South Carolina (before conversion)
Delaware (after conversion) (State or other jurisdiction of incorporation or organization) |
6141
(Primary Standard Industrial Classification Code Number) |
57-0847115
(I.R.S. Employer Identification No.) |
Joshua Ford Bonnie
Lesley Peng Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, New York 10017 Telephone: (212) 455-2000 Facsimile: (212) 455-2502 |
Colin J. Diamond
White & Case LLP 1155 Avenue of the Americas New York, New York 10036 Telephone: (212) 819-8200 Facsimile: (212) 354-8113 |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o |
PROPOSED MAXIMUM
|
||||||
TITLE OF EACH CLASS OF
|
AGGREGATE OFFERING
|
AMOUNT OF
|
||||
SECURITIES TO BE REGISTERED | PRICE (1)(2) | REGISTRATION FEE | ||||
Common Stock, par value $0.10 per share
|
$ 100,000,000 | $ 11,610 (3) | ||||
(1) | Estimated solely for the purpose of determining the amount of the registration fee in accordance with Rule 457(o) under the Securities Act of 1933. | |
(2) | Includes shares of common stock subject to the underwriters over-allotment option. |
(3) | Previously paid. |
The
information contained in this preliminary prospectus is not
complete and may be changed. We and the selling stockholders may
not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This
preliminary prospectus is not an offer to sell these securities
and is not soliciting an offer to buy these securities in any
jurisdiction where the offer or sale is not
permitted.
|
PER SHARE | TOTAL | |||||||
Public Offering Price
|
$ | $ | ||||||
Underwriting Discounts and Commissions
|
$ | $ | ||||||
Proceeds to Regional Management Corp. before expenses
|
$ | $ | ||||||
Proceeds to the selling stockholders before expenses
|
$ | $ |
Jefferies
JMP Securities |
Stephens Inc.
BMO Capital Markets |
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F-1 | ||||||||
EX-10.4 | ||||||||
EX-10.7 | ||||||||
EX-10.8 | ||||||||
EX-10.9 | ||||||||
EX-10.10 | ||||||||
EX-10.11 | ||||||||
EX-10.12 | ||||||||
EX-10.13 | ||||||||
EX-23.1 |
i
ii
9
10
F-17
F-23
F-42
II-3
n
Small Installment Loans
We offer standardized
small installment loans ranging from $300 to $2,500, with terms
of up to 36 months, which are secured by non-essential
household goods. We originate these loans both through our
branches and through mailing live checks to
pre-screened individuals who are able to enter into a loan by
depositing these checks. As of March 31, 2011, we had
approximately 110,000 small installment loans outstanding
representing $99.6 million in finance receivables.
n
Large Installment Loans
We offer large
installment loans through our branches ranging from $2,500 to
$18,000, with terms of between 18 and 54 months, which are
secured by a vehicle in addition to non-essential household
goods. As of March 31, 2011, we had approximately 11,000
large installment loans outstanding representing
$32.7 million in finance receivables.
n
Automobile Purchase Loans
We offer automobile
purchase loans of up to $30,000, generally with terms of between
36 and 72 months, which are secured by the purchased
vehicle. Our automobile purchase loans are offered through a
network of dealers in our geographic footprint, including over
1,550 independent and over 540 franchise automobile dealerships
as of March 31, 2011. Our automobile purchase loans include
both direct loans, which are sourced through a dealership and
closed at one of our branches, and indirect loans, which are
originated and closed at a dealership in our network without the
need for the customer to visit one of our branches. As of
March 31, 2011, we had approximately 13,700 automobile
purchase loans outstanding representing $102.2 million in
finance receivables.
n
Furniture and Appliance Purchase Loans
We
offer indirect furniture and appliance purchase loans of up to
$7,500, with terms of between six and 48 months, which are
secured by the purchased furniture or appliance. These loans are
offered through a network of over 100 furniture and appliance
retailers. Since launching this product in November 2009, our
portfolio has grown to approximately 3,200 furniture and
appliance purchase loans outstanding representing
$3.7 million in finance receivables.
n
Insurance Products
We offer our customers
optional payment protection insurance relating to many of our
loan products.
1
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n
146 branches across five states;
n
a network of over 1,550 independent and over 540 franchise auto
dealerships, which offer our loans to their customers;
n
our pre-screened live check mailings;
n
a network of over 100 furniture and appliance retailers, which
offer our loans to their customers; and
n
our consumer website through which we facilitate loan
applications.
3
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n
Existing Branches
We intend to continue
increasing same-store revenues, which have grown an average of
13.4% per annum for the five years ended December 31, 2010,
by further building relationships in the communities in which we
operate and capitalizing on opportunities to offer our customers
new loan products as their credit profiles evolve. From 2006 to
2010, we opened 44 new branches, and we expect revenues at these
branches will continue to grow faster than our overall
same-store revenue growth rate as these branches mature.
n
New Branches
We believe there is sufficient
demand for consumer finance services to continue our pattern of
new branch growth in the states where we currently operate,
allowing us to capitalize on our existing infrastructure and
experience in these markets. Opening new branches allows us to
generate both direct lending at the branches, as well as to
create new origination opportunities by establishing
relationships through the branches with automobile dealerships
and furniture and appliance retailers in the community.
n
New States
We intend to explore opportunities
for growth in several states outside our existing geographic
footprint that enjoy favorable interest rate and regulatory
environments.
n
Automobile Purchase Loans
We have identified
over 11,500 additional dealers in our existing geographic
footprint. We have hired dedicated marketing personnel to
develop relationships with these additional dealers to expand
our network. We will also seek to capture a larger percentage of
the financing activity of dealers in our existing network. We
intend to continue expanding the number of franchise dealer
relationships through our AutoCredit Source branches to grow our
loan portfolio through increased penetration.
n
Live Check Program
We continue to refine our
screening criteria and tracking for direct mail campaigns, which
we believe has enabled us to improve response rates and credit
performance and allowed us to triple the annual number of live
checks that we mailed from 2007 to 2010. We intend to continue
to increase our use of live checks to grow our loan portfolio by
adding new customers and creating opportunities to offer new
loan products to our existing customers.
n
Furniture and Appliance Purchase Loans
We
have identified over 3,700 additional furniture and appliance
retail locations in our existing geographic footprint which
offers us the opportunity to expand our network.
n
Online Sourcing
We intend to continue to
develop and expand our online marketing efforts and increase
traffic to our consumer website through the use of tools such as
search engine optimization and paid online advertising.
4
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n
We have grown significantly in recent years and our delinquency
and charge-off rates and overall results of operations may be
adversely affected if we do not manage our growth effectively;
n
We face significant risks in implementing our growth strategy
some of which are outside our control;
n
We face strong direct and indirect competition;
n
Our business products and activities are strictly and
comprehensively regulated at the local, state and federal level;
n
Changes in laws and regulations or interpretations of laws and
regulations could negatively impact our business, results of
operations and financial condition;
n
The Dodd-Frank Wall Street Reform and Consumer Protection Act of
2010 (the Dodd-Frank Act) authorizes the newly
created Consumer Financial Protection Bureau (the
CFPB) to adopt rules that could potentially have a
serious impact on our ability to offer short-term consumer loans
and have a material adverse effect on our operations and
financial performance;
n
A substantial majority of our revenue is generated by our
branches in South Carolina, Texas and North Carolina;
n
Our business could suffer if we are unsuccessful in making,
continuing and growing relationships with automobile dealers and
furniture and appliance retailers;
n
Regular turnover among our managers and other employees at our
branches makes it more difficult for us to operate our branches
and increases our costs of operations, which could have an
adverse effect on our business, results of operations and
financial condition;
n
Our live check direct mail strategy exposes us to certain risks;
and
n
We face credit risk in our lending activities.
5
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shares.
shares
( shares
if the underwriters exercise their over-allotment option in
full).
The selling stockholders have granted the underwriters a
30-day
option to purchase up
to additional
shares of our common stock at the initial public offering price,
solely to cover over-allotments, if any.
shares.
We estimate that the net proceeds to us from this offering,
after deducting the underwriting discount and estimated offering
expenses payable by us, will be approximately
$ million. We intend to use
the net proceeds of this offering as follows:
Any additional net proceeds will be applied to repay additional
outstanding borrowings under our senior revolving credit
facility. We will not receive any proceeds from the sale of
shares of our common stock by the selling stockholders. See
Use of Proceeds.
We have no current plans to pay dividends on our common stock in
the foreseeable future.
See Risk Factors for a discussion of risks you
should carefully consider before deciding to invest in our
common stock.
RM
We intend to use a portion of the net proceeds from this
offering to repay amounts outstanding under our senior revolving
credit facility. An affiliate of BMO Capital Markets Corp., an
underwriter in this offering, is one of the lenders under our
senior revolving credit facility. Because more than 5% of the
proceeds of this offering, not including underwriting
compensation, will be received by an affiliate of an underwriter
in this
6
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offering, this offering is being conducted in compliance with
FINRA Rule 5121, as administered by the Financial Industry
Regulatory Authority, Inc. However, no qualified independent
underwriter is needed for this offering because this offering
meets the conditions set forth in FINRA Rule 5121(a)(1)(A).
See Use of Proceeds and Underwriting
(Conflicts of Interest) Affiliations and Conflicts
of Interest.
n
589,022 shares of our common stock issuable upon exercise
of options at a weighted average exercise price of $5.4623 per
share outstanding as of March 31, 2011 under the Regional
Management Corp. 2007 Management Incentive Plan (our 2007
Stock Plan) including options granted in 2007 and
2008; and
n
shares
of common stock that have been reserved for issuance under the
Regional Management Corp. 2011 Stock Incentive Plan (our
2011 Stock Plan)
including shares issuable
upon the exercise of stock options that we intend to grant to
our executive officers and directors at the time of this
offering with an exercise price equal to the initial public
offering price. See Management Compensation
Discussion and Analysis 2011 Stock Incentive
Plan and Actions Taken in 2011 and
Anticipated Actions in Connection with the Offering.
7
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8
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UNAUDITED
UNAUDITED
PRO
UNAUDITED
PRO
FORMA
THREE
FORMA
THREE
MONTHS
YEAR
MONTHS
ENDED
ENDED
ENDED
YEAR ENDED DECEMBER 31,
MARCH 31,
DECEMBER 31,
MARCH 31,
2006
2007
(1)
2008
2009
2010
2010
2011
2010
2011
(Dollars in thousands, except for per share amounts)
$
42,240
$
49,478
$
58,471
$
63,590
$
74,218
$
18,022
$
21,045
$
74,218
$
21,045
6,718
7,144
8,271
9,224
12,614
3,657
3,651
12,614
3,651
48,958
56,622
66,742
72,814
86,832
21,679
24,696
86,832
24,696
9,526
13,665
17,376
19,405
16,568
3,902
3,836
16,568
3,836
21,128
22,950
27,862
29,120
33,525
8,919
10,212
33,525
10,212
2,006
1,644
1,263
1,233
308
310
7,812
8,687
7,399
4,846
5,542
1,484
1,763
5,353
3,706
3,835
4,342
984
996
7,812
14,040
11,105
8,681
9,884
2,468
2,759
38,466
52,661
57,987
58,469
61,210
15,597
17,117
10,492
3,961
8,755
14,345
25,622
6,082
7,579
3,525
857
2,276
4,472
9,178
2,129
2,644
$
6,967
$
3,104
$
6,479
$
9,873
$
16,444
$
3,953
$
4,935
$
$
$
0.69
$
1.06
$
1.76
$
0.42
$
0.53
$
$
$
0.68
$
1.03
$
1.70
$
0.41
$
0.51
$
$
9,336,727
9,336,727
9,336,727
9,336,727
9,336,727
9,482,604
9,590,564
9,669,618
9,606,178
9,648,103
$
140,605
$
167,535
$
192,289
$
214,909
$
247,246
$
200,043
$
238,117
$
247,246
$
238,117
(11,191
)
(13,290
)
(15,665
)
(18,441
)
(18,000
)
(17,975
)
(18,000
)
(18,000
)
(18,000
)
$
129,414
$
154,245
$
176,624
$
196,468
$
229,246
$
182,068
$
220,117
$
229,246
$
220,117
141,591
168,484
192,502
214,447
241,358
197,138
237,013
120,110
159,079
176,095
187,807
197,914
166,456
188,556
12,000
12,000
12,000
12,000
12,000
12,000
21,481
(2,595
)
4,407
14,640
31,444
18,682
36,469
$
123,645
$
146,265
$
178,159
$
192,981
$
216,024
$
206,858
$
240,884
89
96
112
117
134
119
146
$
16,129
$
17,990
$
26,654
$
31,232
$
41,215
$
11,171
$
9,985
43.2
%
40.5
%
41.7
%
40.0
%
38.6
%
41.1
%
41.4
%
$
133,535
$
163,945
$
184,087
$
212,804
$
236,717
$
197,795
$
224,684
9.6
%
15.3
%
15.7
%
9.0
%
17.4
%
24.0
%
8.9
%
11.8
%
16.6
%
9.9
%
10.7
%
10.1
%
11.6
%
12.3
%
Table of Contents
UNAUDITED
UNAUDITED
PRO
UNAUDITED
PRO
FORMA
THREE
FORMA
THREE
MONTHS
YEAR
MONTHS
ENDED
ENDED
ENDED
YEAR ENDED DECEMBER 31,
MARCH 31,
DECEMBER 31,
MARCH 31,
2006
2007
(1)
2008
2009
2010
2010
2011
2010
2011
(Dollars in thousands, except for per share amounts)
84,760
99,089
110,895
128,285
148,813
119,615
137,367
19.5
%
24.1
%
26.0
%
26.7
%
19.1
%
18.0
%
15.5
%
7.7
%
9.3
%
9.8
%
10.1
%
7.7
%
7.5
%
(10)
6.4
%
(10)
7.0
%
7.8
%
8.4
%
8.6
%
7.9
%
8.4
%
(10)
6.4
%
(10)
2.8
%
2.7
%
4.5
%
3.9
%
2.3
%
3.6
%
2.3
%
0.7
%
0.6
%
1.3
%
1.0
%
0.4
%
1.2
%
0.5
%
(1)
On March 21, 2007, Palladium
Equity Partners III, L.P. and Parallel 2005 Equity Fund, LP
acquired the majority of our outstanding common stock. In
connection with the acquisition transaction, we issued
$25.0 million of mezzanine debt at an interest rate of
18.375%, plus related fees, which we refinanced in 2007 and
again in 2010 with Palladium Equity Partners III, L.P. and
certain of our individual owners. Additionally, we pay the
sponsors annual advisory fees of $675,000 in the aggregate, and
pay certain individual owners annual consulting fees of $450,000
in the aggregate, in each case, plus certain expenses. See
Certain Relationships and Related Person
Transactions Advisory and Consulting Fees. We
intend to repay the mezzanine debt with proceeds from this
offering, and we expect to terminate the consulting and advisory
agreements concurrent with this offering.
(2)
As of January 1, 2010, we
changed our loan loss allowance methodology for small
installment loans to determine the allowance using losses from
the trailing eight months, rather than the trailing nine months,
to more accurately reflect the six-month average life of our
small installment loans. The change from nine to eight months of
average losses reduced the loss allowance for small installment
loans by $1.1 million as of January 1, 2010 and
reduced the provision for loan losses by $451,000 for 2010.
(3)
Prior to the acquisition
transaction, we had a different capital structure, including a
different number of shares of common stock outstanding.
Accordingly, a comparison of earnings before the acquisition
transaction is not meaningful.
(4)
Finance receivables equal the total
amount due from the customer, net of unearned finance charges,
insurance premiums and commissions.
(5)
Net finance receivables equal the
total amount due from the customer, net of unearned finance
charges, insurance premiums and commissions and allowance for
loan losses.
(6)
The shareholders agreement among
us, Regional Holdings LLC, the sponsors and the individual
owners provides that the individual owners have the right to put
their stock back to us if an initial public offering does not
occur within five years of the date of the acquisition
transaction, March 21, 2007. We valued this put option at
the original purchase price of $12.0 million. The filing of
the registration statement of which this prospectus forms a part
relating to this offering makes it probable that the put option
will not become exercisable.
(7)
Average finance receivables are
computed using the most recent thirteen month-end balances for
the annual periods shown and the most recent four month-end
balances for the three-month periods shown.
(8)
Our efficiency ratio is calculated
by dividing the sum of general and administrative expenses by
total revenue.
(9)
All same-store measurements for any
period are calculated based on stores that had been open for at
least one year as of the end of the period.
(10)
The loan loss provision and net
charge-offs as a percentage of average finance receivables are
annualized figures.
Table of Contents
n
the prevailing laws and regulatory environment of each state in
which we operate or seek to operate, and, to the extent
applicable, federal laws and regulations, which are subject to
change at any time;
n
the degree of competition in new markets and its effect on our
ability to attract new customers;
n
our ability to identify attractive locations for new branches;
n
our ability to recruit qualified personnel, in particular in
remote areas and areas where we face a great deal of
competition; and
n
our ability to obtain adequate financing for our expansion plans.
