensation and
Stock
Option Committee, which administers the Company's stock option plans. The intent
of such long-term incentive compensation awards is to motivate the achievement
of longer range and strategic goals. The Company agrees to enhance awards when
goals are achieved and exceeded in recognition of the intent of this
plan.
4.4 BENEFITS
AND PERQUISITES
4.4.i Salaried
Employee Benefits
Executive
will be entitled to participate in all compensation and employee benefit plans
and programs and receive all benefits and perquisites for which any salaried
employee of the Company is eligible under any plan or program now or later
established by the Company for salaried employees. The Executive will
participate to the extent permissible under the terms and provisions of such
plans or programs. Nothing in this Agreement will preclude the Company from
amending or terminating any of the plans or programs applicable to salaried
employees as long as such amendment or termination is applicable to all
similarly situated salaried employees.
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4.4.ii Supplemental
Benefits
The
Company also will provide long-term disability insurance which provides a
benefit to the Executive of 60% of the Executive's Base Salary in effect at
the
time of disability.
In
the
event a group long-term disability benefit is provided by the Company for which
the Executive becomes eligible, the Executive's long-term disability benefits
under this Agreement will be offset by the benefits payable under the group
policy such that combined long-term disability benefits payable under the two
plans do not exceed 60% of the Executive's then current Base
Salary.
Executive
will be entitled to participate in the World Acceptance Corporation Supplemental
Income Plan (SERP) in accordance with the terms of that plan.
4.5
AUTOMOBILE
The
Company will provide an automobile (including maintenance and insurance expense)
of a value commensurate with his position for use by the Executive in accordance
with the Company Car Policy.
SECTION
V
BUSINESS
EXPENSES
The
Company will reimburse the Executive for all reasonable travel, entertainment,
business and other expenses incurred by the Executive in connection with the
performance of his duties and obligations under this Agreement.
SECTION
VI
DISABILITY
6.1 In
the
event the Executive during the Period of Employment is unable to perform with
or
without accommodation his duties as set forth in Section III.3.2 for reasons
of
physical or mental incapacity, the Company will continue to pay the Executive
in
accordance with the compensation provisions of this Agreement during the period
of his disability. However, in the event the Executive is disabled for a
continuous period of ninety (90) days or more, the Company may terminate the
employment of the Executive pursuant to this Agreement, and make payments to
the
Executive under the terms of the long-term disability provisions of this
Agreement. In the event the Company terminates the employment of the Executive
pursuant to this Section VI, the Company will have no further compensation
obligations to the Executive, except for earned but unpaid Base Salary, annual
incentive compensation payment, if any, pro rated to the Date of Termination
of
employment and any benefits payable under the SERP.
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6.2 During
the period the Executive is receiving either regular compensation or disability
payments as described in this Agreement, and as long as he is physically and
mentally able to do so, the Executive will furnish information and assistance
to
the Company and from time to time will make himself available to the Company
to
undertake assignments consistent with his prior position with the Company and
his physical and mental health. During the disability period, the Executive
is
responsible for reporting directly to the Board. If the Company fails to make
a
payment or provide a benefit required as part of the Agreement, the Executive's
obligation to fulfill information and assistance will end.
6.3 The
term
"disability" will have the same meaning as under the disability benefits to
be
provided pursuant to this Agreement, or such group disability plan as may be
in
effect for similarly situated employees at that time. In the event the
definition of disability is not consistent, the definition contained in the
plan
document of such group plan shall control.
SECTION
VII
DEATH
In
the
event of the death of the Executive during the Period of Employment, the
Company's obligation to make payments under this Agreement shall cease as of
the
date of death, except for Base Salary through the end of the Company's normal
payroll period and any earned but unpaid annual incentive compensation payments
prorated to the date of death. The Executive's designated beneficiary will
be
entitled to receive the proceeds of any life or other insurance or other death
benefit programs provided in this Agreement, including the SERP according to
the
terms and conditions of that Plan.
