UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 |
For the fiscal year ended March 31, 2016
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission file number: 0-26680
NICHOLAS FINANCIAL, INC.
(Exact Name of Registrant as Specified in its Charter)
British Columbia, Canada | 8736-3354 | |
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
2454 McMullen Booth Road, Building C
Clearwater, Florida 33759
(Address of Principal Executive Offices, Including Zip Code)
(727) 726-0763
(Registrants Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
Title of Each Class |
Name of Each Exchange on Which Registered |
|
Common shares, no par value | NASDAQ Global Select Market |
Securities registered under Section 12(g) of the Exchange Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. ¨
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ¨ | Accelerated filer | x | |||
Non-accelerated filer | ¨ | Smaller reporting company | ¨ |
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
At September 30, 2015, the aggregate market value of the Registrants Common Shares held by non-affiliates of the Registrant was approximately $95.8 million.
As of June 6, 2016, approximately 12.5 million shares, no par value, of the Registrant were outstanding (of which approximately 4.7 million shares were held by the Registrants principal operating subsidiary and pursuant to applicable law, not entitled to vote and approximately 7.8 million shares were entitled to vote).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrants definitive Proxy Statement and Information Circular for the 2016 Annual General Meeting of Shareholders currently expected to be held on September 8, 2016, are incorporated by reference in Part III, Items 10 through 14, of this Annual Report on Form 10-K.
NICHOLAS FINANCIAL, INC.
FORM 10-K ANNUAL REPORT
Forward-Looking Information
This Annual Report on Form 10-K (Report) contains various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are based on managements current beliefs and assumptions, as well as information currently available to management. When used in this document, the words anticipate, estimate, expect, will, may, plan, believe, intend and similar expressions are intended to identify forward-looking statements. Although Nicholas Financial, Inc., including its subsidiaries (collectively the Company), believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Such statements are subject to certain risks, uncertainties and assumptions, including but not limited to the risk factors discussed herein under Item 1A Risk Factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or expected. Among the key factors that may cause actual results to differ materially from those projected in forward-looking statements include fluctuations in the economy, the degree and nature of competition, fluctuations in interest rates, the availability of capital at acceptable rates and terms, demand for consumer financing in the markets served by the Company, the Companys products and services, increases in the default rates experienced on retail installment sales contracts (Contracts), regulatory changes in the Companys existing and future markets, the Companys intentions regarding strategic alternatives, and the Companys ability to expand its business, including its ability to identify and complete acquisitions and integrate the operations of acquired businesses, to recruit and retain qualified employees, to expand into new markets and to maintain profit margins in the face of increased pricing competition. All forward-looking statements included in this Report are based on information available to the Company as of the date of filing of this Report, and the Company assumes no obligation to update any such forward-looking statement. Prospective investors should also consult the risk factors described from time to time in the Companys filings made with the US Securities and Exchange Commission (SEC), including its reports on Forms 10-Q, 8-K and 10-K and annual reports to shareholders.
General
Nicholas Financial, Inc. (Nicholas Financial-Canada) is a Canadian holding company incorporated under the laws of British Columbia in 1986. The business activities of Nicholas Financial-Canada are currently conducted exclusively through its wholly-owned indirect subsidiary, Nicholas Financial, Inc., a Florida corporation (Nicholas Financial). Nicholas Financial is a specialized consumer finance company engaged primarily in acquiring and servicing automobile finance installment contracts (Contracts) for purchases of new and used automobiles and light trucks. To a lesser extent, Nicholas Financial also originates direct consumer loans (Direct Loans) and sells consumer-finance related products. Nicholas Financials financing activities accounted for 100% of the Companys consolidated revenue for the fiscal year ended March 31, 2016 and more than 99% of the Companys consolidated revenues for each of the fiscal years ended March 31, 2015 and 2014, respectively.
A second Florida subsidiary, Nicholas Data Services, Inc. (NDS), historically was engaged in supporting and updating industry-specific computer application software for small businesses located primarily in the Southeastern United States. NDSs activities accounted for less than 1% of the Companys consolidated revenues for each of the fiscal years ended March 31, 2015 and 2014. NDS ceased its operations during the fiscal year ended March 31, 2015; however it continues as the interim holding company for Nicholas Financial.
Nicholas Financial-Canada, Nicholas Financial and NDS are hereafter collectively referred to as the Company. All financial information herein is designated in United States dollars. References to fiscal 2016 are to our fiscal year ended March 31, 2016 and references to fiscal 2017 are to our fiscal year ending March 31, 2017.
The Companys principal executive offices are located at 2454 McMullen Booth Road, Building C, Clearwater, Florida 33759, and its telephone number is (727) 726-0763.
Available Information
The Companys filings with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q, definitive proxy statements on Schedule 14A, current reports on Form 8-K, and any amendments to those reports filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, are made available free of charge through the Investor Center section of the Companys Internet website at http://www.nicholasfinancial.com as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the SEC. The Company is not including the information contained on or available through its web site as a part of, or incorporating such information by reference into, this Report. Copies of any materials the Company files with the SEC can also be obtained free of charge through the SECs website at http://www.sec.gov or at the SECs Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information regarding the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.
Growth Strategy
The Companys principal goals are to increase its profitability and its long-term shareholder value through greater penetration in its current markets and controlled geographic expansion into new markets. The Company seeks to expand its automobile financing program in the eighteen states Alabama, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Maryland, Michigan, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and Wisconsin in which it currently operates by increasing the business generated at its existing branch locations and by targeting certain geographic locations within some of these states where it believes there is a sufficient market for its automobile financing program. The Companys strategy is to monitor these markets and ultimately decide if and where it will open additional branch locations. During fiscal 2016, the Company started buying Contracts in Wisconsin and Pennsylvania. The Company is planning to open a branch in Pittsburgh by the end of the second quarter in fiscal 2017. Dealers in Wisconsin are serviced in our Gurnee, Illinois branch. During fiscal 2016, the Company also opened a branch in the Chicago area, and two new branch offices in Texas. The Company consolidated two branch locations (Clearwater, FL and Birmingham, AL) into branches previously established within their market. The Company will continue to evaluate any branch locations that do not meet its minimum profitability targets and may elect to close one or more of these branches in the future. The Company also continues to analyze other markets in states in which it does not currently operate for expansion opportunities. The Company is also evaluating the organization and its structure. The Companys decisions on how it plans to continue operating its business strategy will be influenced by the sustainability of some of its competitors underwriting and risk-based pricing. Although the Company has not made any bulk purchases of Contracts in over two decades, if the opportunity arises, the Company may consider
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possible acquisitions of portfolios of seasoned Contracts from dealers in bulk transactions as a means of further penetrating its existing markets or expanding its presence in targeted geographic locations. The Company cannot provide any assurances, however, that it will be able to further expand in either its current markets or any targeted new markets.
The Company is currently licensed to provide Direct Loans in Florida and North Carolina. The Company does not have any current plans to expand its strategy of soliciting current customers and expects total Direct Loans to remain less than 5% of its total portfolio for the foreseeable future.
Automobile Finance Business Contracts
The Company is engaged in the business of providing financing programs, primarily on behalf of purchasers of new and used cars and light trucks who meet the Companys credit standards but who do not meet the credit standards of traditional lenders, such as banks and credit unions because of the customers credit history or job instability or the age of the vehicle being financed. Unlike traditional lenders, which look primarily to the credit history of the borrower in making lending decisions and typically finance new automobiles, the Company is willing to purchase Contracts for purchases made by borrowers who do not have a good credit history and for older model and high-mileage automobiles. In making decisions regarding the purchase of a particular Contract, the Company considers the following factors related to the borrower: current income; credit history; history in making installment payments for automobiles; current and prior job status; and place and length of residence. In addition, the Company examines its prior experience with Contracts purchased from the dealer from which the Company is purchasing the Contract, and the value of the automobile in relation to the purchase price and the term of the Contract.
As of the date of this annual report on Form 10-K, the Companys automobile finance programs are conducted in eighteen states through a total of 67 branch offices, consisting of twenty in Florida, eight in Ohio, six in each of North Carolina and Georgia, three in each of Illinois, Indiana, Kentucky, Missouri and Michigan, two in each of Alabama, South Carolina, Tennessee, Texas and Virginia, and one in each of Kansas and Maryland. The Company has also commenced Contract acquisition in Pennsylvania utilizing the underwriting staff of the Columbus, Ohio branch location. The Company is planning to open a branch in Pittsburgh by the end of the second quarter in fiscal 2017. The Company has also commenced Contract acquisition in Wisconsin using the underwriting staff of the Gurnee, Illinois branch location. At this time, the Company does not have any plans to open a branch in the Wisconsin area. As of March 31, 2016 the Company had non-exclusive agreements with approximately 4,100 dealers, of which approximately 2,300 were active, for the purchase of individual Contracts that meet the Companys financing criteria. The Company considers a dealer agreement to be active if the Company has purchased a Contract thereunder in the last six months. Each dealer agreement requires the dealer to originate Contracts in accordance with the Companys guidelines. Once a Contract is purchased by the Company, the dealer is no longer involved in the relationship between the Company and the borrower, other than through the existence of limited representations and warranties of the dealer in favor of the Company.
A customer under a Contract typically makes a down payment, in the form of cash or trade-in, ranging from 5% to 35% of the sale price of the vehicle financed. The balance of the purchase price of the vehicle plus taxes, title fees and, if applicable, premiums for extended service contracts, gap insurance, roadside assistance plans, credit disability insurance and/or credit life insurance are generally financed over a period of 12 to 72 months.
At approximately the time of origination, the Company purchases a Contract from an automobile dealer at a negotiated price that is less than the original principal amount being financed (the dealer discount) by the purchaser of the automobile. The amount of the dealer discount depends upon factors such as the age and value of the automobile, creditworthiness of the customer and competition in any given market. The Company will pay more (i.e., purchase the Contract at a smaller discount from the original principal amount) for Contracts as the credit risk of the customer improves. In certain markets, competition more significantly impacts the discount that the Company can charge. To date, the Contracts purchased by the Company have been purchased at discounts that range from 1% to 15% of the original principal amount of each Contract. As of March 31, 2016, the Companys loan portfolio consisted exclusively of Contracts purchased without recourse to the dealer. Although all of the Contracts in the Companys loan portfolio were acquired without recourse, each dealer remains potentially liable to the Company for breaches of certain representations and warranties made by the dealer with respect to compliance with applicable federal and state laws and valid title to the vehicle.
The Companys policy is to only purchase a Contract after the dealer has provided the Company with the requisite proof that the Company has a first priority lien on the financed vehicle (or the Company has, in fact, perfected such first priority lien), that the customer has obtained the required collision insurance naming the Company as loss payee and that the Contract has been fully and accurately completed and validly executed. Once the Company has received and approved all required documents, it pays the dealer for the Contract and commences servicing the Contract. The Company requires the owner of the vehicle to obtain and maintain collision insurance, naming the Company as the loss payee, with a deductible of not more than $1,000.
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Contract Procurement
The Company currently purchases Contracts in the states listed in the table below. The Contracts purchased by the Company are predominately for used vehicles; for the periods shown below, less than 1% were for new vehicles. The average model year
collateralizing the portfolio as of March 31, 2016 was a 2007 vehicle. The dollar amounts shown in the table below represent the Companys finance receivables, net of unearned interest on Contracts purchased:
Maximum
allowable interest rate (1) |
Fiscal year ended March 31,
(In thousands) |
|||||||||||||
State |
2016 | 2015 | 2014 | |||||||||||
Alabama |
(2) | $ | 5,764 | $ | 6,289 | $ | 6,041 | |||||||
Florida |
18-30%(3) | 55,270 | 54,653 | 51,841 | ||||||||||
Georgia |
18-30%(3) | 18,227 | 18,710 | 17,423 | ||||||||||
Illinois |
(2) | 7,563 | 6,457 | 3,905 | ||||||||||
Indiana |
25% | 8,595 | 7,654 | 6,983 | ||||||||||
Kansas |
(2) | 3,052 | 2,165 | 1,539 | ||||||||||
Kentucky |
18-25%(3) | 8,837 | 9,768 | 8,758 | ||||||||||
Maryland |
24% | 2,626 | 4,081 | 3,081 | ||||||||||
Michigan |
25% | 7,671 | 7,355 | 6,345 | ||||||||||
Missouri |
(2) | 8,227 | 7,554 | 5,651 | ||||||||||
North Carolina |
18-29%(3) | 14,291 | 15,078 | 15,753 | ||||||||||
Ohio |
25% | 24,520 | 24,245 | 24,682 | ||||||||||
Pennsylvania |
18-21%(3) | 392 | | | ||||||||||
South Carolina |
(2) | 6,145 | 3,966 | 4,965 | ||||||||||
Tennessee |
(2) | 6,134 | 5,206 | 6,270 | ||||||||||
Texas |
18-28%(3) | 4,965 | 821 | | ||||||||||
Virginia |
(2) | 4,614 | 4,367 | 6,008 | ||||||||||
Wisconsin |
(2) | 382 | | | ||||||||||
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|
|
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Total |
$ | 187,275 | $ | 178,369 | $ | 169,245 | ||||||||
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(1) | The maximum allowable interest rates by state are subject to change and are governed by the individual states the Company conducts business in. |
(2) | None of these states currently imposes a maximum allowable interest rate with respect to the types and sizes of Contracts the Company purchases. The maximum rate which the Company will typically charge any customer in each of these states is 30% per annum. |
(3) | The maximum allowable interest rate in each of these states varies depending upon the model year of the vehicle being financed. In addition, Georgia does not currently impose a maximum allowable interest rate with respect to Contracts over $5,000. |
The following table presents selected information on Contracts purchased by the Company, net of unearned interest:
Fiscal year ended March 31,
(Purchases in thousands) |
||||||||||||
Contracts |
2016 | 2015 | 2014 | |||||||||
Purchases |
$ | 187,275 | $ | 178,369 | $ | 169,245 | ||||||
Weighted APR |
22.66 | % | 22.90 | % | 23.00 | % | ||||||
Average dealer discount |
7.51 | % | 8.08 | % | 8.44 | % | ||||||
Weighted average term (months) |
56 | 55 | 52 | |||||||||
Average loan |
$ | 11,348 | $ | 10,967 | $ | 10,612 | ||||||
Number of Contracts purchased |
16,503 | 16,264 | 15,949 |
Direct Loans
The Company currently originates Direct Loans in Florida and North Carolina. Direct Loans are loans originated directly between the Company and the consumer. These loans are typically for amounts ranging from $1,000 to $9,000 and are generally secured by a lien on an automobile, watercraft or other permissible tangible personal property. The average loan made to date by the Company had an initial principal balance of approximately $4,000. The Company does not expect the average loan size to increase significantly within the foreseeable future. The majority of Direct Loans are originated with current or former customers under the Companys automobile
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financing program. The typical Direct Loan represents a significantly better credit risk than our typical Contract due to the customers historical payment history with the Company. The Company does not have a Direct Loan license in Alabama, Illinois, Indiana, Kansas, Kentucky, Maryland, Michigan, Missouri, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia or Wisconsin, and none is presently required in Georgia (as long as the Direct Loan is greater than $3,000). The Company is currently not pursuing Direct Loans in Georgia. The Company does not expect to pursue a Direct Loan license in any other state during the fiscal year ending March 31, 2017. The size of the loan and maximum interest rate that can be charged vary from state to state. In deciding whether or not to make a loan, the Company considers the individuals income, credit history, job stability, and the value of the collateral offered by the borrower to secure the loan. Additionally, because most of the Direct Loans made by the Company to date have been made to borrowers under Contracts previously purchased by the Company, the payment history of the borrower under the Contract is a significant factor in making the loan decision. The Companys Direct Loan program was implemented in April 1995 and accounted for approximately 3% of the Companys annual consolidated revenues during the year ended March 31, 2016.
In connection with its Direct Loan program, the Company also makes available credit disability, credit life insurance, and involuntary unemployment insurance coverage to customers through an unaffiliated third-party insurance carrier. Customers in approximately 76% of the approximate 3,000 Direct Loan transactions outstanding as of March 31, 2016 had elected to purchase third-party insurance coverage made available by the Company. The cost of this insurance is included in the amount financed by the customer.
The following table presents selected information on Direct Loans originated by the Company, net of unearned interest:
Fiscal year ended March 31,
(Originations in thousands) |
||||||||||||
Direct Loans |
2016 | 2015 | 2014 | |||||||||
Originations |
$ | 9,578 | $ | 9,525 | $ | 9,787 | ||||||
Weighted APR |
25.82 | % | 26.47 | % | 26.72 | % | ||||||
Weighted average term (months) |
30 | 29 | 29 | |||||||||
Average loan |
$ | 3,589 | $ | 3,536 | $ | 3,427 | ||||||
Number of contracts originated |
2,669 | 2,694 | 2,856 |
Underwriting Guidelines
The Companys typical customer has a credit history that fails to meet the lending standards of most banks and credit unions. Among the credit problems experienced by the Companys customers that resulted in a poor credit history are: unpaid revolving credit card obligations; unpaid medical bills; unpaid student loans; prior bankruptcy; and evictions for nonpayment of rent. The Company believes that its customer profile is similar to that of its direct competitors.
Prior to its approval of the purchase of a Contract, the Company is provided with a standardized credit application completed by the consumer which contains information relating to the consumers background, employment, and credit history. The Company also obtains credit reports from Equifax, Experian and/or TransUnion, which are independent credit reporting services. The Company verifies the consumers employment history, income and residence. In most cases, consumers are interviewed via telephone by a Company application processor. The Company also considers the customers prior payment history with the Company, if any, as well as the collateral value of the vehicle being financed.
The Company has established internal buying guidelines to be used by its Branch Managers and internal underwriters when purchasing Contracts. Any Contract that does not meet these guidelines must be approved by the senior management of the Company. The Company currently has District Managers charged with managing the specific branches in a defined geographic area. In addition to a variety of administrative duties, the District Managers are responsible for monitoring their assigned branches compliance with the Companys underwriting standards.
The Company uses essentially the same criteria in analyzing a Direct Loan as it does in analyzing the purchase of a Contract. Lending decisions regarding Direct Loans are made based upon a review of the customers loan application, income, credit history, job stability, and the value of the collateral offered by the borrower to secure the loan. To date, since the majority of the Companys Direct Loans have been made to individuals whose automobiles have been financed by the Company, the customers payment history under his or her existing or past Contract is a significant factor in the lending decision.
After reviewing the information included in the Contract or Direct Loan application and taking the other factors into account, the Companys loan origination system categorizes the customer using internally developed credit classifications of 1, indicating higher creditworthiness, through 6, indicating lower creditworthiness. Contracts are financed for individuals who fall within all six acceptable rating categories utilized, 1 through 6. Usually a customer who falls within the two highest categories (i.e., 1 or 2) is purchasing a two to four-year old, low mileage used automobile from the inventory of a new car or franchise dealer, while a customer in any of the three lowest categories (i.e., 4, 5, or 6) usually is purchasing an older, high mileage automobile from an independent used automobile dealer.
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The Company utilizes internal audit ( the IA) to perform on-site audits of its branches compliance with Company underwriting guidelines. IA audits Company branches on a schedule that is variable depending on the size of the branch, length of time a branch has been open, current tenure of the Branch Manager, previous branch audit score and current and historical branch profitability. IA reports directly to the SVP of Operations of the Company.
Monitoring and Enforcement of Contracts
The Company requires each customer under a Contract to obtain and maintain collision insurance covering damage to the vehicle. Failure to maintain such insurance constitutes a default under the Contract, and the Company may, at its discretion, repossess the vehicle. To reduce potential loss due to insurance lapse, the Company has the contractual right to force place collateral protection insurance through a third-party, which covers loss due to physical damage to a vehicle not covered by any insurance policy of the customer.
The Companys Management Information Services personnel maintain a number of reports to monitor compliance by customers with their obligations under Contracts and Direct Loans made by the Company. These reports may be accessed on a real-time basis throughout the Company by management personnel, including Branch Managers and staff, at computer terminals located in the main office and each branch office. These reports include delinquency aging reports, customer promises reports, vehicle information reports, purchase reports, dealer analysis reports, static pool reports, and repossession reports.
A delinquency report is an aging report that provides basic information regarding each account and indicates accounts that are past due. The report includes information such as the account number, address of the customer, phone numbers of the customer, original term of the Contract, number of remaining payments, outstanding balance, due dates, date of last payment, number of days past due, scheduled payment amount, amount of last payment, total past due, and special payment arrangements or agreements.
Any account that is less than 120 days old is included on the delinquency report on the first day that the Contract is contractually past due. Once an account becomes 30 days past due, repossession proceedings are implemented unless the customer provides the Company with an acceptable explanation for the delinquency and displays a willingness and the ability to make the payment, and commits to a plan to return the account to current status. When an account is 61 days past due, the Company ceases recognition of income on the Contract and repossession proceedings are initiated. At 120 days delinquent, if the vehicle has not yet been repossessed, the account is written off. Once a vehicle has been repossessed, the related loan balance no longer appears on the delinquency report. Instead, the vehicle appears on the Companys repossession report and is sold, either at auction or to an automobile dealer.
When an account becomes delinquent, the Company immediately contacts the customer to determine the reason for the delinquency and to determine if appropriate arrangements for payment can be made. If payment arrangements acceptable to the Company can be made, the information is entered in its database and is used to generate a Promises Report, which is utilized by the Companys collection staff for account follow up.
The Company prepares a repossession report that provides information regarding repossessed vehicles and aids the Company in disposing of repossessed vehicles. In addition to information regarding the customer, this report provides information regarding the date of repossession, date the vehicle was sold, number of days it was held in inventory prior to sale, year, make and model of the vehicle, mileage, payoff amount on the Contract, NADA book value, Black Book value, suggested sale price, location of the vehicle, original dealer and condition of the vehicle, as well as notes other information that may be helpful to the Company.
The Company also prepares a dealer analysis report that provides information regarding each dealer from which it purchases Contracts. This report allows the Company to analyze the volume of business done with each dealer and the terms on which it has purchased Contracts from such dealer.
The Companys policy is to pursue legal remedies to collect deficiencies from customers. Oral requests for payment are made beginning when an account becomes 11 days delinquent. When an account becomes 30 days delinquent and the customer has not made payment arrangements acceptable to the Company or has failed to respond to the requests for payment, a repossession request is generally contemplated by the responsible branch office employee for approval by the Branch Manager for the vicinity in which the borrower lives; however, each account is unique and looked at individually. Once the repossession request has been approved, first by the Branch Manager and second by the applicable District Manager, it must then be approved by the Director of Loss Recovery. The repossessor delivers the vehicle to a secure location specified by the Company. The Company maintains relationships with several licensed repossession firms that repossess vehicles for fees that range from $250 to $500 for each vehicle repossessed. As required by Alabama, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Maryland, Michigan, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and Wisconsin law, the customer is notified by certified letter that the vehicle has been repossessed and what the customer needs to do in order to regain their vehicle.
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Generally, the minimum requirement for return of the vehicle is payment of all past due amounts under the Contract and all expenses associated with the repossession incurred by the Company. If satisfactory arrangements for return of the vehicle are not made within the statutory period, the Company then sends title to the vehicle to the applicable state title transfer department, which then registers the vehicle in the name of the Company. The Company then either sells the vehicle to a dealer or has it transported to an automobile auction for sale. On average, approximately 30 days lapse between the time the Company takes possession of a vehicle and the time it is sold to a dealer or at auction. When the Company determines that there is a reasonable likelihood of recovering part or all of any deficiency against the customer under the Contract, it pursues legal remedies available to it, including lawsuits, judgment liens and wage garnishments. Historically, the Company has recovered approximately 10-18% of deficiencies from such customers. Proceeds from the disposition of the vehicles are not included in calculating the foregoing percentage range.