11
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12
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n
it is more difficult to maintain sound underwriting standards
with live check customers, and these customers have historically
presented a higher risk of default than customers that originate
loans in our branches, as we do not meet a live check customer
prior to soliciting them and extending a loan to them, and we
may not be able to verify certain elements of their financial
condition, including their current employment status or life
circumstances;
n
we rely on a software-based model and credit information from a
third-party credit bureau that is more limited than a full
credit report to pre-screen potential live check recipients,
which may not be as effective or may be inaccurate or outdated;
13
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n
we face limitations on the number of potential borrowers who
meet our lending criteria within proximity to our branches;
n
we may not be able to continue to access the demographic and
credit file information that we use to generate our mailing
lists due to expanded regulatory or privacy restrictions;
n
live checks pose a greater risk of fraud as the live checks may
be fraudulently replicated;
n
we depend on one bank to issue and clear our live checks and any
failure by that bank to properly process the live checks could
limit the ability of a recipient to cash the check and enter
into a loan with us;
n
we sell clearly disclosed optional credit insurance products as
part of our live check mailing campaigns; however, customers may
subsequently claim that they did not receive sufficient
explanation or notice of the insurance products that they
purchased;
n
customers may opt out of direct mail solicitations and
solicitations based on their credit file or may otherwise
prohibit us from soliciting them; and
n
postal rates and piece printing rates may continue to rise.
n
overvaluing potential targets due to limitations on our due
diligence efforts;
n
difficulties in integrating any acquired companies, branches or
products into our existing business, including integration of
account data into our information systems;
n
inability to realize the benefits we anticipate in a timely
fashion, or at all;
n
attrition of key personnel from acquired businesses;
n
unexpected losses due to the acquisition of existing loan
portfolios with loans originated using less stringent
underwriting criteria;
n
significant costs, charges or writedowns; or
n
unforeseen operating difficulties that require significant
financial and managerial resources that would otherwise be
available for the ongoing development and expansion of our
existing operations.
14
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15
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16
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n
incur or guarantee additional indebtedness;
n
purchase large loan portfolios in bulk;
n
pay dividends or make distributions on our capital stock or make
certain other restricted payments;
n
sell assets, including our loan portfolio or the capital stock
of our subsidiaries;
n
enter into transactions with our affiliates;
n
create or incur liens; and
n
consolidate, merge, sell or otherwise dispose of all or
substantially all of our assets.
17
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n
the interest rates that we may charge customers;
n
terms of loans, including fees, maximum amounts and minimum
durations;
n
the number of simultaneous or consecutive loans and required
waiting periods between loans;
n
disclosure practices, including posting of fees;
n
currency and suspicious activity reporting;
18
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n
recording and reporting of certain financial transactions;
n
privacy of personal customer information;
n
the types of products and services that we may offer;
n
collection practices;
n
approval of licenses; and
n
locations of our branches.
19
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20
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21
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22
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23
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n
authorize the issuance of undesignated preferred stock, the
terms of which may be established and the shares of which may be
issued without stockholder approval, and which may include super
voting, special approval, dividend, or other rights or
preferences superior to the rights of the holders of common
stock;
n
prohibit stockholder action by written consent, which requires
all stockholder actions to be taken at a meeting of our
stockholders;
n
provide that the board of directors is expressly authorized to
make, alter, or repeal our bylaws and that our stockholders may
only amend our bylaws with the approval of 80% or more of all of
the outstanding shares of our capital stock entitled to
vote; and
24
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n
establish advance notice requirements for nominations for
elections to our board or for proposing matters that can be
acted upon by stockholders at stockholder meetings.
25
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n
our intention to expand our automobile and furniture purchase
loan portfolios, expand our live check campaigns and continue to
develop our online marketing;
n
our intention to increase volume at our existing branches, open
new branches and enter new markets in the future;
n
our plans to develop new products in the future;
n
our intention to increase the number of customers we serve
through expanding our channels and products;
n
our ability to maintain the quality of our asset portfolio and
our plans to develop new underwriting and credit control
strategies;
n
our belief that our capital expenditure requirements and
liquidity needs will be met; and
n
our expectations about future dividends and our plans to retain
any future earnings.
26
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n
approximately $ million to
repay outstanding borrowings, plus accrued and unpaid interest,
under our senior revolving credit facility;
n
to repay $25.8 million outstanding as of March 31,
2011, plus accrued and unpaid interest, under our mezzanine
debt, which is currently held by certain of our existing
owners; and
n
$1.1 million to make one-time payments to certain of our
existing owners in the aggregate in consideration for the
termination of our advisory and consulting agreements with them
in accordance with their terms upon consummation of this
offering as described under Certain Relationships and
Related Person Transactions Advisory and Consulting
Fees.
27
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28
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n
on a historical basis; and
n
on an as adjusted basis to give effect to the offering and the
application of the estimated net proceeds therefrom as described
under Use of Proceeds, as if each had occurred on
March 31, 2011.
AS OF MARCH 31, 2011
ACTUAL
AS
ADJUSTED
(1)
(Dollars in thousands)
$
25,814
$
151,347
177,161
12,000
934
28,048
7,487
36,469
$
225,630
$
(1)
A $1.00 increase in the assumed
initial public offering price per share would decrease total
long-term debt by $ million,
would increase additional paid-in capital by
$ million and would increase
total stockholders equity by
$ million and increase total
capitalization by $ million,
assuming the number of shares offered by us remains the same and
after deducting the underwriting discount and the estimated
offering expenses payable by us. An increase of 1.0 million
shares in the number of shares offered by us would decrease
total long-term debt by
$ million, would increase
additional paid-in capital by
$ million, and would increase
total stockholders equity by
$ million and increase total
capitalization by approximately
$ million, assuming the
initial public offering price remains the same and after
deducting the underwriting discount and estimated offering
expenses payable by us. A $1.00 decrease in the assumed initial
public offering price per share or a decrease of
1.0 million shares in the number of shares offered by us
would result in equal changes in the opposite direction.
(2)
Our senior revolving credit
facility is a $225.0 million facility, as described under
Managements Discussion and Analysis of Financial
Condition and Results of Operations Liquidity and
Capital Resources Financing Arrangements
Senior Revolving Credit Facility. We intend to repay a
portion of the borrowings under our senior revolving credit
facility with a portion of the net proceeds from this offering.
(3)
The shareholders agreement among
us, Regional Holdings LLC, the sponsors and the individual
owners provides that the individual owners have the right to put
their stock back to us if an initial public offering does not
occur within five years of the date of the acquisition
transaction, March 21, 2007. We valued this put option at
the original purchase price of $12.0 million. The filing of
the registration statement of which this prospectus forms a part
relating to this offering makes it probable that the put option
will not become exercisable.
29
Table of Contents
$
$
$
30
Table of Contents
31
Table of Contents
n
the application of the proceeds from this offering as described
under Use of Proceeds including:
the repayment of a portion of our outstanding indebtedness and
the associated reduction in interest expense; and
the termination of our advisory agreement with the sponsors and
consulting agreements with certain of the individual owners and
the associated termination of consulting and advisory fees, each
in accordance with its terms upon the consummation of this
offering as described under Certain Relationships and
Related Person Transactions, which termination does not
result in any adjustment to our pro forma consolidated balance
sheet; and
n
the termination of the right of the individual owners to sell
their stock back to us, which pursuant to the terms of the
shareholders agreement among us, Regional Holdings LLC, the
sponsors and the individual owners terminates upon the
consummation of this offering.
32
Table of Contents
PRO FORMA
ACTUAL
ADJUSTMENTS
PRO FORMA
(In thousands, except share and per share data)
$
74,218
$
$
74,218
8,252
8,252
4,362
4,362
86,832
86,832
16,568
16,568
20,630
20,630
5,165
5,165
2,027
2,027
1,233
(1,233
)
(1)
5,703
5,703
5,542
(2)
4,342
(4,342
)
(3)
9,884
61,210
25,622
9,178
(4)
$
16,444
$
$
$
1.76
$
1.70
$
$
9,336,727
9,669,618
(1)
Reflects the termination of the
advisory agreement we entered into with each of the sponsors and
the consulting agreements we entered into with certain of the
individual owners, pursuant to which we paid the sponsors and
the individual owners an aggregate of $1.2 million for the
year ended December 31, 2010. These agreements will be
terminated upon the consummation of this offering in accordance
with their terms upon payment of one-time aggregate termination
fees of $1.1 million.
(2)
Reflects reduction in interest
expense of $ million as a
result of repayment of
$ million in aggregate
principal amount of our senior revolving credit facility, offset
in part by an unused line fee associated with our senior
revolving credit facility of 0.50%. Our senior revolving credit
facility bears interest a rate equal to one-month LIBOR (with a
LIBOR floor of 1.00%) plus 3.25% as of December 31, 2010.
(3)
Reflects reduction in interest
expense of $4.3 million as a result of repayment of the
$25.8 million in aggregate principal amount of our
mezzanine debt. Our mezzanine debt accrues interest at a rate of
15.25% per annum.
(4)
Reflects an increase in income
taxes of $ million as a
result of the increase in income before taxes.
33
Table of Contents
PRO FORMA
ACTUAL
ADJUSTMENTS
PRO FORMA
(In thousands, except share and per share data)
$
21,045
$
$
21,045
2,194
2,194
1,457
1,457
24,696
24,696
3,836
3,836
6,540
6,540
1,471
1,471
647
647
310
(310
)
(1)
1,554
1,554
1,763
(2)
996
(996
)
(3)
2,759
17,117
7,579
2,644
(4)
$
4,935
$
$
$
0.53
$
0.51
$
$
9,336,727
9,648,103
(1)
Reflects the termination of the
advisory agreement we entered into with each of the sponsors and
the consulting agreements we entered into with certain of the
individual owners, pursuant to which we paid the sponsors and
the individual owners an aggregate of $0.3 million for the
three months ended March 31, 2011. These agreements will be
terminated upon the consummation of this offering in accordance
with their terms upon payment of a one-time aggregate
termination fee of $1.1 million.
(2)
Reflects reduction in interest
expense of $ million as a
result of repayment of
$ million in aggregate
principal amount of our senior revolving credit facility, offset
in part by an unused line fee associated with our senior
revolving credit facility of 0.50%. Our senior revolving credit
facility bears interest a rate equal to one-month LIBOR (with a
LIBOR floor of 1.00%) plus 3.25% as of March 31, 2011.
(3)
Reflects reduction in interest
expense of $1.0 million as a result of repayment of the
$25.8 million in aggregate principal amount of our
mezzanine debt. Our mezzanine debt accrues interest at a rate of
15.25% per annum.
(4)
Reflects an increase in income
taxes of $ million as a
result of the increase in income before taxes.
34
Table of Contents
PRO FORMA
ACTUAL
ADJUSTMENTS
PRO FORMA
(In thousands, except share and per share data)
$
4,384
$
(1)
$
304,840
304,840
(66,723
)
(66,723
)
238,117
238,117
(18,000
)
(18,000
)
220,117
220,117
3,366
3,366
4,726
4,726
183
183
4,727
(111
)
(2)
4,616
$
237,503
$
$
$
1,404
$
$
1,404
10,273
10,273
151,347
(3)
25,814
(25,814
)
(4)
196
196
189,034
12,000
(12,000
)
(5)
934
(6)
28,049
(7)
7,486
7,486
36,469
$
237,503
$
$
(1)
Reflects the net effect on cash of
the receipt of offering proceeds (net of underwriting discounts
and estimated offering expenses) of
$ million and the uses of
proceeds described under Use of Proceeds.
(2)
Reflects the write off of
unamortized debt issuance costs related to the mezzanine debt.
(3)
Reflects the repayment of
$ million in aggregate
principal amount under our senior revolving credit facility as
described under Use of Proceeds.
(4)
Reflects the repayment of
$25.8 million in aggregate principal amount of mezzanine
debt as described under Use of Proceeds.
(5)
Reflects the reclassification of
temporary equity to additional paid-in capital. The shareholders
agreement between us, Regional Holdings LLC, the sponsors and
the individual owners provides that the individual owners have
the right to put their stock back to us if an initial public
offering does not occur within five years of the date of
acquisition, March 21, 2007. This right will be terminated
upon the consummation of this offering.
(6)
Reflects an adjustment to common
stock reflecting the par value for the common stock to be issued
in this offering.
(7)
Reflects (i) an adjustment for
the estimated net proceeds to us from this offering less the par
value recorded under common stock as described in footnote 6
above and (ii) the reclassification of temporary equity to
additional paid-in capital as described in footnote 5 above.
35
Table of Contents
UNAUDITED
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31,
MARCH 31,
2006
2007
(1)
2008
2009
2010
2010
2011
(Dollars in thousands, except per share data)
$
42,240
$
49,478
$
58,471
$
63,590
$
74,218
$
18,022
$
21,045
6,718
7,144
8,271
9,224
12,614
3,657
3,651
48,958
56,622
66,742
72,814
86,832
21,679
24,696
9,526
13,665
17,376
19,405
16,568
3,902
3,836
21,128
22,950
27,862
29,120
33,525
8,919
10,212
2,006
1,644
1,263
1,233
308
310
7,812
8,687
7,399
4,846
5,542
1,484
1,763
5,353
3,706
3,835
4,342
984
996
7,812
14,040
11,105
8,681
9,884
2,468
2,759
38,466
52,661
57,987
58,469
61,210
15,597
17,117
10,492
3,961
8,755
14,345
25,622
6,082
7,579
3,525
857
2,276
4,472
9,178
2,129
2,644
$
6,967
$
3,104
$
6,479
$
9,873
$
16,444
$
3,953
$
4,935
$
0.69
$
1.06
$
1.76
$
0.42
$
0.53
$
0.68
$
1.03
$
1.70
$
0.41
$
0.51
9,336,727
9,336,727
9,336,727
9,336,727
9,336,727
9,482,604
9,590,564
9,669,618
9,606,178
9,648,103
$
140,605
$
167,535
$
192,289
$
214,909
$
247,246
$
200,043
$
238,117
(11,191
)
(13,290
)
(15,665
)
(18,441
)
(18,000
)
(17,975
)
(18,000
)
$
129,414
$
154,245
$
176,624
$
196,468
$
229,246
$
182,068
$
220,117
141,591
168,484
192,502
214,447
241,358
197,138
237,025
120,110
159,079
176,095
187,807
197,914
166,456
188,556
12,000
12,000
12,000
12,000
12,000
12,000
21,481
(2,595
)
4,407
14,640
31,444
18,682
36,469
36
Table of Contents
(1)
On March 21, 2007, Palladium
Equity Partners III, L.P. and Parallel 2005 Equity Fund, LP
acquired the majority of our outstanding common stock. In
connection with the acquisition transaction, we issued
$25.0 million of mezzanine debt at an interest rate of
18.375%, plus related fees, which we refinanced in 2007 and
again in 2010 with Palladium Equity Partners III, L.P. and
certain of our individual owners. Additionally, we pay the
sponsors annual advisory fees of $675,000, in the aggregate and
pay certain individual owners annual consulting fees of $450,000
in the aggregate, in each case, plus certain expenses. See
Certain Relationships and Related Person
Transactions Advisory and Consulting Fees. We
intend to repay the mezzanine debt in full with proceeds from
this offering, and we expect to terminate the consulting and
advisory agreements concurrent with this offering.
(2)
As of January 1, 2010, we
changed our loan loss allowance methodology for small
installment loans to determine the allowance using losses from
the trailing eight months, rather than the trailing nine months,
to more accurately reflect the six-month average life of our
small installment loans. The change from nine to eight months of
average losses reduced the loss allowance for small installment
loans by $1.1 million as of January 1, 2010 and
reduced the provision for loan losses by $451,000 for 2010.
(3)
Prior to the acquisition
transaction, we had a different capital structure, including a
different number of shares of common stock outstanding.
Accordingly, a comparison of earnings before the acquisition
transaction is not meaningful.
(4)
Finance receivables equal the total
amount due from the customer, net of unearned finance charges,
insurance premiums and commissions.
(5)
Net finance receivables equal the
total amount due from the customer, net of unearned finance
charges, insurance premiums and commissions and allowance for
loan losses.
(6)
The shareholders agreement among
us, Regional Holdings LLC, the sponsors and the individual
owners provides that the individual owners have the right to put
their stock back to us if an initial public offering does not
occur within five years of the date of the acquisition
transaction, March 21, 2007. We valued this put option at
the original purchase price of $12.0 million. The filing of
the registration statement of which this prospectus forms a part
relating to this offering makes it probable that the put option
will not become exercisable.
37
Table of Contents
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
n
Small Installment Loans
As of March 31,
2011, we had approximately 110,000 small installment loans
outstanding representing $99.6 million in finance
receivables.
n
Large Installment Loans
As of March 31,
2011, we had approximately 11,000 large installment loans
outstanding representing $32.7 million in finance
receivables.
n
Automobile Purchase Loans
As of
March 31, 2011, we had approximately 13,700 automobile
purchase loans outstanding representing $102.2 million in
finance receivables.
n
Furniture and Appliance Purchase Loans
As of
March 31, 2011, we had approximately 3,200 furniture and
appliance purchase loans outstanding representing
$3.7 million in finance receivables.
n
Insurance Products
We offer our customers
optional payment protection insurance options relating to many
of our loan products.