SECTION
VIII
EFFECT
OF TERMINATION OF EMPLOYMENT
Except
as
otherwise set forth in Sections VI, VII and IX:
8.1 If
the
Executive's employment terminates, due to either a Without Cause Termination
or
a Constructive Discharge, as hereafter defined in this Agreement, the Company
will pay the Executive, or in the event of his death, his beneficiary or
beneficiaries,
8.1.i in
a lump
sum in cash within 30 days after the Date of Termination the aggregate of the
following amounts:
A. the
sum
of (1) the Executive’s accrued Annual Base Salary and any accrued vacation
pay through the Date of Termination, (2) the Executive’s business expenses
that have not been reimbursed by the Company as of the Date of Termination
that
were incurred by the Executive prior to the Date of Termination in accordance
with the applicable Company policy, and (3) the Executive’s Annual Bonus earned
for the fiscal year immediately preceding the fiscal year in which the Date
of
Termination occurs if such bonus has not been paid as of the Date of Termination
(“Accrued Compensation”); and
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B. the
product of (1) the average annual bonus paid to the Executive in respect of
the
three final years prior to the Date of Termination (“Reference Bonus”), and (2)
a fraction, the numerator of which is the number of days from April 1 in the
fiscal year in which the Date of Termination occurs through the Date of
Termination, and the denominator of which is 365 (the “Pro Rata Bonus”);
and
8.1.ii the
Company shall pay to the Executive as severance an amount equal to the product
of (1) two and (2) the sum of (x) the Executive’s Annual Base Salary and (y) the
Reference Bonus, such sum to be paid in 24 equal monthly installments in
accordance with the Company’s normal payroll policies; and
8.1.iii
any
stock options and other equity incentives shall vest and become immediately
exercisable, as the case may be and all vested stock options held by the
Executive shall be exercisable for a period of one year, but not beyond the
original expiration of their term (“Equity Benefits”)
8.1.iv for
two
years after the Date of Termination, or until such time that the Executive
becomes employed by another company that offers similar benefits and is eligible
for such benefits, the Company shall continue to provide to the Executive and
his eligible dependents the health, welfare and other benefits specified in
Section IV.4.4 above as if the Executive remained an active employee of the
Company. Subject to the provision of health benefits as provided below, such
benefits will be provided to Executive only to the extent such benefits may
be
provided to Executive on a non-taxable basis. If the health benefits provided
to
the Executive are considered taxable benefits, such health benefits will be
provided to Executive for the lesser of the applicable maximum coverage period
under the COBRA health care continuation rules or two years. If the Company
is
unable to provide the coverage indicated above due to plan limitations, it
will
make two years of payments to the Executive equal to the premiums in effect
at
the time of termination. (“Welfare and Fringe Benefits”);
8.2 If
the
Executive's employment terminates due to a Termination for Cause, as hereinafter
defined, the Company will pay to the Executive the Accrued Compensation defined
in Section VIII.1.i.A. No other payments will be made and the Company will
not
be obligated to provide any other benefits to or on behalf of the
Executive.
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8.3 If
Executive resigns from employment with the Company or gives notice of
non-renewal in accordance with Section III.3.1 hereof, the Company will pay
the
Accrued Compensation defined in Section VIII.1.i.A. No other payments will
be
made and the Company will not be obligated to provide any other benefits to
or
on behalf of the Executive except any benefits payable under the
SERP.
8.4 Except
as
otherwise expressly provided in this Agreement and except for any long-term
incentive payments to which Executive is entitled, upon termination of the
Executive's employment hereunder, the Company's obligation to make payments
or
provide benefits under this Agreement will cease.