Marketing and Advertising
The Companys Contract marketing efforts currently are directed exclusively toward automobile dealers. The Company attempts to meet dealers needs by offering highly-responsive, cost-competitive and service-oriented financing programs. The Company relies on its District and Branch Managers to solicit agreements for the purchase of Contracts with automobile dealers located within a 30-mile radius of each branch office. The Branch Manager provides dealers with information regarding the Company and the general terms upon which the Company is willing to purchase Contracts. The Company presently has no plans to implement any other forms of advertising, such as radio or newspaper advertisements, for the purchase of Contracts.
The Company solicits customers under its Direct Loan program primarily through direct mailings, followed by telephone calls to individuals who have a good credit history with the Company in connection with Contracts purchased by the Company.
Computerized Information System
The Company uses a third party loan origination system and an internally developed loan servicing system to assist in responding to customer inquiries and to monitor the performance of its Contract and Direct Loan portfolio and the performance of individual customers under Contracts. All Company personnel are provided with real-time access to information. The Company has created specialized programs to automate the tracking of Contracts and Direct Loans from inception. The Companys computer network encompasses both its corporate headquarters and its branch office locations. See Monitoring and Enforcement of Contracts above for a summary of the different reports prepared by the Company.
Competition
The consumer finance industry is highly fragmented and highly competitive. Due to various factors, including the existing low interest rate environment, the competitiveness of the industry continues to increase as new competitors continue to enter the market and certain existing competitors continue to expand their operations. There are numerous financial service companies that provide consumer credit in the markets served by the Company, including banks, credit unions, other consumer finance companies, and captive finance companies owned by automobile manufacturers and retailers. Many of these companies have significantly greater resources than the Company. Increased competition for the purchase of Contracts has caused a reduction in the interest rates payable by many individual purchasers of automobiles, and the Company believes that continued increased competition could materially reduce such interest rates in the foreseeable future. In addition, increased competition for the purchase of Contracts has enabled automobile dealers to shop for the best price, thereby giving rise to an erosion in the dealer discounts from the initial principal amounts at which the Company is willing to purchase Contracts and higher advance rates. The Companys average dealer discount for the fiscal years ended March 31, 2016, 2015, and 2014 was 7.51%, 8.08% and 8.44%, respectively. Further, increased competition has resulted in the purchase of lower credit quality Contracts, though these Contracts are still acceptable under the Companys underwriting guidelines.
The Companys target market consists of persons who are generally unable to obtain traditional used car financing because of their credit history or the vehicles mileage or age. The Company has been able to expand its automobile finance business in the non-prime credit market by offering to purchase Contracts on terms that are competitive with those of other companies which purchase automobile receivables in that market segment. Because of the daily contact that many of its employees have with automobile dealers located throughout the market areas served by it, the Company is generally aware of the terms upon which its competitors are offering to purchase Contracts. The Companys policy is to modify its terms, if necessary, to remain competitive. However, the Company generally will not sacrifice its purchasing criteria or prudent business practices in order to meet the competition.
The Companys ability to compete effectively with other companies offering similar financing arrangements depends in part upon the Company maintaining close business relationships with dealers of new and used vehicles. No single dealer out of the approximately 2,300 dealers with which the Company currently has active Contractual relationships accounted for over 1% of its business volume for any of the fiscal years ended March 31, 2016, 2015 or 2014.
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Regulation
The Companys financing operations are subject to regulation, supervision and licensing under various federal, state and local statutes, regulations and ordinances. Additionally, the procedures that the Company must follow in connection with the repossession of vehicles securing Contracts are regulated by each of the states in which the Company does business. To date, the Companys operations have been conducted exclusively in the states of Alabama, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Maryland, Michigan, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and Wisconsin. Accordingly, the laws of such states, as well as applicable federal law, govern the Companys operations. The following constitute certain of the existing federal, state and local statutes, regulations and ordinances with which the Company must comply:
| State consumer regulatory agency requirements. Pursuant to state regulations, on-site audits can be conducted for each of the Companys branches located within Florida, Alabama, Illinois, Indiana, Michigan and Missouri to monitor compliance with applicable regulations. These regulations include, but are not limited to: licensure requirements; requirements for maintenance of proper records; payment of required fees; maximum interest rates that may be charged on loans to finance used vehicles; and proper disclosure to customers regarding financing terms. Pursuant to North Carolina law, the Companys Direct Loan activities in that state are subject to similar periodic on-site audits by the North Carolina Office of the Commissioner of Banks. |
| State licensing requirements. The Company maintains a Sales Finance Company License with the Florida Department of Banking and Finance, as well as consumer loan licenses in Florida and North Carolina. In addition, each of the dealers that the Company does business with is required to maintain a Retail Installment Sellers License with each state in which it operates. |
| Fair Debt Collection Practices Act. The Fair Debt Collection Practices Act (FDCPA) and applicable state law counterparts prohibit the Company from contacting customers during certain times and at certain places, from using certain threatening practices and from making false implications when attempting to collect a debt. |
| Truth in Lending Act. The Truth in Lending Act (TILA) requires the Company and the dealers it does business with to make certain disclosures to customers, including the terms of repayment, the total finance charge and the annual percentage rate charged on each Contract or Direct Loan. |
| Equal Credit Opportunity Act. The Equal Credit Opportunity Act (ECOA) prohibits creditors from discriminating against loan applicants on the basis of race, color, sex, age or marital status. Pursuant to Regulation B promulgated under the ECOA, creditors are required to make certain disclosures regarding consumer rights and advise consumers whose credit applications are not approved of the reasons for the rejection. |
| Fair Credit Reporting Act. The Fair Credit Reporting Act (FCRA) requires the Company to provide certain information to consumers whose credit applications are not approved on the basis of a report obtained from a consumer-reporting agency. |
| Gramm-Leach-Bliley Act. The Gramm-Leach-Bliley Act (GLBA) requires the Company to maintain privacy with respect to certain consumer data in its possession and to periodically communicate with consumers on privacy matters. |
| Servicemembers Civil Relief Act. The Servicemembers Civil Relief Act (SCRA) requires the Company to reduce the interest rate charged on each loan to customers who have subsequently joined, enlisted, been inducted or called to active military duty. |
| Electronic Funds Transfer Act. The Electronic Funds Transfer Act (EFTA) prohibits the Company from requiring its customers to repay a loan or other credit by electronic funds transfer (EFT), except in limited situations which do not apply to the Company. The Company is also required to provide certain documentation to its customers when an EFT is initiated and to provide certain notifications to its customers with regard to preauthorized payments. |
| Telephone Consumer Protection Act. The Telephone Consumer Protection Act (TCPA) governs the Companys practice of contacting customers by certain means i.e. auto dealers, pre-recorded or artificial voice calls on customers land lines, fax machines and cell phones, including text messages. |
| Bankruptcy. Federal bankruptcy and related state laws may interfere with or affect the Companys ability to recover collateral or enforce a deficiency judgment. |
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Dodd-Frank Wall Street Reform and Consumer Protection Act 0f 2010 (Dodd-Frank Act). Title X of the Dodd-Frank Act created the Consumer Financial Protection Bureau (CFPB), which, effective as of July 21, 2011, has the authority to issue and enforce regulations under the federal enumerated consumer laws, including (subject to certain statutory limitations) FDCPA, TILA, ECOA, FCRA, GLBA and EFTA. The CFPB has rulemaking and enforcement authority over certain non-depository institutions, including us. The CFPB is specifically authorized, among other things, to take actions to prevent companies providing consumer financial products or services and their service providers from engaging in unfair, deceptive or abusive acts or practices in connection with consumer financial products and services, and to issue rules requiring enhanced disclosures for consumer financial products or services. Under the Dodd-Frank Act, the CFPB |
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also may restrict the use of pre-dispute mandatory arbitration clauses in contracts between covered persons and consumers for a consumer financial product or service. The CFPB also has authority to interpret, enforce, and issue regulations implementing enumerated consumer laws, including certain laws that apply to our business. The CFPB recently issued rules regarding the supervision and examination of non-depository larger participants in the automobile finance business. Since we are deemed a larger participant, we are subject to supervision and examination by the CFPB. |
Failure to comply with these laws or regulations could have a material adverse effect on us by, among other things, limiting the jurisdictions in which we may operate, restricting our ability to realize the value of the collateral securing the Contracts, making it more costly or burdensome to do business or resulting in potential liability. The volume of new or modified laws and regulations and the activity of agencies enforcing such law have increased in recent years in response to issues arising with respect to consumer lending. From time to time, legislation and regulations are enacted which increase the cost of doing business, limit or expand permissible activities or affect the competitive balance among financial services providers. Proposals to change the laws and regulations governing the operations and taxation of financial institutions and financial services providers are frequently made in the U.S. Congress, in the state legislatures and by various regulatory agencies. This legislation may change our operating environment in substantial and unpredictable ways and may have a material adverse effect on our business.
In particular, the Dodd-Frank Act and regulations promulgated thereunder, including the rules regarding supervision and examination recently issued by the CFPB, are likely to affect our cost of doing business, may limit or expand our permissible activities, may affect the competitive balance within our industry and market areas and could have a material adverse effect on us. Our management continues to assess the Dodd-Frank Acts probable impact on our business, financial condition and results of operations, and to monitor developments involving the entities charged with promulgating regulations thereunder. However, the ultimate effect of the Dodd-Frank Act on the financial services industry in general, and on us in particular, is uncertain at this time.
In addition to the CFPB, other state and federal agencies have the ability to regulate aspects of our business. For example, the Dodd-Frank Act provides a mechanism for state Attorneys General to investigate us. In addition, the Federal Trade Commission has jurisdiction to investigate aspects of our business. We expect that regulatory investigation by both state and federal agencies will continue and that the results of these investigations could have a material adverse impact on us.
Dealers with which we do business must also comply with credit and trade practice statutes and regulations. Failure of these dealers to comply with such statutes and regulations could result in customers having rights of rescission and other remedies that could have a material adverse effect on us.
The sale of vehicle service contracts and other ancillary products by dealers in connection with Contracts assigned to us from dealers is also subject to state laws and regulations. As we are the holder of the Contracts that may, in part, finance these products, some of these state laws and regulations may apply to our servicing and collection of the Contracts. Although these laws and regulations may not significantly affect our business, there can be no assurance that insurance or other regulatory authorities in the jurisdictions in which these products are offered by dealers will not seek to regulate or restrict the operation of our business in these jurisdictions. Any regulation or restriction of our business in these jurisdictions could materially adversely affect the income received from these products.
The Companys management believes that the Company maintains all requisite licenses and permits and is in material compliance with applicable local, state and federal laws and regulations. The Company periodically reviews its branch office practices in an effort to ensure such compliance. In addition, the Company continues to increase the size of its compliance department in response to the increasing complexity of the regulatory environment. Although compliance with existing laws and regulations has not had a material adverse effect on the Companys operations to date, given the increasingly complex regulatory environment, the increasing costs of complying with such laws and regulations, and the increasing risk of penalties, fines or other liabilities associated therewith, no assurances can be given that we are in material compliance with all of such laws or regulations or that the costs of such compliance, or the failure to be in such compliance, will not have a material adverse effect on our business, financial condition or results of operations.
Employees
The Companys management and various support functions are centralized at the Companys Corporate Headquarters in Clearwater, Florida. As of March 31, 2016 the Company employed a total of 333 persons, of which 41 persons were employed at the Companys Corporate Headquarters. None of the Companys employees are subject to a collective bargaining agreement, and the Company considers its relations with its employees generally to be good.
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The following factors, as well as other factors not set forth below, may adversely affect the business, operations, financial condition or results of operations of the Company (sometimes referred to in this section as we us or our).
We operate in an increasingly competitive market.
The non-prime consumer-finance industry is highly competitive, and the competitiveness of the market continues to increase as new competitors continue to enter the market and certain existing competitors continue to expand their operations and become more aggressive in offering competitive terms. There are numerous financial service companies that provide consumer credit in the markets served by us, including banks, credit unions, other consumer finance companies and captive finance companies owned by automobile manufacturers and retailers. Many of these competitors have substantially greater financial resources than us. In addition, our competitors often provide financing on terms more favorable to automobile purchasers or dealers than we offer. Many of these competitors also have long-standing relationships with automobile dealerships and may offer dealerships or their customers other forms of financing, including dealer floor-plan financing and leasing, which are not provided by us. Providers of non-prime consumer financing have traditionally competed primarily on the basis of:
| interest rates charged; |
| the quality of credit accepted; |
| dealer discount; |
| amount paid to dealers relative to the wholesale book value; |
| the flexibility of loan terms offered; and |
| the quality of service provided. |
Our ability to compete effectively with other companies offering similar financing arrangements depends in part on our ability to maintain close relationships with dealers of new and used vehicles. We may not be able to compete successfully in this market or against these competitors.
We have focused on a segment of the market composed of consumers who typically do not meet the more stringent credit requirements of traditional consumer financing sources and whose needs, as a result, have not been addressed consistently by such financing sources. As new and existing providers of consumer financing have undertaken to penetrate our targeted market segment, we have experienced increasing pressure to reduce our interest rates, fees and dealer discounts in order to maintain our market share. The Companys average dealer discount for the fiscal years ended March 31, 2016, 2015, and 2014 was 7.51%, 8.08%, and 8.44%, respectively. Further reductions in our interest rates, fees or dealer discount rates could have a material adverse impact on our profitability or financial condition.
The Dodd-Frank Act authorizes the CFPB to adopt rules that could potentially have a material adverse effect on our operations and financial performance.
Title X of the Dodd-Frank Act established the CFPB, which became operational on July 21, 2011. Under the Dodd-Frank Act, the CFPB has regulatory, supervisory and enforcement powers over providers of consumer financial products, such as Contracts and the Direct Loans that we offer, including explicit supervisory authority to examine and require registration of installment lenders such as ourselves. Included among the powers afforded to the CFPB is the authority to adopt rules describing specified acts and practices as being unfair, deceptive or abusive, and hence unlawful. Although the Dodd-Frank Act expressly provides that the CFPB has no authority to establish usury limits, some consumer advocacy groups have suggested that certain forms of alternative consumer finance products, such as installment loans, should be a regulatory priority and it is possible that at some time in the future the CFPB could propose and adopt rules making such lending or other products that we may offer materially less profitable or impractical. Further, the CFPB may target specific features of loans by rulemaking that could cause us to cease offering certain products. Any such rules could have a material adverse effect on our business, results of operation and financial condition. The CFPB could also adopt rules imposing new and potentially burdensome requirements and limitations with respect to any of our current or future lines of business, which could have a material adverse effect on our operations and financial performance.
In addition to the Dodd-Frank Acts grant of regulatory powers to the CFPB, the Dodd-Frank Act gives the CFPB authority to pursue administrative proceedings or litigation for violations of federal consumer financial laws. In these proceedings, the CFPB can obtain cease and desist orders (which can include orders for restitution or rescission of contracts, as well as other kinds of affirmative relief) and monetary penalties ranging from $5,000 per day for minor violations of federal consumer financial laws (including the CFPBs own rules) to $25,000 per day for reckless violations and $1 million per day for knowing violations. If we are subject to such administrative proceedings, litigation, orders or monetary penalties in the future, this could have a material adverse effect on our
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operations and financial performance. Also, where a company has violated Title X of the Dodd-Frank Act or CFPB regulations under Title X, the Dodd-Frank Act empowers state attorneys general and state regulators to bring civil actions for the kind of cease and desist orders available to the CFPB (but not for civil penalties). If the CFPB or one or more state officials believe we have violated the foregoing laws, they could exercise their enforcement powers in ways that would have a material adverse effect on us. See Item 1. Business Regulation for additional information.
Pursuant to the authority granted to it under the Dodd-Frank Act, the CFPB adopted rules that subject larger nonbank automobile finance companies such as us to supervision and examination by the CFPB. Any such examination by the CFPB likely would have a material adverse effect on our operations and financial performance.
The CFPB issued rules regarding the supervision and examination of non-depository larger participants in the automobile finance business, including us. Since we are deemed a larger participant, we are subject to supervision and examination by the CFPB. The CFPBs stated objectives of such examinations are: to assess the quality of a larger participants compliance management systems for preventing violations of federal consumer financial laws; to identify acts or practices that materially increase the risk of violations of federal consumer finance laws and associated harm to consumers; and to gather facts that help determine whether the larger participant engages in acts or practices that are likely to violate federal consumer financial laws in connection with its automobile finance business. Thus, as a larger participant, we will be subject to examination by the CFPB for, among other things, ECOA compliance; unfair, deceptive or abusive acts or practices (UDAAP) compliance; and the adequacy of our compliance management systems.
In February 2016, the CFPB published a list of nine policy priorities on which it intends to focus its resources over the next two years. These priorities include, among other things, initiation of the rulemaking process regarding debt collection practices that would apply to third-party collectors and first-party collectors and continued examination and investigation of, and potential rulemaking regarding, consumer credit reporting practices. The timing and impact of these anticipated rules on our business remain uncertain.
We have evaluated our existing compliance management systems and are in the process of updating, improving and/or replacing such systems. We expect this process to continue as the CFPB promulgates new and evolving rules and interpretations. Given the time and effort needed to establish, implement and maintain adequate compliance management systems and the resources and costs associated with being examined by the CFPB, such an examination would likely have a material adverse effect on our business, financial condition and profitability. Moreover, any such examination by the CFPB could result in the assessment of penalties, including fines, and other remedies which could, in turn, have a material effect on our business, financial condition and profitability.
We are subject to many other laws and governmental regulations, and any material violations of or changes in these laws or regulations could have a material adverse effect on our financial condition and business operations.
Our financing operations are subject to regulation, supervision and licensing under various other federal, state and local statutes and ordinances. Additionally, the procedures that we must follow in connection with the repossession of vehicles securing Contracts are regulated by each of the states in which we do business. The various federal, state and local statutes, regulations, and ordinances applicable to our business govern, among other things:
| licensing requirements; |
| requirements for maintenance of proper records; |
| payment of required fees to certain states; |
| maximum interest rates that may be charged on loans to finance new and used vehicles; |
| debt collection practices; |
| proper disclosure to customers regarding financing terms; |
| privacy regarding certain customer data; |
| interest rates on loans to customers; |
| late fees and insufficient fees charged; |
| telephone solicitation of Direct Loan customers; and |
| collection of debts from loan customers who have filed bankruptcy. |
We believe that we maintain all material licenses and permits required for our current operations and are in substantial compliance with all applicable local, state and federal regulations. Our failure, or the failure by dealers who originate the Contracts we purchase, to maintain all requisite licenses and permits, and to comply with other regulatory requirements, could result in consumers having rights of rescission and other remedies that could have a material adverse effect on our financial condition. Furthermore, any changes in applicable laws, rules and regulations, such as the passage of the Dodd-Frank Act and the creation of the CFPB, may make our compliance therewith more difficult or expensive or otherwise materially adversely affect our business and financial condition.
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We are subject to risks associated with litigation.
As a consumer finance company, we are subject to various consumer claims and litigation seeking damages and statutory penalties, based upon, among other things:
| usury laws; |
| disclosure inaccuracies; |
| wrongful repossession; |
| violations of bankruptcy stay provisions; |
| certificate of title disputes; |
| fraud; |
| breach of contract; and |
| discriminatory treatment of credit applicants. |
Some litigation against us could take the form of class action complaints by consumers. As the assignee of Contracts originated by dealers, we may also be named as a co-defendant in lawsuits filed by consumers principally against dealers. The damages and penalties claimed by consumers in these types of actions can be substantial. The relief requested by the plaintiffs varies but may include requests for compensatory, statutory and punitive damages. We also are periodically subject to other kinds of litigation typically experienced by businesses such as ours, including employment disputes and breach of contract claims. No assurances can be given that we will not experience material financial losses in the future as a result of litigation or other legal proceedings.
Our profitability and future growth depend on our continued access to bank financing.
The profitability and growth of our business currently depend on our ability to access bank debt at competitive rates. We currently depend on a $225.0 million line of credit facility with a financial institution to finance a large portion of our purchases of Contracts and fund our Direct Loans. This line of credit currently has a maturity date of January 30, 2018 and is secured by substantially all our assets. At March 31, 2016, we had $211.0 million outstanding under the line of credit and $14.0 million available for additional borrowing. As of June 13, 2016 we had $209.0 million outstanding under the line of credit and $16.0 million available for additional borrowing.
The availability of our credit facility depends, in part, on factors outside of our control, including regulatory capital treatment for unfunded bank lines of credit and the availability of bank loans in general. Our average indebtedness under the line of credit increased to $208.2 million in fiscal 2016 from $133.4 million in fiscal 2015 and $127.1 million in fiscal 2014. Therefore, we cannot guarantee that this credit facility will continue to be available beyond the current maturity date on reasonable terms or at all. If we are unable to renew or replace our credit facility or find alternative financing at reasonable rates or upon reasonable terms, we may be forced to liquidate. We will continue to depend on the availability of our line of credit, together with cash from operations, to finance our future operations.
The terms of our indebtedness impose significant restrictions on us.
Our existing outstanding indebtedness restricts our ability to, among other things:
| sell or transfer assets; |
| incur additional debt; |
| repay other debt; |
| make certain investments or acquisitions; |
| repurchase or redeem capital stock; |
| engage in mergers or consolidations; and |
| engage in certain transactions with subsidiaries and affiliates. |
In addition, our line of credit facility requires us to comply with certain financial ratios and covenants and to satisfy specified financial tests, including maintenance of asset quality and portfolio performance tests. The need to comply with such covenants and other
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provisions could impact our ability to pay dividends to our shareholders. Moreover, our ability to continue to meet those financial ratios and tests could be affected by events beyond our control. Failure to meet any of these covenants, financial ratios or financial tests could result in an event of default under our line of credit facility. If an event of default occurs under this credit facility, our lenders may take one or more of the following actions:
| increase our borrowing costs; |
| restrict our ability to obtain additional borrowings under the facility; |
| accelerate all amounts outstanding under the facility; or |
| enforce their interest against collateral pledged under the facility. |
If our lender accelerates our debt payments, our assets may not be sufficient to fully repay the debt.
We will require a significant amount of cash to service our indebtedness and meet our other liquidity needs.
Our ability to make payments on or to refinance our indebtedness and to fund our operations and planned capital expenditures depends on our future operating performance. Our primary cash requirements include the funding of:
| Contract purchases and Direct Loans; |
| interest payments under our line of credit facility and other indebtedness; |
| capital expenditures for technology and facilities; |
| ongoing operating expenses; |
| planned expansions by opening additional branch offices; and |
| any required income tax payments. |
In addition, because we expect to continue to require substantial amounts of cash for the foreseeable future, we may seek additional debt or equity financing. The type, timing and terms of the financing we select will be dependent upon our cash needs, the availability of other financing sources and the prevailing conditions in the financial markets. There is no assurance that any of these sources will be available to us at any given time or that the terms on which these sources may be available will be favorable. Our inability to obtain such additional financing on reasonable terms could adversely impact our ability to grow.
Our high level of indebtedness could have important consequences for our business.
Our high level of indebtedness could have important consequences for our business. For example,
| we may be unable to satisfy our obligations under our outstanding indebtedness; |
| we may find it more difficult to fund future working capital, capital expenditures, acquisitions, and general corporate needs; |
| we may have to dedicate a substantial portion of our cash resources to the payments on our outstanding indebtedness, thereby reducing the funds available for operations and future business opportunities; and |
| we may be more vulnerable to adverse general economic and industry conditions. |
Our ability to make payments on, or to refinance, our indebtedness will depend on our future operating performance, including our ability to access additional debt and equity financing, which to a certain extent, is subject to economic, financial, competitive and other factors beyond our control. If new debt is added to our current levels, the risks described above could intensify.
We may experience high delinquency and loss rates in our loan portfolios, which could reduce our profitability.