38
Table of Contents
AS OF DECEMBER 31,
AS OF MARCH 31,
2009
2010
2011
% OF
% OF
% OF
FINANCE
TOTAL FINANCE
FINANCE
TOTAL FINANCE
FINANCE
TOTAL FINANCE
RECEIVABLES
RECEIVABLES
RECEIVABLES
RECEIVABLES
RECEIVABLES
RECEIVABLES
(Dollars in thousands)
$
102,651
47.8
%
$
117,599
47.6
%
$
99,622
41.8
%
28,217
13.1
%
33,653
13.6
%
32,669
13.7
%
83,253
38.7
%
93,232
37.7
%
102,164
42.9
%
788
0.4
%
2,762
1.1
%
3,661
1.6
%
$
214,909
100.0
%
$
247,246
100.0
%
$
238,117
100.0
%
39
Table of Contents
FOR THE YEAR ENDED DECEMBER 31,
FOR THE THREE MONTHS ENDED MARCH 31,
2010
2011
AVERAGE FINANCE
AVERAGE FINANCE
RECEIVABLES
AVERAGE YIELD
RECEIVABLES
AVERAGE YIELD
(Dollars in thousands)
$
96,104
47.6
%
$
108,324
48.8
%
32,483
26.6
%
32,700
27.2
%
85,705
22.7
%
96,528
22.7
%
1,730
22.8
%
3,273
18.2
%
$
216,024
34.4
%
$
240,824
35.0
%
40
Table of Contents
41
Table of Contents
YEAR ENDED DECEMBER 31,
THREE MONTHS ENDED MARCH 31,
2008
2009
2010
2010
2011
% OF
% OF
% OF
% OF
% OF
AMOUNT
REVENUE
AMOUNT
REVENUE
AMOUNT
REVENUE
AMOUNT
REVENUE
AMOUNT
REVENUE
(In thousands, except percentages)
$
58,471
87.6
%
$
63,590
87.3
%
$
74,218
85.5
%
$
18,022
83.1
%
$
21,045
85.2
%
4,620
6.9
%
5,229
7.2
%
8,252
9.5
%
2,295
10.6
%
2,194
8.9
%
3,651
5.5
%
3,995
5.5
%
4,362
5.0
%
1,362
6.3
%
1,457
5.9
%
66,742
100.0
%
72,814
100.0
%
86,832
100.0
%
21,679
100.0
%
24,696
100.0
%
17,376
26.0
%
19,405
26.7
%
16,568
19.1
%
3,902
18.0
%
3,836
15.5
%
17,781
26.7
%
18,991
26.1
%
20,630
23.8
%
5,946
27.4
%
6,540
26.5
%
4,398
6.6
%
4,538
6.2
%
5,165
5.9
%
1,222
5.6
%
1,471
6.0
%
999
1.5
%
1,212
1.7
%
2,027
2.3
%
547
2.5
%
647
2.6
%
4,684
7.0
%
4,379
6.0
%
5,703
6.6
%
1,204
5.6
%
1,554
6.3
%
1,644
2.5
%
1,263
1.7
%
1,233
1.4
%
308
1.4
%
310
1.3
%
7,399
11.0
%
4,846
6.6
%
5,542
6.4
%
1,484
6.8
%
1,763
7.1
%
3,706
5.6
%
3,835
5.3
%
4,342
5.0
%
984
4.5
%
996
4.0
%
11,105
16.6
%
8,681
11.9
%
9,884
11.4
%
2,468
11.4
%
2,759
11.1
%
57,987
86.9
%
58,469
80.3
%
61,210
70.5
%
15,597
71.9
%
17,117
69.3
%
8,755
13.1
%
14,345
19.7
%
25,622
29.5
%
6,082
28.1
%
7,579
30.7
%
2,276
3.4
%
4,472
6.1
%
9,178
10.6
%
2,129
9.8
%
2,644
10.7
%
$
6,479
9.7
%
$
9,873
13.6
%
$
16,444
18.9
%
$
3,953
18.3
%
$
4,935
20.0
%
42
Table of Contents
43
Table of Contents
44
Table of Contents
45
Table of Contents
46
Table of Contents
YEAR ENDED DECEMBER 31,
UNAUDITED THREE MONTHS ENDED MARCH 31,
2008
2009
2010
2010
2011
(In thousands)
$
26,654
$
31,232
$
41,215
$
11,171
$
9,985
(41,198
)
(40,711
)
(50,599
)
10,303
4,728
14,428
11,066
7,222
(23,730
)
(11,185
)
$
(116
)
$
1,587
$
(2,162
)
$
(2,256
)
$
3,528
YEAR ENDED DECEMBER 31,
UNAUDITED THREE MONTHS ENDED MARCH 31,
2008
2010
2010
2011
(In thousands)
$
(39,755
)
$
(49,346
)
$
10,497
$
4,728
(95
)
(1,348
)
(1,210
)
(194
)
(565
)
(43
)
$
(41,198
)
$
(50,599
)
$
10,303
$
4,728
47
Table of Contents
YEAR ENDED DECEMBER 31,
UNAUDITED THREE MONTHS ENDED MARCH 31,
2008
2009
2010
2010
2011
(In thousands)
$
(332
)
$
(214
)
$
215
$
744
$
1,039
16,396
11,674
7,015
(24,591
)
(11,954
)
25,814
(25,814
)
(1,636
)
(394
)
(8
)
117
(270
)
$
14,428
$
11,066
$
7,222
$
(23,730
)
$
(11,185
)
NET ADVANCES ON
SENIOR REVOLVING
NET ADVANCES
CREDIT FACILITY AS A
(PAYMENTS)
PERCENTAGE OF
FINANCE
ON SENIOR
FINANCE
RECEIVABLES
REVOLVING
RECEIVABLES
ORIGINATED
CREDIT FACILITY
ORIGINATED
(In thousands, except percentages)
$
39,755
$
16,396
41
%
$
39,249
$
11,674
30
%
$
49,346
$
7,015
14
%
$
5,293
$
(11,954
)
NA
48
Table of Contents
THREE MONTHS
YEAR ENDED DECEMBER 31,
ENDED MARCH 31,
2008
2009
2010
2010
2011
(In thousands)
$
13,290
$
15,665
$
18,441
$
18,441
$
18,000
17,376
19,405
16,568
3,902
3,836
(15,879
)
(17,002
)
(17,469
)
(4,486
)
(4,004
)
878
373
460
118
168
$
15,665
$
18,441
$
18,000
$
17,975
$
18,000
AS OF DECEMBER 31, 2010
AS OF MARCH 31, 2011
ALLOWANCE AS
ALLOWANCE AS
PERCENTAGE OF
PERCENTAGE OF
FINANCE
RELATED FINANCE
FINANCE
RELATED FINANCE
RECEIVABLES
RECEIVABLES
RECEIVABLES
RECEIVABLES
(Dollars in thousands)
$
117,559
7.6
%
$
98,623
6.9
%
33,653
8.5
%
32,669
7.2
%
93,232
5.7
%
102,164
4.7
%
2,762
5.1
%
3,661
4.5
%
$
247,246
7.3
%
$
238,117
7.6
%
THREE MONTHS
YEAR ENDED DECEMBER 31,
ENDED MARCH 31,
2008
2009
2010
2010
2011
(In thousands)
$
13,290
$
15,665
$
18,441
$
18,441
$
18,000
17,376
19,405
16,568
(1)
3,902
3,836
(15,879
)
(17,002
)
(17,469
)
(4,486
)
(4,004
)
878
373
460
118
168
$
15,665
$
18,441
$
18,000
$
17,975
$
18,000
(1)
Reducing the required allowance for
small loans from nine to eight months of losses reduced the 2010
provision by $451,000.
WITHIN ONE
ONE YEAR TO
YEAR
FIVE YEARS
AFTER FIVE YEARS
TOTAL
(In thousands)
$
58,169
$
59,430
$
$
117,599
4,388
29,265
33,653
6,080
86,979
173
93,232
703
2,059
2,762
$
69,340
$
177,733
$
173
$
247,246
49
Table of Contents
WITHIN ONE
ONE YEAR TO
YEAR
FIVE YEARS
AFTER FIVE YEARS
TOTAL
(Dollars in thousands)
$
29,466
$
99,935
$
66
$
129,467
20,628
21,870
61
42,559
10,288
48,364
16
58,668
5,385
4,691
30
10,106
3,573
2,873
6,446
$
69,340
$
177,733
$
173
$
247,246
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PAYMENTS DUE BY PERIOD
LESS THAN 1
MORE THAN
TOTAL
YEAR
1 - 3 YEARS
3 - 5 YEARS
5 YEARS
(In thousands)
$
189,581
$
466
$
189,115
$
$
30,744
11,341
19,403
3,936
1,836
1,998
79
23
$
224,261
$
13,643
$
210,516
$
79
$
23
PAYMENTS DUE BY PERIOD
LESS THAN 1
MORE THAN
TOTAL
YEAR
1 - 3 YEARS
3 - 5 YEARS
5 YEARS
(In thousands)
$
$
466
$
$
$
3,936
1,836
1,998
79
23
$
$
$
$
79
$
23
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n
Small Installment Loans
We offer standardized
small installment loans ranging from $300 to $2,500, with terms
of up to 36 months, which are secured by non-essential
household goods. We originate these loans both through our
branches and through mailing live checks to pre-screened
individuals who are able to enter into a loan by depositing
these checks. As of March 31, 2011, we had approximately
110,000 small installment loans outstanding representing
$99.6 million in finance receivables or an average of
approximately $910 per loan. In 2010 and the first three months
of 2011, interest and fee income from small installment loans
contributed $45.7 million and $13.2 million,
respectively, to our total revenue.
n
Large Installment Loans
We offer large
installment loans through our branches ranging from $2,500 to
$18,000, with terms of between 18 and 54 months, which are
secured by a vehicle in addition to non-essential household
goods. As of March 31, 2011, we had approximately 11,000
large installment loans outstanding representing
$32.7 million in finance receivables or an average of
approximately $3,000 per loan. In 2010 and the first three
months of 2011, interest and fee income from large installment
loans contributed $8.6 million and $2.2 million,
respectively, to our total revenue.
n
Automobile Purchase Loans
We offer automobile
purchase loans of up to $30,000, generally with terms of between
36 and 72 months, which are secured by the purchased
vehicle. Our automobile purchase loans are offered through a
network of dealers in our geographic footprint, including over
1,550 independent and over 540 franchise automobile dealerships
as of March 31, 2011. Our automobile purchase loans include
both direct loans, which are sourced through a dealership and
closed at one of our branches, and indirect loans, which are
originated and closed at a dealership in our network without the
need for the customer to visit one of our branches. As of
March 31, 2011, we had approximately 13,700 automobile
purchase loans outstanding representing $102.2 million in
finance receivables or an average of approximately $7,500 per
loan. In 2010 and the first three months of 2011, interest and
fee income from automobile purchase loans contributed
$19.5 million and $5.5 million, respectively, to our
total revenue.
n
Furniture and Appliance Purchase Loans
We
offer indirect furniture and appliance purchase loans of up to
$7,500, with terms of between six and 48 months, which are
secured by the purchased furniture or appliance. These loans are
offered through a network of over 100 furniture and appliance
retailers, including 50 franchise locations of the largest
furniture retailer in the United States. Since launching this
product in November 2009, our portfolio has grown to
approximately 3,200 furniture and appliance purchase loans
outstanding representing $3.7 million in finance
receivables or an average of approximately $1,160 per loan as of
March 31, 2011. In 2010 and the first three months of 2011,
interest and fee income from furniture and appliance loans
contributed $362,000 and $149,000, respectively, to our total
revenue.
n
Insurance Products
We offer our customers
optional payment protection insurance relating to many of our
loan products.
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n
Existing Branches
We intend to continue
increasing same-store revenues, which have grown an average of
13.4% per annum for the five years ended December 31, 2010,
by further building relationships in the communities in which we
operate and capitalizing on opportunities to offer our customers
new loan products as their credit profiles evolve. From 2006 to
2010, we opened 44 new branches, and we expect revenues at these
branches will continue to grow faster than our overall
same-store revenue growth rate as these branches mature.
n
New Branches
We believe there is sufficient
demand for consumer finance services to continue our pattern of
new branch growth in the states where we currently operate,
allowing us to capitalize on our existing infrastructure and
experience in these markets. We also analyze detailed
demographic and market data to identify favorable locations for
new branches. Opening new branches allows us to generate both
direct lending at the branches, as well as to create new
origination opportunities by establishing relationships through
the branches with automobile dealerships and furniture and
appliance retailers in the community.
n
New States
We intend to explore opportunities
for growth in several states outside our existing geographic
footprint that enjoy favorable interest rate and regulatory
environments, such as Georgia, Kentucky, Louisiana, Mississippi,
Missouri, New Mexico, Oklahoma and Virginia. We do not expect to
expand into states with unfavorable interest rate or regulatory
environments even if those states are otherwise attractive for
our business.
n
Automobile Purchase Loans
We source our
automobile purchase loans through a network of approximately
2,090 dealers as of March 31, 2011, and have identified over
11,500 additional dealers in our existing geographic footprint.
We have hired dedicated marketing personnel to develop
relationships with these additional dealers to expand our
automobile financing network. We will also seek to capture a
larger percentage of the financing activity of dealers in our
existing network by continuing to improve our relationships with
dealers and our response time for loan applications. We intend
to continue expanding the number of franchise dealer
relationships through our AutoCredit Source branches to grow our
loan portfolio through increased penetration.
n
Live Check Program
We continue to refine our
screening criteria and tracking for direct mail campaigns, which
we believe has enabled us to improve response rates and credit
performance and allowed us to triple the annual number of live
checks that we mailed from 2007 to 2010. We intend to continue
to increase our use of live checks to grow our loan portfolio by
adding new customers and increasing volume at our branches,
creating opportunities to offer new loan products to our
existing customers. In addition, we mail live checks in new
markets shortly before opening new branches, which we believe
helps our new branches
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to more quickly develop a customer base and build finance
receivables. The use of live checks is not subject to
substantial regulation in any of the states in which we
currently operate or any states into which we expect to expand,
but is subject to regulation in other jurisdictions. We are not
aware of any pending legislation in any of the states in which
we operate that would affect our use of live checks.
n
Furniture and Appliance Purchase Loans
As of
March 31, 2011, we had a network over 100 furniture and
appliance retail locations through which we offer our furniture
and appliance loans, and have identified over 3,700 additional
furniture and appliance retail locations in our existing
geographic footprint. We intend to continue to grow our network
of furniture and appliance retailers by having our dedicated
marketing personnel continue to solicit new retailers, obtain
referrals through relationships with our existing retail
partners, and, to a lesser extent, reach retailers through trade
shows and industry associations. We believe that the furniture
and appliance purchase lending markets are currently
substantially underpenetrated, particularly with respect to
non-prime customers, due to the limited number of lenders
providing financing to these customers and the recent
curtailment of credit provided by prime financing sources.
n
Online Sourcing
We developed a new channel in
late 2008 by offering an online loan application on our consumer
website to serve customers who seek to reach us over the
Internet. We intend to continue to develop and expand our online
marketing efforts and increase traffic to our consumer website
through the use of tools such as search engine optimization and
paid online advertising.
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TOTAL
NUMBER
FINANCE
AVERAGE
OF LOANS
RECEIVABLES
PER LOAN
(In thousands)
48,109
$
42,681
$
887
33,570
28,167
839
17,646
20,579
1,166
6,025
4,746
788
4,256
3,449
810
109,606
$
99,622
$
909
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TOTAL NUMBER
FINANCE
AVERAGE
OF LOANS
RECEIVABLES
PER LOAN
(In thousands)
5,775
$
17,368
$
3,007
1,245
2,885
2,317
2,851
9,638
3,380
524
1,479
2,823
497
1,299
2,614
10,892
$
32,669
$
2,999
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TOTAL NUMBER
FINANCE
AVERAGE
OF LOANS
RECEIVABLES
PER LOAN
(In thousands)
8,378
$
63,699
$
7,603
917
7,685
8,381
3,804
25,785
6,779
431
3,546
8,227
173
1,449
8,376
13,703
$
102,164
$
7,456
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TOTAL NUMBER
FINANCE
AVERAGE
OF LOANS
RECEIVABLES
PER LOAN
(In thousands)
419
$
549
$
1,311
1,128
1,475
1,308
1,603
1,613
1,006
11
14
1,242
5
10
1,908
3,166
$
3,661
$
1,156
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AVERAGE FINANCE
RECEIVABLES PER
AGE OF BRANCH
BRANCH AS OF
PERCENTAGE INCREASE
NUMBER OF
MARCH 31, 2011
FROM NEWER CATEGORY
BRANCHES
(In thousands)
$
498
27
$
1,247
150.4
%
24
$
1,425
14.3
%
24
$
2,261
58.7
%
71
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42
Chairman of the Board of Directors
62
Director Nominee
34
Director
63
Director
39
Director
53
Director Nominee
43
Director
47
Chief Executive Officer and Director Nominee
64
President and Chief Operating Officer
67
Executive Vice President and Chief Financial Officer
36
Senior Vice President, Strategic Development and Corporate
Secretary
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n
within one year of the date of the listing of our common stock
on the New York Stock Exchange, a majority of our board of
directors consists of independent directors, as
defined under the rules of the New York Stock Exchange;
n
we have a compensation committee that is, within one year of the
date of the listing of our common stock on the New York Stock
Exchange, composed entirely of independent directors; and
n
we have a corporate governance and nominating committee that is,
within one year of the date of the listing of our common stock
on the New York Stock Exchange, composed entirely of independent
directors.