SECTION
IX
DEFINITIONS
For
this
Agreement, the following terms have the following meanings:
9.1 Termination
for Cause means termination of the Executive's employment by the Company, by
written notice to the Executive, specifying the event relied upon for such
termination, due to (i.) the Participant's gross misconduct in respect of his
duties for the Company or any conduct which has resulted or is likely to result
in damage to the Company’s reputation, (ii.) conviction for a felony, (iii.)
knowing and intentional failure to comply with applicable laws with respect
to
the execution of the Company's business operations, (iv.) theft, fraud,
embezzlement, dishonesty or other conduct which has resulted or is likely to
result in material economic damage to the Company or any of its Affiliates,
or
(v.) substantial dependence on or addiction to alcohol or use of drugs except
those legally prescribed by and administered pursuant to the directions of
a
practitioner licensed to do so under the laws of the state or country of
licensure.
9.2 Constructive
Discharge means termination of the Executive's employment by the Company due
to
a failure of the Company to fulfill its obligations under this Agreement in
any
material respect, including any material reduction of the Executive's Base
Salary, failure to appoint or reappoint the Executive to the office of Chief
Executive Officer or other material change by the Company in the functions,
duties or responsibilities of the position which would reduce the ranking or
level, responsibility, importance or scope of the position. This would also
include any assignment or reassignment by the Company of the Executive to a
place of employment that is a material change in the geographic location away
from the Company's present headquarters or another location in Greenville,
South
Carolina. The Executive will provide the Company written notice which describes
the circumstances being relied on for the Constructive Discharge with respect
to
the Agreement within ninety (90) days after the event giving rise to the notice.
The Company will have thirty (30) days to remedy the situation prior to the
Termination for Constructive Discharge.
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9.3 Without
Cause Termination means termination of the Executive's employment by the Company
other than due to death or disability and other than Termination for Cause
and
includes, without limitation, termination of the Executive's employment by
the
Company's giving notice of non-renewal in accordance with Section III.3.1
hereof.
SECTION
X
OTHER
DUTIES OF THE EXECUTIVE DURING AND
AFTER
THE PERIOD OF EMPLOYMENT
During
the Period of Employment and for 24 months thereafter:
10.1 The
Executive will, with reasonable notice, furnish information as may be in his
possession and cooperate with the Company as may reasonably be requested in
connection with any claim or legal actions in which the Company is or may become
a party.
10.2 The
Executive recognizes and acknowledges that all information pertaining to the
affairs, business, clients, customers or other relationships of the Company
is
confidential and is a unique and valuable asset of the Company. Access to and
knowledge of this information is essential to the performance of the Executive's
duties under this Agreement.
10.3 The
Executive will not, except to the extent reasonably necessary in performance
of
the duties under this Agreement or except as required by law, give to any
person, firm, company, corporation or governmental agency any information
concerning the affairs, business, clients, customers or other relationships
of
the Company. The Executive will not make use of this type of information for
his
own purposes or for the benefit of any person or organization other than the
Company. The Executive will also use his best efforts to prevent the disclosure
of this information by others.
10.4 All
records, memoranda, etc. relating to the business of the Company whether made
by
the Executive or otherwise coming into his possession are confidential and
will
remain the property of the Company and in the Company’s possession.
10.5 The
Executive will not use his status with the Company to obtain financial benefits,
loans, goods or services from another organization on terms that would not
be
available to him in the absence of his relationship with the
Company.
10.6 The
Executive will not make any statements or perform any acts intended to advance
the interest of any existing or prospective competitors of the Company in any
way that will injure the interest of the Company.
10.7 The
Executive, without prior express written approval by the Board, will not
directly or indirectly own or hold any proprietary interest in, be employed
by,
or receive compensation from any party engaged in the same business as the
Company. For the purposes of this Agreement, proprietary interest means legal
or
equitable ownership, whether through stock holdings or otherwise of an equity
interest in any privately owned business firm or entity or ownership of more
than five percent (5%) of any class of equity interest in a publicly-held
corporation.
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10.8 The
Executive, without express written approval from the Board, will not solicit
any
members of the then current clients of the Company or then current employees
of
the Company or discuss with any employee of the Company information or operation
of any business intended to compete with the Company. Executive agrees that
any
obligation of the Company to make any payments to the Executive under the terms
of this Agreement will cease upon any violation of the preceding
paragraphs.