Our profitability depends, to a material extent, on the performance of Contracts that we purchase. Historically, we have experienced higher delinquency rates than traditional financial institutions because substantially all of our loans are to non-prime borrowers, who are unable to obtain financing from traditional sources due to their credit history. Our underwriting standards and collection procedures, may not offer adequate protection against the risk of default, especially in periods of economic uncertainty and high unemployment such as have existed over much of the past few years. In the event of a default, the collateral value of the financed vehicle usually does not cover the outstanding loan balance and costs of recovery. Higher than anticipated delinquencies and defaults on our Contracts would reduce our profitability.
In addition, in the event we were to make any bulk purchases of seasoned Contracts, we may experience higher than normal delinquency rates with respect to these loan portfolios due to our inability to apply our underwriting standards to each loan comprising the acquired portfolios. No assurances can be given that we would be able to successfully mitigate the high credit risk associated with the loans.
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Other than limited representations and warranties made by dealers in favor of the Company, Contracts are purchased from the dealers without recourse, and we are therefore only able to look to the borrowers for repayment.
We depend upon our relationships with our dealers.
Our business depends in large part upon our ability to establish and maintain relationships with reputable dealers who originate the Contracts we purchase. Although we believe we have been successful in developing and maintaining such relationships, such relationships are not exclusive, and many of them are not longstanding. There can be no assurances that we will be successful in maintaining such relationships or increasing the number of dealers with whom we do business, or that our existing dealer base will continue to generate a volume of Contracts comparable to the volume of such Contracts historically generated by such dealers.
Our success depends upon our ability to implement our business strategy.
Our financial position depends on managements ability to execute our business strategy. Key factors involved in the execution of our business strategy include achievement of the desired Contract purchase volume, the use of effective risk management techniques and collection methods, continued investment in technology to support operating efficiency, and continued access to significant funding and liquidity sources. Our failure or inability to execute any element of our business strategy could have a material adverse effect on our business and financial condition.
Our business is highly dependent upon general economic conditions.
We are subject to changes in general economic conditions that are beyond our control. During periods of economic uncertainty, such as has existed for much of the past few years, delinquencies, defaults, repossessions and losses generally increase, absent offsetting factors. These periods also may be accompanied by decreased consumer demand for automobiles and declining values of automobiles securing outstanding loans, which weakens collateral coverage on our loans and increases the amount of a loss we would experience in the event of default. Because we focus on non-prime borrowers, the actual rates of delinquencies, defaults, repossessions and losses on these loans are higher than those experienced in the general automobile finance industry and could be more dramatically affected by a general economic downturn. In addition, during an economic slowdown or recession, our servicing costs may increase without a corresponding increase in our servicing income. No assurances can be given that our underwriting criteria and collection methods to manage the higher risk inherent in loans made to non-prime borrowers will afford adequate protection against these risks. Any sustained period of increased delinquencies, defaults, repossessions or losses or increased servicing costs could have a material adverse effect on our business and financial condition.
Furthermore, in a low interest-rate environment such as has existed in the United States in recent years, the level of competition increases in the non-prime consumer-finance industry as new competitors enter the market and many existing competitors expand their operations. Such increased competition, in turn, exerts increasing pressure on us to reduce our interest rates, fees and dealer discount rates in order to maintain our market share. Reductions in our interest rates, fees or dealer discount rates could have a material adverse impact on our profitability or financial condition. For example, the weighted average APR of our portfolio decreased from 22.93% to 22.73% for the fiscal years ended March 31, 2015 and 2016, respectively. Our average dealer discount decreased from 8.08% to 7.51% for the fiscal years ended March 31, 2015 and 2016, respectively.
Recent economic developments may adversely affect our business and financial condition.
Over the past several years, the United States has experienced a period of economic uncertainty and wage stagnation that has adversely affected our business and financial condition. Stagnant wages and a continued lack of available credit have contributed to higher delinquencies and losses than we would otherwise experience.
Additionally, stagnant wages, fluctuating gasoline prices, unstable real estate values, food inflation, resets of adjustable rate mortgages and other factors have adversely impacted consumer confidence and disposable income. These conditions have increased loss frequency, decreased consumer demand for automobiles and weakened collateral values on certain types of vehicles. Because we focus predominately on non-prime borrowers, the actual rates of delinquencies, defaults, repossessions and losses on Contracts are higher than those experienced in the general automobile finance industry and have been materially affected by recent economic conditions. If economic and credit conditions, including wage conditions, do not continue to improve, our business and financial condition could be further adversely affected.
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The auction proceeds we receive from the sale of repossessed vehicles and other recoveries are subject to fluctuation due to economic and other factors beyond our control.
If we repossess a vehicle securing a Contract, we typically have it transported to an automobile auction for sale. Auction proceeds from the sale of repossessed vehicles and other recoveries are usually not sufficient to cover the outstanding balance of the Contract, and the resulting deficiency is charged off. In addition, there is, on average, approximately a 30-day lapse between the time we repossess a vehicle and the time it is sold. The proceeds we receive from such sales depend upon various factors, including the supply of, and demand for, used vehicles at the time of sale. Such supply and demand are dependent on many factors. For example, during periods of economic uncertainty, the demand for used cars may soften, resulting in decreased auction proceeds to us from the sale of repossessed automobiles. Furthermore, depressed wholesale prices for used automobiles may result from significant liquidations of rental or fleet inventories, and from increased volume of trade-ins due to promotional financing programs offered by new vehicle manufacturers. We have experienced declining auction proceeds in the recent past and we expect this trend to continue for the foreseeable future. Decreased auction proceeds to us resulting from sales of used automobiles at depressed prices will result in losses and, in turn, reduced profitability.
An increase in market interest rates may reduce our profitability.
Our long-term profitability may be directly affected by the level of and fluctuations in interest rates. Sustained, significant increases in interest rates may adversely affect our liquidity and profitability by reducing the interest rate spread between the rate of interest we receive on our Contracts and interest rates that we pay under our outstanding line of credit facility. As interest rates increase, our gross interest rate spread on new originations will generally decline since the rates charged on the Contracts originated or purchased from dealers generally are limited by statutory maximums, restricting our opportunity to pass on increased interest costs. We monitor the interest rate environment and, on occasion, enter into interest rate swap agreements relating to a portion of our outstanding debt. Such agreements effectively convert a portion of our floating-rate debt to a fixed-rate, thus reducing the impact of interest rate changes on our interest expense. On June 4, 2012 and July 30, 2012, the Company entered into interest rate swap agreements to convert a portion of its floating rate debt to a fixed rate, more closely matching the interest rate characteristics of finance receivables. The June 4, 2012 agreement provides for a five-year interest rate swap in which the Company pays a fixed rate of 1% and receives payments from the counterparty on the 1-month LIBOR rate. This swap has an effective date of June 13, 2012 and a notional amount of $25 million. The July 30, 2012 agreement provides for a five-year interest rate swap in which the Company pays a fixed rate of 0.87% and receives payments from the counterparty on the 1-month LIBOR rate. This swap has an effective date of August 13, 2012 and a notional amount of $25 million. The changes in the fair value of the interest rate swap agreements (unrealized gains and losses) are recorded in earnings. We will continue to evaluate interest rate swap pricing and we may or may not enter into additional interest rate swap agreements in the future.
We may experience problems with our integrated computer systems or be unable to keep pace with developments in technology.
We use various technologies in our business, including telecommunication, data processing, and integrated computer systems. Technology changes rapidly. Our ability to compete successfully with other financing companies may depend on our ability to efficiently and cost-effectively implement technological changes. Moreover, to keep pace with our competitors, we may be required to invest in technological changes that do not necessarily improve our profitability. We replaced our loan origination system with a third party vendor during fiscal 2016 and plan to upgrade our loan servicing system during the end of fiscal 2017 or the beginning of fiscal 2018. Difficulties experienced in the implementation of a new servicing system could have a material adverse effect on our ability to service existing Contracts and Direct Loans and, thus, on our business and financial condition.
We utilize our integrated computer systems to respond to customer inquiries and to monitor the performance of our Contract and Direct Loan portfolios and the performance of individual customers under our Contracts and Direct Loans. Problems with our systems operations could adversely impact our ability to monitor our portfolios or collect amounts due under our Contracts and Direct Loans, which could have a material adverse effect on our financial condition and results of operations.
Failure to properly safeguard confidential customer information could subject us to liability, decrease our profitability and damage our reputation.
In the ordinary course of our business, we collect and store sensitive data, including our proprietary business information and personally identifiable information of our customers, on our computer networks. The secure processing, maintenance and transmission of this information is critical to our operations and business strategy.
If third parties are able to breach our network security, the network security of a third party that we share information with or otherwise misappropriate our customers personal information, or if we give third parties improper access to our customers personal information, we could be subject to liability. This liability could include identity theft or other similar fraud-related claims. This liability could also include claims for other misuses or losses or personal information, including for unauthorized marketing purposes. Other liabilities could include claims alleging misrepresentation of our privacy and data security practices.
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We rely on encryption and authentication technology licensed from third parties to provide the security and authentication necessary to secure online transmission of confidential customer information. Advances in computer capabilities, new discoveries in the field of cryptography or other events or developments may result in a compromise or breach of the algorithms that we use to protect sensitive customer data. A party who is able to circumvent our security measures could misappropriate proprietary information or cause interruptions in our operations. We may be required to expend capital and other resources to protect against, or alleviate problems caused by, security breaches or other cybersecurity incidents. Although we have not experienced any material cybersecurity incidents to dates, there can be no assurance that a cyber-attack, security breach or other cybersecurity incident will not have a material adverse effect on our business, financial condition or results of operations in the future. Our security measures are designed to protect against security breaches, but our failure to prevent security breaches could subject us to liability, decrease our profitability and damage our reputation.
Our growth depends upon our ability to retain and attract a sufficient number of qualified employees.
To a large extent, our growth strategy depends on the opening of new offices that focus primarily on purchasing Contracts and making Direct Loans in markets we have not previously served. Future expansion of our branch office network depends, in part, upon our ability to attract and retain qualified and experienced office managers and the ability of such managers to develop relationships with dealers that serve those markets. We generally do not open a new office until we have located and hired a qualified and experienced individual to manage the office. Typically, this individual will be familiar with local market conditions and have existing relationships with dealers in the area to be served. Although we believe that we can attract and retain qualified and experienced personnel as we proceed with planned expansion into new markets, no assurance can be given that we will be successful in doing so. Competition to hire personnel possessing the skills and experience required by us could contribute to an increase in our employee turnover rate. High turnover or an inability to attract and retain qualified personnel could have an adverse effect on our origination, delinquency, default and net loss rates and, ultimately, our business and financial condition.
The loss of one of our key executives could have a material adverse effect on our business.
Our future growth and development to date will be largely dependent upon the services of Ralph T. Finkenbrink, our President and Chief Executive Officer, Kevin D. Bates, our Senior Vice President of Branch Operations, and Katie L. MacGillivary, our Chief Financial Officer and Vice President of Finance. We do not maintain key-man life insurance policies on these executives. Although we believe that we have sufficient experienced management personnel to accommodate the loss of any key executive, the loss of services of one or more of these executives could have a material adverse effect on our business and financial condition.
Our stock is thinly traded, which may limit your ability to resell your shares.
The average daily trading volume of our Common shares on the NASDAQ Global Select Market for the fiscal year ended March 31, 2016 was approximately 26,000 shares. Moreover, on March 19, 2015, our Nicholas Financial subsidiary purchased an aggregate of approximately 4.7 million of our Common shares pursuant to a modified Dutch auction tender offer, thereby reducing the number of shares potentially available in the public market. Thus, our Common shares are thinly traded. Thinly traded stock can be more volatile than stock trading in an active public market. Factors such as our financial results, the introduction of new products and services by us or our competitors, and various factors affecting the consumer-finance industry generally may have a significant impact on the market price of our Common shares. In recent years, the stock market has experienced a high level of price and volume volatility, and market prices for the stocks of many companies, including ours, have experienced wide price fluctuations that have not necessarily been related to their operating performance. Therefore, our shareholders may not be able to sell their shares at the volumes, prices, or times that they desire.
Natural disasters, acts of war, terrorist attacks and threats or the escalation of military activity in response to these attacks or otherwise may negatively affect our business, financial condition and results of operations.
Natural disasters (such as hurricanes), acts of war, terrorist attacks and the escalation of military activity in response to these attacks or otherwise may have negative and significant effects, such as disruptions in our operations, imposition of increased security measures, changes in applicable laws, market disruptions and job losses. These events may have an adverse effect on the economy in general. Moreover, the potential for future terrorist attacks and the national and international responses to these threats could affect the business in ways that cannot be predicted. The effect of any of these events or threats could have a material adverse effect on our business, financial condition and results of operations.
Item 1B. | Unresolved Staff Comments |
None.
15
Item 2. | Properties |
The Company leases its Corporate Headquarters and branch office facilities. The Companys Headquarters, located at 2454 McMullen Booth Road, Building C, in Clearwater, Florida, consist of approximately 15,000 square feet of office space leased at an annual rate of approximately $18.00 per square foot. The current lease relating to this space was entered into effective April 1, 2015 and expires on March 31, 2020.
Each of the Companys 67 branch offices located in Alabama, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Maryland, Michigan, Missouri, North Carolina, Ohio, South Carolina, Tennessee, Texas, and Virginia consists of approximately 1,400 square feet of office space. These offices are located in office parks, shopping centers or strip malls and are occupied pursuant to leases with an initial term of one to five years at annual rates ranging from approximately $12.00 to $35.00 per square foot. The Company believes that these facilities and additional or alternate space available to it are adequate to meet its needs for the foreseeable future.
Item 3. | Legal Proceedings |
The Company currently is not a party to any pending legal proceedings other than ordinary routine litigation incidental to its business, none of which, if decided adversely to the Company, would, in the opinion of management, have a material adverse effect on the Companys financial condition or results of operations.
Item 4. | Mine Safety Disclosures |
Not Applicable.
Item 5. | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
The Companys common shares are traded on the NASDAQ Global Select Market under the symbol NICK.
The following table sets forth the high and low sales prices of the Companys common shares for the fiscal years ended March 31, 2016 and 2015, respectively.
Fiscal year ended March 31, 2016 |
High | Low | ||||||
First Quarter |
$ | 14.49 | $ | 12.25 | ||||
Second Quarter |
$ | 14.08 | $ | 12.25 | ||||
Third Quarter |
$ | 13.80 | $ | 11.45 | ||||
Fourth Quarter |
$ | 11.88 | $ | 9.92 |
Fiscal year ended March 31, 2015 |
High | Low | ||||||
First Quarter |
$ | 15.85 | $ | 14.27 | ||||
Second Quarter |
$ | 14.49 | $ | 10.64 | ||||
Third Quarter |
$ | 14.95 | $ | 10.90 | ||||
Fourth Quarter |
$ | 15.47 | $ | 13.38 |
As of June 18 2015, there were approximately 1,700 holders of record of the Companys Common shares.
No cash dividends were declared or paid during the fiscal year ended March 31, 2016 or 2015. The following cash dividends were declared and paid during the fiscal year ended March 31, 2014.
Date Declared |
Record Date | Date Paid |
Amount of
Dividend |
|||||
May 7, 2013 |
June 21, 2013 | June 28, 2013 | $ | 0.12 | ||||
August 13, 2013 |
September 20, 2013 | September 27, 2013 | 0.12 | |||||
|
|
|||||||
$ | 0.24 | |||||||
|
|
Although the Company has declared and paid cash dividends on its Common shares in the past, we have no current plans to declare or pay any cash dividends in the foreseeable future. The payment of future dividends, if any, is reviewed periodically by the Companys directors and management and will depend upon, among other things, existing conditions, including earnings, financial condition and capital requirements, restrictions in financing agreements, business opportunities, tax considerations and other conditions and factors, including prospects.
16
There are no Canadian foreign exchange controls or laws that would affect the remittance of dividends or other payments to the Companys non-Canadian resident shareholders. There are no Canadian laws that restrict the export or import of capital, other than the Investment Canada Act (Canada), which requires the notification or review of certain investments by non-Canadians to establish or acquire control of a Canadian business. The Company is not a Canadian business as defined under the Investment Canada Act because it has no place of business in Canada, has no individuals employed in Canada in connection with its business, and has no assets in Canada used in carrying on its business.
Canada and the United States of America are signatories to the Convention Between the United States of America and Canada With Respect to Taxes on Income and on Capital (the Tax Treaty). The Tax Treaty contains provisions governing the tax treatment of interest, dividends, gains and royalties paid to or received by a person residing in the United States. The Tax Treaty also contains provisions to prevent the occurrence of double taxation, essentially by permitting the taxpayer to claim a tax credit for taxes paid in the foreign jurisdiction.
Dividends paid to the Company from its U.S. subsidiaries current and accumulated earnings and profits will be subject to a U.S. withholding tax of 5%. The gross dividends (i.e., before payment of the withholding tax) must be included in the Companys net income. However, under certain circumstances, the Company may be allowed to deduct the dividends in the calculation of its Canadian taxable income. If the Company has no other foreign (i.e., non-Canadian) non-business income, no relief is available in that case to recover the withholding taxes previously paid.
A 15% Canadian withholding tax applies to dividends paid by the Company to a U.S. shareholder (including those that own less than 10% of the Companys voting shares) that is an individual. The U.S. shareholder must include the gross amount of the dividends in his net income to be taxed at the regular rates. In general, a U.S. shareholder can obtain a foreign tax credit for U.S. federal income tax purposes with respect to the Canadian withholding tax on such dividends, but the amount of such credit is subject to a limitation that depends, in part, on the amount of the shareholders income and losses from other sources. A U.S. shareholder that is an individual also can elect to claim a deduction (rather than a foreign tax credit) for all non-U.S. income taxes paid by the shareholder during the particular year. U.S. shareholders are urged to consult their own tax advisors regarding the U.S. federal income tax treatment of any Canadian withholding tax imposed on dividends from the Company.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The following table sets forth certain information with respect to the purchase of Common shares by our Nicholas Financial subsidiary pursuant to a modified Dutch auction tender offer for up to $70.0 million (but not less than $50.0 million) in aggregate value of Common shares. The tender offer commenced on February 10, 2015 and expired on March 13, 2015. The tender offer was completed on March 19, 2015.
ISSUER PURCHASES OF EQUITY SECURITIES
(In Millions, except average price)
Period |
Total Number of
Common shares Purchased |
Average Price Paid
per Common share |
Total Number of Common
Shares Purchased As Part of Publicly Announced Plans or Programs |
Maximum Number of
Common shares that May Yet Be Purchased Under the Plans or Programs |
||||||||||||
March 1, 2015 through March 31, 2015 |
4.7 | $ | 14.85 | 4.7 | |
Securities Authorized for Issuance Under Equity Compensation Plans
The following table sets forth certain information, as of March 31, 2016, with respect to compensation plans under which equity securities of the Company were authorized for issuance:
EQUITY COMPENSATION PLAN INFORMATION
(In thousands, except exercise price)
Plan Category |
Number of Securities to
be Issued Upon Exercise of Outstanding Options, Warrants and Rights |
Weighted Average
Exercise Price of Outstanding Options, Warrants and Rights |
Number of Securities
Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) |
|||||||||
(a) | (b) | (c) | ||||||||||
Equity Compensation Plans Approved by Security Holders |
357 | $ | 10.07 | 703 | ||||||||
Equity Compensation Plans Not Approved by Security Holders |
None | Not Applicable | None | |||||||||
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|
|
|
|
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TOTAL |
357 | $ | 10.07 | 703 | ||||||||
|
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|
|
|
17
Performance Graph
Set forth below is a graph comparing the cumulative total return on the Companys Common shares for the five-year period ended March 31, 2016, with that of an overall stock market (NASDAQ Composite) and the Companys peer group index (Dow Jones US General Financial Index). The stock performance graph assumes that the value of the investment in each of the Companys Common shares, the NASDAQ Composite Index and the Dow Jones US General Financial Index was $100 on April 1, 2011 and that all dividends were reinvested.
The graph displayed below is presented in accordance with SEC requirements. Shareholders are cautioned against drawing any conclusions from the data contained therein, as past results are not necessarily indicative of future performance. This graph in no way reflects the Companys forecast of future financial performance.
04/01/2011 | 03/31/2012 | 03/31/2013 | 03/31/2014 | 03/31/2015 | 03/31/2016 | |||||||||||||||||||
Nicholas Financial, Inc. |
$ | 100.00 | $ | 108.11 | $ | 120.49 | $ | 128.93 | $ | 114.84 | $ | 88.44 | ||||||||||||
NASDAQ Composite |
100.00 | 111.16 | 117.49 | 150.98 | 176.22 | 175.11 | ||||||||||||||||||
Dow Jones US General Financial Index |
100.00 | 101.58 | 123.49 | 158.19 | 174.92 | 159.65 |
18
Item 6. | Selected Financial Data |
The following tables present selected consolidated financial data of the Company as of and for the fiscal years ended March 31, 2016, 2015, 2014, 2013, and 2012. The selected consolidated financial data have been derived from our consolidated financial statements.
You should read the selected consolidated financial data below in conjunction with Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations and our audited consolidated financial statements and notes thereto that are included elsewhere in this Report.
Fiscal Year ended March 31,
(In thousands, except earnings per share numbers) |
||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||
Statement of Operations Data |
||||||||||||||||||||
Interest income on finance receivables |
$ | 90,707 | $ | 86,790 | $ | 82,629 | $ | 82,110 | $ | 80,515 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Interest expense |
9,007 | 5,970 | 5,678 | 5,121 | 4,892 | |||||||||||||||
Provision for credit losses |
26,278 | 20,371 | 14,979 | 13,392 | 12,368 | |||||||||||||||
Salaries and employee benefits |
22,313 | 20,835 | 19,634 | 18,326 | 17,583 | |||||||||||||||
Change in fair value of interest rate swaps |
24 | 364 | (688 | ) | 505 | | ||||||||||||||
Other expenses |
12,980 | 13,154 | 14,509 | 12,280 | 9,524 | |||||||||||||||
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|
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|
|
|
|
|||||||||||
70,602 | 60,694 | 54,112 | 49,624 | 44,367 | ||||||||||||||||
|
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|
|
|
|
|||||||||||
Operating income before income taxes |
20,105 | 26,096 | 28,517 | 32,486 | 36,148 | |||||||||||||||
Income tax expense |
7,726 | 9,240 | 11,814 | 12,545 | 13,926 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income |
$ | 12,379 | $ | 16,856 | $ | 16,703 | $ | 19,941 | $ | 22,222 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Earnings per share basic: |
$ | 1.60 | $ | 1.40 | $ | 1.38 | $ | 1.66 | $ | 1.89 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Weighted average shares outstanding |
7,622 | 12,013 | 12,096 | 11,977 | 11,747 | |||||||||||||||
|
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|
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Earnings per share diluted: |
$ | 1.59 | $ | 1.38 | $ | 1.36 | $ | 1.63 | $ | 1.85 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Weighted average shares outstanding |
7,692 | 12,192 | 12,325 | 12,218 | 12,033 | |||||||||||||||
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|
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|
|||||||||||
As of and for the Fiscal Year ended March 31,
(In thousands, except number of branch locations) |
||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||
Balance Sheet Data |
||||||||||||||||||||
Total assets |
$ | 325,309 | $ | 302,529 | $ | 283,430 | $ | 263,835 | $ | 256,560 | ||||||||||
Finance receivables, net |
311,837 | 288,904 | 269,344 | 249,826 | 241,253 | |||||||||||||||
Line of credit |
211,000 | 199,000 | 127,900 | 125,500 | 112,000 | |||||||||||||||
Shareholders equity |
102,849 | 89,888 | 141,938 | 126,965 | 135,263 | |||||||||||||||
Operating Data |
||||||||||||||||||||
Return on average assets |
3.94 | % | 5.75 | % | 6.10 | % | 7.66 | % | 8.90 | % | ||||||||||
Return on average equity |
12.85 | % | 14.54 | % | 12.42 | % | 15.21 | % | 17.79 | % | ||||||||||
Gross portfolio yield (1) |
27.10 | % | 28.00 | % | 28.44 | % | 29.22 | % | 29.48 | % | ||||||||||
Pre-tax yield (1) |
6.02 | % | 8.54 | % | 9.65 | % | 11.82 | % | 13.31 | % | ||||||||||
Total delinquencies over 30 days, excluding Chapter 13 bankruptcy accounts |
5.50 | % | 4.11 | % | 4.00 | % | 3.68 | % | 2.99 | % | ||||||||||
Write-off to liquidation (1) |
9.10 | % | 8.13 | % | 7.17 | % | 6.81 | % | 5.66 | % | ||||||||||
Net charge-off percentage (1) |
7.56 | % | 7.04 | % | 6.22 | % | 5.88 | % | 4.59 | % | ||||||||||
Automobile Finance Data & Direct Loan Origination |
||||||||||||||||||||
Contracts purchased/Direct Loans originated |
$ | 196,853 | $ | 187,893 | $ | 179,031 | $ | 160,078 | $ | 152,316 | ||||||||||
Average dealer discount on Contracts purchased |
7.51 | % | 8.08 | % | 8.44 | % | 8.54 | % | 9.23 | % | ||||||||||
Weighted average contractual rate on Contracts & Direct Loans purchased |
22.81 | % | 23.08 | % | 23.20 | % | 23.43 | % | 23.93 | % | ||||||||||
Number of branch locations |
67 | 66 | 65 | 64 | 60 |
19
Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
Overview
Nicholas Financial-Canada is a Canadian holding company incorporated under the laws of British Columbia in 1986. Nicholas Financial-Canada currently conducts its business activities exclusively through a wholly-owned indirect Florida subsidiary, Nicholas Financial, which purchases and services Contracts, makes Direct Loans and sells consumer-finance related products. Nicholas Financial accounted for more than 99% of the Companys consolidated revenue for each of the fiscal years ended March 31, 2015 and 2014, and 100% of the Companys consolidated revenue for the fiscal year ended March 31, 2016. A second Florida subsidiary, NDS, which historically provided limited computer software support and updated services to small businesses, has ceased such operations; however it continues as the intermediate holding company for Nicholas Financial. Nicholas Financial-Canada, Nicholas Financial and NDS are collectively referred to herein as the Company.