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n
Mr. Perez was selected to serve as a director in light of
his affiliation with Palladium and his significant experience in
working with companies controlled by private equity sponsors,
including several financial companies, and his experience in
working with the management of various other companies owned by
Palladiums funds;
n
Mr. Campos was selected to serve as a director in light of
his extensive financial background and experience in working
with financial services companies, his experience with the SEC
and his significant experience with public companies across a
variety of industries;
n
Mr. DellAquila was selected to serve as a director in
light of his affiliation with Parallel, his extensive financial
background and experience in working with financial services
companies and his experience in working with the management of
various other companies owned by Parallel;
n
Mr. Godley was selected to serve as a director due to his
long-standing role with the company as founder and his
significant continuing equity ownership;
n
Mr. Johnson was selected to serve as a director in light of
his affiliation with Parallel, his extensive financial
background and his experience in working with the management of
various other companies owned by Parallel;
n
Mr. de Molina was selected to serve as a director in light of
his extensive financial background and his significant
experience with public and private financial services companies;
n
Mr. Scott was selected as a director in light of his
affiliation with Palladium, his extensive financial background
and his experience in working with the management of various
other companies owned by Palladium funds; and
n
Mr. Fortin was selected to serve as a director in light of
his role as our Chief Executive Officer and the management
perspective he brings to board deliberations as well as his
experience with the state and federal regulators applicable to
our business.
n
selecting and hiring our independent auditors, and approving the
audit and non-audit services to be performed by our independent
auditors;
n
assisting the board of directors in evaluating the
qualifications, performance and independence of our independent
auditors;
n
assisting the board of directors in monitoring the quality and
integrity of our financial statements and our accounting and
financial reporting processes;
n
assisting the board of directors in monitoring our compliance
with legal and regulatory requirements;
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n
assisting the board of directors in reviewing the adequacy and
effectiveness of our internal control over financial reporting
processes;
n
assisting the board of directors in monitoring the performance
of our internal audit function;
n
discussing the scope and results of the audit with the
independent registered public accounting firm;
n
reviewing with management and our independent auditors our
annual and quarterly financial statements;
n
establishing procedures for the receipt, retention and treatment
of complaints received by us regarding accounting, internal
accounting controls or auditing matters and the confidential,
anonymous submission by our employees of concerns regarding
questionable accounting or auditing matters; and
n
preparing the audit committee report that the SEC requires in
our annual proxy statement.
n
reviewing and approving, or making recommendations to the board
of directors with respect to, corporate goals and objectives
relevant to the compensation of our CEO, evaluating our
CEOs performance in light of those goals and objectives,
and, either as a committee or together with the other
independent directors (as directed by the board of directors),
determining and approving our CEOs compensation level
based on such evaluation;
n
reviewing and approving the compensation of our executive
officers, including annual base salary, annual incentive
bonuses, specific goals, equity compensation, employment
agreements, severance and change in control arrangements, and
any other benefits, compensation or arrangements;
n
reviewing and recommending the compensation of our directors;
n
reviewing and discussing annually with management our
Compensation Discussion and Analysis disclosure
required by SEC rules following the consummation of this
offering;
n
preparing the compensation committee report required by the SEC
to be included in our annual proxy statement following the
consummation of this offering; and
n
reviewing and making recommendations with respect to our equity
compensation plans.
n
assisting our board of directors in identifying prospective
director nominees and recommending nominees to the board of
directors;
n
overseeing the evaluation of the board of directors and
management;
n
reviewing developments in corporate governance practices and
developing and recommending a set of corporate governance
guidelines; and
n
recommending members for each committee of our board of
directors.
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n
net income from operations, which measures profitability;
n
total debt / EBITDA (earnings before interest, taxes,
depreciation and amortization), which is our leverage ratio;
n
average finance receivables, which measures our loan growth;
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n
net loans charged off, which measures our charge-off
control; and
n
total general and administrative expense percentage, which
measures our expense control.
ACTUAL
ACTUAL
MAXIMUM
INITIAL
TARGET FOR
RESULTS FOR
WEIGHTING
WEIGHTING
WEIGHTING
2010
2010
FOR 2010
FOR 2010
30.0
%
$
15,151,000
$
20,023,000
33.0
%
33
%
30.0
%
5.7
x
4.5
x
33.0
%
33
%
13.3
%
$
214,038,000
$
216,115,000
13.5
%
14.63
%
13.3
%
8.5
%
8.0
%
14.1
%
14.63
%
13.3
%
41.7
%
38.3
%
14.4
%
14.63
%
100.0
%
108.0
%
109.89
%
(1)
If net income from operations is
(A) equal to or greater than 90% but less than 100% of the
target, the executive is entitled to an award equal to 30% of
the target award amount multiplied by a fraction, the numerator
of which is equal to the actual net income from operations
expressed as a percentage of the target minus 90% and the
denominator of which is equal to 10%; and (B) equal to or
greater than 100% of the target, the executive is entitled to an
award equal to 30% of the target award amount multiplied by a
fraction, the numerator of which is equal to the actual net
income from operations expressed as a percentage of the target
and the denominator of which is equal to 100%.
(2)
If total debt / EBITDA is
(A) greater than 100% but less than 110% of the target, the
executive is entitled to an award equal to 30% of the target
award multiplied by a fraction, the numerator of which is equal
to the difference between 110% and the actual total debt /
EBITDA expressed as a percentage of the target and the
denominator of which is equal to 10%; and (B) equal to or
less than 100% of the target, the executive is entitled to an
award equal to 30% of the target award amount multiplied by the
sum of one and the difference between 100% and the actual total
debt / EBITDA expressed as a percentage of the target.
(3)
If average monthly finance
receivables is equal to or greater than 100% of the target, the
executive is entitled to an award equal to 13.3% of the target
award amount multiplied by a fraction, the numerator of which is
equal to the actual finance receivables expressed as a
percentage of the target and the denominator of which is equal
to 100%.
(4)
If net loans charged off is equal
to or less than 100% of the target, the executive is entitled to
an award equal to 13.3% of the target award amount multiplied by
the sum of one and the difference between 100% and actual net
loans charged off expressed as a percentage of net loans charged
off.
(5)
If the total general and
administrative expense percentage is equal to or less than 100%
of the target, the executive is entitled to an award equal to
13.3% of the target award amount multiplied by the sum of one
and the difference between 100% and the actual total general and
administrative expense percentage expressed as a percentage of
the total general and administrative expense percentage.
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PERCENTAGE
MAXIMUM
OF BASE
AWARD
ANNUAL
SALARY USED TO
ACTUAL
(109.89%
BASE
DETERMINE AWARD
TARGET
AWARD (108%
OF TARGET
SALARY
ELIGIBILITY
AWARD
OF TARGET AWARD)
AWARD)
$
350,000
59
%
$
206,500
$
223,020
$
226,923
$
225,000
74.5
%
$
167,625
$
181,035
$
184,203
$
435,750
42.4
%
$
184,758
$
199,539
$
203,031
$
102,300
25
%
$
25,575
$
27,621
$
28,104
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NON-EQUITY
INCENTIVE PLAN
ALL OTHER
SALARY
BONUS
COMPENSATION
COMPENSATION
TOTAL
YEAR
($)
($)
(1)
($)
($)
(2)
($)
Chief Executive Officer
2010
350,000
12,000
223,020
15,847
600,867
Executive Vice President and Chief Financial Officer
2010
225,000
3,400
181,035
17,894
427,329
President and Chief Operating Officer
2010
435,750
199,539
26,695
661,984
Senior Vice President, Strategic Development and Corporate
Secretary
2010
102,300
27,621
4,118
134,039
(1)
Represents discretionary bonuses
awarded in 2010. See Compensation Discussion and
Analysis Elements of Compensation
Discretionary Cash Bonuses.
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(2)
Represents aggregate automobile
allowance payments of $13,800 to each of Messrs. Fortin and
Barry, and $19,800 to Mr. Quattlebaum, a 401(k) plan
matching contribution of $2,047 (of which $178 was an excess
contribution and was refunded by the 401(k) plan administrator
to the executive), $4,094 (of which $2,441 was an excess
contribution and was refunded by the 401(k) plan administrator
to the executive), $6,895 (of which $5,508 was an excess
contribution and was refunded by the 401(k) plan administrator
to the executive) and $2,224 (of which $378 was an excess
contribution and was refunded by the 401(k) plan administrator
to the executive) to Mr. Fortin, Mr. Barry,
Mr. Quattlebaum and Ms. Masters, respectively, and a
cash payment of $1,894 to Ms. Masters in lieu of accrued
and unused vacation time as provided by company policy.
ESTIMATED FUTURE PAYOUTS
UNDER NON-EQUITY INCENTIVE PLAN
AWARDS
(1)
THRESHOLD
TARGET
MAXIMUM
($)
($)
($)
Chief Executive Officer
206,500
226,923
Executive Vice President and Chief Financial Officer
167,625
184,203
President and Chief Operating Officer
184,758
203,031
Senior Vice President, Strategic Development and Corporate
Secretary
25,575
28,104
(1)
Amounts represent estimated
possible payments under our annual incentive program. Actual
amounts paid under the annual incentive program for 2010 are
shown in the Non-Equity Incentive Plan Compensation
column of the Summary Compensation Table. For more
information on the performance metrics applicable to these
awards, see Compensation Discussion and
Analysis Elements of Compensation
Performance-Based Annual Cash Awards.
OPTION AWARDS
NUMBER OF
NUMBER OF
SECURITIES
SECURITIES
UNDERLYING
UNDERLYING
UNEXERCISED
UNEXERCISED
OPTION
OPTIONS
OPTIONS
EXERCISE
OPTION
(#)
(#)
PRICE
EXPIRATION
EXERCISABLE
UNEXERCISABLE
($)
DATE
Chief Executive Officer
117,937.8
(1)
78,625.2
(1)
$
5.4623
3/21/17
58,968.8
(2)
14,742.2
(2)
$
5.4623
3/21/17
Chief Financial Officer
14,702.4
(3)
9,801.6
(3)
$
5.4623
3/21/17
President and Chief Operating Officer
235,875.2
(2)
58,968.8
(2)
$
5.4623
3/21/17
Senior Vice President, Strategic Development and Corporate
Secretary
(1)
Of these options, 20% vested on the
February 26, 2008 grant date; 20% vested on March 21,
2009; 20% vested on March 21, 2010; 20% vested on
March 21, 2011; and 20% are scheduled to vest on
March 21, 2012, subject to Mr. Fortin remaining
employed by us through such vesting date. The remaining unvested
options automatically vest upon a change of control, which would
be triggered, among other things, if the existing owners cease
to own at least 50% of the outstanding voting power of the
Company.
(2)
Of these options, 20% vested on the
October 11, 2007 grant date; 20% vested on March 21,
2008; 20% vested on March 21, 2009; 20% vested on
March 21, 2010; and 20% vested on March 21, 2011.
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(3)
Of these options, 20% vested on the
April 23, 2008 grant date; 20% vested on April 23,
2009; 20% vested on April 23, 2010; 20% vested on
April 23, 2011; and 20% are scheduled to vest on April,
2012, subject to Mr. Barry remaining employed by us through
such vesting date. The remaining unvested options automatically
vest upon a change of control, which would be triggered, among
other things, if the existing owners cease to own at least 50%
of the outstanding voting power of the Company.
ACCELERATED
SALARY
VESTING
COBRA
CONTINUATION
OF OPTIONS
PREMIUMS
TOTAL
($)
($)
($)
($)
175,000
11,545
186,545
175,000
11,545
186,545
(3
)
(3
)
(1)
If Mr. Fortins death
occurs during a fiscal year, he is entitled to a pro rata
portion of his performance-based annual cash award for the year.
(2)
Following termination upon
Disability, termination without Cause or an Involuntary
Termination (each as defined in Mr. Fortins
Employment Agreement), Mr. Fortin would be entitled to
continued salary payments for six months, provided that those
payments will be reduced by the value of any disability benefits
paid to Mr. Fortin (in the case of Disability) and by the
amount of any income Mr. Fortin earns from any other
employment. During the salary continuation period,
Mr. Fortin is entitled to COBRA premium payments for
coverage comparable to that under our group medical plan unless
he becomes entitled to health insurance from a subsequent
employer. If Mr. Fortins termination upon Disability,
termination without Cause or Involuntary Termination occurs
during a fiscal year, he is entitled to a pro rata portion of
his performance-based annual cash award for the year.
(3)
Upon a Change of Control (as
defined in Mr. Fortins Option Award Agreement), all
of Mr. Fortins unvested options would vest. As of
December 31, 2010, Mr. Fortin held 78,625.2 unvested
options. Because there was no public market for our Common Stock
as of December 31, 2010, the market value of each share of
Common Stock as of that date is not determinable. Accordingly,
we cannot calculate the value of accelerated vesting of options
on that date.
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ACCELERATED
SALARY
VESTING
COBRA
CONTINUATION
OF OPTIONS
PREMIUMS
TOTAL
($)
($)
($)
($)
112,500
112,500
(2
)
(2
)
(1)
Following termination without
cause, Mr. Barry would be entitled to continued salary
payments for six months.
(2)
Upon a Change of Control (as
defined in Mr. Barrys Option Award Agreements), all
of Mr. Barrys unvested options would vest. As of
December 31, 2010, Mr. Barry held an aggregate of
24,543.8 unvested options. Because we there was no public market
for our Common Stock as of December 31, 2010, the market
value of each share of Common Stock as of that date is not
determinable. Accordingly, we cannot calculate the value of
accelerated vesting of options on that date.
ACCELERATED
SALARY
VESTING
COBRA
CONTINUATION
OF OPTIONS
PREMIUMS
TOTAL
($)
($)
($)
($)
435,750
23,697
459,447
435,750
23,697
459,447
(3
)
(3
)
(1)
If Mr. Quattlebaums
death occurs during a fiscal year, he is entitled to a pro rata
portion of his performance-based annual cash award for the year.
(2)
Following termination upon
Disability, termination without Cause or an Involuntary
Termination (each as defined in Mr. Quattlebaums
Employment Agreement), Mr. Quattlebaum would be entitled to
continued salary payments for twelve months, provided that those
payments will be reduced by the value of any disability benefits
paid to Mr. Quattlebaum (in the case of Disability) and by
the amount of any income Mr. Quattlebaum earns from any
other employment. During the salary continuation period,
Mr. Quattlebaum is entitled to COBRA premium payments for
coverage comparable to that under our group medical plan unless
he becomes entitled to health insurance from a subsequent
employer. If Mr. Quattlebaums termination upon
Disability, termination without Cause or Involuntary Termination
occurs during a fiscal year, he is entitled to a pro rata
portion of his performance-based annual cash award for the year.
(3)
Upon a Change of Control (as
defined in Mr. Quattlebaums Option Award Agreement),
all of Mr. Quattlebaums unvested options would vest.
As of December 31, 2010, Mr. Quattlebaum held 58,968.8
unvested options. Because there was no public market for our
Common Stock as of December 31, 2010, the market value of
each share of Common Stock as of that date is not determinable.
Accordingly, we cannot calculate the value of accelerated
vesting of options on that date.
85
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86
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87
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88
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89
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90
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91
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92
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93
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94
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95
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96
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97
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SHARES OF COMMON STOCK BENEFICIALLY OWNED
AFTER THE OFFERING
AFTER THE OFFERING
SHARES OF
SHARES OF
ASSUMING
ASSUMING
COMMON
COMMON
UNDERWRITERS
UNDERWRITERS
STOCK
STOCK
OPTION IS NOT
OPTION IS
BEING
SUBJECT TO
PRIOR TO THE OFFERING
EXERCISED
EXERCISED IN FULL
OFFERED
OPTION
NUMBER
%
NUMBER
%
NUMBER
%
NUMBER
NUMBER
9,881,535
100.0
%
4,495,461
48.2
%
2,644,389
28.3
%
549,219
5.9
%
1,246,512
13.4
%
477,917
5.0
%
92,714
*
157,250
1.7
%
1,974,393
20.0
%
183,073
2.0
%
35,000
*
*
Represents less than 1%.
(1)
Regional Holdings LLC, Parallel
2005 Equity Fund, LP, Palladium Equity Partners III, L.P.,
Richard A. Godley, Sr. Revocable Trust, the estate of Richard
Allen Godley, Jr., William T. Godley, Denise Godley, Jerry L.
Shirley, Brenda F. Kinlaw, C. Glynn Quattlebaum,
98
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Sherri Quattlebaum and Jesse W.
Geddings will be parties to our amended and restated
shareholders agreement as described under Certain
Relationships and Related Person Transactions
Shareholders Agreement.
(2)
Palladium Equity Partners III,
L.L.C. (Palladium General) is the general partner of
Palladium Equity Partners III, L.P. Marcos A. Rodriguez is the
managing member of Palladium General. The address of each of the
entities listed and Mr. Rodriguez is Rockefeller Center,
1270 Avenue of the Americas, Suite 2200 New York, New York
10020. Mr. Rodriguez disclaims beneficial ownership of such
shares. Palladium Equity Partners III, L.P. is a party to our
shareholders agreement and its affiliate receives advisory fees
from us pursuant to an advisory agreement that will be
terminated upon consummation of this offering, as described
under Certain Relationships and Related Person
Transactions.
(3)
Parallel 2005 Equity Partners, LP
is the general partner of Parallel 2005 Equity Fund, LP.
Parallel 2005 Equity Partners, LLC is the general partner of
Parallel 2005 Equity Partners, LP. F. Barron Fletcher, III
is the managing member of Parallel 2005 Equity Partners, LLC.
The address of each of the entities listed and Mr. Fletcher
is 2100 McKinney Avenue, Ste. 1200, Dallas, Texas 75201.
Mr. Fletcher disclaims beneficial ownership of such shares,
except to the extent of his pecuniary interest therein. Parallel
2005 Equity Fund, LP is a party to our shareholders agreement
and its affiliate receives advisory fees from us pursuant to an
advisory agreement that will be terminated upon consummation of
this offering, as described under Certain Relationships
and Related Person Transactions.
(4)
The address for Mr. Shirley is
c/o Regional
Management Corp., 509 West Butler Road, Greenville, South
Carolina 29607. Mr. Shirley currently acts as a consultant
to Regional as described under Certain Relationships and
Related Person Transactions Advisory and Consulting
Fees.
(5)
The address for Mr. Godley is
c/o Regional
Management Corp., 509 West Butler Road, Greenville, South
Carolina 29607. Includes shares owned by Mr. Godleys
spouse Denise Godley (75,000 shares),
Mr. Godleys son, William T. Godley
(35,870 shares) and the estate of Mr. Godleys
deceased son Richard Allen Godley, Jr. (31,122 shares),
over which Mr. Godley may be deemed to have beneficial
ownership. Mr. Godley disclaims beneficial ownership with
respect to the shares beneficially owned by these family
members. Mr. Godley is a director of Regional Management
Corp. In addition, Mr. Godley is party to our shareholders
agreement and currently serves as a consultant to Regional, in
each case as described under Certain Relationships and
Related Person Transactions.
(6)
Includes 294,844 shares
subject to options either currently exercisable or exercisable
within 60 days over which Mr. Quattlebaum will not
have voting or investment power until the options are exercised.