The
parties desire that the provisions of Section X be enforced to the fullest
extent permissible under the laws and public policies applied in the
jurisdictions in which enforcement is sought, and agree that the Company may
specifically enforce the terms hereof. If any portion of Section X is judged
to
be invalid or unenforceable, Section X will be amended to conform to the legal
changes so that the remainder of the Agreement remains in
effect.
SECTION
XI
EFFECTS
OF CHANGE IN CONTROL
11.1 In
the
event there is a Change in Control (as hereafter defined) of the ownership
of
the Company, the Executive may at any time immediately resign upon written
notice to the Company. In this event, the Company will pay the Accrued
Compensation through the Date of Termination.
11.2 In
the
event there is a Change in Control of the Company, and the Executive's
employment is terminated within two years of such Change in Control due to
a
Without Cause termination or Constructive Discharge, the Company will pay the
Executive:
11.2.i In
the
form of a lump sum payment of Accrued Compensation, Pro Rata Bonus and two
times
the sum of Base Salary plus the Reference Bonus as defined in Section 8 - except
that the Base Salary used for calculation of the payment will be the highest
base salary in effect between the date immediately preceding the occurrence
of
the Change in Control and the Executive's Date of Termination. Such amount
will
be paid within thirty (30) days after the Executive's Date of
Termination.
11.2.ii
In
addition, any stock options and other equity incentives shall vest and become
immediately exercisable, as the case may be and all vested stock options held
by
the Executive shall be exercisable for a period of one year, but not beyond
the
original expiration of their term.
11.2.iii
All
other benefits described in Section 8.1.iv of this Agreement will be continued
in accordance with Section 8.1.iv of this Agreement.
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It
is
understood that, in the event that Executive is entitled to severance payments
under this Section 11.2, then such severance payments shall be in lieu of any
severance payments to which the Executive would be entitled under Section 8
hereof.
In
the
event there is a Change in Control of the Company and the Executive's employment
is terminated as provided in this Section 11.2 after the first anniversary
of
such Change in Control, the compensation otherwise payable under this Section
11.2.i shall not be paid in a lump sum but shall be paid in the manner specified
in Section 8 of this Agreement.
11.3 It
is the
intention of the parties hereto that the severance payments and other
compensation provided for herein are reasonable compensation for Executive's
services to the Company and shall not constitute "excess parachute payments"
within the meaning of Section 280G of the Code and any regulations there under.
In the event that the Company's independent accountants acting as auditors
for
the Company on the date of a Change in Control determine that the payments
provided for herein constitute "excess parachute payments," then the
compensation payable hereunder shall be reduced to the point that such
compensation shall not qualify as "excess parachute payments."
11.4 Change
in
Control means a "change in ownership," a "change in effective control," or
a
“change in the ownership of substantial assets” of a corporation as described in
Treasury Regulations Section 1.409A-3(g)(5) (which events are collectively
referred to herein as “Change in Control events”).
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11.4i.
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A
"change in ownership" of the Company occurs on the date that any
one
person, or more than one person acting as a group, acquires ownership
of
stock of the corporation that, together with stock held by such person
or
group, constitutes more that fifty percent (50%) of the total fair
market
value or total voting power of the Company. However, if any one person,
or
more than one person acting as a group, is considered to own more
than
fifty percent (50%) of the total fair market value or total voting
power
of the stock of the Company, the acquisition of additional stock
by the
same person or persons is not considered to cause a change in ownership
of
the Company (or to cause a change in the effective control of the
Company
(within the meaning of paragraph (b)
below)).
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11.4ii
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If
the Company has not undergone a change in ownership under paragraph
(a)
above, a "change in effective control" of the Company occurs on the
date
that either:
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(a)
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Any
one person, or more than one person acting as a group, acquires (or
has
acquired during the 12-month period ending on the date of the most
recent
acquisition by such person or persons) ownership of stock of the
Company
possessing 30 percent or more of the total voting power of the stock
of
the Company; or
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(b)
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A
majority of members of the Company’s Board is replaced during any
12-monthperiod by directors whose appointment or election is not
endorsed
by a majority of the members of the Company’s Board prior to the date of
the appointment or election.