Introduction
The Companys consolidated revenues increased for the fiscal year ended March 31, 2016 to $90.7 million as compared to $86.8 million and $82.6 million for the fiscal years ended March 31, 2015 and 2014, respectively. The Companys diluted earnings per share increased for the fiscal year ended March 31, 2016 to $1.59 as compared to $1.38 and $1.36 for the fiscal years ended March 31, 2015 and 2014, respectively. The per share diluted net earnings for the fiscal year ended March 31, 2016 were positively impacted by the purchase of 4.7 million of the Companys common shares by its principal operating subsidiary on March 19, 2015. The Companys operating income before taxes for the fiscal year ended March 31, 2016 decreased to $20.1 million as compared to $26.1 million and $28.5 million for the fiscal years ended March 31, 2015 and 2014, respectively. This was a result of a decrease in the gross portfolio yield, an increase in the provision for credit losses, and an increase in interest expense due to the $70 million the Company borrowed for the tender offer. The effective income tax rate for the fiscal year ended March 31, 2014 was higher than normal due to non-deductible professional fees relating to an agreement providing for the acquisition of the Company by an unaffiliated third party. The effective income tax rate for the fiscal year ended March 31, 2015 was lower than normal due to the same non-deductible expenses becoming deductible when such agreement was terminated. The Companys consolidated net income for the fiscal years ended March 31, 2016, 2015, and 2014 were $12.4 million, $16.9 million and $16.7 million, respectively. The Company believes the increase in losses each successive year was primarily attributable to an increase in competition which has driven higher advance rates for Contracts acquired. In addition, competition generally results in the purchase of lower credit quality Contracts, though these Contracts are still acceptable under the Companys underwriting guidelines. Historically, when competition has increased, the Company has experienced higher losses, decreased Contract origination and reduced profits. While it is difficult to predict the level of competition long-term, the Company believes that the current highly competitive environment will prevail for the foreseeable future, which will continue to put pressure on its margins. The weighted average APR of the portfolio for the fiscal years ended March 31, 2016, 2015, and 2014 were 22.73%, 22.93%, and 23.20%, respectively. The average dealer discounts as a percent of gross finance receivables associated with new volume for the fiscal years ended March 31, 2016, 2015, and 2014 were 7.51%, 8.08%, and 8.44%, respectively.
The Company is evaluating its organization and its structure. The Companys decisions on how it plans to continue operating its business strategy will be influenced by the sustainability of some of its competitors underwriting and risk-based pricing.
20
Portfolio Summary |
Fiscal Year ended March 31,
(In thousands) |
|||||||||||
2016 | 2015 | 2014 | ||||||||||
Average finance receivables, net of unearned interest (1) |
$ | 334,754 | $ | 309,995 | $ | 290,502 | ||||||
|
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|
|
|
|
|||||||
Average indebtedness (2) |
$ | 208,214 | $ | 133,434 | $ | 127,093 | ||||||
|
|
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|
|
|
|||||||
Interest and fee income on finance receivables |
$ | 90,707 | $ | 86,785 | $ | 82,610 | ||||||
Interest expense |
$ | 9,007 | $ | 5,970 | $ | 5,678 | ||||||
|
|
|
|
|
|
|||||||
Net interest and fee income on finance receivables |
$ | 81,700 | $ | 80,815 | $ | 76,932 | ||||||
|
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|
|||||||
Weighted average contractual rate (3) |
22.73 | % | 22.93 | % | 23.20 | % | ||||||
|
|
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|
|
|||||||
Average cost of borrowed funds (2) |
4.33 | % | 4.47 | % | 4.47 | % | ||||||
|
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|
|
|
|||||||
Gross portfolio yield (4) |
27.10 | % | 28.00 | % | 28.44 | % | ||||||
Interest expense as a percentage of average finance receivables, net of unearned interest |
2.69 | % | 1.93 | % | 1.95 | % | ||||||
Provision for credit losses as a percentage of average finance receivables, net of unearned interest |
7.85 | % | 6.57 | % | 5.16 | % | ||||||
|
|
|
|
|
|
|||||||
Net portfolio yield (4) |
16.56 | % | 19.50 | % | 21.33 | % | ||||||
Marketing, salaries, employee benefits, depreciation, administrative and professional fee expenses and dividend taxes as a percentage of average finance receivables, net of unearned interest (5) |
10.54 | % | 10.96 | % | 11.68 | % | ||||||
|
|
|
|
|
|
|||||||
Pre-tax yield as a percentage of average finance receivables, net of unearned interest (6) |
6.02 | % | 8.54 | % | 9.65 | % | ||||||
|
|
|
|
|
|
|||||||
Write-off to liquidation (7) |
9.10 | % | 8.13 | % | 7.17 | % | ||||||
Net charge-off percentage (8) |
7.56 | % | 7.04 | % | 6.22 | % |
(1) | Average finance receivables, net of unearned interest, represents the average of gross finance receivables, less unearned interest throughout the period. |
(2) | Average indebtedness represents the average outstanding borrowings under the Line. Average cost of borrowed funds represents interest expense as a percentage of average indebtedness. |
(3) | Weighted average contractual rate represents the weighted average annual percentage rate (APR) of all Contracts and Direct Loans as of the period ending date. |
(4) | Gross portfolio yield represents interest and fee income on finance receivables as a percentage of average finance receivables, net of unearned interest. Net portfolio yield represents interest and fee income on finance receivables minus (a) interest expense and (b) the provision for credit losses as a percentage of average finance receivables, net of unearned interest. |
(5) | The numerator for the fiscal year ended March 31, 2015 included expenses associated with the abandoned sale of the Company. Absent these expenses, the percentage would have been 10.85%. The numerator for the fiscal year ended March 31, 2014 included expenses associated with the potential sale of the Company and payments of cash dividends. Absent these expenses, the percentage would have been 10.83%. |
(6) | Pre-tax yield represents net portfolio yield minus operating expenses as a percentage of average finance receivables, net of unearned interest. |
(7) | Write-off to liquidation percentage is defined as net charge-offs divided by liquidation. Liquidation is defined as beginning receivable balance plus current period purchases minus voids and refinances minus ending receivable balance. |
(8) | Net charge-off percentage represents net charge-offs divided by average finance receivables, net of unearned interest, outstanding during the period. |
Critical Accounting Policy
The Companys critical accounting policy relates to the allowance for credit losses. It is based on managements opinion of an amount that is adequate to absorb losses incurred in the existing portfolio. The allowance for credit losses is established through a provision for credit losses based on managements evaluation of the risk inherent in the loan portfolio, the composition of the portfolio, specific impaired loans and current economic conditions. Such evaluation considers, among other matters, the estimated net realizable value or the fair value of the underlying collateral, economic conditions, historical loan loss experience, managements estimate of probable credit losses and other factors that warrant recognition in providing for an adequate credit loss allowance.
21
Because of the nature of the customers under the Companys Contracts and its Direct Loan program, the Company considers the establishment of adequate reserves for credit losses to be imperative. The Company segregates its Contracts into static pools for purposes of establishing reserves for losses. All Contracts purchased by a branch during a fiscal quarter comprise a static pool. The Company pools Contracts according to branch location because the branches purchase Contracts in different geographic markets. This method of pooling by branch and quarter allows the Company to evaluate the different markets where the branches operate. The pools also allow the Company to evaluate the different levels of customer income, stability and credit history, and the types of vehicles purchased, in each market. Each such static pool consists of the Contracts purchased by a branch office during a fiscal quarter.
Contracts are purchased from many different dealers and are all purchased on an individual Contract-by-Contract basis. Individual Contract pricing is determined by the automobile dealerships and is generally the lesser of the applicable state maximum interest rate, if any, or the maximum interest rate which the customer will accept. In certain markets, competitive forces will drive down Contract rates from the maximum rate to a level where an individual competitor is willing to buy an individual Contract. The Company purchases Contracts on an individual basis, although the Company may consider portfolio acquisitions as part of its growth strategy. See Item 1. BusinessGrowth Strategy.
The Company utilizes the branch model, which allows for Contract purchasing to be done on the branch level. The Company has detailed underwriting guidelines it utilizes to determine which Contracts to purchase. These guidelines are specific and are designed to cause all of the Contracts that the Company purchases to have common risk characteristics. The Company utilizes its District Managers to evaluate their respective branch locations for adherence to these underwriting guidelines. The Company also utilizes IA to assure adherence to its underwriting guidelines.
The allowance for credit losses is established through charges to earnings through the provision for credit losses. The allowance for credit losses is maintained at an amount that reduces the net carrying amount of finance receivables for incurred losses.
In analyzing a static pool, the Company considers the performance of prior static pools originated by the same branch office, the performance of prior Contracts purchased from the dealers whose Contracts are included in the current static pool, the credit rating of the customers under the Contracts in the static pool, and current market and economic conditions. Each static pool is analyzed monthly to determine if the loss reserves are adequate, and adjustments are made if they are determined to be necessary.
Fiscal 2016 Compared to Fiscal 2015
Interest and Fee Income on Finance Receivables
Interest income on finance receivables, predominantly finance charge income, increased 4.5% to $90.7 million in fiscal 2016 from $86.8 million in fiscal 2015. The average finance receivables, net of unearned interest, totaled $334.8 million for the fiscal year ended March 31, 2016, an increase of 8% from $310.0 million for the fiscal year ended March 31, 2015. The primary reason average finance receivables, net of unearned interest, increased was an increase of the receivable base of several existing branches in younger markets in fiscal 2016. (see Item 1. BusinessContract Procurement). The gross finance receivable balance increased 9% to $498.1 million for the fiscal year ended March 31, 2016 from $458.0 million for the fiscal year ended March 31, 2015. The primary reasons gross finance receivables increased were an increase in Contracts purchased and an increase in the weighted-average term of Contracts purchased. The primary reason interest income increased was the increase in the volume of the outstanding loan portfolio, which was partially offset by a lower weighted APR earned on our portfolio for the fiscal year ended March 31, 2016 compared to the fiscal year ended March 31, 2015. The gross portfolio yield decreased to 27.10% for the fiscal year ended March 31, 2016 from 28.00% for the fiscal year ended March 31, 2015. The net portfolio yield decreased to 16.56% for the fiscal year ended March 31, 2016 from 19.50% for the fiscal year ended March 31, 2015. The gross portfolio yield decreased primarily due to the decrease in the average dealer discount and a decrease in the average weighted APR, both of which is primarily the result of increased competition. The net portfolio yield decreased due to a decrease in the gross portfolio yield, an increase in the provision for credit losses, and an increase in interest expense (see Analysis of Credit Losses and Interest Expense below).
Marketing, Salaries and Employee Benefits, Depreciation, Administrative, and Professional Fee Expenses
Marketing, salaries and employee benefits, depreciation, administrative, and professional fee expenses increased to $35.3 million for the fiscal year ended March 31, 2016 compared to $34.0 million for the fiscal year ended March 31, 2015, primarily because of an increase in cost associated with maintaining the finance receivables portfolio. The Company opened three new branch locations during the fiscal year ended March 31, 2016, and consolidated two branch locations into branches previously established within their market. However, the Company increased the average headcount to 338 for the fiscal year ended March 31, 2016 from 330 for the fiscal year ended March 31, 2015. Marketing, salaries and employee benefits, depreciation, administrative expenses, and professional fee expenses as a percentage of average finance receivables, net of unearned interest, decreased to 10.54% for the fiscal year ended March 31, 2016 from 10.96% for the fiscal year ended March 31, 2015. Absent the professional expenses associated with the abandoned sale of the Company the percentage would have been 10.85% for the fiscal year ended March 31, 2015.
22
Interest Expense
Interest expense increased to $9.0 million for the fiscal year ended March 31, 2016 as compared to $6.0 million for the fiscal year ended March 31, 2015. The average outstanding debt as of March 31, 2016 and March 31, 2015 was $208.2 million and $133.4 million, respectively. The total average debt outstanding increased due to the tender offer executed on March 19, 2015 The following table summarizes the Companys average cost of borrowed funds for the fiscal years ended March 31:
2016 | 2015 | |||||||
Variable interest under the line of credit facility |
0.37 | % | 0.34 | % | ||||
Settlements under interest rate swap agreements |
0.16 | % | 0.29 | % | ||||
Credit spread under the line of credit facility |
3.80 | % | 3.84 | % | ||||
|
|
|
|
|||||
Average cost of borrowed funds |
4.33 | % | 4.47 | % | ||||
|
|
|
|
The Companys average cost of borrowed funds decreased mostly due to the fixed notional amount interest rate swap agreements representing a lower percentage of average debt. During fiscal 2016 LIBOR rates have increased, which has caused the credit spread to decrease and the variable interest expense to increase. The variable interest rate also includes a decrease in the unused line fees offset with an increase in amortized loan origination fees.
For a further discussion regarding the Companys line of credit, see Liquidity and Capital Resources below and Note 5 (Line of Credit) to our audited consolidated financial statements included elsewhere in this Report.
The weighted average notional amount of interest rate swaps was $50.0 million at a weighted average fixed rate of 0.94% for each of the fiscal years ended March 31, 2016 and 2015. For a further discussion regarding the effect of our interest rate swap agreements, see Note 6 (Interest Rate Swap Agreements) to our audited consolidated financial statements included elsewhere in this Report.
Analysis of Credit Losses
As of March 31, 2016, the Company had approximately 1,400 active static pools. The average pool upon inception consisted of 61 Contracts with aggregate finance receivables, net of unearned interest, of approximately $683,000.
The following table sets forth a reconciliation of the changes in the allowance for credit losses on Contracts for the fiscal years ended March 31:
(In thousands) | ||||||||
2016 | 2015 | |||||||
Balance at beginning of year |
$ | 11,325 | $ | 12,889 | ||||
Current year provision |
25,926 | 20,008 | ||||||
Losses absorbed |
(27,963 | ) | (25,042 | ) | ||||
Recoveries |
2,977 | 3,470 | ||||||
|
|
|
|
|||||
Balance at end of year |
$ | 12,265 | $ | 11,325 | ||||
|
|
|
|
The following table sets forth a reconciliation of the changes in the allowance for credit losses on Direct Loans for the fiscal years ended March 31:
(In thousands) | ||||||||
2016 | 2015 | |||||||
Balance at beginning of year |
$ | 703 | $ | 590 | ||||
Current year provision |
352 | 362 | ||||||
Losses absorbed |
(328 | ) | (277 | ) | ||||
Recoveries |
21 | 28 | ||||||
|
|
|
|
|||||
Balance at end of year |
$ | 748 | $ | 703 | ||||
|
|
|
|
The provision for credit losses increased to $26.3 million for the fiscal year ended March 31, 2016 from $20.4 million for the fiscal year ended March 31, 2015, largely due to the fact that net charge-offs increased to 7.56% for the fiscal year ended March 31, 2016 from 7.04% for the fiscal year ended March 31, 2015, as well as the portfolio growing. During the fourth quarter of the fiscal year ended March 31, 2016, the Company refined its allowance for credit loss model to incorporate recent trends that include the acquisition of longer term contracts and increased delinquencies. The Company feels that these improvements to the current model better reflect the current trends of incurred losses within the portfolio and better align the allowance for credit losses with the portfolios performance indicators.
23
The Companys losses as a percentage of liquidation increased to 9.10% for the fiscal year ended March 31, 2016 as compared to 8.13% for the fiscal year ended March 31, 2015. This increase was primarily the result of increased competition in all markets in which the Company presently operates. Increased competition has led to a higher percentage of loans acquired that are categorized in the lower tiers of the Companys guidelines. The Company also experienced a decrease in auction prices from fiscal year 2015 to fiscal year 2016. Decreased auction proceeds from repossessed vehicles increased the amount of write-offs which, in turn, increased the write-off to liquidation percentage. During the fiscal years ended March 31, 2016 and 2015, auction proceeds from the sale of repossessed vehicles averaged approximately 42% and 46%, respectively, of the related principal balance.
Recoveries as a percentage of charge-offs were approximately 10.59% and 13.82% for the fiscal years ended March 31, 2016 and 2015, respectively. Historically, recoveries as a percentage of charge-offs have fluctuated from period to period, and the Company does not attribute this decrease to any particular change in operational strategy or economic events.
The delinquency percentage for Contracts more than thirty days past due, excluding Chapter 13 bankruptcy accounts, as of March 31, 2016 increased to 5.57% from 4.17% as of March 31, 2015. The delinquency percentage for Direct Loans more than thirty days past-due as of March 31, 2016 increased to 2.19% from 1.64% as of March 31, 2015. The delinquency percentage increase for Contracts reflects portfolio weakness that generally manifests itself in increased future losses mainly due to competition. The Company utilizes a static pool approach to analyzing portfolio performance and looks at specific static pool performance and recent trends as leading indicators of the future performance of its portfolio.
The Company also considers the following factors to assist in determining the appropriate loss reserve levels: unemployment rates; competition; the number of bankruptcy filings; the results of internal branch audits; consumer sentiment; consumer spending; economic growth (i.e., changes in GDP); the condition of the housing sector; and other leading economic indicators. The Company continues to evaluate reserve levels on a pool-by-pool basis during each reporting period. The longer-term outlook for portfolio performance will depend on overall economic conditions, the unemployment rate, the rational or irrational behavior of the Companys competitors, and the Companys ability to monitor, manage and implement its underwriting philosophy in additional geographic areas as it strives to continue its expansion.
In accordance with our policies and procedures, certain borrowers qualify for, and the Company offers, one-month principal payment deferrals on Contracts and Direct Loans. For the fiscal years ended March 31, 2016 and March 31, 2015 the Company granted deferrals to approximately 22.65% and 23.28%, respectively, of total Contracts and Direct Loans. The number of deferrals is influenced by portfolio performance, general economic conditions and the unemployment rate.
Income Taxes
The provision for income taxes decreased to approximately $7.7 million in fiscal 2016 from approximately $9.2 million in fiscal 2015. The Companys effective tax rate increased to 38.43% in fiscal 2016 from 35.41% in fiscal 2015. The Company had approximately $2.1 million of non-deductible expenses associated with the potential sale of the Company in 2014. Since the sale of the Company was not consummated, the $2.1 million became deductible in 2015 creating a favorable effective tax rate.
Fiscal 2015 Compared to Fiscal 2014
Interest and Fee Income on Finance Receivables
Interest income on finance receivables, predominantly finance charge income, increased 5% to $86.8 million in fiscal 2015 from $82.6 million in fiscal 2014. The average finance receivables, net of unearned interest, totaled $310.0 million for the fiscal year ended March 31, 2015, an increase of 7% from $290.5 million for the fiscal year ended March 31, 2014. The primary reason average finance receivables, net of unearned interest, increased was the opening of one additional branch office and the increase of the portfolio size in certain existing branches during fiscal 2015 (see Item 1. BusinessContract Procurement). The gross finance receivable balance increased 8% to $458.0 million for the fiscal year ended March 31, 2015 from $424.3 million for the fiscal year ended March 31, 2014. The primary reasons gross finance receivables increased were an increase in Contracts purchased and an increase in the weighted-average term of Contracts purchased. The primary reason interest income increased was the increase in the outstanding loan portfolio. The gross portfolio yield decreased to 28.00% for the fiscal year ended March 31, 2015 from 28.44% for the fiscal year ended March 31, 2014. The net portfolio yield decreased to 19.50% for the fiscal year ended March 31, 2015 from 21.33% for the fiscal year ended March 31, 2014. The gross portfolio yield decreased primarily as the result of a lower weighted APR and a reduction of the average dealer discount on Contracts purchased due to increased competition. The net portfolio yield decreased primarily due to the decrease in the gross portfolio yield and an increase in the provision for credit losses.
24
Marketing, Salaries and Employee Benefits, Depreciation, Administrative, Professional Fee Expenses
Marketing, salaries and employee benefits, depreciation, administrative, and professional fee expenses remained relatively flat at $34.0 million for the fiscal year ended March 31, 2015 compared to $34.1 million for the fiscal year ended March 31, 2014. The Company opened one new branch location during the fiscal year ended March 31, 2015. The Company increased the average headcount to 330 for the fiscal year ended March 31, 2015 from 325 for the fiscal year ended March 31, 2014. Marketing, salaries and employee benefits, depreciation, administrative expenses, and professional fee expenses as a percentage of average finance receivables, net of unearned interest, decreased to 10.96% for the fiscal year ended March 31, 2015 from 11.68% for the fiscal year ended March 31, 2014. Absent the professional expenses associated with the abandoned sale of the Company and taxes associated with the payment of cash dividends, the percentages would have been 10.85% and 10.83% for the fiscal years ended March 31, 2015 and 2014, respectively.
Interest Expense
Interest expense increased to $6.0 million for the fiscal year ended March 31, 2015 as compared to $5.7 million for the fiscal year ended March 31, 2014. The following table summarizes the Companys average cost of borrowed funds for the fiscal years ended March 31:
2015 | 2014 | |||||||
Variable interest under the line of credit facility |
0.34 | % | 0.35 | % | ||||
Settlements under interest rate swap agreements |
0.29 | % | 0.30 | % | ||||
Credit spread under the line of credit facility |
3.84 | % | 3.82 | % | ||||
|
|
|
|
|||||
Average cost of borrowed funds |
4.47 | % | 4.47 | % | ||||
|
|
|
|
The Companys average cost of funds for the fiscal year ended March 31, 2015 remained unchanged from the preceding fiscal year.
For a further discussion regarding the Companys line of credit, see Liquidity and Capital Resources below and Note 5 (Line of Credit) to our audited consolidated financial statements included elsewhere in this Report.