The shares described in this note are considered outstanding for
the purpose of computing the percentage of outstanding stock
owned by Mr. Quattlebaum and by directors and executive
officers as a group, but not for the purpose of computing the
percentage ownership of any other person.
(7)
Includes 92,714 shares subject
to options either currently exercisable or exercisable within
60 days over which Mr. Barry will not have voting or
investment power until the options are exercised. The shares
described in this note are considered outstanding for the
purpose of computing the percentage of outstanding stock owned
by Mr. Barry and by directors and executive officers as a
group, but not for the purpose of computing the percentage
ownership of any other person.
(8)
Mr. DellAquila is a
Principal with Parallel.
(9)
Includes 157,250 shares
subject to options either currently exercisable or exercisable
within 60 days over which Mr. Fortin will not have
voting or investment power until the options are exercised. The
shares described in this note are considered outstanding for the
purpose of computing the percentage of outstanding stock owned
by Mr. Fortin and by directors and executive officers as a
group, but not for the purpose of computing the percentage
ownership of any other person. Mr. Fortin was an operating
partner of Parallel from 2003 to 2007.
(10)
Mr. Johnson is a Managing
Director with Parallel.
(11)
Mr. Perez is a Managing
Director with Palladium.
(12)
Mr. Scott is a Managing
Director with Palladium.
(13)
Ms. Kinlaw currently acts as a
consultant to Regional as described under Certain
Relationships and Related Person Transactions
Advisory and Consulting Fees.
99
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n
the designation of the series;
n
the number of shares of the series, which our board may, except
where otherwise provided in the preferred stock designation,
increase or decrease, but not below the number of shares
then-outstanding;
n
whether dividends, if any, will be cumulative or non-cumulative
and the dividend rate of the series;
n
the dates at which dividends, if any, will be payable;
n
the redemption rights and price or prices, if any, for shares of
the series;
n
the terms and amounts of any sinking fund provided for the
purchase or redemption of shares of the series;
n
the amounts payable on shares of the series in the event of any
voluntary or involuntary liquidation, dissolution or
winding-up
of the affairs of our company;
n
whether the shares of the series will be convertible into shares
of any other class or series, or any other security, of our
company or any other entity, and, if so, the specification of
the other class or series or other security, the conversion
price or prices or rate or rates, any rate adjustments, the date
or dates as of which the shares will be convertible and all
other terms and conditions upon which the conversion may be made;
n
restrictions on the issuance of shares of the same series or of
any other class or series; and
n
the voting rights, if any, of the holders of the series.
100
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101
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n
prior to the date of the transaction, the board of directors of
the corporation approved either the business combination or the
transaction that resulted in the stockholder becoming an
interested stockholder;
n
upon completion of the transaction that resulted in the
stockholder becoming an interested stockholder, the stockholder
owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for
purposes of determining the number of shares outstanding
(1) shares owned by persons who are directors and also
officers and (2) shares owned by employee stock plans in
which employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer; or
n
on or subsequent to the date of the transaction, the business
combination is approved by the board and authorized at an annual
or special meeting of stockholders, and not by written consent,
by the affirmative vote of at least
66
2
/
3
%
of the outstanding voting stock which is not owned by the
interested stockholder.
102
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103
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ESTATE TAX CONSEQUENCES TO
NON-U.S.
HOLDERS
n
an individual citizen or resident of the United States;
n
a corporation (or any other entity treated as a corporation for
United States federal income tax purposes) created or organized
in or under the laws of the United States, any state thereof or
the District of Columbia;
n
an estate the income of which is subject to United States
federal income taxation regardless of its source; or
n
a trust if it (1) is subject to the primary supervision of
a court within the United States and one or more United States
persons have the authority to control all substantial decisions
of the trust or (2) has a valid election in effect under
applicable United States Treasury regulations to be treated as a
United States person.
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n
the gain is effectively connected with a trade or business of
the
non-U.S. holder
in the United States (and, if required by an applicable income
tax treaty, is attributable to a United States permanent
establishment of the
non-U.S. holder);
n
the
non-U.S. holder
is an individual who is present in the United States for
183 days or more in the taxable year of that disposition,
and certain other conditions are met; or
n
we are or have been a United States real property holding
corporation for United States federal income tax purposes.
105
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n
1% of the number of shares of our common stock then outstanding,
which will equal
approximately shares
immediately after this offering; or
n
the average weekly trading volume of our common stock during the
four calendar weeks preceding the filing of a notice on
Form 144 with respect to such sale.
106
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107
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NUMBER OF SHARES
OF COMMON STOCK
108
Table of Contents
PER SHARE
TOTAL
WITHOUT
WITH
WITHOUT
WITH
OVER-ALLOTMENT
OVER-ALLOTMENT
OVER-ALLOTMENT
OVER-ALLOTMENT
OPTION
OPTION
OPTION
OPTION
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
n
sell, offer, contract or grant any option to sell (including any
short sale), pledge, transfer, establish an open put
equivalent position within the meaning of
Rule 16a-1(h)
under the Exchange Act, or
n
otherwise dispose of any shares of common stock, options or
warrants to acquire common stock, or securities exchangeable or
exercisable for or convertible into common stock currently or
hereafter owned either of record or beneficially, or
n
publicly announce an intention to do any of the foregoing for a
period of 180 days after the date of this prospectus
without the prior written consent of Jefferies &
Company, Inc.
109
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n
during the last 17 days of the
180-day
restricted period, we issue an earnings release or material news
or a material event relating to us occurs, or
n
prior to the expiration of the
180-day
restricted period, we announce that we will release earnings
results during the
16-day
period beginning on the last day of the
180-day
restricted period,
110
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111
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112
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(a)
to qualified investors, as defined in the Prospectus
Directive, including:
(i)
(in the case of Relevant Member States other than Early
Implementing Member States), legal entities which are authorized
or regulated to operate in the financial markets or, if not so
authorized or regulated, whose corporate purpose is solely to
invest in securities, or any legal entity which has two or more
of (i) an average of at least 250 employees during the
last financial year; (ii) a total balance sheet of more
than 43.0 million and (iii) an annual net
turnover of more than 50.0 million as shown in its
last annual or consolidated accounts; or
(ii)
(in the case of Early Implementing Member States), persons or
entities that are described in points (1) to (4) of
Section I of Annex II to Directive 2004/39/EC, and
those who are treated on request as professional clients in
accordance with Annex II to Directive 2004/39/EC, or
recognized as eligible counterparties in accordance with
Article 24 of Directive 2004/39/EC unless they have
requested that they be treated as non-professional
clients; or
(b)
to fewer than 100 (or, in the case of Early Implementing Member
States, 150) natural or legal persons (other than
qualified investors as defined in the Prospectus
Directive) subject to obtaining the prior consent of the
book-running mangers for any such offer; or
(c)
in any other circumstances falling within Article 3(2) of
the Prospectus Directive, provided that no such offer of shares
of our common stock offered hereby shall result in a requirement
for the publication of a prospectus pursuant to Article 3
of the Prospectus Directive or of a supplement to a prospectus
pursuant to Article 16 of the Prospectus Directive.
113
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(a)
it has only communicated or caused to be communicated and will
only communicate or cause to be communicated an invitation or
inducement to engage in investment activity (within the meaning
of Section 21 of the Financial Services and Markets Act
2000, as amended (the FSMA)) received by it in
connection with the issue or sale of the Shares in circumstances
in which Section 21(1) of the FSMA does not apply to
us; and
(b)
it has complied and will comply with all applicable provisions
of the FSMA with respect to anything done by it in relation to
the shares of our common stock in, from or otherwise involving
the United Kingdom.
114
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(a)
by a corporation (which is not an accredited investor as defined
in Section 4A of the SFA) the sole business of which is to
hold investments and the entire share capital of which is owned
by one or more individuals, each of whom is an accredited
investor; or
(b)
for a trust (where the trustee is not an accredited investor)
whose sole purpose is to hold investments and each beneficiary
of the trust is an individual who is an accredited investor,
(1)
to an institutional investor (for corporations under
Section 274 of the SFA) or to a relevant person defined in
Section 275(2) of the SFA, or any person pursuant to an
offer that is made on terms that such shares of that corporation
or such rights and interest in that trust are acquired at a
consideration of not less than $200,000 (or its equivalent in a
foreign currency) for each transaction, whether such amount is
to be paid for in cash or by exchange of securities or other
assets, and further for corporations, in accordance with the
conditions, specified in Section 275 of the SFA;
(2)
where no consideration is given for the transfer; or
(3)
where the transfer is by operation of law.
115
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116
F-2
F-3
F-4
F-5
F-6
F-7
F-29
F-30
F-31
F-32
F-1
Table of Contents
Table of Contents
2009
2010
(Dollars in thousands, except per share information)
$
3,018
$
856
272,432
318,991
(57,523
)
(71,745
)
214,909
247,246
(18,441
)
(18,000
)
196,468
229,246
2,812
3,069
7,306
4,376
665
296
4,178
3,515
$
214,447
$
241,358
$
150
$
365
5,217
7,968
156,286
163,301
25,680
25,814
474
466
187,807
197,914
12,000
12,000
934
934
27,599
27,959
(13,893
)
2,551
14,640
31,444
$
214,447
$
241,358
F-3
Table of Contents
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2008, 2009,
AND 2010
2008
2009
2010
(Dollars in thousands, except per share information)
$
58,471
$
63,590
$
74,218
4,620
5,229
8,252
3,651
3,995
4,362
66,742
72,814
86,832
17,376
19,405
16,568
17,781
18,991
20,630
4,398
4,538
5,165
999
1,212
2,027
4,684
4,379
5,703
1,644
1,263
1,233
7,399
4,846
5,542
3,706
3,835
2,915
1,427
11,105
8,681
9,884
57,987
58,469
61,210
8,755
14,345
25,622
2,276
4,472
9,178
$
6,479
$
9,873
$
16,444
$
0.69
$
1.06
$
1.76
$
0.68
$
1.03
$
1.70
9,336,727
9,336,727
9,336,727
9,482,604
9,590,564
9,669,618
F-4
Table of Contents
CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY
YEARS
ENDED DECEMBER 31, 2008, 2009,
AND 2010
ADDITIONAL
RETAINED
COMMON
PAID-IN
EARNINGS
STOCK
CAPITAL
(DEFICIT)
TOTAL
(Dollars in thousands)
$
934
$
26,716
$
(30,245
)
$
(2,595
)
523
523
6,479
6,479
934
27,239
(23,766
)
4,407
360
360
9,873
9,873
934
27,599
(13,893
)
14,640
360
360
16,444
16,444
$
934
$
27,959
$
2,551
$
31,444
F-5
Table of Contents
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2008, 2009, AND 2010
2008
2009
2010
(Dollars in thousands)
$
6,479
$
9,873
$
16,444
17,376
19,405
16,568
523
360
360
(280
)
843
168
512
134
(1,183
)
(98
)
2,930
1,078
1,144
1,383
(506
)
182
(198
)
2,719
134
2,751
26,654
31,232
41,215
(39,755
)
(39,249
)
(49,346
)
(95
)
(106
)
(1,348
)
(556
)
(1,210
)
(800
)
(43
)
(41,198
)
(40,711
)
(50,599
)
(332
)
(214
)
215
16,396
11,674
7,015
25,814
(25,814
)
(1,636
)
(394
)
(8
)
14,428
11,066
7,222
(116
)
1,587
(2,162
)
1,547
1,431
3,018
$
1,431
$
3,018
$
856
$
11,152
$
8,918
$
7,201
$
$
$
1,072
$
1,820
$
4,844
$
8,461
$
168
$
512
$
134
F-6
Table of Contents
F-7
Table of Contents
AVERAGE SIZE
$
1.0
$
3.1
$
10.8
$
1.4
n
Most recent twelve months of historical losses are used to
estimate the allowance for large installment loans (loans in
excess of $2,500), automobile purchase loans and all furniture
and appliance purchase loans
n
Most recent eight months of historical losses are used to
estimate the allowance for small installment loans, including
live checks (loans of $2,500 or less)
F-8
Table of Contents
n
An unallocated allowance amount
AS OF DECEMBER 31, 2010
NON-BANKRUPT
CUSTOMERS
TOTAL 180+ PAST DUE
IN BANKRUPTCY
ACCOUNTS
$
709
$
224
$
933
91
82
173
5
5
$
800
$
311
$
1,111
F-9
Table of Contents
F-10
Table of Contents
NET WRITTEN
EARNED
PREMIUMS
PREMIUMS
$
8,000
$
6,892
10,463
8,592
12,641
11,845
F-11
Table of Contents
F-12
Table of Contents
2009
2010
CARRYING
FAIR
CARRYING
FAIR
AMOUNT
VALUE
AMOUNT
VALUE
$
3,018
$
3,018
$
856
$
856
888
888
888
888
196,468
196,468
229,246
229,246
1,080
1,080
280
280
156,286
156,208
163,301
163,301
25,680
23,764
25,814
26,697
474
474
466
466
INTEREST RATE CAPS
TOTAL
LEVEL 1
LEVEL 2
LEVEL 3
$
1,080
$
$
1,080
$
280
280
F-13
Table of Contents
REPOSSESSED ASSETS
TOTAL
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL LOSSES
$
665
$
$
$
665
$
518
296
296
218
F-14
Table of Contents
2009
2010
$
102,651
$
117,599
28,217
33,653
83,253
93,232
788
2,762
$
214,909
$
247,246
2008
2009
2010
$
13,290
$
15,665
$
18,441
17,376
19,405
16,568
(1)
(15,879
)
(17,002
)
(17,469
)
878
373
460
$
15,665
$
18,441
$
18,000
(1)
Reducing the required allowance for
small loans from nine to eight months of losses reduced the 2010
provision by $451.