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11.4iii
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A
"change in the ownership of substantial assets" of the Company occurs
on
the date that any one person, or more than one person acting as a
group,
acquires (or has acquired during the 12-month period ending on the
date of
the most recent acquisition by such person or persons) assets from
the
Company that have a total gross fair market value equal to or more
than
forty percent (40%) of the total gross fair market value of all of
the
assets of the Company immediately prior to such acquisition or
acquisitions. For this purpose, gross fair market value means the
value of
the assets of the Company, or the value of the assets being disposed
of,
determined without regard to any liabilities associated with such
assets.
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SECTION
XII
WITHHOLDING
TAXES
The
Company may directly or indirectly withhold from any payments under this
Agreement all federal, state, city or other taxes that shall be required to
be
withheld pursuant to any law or governmental regulation.
SECTION
XIII
EFFECT
OF PRIOR AGREEMENTS
This
Agreement contains the entire understanding between the Company and the
Executive with respect to the subject matter and supersedes any prior Employment
Agreement between the Company and the Executive, except that this Agreement
shall not affect or operate to reduce any benefits or compensation inuring
to
the Executive of a kind elsewhere provided and not expressly provided in this
Agreement.
SECTION
XIV
CONSOLIDATION,
MERGER, OR SALE OF ASSETS
Nothing
in this Agreement shall preclude the Company from consolidating or merging
into
or with, or transferring all or substantially all of its assets to another
corporation or person which assumes this Agreement and all obligations and
undertakings of the Company hereunder. Upon such a Consolidation, Merger, or
Sale of Assets the term "the Company" as used will mean the other corporation
and this Agreement shall continue in full force and effect.
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SECTION
XV
MODIFICATION
This
Agreement may not be modified or amended except in writing signed by both
parties. No term or condition of this Agreement will be deemed to have been
waived except in writing by the party charged with waiver. A waiver shall
operate only as to the specific term or condition waived and will not constitute
a waiver for the future or act on anything other than that which is specifically
waived.
SECTION
XVI
COMPLIANCE
WITH SECTION 409A
Notwithstanding
any other provisions of this Agreement, to the extent applicable, this Agreement
is intended to comply with Internal Revenue Code Section 409A and the
regulations (or similar guidance) there under. To the extent any provision
of
this Agreement is contrary to or fails to address the requirements of Code
Section 409A, this Agreement shall be construed and administered as necessary
to
comply with such requirements. If the Executive is considered a "specified
employee" (as defined in Code Section 409A and related treasury regulations)
at
the time of any termination of employment under Section 8.1 or Section 11.2
of
this Agreement, a portion of the amount payable to Executive under Section
8.1
or Section 11.2 shall be delayed for six (6) months following Executive's Date
of Termination to the extent necessary to comply with the requirements of Code
Section 409A. Any amounts payable to Executive during such six (6) month-period
that are delayed due to the limitation in the preceding sentence shall be paid
to Executive in a lump sum on or after the first day of the seventh
(7th)
month
following Executive's Date of Termination.
SECTION
XVII
GOVERNING
LAW
This
Agreement has been executed and delivered in the State of South Carolina and
its
validity, interpretation, performance and enforcement shall be governed by
the
laws of that state.
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IN
WITNESS WHEREOF,
the
Company has caused this Agreement to be executed as of May 21, 2007 by its
duly
authorized officers and Executive has hereunto set his hand.
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WORLD
ACCEPTANCE CORPORATION
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| By: |
/s/
Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx, Chairman of the Compensation Committee |
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/s/
A. Xxxxxxxxx XxXxxx,
III (SEAL)
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A.
Xxxxxxxxx XxXxxx, III
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