The weighted average notional amount of interest rate swaps was $50.0 million at a weighted average fixed rate of 0.94% for each of the fiscal years ended March 31, 2015 and 2014. For a further discussion regarding the effect of our interest rate swap agreements, see Note 6 (Interest Rate Swap Agreements) to our audited consolidated financial statements included elsewhere in this Report.
Analysis of Credit Losses
As of March 31, 2015, the Company had approximately 1,400 active static pools. The average pool upon inception consisted of 69 Contracts with aggregate finance receivables, net of unearned interest, of approximately $649,000.
The following table sets forth a reconciliation of the changes in the allowance for credit losses on Contracts for the fiscal years ended March 31:
(In thousands) | ||||||||
2015 | 2014 | |||||||
Balance at beginning of year |
$ | 12,889 | $ | 16,091 | ||||
Current year provision |
20,008 | 14,694 | ||||||
Losses absorbed |
(25,042 | ) | (21,691 | ) | ||||
Recoveries |
3,470 | 3,795 | ||||||
|
|
|
|
|||||
Balance at end of year |
$ | 11,325 | $ | 12,889 | ||||
|
|
|
|
25
The following table sets forth a reconciliation of the changes in the allowance for credit losses on Direct Loans for the fiscal years ended March 31:
(In thousands) | ||||||||
2015 | 2014 | |||||||
Balance at beginning of year |
$ | 590 | $ | 468 | ||||
Current year provision |
362 | 285 | ||||||
Losses absorbed |
(277 | ) | (192 | ) | ||||
Recoveries |
28 | 29 | ||||||
|
|
|
|
|||||
Balance at end of year |
$ | 703 | $ | 590 | ||||
|
|
|
|
The provision for credit losses increased to $20.4 million for the fiscal year ended March 31, 2015 from $15.0 million for the fiscal year ended March 31, 2014, primarily as a result of an increase in the average finance receivables and an increase in the net charge-off percentage.
The Companys losses as a percentage of liquidation increased to 8.13% for the fiscal year ended March 31, 2015 as compared to 7.17% for the fiscal year ended March 31, 2014. This increase was primarily the result of increased competition in all markets that the Company presently operates in and higher advance rates on Contracts purchased during the fiscal year ended March 31, 2015. The Company has experienced favorable variances between projected write-offs and actual write-offs on many seasoned pools, which resulted in an increase in expected future cash flows and favorable impact on the allowance for credit losses. However, increased competition has led to a higher percentage of loans acquired that are categorized in the lower tiers of the Companys guidelines. Static pools originated during fiscal 2015, 2014 and 2013, while still performing at acceptable net charge-off levels, have experienced losses higher than static pools originated in previous years. The Company also experienced a decrease in auction prices from fiscal year 2014 to fiscal year 2015. Decreased auction proceeds from repossessed vehicles increased the amount of write-offs which, in turn, increased the write-off to liquidation percentage. During the fiscal years ended March 31, 2015 and 2014, auction proceeds from the sale of repossessed vehicles averaged approximately 46% and 48%, respectively, of the related principal balance. Recoveries as a percentage of charge-offs were approximately 13.82% and 17.46% for the fiscal years ended March 31, 2015 and 2014, respectively. Historically, recoveries as a percentage of charge-offs have fluctuated from period to period, and the Company does not attribute this decrease to any particular change in operational strategy or economic events.
The delinquency percentage for Contracts more than thirty days past due, excluding Chapter 13 bankruptcy accounts, as of March 31, 2015 increased to 4.17% from 4.03% as of March 31, 2014. The delinquency percentage for Direct Loans more than thirty days past-due as of March 31, 2015 decreased to 1.64% from 1.78% as of March 31, 2014. The delinquency percentage increase for Contracts reflects portfolio weakness that generally manifests itself in increased future losses. The Company utilizes a static pool approach to analyzing portfolio performance and looks at specific static pool performance and recent trends as leading indicators of the future performance of its portfolio.
The Company also considers the following factors to assist in determining the appropriate loss reserve levels: unemployment rates; competition; the number of bankruptcy filings; the results of internal branch audits; consumer sentiment; consumer spending; economic growth (i.e., changes in GDP); the condition of the housing sector; and other leading economic indicators. The Company continues to evaluate reserve levels on a pool-by-pool basis during each reporting period. The longer-term outlook for portfolio performance will depend on overall economic conditions, the unemployment rate, the rational or irrational behavior of the Companys competitors, and the Companys ability to monitor, manage and implement its underwriting philosophy in additional geographic areas as it strives to continue its expansion.
Income Taxes
The provision for income taxes decreased to approximately $9.2 million in fiscal 2015 from approximately $11.8 million in fiscal 2014. The Companys effective tax rate decreased to 35.41% in fiscal 2015 from 41.43% in fiscal 2014. The Company had approximately $2.1 million of non-deductible expenses associated with the potential sale of the Company in 2014. Since the sale of the Company was not consummated, the $2.1 million became deductible in 2015 creating a favorable effective tax rate.
26
Liquidity and Capital Resources
The Companys cash flows are summarized as follows:
Fiscal Year ended March 31,
(In thousands) |
||||||||||||
2016 | 2015 | 2014 | ||||||||||
Cash provided by (used in): |
||||||||||||
Operations |
$ | 24,070 | $ | 25,758 | $ | 21,366 | ||||||
Investing activities (primarily purchases of Contracts) |
(36,653 | ) | (26,504 | ) | (21,880 | ) | ||||||
Financing activities |
11,044 | 1,499 | 351 | |||||||||
|
|
|
|
|
|
|||||||
Net (decrease) increase in cash |
$ | (1,539 | ) | $ | 753 | $ | (163 | ) | ||||
|
|
|
|
|
|
The Companys primary use of working capital for the fiscal year ended March 31, 2016 was funding the purchase of Contracts, which are financed substantially through cash from principal payments received, cash from operations and our line of credit (the Line). The Line is secured by all of the assets of the Company and has a maturity date of January 30, 2018. The Company may borrow up to $225.0 million. Borrowings under the Line may be under various LIBOR pricing options plus 300 basis points with a 1% floor on LIBOR. As of March 31, 2016, the amount outstanding under the Line was $211.0 million, and the amount available under the Line was $14.0 million.
The Company will continue to depend on the availability of the Line, together with cash from operations, to finance future operations. Amounts outstanding under the Line increased by $12.0 million as of March 31, 2016 compared to March 31, 2015 and increased by approximately $71.1 million as of March 31, 2015 compared to March 31, 2014. The increase in the amount outstanding under the Line as of March 31, 2016 was principally related to the growth in finance receivables. The increase in the amount outstanding under the Line as of March 31, 2015 was principally related to the $70.0 million tender offer completed on March 19, 2015. The amount of debt the Company incurs from time to time under these financing mechanisms depends on the Companys need for cash and ability to borrow under the terms of the Line. The Company believes that borrowings available under the Line as well as cash flow from operations will be sufficient to meet its short-term funding needs. The Line requires compliance with certain debt covenants including financial ratios, asset quality and other performance tests. The Company is currently in compliance with all of its debt covenants.
No cash dividends were declared or paid during the fiscal year ended March 31, 2016 or 2015. The following cash dividends were declared and paid during the fiscal years ended March 31, 2014:
Fiscal Year |
Date Declared | Record Date | Date Paid |
Amount of
Dividend |
||||||
2014 |
May 7, 2013 | June 21, 2013 | June 28, 2013 | $ | 0.12 | |||||
August 13, 2013 | September 20, 2013 | September 27, 2013 | 0.12 | |||||||
|
|
|||||||||
$ | 0.24 | |||||||||
|
|
Although the Company has declared and paid cash dividends on its Common shares in the past, we have no current plans to declare or pay any cash dividends in the foreseeable future. The payment of future dividends, if any, is reviewed periodically by the Companys directors and management and will depend upon, among other things, existing conditions, including earnings, financial condition and capital requirements, restrictions in financing agreements, business opportunities, tax considerations and other conditions and factors, including prospects.
Impact of Inflation
The Company is affected by inflation primarily through increased operating costs and expenses including increases in interest rates. Inflationary pressures on operating costs and expenses historically have been largely offset by the Companys continued emphasis on stringent operating and cost controls, although no assurances can be given regarding the Companys ability to offset the effects of inflation in the future.
27
Contractual Obligations
The following table summarizes the Companys material obligations as of March 31, 2016.
Payments Due by Period
(In thousands) |
||||||||||||||||||||
Total |
Less
than 1 year |
1 to 3
years |
3 to 5
years |
More than
5 years |
||||||||||||||||
Operating leases |
$ | 5,535 | $ | 2,101 | $ | 2,774 | $ | 660 | $ | | ||||||||||
Line of credit 1 |
211,000 | | 211,000 | | | |||||||||||||||
Interest on line of credit 1 |
16,750 | 9,136 | 7,614 | | | |||||||||||||||
|
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|
|
|
|
|
|
|
|
|||||||||||
Total |
$ | 233,285 | $ | 11,237 | $ | 221,388 | $ | 660 | $ | | ||||||||||
|
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|
|
|
|
|
|
|
1 | The Companys current Line matures on January 30, 2018. Interest on outstanding borrowings under the Line as of March 31, 2016 is based on an effective interest rate of 4.33%. The effective interest rate used in the above table does not contemplate the possibility of entering into additional interest rate swap agreements in the future. |
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
Market risks relating to the Companys operations result primarily from changes in interest rates. The Company does not engage in speculative or leveraged transactions, nor does it hold or issue financial instruments for trading purposes.
Interest Rate Risk
Managements objective is to minimize the cost of borrowing through an appropriate mix of fixed and floating rate debt. Derivative financial instruments, such as interest rate swap agreements, may be used for the purpose of managing fluctuating interest rate exposures that exist from ongoing business operations. The Company does not use interest rate swap agreements for speculative purposes. At March 31, 2016, $161.0 million, or approximately 76% of our total debt, was subject to floating interest rates; however, due to a 1% floor on the debt these rates are effectively fixed until the variable rates exceed this threshold. As a result, a hypothetical increase in the variable interest rates of 1% or 100 basis points (an increase to 1.44% as of March 31, 2016) as of March 31, 2016 applicable to this floating rate debt would have an annual after-tax effect on net income of approximately $260,000.
28
Item 8. Financial Statements and Supplementary Data
The following financial statements are filed as part of this Report (see pages 31-50)
30 | ||||
Audited Consolidated Financial Statements |
||||
31 | ||||
32 | ||||
33 | ||||
34 | ||||
35 |
29
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Nicholas Financial, Inc.
We have audited the accompanying consolidated balance sheets of Nicholas Financial, Inc. and Subsidiaries (the Company) as of March 31, 2016 and 2015 and the related consolidated statements of income, shareholders equity, and cash flows for each of the years in the three-year period ended March 31, 2016. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2016 and 2015 and the results of its operations and its cash flows for each of the years in the three-year period ended March 31, 2016, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Companys internal control over financial reporting as of March 31, 2016, based on criteria established in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated June 14, 2016 expressed an unqualified opinion on the effectiveness of the Companys internal control over financial reporting.
/s/ Dixon Hughes Goodman LLP
Atlanta, Georgia
June 14, 2016
30
Nicholas Financial, Inc. and Subsidiaries
(In thousands)
March 31, | ||||||||
2016 | 2015 | |||||||
Assets |
||||||||
Cash |
$ | 1,849 | $ | 3,388 | ||||
Finance receivables, net |
311,837 | 288,904 | ||||||
Assets held for resale |
2,148 | 1,747 | ||||||
Prepaid expenses and other assets |
977 | 1,144 | ||||||
Income taxes receivable |
593 | 113 | ||||||
Property and equipment, net |
1,290 | 872 | ||||||
Deferred income taxes |
6,615 | 6,361 | ||||||
|
|
|
|
|||||
Total assets |
$ | 325,309 | $ | 302,529 | ||||
|
|
|
|
|||||
Liabilities and shareholders equity |
||||||||
Line of credit |
$ | 211,000 | $ | 199,000 | ||||
Drafts payable |
1,499 | 2,476 | ||||||
Accounts payable and accrued expenses |
5,839 | 7,841 | ||||||
Deferred revenues |
3,917 | 3,143 | ||||||
Interest rate swap agreements |
205 | 181 | ||||||
|
|
|
|
|||||
Total liabilities |
222,460 | 212,641 | ||||||
Commitments and contingencies |
||||||||
Shareholders equity: |
||||||||
Preferred stock, no par: 5,000 shares authorized; none issued |
||||||||
Common stock, no par: 50,000 shares authorized; 12,466 and 12,416 shares issued respectively; 7,753 and 7,702 shares outstanding, respectively |
33,287 | 32,655 | ||||||
Treasury stock: 4,714 common shares, at cost |
(70,459 | ) | (70,409 | ) | ||||
Retained earnings |
140,021 | 127,642 | ||||||
|
|
|
|
|||||
Total shareholders equity |
102,849 | 89,888 | ||||||
|
|
|
|
|||||
Total liabilities and shareholders equity |
$ | 325,309 | $ | 302,529 | ||||
|
|
|
|
See accompanying notes.
31
Nicholas Financial, Inc. and Subsidiaries
Consolidated Statements of Income
(In thousands, except per share amounts)
Fiscal Year ended March 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Interest and fee income on finance receivables |
$ | 90,707 | $ | 86,790 | $ | 82,629 | ||||||
Expenses: |
||||||||||||
Marketing |
1,497 | 1,562 | 1,491 | |||||||||
Salaries and employee benefits |
22,313 | 20,835 | 19,634 | |||||||||
Professional fees |
1,194 | 1,383 | 3,659 | |||||||||
Administrative |
9,831 | 9,843 | 9,041 | |||||||||
Provision for credit losses |
26,278 | 20,371 | 14,979 | |||||||||
Depreciation |
458 | 366 | 318 | |||||||||
Interest expense |
9,007 | 5,970 | 5,678 | |||||||||
Change in fair value of interest rate swap agreements |
24 | 364 | (688 | ) | ||||||||
|
|
|
|
|
|
|||||||
70,602 | 60,694 | 54,112 | ||||||||||
|
|
|
|
|
|
|||||||
Operating income before income taxes |
20,105 | 26,096 | 28,517 | |||||||||
Income tax expense |
7,726 | 9,240 | 11,814 | |||||||||
|
|
|
|
|
|
|||||||
Net income |
$ | 12,379 | $ | 16,856 | $ | 16,703 | ||||||
|
|
|
|
|
|
|||||||
Earnings per share: |
||||||||||||
Basic |
$ | 1.60 | $ | 1.40 | $ | 1.38 | ||||||
|
|
|
|
|
|
|||||||
Diluted |
$ | 1.59 | $ | 1.38 | $ | 1.36 | ||||||
|
|
|
|
|
|
|||||||
Dividends declared per share |
$ | | $ | | $ | 0.24 | ||||||
|
|
|
|
|
|
See accompanying notes.
32
Nicholas Financial, Inc. and Subsidiaries
Consolidated Statements of Shareholders Equity
(In thousands)
Common Stock |
Treasury
Stock |
Retained
Earnings |
Total
Shareholders Equity |
|||||||||||||||||
Shares | Amount | |||||||||||||||||||
Balance at March 31, 2013 |
12,154 | $ | 30,032 | $ | | $ | 96,934 | $ | 126,966 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income |
| | | 16,703 | 16,703 | |||||||||||||||
Issuance of common stock under stock options |
67 | 329 | | | 329 | |||||||||||||||
Excess tax benefit on share awards |
| 256 | | | 256 | |||||||||||||||
Share-based compensation |
| 535 | | | 535 | |||||||||||||||
Cash dividend |
| | | (2,851 | ) | (2,851 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at March 31, 2014 |
12,221 | $ | 31,152 | $ | | $ | 110,786 | $ | 141,938 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income |
| | | 16,856 | 16,856 | |||||||||||||||
Issuance of common stock under stock options |
151 | 389 | | | 389 | |||||||||||||||
Grants of restricted share awards, net of forfeitures |
44 | | | | | |||||||||||||||
Excess tax benefit on share awards |
| 600 | | | 600 | |||||||||||||||
Share-based compensation |
| 514 | | | 514 | |||||||||||||||
Common shares purchased |
(4,714 | ) | | (70,409 | ) | | (70,409 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at March 31, 2015 |
7,702 | $ | 32,655 | $ | (70,409 | ) | $ | 127,642 | $ | 89,888 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income |
| | | 12,379 | 12,379 | |||||||||||||||
Issuance of common stock under stock options |
13 | 85 | | | 85 | |||||||||||||||
Grants of restricted share awards, net of forfeitures |
38 | | | | | |||||||||||||||
Tax deficiency on share awards |
| (38 | ) | | | (38 | ) | |||||||||||||
Excess tax benefit on share awards |
| 11 | | | 11 | |||||||||||||||
Share-based compensation |
| 574 | | | 574 | |||||||||||||||
Additional tender offer cost |
| | (50 | ) | | (50 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at March 31, 2016 |
7,753 | $ | 33,287 | $ | (70,459 | ) | $ | 140,021 | $ | 102,849 | ||||||||||
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
33
Nicholas Financial, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
Fiscal Year ended March 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Cash flows from operating activities: |
||||||||||||
Net income |
$ | 12,379 | $ | 16,856 | $ | 16,703 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||
Depreciation |
458 | 366 | 318 | |||||||||
(Gain) loss on sale of property and equipment |
(24 | ) | 6 | (64 | ) | |||||||
Provision for credit losses |
26,278 | 20,371 | 14,979 | |||||||||
Amortization of dealer discounts |
(13,811 | ) | (13,852 | ) | (13,491 | ) | ||||||
Deferred income taxes |
(292 | ) | 356 | 1,710 | ||||||||
Share-based compensation |
574 | 514 | 535 | |||||||||
Change in fair value of interest rate swap agreements |
24 | 364 | (688 | ) | ||||||||
Changes in operating assets and liabilities: |
||||||||||||
Prepaid expenses and other assets |
192 | 66 | (129 | ) | ||||||||
Accounts payable and accrued expenses |
(2,002 | ) | (1,085 | ) | 1,519 | |||||||
Income taxes receivable |
(480 | ) | 981 | (991 | ) | |||||||
Deferred revenues |
774 | 815 | 965 | |||||||||
|
|
|
|
|
|
|||||||
Net cash provided by operating activities |
24,070 | 25,758 | 21,366 | |||||||||
|
|
|
|
|
|
|||||||
Cash flows from investing activities: |
||||||||||||
Purchase and origination of finance contracts |
(173,027 | ) | (164,830 | ) | (156,997 | ) | ||||||
Principal payments received including recoveries |
137,627 | 138,752 | 135,992 | |||||||||
Increase in assets held for resale |
(401 | ) | (51 | ) | (493 | ) | ||||||
Purchase of property and equipment |
(913 | ) | (443 | ) | (465 | ) | ||||||
Proceeds from sale of property and equipment |
61 | 68 | 83 | |||||||||
|
|
|
|
|
|
|||||||
Net cash used in investing activities |
(36,653 | ) | (26,504 | ) | (21,880 | ) | ||||||
Cash flows from financing activities: |
||||||||||||
Net proceeds from line of credit |
12,000 | 71,100 | 2,400 | |||||||||
Payment of cash dividend |
| | (2,851 | ) | ||||||||
(Decrease) increase in drafts payable |
(977 | ) | 137 | 242 | ||||||||
Payment of debt origination costs |
(25 | ) | (318 | ) | (25 | ) | ||||||
Proceeds from exercise of share awards |
85 | 389 | 329 | |||||||||
Excess tax benefits of stock options |
11 | 600 | 256 | |||||||||
Purchase of common shares |
(50 | ) | (70,409 | ) | | |||||||
|
|
|
|
|
|
|||||||
Net cash provided by financing activities |
11,044 | 1,499 | 351 | |||||||||
|
|
|
|
|
|
|||||||
Net (decrease) increase in cash |
(1,539 | ) | 753 | (163 | ) | |||||||
Cash, beginning of year |
3,388 | 2,635 | 2,798 | |||||||||
|
|
|
|
|
|
|||||||
Cash, end of year |
$ | 1,849 | $ | 3,388 | $ | 2,635 | ||||||
|
|
|
|
|
|
|||||||
Supplemental disclosure of noncash investing and financing activities: |
||||||||||||
Tax deficiency from share awards |
$ | (38 | ) | $ | | $ | | |||||
|
|
|
|
|
|
See accompanying notes.
34
Nicholas Financial, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
1. Organization and Basis of Presentation
Nicholas Financial, Inc. (Nicholas Financial Canada) is a Canadian holding company incorporated under the laws of British Columbia with two wholly owned United States subsidiaries, Nicholas Data Services, Inc. (NDS) and Nicholas Financial, Inc. (NFI). NDS historically was engaged in supporting and updating industry-specific computer application software for small businesses located primarily in the Southeastern United States. NDS has ceased its operations; however it continues as the interim holding company for Nicholas Financial. NDSs activities accounted for less than 1% of the Companys consolidated revenues for each of the fiscal years ended March 31, 2015 and 2014. NFI is a specialized consumer finance company engaged primarily in acquiring and servicing automobile finance installment contracts (Contracts) for purchases of new and used automobiles and light trucks. To a lesser extent, NFI also offers direct consumer loans (Direct Loans) and sells consumer-finance related products. Both NDS and NFI are based in Florida, U.S.A. The accompanying consolidated financial statements are stated in U.S. dollars and are presented in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP).
The Company has one reportable segment, which is the consumer finance company.
2. Summary of Significant Accounting Policies
Consolidation
The consolidated financial statements include the accounts of Nicholas Financial Canada and its wholly owned subsidiaries, NDS and NFI, collectively referred to as (the Company). All intercompany transactions and balances have been eliminated.
Dividends
The following cash dividends were declared during fiscal year ended March 31, 2014. No dividends were declared during the fiscal years ended March 31, 2015 and 2016.
Fiscal Year |
Date Declared | Record Date | Date Paid |
Amount of
Dividend |
||||||
2014 |
May 7, 2013 | June 21, 2013 | June 28, 2013 | $ | 0.12 | |||||
August 13, 2013 | September 20, 2013 | September 27, 2013 | 0.12 | |||||||
|
|
|||||||||
$ | 0.24 | |||||||||
|
|
Payment of cash dividends results in a 5% withholding tax payable by the Company under the Canada-United States Income Tax Convention which is included in earnings under the caption of administrative expenses.
Tender Offer
On March 19, 2015, the Company announced the final results of the modified Dutch auction tender offer for the purchase of approximately 4.7 million shares of the Companys common shares by its principal operating subsidiary. The tender offer expired on March 13, 2015. Total payments for common shares, including costs were approximately $70.5 million. Such costs were recorded as an increase to treasury stock, reducing shareholders equity.
The aggregate number of common shares purchased in the tender offer by Nicholas represented approximately 38.0% of the Companys outstanding common shares as of March 17, 2015. Following settlement of the tender offer, the Company had approximately 7.7 million common shares outstanding.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses on finance receivables and the fair value of interest rate swap agreements.
35
2. Summary of Significant Accounting Policies (continued)
Finance Receivables
Finance receivables are recorded at cost, net of unearned interest, unearned dealer discounts and the allowance for credit losses. The amount of unearned interest, dealer discounts and allowance for credit losses as of March 31, 2016 and March 31, 2015 are approximately $186.3 and 169.1 million respectively (See Note 3).
Allowance for Credit Losses
The allowance for credit losses is increased by charges against earnings and decreased by charge-offs (net of recoveries). The Company aggregates Contracts into static pools consisting of Contracts purchased during a three-month period for each branch location as management considers these pools to have similar risk characteristics. Managements periodic evaluation of the adequacy of the allowance is based on the Companys past loan experience, known and inherent risks in the portfolio, adverse situations that may affect the borrowers ability to repay, the estimated value of any underlying collateral, and current economic conditions. As conditions change, the Companys level of provisioning and allowance may change as well.