ALLOWANCE AS
ALLOWANCE AS
PERCENTAGE
PERCENTAGE
LOAN
OF LOAN
OF LOAN
BALANCE
BALANCE
BALANCE
BALANCE
BALANCE
JANUARY 1,
CHARGE-
DECEMBER 31,
DECEMBER 31,
DECEMBER 31,
DECEMBER 31,
2010
PROVISION
OFFS
RECOVERIES
2010
2010
2009
2010
$
8,022
$
10,642
$
(10,068
)
$
295
$
8,891
$
117,599
7.8
%
7.6
%
2,700
2,685
(2,588
)
61
2,858
33,653
9.6
%
8.5
%
7,517
2,457
(4,738
)
103
5,339
93,232
9.0
%
5.7
%
7
208
(75
)
1
141
2,762
9.0
%
5.1
%
195
576
771
0.9
%
$
18,441
$
16,568
$
(17,469
)
$
460
$
18,000
$
247,246
8.6
%
7.3
%
F-15
Table of Contents
FINANCE
FINANCE
RECEIVABLES IN
RECEIVABLES IN
BANKRUPTCY
BANKRUPTCY
AS OF
AS OF
DECEMBER 31,
DECEMBER 31,
2009
2010
$
440
$
353
732
559
1,641
1,715
27
35
$
2,840
$
2,662
DECEMBER 31, 2009
FURNITURE
AND
SMALL
LARGE
APPLIANCE
INSTALLMENT
INSTALLMENT
AUTOMOBILE
PURCHASE
LOANS
LOANS
PURCHASE LOANS
LOANS
TOTAL
$
%
$
%
$
%
$
%
$
%
$
79,625
77.6
%
$
17,555
62.2
%
$
55,718
66.9
%
$
516
65.5
%
$
153,414
71.4
%
13,251
12.9
%
6,920
24.5
%
19,718
32.7
%
190
24.1
%
40,079
18.6
%
2,995
2.9
%
1,463
5.2
%
3,829
4.6
%
67
8.5
%
8,354
3.9
%
2,092
2.0
%
728
2.6
%
1,860
2.2
%
4
0.5
%
4,684
2.2
%
4,688
4.6
%
1,551
5.5
%
2,128
2.6
%
11
1.4
%
8,378
3.9
%
9,775
9.5
%
3,742
13.3
%
7,817
9.4
%
82
10.4
%
21,416
10.0
%
$
102,651
100.0
%
$
28,217
100.0
%
$
83,253
100.0
%
$
788
100.0
%
$
214,909
100.0
%
$
4,688
4.6
%
$
1,551
5.5
%
$
2,128
2.6
%
$
11
1.4
%
$
8,378
3.9
%
F-16
Table of Contents
DECEMBER 31, 2010
FURNITURE AND
SMALL
LARGE
APPLIANCE
INSTALLMENT
INSTALLMENT
AUTOMOBILE
PURCHASE
LOANS
LOANS
PURCHASE LOANS
LOANS
TOTAL
$
%
$
%
$
%
$
%
$
%
$
90,455
76.9
%
$
22,969
68.3
%
$
67,751
72.7
%
$
2,299
83.2
%
$
183,474
74.2
%
18,387
15.7
%
7,424
22.0
%
20,363
21.8
%
342
12.4
%
46,516
18.8
%
3,269
2.8
%
1,486
4.4
%
2,816
3.0
%
40
1.5
%
7,611
3.1
%
1,986
1.6
%
762
2.3
%
1,113
1.2
%
31
1.1
%
3,892
1.6
%
3,502
3.0
%
1,012
3.0
%
1,189
1.3
%
50
1.8
%
5,753
2.3
%
8,757
7.4
%
3,260
9.7
%
5,118
5.5
%
121
4.4
%
17,256
7.0
%
$
117,599
100.0
%
$
33,653
100.0
%
$
93,232
100.0
%
$
2,762
100.0
%
$
247,246
100.0
%
$
3,502
3.0
%
$
1,012
3.0
%
$
1,189
1.3
%
$
50
1.8
%
$
5,753
2.3
%
DECEMBER 31, 2009
DECEMBER 31, 2010
$
2,187
$
1,111
212,722
246,135
$
214,909
$
247,246
2009
2010
$
1,020
$
844
6,619
7,807
1,183
1,289
8,822
9,940
6,010
6,871
$
2,812
$
3,069
Table of Contents
AMOUNT
$
1,836
1,255
587
156
79
23
$
3,936
2009
2010
$
758
$
792
752
808
1,080
280
888
888
700
747
$
4,178
$
3,515
F-18
Table of Contents
2009
2010
$
156,286
$
163,301
25,680
25,814
122
352
466
$
182,440
$
189,581
$
11,214
$
61,699
F-19
Table of Contents
AMOUNT
$
466
189,115
$
189,581
F-20
Table of Contents
2008
2009
2010
$
2,977
$
4,877
$
8,968
(568
)
(583
)
(444
)
209
360
569
(342
)
(182
)
85
$
2,276
$
4,472
$
9,178
2008
2009
2010
$
2,967
$
4,024
$
5,732
492
546
516
3,459
4,570
6,248
(1,007
)
(83
)
2,553
(176
)
(15
)
377
(1,183
)
(98
)
2,930
$
2,276
$
4,472
$
9,178
F-21
Table of Contents
2009
2010
$
6,340
$
6,587
840
1,172
554
813
496
636
329
248
227
98
135
129
66
63
243
8,885
10,091
4,394
1,240
1,161
66
4
154
181
94
1,579
5,715
$
7,306
$
4,376
2008
NET INCOME
SHARES
PER SHARE
$
6,479
9,336,727
$
0.69
145,877
$
6,479
9,482,604
$
0.68
F-22
Table of Contents
2009
NET INCOME
SHARES
PER SHARE
$
9,873
9,336,727
$
1.06
253,837
$
9,873
9,590,564
$
1.03
2010
NET INCOME
SHARES
PER SHARE
$
16,444
9,336,727
$
1.76
332,891
$
16,444
9,669,618
$
1.70
INDIVIDUAL
OWNERS
SPONSORS
$
454
$
948
454
809
5,000
20,814
20
83
210
864
450
783
Table of Contents
F-24
Table of Contents
2007
2008
37.48
%
37.48
%
0.00
%
0.00
%
10.00
9.00
4.50
%
3.77
%
4
4
F-25
Table of Contents
WEIGHTED
WEIGHTED
AVERAGE
AVERAGE
REMAINING
AGGREGATE
NUMBER OF
PRICE
CONTRACTUAL
INTRINSIC
SHARES
PER SHARE
LIFE (YEARS)
VALUE
441
$
5.4623
221
5.4623
(73
)
5.4623
589
$
5.4623
8.3
$
3,450
191
$
5.4623
8.3
$
1,119
448
589
$
5.4623
589
$
5.4623
7.3
$
5,298
309
$
5.4623
7.3
$
2,779
448
589
$
5.4623
589
$
5.4623
6.3
$
9,654
427
$
5.4623
6.3
$
6,999
448
F-26
Table of Contents
2009
2010
WEIGHTED
WEIGHTED
AVERAGE
AVERAGE
GRANT DATE
GRANT DATE
SHARES
FAIR VALUE
SHARES
FAIR VALUE
398
$
5.4623
280
$
5.4623
5.4623
5.4623
(118
)
5.4623
(118
)
5.4623
5.4623
5.4623
280
$
5.4623
162
$
5.4623
F-27
Table of Contents
2009
2010
$
$
1,080
800
43
280
(843
)
$
1,080
$
280
F-28
Table of Contents
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2010 AND MARCH 31, 2011
DECEMBER 31,
MARCH 31,
2010
2011
(Unaudited)
(Dollars in thousands, except per share information)
$
856
$
4,384
318,991
304,840
(71,745
)
(66,723
)
247,246
238,117
(18,000
)
(18,000
)
229,246
220,117
3,069
3,366
4,376
4,726
296
183
3,515
4,727
$
241,358
$
237,503
$
365
$
1,404
7,968
10,273
163,301
151,347
25,814
25,814
466
196
197,914
189,034
12,000
12,000
934
934
27,959
28,049
2,551
7,486
31,444
36,469
$
241,358
$
237,503
F-29
Table of Contents
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2010 AND 2011
2010
2011
(Unaudited)
(Dollars in thousands, except per share information)
$
18,022
$
21,045
2,295
2,194
1,362
1,457
21,679
24,696
3,902
3,836
5,946
6,540
1,222
1,471
547
647
1,204
1,554
308
310
1,484
1,763
984
996
2,468
2,759
15,597
17,117
6,082
7,579
2,129
2,644
$
3,953
$
4,935
$
0.42
$
0.53
$
0.41
$
0.51
9,336,727
9,336,727
9,606,178
9,648,103
F-30
Table of Contents
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2011
2010
2011
(Unaudited)
(Dollars in thousands, except per share information)
$
3,953
$
4,935
3,902
3,836
293
305
90
90
439
21
128
150
(350
)
116
(1,157
)
2,100
2,305
11,171
9,985
10,497
5,293
(194
)
(565
)
10,303
4,728
744
1,039
(24,591
)
(11,954
)
117
(270
)
(23,730
)
(11,185
)
(2,256
)
3,528
3,018
856
$
762
$
4,384
$
1,676
$
1,731
$
$
957
$
160
$
1,949
$
128
$
F-31
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2010 AND 2011
(Dollars in thousands, except per share information)
F-32
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
THREE MONTHS ENDED MARCH 31, 2010 AND 2011
(Dollars in thousands, except per share information)
F-33
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
THREE MONTHS ENDED MARCH 31, 2010 AND 2011
(Dollars in thousands, except per share information)
n
Most recent twelve months of historical losses are used to
estimate the allowance for large installment loans (loans in
excess of $2,500), automobile purchase loans, and all furniture
and appliance purchase loans
n
Most recent eight months of historical losses are used to
estimate the allowance for small installment loans, including
live checks (loans of $2,500 or less)
n
An unallocated allowance amount
F-34
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
THREE MONTHS ENDED MARCH 31, 2010 AND 2011
(Dollars in thousands, except per share information)
MARCH 31, 2011
NON-
CUSTOMERS
TOTAL 180+
BANKRUPT
IN
PAST DUE
CUSTOMERS
BANKRUPTCY
ACCOUNTS
$
937
$
187
$
1,124
39
22
61
1
5
6
$
977
$
214
$
1,191
F-35
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
THREE MONTHS ENDED MARCH 31, 2010 AND 2011
(Dollars in thousands, except per share information)
F-36
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
THREE MONTHS ENDED MARCH 31, 2010 AND 2011
(Dollars in thousands, except per share information)
F-37
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
THREE MONTHS ENDED MARCH 31, 2010 AND 2011
(Dollars in thousands, except per share information)
DECEMBER 31, 2010
MARCH 31, 2011
CARRYING AMOUNT
FAIR VALUE
CARRYING AMOUNT
FAIR VALUE
(Unaudited)
$
856
$
856
$
4,384
$
4,384
888
888
888
888
229,246
229,246
220,117
220,117
280
280
259
259
163,301
163,301
151,347
151,347
25,814
26,697
25,814
26,647
466
466
196
196
F-38
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
THREE MONTHS ENDED MARCH 31, 2010 AND 2011
(Dollars in thousands, except per share information)
INTEREST RATE CAPS (INCLUDED IN OTHER ASSETS)
QUOTED
PRICES IN
ACTIVE
SIGNIFICANT
MARKETS FOR
OTHER
SIGNIFICANT
IDENTICAL
OBSERVABLE
UNOBSERVABLE
ASSETS
INPUTS
INPUTS
TOTAL
(LEVEL 1)
(LEVEL 2)
(LEVEL 3)
$
280
$
$
280
$
259
259
REPOSSESSED ASSETS
QUOTED
PRICES IN
ACTIVE
MARKETS
SIGNIFICANT
FOR
OTHER
SIGNIFICANT
IDENTICAL
OBSERVABLE
UNOBSERVABLE
ASSETS
INPUTS
INPUTS
TOTAL
TOTAL
(LEVEL 1)
(LEVEL 2)
(LEVEL 3)
LOSSES
$
296
$
$
$
296
$
218
183
183
218
F-39
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
THREE MONTHS ENDED MARCH 31, 2010 AND 2011
(Dollars in thousands, except per share information)
DECEMBER 31, 2010
MARCH 31, 2011
(Unaudited)
$
117,599
$
99,623
33,653
32,669
93,232
102,164
2,762
3,661
$
247,246
$
238,117
F-40
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
THREE MONTHS ENDED MARCH 31, 2010 AND 2011
(Dollars in thousands, except per share information)
THREE MONTHS ENDED
MARCH 31,
2010
2011
(Unaudited)
$
18,441
$
18,000
3,902
3,836
(4,486
)
(4,004
)
118
168
$
17,975
$
18,000
ALLOWANCE AS
PERCENTAGE
LOAN
OF LOAN
BALANCE
BALANCE
BALANCE
BALANCE
JANUARY 1,
CHARGE-
DECEMBER 31,
DECEMBER 31,
DECEMBER 31,
2010
PROVISION
OFFS
RECOVERIES
2010
2010
2010
$
8,022
$
10,642
$
(10,068
)
$
295
$
8,891
$
117,599
7.6
%
2,700
2,685
(2,588
)
61
2,858
33,653
8.5
%
7,517
2,457
(4,738
)
103
5,339
93,232
5.7
%
7
208
(75
)
1
141
2,762
5.1
%
195
576
771
$
18,441
$
16,568
$
(17,469
)
$
460
$
18,000
$
247,246
7.3
%
F-41
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
THREE MONTHS ENDED MARCH 31, 2010 AND 2011
(Dollars in thousands, except per share information)
ALLOWANCE AS
PERCENTAGE
FINANCE
OF FINANCE
BALANCE
BALANCE
RECEIVABLES
RECEIVABLES
DECEMBER 31,
CHARGE-
MARCH 31,
MARCH 31,
MARCH 31,
2010
PROVISION
OFFS
RECOVERIES
2011
2011
2011
$
8,891
$
324
$
(2,465
)
$
123
$
6,873
$
99,623
6.9
%
2,858
69
(579
)
19
2,367
32,669
7.2
%
5,339
377
(925
)
26
4,817
102,164
4.7
%
141
60
(35
)
0
166
3,661
4.5
%
771
3,006
3,777
$
18,000
$
3,836
$
(4,004
)
$
168
$
18,000
$
238,117
7.6
%
FINANCE
FINANCE
RECEIVABLES IN
RECEIVABLES IN
BANKRUPTCY
BANKRUPTCY
AS OF DECEMBER 31,
AS OF MARCH 31,
2010
2011
(Unaudited)
$
353
$
341
559
544
1,715
1,760
35
29
$
2,662
$
2,674
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
THREE MONTHS ENDED MARCH 31, 2010 AND 2011
(Dollars in thousands, except per share information)
DECEMBER 31, 2010
FURNITURE
AND
SMALL
LARGE
APPLIANCE
INSTALLMENT
INSTALLMENT
AUTOMOBILE
PURCHASE
LOANS
LOANS
PURCHASE LOANS
LOANS
TOTAL
$
%
$
%
$
%
$
%
$
%
$
90,455
76.9
%
$
22,969
68.3
%
$
67,751
72.7
%
$
2,299
83.2
%
$
183,474
74.2
%
18,387
15.7
%
7,424
22.0
%
20,363
21.8
%
342
12.4
%
46,516
18.8
%
3,269
2.8
%
1,486
4.4
%
2,816
3.0
%
40
1.5
%
7,611
3.1
%
1,986
1.6
%
762
2.3
%
1,113
1.2
%
31
1.1
%
3,892
1.6
%
3,502
3.0
%
1,012
3.0
%
1,189
1.3
%
50
1.8
%
5,753
2.3
%
8,757
7.4
%
3,260
9.7
%
5,118
5.5
%
121
4.4
%
17,256
7.0
%
$
117,599
100.0
%
$
33,653
100.0
%
$
93,232
100.0
%
$
2,762
100.0
%
$
247,246
100.0
%
$
3,502
3.0
%
$
1,012
3.0
%
$
1,189
1.3
%
$
50
1.8
%
$
5,753
2.3
%
MARCH 31, 2011
FURNITURE AND
SMALL
LARGE
APPLIANCE
INSTALLMENT
INSTALLMENT
AUTOMOBILE
PURCHASE
LOANS
LOANS
PURCHASE LOANS
LOANS
TOTAL
$
%
$
%
$
%
$
%
$
%
(Unaudited)
$
76,899
77.2
%
$
23,869
73.1
%
$
81,317
79.6
%
$
3,186
87.0
%
$
185,271
77.8
%
15,314
15.4
%
6,329
19.3
%
17,269
16.9
%
374
10.2
%
39,286
16.5
%
2,421
2.4
%
985
3.0
%
1,854
1.8
%
26
0.7
%
5,286
2.2
%
1,651
1.6
%
488
1.5
%
648
0.6
%
29
0.8
%
2,816
1.2
%
3,338
3.4
%
998
3.1
%
1,076
1.1
%
46
1.3
%
5,458
2.3
%
$
7,410
7.4
%
$
2,471
7.6
%
$
3,578
3.5
%
$
101
2.8
%
$
13,560
5.7
%
$
99,623
100.0
%
$
32,669
100.0
%
$
102,164
100.0
%
3,661
100.0
%
$
238,117
100.0
%
$
3,338
3.4
%
$
998
3.1
%
$
1,076
1.1
%
$
46
1.3
%
$
5,459
2.3
%
F-43
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
THREE MONTHS ENDED MARCH 31, 2010 AND 2011
(Dollars in thousands, except per share information)
DECEMBER 31, 2010
MARCH 31, 2011
(Unaudited)
$
1,111
$
1,192
246,135
236,925
$
247,246
$
238,117
F-44
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
THREE MONTHS ENDED MARCH 31, 2010 AND 2011
(Dollars in thousands, except per share information)
2010
NET INCOME
SHARES
PER SHARE
(Unaudited)
$
3,953
9,336,727
$
0.42
269,451
$
3,953
9,606,178
$
0.41
2011
NET INCOME
SHARES
PER SHARE
(Unaudited)
$
4,935
9,336,727
$
.53
311,376
$
4,935
9,648,103
$
.51
INDIVIDUAL
OWNERS
SPONSORS
$
113
$
195
191
794
113
195
F-45
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
THREE MONTHS ENDED MARCH 31, 2010 AND 2011
(Dollars in thousands, except per share information)
F-46
Table of Contents
Table of Contents
$
11,610
$
10,500
*
*
*
*
*
*
*
*
To be provided by amendment.
II-1
Table of Contents
(a)
Exhibit Index
1
.1
Form of Underwriting Agreement*
3
.1
Form of Amended and Restated Certificate of Incorporation of the
Registrant*
3
.2
Form of Amended and Restated Bylaws of the Registrant*
5
.1
Opinion of Simpson Thacher & Bartlett LLP regarding
validity of the shares of common stock registered*
10
.1
Form of Amended and Restated Shareholders Agreement*
10
.2
Third Amended and Restated Loan and Security Agreement, dated as
of March 21, 2007, among the lenders named therein, Bank of
America, N.A., as the agent, and the Registrant, Regional
Finance Corporation of South Carolina, Regional Finance
Corporation of Georgia, Regional Finance Corporation of Texas,
Regional Finance Corporation of North Carolina, Regional Finance
Corporation of Alabama, Regional Finance Corporation of
Tennessee and R.M.C. Financial Services Corp., as borrowers;
Amendment No. 1, dated as of June 29, 2007; Consent
and Amendment No. 2, dated as of November 21, 2007;
Amendment No. 3, dated as of May 27, 2008; Joinder and
Amendment No. 4, dated as of July 28, 2008; and
Extension and Amendment No. 5, dated as of August 25,
2010*
10
.3
Senior Subordinated Loan and Security Agreement, dated as of
August 25, 2010, by and among the lenders named therein,
Palladium Capital Management III, L.L.C., as the agent, and the
Registrant, Regional Finance Corporation of South Carolina,
Regional Finance Corporation of Georgia, Regional Finance
Corporation of Texas, Regional Finance Corporation of North
Carolina, Regional Finance Corporation of Alabama and Regional
Finance Corporation of Tennessee*
10
.4
Regional Management Corp. 2007 Management Incentive Plan
10
.5
Form of Regional Management Corp. 2011 Stock Incentive Plan*
10
.6
Form of Regional Management Corp. Annual Incentive Plan*
10
.7
Option Award Agreement with Robert D. Barry, dated as of
October 11, 2007
10
.8
Option Award Agreement with Thomas F. Fortin, dated
February 26, 2008
10
.9
Option Award Agreement with Robert D. Barry, effective as of
April 23, 2008
10
.10
Option Award Agreement with C. Glynn Quattlebaum, dated as of
October 11, 2007
II-2
Table of Contents
10
.11
Employment Agreement, dated as of March 21, 2007, between
C. Glynn Quattlebaum and the Registrant; First Amendment, dated
as of July 18, 2008; Second Amendment, dated effective as
of January 1, 2009; Third Amendment, dated as of
April 13, 2010; and Fourth Amendment, dated as of
May 17, 2011
10
.12
Employment Agreement, dated as of February 29, 2008,
between the Registrant and Thomas F. Fortin; First Amendment to
Employment Agreement between the Registrant and Thomas F.