Assets Held for Resale
Assets held for resale are stated at net realizable value and consist primarily of automobiles that have been repossessed by the Company and are awaiting final disposition. Most costs associated with repossession, transport and auction preparation expenses are reported under operating expenses in the period in which they are incurred.
Property and Equipment
Property and equipment are recorded at cost, net of accumulated depreciation. Expenditures for repairs and maintenance are charged to expense as incurred. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the assets as follows:
Automobiles |
3 years | |
Equipment |
5 years | |
Furniture and fixtures |
7 years | |
Leasehold improvements |
Lesser of lease term or useful life (generally 6 - 7 years) |
Drafts Payable
Drafts payable represent checks disbursed for loan purchases which have not yet been funded. Amounts generally clear within two business days of period end and then increase the line of credit or reduce cash.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases along with operating loss and tax credit carryforwards, if any. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date.
36
2. Summary of Significant Accounting Policies (continued)
The Company recognizes tax benefits from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from any such position would be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. It is the Companys policy to recognize interest and penalties accrued on any uncertain tax benefits as a component of income tax expense. The Company does not have any accrued interest or penalties associated with any unrecognized tax benefits, nor has the Company recognized any related interest or penalties during the three years ended March 31, 2016.
The Company files income tax returns in the U.S. Federal jurisdiction and various State jurisdictions. The Company is no longer subject to U.S. Federal and State tax examinations for years before 2013. The Company does not believe there will be any material changes in its unrecognized tax positions over the next 12 months.
Revenue Recognition
Interest income on finance receivables is recognized using the interest method. Accrual of interest income on finance receivables is suspended when a loan is contractually delinquent for 60 days or more or the collateral is repossessed, whichever is earlier, or when the account is in Chapter 13 bankruptcy. Chapter 13 bankruptcy accounts are accounted for under the cost-recovery method. Interest income on Chapter 13 bankruptcy accounts does not resume until all principal amounts are recovered (see Note 3).
A dealer discount represents the difference between the finance receivable, net of unearned interest, of a Contract, and the amount of money the Company actually pays for the Contract. The discount negotiated by the Company is a function of the lender, the wholesale value of the vehicle, and competition in any given market. In making decisions regarding the purchase of a particular Contract the Company considers the following factors related to the borrower: place and length of residence; current and prior job status; history in making installment payments for automobiles; current income; and credit history. In addition, the Company examines its prior experience with Contracts purchased from the dealer from which the Company is purchasing the Contract, and the value of the automobile in relation to the purchase price and the term of the Contract. The dealer discount is amortized as an adjustment to yield using the interest method over the life of the loan. The average dealer discount, as a percent of the amount financed, associated with new volume for the fiscal years ended March 31, 2016, 2015, and 2014 was 7.51%, 8.08% and 8.44%, respectively.
The amount of future unearned income is computed as the product of the Contract rate, the Contract term and the Contract amount.
Deferred revenues consist primarily of commissions received from the sale of ancillary products. These products include automobile warranties, roadside assistance programs, accident and health insurance, credit life insurance and forced placed automobile insurance. These commissions are amortized over the life of the contract using the interest method.
The Companys net costs for originating Direct Loans are deferred and recognized as an adjustment to the yield and are amortized over the life of the loan using the interest method.
37
2. Summary of Significant Accounting Policies (continued)
Earnings Per Share
The Company has granted stock compensation awards with nonforfeitable dividend rights which are considered participating securities. As such, earnings per share is calculated using the two-class method. Basic earnings per share is calculated by dividing net income allocated to common shareholders by the weighted average number of common shares outstanding during the period, which excludes the participating securities. Diluted earnings per share includes the dilutive effect of additional potential common shares from stock compensation awards. Earnings per share have been computed based on the following weighted average number of common shares outstanding:
Fiscal Year ended March 31,
(In thousands, except earnings per share numbers) |
||||||||||||
2016 | 2015 | 2014 | ||||||||||
Numerator: |
||||||||||||
Net income per consolidated statements of income |
$ | 12,379 | $ | 16,856 | $ | 16,703 | ||||||
Less: Allocation of earnings to participating securities |
(170 | ) | | | ||||||||
|
|
|
|
|
|
|||||||
Net income allocated to common stock |
12,209 | $ | 16,856 | $ | 16,703 | |||||||
|
|
|
|
|
|
|||||||
Basic earnings per share computation: |
||||||||||||
Net income allocated to common stock |
$ | 12,209 | $ | 16,856 | $ | 16,703 | ||||||
|
|
|
|
|
|
|||||||
Weighted average common shares outstanding, including shares considered participating securities |
7,727 | 12,013 | 12,096 | |||||||||
Less: Weighted average participating securities outstanding |
(105 | ) | | | ||||||||
|
|
|
|
|
|
|||||||
Weighted average shares of common stock |
7,622 | 12,013 | 12,096 | |||||||||
|
|
|
|
|
|
|||||||
Basic earnings per share |
$ | 1.60 | 1.40 | 1.38 | ||||||||
|
|
|
|
|
|
|||||||
Diluted earnings per share computation: |
||||||||||||
Net income allocated to common stock |
$ | 12,209 | $ | 16,856 | $ | 16,703 | ||||||
Undistributed earnings re-allocated to participating securities |
2 | | | |||||||||
|
|
|
|
|
|
|||||||
Net income allocated to common stock |
$ | 12,211 | $ | 16,856 | $ | 16,703 | ||||||
Weighted average common shares outstanding for basic earnings per share |
7,622 | 12,013 | 12,096 | |||||||||
Incremental shares from stock options |
70 | 179 | 229 | |||||||||
|
|
|
|
|
|
|||||||
Weighted average shares and dilutive potential common shares |
7,692 | 12,192 | 12,325 | |||||||||
|
|
|
|
|
|
|||||||
Diluted earnings per share |
$ | 1.59 | $ | 1.38 | $ | 1.36 | ||||||
|
|
|
|
|
|
Diluted earnings per share do not include the effect of certain stock options as their impact would be anti-dilutive. Approximately 161,000, 155,000, and 10,000 stock options were not included in the computation of diluted earnings per share for the years ended March 31, 2016, 2015 and 2014 respectively, because their effect would have been anti-dilutive.
Share-Based Payments
The grant date fair value of share awards is recognized in earnings over the requisite service period (presumptively the vesting period). The Company estimates the fair value of option awards using the Black-Scholes option pricing model. The risk-free interest rate is based upon a U.S. Treasury instrument with a life that is similar to the expected term of the options. Expected volatility is based upon the historical volatility for the previous period equal to the expected term of the options. The expected term is based upon the average life of previously issued options. The expected dividend yield is based upon the yield expected on date of grant to occur over the term of the option. The fair value of non-vested restricted and performance shares are measured at the market price of a share on a grant date.
38
2. Summary of Significant Accounting Policies (continued)
The pool of excess tax benefits available to absorb future tax deficiencies is based on increases to shareholders equity related to tax benefits from share-based compensation, combined with the tax on the cumulative incremental compensation costs previously included in pro forma net income disclosures as if the Company had applied the fair-value method to all awards.
Fair Value Measurements
The Company measures specific assets and liabilities at fair value, which is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When applicable, the Company utilizes market data or assumptions that market participants would use in pricing the asset or liability under a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs about which little or no market data exists, therefore requiring an entity to develop its own assumptions (see Note 7).
Financial Instruments and Concentrations
The Companys financial instruments consist of cash, finance receivables (accrued interest is a part of finance receivables), the line of credit, and interest rate swap agreements. Financial instruments that are exposed to concentrations of credit risk are primarily finance receivables and cash.
As of March 31, 2016, the Company operated in eighteen states through sixty-seven branch locations. Florida represented 29% of the finance receivables total as of March 31, 2016. Ohio represented 14%, Georgia represented 10% and North Carolina represented 8% of the finance receivables total as of March 31, 2016. Of the remaining fourteen states, no one state represented more than 5% of the total finance receivables. The Company provides credit during the normal course of business and performs ongoing credit evaluations of its customers.
The Company maintains reserves for potential credit losses which, when realized, have been within the range of managements expectations. The Company perfects a primary security interest in all vehicles financed as a form of collateral.
The combined account balances the Company maintains at financial institutions typically exceed federally insured limits, and there is a concentration of credit risk related to accounts on deposit in excess of federally insured limits. The Company has not experienced any losses in such accounts and believes this risk of loss is not significant.
Interest Rate Swap Agreements
Interest rate swap agreements are reported as either assets or liabilities in the consolidated balance sheet at fair value. Interest rate swap agreements are not designated as cash-flow hedges, and accordingly, the changes in the fair value are recorded in earnings. The Company does not use interest rate swap agreements for speculative purposes (see Note 6).
Statements of Cash Flows
Cash paid for income taxes for the years ended March 31, 2016, 2015 and 2014 was approximately $8.5 million, $7.3 million and $10.8 million respectively. Cash paid for interest, including debt origination costs for the years ended March 31, 2016, 2015 and 2014 was approximately $8.8 million, $6.1 million and $5.7 million respectively.
Recent Accounting Pronouncements
In March 2016, the Financial Accounting Standards Board (FASB) issued the Accounting Standards Update (ASU) 2016-09, CompensationStock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public entities, ASU 2016-09 is effective for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. Early application is permitted. The Company is currently evaluating the impact of the adoption of this ASU on the consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, Leases, intended to improve financial reporting about leasing transactions. The ASU affects all companies and other organizations that lease assets such as real estate, airplanes, and manufacturing equipment.
39
2. Summary of Significant Accounting Policies (continued)
The ASU will require organizations that lease assetsreferred to as lesseesto recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The accounting by organizations that own the assets leased by the lesseealso known as lessor accounting will remain largely unchanged from current U.S. GAAP. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. The Company is currently evaluating the impact of the pending adoption of this ASU on the Companys consolidated financial statements.
In January 2016, the FASB issued ASU No. 2016-01, Financial InstrumentsRecognition and Measurement of Financial Assets and Liabilities, which is intended to improve the recognition and measurement of financial instruments by requiring: equity investments (other than equity method or consolidation) to be measured at fair value with changes in fair value recognized in net income; public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as own credit) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. This ASU is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This ASU permits early adoption of the instrument-specific credit risk provision. The Company is currently evaluating the impact of the pending adoption of this ASU on the Companys consolidated financial statements.
In April 2015, the FASB issued ASU No. 2015-03, InterestImputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issued ASU No. 2015-15, since 2015-03 did not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. The SEC staff indicated they would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The amendments are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption of the amendments is permitted. The Company does not believe the adoption of this ASU will have a significant impact on the consolidated financial statements.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The ASU requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU, and all subsequently issued clarifying ASUs, will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The standard permits the use of either the retrospective or cumulative effect transition method. On July 9, 2015, the FASB approved the deferral of the effective date of ASU 2014-09 by one year. As a result, ASU 2014-09 will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The ASU would permit public entities to adopt the ASU early, but not before the original effective date (i.e., annual periods beginning after December 15, 2016). The Company has not yet selected a transition method and is currently evaluating the impact of the pending adoption of this ASU on the Companys consolidated financial statements.
The Company does not believe there are any other recently issued accounting standards that have not yet been adopted that will have a material impact on the Companys consolidated financial statements.
3. Finance Receivables
Finance receivables consist of Contracts and Direct Loans, each of which comprise a portfolio segment. Each portfolio segment consists of smaller balance homogeneous loans which are collectively evaluated for impairment.
The Company purchases individual Contracts from new and used automobile dealers in its markets. There is no relationship between the Company and the dealer with respect to a given Contract once the assignment of that Contract is complete. The dealer has no vested interest in the performance of any Contract the Company purchases. The Company charges-off receivables when an individual account has become more than 120 days contractually delinquent. In the event of repossession, the charge-off will occur in the month in which the vehicle was repossessed.
40
3. Finance Receivables (continued)
Contracts included in finance receivables are detailed as follows as of fiscal years ended March 31:
(In thousands) | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Indirect finance receivables, gross contract |
$ | 487,118 | $ | 447,043 | $ | 413,612 | ||||||
Unearned interest |
(152,911 | ) | (136,896 | ) | (121,996 | ) | ||||||
|
|
|
|
|
|
|||||||
Indirect finance receivables, net of unearned interest |
334,207 | 310,147 | 291,616 | |||||||||
Unearned dealer discounts |
(18,023 | ) | (17,780 | ) | (17,214 | ) | ||||||
|
|
|
|
|
|
|||||||
Indirect finance receivables, net of unearned interest and unearned dealer discounts |
316,184 | 292,367 | 274,402 | |||||||||
Allowance for credit losses |
(12,265 | ) | (11,325 | ) | (12,889 | ) | ||||||
|
|
|
|
|
|
|||||||
Indirect finance receivables, net |
$ | 303,919 | $ | 281,042 | $ | 261,513 | ||||||
|
|
|
|
|
|
The terms of the Contracts range from 12 to 72 months and bear a weighted average contractual interest rate of 22.67% and 22.86% as of March 31, 2016 and 2015, respectively.
The following table sets forth a reconciliation of the changes in the allowance for credit losses on Contracts for the fiscal years ended March 31:
(In thousands) | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Balance at beginning of year |
$ | 11,325 | $ | 12,889 | $ | 16,091 | ||||||
Provision for credit losses |
25,926 | 20,008 | 14,694 | |||||||||
Losses absorbed |
(27,963 | ) | (25,042 | ) | (21,691 | ) | ||||||
Recoveries |
2,977 | 3,470 | 3,795 | |||||||||
|
|
|
|
|
|
|||||||
Balance at end of year |
$ | 12,265 | $ | 11,325 | $ | 12,889 | ||||||
|
|
|
|
|
|
The Company purchases Contracts from automobile dealers at a negotiated price that is less than the original principal amount being financed by the purchaser of the automobile. The Contracts are predominately for used vehicles. As of March 31, 2016, the average model year of vehicles collateralizing the portfolio was a 2007 vehicle. The Company utilizes a static pool approach to track portfolio performance. If the allowance for credit losses is determined to be inadequate for a static pool, then an additional charge to income through the provision is used to maintain adequate reserves based on managements evaluation of the risk inherent in the loan portfolio, the composition of the portfolio, and current economic conditions. Such evaluation, considers among other matters, the estimated net realizable value of the underlying collateral, economic conditions, historical loan loss experience, managements estimate of probable credit losses and other factors that warrant recognition in providing for an adequate allowance for credit losses.
Direct Loans are also included in finance receivables and are detailed as follows as of fiscal years ended March 31:
(In thousands) | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Direct finance receivables, gross contract |
$ | 11,012 | $ | 10,932 | $ | 10,731 | ||||||
Unearned interest |
(2,346 | ) | (2,367 | ) | (2,311 | ) | ||||||
|
|
|
|
|
|
|||||||
Direct finance receivables, net of unearned interest |
8,666 | 8,565 | 8,420 | |||||||||
Allowance for credit losses |
(748 | ) | (703 | ) | (590 | ) | ||||||
|
|
|
|
|
|
|||||||
Direct finance receivables, net |
$ | 7,918 | $ | 7,862 | $ | 7,830 | ||||||
|
|
|
|
|
|
The terms of the Direct Loans range from 12 to 60 months and bear a weighted average contractual interest rate of 25.72% and 26.14% as of March 31, 2016 and 2015, respectively.
41
3. Finance Receivables (continued)
The following table sets forth a reconciliation of the changes in the allowance for credit losses on Direct Loans for the fiscal years ended March 31:
(In thousands) | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Balance at beginning of year |
$ | 703 | $ | 590 | $ | 468 | ||||||
Provision for credit losses |
352 | 362 | 285 | |||||||||
Losses absorbed |
(328 | ) | (277 | ) | (192 | ) | ||||||
Recoveries |
21 | 28 | 29 | |||||||||
|
|
|
|
|
|
|||||||
Balance at end of year |
$ | 748 | $ | 703 | $ | 590 | ||||||
|
|
|
|
|
|
Direct Loans are loans originated directly between the Company and the consumer. These loans are typically for amounts ranging from $1,000 to $9,000 and are generally secured by a lien on an automobile, watercraft or other permissible tangible personal property. The majority of Direct Loans are originated with current or former customers under the Companys automobile financing program. The typical Direct Loan represents a significantly better credit risk than Contracts due to the customers historical payment history with the Company; however, the underlying collateral is less valuable. In deciding whether or not to make a loan, the Company considers the individuals credit history, job stability, income and impressions created during a personal interview with a Company loan officer. Additionally, because most of the Direct Loans made by the Company to date have been made to borrowers under Contracts previously purchased by the Company, the payment history of the borrower under the Contract is a significant factor in making the loan decision. As of March 31, 2016, loans made by the Company pursuant to its Direct Loan program constituted approximately 2% of the aggregate principal amount of the Companys loan portfolio. Changes in the allowance for credit losses for both Contracts and Direct Loans were driven by current economic conditions and credit loss trends over several reporting periods which are utilized in estimating future losses and overall portfolio performance.
A performing account is defined as an account that is less than 61 days past due. A non-performing account is defined as an account that is contractually delinquent for 61 days or more or is a Chapter 13 bankruptcy account, and the accrual of interest income is suspended. When an account is 120 days contractually delinquent, the account is written off. Upon notification of a bankruptcy, an account is monitored for collection with other Chapter 13 bankruptcy accounts. In the event the debtors balance has been reduced by the bankruptcy court, the Company will record a loss equal to the amount of principal balance reduction. The remaining balance will be reduced as payments are received by the bankruptcy court. In the event an account is dismissed from bankruptcy, the Company will decide, based on several factors, to begin repossession proceedings or to allow the customer to begin making regularly scheduled payments.
The following table is an assessment of the credit quality by creditworthiness as of March 31:
(In thousands) | ||||||||||||||||
2016 | 2015 | |||||||||||||||
Contracts |
Direct
Loans |
Contracts |
Direct
Loans |
|||||||||||||
Performing accounts |
$ | 473,429 | $ | 10,899 | $ | 438,318 | $ | 10,855 | ||||||||
Non-performing accounts |
9,435 | 79 | 4,765 | 57 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 482,864 | $ | 10,978 | $ | 443,083 | $ | 10,912 | ||||||||
Chapter 13 bankruptcy accounts, net of unearned interest |
4,254 | 34 | 3,960 | 20 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Finance receivables, gross contract |
$ | 487,118 | $ | 11,012 | $ | 447,043 | $ | 10,932 | ||||||||
|
|
|
|
|
|
|
|
42
3. Finance Receivables (continued)
The following tables present certain information regarding the delinquency rates experienced by the Company with respect to Contracts and Direct Loans, excluding any Chapter 13 bankruptcy accounts:
(In thousands) | ||||||||||||||||||||
Contracts |
Gross Balance
Outstanding |
31 60 days | 61 90 days |
Over
90 days |
Total | |||||||||||||||
March 31, 2016 |
$ | 482,864 | $ | 17,466 | $ | 6,069 | $ | 3,366 | $ | 26,901 | ||||||||||
3.61 | % | 1.26 | % | 0.70 | % | 5.57 | % | |||||||||||||
March 31, 2015 |
$ | 443,083 | $ | 13,694 | $ | 3,435 | $ | 1,330 | $ | 18,459 | ||||||||||
3.09 | % | 0.78 | % | 0.30 | % | 4.17 | % | |||||||||||||
March 31, 2014 |
$ | 410,532 | $ | 11,713 | $ | 2,944 | $ | 1,897 | $ | 16,554 | ||||||||||
2.85 | % | 0.72 | % | 0.46 | % | 4.03 | % | |||||||||||||
Direct Loans |
Gross Balance
Outstanding |
31 60 days | 61 90 days |
Over
90 days |
Total | |||||||||||||||
March 31, 2016 |
$ | 10,978 | $ | 161 | $ | 41 | $ | 38 | $ | 240 | ||||||||||
1.47 | % | 0.37 | % | 0.35 | % | 2.19 | % | |||||||||||||
March 31, 2015 |
$ | 10,912 | $ | 122 | $ | 42 | $ | 15 | $ | 179 | ||||||||||
1.12 | % | 0.38 | % | 0.14 | % | 1.64 | % | |||||||||||||
March 31, 2014 |
$ | 10,705 | $ | 143 | $ | 25 | $ | 23 | $ | 191 | ||||||||||
1.34 | % | 0.23 | % | 0.21 | % | 1.78 | % |
4. Property and Equipment
Property and equipment as of March 31, 2016 and 2015 is summarized as follows:
(In thousands) | ||||||||||||
Cost |
Accumulated
Depreciation |
Net Book
Value |
||||||||||
2016 |
||||||||||||
Automobiles |
$ | 623 | $ | 413 | $ | 210 | ||||||
Equipment |
1,473 | 664 | 809 | |||||||||
Furniture and fixtures |
512 | 408 | 104 | |||||||||
Leasehold improvements |
1,144 | 977 | 167 | |||||||||
|
|
|
|
|
|
|||||||
$ | 3,752 | $ | 2,462 | $ | 1,290 | |||||||
|
|
|
|
|
|
|||||||
2015 |
||||||||||||
Automobiles |
$ | 613 | $ | 365 | $ | 248 | ||||||
Equipment |
906 | 516 | 390 | |||||||||
Furniture and fixtures |
486 | 391 | 95 | |||||||||
Leasehold improvements |
1,103 | 964 | 139 | |||||||||
|
|
|
|
|
|
|||||||
$ | 3,108 | $ | 2,236 | $ | 872 | |||||||
|
|
|
|
|
|
5. Line of Credit
On January 31, 2015 the Company executed an amendment with its consortium of lenders. Included in the amendment was an increase in the size of the credit facility (the Line) from $150.0 million to $225.0 million once the tender offer (see Note 1) became effective which was executed on March 13, 2015. The pricing of the Line, which did not change, expires on January 30, 2018, is 300 basis points above 1-month LIBOR with a 1% floor on LIBOR (4.00% at March 31, 2016 and March 31, 2015) plus an unused line fee of 0.50%. Pledged as collateral for the Line are all of the assets of the Company. The outstanding amount of the Line was $211.0 million and $199.0 million as of March 31, 2016 and March 31, 2015, respectively. The amount available under the Line was $14.0 million and $26.0 million as of March 31, 2016 and March 31, 2015, respectively.
43
5. Line of Credit (continued)
The Line requires compliance with certain financial ratios and covenants and satisfaction of specified financial tests, including maintenance of asset quality and performance tests. Dividends do not require consent in writing by the agent and majority lenders under the new Line as long as the Company is in compliance with a net income covenant. As of March 31, 2016, the Company was in compliance with all debt covenants.
6. Interest Rate Swap Agreements
The Company utilizes interest rate swap agreements to manage exposure to variability in expected cash flows attributable to interest rate risk. The interest rate swap agreements convert a portion of the Companys floating rate debt to a fixed rate, more closely matching the interest rate characteristics of the Companys finance receivables. As of the twelve months ended March 31, 2016 and 2015, no new contracts were initiated and no contracts matured.
The Company currently has two interest rate swap agreements. A June 4, 2012 interest rate swap agreement provides for a five-year term in which the Company pays a fixed rate of 1% and receives payments from the counterparty on the 1-month LIBOR rate. This interest rate swap agreement has an effective date of June 13, 2012 and a notional amount of $25.0 million. A July 30, 2012 agreement provides for a five-year term in which the Company pays a fixed rate of 0.87% and receives payments from the counterparty on the 1-month LIBOR rate. This interest rate swap agreement has an effective date of August 13, 2012 and a notional amount of $25.0 million.
The locations and amounts of losses recognized in income are detailed as follows for the fiscal years ended March 31:
(In thousands) | ||||||||
2016 | 2015 | |||||||
Periodic change in fair value of interest rate swap agreements |
$ | (24 | ) | $ | (364 | ) | ||
Periodic settlement differentials included in interest expense |
(343 | ) | (393 | ) | ||||
|
|
|
|
|||||
Loss recognized in income |
$ | (367 | ) | $ | (757 | ) | ||
|
|
|
|
Net realized losses from the interest rate swap agreements were recorded in the interest expense line item of the consolidated statements of income.
The following table summarizes the average variable rates received and average fixed rates paid under the interest rate swap agreements as of March 31:
2016 | 2015 | |||||||
Average variable rate received |
0.26 | % | 0.16 | % | ||||
Average fixed rate paid |
0.94 | % | 0.94 | % |
7. Fair Value Disclosures
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
The Company estimates the fair value of interest rate swap agreements based on the estimated net present value of the future cash flows using a forward interest rate yield curve in effect as of the measurement period, adjusted for nonperformance risk, if any, including a quantitative and qualitative evaluation of both the Companys credit risk and the counterpartys credit risk. Accordingly, the Company classifies interest rate swap agreements as Level 2.
Fair Value Measurement Using
(In thousands) |
||||||||||||||||
Description |
Level 1 | Level 2 | Level 3 |
Fair
Value |
||||||||||||
Interest rate swap agreements: |
||||||||||||||||
March 31, 2016 liability: |
$ | | $ | (205 | ) | $ | | $ | (205 | ) | ||||||
March 31, 2015 liability: |
$ | | $ | (181 | ) | $ | | $ | (181 | ) |
44
7. Fair Value Disclosures (continued)
Financial Instruments Not Measured at Fair Value
The Companys financial instruments consist of cash, finance receivables and the Line. For each of these financial instruments the carrying value approximates fair value.
Finance receivables, net approximates fair value based on the price paid to acquire Contracts. The price paid reflects competitive market interest rates and purchase discounts for the Companys chosen credit grade in the economic environment. This market is highly liquid as the Company acquires individual loans on a daily basis from dealers. The initial terms of the Contracts range from 12 to 72 months. The initial terms of the Direct Loans range from 12 to 60 months. In addition, there have been minimal decreases in interest rates and purchase discounts related to these types of loans due to the competitive nature of the current market. If liquidated outside of the normal course of business, the amount received may not be the carrying value.
Based on current market conditions, any new or renewed credit facility would contain pricing that approximates the Companys current Line. Based on these market conditions, the fair value of the Line as of March 31, 2016 was estimated to be equal to the book value. The interest rate for the Line is a variable rate based on LIBOR pricing options.
Fair Value Measurement Using
(In thousands) |
||||||||||||||||||||
Description |
Level 1 | Level 2 | Level 3 |
Fair
Value |
Carrying
Value |
|||||||||||||||
Cash: |
||||||||||||||||||||
March 31, 2016 |
$ | 1,849 | $ | | $ | | $ | 1,849 | $ | 1,849 | ||||||||||
March 31, 2015 |
$ | 3,388 | $ | | $ | | $ | 3,388 | $ | 3,388 | ||||||||||
Finance receivables: |
||||||||||||||||||||
March 31, 2016 |
$ | | $ | | $ | 311,837 | $ | 311,837 | $ | 311,837 | ||||||||||
March 31, 2015 |
$ | | $ | | $ | 288,904 | $ | 288,904 | $ | 288,904 | ||||||||||
Line of credit: |
||||||||||||||||||||
March 31, 2016 |
$ | | $ | 211,000 | $ | | $ | 211,000 | $ | 211,000 | ||||||||||
March 31, 2015 |
$ | | $ | 199,000 | $ | | $ | 199,000 | $ | 199,000 |
Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis
The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a nonrecurring basis. The Company did not have any assets or liabilities measured at fair value on a nonrecurring basis as of March 31, 2016 and 2015.
8. Income Taxes
The provision for income taxes consists of the following for the years ended March 31:
(In thousands) | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Current: |
||||||||||||
Federal |
$ | 6,931 | $ | 7,688 | $ | 8,709 | ||||||
State |
1,049 | 1,196 | 1,395 | |||||||||
|
|
|
|
|
|
|||||||
Total current |
7,980 | 8,884 | 10,104 | |||||||||
|
|
|
|
|
|
|||||||
Deferred: |
||||||||||||
Federal |
(221 | ) | 308 | 1,474 | ||||||||
State |
(33 | ) | 48 | 236 | ||||||||
|
|
|
|
|
|
|||||||
Total deferred |
(254 | ) | 356 | 1,710 | ||||||||
|
|
|
|
|
|
|||||||
Income tax expense |
$ | 7,726 | $ | 9,240 | $ | 11,814 | ||||||
|
|
|
|
|
|
45
8. Income Taxes (continued)
The net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes are reflected in deferred income taxes. Significant components of the Companys deferred tax assets consist of the following as of March 31:
(In thousands) | ||||||||
2016 | 2015 | |||||||
Allowance for credit losses not currently deductible for tax purposes |
$ | 5,918 | $ | 5,552 | ||||
Share-based compensation |
491 | 514 | ||||||
Interest rate swap agreements |
78 | 69 | ||||||
Other items |
128 | 226 | ||||||
|
|
|
|
|||||
Deferred income taxes |
$ | 6,615 | $ | 6,361 | ||||
|
|
|
|
The provision for income taxes reflects an effective U.S tax rate, which differs from the corporate tax rate for the following reasons:
(In thousands) | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Provision for income taxes at Federal statutory rate |
$ | 7,037 | $ | 9,134 | $ | 9,981 | ||||||
Increase (decrease) resulting from: |
||||||||||||
State income taxes, net of Federal benefit
|
660 | 809 | 1,059 | |||||||||
Transaction costs |
| (734 | ) | 734 | ||||||||
Other |
29 | 31 | 40 | |||||||||
|
|
|
|
|
|
|||||||
Income tax expense |
$ | 7,726 | $ | 9,240 | $ | 11,814 | ||||||
|
|
|
|
|
|
The Companys effective tax rate increased to 38.43% in fiscal 2016 from 35.41% in fiscal 2015 and 41.73% in fiscal 2014. The Company had approximately $2.1 million of previously non-deductible expenses associated with the potential sale of the Company in 2014. Since the sale of the Company was not consummated, the $2.1 million became deductible in 2015 creating a favorable effective tax rate.
9. Share-Based Payments
The Company has share awards outstanding under two share-based compensation plans (the Equity Plans). The Company believes that such awards better align the interests of its employees with those of its shareholders. Under the shareholder-approved 2006 Equity Incentive Plan (the 2006 Plan) the Board of Directors was authorized to grant option awards for up to approximately 1.1 million common shares. On August 13, 2015, the Companys shareholders approved the Nicholas Financial, Inc. Omnibus Incentive Plan (the 2015 Plan) for employees and non-employee directors. Under the 2015 Plan, the Board of Directors is authorized to grant total share awards for up to 750,000 common shares. Awards under the 2006 Plan will continue to be governed by the terms of that plan. The 2015 Plan replaced the 2006 Plan; accordingly no additional option awards may be granted under the 2006 Plan. In addition to option awards, the 2015 Plan provides for restricted stock, performance share awards, and other equity based compensation.
Option awards previously granted to employees and directors under the 2006 Plan generally vest ratably based on service over a five- and three-year period, respectively, and generally have a contractual term of ten years. Vesting and contractual terms for option awards under the 2015 Plan are essentially the same as those of the 2006 Plan. Restricted stock awards generally cliff vest over a three-year period based on service conditions. The annual vesting of performance share awards is contingent upon the attainment of company-wide performance goals including annual revenue growth and operating income targets. There are no post-vesting restrictions for share awards.
The Company funds share awards from authorized but unissued shares and does not purchase shares to fulfill the obligations of the plans. Cash dividends, if any, are not paid on unvested performance shares or unexercised options, but are paid on unvested restricted stock awards.
46
9. Share-Based Payments (continued)
The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:
2016 | 2015 | |||||||
Risk-free interest rate |
1.58 | % | 1.68 | % | ||||
Weighted average expected original term |
5 years | 5 years | ||||||
Expected volatility |
23 | % | 23 | % | ||||
Expected dividend yield |
0.00 | % | 3.65 | % |
The Company did not grant any options during the year ended March 31, 2014.
A summary of option activity under the Equity Plans as of March 31, 2016, and changes during the year are presented below.
(Shares in thousands) | ||||||||||||||||
Options |
Shares |
Weighted
Average Exercise Price |
Weighted
Average Remaining Contractual Term |
Aggregate
Intrinsic Value |
||||||||||||
Outstanding at March 31, 2015 |
363 | $ | 9.86 | |||||||||||||
Granted |
10 | $ | 12.95 | |||||||||||||
Exercised |
(13 | ) | $ | 6.45 | ||||||||||||
Forfeited |
(3 | ) | $ | 10.07 | ||||||||||||
|
|
|
|
|||||||||||||
Outstanding at March 31, 2016 |
357 | $ | 10.07 | 5.75 | $ | 725 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Exercisable at March 31, 2016 |
198 | $ | 7.75 | 4.04 | $ | 725 | ||||||||||
|
|
|
|
|
|
|
|
The Company granted approximately 10,000 options with a weighted average fair value of $3.01 during the year ended March 31, 2016. The total intrinsic value of options exercised during the years ended March 31, 2016, 2015 and 2014 was approximately $82,000, $1,829,000, and $699,000 respectively.
During the fiscal year ended March 31, 2016, approximately 13,000 options were exercised at exercise prices ranging from $1.20 to $10.96 per share. During the same period approximately 3,000 options were forfeited at exercise prices ranging from $3.60 to $10.96 per share.
Cash received from options exercised during the fiscal years ended March 31, 2016, 2015 and 2014 totaled approximately $85,000, $389,000, and $329,000, respectively. Related income tax benefits during the same periods totaled approximately $31,000, $700,000, and $267,000, respectively. Such amounts are included in proceeds from exercise of stock options and excess tax benefit on share awards under cash flows from financing activities in the consolidated statements of cash flows. As of March 31, 2016, there was approximately $246,000 of total unrecognized compensation cost related to options granted. That cost is expected to be recognized over a weighted-average period of approximately 2.6 years.
A summary of the status of the Companys non-vested restricted shares under the Equity Plan as of March 31, 2016, and changes during the year then ended is presented below.
(Shares in thousands) | ||||||||||||||||
Restricted Share Awards |
Shares |
Weighted
Average Grant Date Fair Value |
Weighted
Average Remaining Contractual Term |
Aggregate
Intrinsic Value |
||||||||||||
Non-vested at March 31, 2015 |
89 | $ | 13.56 | |||||||||||||
Granted |
38 | $ | 13.27 | |||||||||||||
Vested |
(45 | ) | $ | 12.93 | ||||||||||||
Forfeited |
| $ | | |||||||||||||
|
|
|
|
|||||||||||||
Non-vested at March 31, 2016 |
82 | $ | 13.78 | 1.75 | $ | 879 | ||||||||||
|
|
|
|
|
|
|
|
47
9. Share-Based Payments (continued)
The Company awarded approximately 38,000 restricted shares during the fiscal year ended March 31, 2016. During the same period no restricted shares were forfeited.
As of March 31, 2016, there was approximately $643,000 of total unrecognized compensation cost related to non-vested restricted share awards granted under the Equity Plans. That cost is expected to be recognized over a weighted-average period of approximately 1.75 years.
The Company did not award any performance shares during the fiscal year ended March 31, 2016 or March 31, 2015. As of March 31, 2016, under the Equity Plans, there were no non-vested performance shares and no unrecognized compensation related to performance shares.
10. Employee Benefit Plan
The Company has a 401(k) retirement plan under which all employees are eligible to participate. Employee contributions are voluntary and subject to Internal Revenue Service limitations. The Company did not make a discretionary matching employee contribution. The Board will re-evaluate the Companys matching policy for plan year 2017 later this year. For the fiscal years ended March 31, 2016, 2015 and 2014, the Company recorded expenses of approximately $7,000, each year related to this plan.
11. Commitments and Contingencies
The Company leases corporate and branch offices under operating lease agreements which provide for annual minimum rental payments as follows:
Fiscal Year Ending March 31 |
(In thousands) | |||
2017 |
$ | 2,101 | ||
2018 |
1,610 | |||
2019 |
1,164 | |||
2020 |
581 | |||
2021 |
79 | |||
|
|
|||
$ | 5,535 | |||
|
|
Rent expense for the fiscal years ended March 31, 2016, 2015, and 2014 was approximately $2.3, $2.1, and $2.0 million respectively. The Company recognizes rent expense on a straight-line basis over the term of the lease, taking into account, when applicable, lessor incentives for tenant improvements, periods where no rent payment is required and escalations in rent payments over the term of the lease.
The Company currently is not a party to any pending legal proceedings other than ordinary routine litigation incidental to its business, none of which, if decided adversely to the Company, would, in the opinion of management, have a material adverse effect on the Companys financial condition or results of operations.
48
12. Quarterly Results of Operations (Unaudited)
Fiscal Year ended March 31, 2016
(In thousands, except earnings per share amounts) |
||||||||||||||||
First
Quarter |
Second
Quarter |
Third
Quarter |
Fourth
Quarter |
|||||||||||||
Total revenue |
$ | 22,025 | $ | 22,687 | $ | 22,757 | $ | 23,238 | ||||||||
Interest expense |
2,166 | 2,273 | 2,311 | 2,257 | ||||||||||||
Provision for credit losses |
4,989 | 6,177 | 7,599 | 7,513 | ||||||||||||
Non-interest expense |
8,915 | 8,940 | 8,422 | 9,040 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating income before income taxes |
5,955 | 5,297 | 4,425 | 4,428 | ||||||||||||
Income tax expense |
2,285 | 2,041 | 1,698 | 1,702 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income |
$ | 3,670 | $ | 3,256 | $ | 2,727 | $ | 2,726 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Earnings per share: |
||||||||||||||||
Basic |
$ | 0.48 | $ | 0.43 | $ | 0.36 | $ | 0.35 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted |
$ | 0.47 | $ | 0.42 | $ | 0.35 | $ | 0.35 | ||||||||
|
|
|
|
|
|
|
|
Fiscal Year ended March 31, 2015
(In thousands, except earnings per share amounts) |
||||||||||||||||
First
Quarter |
Second
Quarter |
Third
Quarter |
Fourth
Quarter |
|||||||||||||
Total revenue |
$ | 21,333 | $ | 21,723 | $ | 21,801 | $ | 21,933 | ||||||||
Interest expense |
1,449 | 1,485 | 1,458 | 1,578 | ||||||||||||
Provision for credit losses |
4,232 | 5,154 | 5,797 | 5,188 | ||||||||||||
Non-interest expense |
8,921 | 8,089 | 8,408 | 8,935 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating income before income taxes |
6,731 | 6,995 | 6,138 | 6,232 | ||||||||||||
Income tax expense |
1,822 | 2,665 | 2,369 | 2,384 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income |
$ | 4,909 | $ | 4,330 | $ | 3,769 | $ | 3,848 | ||||||||
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Earnings per share: |
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Basic |
$ | 0.40 | $ | 0.36 | $ | 0.31 | $ | 0.34 | ||||||||
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Diluted |
$ | 0.40 | $ | 0.35 | $ | 0.30 | $ | 0.33 | ||||||||
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49
Item 9. | Changes In and Disagreements with Accountants on Accounting and Financial Disclosure |
None.
Item 9A. | Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures designed to ensure information required to be disclosed in its reports filed pursuant to the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms. Such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure. The Companys management, including its Chief Executive Officer and Chief Financial Officer, does not expect that the Companys disclosure controls and procedures or internal controls will prevent all possible error and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.
The Companys management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the Companys disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of March 31, 2016. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Companys disclosure controls and procedures were effective as of March 31, 2016.
Managements Report on Internal Control over Financial Reporting
The Companys management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. The Companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of financial statements in accordance with generally accepted accounting principles. The Companys management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2016, the end of the fiscal year covered by this Report, based on the criteria set forth in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on managements evaluation under the framework in Internal Control-Integrated Framework , management has concluded that the Companys internal control over financial reporting was effective as of March 31, 2016.
Dixon Hughes Goodman LLP, an independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as of March 31, 2016, as stated in their report, which is included below.
June 14, 2016
Ralph T. Finkenbrink |
Katie L. MacGillivary | |
President and Chief Executive Officer |
Vice President-Finance and Chief Financial Officer |
Changes in Internal Control Over Financial Reporting
No change in the Companys internal control over financial reporting occurred during the Companys last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.
50
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Nicholas Financial, Inc.
We have audited Nicholas Financial, Inc. and Subsidiaries (the Company) internal control over financial reporting as of March 31, 2016, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ( the COSO criteria). The Companys management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Managements Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Companys internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2016, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements of Nicholas Financial, Inc. as of and for the year ended March 31, 2016, and our report dated June 14, 2016, expressed an unqualified opinion.
/s/ Dixon Hughes Goodman LLP
Atlanta, Georgia
June 14, 2016
51
Item 9B. | Other Information |
None.
Item 10. | Directors, Executive Officers and Corporate Governance |
The information to be set forth under the captions Proposal 1: Election of Directors, Board of Directors, Executive Officers and Compensation and Section 16(a) Beneficial Ownership Reporting Compliance in the definitive Proxy Statement and Information Circular for the 2016 Annual General Meeting of Shareholders of the Company, which will be filed with the SEC on or about July 20, 2016 (the Proxy Statement), is incorporated herein by reference.
The Company has adopted a written code of ethics applicable to its chief executive officer, chief financial officer, principal accounting officer and persons performing similar functions. The text of this code of ethics is filed as Exhibit 14 to this Report. A copy of the code of ethics is also posted on the Companys web site at www.nicholasfinancial.com . The Company intends to satisfy the disclosure requirements under Item 5.05 of the SECs Current Report on Form 8-K regarding amendments to, or waivers from, the code of ethics by posting such information on the Companys web site at www.nicholasfinancial.com . The Company is not including the information contained on or available through its web site as a part of, or incorporating such information by reference into, this Report.
Item 11. | Executive Compensation, Compensation Interlocks and Insider Participation |
The information to be set forth under the captions Executive Officers and Compensation and Board of Directors in the Proxy Statement is incorporated herein by reference.
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
The information to be set forth under the caption Voting Shares and Ownership of Management and Principal Holders in the Proxy Statement is incorporated herein by reference. See also Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Securities Authorized for Issuance Under Equity Compensation Plans on page 16 and 17 of this Report for certain information relating to the Companys equity compensation plans.
Item 13. | Certain Relationships and Related Transactions, Director Independence and Board of Directors |
The information to be set forth under the captions Board of Directors and Certain Relationships and Related Transactions in the Proxy Statement is incorporated herein by reference.
Item 14. | Principal Accountant Fees and Services |
The information to be set forth under the caption Proposal 2: Ratification of Appointment of Independent Auditors in the Proxy Statement is incorporated herein by reference.