Fortin, dated as of July 18, 2008; Second Amendment, dated
effective as of January 1, 2009; Third Amendment, dated as
of April 13, 2010; and Fourth Amendment, dated as of
May 17, 2011
10
.13
Letter agreement, dated as of July 1, 2008, between the
Registrant and Robert D. Barry; the letter agreement, dated as
of April 13, 2010; and the letter agreement, dated as of
May 17, 2011
21
.1
Subsidiaries of the Registrant*
23
.1
Consent of McGladrey & Pullen, LLP
23
.2
Consent of Simpson Thacher & Bartlett LLP (included as
part of Exhibit 5.1)*
23
.3
Consent of Roel C. Campos to be named as a director nominee**
23
.4
Consent of Alvaro G. de Molina to be named as a director
nominee**
23
.5
Consent of Thomas F. Fortin to be named as a director nominee**
24
.1
Power of Attorney (included on signature page to this
Registration Statement)**
*
To be filed by amendment.
**
Previously filed.
(b)
Financial
Statement Schedule
(1)
The undersigned registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting
agreement certificates in such denominations and registered in
such names as required by the underwriter to permit prompt
delivery to each purchaser.
(2)
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
(3)
The undersigned Registrant hereby undertakes that:
(A)
For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon
Rule 430A and contained in a form of prospectus filed by
the registrant pursuant to Rule 424(b) (1) or
(4) or 497(h) under the Securities Act shall be deemed to
be part of this registration statement as of the time it was
declared effective.
(B)
For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
Table of Contents
By:
Title:
Chief Executive Officer
Chairman of the Board of Directors
Director
Director
Director
Director
Chief Executive Officer
(principal executive officer)
Executive Vice President and Chief Financial Officer
(principal financial and accounting officer)
*By:
II-4
REGIONAL MANAGEMENT CORP.
|
||||
By: | /s/ Eric A. Anderson | |||
Eric A. Anderson | ||||
Chief Financial Officer | ||||
Participant:
|
Robert D. Barry (the Participant ) | |
|
||
|
This Option Award Agreement provides for the option contemplated in that certain Letter dated January 30, 2007 from Regional Holdings LLC to Participant | |
|
||
Date of grant:
|
October 11, 2007 | |
|
||
Total no. of shares:
|
73,711 shares of Common Stock | |
|
||
Exercise price:
|
$5.4623 per share (the Option Price ) | |
|
||
Type of option:
|
Non-statutory Stock Option | |
|
||
Vesting dates:
|
This Stock Option will vest and become exercisable in accordance with the following schedule: | |
|
||
|
(i) 20% of the total shares on and after the date of grant, | |
|
(ii) 20% of the total shares on and after March 21, 2008, | |
|
(iii) 20% of the total shares on and after March 21, 2009, | |
|
(iv) 20% of the total shares on and after March 21, 2010, and | |
|
(v) 20% of the total shares on and after March 21, 2011, | |
|
||
|
subject to the Participant remaining employed by the Corporation or a Subsidiary through each such vesting date. | |
|
||
Expiration date:
|
This Stock Option will expire on, and may not be exercised after, March 21, 2017. | |
|
||
Payment of exercise price:
|
The Participant may pay the exercise price (i) in cash or by check acceptable to the Corporation, (ii) by the actual or constructive transfer to the Corporation of shares of Common Stock owned by the Participant for at least six months (or, with the consent of the Committee, for less than six months) having an aggregate Market Value Per Share at the date of exercise equal to the aggregate Option Price, (iii) with the consent of the Committee, by authorizing the Corporation to withhold a number of shares of Common Stock having an aggregate Market Value |
|
Per Share on the date of exercise equal to the aggregate Option Price, or (iv) by a combination of the foregoing methods; provided, that the payment methods described in clauses (ii), (iii) and (iv) will not be available at any time the Corporation is prohibited from purchasing or acquiring such shares of Common Stock. To the extent permitted by law, the Participant may also make arrangements satisfactory to the Corporation for the deferred payment of the aggregate Option Price from the proceeds of a sale through a broker of some or all of the shares to which such exercise relates. Notwithstanding the foregoing, this Stock Option will vest and become exercisable in full upon the occurrence of a Change of Control. | |
|
||
|
Change of Control means the sale of all or substantially all of the Corporations business or assets to any Person (other than one or a group of the Corporations shareholders collectively beneficially owning a majority of the voting power of the Corporation or any Affiliate or related Person of any such shareholder or group of shareholders the majority of the voting power of which is also beneficially owned by such shareholder or group of shareholders), or any other transaction whether by sale of stock, sale of assets, merger, recapitalization, reorganization or otherwise, pursuant to which one or more Persons (other than one or a group of the Corporations shareholders collectively beneficially owning a majority of the voting power of the Corporation or any Affiliate or related Person of any such shareholder or group of shareholders the majority of the voting power of which is also beneficially owned by such shareholder or group of shareholders) shall own securities having in excess of 50% of the voting power of the Corporation, on a fully diluted basis, in each case in a single transaction or series of related transactions. | |
|
||
|
Affiliate means with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person. For purposes of this definition, control , when used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of any such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms controlling and controlled have the respective meanings correlative to the foregoing. With respect to any natural Person, Affiliate will also include such Persons grandparents, any descendants of such Persons grandparents, the grandparents of such Persons spouse and any descendants of the grandparents of such Persons spouse (in each |
2
|
case, whether by blood, adoption or marriage). | |
|
||
|
Person means an individual, a corporation, a partnership, a limited liability company, an association, a trust, a joint stock corporation, a joint venture, an unincorporated organization or any federal, state, county, city, municipal or other local or foreign government or any subdivision, authority, commission, board, bureau, court, administrative panel or other instrumentality thereof. | |
|
||
Termination of
Employment:
|
Notwithstanding any provision of any employment agreement between the Participant and the Corporation or any Subsidiary entered into prior to the date of this Option Award Agreement to the contrary: (1) if the Corporation or a Subsidiary terminates the Participants employment for cause, as defined in the employment agreement between the Participant and the Corporation or Subsidiary or, if none, as determined by the Committee in its sole discretion, then the Stock Option will expire immediately and the unexercised portion thereof will be forfeited on the date of the Participants termination of employment; (2) if the Participants employment terminates by reason of permanent disability (as determined by the Committee) or death, the vested portion of the Stock Option will expire six months after the date the Participant terminates employment, and the nonvested portion of the Stock Option will be forfeited upon the Participants termination of employment, and (3) if the Participants employment terminates for any reason other than those previously described in this paragraph, the vested portion of the Stock Option will expire 90 days after the date of the termination of employment and the non- vested portion of the Stock Option will be forfeited upon the Participants termination of employment. | |
|
||
Transferability:
|
The Participant may transfer Stock Options only by will or the laws of descent and distribution. Only the Participant or the Participants guardian or legal representative can exercise Stock Options during the Participants lifetime. All shares of Common Stock issued pursuant to the exercise of a Stock Option will be subject to the terms and restrictions, including restrictions on transfer, set forth in the Plan. | |
|
||
Other terms and conditions:
|
In no event will the Stock Option be exercisable after its expiration date. | |
|
||
|
The Participant will not have any of the rights of a stockholder of the Corporation with respect to the shares of Common Stock subject to this Stock Option except to the extent that one or more |
3
|
certificates representing such shares of Common Stock have been delivered to him, or he has been determined to be a stockholder of record by the Corporations transfer agent, upon due exercise of this Stock Option. Further, nothing herein will confer upon the Participant any right to become or remain in the service or employ of the Corporation or one of its Subsidiaries, as applicable. | |
|
||
|
This Stock Option is subject to all other terms and conditions of the Plan. Copies of the Plan may be obtained from the Corporation. By executing this Option Award Agreement, the Participant agrees to the terms set forth above and agrees to be bound by the provisions of the Plan. |
4
REGIONAL MANAGEMENT CORP.
|
||||
By: | /s/ Thomas F. Fortin | |||
Name: | Thomas F. Fortin | |||
Title: | CEO | |||
Signature | /s/ Robert D. Barry | |||
Name: | Robert D. Barry | |||
Date: | 10/15/07 | |||
Participant:
|
Thomas F. Fortin (the Participant ) | |
|
||
|
This Option Award Agreement provides for the option contemplated in Section 2.4(c) of that certain Employment Agreement dated February 29, 2008 between the Corporation and the Participant. | |
|
||
Date of grant:
|
February 26, 2008 | |
|
||
Total no. of shares:
|
196,563 shares of Common Stock | |
|
||
Exercise price:
|
$5.4623 per share (the Option Price ) | |
|
||
Type of option:
|
Non-statutory Stock Option | |
|
||
Vesting dates:
|
This Stock Option will vest and become exercisable in accordance with the following schedule: |
(i) 20% of the total shares on and after the date of grant, | |
(ii) 20% of the total shares on and after March 21, 2009, | |
(iii) 20% of the total shares on and after March 21, 2010, | |
(iv) 20% of the total shares on and after March 21, 2011, and | |
(v) 20% of the total shares on and after March 21, 2012,
subject to the Participant remaining employed by the Corporation or a Subsidiary through each such vesting date. |
Expiration date:
|
This Stock Option will expire on, and may not be exercised after, March 21, 2017. | |
|
||
Payment of exercise price:
|
The Participant may pay the exercise price (i) in cash or by check acceptable to the Corporation, (ii) by the actual or constructive transfer to the Corporation of shares of Common Stock owned by the Participant for at least six months (or, with the consent of the Committee, for less than six months) having an aggregate Market Value Per Share at the date of exercise equal to the aggregate Option Price, (iii) with the consent of the Committee, by authorizing the Corporation to withhold a number of shares of |
|
Common Stock having an aggregate Market Value Per Share on the date of exercise equal to the aggregate Option Price, or (iv) by a combination of the foregoing methods; provided, that the payment methods described in clauses (ii), (iii) and (iv) will not be available at any time the Corporation is prohibited from purchasing or acquiring such shares of Common Stock. To the extent permitted by law, the Participant may also make arrangements satisfactory to the Corporation for the deferred payment of the aggregate Option Price from the proceeds of a sale through a broker of some or all of the shares to which such exercise relates. Notwithstanding the foregoing, this Stock Option will vest and become exercisable in full upon the occurrence of a Change of Control. | |
|
||
|
Change of Control means the sale of all or substantially all of the Corporations business or assets to any Person (other than one or a group of the Corporations shareholders collectively beneficially owning a majority of the voting power of the Corporation or any Affiliate or related Person of any such shareholder or group of shareholders the majority of the voting power of which is also beneficially owned by such shareholder or group of shareholders), or any other transaction whether by sale of stock, sale of assets, merger, recapitalization, reorganization or otherwise, pursuant to which one or more Persons (other than one or a group of the Corporations shareholders collectively beneficially owning a majority of the voting power of the Corporation or any Affiliate or related Person of any such shareholder or group of shareholders the majority of the voting power of which is also beneficially owned by such shareholder or group of shareholders) shall own securities having in excess of 50% of the voting power of the Corporation, on a fully diluted basis, in each case in a single transaction or series of related transactions. | |
|
||
|
Affiliate means with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person. For purposes of this definition, control , when used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of any such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms controlling and controlled have the respective meanings correlative to the foregoing With respect to any natural Person, Affiliate will also include such Persons grandparents, any descendants of such Persons grandparents, the grandparents of such Persons spouse and any descendants of the grandparents of such Persons spouse (in each case, whether by blood, adoption or marriage). |
2
|
Person means an individual, a corporation, a partnership, a limited liability company, an association, a trust, a joint stock corporation, a joint venture, an unincorporated organization or any federal, state, county, city, municipal or other local or foreign government or any subdivision, authority, commission, board, bureau, court, administrative panel or other instrumentality thereof. | |
|
||
Termination of
Employment
|
Notwithstanding any provision of any employment agreement between the Participant and the Corporation or any Subsidiary entered into prior to the date of this Option Award Agreement to the contrary: (1) if the Corporation or a Subsidiary terminates the Participants employment for cause, as defined in the employment agreement between the Participant and the Corporation or Subsidiary or, if none, as determined by the Committee in its sole discretion, then the Stock Option will expire immediately and the unexercised portion thereof will be forfeited on the date of the Participants termination of employment; (2) if the Participants employment terminates by reason of permanent disability (as determined by the Committee) or death, the vested portion of the Stock Option will expire six months after the date the Participant terminates employment, and the nonvested portion of the Stock Option will be forfeited upon the Participants termination of employment, and (3) if the Participants employment terminates for any reason other than those previously described in this paragraph, the vested portion of the Stock Option will expire 90 days after the date of the termination of employment and the non- vested portion of the Stock Option will be forfeited upon the Participants termination of employment. | |
|
||
Transferability:
|
The Participant may transfer Stock Options only by will or the laws of descent and distribution. Only the Participant or the Participants guardian or legal representative can exercise Stock Options during the Participants lifetime. All shares of Common Stock issued pursuant to the exercise of a Stock Option will be subject to the terms and restrictions, including restrictions on transfer, set forth in the Plan. | |
|
||
Other terms and conditions:
|
In no event will the Stock Option be exercisable after its expiration date. | |
|
||
|
The Participant will not have any of the rights of a stockholder of the Corporation with respect to the shares of Common Stock subject to this Stock Option except to the extent that one or more certificates representing such shares of Common Stock have been |
3
|
delivered to him, or he has been determined to be a stockholder of record by the Corporations transfer agent, upon due exercise of this Stock Option. Further, nothing herein will confer upon the Participant any right to become or remain in the service or employ of the Corporation or one of its Subsidiaries, as applicable. | |
|
||
|
This Stock Option is subject to all other terms and conditions of the Plan. Copies of the Plan may be obtained from the Corporation. By executing this Option Award Agreement, the Participant agrees to the terms set forth above and agrees to be bound by the provisions of the Plan. |
4
REGIONAL MANAGEMENT CORP. | ||||||
|
||||||
|
By: |
/s/ C.
Glynn Quattlebaum
|
||||
|
Name: |
C. Glynn
Quattlebaum
|
||||
|
Title: | President/COO | ||||
|
|
|
Signature: |
/s/ Thomas
F. Fortin
|
||||
|
Name: |
Thomas F.
Fortin
|
||||
|
Date: | 2/28/08 | ||||
|
|
Participant:
|
Robert D. Barry (the Participant ) | |
|
||
|
This Option Award Agreement provides for the option agreed upon by the Board of Directors of Regional Management Corp. at their quarterly meeting held April 23, 2008. | |
|
||
Date of grant:
|
April 23, 2008 | |
|
||
Total no. of shares:
|
24,504 shares of Common Stock | |
|
||
Exercise price:
|
$5.4623 per share (the Option Price ) | |
|
||
Type of option:
|
Non-statutory Stock Option | |
|
||
Vesting dates:
|
This Stock Option will vest and become exercisable in accordance with the following schedule: | |
|
||
|
(i) 20% of the total shares on and after the date of grant, | |
|
(ii) 20% of the total shares on and after April 23, 2009, | |
|
(iii) 20% of the total shares on and after April 23, 2010, | |
|
(iv) 20% of the total shares on and after April 23, 2011, and | |
|
(v) 20% of the total shares on and after April 23, 2012,
subject to the Participant remaining employed by the Corporation or a Subsidiary through each such vesting date. |
|
|
||
Expiration date:
|
This Stock Option will expire on, and may not be exercised after, April 23, 2018. | |
|
||
Payment of exercise price:
|
The Participant may pay the exercise price (i) in cash or by check acceptable to the Corporation, (ii) by the actual or constructive transfer to the Corporation of shares of Common Stock owned by the Participant for at least six months (or, with the consent of the Committee, for less than six months) having an aggregate Market Value Per Share at the date of exercise equal to the aggregate Option Price, (iii) with the consent of the Committee, by authorizing the Corporation to withhold a number of shares of Common Stock having an aggregate Market Value Per Share on |
|
the date of exercise equal to the aggregate Option Price, or (iv) by a combination of the foregoing methods; provided, that the payment methods described in clauses (ii), (iii) and (iv) will not be available at any time the Corporation is prohibited from purchasing or acquiring such shares of Common Stock. To the extent permitted by law, the Participant may also make arrangements satisfactory to the Corporation for the deferred payment of the aggregate Option Price from the proceeds of a sale through a broker of some or all of the shares to which such exercise relates. Notwithstanding the foregoing, this Stock Option will vest and become exercisable in full upon the occurrence of a Change of Control. | |
|
||
|
Change of Control means the sale of all or substantially all of the Corporations business or assets to any Person (other than one or a group of the Corporations shareholders collectively beneficially owning a majority of the voting power of the Corporation or any Affiliate or related Person of any such shareholder or group of shareholders the majority of the voting power of which is also beneficially owned by such shareholder or group of shareholders), or any other transaction whether by sale of stock, sale of assets, merger, recapitalization, reorganization or otherwise, pursuant to which one or more Persons (other than one or a group of the Corporations shareholders collectively beneficially owning a majority of the voting power of the Corporation or any Affiliate or related Person of any such shareholder or group of shareholders the majority of the voting power of which is also beneficially owned by such shareholder or group of shareholders) shall own securities having in excess of 50% of the voting power of the Corporation, on a fully diluted basis, in each case in a single transaction or series of related transactions. | |
|
||
|
Affiliate means with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person. For purposes of this definition, control , when used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of any such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms controlling and controlled have the respective meanings correlative to the foregoing. With respect to any natural Person, Affiliate will also include such Persons grandparents, any descendants of such Persons grandparents, the grandparents of such Persons spouse and any descendants of the grandparents of such Persons spouse (in each case, whether by |
2
|
blood, adoption or marriage). | |
|
||
|
Person means an individual, a corporation, a partnership, a limited liability company, an association, a trust, a joint stock corporation, a joint venture, an unincorporated organization or any federal, state, county, city, municipal or other local or foreign government or any subdivision, authority, commission, board, bureau, court, administrative panel or other instrumentality thereof. | |
|
||
Termination of
Employment
|
Notwithstanding any provision of any employment agreement between the Participant and the Corporation or any Subsidiary entered into prior to the date of this Option Award Agreement to the contrary: (1) if the Corporation or a Subsidiary terminates the Participants employment for cause, as defined in the employment agreement between the Participant and the Corporation or Subsidiary or, if none, as determined by the Committee in its sole discretion, then the Stock Option will expire immediately and the unexercised portion thereof will be forfeited on the date of the Participants termination of employment; (2) if the Participants employment terminates by reason of permanent disability (as determined by the Committee) or death, the vested portion of the Stock Option will expire six months after the date the Participant terminates employment, and the nonvested portion of the Stock Option will be forfeited upon the Participants termination of employment, and (3) if the Participants employment terminates for any reason other than those previously described in this paragraph, the vested portion of the Stock Option will expire 90 days after the date of the termination of employment and the non- vested portion of the Stock Option will be forfeited upon the Participants termination of employment. | |
|
||
Transferability:
|
The Participant may transfer Stock Options only by will or the laws of descent and distribution. Only the Participant or the Participants guardian or legal representative can exercise Stock Options during the Participants lifetime. All shares of Common Stock issued pursuant to the exercise of a Stock Option will be subject to the terms and restrictions, including restrictions on transfer, set forth in the Plan. | |
|
||
Other terms and conditions:
|
In no event will the Stock Option be exercisable after its expiration date. | |
|
||
|
The Participant will not have any of the rights of a stockholder of the Corporation with respect to the shares of Common Stock subject to this Stock Option except to the extent that one or more certificates representing such shares of Common Stock have been |
3
|
delivered to him, or he has been determined to be a stockholder of record by the Corporations transfer agent, upon due exercise of this Stock Option. Further, nothing herein will confer upon the Participant any right to become or remain in the service or employ of the Corporation or one of its Subsidiaries, as applicable. | |
|
||
|
This Stock Option is subject to all other terms and conditions of the Plan. Copies of the Plan may be obtained from the Corporation. By executing this Option Award Agreement, the Participant agrees to the terms set forth above and agrees to be bound by the provisions of the Plan. |
4
REGIONAL MANAGEMENT CORP. | ||||||
|
||||||
|
By: | /s/ Thomas F. Fortin | ||||
|
|
|||||
|
Name: | Thomas F. Fortin | ||||
|
|
|||||
|
Title: | CEO | ||||
|
|
|
By: | /s/ Robert D. Barry | ||||
|
|
|||||
|
Name: | Robert D. Barry | ||||
|
|
|||||
|
Date: | A/O 4/23/08 | ||||
|
|
Participant:
|
C. Glynn Quattlebaum (the Participant ) | |
|
||
|
This Option Award Agreement provides for the option contemplated in Section 2.4(c) of that certain Employment Agreement dated March 21, 2007 between the Corporation and the Participant. | |
|
||
Date of grant:
|
October 11, 2007 | |
|
||
Total no. of shares:
|
294,844 shares of Common Stock | |
|
||
Exercise price:
|
$5.4623 per share (the Option Price ) | |
|
||
Type of option:
|
Non-statutory Stock Option | |
|
||
Vesting dates:
|
This Stock Option will vest and become exercisable in accordance with the following schedule: | |
|
||
|
(i) 20% of the total shares on and after the date of grant, | |
|
(ii) 20% of the total shares on and after March 21, 2008, | |
|
(iii) 20% of the total shares on and after March 21, 2009, | |
|
(iv) 20% of the total shares on and after March 21, 2010, and | |
|
(v) 20% of the total shares on and after March 21, 2011, | |
|
||
|
subject to the Participant remaining employed by the Corporation or a Subsidiary through each such vesting date. | |
|
||
Expiration date:
|
This Stock Option will expire on, and may not be exercised after, March 21, 2017. | |
|
||
Payment of exercise price:
|
The Participant may pay the exercise price (i) in cash or by check acceptable to the Corporation, (ii) by the actual or constructive transfer to the Corporation of shares of Common Stock owned by the Participant for at least six months (or, with the consent of the Committee, for less than six months) having an aggregate Market Value Per Share at the date of exercise equal to the aggregate Option Price, (iii) with the consent of the Committee, by authorizing the Corporation to withhold a number of shares of |
|
Common Stock having an aggregate Market Value Per Share on the date of exercise equal to the aggregate Option Price, or (iv) by a combination of the foregoing methods; provided, that the payment methods described in clauses (ii), (iii) and (iv) will not be available at any time the Corporation is prohibited from purchasing or acquiring such shares of Common Stock. To the extent permitted by law, the Participant may also make arrangements satisfactory to the Corporation for the deferred payment of the aggregate Option Price from the proceeds of a sale through a broker of some or all of the shares to which such exercise relates. Notwithstanding the foregoing, this Stock Option will vest and become exercisable in full upon the occurrence of a Change of Control. | |
|
||
|
Change of Control means the sale of all or substantially all of the Corporations business or assets to any Person (other than one or a group of the Corporations shareholders collectively beneficially owning a majority of the voting power of the Corporation or any Affiliate or related Person of any such shareholder or group of shareholders the majority of the voting power of which is also beneficially owned by such shareholder or group of shareholders), or any other transaction whether by sale of stock, sale of assets, merger, recapitalization, reorganization or otherwise, pursuant to which one or more Persons (other than one or a group of the Corporations shareholders collectively beneficially owning a majority of the voting power of the Corporation or any Affiliate or related Person of any such shareholder or group of shareholders the majority of the voting power of which is also beneficially owned by such shareholder or group of shareholders) shall own securities having in excess of 50% of the voting power of the Corporation, on a fully diluted basis, in each case in a single transaction or series of related transactions. | |
|
||
|
Affiliate means with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person. For purposes of this definition, control , when used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of any such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms controlling and controlled have the respective meanings correlative to the foregoing. With respect to any natural Person, Affiliate will also include such Persons grandparents, any descendants of such Persons grandparents, the grandparents of such Persons spouse and any descendants of the grandparents of such Persons spouse (in each case, whether by |
2
|
blood, adoption or marriage). | |
|
||
|
Person means an individual, a corporation, a partnership, a limited liability company, an association, a trust, a joint stock corporation, a joint venture, an unincorporated organization or any federal, state, county, city, municipal or other local or foreign government or any subdivision, authority, commission, board, bureau, court, administrative panel or other instrumentality thereof. | |
|
||
Termination of Employment:
|
Notwithstanding any provision of any employment agreement between the Participant and the Corporation or any Subsidiary entered into prior to the date of this Option Award Agreement to the contrary: (1) if the Corporation or a Subsidiary terminates the Participants employment for cause, as defined in the employment agreement between the Participant and the Corporation or Subsidiary or, if none, as determined by the Committee in its sole discretion, then the Stock Option will expire immediately and the unexercised portion thereof will be forfeited on the date of the Participants termination of employment; (2) if the Participants employment terminates by reason of permanent disability (as determined by the Committee) or death, the vested portion of the Stock Option will expire six months after the date the Participant terminates employment, and the nonvested portion of the Stock Option will be forfeited upon the Participants termination of employment, and (3) if the Participants employment terminates for any reason other than those previously described in this paragraph, the vested portion of the Stock Option will expire 90 days after the date of the termination of employment and the non-vested portion of the Stock Option will be forfeited upon the Participants termination of employment. | |
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Transferability:
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The Participant may transfer Stock Options only by will or the laws of descent and distribution. Only the Participant or the Participants guardian or legal representative can exercise Stock Options during the Participants lifetime. All shares of Common Stock issued pursuant to the exercise of a Stock Option will be subject to the terms and restrictions, including restrictions on transfer, set forth in the Plan. | |
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Other terms and
conditions:
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In no event will the Stock Option be exercisable after its expiration date. | |
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The Participant will not have any of the rights of a stockholder of the Corporation with respect to the shares of Common Stock subject to this Stock Option except to the extent that one or more certificates representing such shares of Common Stock have been |
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delivered to him, or he has been determined to be a stockholder of record by the Corporations transfer agent, upon due exercise of this Stock Option. Further, nothing herein will confer upon the Participant any right to become or remain in the service or employ of the Corporation or one of its Subsidiaries, as applicable. | |
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This Stock Option is subject to all other terms and conditions of the Plan. Copies of the Plan may be obtained from the Corporation. By executing this Option Award Agreement, the Participant agrees to the terms set forth above and agrees to be bound by the provisions of the Plan. |
4
REGIONAL MANAGEMENT
CORP.
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By: | /s/ Thomas F Fortin | ||||
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Name: | Thomas F. Fortin | ||||
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Title: | CEO | ||||
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Signature: | /s/ C. Glynn Quattlebaum | ||||
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Name: | C. Glynn Quattlebaum | ||||
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Date: | 10-16-07 | ||||
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(a) | If to the Corporation, to: | ||
Regional Management Corp.
509 West Butler Road Greenville, SC 29607 P.O. Box 776 Mauldin, SC 29662 Facsimile No.: (864) 422-8035 Attention: Thomas Fortin |
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and | |||
Parallel Investment Partners, L.P.
2100 McKinney St., Suite 1200 Dallas, Texas 75201 Facsimile No.: (214) 740-3630 Attention: Ellery W. Roberts |
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and | |||
c/o Palladium Equity Partners III, L.P.
1270 Avenue of the Americas, 22nd Floor New York, New York 10020 Fax: (212) 218-5155 Attention: David Perez and Erik A. Scott |
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with a copy to: | |||
Jones Day
717 Texas, Suite 3300 Houston, Texas 77002 Facsimile No.: (832) 239-3600 Attention: J. Mark Metts |
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(b) | If to Employee, to: | ||
C. Glynn Quattlebaum
1 Northbrook Way Greenville, SC 29615 |
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With a copy to: | |||
Wyche, Burgess, Freeman & Parham, P.A.
44 E. Camperdown Way (29601) Post Office Box 728 Greenville, SC 29602-0728 Facsimile No.: (864) 235-8900 Attention: Eric K. Graben & Mark W. Bakker |
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REGIONAL MANAGEMENT CORP.
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By: | /s/ Eric A. Anderson | |||
Eric A. Anderson | ||||
Chief Financial Officer | ||||
/s/ C. Glynn Quattlebaum | ||||
C. Glynn Quattlebaum | ||||
1. | Section 1. 1(p) of the Agreement shall be deleted in its entirety and shall read as follows: |
2. | Section 1.1(cc) of the Agreement shall be amended and restated in its entirety to read as follows: |
3. | Section 2. 4(b) of the Agreement shall be amended and restated in its entirety to read as follows: |
4. | The Agreement is further amended to add the following Exhibit A: |
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5. | The parties hereby agree that the Agreement will continue to be in full force and effect as modified by the terms of this Amendment. |
EMPLOYEE : | ||||||
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/s/ C. Glynn Quattlebaum | |||||
C. GLYNN QUATTLEBAUM | ||||||
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CORPORATION : | ||||||
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REGIONAL MANAGEMENT CORP. | ||||||
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By: | /s/ Thomas F Fortin | ||||
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Title: | CEO | ||||
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1. | Section 2. 4(b) of the Agreement shall be amended and restated in its entirety effective January 1, 2009 to read as follows: |
2. | Exhibit A of the Agreement shall be amended and restated in its entirety effective January 1, 2009 to read as follows: |
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3. | The parties hereby agree that the Agreement will continue to be in full force and effect as modified by the terms of this Amendment. |
EMPLOYEE : | ||||||||
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/s/ C. Glynn Quattlebaum | ||||||||
C. GLYNN QUATTLEBAUM | ||||||||
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CORPORATION : | ||||||||
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REGIONAL MANAGEMENT CORP. | ||||||||
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By: | /s/ Thomas F. Fortin | ||||||
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Title: | CEO | ||||||
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1. | Section 2. 4(b) of the Agreement shall be amended and restated in its entirety effective January 1, 2010 to read as follows: |
2. | Exhibit A of the Agreement shall be amended and restated in its entirety effective January 1, 2010 to read as follows: |
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3. | The parties hereby agree that the Agreement will continue to be in full force and effect as modified by the terms of this Amendment. |
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EMPLOYEE : | ||||||
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/s/ C. Glynn Quattlebaum | ||||||
C. GLYNN QUATTLEBAUM | ||||||
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CORPORATION : | ||||||
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REGIONAL MANAGEMENT CORP. | ||||||
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By: | /s/ Thomas F. Fortin | ||||
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Title: | CEO | ||||
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1. | Section 2. 4(b) of the Agreement shall be amended and restated in its entirety effective January 1, 2011 to read as follows: |
2. | Exhibit A of the Agreement shall be amended and restated in its entirety effective January 1, 2011 to read as follows: |
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3. | The parties hereby agree that the Agreement will continue to be in full force and effect as modified by the terms of this Amendment. |
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EMPLOYEE : | ||||||
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/s/ C. Glynn Quattlebaum | |||||
C. GLYNN QUATTLEBAUM | ||||||
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CORPORATION : | ||||||
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REGIONAL MANAGEMENT CORP. | ||||||
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By: | /s/ Thomas F. Fortin | ||||
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Title: | Chief Executive Officer | ||||
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(a) | If to the Corporation, to: |
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(b) | If to Employee, to: |
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REGIONAL MANAGEMENT CORP. | ||||
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By: | /s/ C. Glynn Quattlebaum | ||
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Name: | C. Glynn Quattlebaum | ||
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Title: | President/COO | ||
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/s/ Thomas F. Fortin | ||||
Thomas F. Fortin |
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1. | Section 2. 4(b) of the Agreement shall be amended and restated in its entirety to read as follows: |
2. | Exhibit A of the Agreement shall be amended and restated in its entirety to read as follows: |
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3. | The parties hereby agree that the Agreement will continue to be in full force and effect as modified by the terms of this Amendment. |
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EMPLOYEE: | ||||||
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/s/ Thomas F. Fortin | ||||||
THOMAS F. FORTIN | ||||||
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CORPORATION: | ||||||
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REGIONAL MANAGEMENT CORP. | ||||||
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By: | /s/ C. Glynn Quattlebaum | ||||
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Title: | President/COO | ||||
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1. | Section 2. 4(b) of the Agreement shall be amended and restated in its entirety effective January 1, 2009 to read as follows: |
2. | Exhibit A of the Agreement shall be amended and restated in its entirety effective January 1, 2009 to read as follows: |
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3. | The parties hereby agree that the Agreement will continue to be in full force and effect as modified by the terms of this Amendment. |
EMPLOYEE: | ||||||
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/s/ Thomas F. Fortin | ||||||
THOMAS F. FORTIN | ||||||
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CORPORATION: | ||||||
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REGIONAL MANAGEMENT CORP. | ||||||
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By: | /s/ Robert D. Barry | ||||
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Title: | EVP/CFO | ||||
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1. | Section 2. 4(b) of the Agreement shall be amended and restated in its entirety effective January 1, 2010 to read as follows: |
2. | Exhibit A of the Agreement shall be amended and restated in its entirety effective January 1, 2010 to read as follows: |
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3. | The parties hereby agree that the Agreement will continue to be in full force and effect as modified by the terms of this Amendment. |
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EMPLOYEE: | ||||||
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/s/ Thomas F Fortin | ||||||
THOMAS F. FORTIN | ||||||
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CORPORATION: | ||||||
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REGIONAL MANAGEMENT CORP. | ||||||
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By: | /s/ Robert D. Barry | ||||
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Title: | EVP/CFO | ||||
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1. | Section 2. 4(b) of the Agreement shall be amended and restated in its entirety effective January 1, 2011 to read as follows: |
2. | Exhibit A of the Agreement shall be amended and restated in its entirety effective January L 2011 to read as follows: |
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3. | The parties hereby agree that the Agreement will continue to be in full force and effect as modified by the terms of this Amendment. |
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EMPLOYEE: | ||||||
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/s/ Thomas F. Fortin | ||||||
THOMAS F. FORTIN | ||||||
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CORPORATION: | ||||||
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REGIONAL MANAGEMENT CORP. | ||||||
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By: | /s/ Robert D. Barry | ||||
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Title: | EVP/CFO | ||||
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(a) | Up to 50% of your prevailing base salary may be earned based on a four-prong test of financial performance. This test will utilize the criteria, weightings and methodology as set forth on Exhibit A, which is attached to this letter and incorporated herein by reference. | ||
(b) | Up to 17% of your prevailing base salary may be earned based on your achievement of the stated objectives for the CFO established by the Board. The Company, with input from the Board, will prepare a set of written objectives and goals for 2008 shortly and may update and/or revise such goals from time to time as appropriate and in good faith. |
Accepted
by:
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Date: | |||
/s/ Robert D. Barry
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7/18/08 | |||
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Cc:
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David Perez, Ellery Roberts |
1. | The section of the Prior Agreement entitled Bonus shall be amended and restated in its entirety effective January 1, 2010 to read as follows: |
2. | Exhibit A of the Prior Agreement shall be amended and restated in its entirety effective January 1, 2010 to read as follows: |
3. | The parties hereby agree that the Prior Agreement will continue to be in full force and effect as modified by the terms of this Agreement, |
EMPLOYEE: | ||||||
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/s/ Robert D. Barry | |||||
ROBERT D. BARRY | ||||||
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CORPORATION: | ||||||
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REGIONAL MANAGEMENT CORP. | ||||||
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By: | /s/ Thomas F. Fortin | ||||
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Title: | CEO | ||||
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1. | The section of the Prior Agreement entitled Bonus shall be amended and restated in its entirety effective January 1, 2011 to read as follows: |
2. | Exhibit A of the Prior Agreement shall be amended and restated in its entirety effective January 1, 2011 to read as follows; |
3. | The parties hereby agree that the Prior Agreement will continue to be in full force and effect as modified by the terms of this Agreement. |
EMPLOYEE: | ||||||
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/s/ Robert D. Barry | |||||
ROBERT D. BARRY | ||||||
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CORPORATION: | ||||||
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REGIONAL MANAGEMENT CORP. | ||||||
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By: |
/s/
Thomas F Fortin
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Title: |
Chief
Executive Officer
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