52
Item 15. | Exhibits and Financial Statement Schedules |
(a) | The following documents are filed as part of this Report: |
(1) | Financial Statements |
See Part II, Item 8, of this Report. |
(2) | Financial Statement Schedules |
All financial schedules are omitted as the required information is not applicable or the information is presented in the consolidated financial statements or related notes. |
(3) | Exhibits |
Exhibit No. |
Description |
|
3.1 | Articles of Nicholas Financial, Inc. (1) | |
3.2 | Notice of Articles of Nicholas Financial, Inc. (2) | |
4 | Form of Common Stock Certificate (3) | |
10.1 | Second Amended and Restated Loan and Security Agreement, dated as of January 12, 2010, by and among Nicholas Financial Inc., a Florida corporation, Bank of America, N.A., as agent, and each of the Lenders parties thereto (4) | |
10.2 | Amendment No. 1, dated as of September 1, 2011, to Second Amended and Restated Loan and Security Agreement, dated as of January 12, 2010, by and among Nicholas Financial Inc., a Florida corporation, Bank of America, N.A., as agent, and each of the Lenders parties thereto (5) | |
10.3 | Amendment No. 2, dated as of December 21, 2012, to Second Amended and Restated Loan and Security Agreement, dated as of January 12, 2010, by and among Nicholas Financial Inc., a Florida corporation, Bank of America, N.A., as agent, and each of the Lenders parties thereto (6) | |
10.4 | Amendment No. 3, dated as of November 14, 2014, to Second Amended and Restated Loan and Security Agreement, dated as of January 12, 2010, by and among Nicholas Financial, Inc., a Florida corporation, Bank of America, N.A., as agent, and each of the Lenders parties thereto (7) | |
10.5 | Amendment No. 4, dated as of January 30, 2015, to Second Amended and Restated Loan and Security Agreement, dated as of January 12, 2010, by and among Nicholas Financial, Inc., a Florida corporation, Bank of America, N.A., as agent, and each of the Lenders parties thereto (8) | |
10.6 | Nicholas Financial, Inc. Employee Stock Option Plan (9)* | |
10.7 | Nicholas Financial, Inc. Non-Employee Director Stock Option Plan (10)* | |
10.8 | Employment Agreement (as Amended and Restated), dated July 2, 2015, between Nicholas Financial, Inc. and Ralph T. Finkenbrink, President and Chief Executive Officer * | |
10.9 | Employment Agreement (as Amended and Restated), dated July 2, 2015, between Nicholas Financial, Inc. and Kevin D. Bates, Senior Vice President-Branch Operations * | |
10.10 | Employment Agreement dated July 2, 2015, between Nicholas Financial, Inc. and Katie L. MacGillivary, Chief Financial Officer and Vice President of Finance * | |
10.11 | Summary of Fiscal 2015/2016/2017 Annual Incentive Programs* | |
10.12 | Nicholas Financial, Inc. 2015 Omnibus Incentive Plan (11)* | |
10.13 | Form of Nicholas Financial, Inc. 2015 Omnibus Incentive Plan Stock Option Award* | |
10.14 | Form of Nicholas Financial, Inc. 2015 Omnibus Incentive Plan Restricted Stock Award* | |
10.15 | Form of Nicholas Financial, Inc. 2015 Omnibus Incentive Plan Performance Share Award* | |
10.16 | ISDA Master Agreement, dated as of March 30, 1999, between Bank of America, N.A. and Nicholas Financial, Inc. (12) | |
10.17 | Letter Agreement, dated June 4, 2012, and effective June 13, 2012, by and between Nicholas Financial, Inc. and Bank of America, N.A. relating to interest-rate swap transaction (13) |
53
10.18 | Letter Agreement, dated June 30, 2012, and effective August 13, 2012, by and between Nicholas Financial, Inc. and Bank of America, N.A. relating to interest-rate swap transaction (14) | |
10.19 | Form of Dealer Agreement and Schedule thereto listing dealers that are parties to such agreements | |
14 | Code of Ethics for Chief Executive Officer and Senior Financial Officers | |
21 | Subsidiaries of Nicholas Financial, Inc. (15) | |
23 | Consent of Dixon Hughes Goodman LLP | |
24 | Powers of Attorney (included on signature page hereto) | |
31.1 | Certification of President and Chief Executive Officer | |
31.2 | Certification of Vice President and Chief Financial Officer | |
32.1 | Certification of the Chief Executive Officer Pursuant to 18 U.S.C. § 1350 | |
32.2 | Certification of the Chief Financial Officer Pursuant to 18 U.S.C. § 1350 | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Labels Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Represents a management contract or compensatory plan, contract or arrangement in which a director or named executive officer of the Company participated. |
(1) | Incorporated by reference to Appendix B to the Companys Proxy Statement and Information Circular for the 2006 Annual General Meeting of Shareholders filed with the SEC on June 30, 2006 (File No. 0-26680). |
(2) | Incorporated by reference to Exhibit 4.2 to the Companys Registration Statement on Form S-8 filed with the SEC on May 24, 2007 (SEC File No. 0-26680). |
(3) | Incorporated by reference to Exhibit 4 to the Companys Annual Report on Form 10-KSB for the fiscal year ended March 31, 2004, as filed with the SEC on June 29, 2004. |
(4) | Incorporated by reference to Exhibit 10.1 to the Companys Amendment No. 1 to Quarterly Report on Form 10-Q/A for the fiscal quarter ended December 31, 2009, as filed with the SEC on March 23, 2010. |
(5) | Incorporated by reference to Exhibit 10.1.1 to the Companys Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2011, as filed with the SEC on November 9, 2011. |
(6) | Incorporated by reference to Exhibit 10.13 to the Companys Annual Report on Form 10-K for the fiscal year ended March 31, 2013, as filed with the SEC on June 14, 2013. |
(7) | Incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K, dated November 14, 2014, as filed with the SEC on November 18, 2014. |
(8) | Incorporated by reference to Exhibit 10.16 to the Companys Quarterly Report on From 10-Q for the fiscal quarter ended December 31, 2014, as filed with the SEC on February 9, 2015. |
(9) | Incorporated by reference to Exhibit 4 to the Companys Registration Statement on Form S-8 filed with the SEC on June 30, 1999 (SEC File No. 333-81967). |
(10) | Incorporated by reference to Exhibit 4 to the Companys Registration Statement on Form S-8 filed with the SEC on June 30, 1999 (SEC File No. 333-81961). |
(11) | Incorporated by reference to Appendix A to the Companys Proxy Statement and Information Circular for the 2015 Annual General Meeting of Shareholders, as filed with the SEC on July 6, 2015. |
(12) | Incorporated by reference to Exhibit 10.10 to Amendment No. 2 to the Companys Registration Statement on Form S-2 (Reg. No. 333-113215), as filed with the SEC on April 7, 2004 |
(13) | Incorporated by reference to Exhibit 10.15 to the Companys Annual Report on Form 10-K for the fiscal year ended March 31, 2013, as filed with the SEC on June 14, 2013. |
(14) | Incorporated by reference to Exhibit 10.16 to the Companys Annual Report on Form 10-K for the fiscal year ended March 31, 2013, as filed with the SEC on June 14, 2013. |
(15) | Incorporated by reference to Exhibit 21 to the Companys Annual Report on Form 10-KSB for the fiscal year ended March 31, 2004, as filed with the SEC on June 29, 2004. |
54
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
NICHOLAS FINANCIAL, INC. | ||||||
Dated: June 14, 2016 | By: | /s/ Ralph T. Finkenbrink | ||||
Ralph Finkenbrink | ||||||
Chief Executive Officer and President |
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears below constitutes and appoints Ralph T. Finkenbrink and Katie L. MacGillivary, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Report, and to file the same, with all exhibits thereto, and any other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or either of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature |
Title |
Date |
||
/s/ Ralph T. Finkenbrink Ralph T. Finkenbrink |
Chief Executive Officer, President and Director |
June 14, 2016 | ||
/s/ Katie L. MacGillivary Katie L. MacGillivary |
Chief Financial Officer, Vice President Finance |
June 14, 2016 | ||
/s/ Kevin D. Bates Kevin D. Bates |
Sr. Vice President-Branch Operations and Director |
June 14, 2016 | ||
/s/ Stephen Bragin Stephen Bragin |
Director |
June 14, 2016 | ||
/s/ Robin Hastings Robin Hastings |
Director |
June 14, 2016 | ||
/s/ Scott Fink Scott Fink |
Director |
June 14, 2016 |
55
EXHIBIT INDEX
Exhibit No. |
Description |
|
3.1 | Articles of Nicholas Financial, Inc.* | |
3.2 | Notice of Articles of Nicholas Financial, Inc.* | |
4 | Form of Common Stock Certificate* | |
10.1 | Second Amended and Restated Loan and Security Agreement, dated as of January 12, 2010, by and among Nicholas Financial Inc., a Florida corporation, Bank of America, N.A., as agent, and each of the Lenders parties thereto* | |
10.2 | Amendment No. 1, dated as of September 1, 2011, to Second Amended and Restated Loan and Security Agreement, dated as of January 12, 2010, by and among Nicholas Financial Inc., a Florida corporation, Bank of America, N.A., as agent, and each of the Lenders parties thereto* | |
10.3 | Amendment No. 2, dated as of December 21, 2012, to Second Amended and Restated Loan and Security Agreement, dated as of January 12, 2010, by and among Nicholas Financial Inc., a Florida corporation, Bank of America, N.A., as agent, and each of the Lenders parties thereto* | |
10.4 | Amendment No. 3, dated as of November 14, 2014, to Second Amended and Restated Loan and Security Agreement, dated as of January 12, 2010, by and among Nicholas Financial, Inc., a Florida corporation, Bank of America, N.A., as agent, and each of the Lenders parties thereto* | |
10.5 | Amendment No. 4, dated as of January 30, 2015, to Second Amended and Restated Loan and Security Agreement, dated as of January 12, 2010, by and among Nicholas Financial, Inc., a Florida corporation, Bank of America, N.A., as agent, and each of the Lenders parties thereto* | |
10.6 | Nicholas Financial, Inc. Employee Stock Option Plan* | |
10.7 | Nicholas Financial, Inc. Non-Employee Director Stock Option Plan* | |
10.8 | Employment Agreement (as Amended and Restated), dated July 2, 2015, between Nicholas Financial, Inc. and Ralph T. Finkenbrink, President and Chief Executive Officer | |
10.9 | Employment Agreement, (as Amended and Restated), dated July 2, 2015, between Nicholas Financial, Inc. and Kevin D. Bates, Senior Vice President-Branch Operations | |
10.10 | Employment Agreement, dated July 2, 2015, between Nicholas Financial, Inc. and Katie L. MacGillivary, Chief Financial Officer and Vice President of Finance | |
10.11 | Summary of Fiscal 2015/2016/2017 Annual Incentive Bonus Programs | |
10.12 | Nicholas Financial, Inc. 2015 Omnibus Incentive Plan* | |
10.13 | Form of Nicholas Financial, Inc. 2015 Omnibus Incentive Plan Stock Option Award | |
10.14 | Form of Nicholas Financial, Inc. 2015 Omnibus Incentive Plan Restricted Stock Award | |
10.15 | Form of Nicholas Financial, Inc. 2015 Omnibus Incentive Plan Performance Share Award | |
10.16 | ISDA Master Agreement, dated as of March 30, 1999, between Bank of America, N.A. and Nicholas Financial, Inc.* | |
10.17 | Letter Agreement, dated June 4, 2012, and effective June 13, 2012, by and between Nicholas Financial, Inc. and Bank of America, N.A. relating to interest-rate swap transaction* | |
10.18 | Letter Agreement, dated July 30, 2012, and effective August 13, 2012, by and between Nicholas Financial, Inc. and Bank of America, N.A. relating to interest-rate swap transaction* | |
10.19 | Form of Dealer Agreement and Schedule thereto listing dealers that are parties to such agreements | |
14 | Code of Ethics for Chief Executive Officer and Senior Financial Officers | |
21 | Subsidiaries of Nicholas Financial, Inc.* | |
23 | Consent of Dixon Hughes Goodman LLP | |
24 | Powers of Attorney (included on signature page hereto) | |
31.1 | Certification of President and Chief Executive Officer | |
31.2 | Certification of Senior Vice President and Chief Financial Officer | |
32.1 | Certification of the Chief Executive Officer Pursuant to 18 U.S.C. § 1350 | |
32.2 | Certification of the Chief Financial Officer Pursuant to 18 U.S.C. § 1350 | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Labels Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Incorporated by reference. |
Exhibit 10.8
EMPLOYMENT AGREEMENT
As Amended and Restated
THIS AGREEMENT is amended and restated as of the 2 nd day of July, 2015 (as amended and restated, this Agreement), by NICHOLAS FINANCIAL, INC., a British Columbia, Canada corporation (the Company), and RALPH T. FINKENBRINK (the Employee).
W I T N E S S E T H:
WHEREAS, the Company and the Employee entered into an Employment Agreement as of November 22, 1999, which was subsequently amended and restated as of July 3, 2012 and June 30, 2014;
WHEREAS, the Company continues to recognize that circumstances may arise in which a change in control of the Company occurs, through acquisition or otherwise, thereby causing uncertainty about the Employees future employment with the Company without regard to the Employees competence or past contributions, which uncertainty may result in the loss of valuable services of the Employee to the detriment of the Company and its shareholders, and the Company and the Employee wish to provide reasonable security to the Employee against changes in the Employees relationship with the Company in the event of any such change in control;
WHEREAS, the Company and the Employee continue to be desirous that any proposal for a change in control or acquisition of the Company will be considered by the Employee objectively and with reference only to the best interests of the Company and its shareholders;
WHEREAS, the Employee will be in a better position to consider the Companys best interests if the Employee is afforded reasonable security, as provided in this Agreement, against altered conditions of employment which could result from any such change in control or acquisition; and
WHEREAS, the Employee desires to continue to be employed by the Company on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto covenant and agree as follows:
1. EMPLOYMENT AND DUTIES. Subject to the terms and conditions of this Agreement, the Company agrees to employ the Employee, and the Employee hereby agrees to serve the Company, as President and Chief Executive Officer. The Employee shall report directly to the Companys Board of Directors and shall render to the Company such management and policy-making services of the type customarily performed by persons serving in similar capacities with other employers that are similar to the Company, together with such other duties with which he is charged by the Companys Articles or Notice of Articles (or any similar governance
instruments) and subject to the overall direction and control of the Companys Board of Directors. The Employee accepts such employment and agrees to devote his best efforts and substantially all of his business time, skill, labor and attention to the performance of such duties. The Employee agrees not to engage in or be concerned with any other commercial duties or pursuits during the Term (as hereinafter defined) of this Agreement; provided, however, that the Employee may be involved in a passive capacity in a non-competitive business subject to the prior written approval of the Companys Board of Directors. Furthermore, the Employee shall assume and competently perform such reasonable responsibilities and duties as may be assigned to him from time to time by the Board of Directors of the Company. To the extent that the Company shall have any parent, subsidiary, affiliated corporations, partnerships, or joint venture (collectively Related Entities), the Employee shall perform such duties to promote these entities and their respective interests to the same extent as the interests of the Company without additional compensation. At all times, Employee agrees that he has read and will abide by, and prospectively will read and abide by, any employee handbook, policy, or practice that the Company or Related Entities has or hereafter adopts with respect to its employees generally.
2. TERM. The employment of the Employee under this Agreement commences on the date hereof and will continue through and including the close of business on the 2nd anniversary of the date hereof (the Initial Term). After the end of the Initial Term, this Agreement shall continue to renew automatically on the anniversary of the last day of the Initial Term for successive 1-year terms (the Initial Term, as well as any such renewal(s) thereof, shall be referred to herein as the Term) unless the Company provides to the Employee, at least sixty (60) days prior to the expiration of any renewal Term, written notification that it intends not to renew this Agreement; and, provided, further, that this Agreement may be terminated in accordance with Section 5 hereof (with the exception of the obligations of the parties hereunder that shall survive any such termination). Notwithstanding the foregoing, if a Change of Control (as defined in Appendix A hereto) occurs prior to the end of the Initial Term or any renewal term, this Agreement shall be extended automatically for a two year renewal period beginning on the date of the Change of Control (a Post-Change of Control Renewal Period). Expiration of this Agreement will not affect the rights or obligations of the parties hereunder arising out of, or relating to, circumstances occurring prior to the expiration of this Agreement, which rights and obligations will survive the expiration of this Agreement.
3. COMPENSATION.
(a) Annual Base Salary and Bonus. As compensation for his services under this Agreement, the Employee shall receive, and the Company shall pay, an annual base salary of such amount as shall be determined by the Compensation Committee of the Companys Board of Directors (or other committee performing similar functions), but not less than $375,000 (U.S.). Such annual base salary shall be payable in equal installments in accordance with the policy then prevailing for the Companys Employees. Following a Change of Control, the Employees annual base salary shall not be decreased and, during the Post-Change of Control Renewal Period, the Employees base salary shall be increased on an annual basis by an amount at least equal to the average base salary increase, expressed as a percentage, provided to executives of the Company of comparable status and position to the Employee. The Employee also shall be entitled, during the Term, to an annual performance bonus as determined by the Compensation Committee of the Board of Directors (or other committee performing similar functions), and to
-2-
participate in and receive payments from all other bonus and other incentive compensation plans as may be adopted by the Company as are made available to other Employees of the Company. On and after a Change of Control, to assure that the Employee will have an opportunity to earn incentive compensation, Employee shall be included in a bonus plan of the Company which shall satisfy the standards described below (such plan, the Bonus Plan). Bonuses under the Bonus Plan shall be payable with respect to achieving such financial or other goals reasonably related to the business of the Company as the Company shall establish (the Goals), all of which Goals shall be attainable, prior to the end of the Post-Change of Control Renewal Period, with approximately the same degree of probability as the most attainable goals under the Companys bonus plan or plans as in effect at any time during the 180-day period immediately prior to the Change of Control (whether one or more, the Company Bonus Plan) and in view of the Companys existing and projected financial and business circumstances applicable at the time. The amount of the bonus (the Bonus Amount) that Employee is eligible to earn under the Bonus Plan shall be no less than 100% of Employees target award provided in such Company Bonus Plan (such bonus amount herein referred to as the Targeted Bonus), and in the event the Goals are not achieved such that the entire Targeted Bonus is not payable, the Bonus Plan shall provide for a payment of a Bonus Amount equal to a portion of the Targeted Bonus reasonably related to that portion of the Goals which were achieved. Payment of the Bonus Amount shall not be affected by any circumstance occurring subsequent to the end of the Post-Change of Control Renewal Period, including termination of Employees employment.
(b) Payments. All amounts paid pursuant to this Agreement shall be subject to withholding or deduction by reason of the Federal Insurance Contribution Act, Federal income tax, state and local income tax, if any, and comparable laws and regulations.
(c) Other Benefits. The Employee shall be reimbursed by the Company for all reasonable and customary travel and other business expenses incurred by him in the performance of his duties hereunder in accordance with the Companys standard policy regarding expense verification practices. The Employee shall be entitled to that number of weeks paid vacation per year that is available to other Employees of the Company, and shall be eligible to participate in such pension, life insurance, health insurance, disability insurance and other employee benefits plans, if any, which the Company may from time to time make available to its Employees generally. On and after a Change of Control, the Employee shall be included: (i) to the extent eligible thereunder (which eligibility shall not be conditioned on Employees salary grade or on any other requirement which excludes persons of comparable status to Employee unless such exclusion was in effect for such plan or an equivalent plan immediately prior to the Change of Control), in any and all plans providing benefits for the Companys salaried employees in general (including but not limited to group life insurance, hospitalization, medical, dental, and long-term disability plans) and (ii) in plans provided to executives of the Company of comparable status and position to Employee (including but not limited to deferred compensation, split-dollar life insurance, supplemental retirement, stock option, stock appreciation, stock bonus, cash bonus and similar or comparable plans); provided that in no event shall the aggregate level of benefits under the plans described in clause (i) and the plans described in clause (ii), respectively, in which Employee is included be less than the aggregate level of benefits under plans of the Company of the type referred to in such clause, respectively, in which Employee was participating immediately prior to the Change of Control.
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4. NONCOMPETITION AND NON-DISCLOSURE REQUIREMENTS.
(a) Employee acknowledges that his services are of a special, unique, extraordinary and intellectual character, and his position with the Company places him in a position of confidence and trust with customers, suppliers and employees of the Company and other Related Entities. The Employee further acknowledges that the rendering of services under this Agreement necessarily requires the disclosure to him of confidential information (as defined below) of the Company and/or Related Entities. The Employee and the Company agree that both prior to and during his course of employment with the Company, the Employee had, has and will continue to develop personal relationships with the Companys financiers, customers, suppliers and employees, and that the Employee holds a position of substantial trust and confidence. As a consequence, the Employee agrees that it is reasonable and necessary for the protection of goodwill and legitimate business interests of the Company and Related Entities that the Employee make the covenants contained herein, that the covenants are a material inducement for the Company to employ the Employee and to enter into this Agreement, and that the covenants are given as an integral part of and incident to this Agreement.
(b) The Employee covenants and agrees that during his employment by the Company (whether during the Term hereof or otherwise), and thereafter for a period of two (2) years following the termination of the Employees employment with the Company, he will not:
(i) directly or indirectly engage in, continue in or carry on the business of the Company or any Related Entity, or any business substantially similar thereto, including owning or controlling any financial interest in, any corporation, partnership, firm or other form of business organization which competes with or is engaged in or carries on any aspect of such business or any business substantially similar thereto;
(ii) directly or indirectly, assist, promote or encourage any employees or clients, or potential employees or clients, of the Company or Related Entities to terminate or discontinue their relationship in order to pursue opportunities or employment with any competitor of the Company or Related Entities;
(iii) consult with, advise or assist in any way, whether or not for consideration, any corporation, partnership, firm or other business organization which is now, becomes or may become a competitor of the Company or any Related Entity in any aspect of their respective businesses during the Employees employment with the Company, including, but not limited to: advertising or otherwise endorsing the products of any such competitor; soliciting customers or otherwise serving as an intermediary for any such competitor; or loaning money or rendering any other form of financial assistance to or engaging in any form of business transaction whether or not on an arms length basis with any such competitor; or
(iv) engage in any practice the purpose of which is to evade the provisions of this Agreement or to commit any act which is detrimental to the successful continuation of, or which adversely affects, the business or the Company;
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provided, however, that the foregoing shall not preclude the Employees ownership of not more than 5% of the equity securities of a corporation which has such securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the Exchange Act).
(c) The Employee acknowledges that the inventions, innovations, software, trade secrets, business plans, financial strategies, finances, and all other confidential or proprietary information with respect to the business and operations of the Company and Related Entities are valuable, special and unique assets of the Company. The Employee agrees not to, at any time during or after the Term of this Agreement, disclose, directly or indirectly, to any person or entity, or use or authorize or propose to authorize any person or entity to use any confidential or proprietary information with respect to the Company or Related Entities without the prior written consent of the Company including, without limitation, information as to the financial condition, results of operations, identities of clients or prospective clients, products under development, acquisition strategies or acquisitions under consideration, pricing or cost information, marketing strategies or any other information relating to the Company or any of the Related Entities which could be reasonably regarded as confidential. However, this does not include information which is or shall become generally available to the public other than as a result of disclosure by the Company or Related Entities or any of their agents, affiliates or representatives or a person to whom any of them has provided such information.
(d) The Employee agrees that the geographic scope of this covenant not to compete shall extend to (i) the states of Alabama, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Maryland, Michigan, Missouri, North Carolina, Ohio, South Carolina, Tennessee, Texas and Virginia, which constitute the geographic area in which the Company has operated its business at some time during the two years preceding the date of this Agreement; or (ii) such broader geographic area where the Company conducts business at any time during the Term of this Agreement.
(e) In the event of any breach of this covenant not to compete, the Employee recognizes that the remedies at law will be inadequate and that in addition to any relief at law which may be available to the Company for such violation or breach and regardless of any other provision contained in this Agreement, the Company shall be entitled to equitable remedies (including an injunction) and such other relief as a court may grant after considering the intent of this Section 4.
(f) In the event a court of competent jurisdiction determines that the provisions of this covenant not to compete are excessively broad as to duration, geographic scope, prohibited activities or otherwise, the parties agree that this covenant shall be reduced or curtailed to the extent necessary to render it enforceable.
5. TERMINATION.
(a) Death. The Employees employment hereunder shall terminate upon his death.
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(b) Disability. If, during the Term, the Employee becomes physically or mentally disabled in accordance with the terms and conditions of any disability insurance policy covering the Employee or, if due to such physical or mental disability, the Employee becomes unable for a period of more than one hundred eighty (180) consecutive days to perform his duties hereunder on substantially a full-time basis as determined by the Company in its sole reasonable discretion, the Company may, at its option, terminate the Employees employment hereunder upon not less than thirty (30) days written notice of termination.
(c) Cause. The Company may terminate this Agreement at any time with Cause. As used in this Agreement, Cause shall mean the following: (1) a material violation of the Companys policies or practices which reasonably justifies termination; (2) conviction of a felony, as evidenced by a binding and final judgment, order or decree of a court of competent jurisdiction; (3) the commission by the Employee of any act which would reasonably be expected to materially injure the reputation, business, or business relationships of the Company or Related Entities; or (4) any material breach by Employee of this Agreement. The Company may terminate this Agreement with Cause as defined in clauses (1) and (4) above upon fifteen (15) business days prior written notice (the Cause Notification Period) to Employee, but such termination shall only become effective in the event of Employees failure to cure the applicable breach or violation, to the reasonable satisfaction of Company, prior to the end of the Cause Notification Period. The Company may terminate this Agreement without notice at any time with Cause as defined in clause (2) or (3) above. Notwithstanding anything in the foregoing to the contrary, upon and after a Change of Control, the Company may terminate this Agreement with Cause only as defined in clause (2) or (4) above. In the event of a termination with Cause, the Company shall be relieved of all its obligations to the Employee provided for by this Agreement, and all payments to the Employees hereunder shall immediately cease and terminate. For the avoidance of doubt, the Company also may terminate the Employees employment hereunder at any time without Cause by written notice; provided, however, that the Company shall owe the Employee the Severance Payment (as defined below) following a termination of the Employees employment by the Company other than for Cause.
(d) Involuntary Termination by Employee. The Employee may terminate his employment hereunder upon (i) a good faith determination by the Employee that there has been a material breach of the Agreement by the Company, (ii) a material adverse change in the Employees working conditions or status, (iii) a significant relocation of the Employees principal office, or (iv) upon or within the two-year period following a Change of Control, a good faith determination by the Employee that there has been any of the following: a breach of the Agreement by the Company, any adverse change in the Employees working conditions, status, authority, duties, responsibilities (including but not limited to a requirement that the Employee report to a corporate officer instead of reporting directly to the board of directors) or any requirement that the Employee relocate his principal office to a location that is more than ten (10) miles from the location of the Employees principal office immediately prior to the Change of Control (any one of the preceding constituting Good Reason), by delivering written notice of termination to the Company indicating in reasonable detail the facts and circumstances alleged to provide a basis for such termination and shall cease performing the Employees duties hereunder on the date which is ten (10) days after delivery of the notice, which date shall also be the date of termination of the Employees employment.
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(e) Voluntary Termination by Employee. The Employee agrees to provide the Company with at least twenty (20) business days (Termination Notice Period) prior written notice of his intent to terminate employment voluntarily. Failure to provide such notice terminates the Employees entitlement to payment of accrued, unused benefits, such as vacation. However, the Company reserves the right to terminate the Employee before the end of the Termination Notice Period, provided that the Company pays the Employee the salary that he would have received from the date of the last payroll payment to the end of the Termination Notice Period. Such salary shall be paid in accordance with the Companys normal payroll procedures applicable to base salary. During the Termination Notice Period, the Employee agrees to make a good faith effort to perform the duties described hereunder. If, during the Term, the Employee voluntarily terminates his employment with the Company, the Companys obligations, including payment obligations, under this Agreement shall cease, except that the Company shall pay the Employee the amount of base salary that he would have received from the date of the last payroll payment to the end of the Termination Notice Period in accordance with the Companys normal payroll procedures applicable to base salary.
(f) Severance Payment and Post-Change of Control Benefits. In the event of a termination of the Employees employment (i) by the Company other than for Cause or (ii) by the Employee in a manner which satisfies Section 5(d):
(i) The Company shall pay the Employee (subject to the provisions of Section 6 of this Agreement) a one-time, lump-sum severance payment equal to TWO (2) times the sum of (A) the Employees annual base salary in effect at the time of such termination and (B) the Employees average annual bonus for the TWO (2) full calendar years immediately preceding such termination (Severance Payment). Notwithstanding the foregoing, if such termination of the Employees employment occurs during a Post-Change of Control Renewal Period, the Severance Payment shall be calculated using the Employees annual base salary in effect at any time during the period of 180 days prior to the date on which the Change of Control occurred in clause (A), if higher than the annual base salary in effect at the time of such termination, and the Employees average annual bonus for the TWO (2) full calendar years immediately preceding the Change of Control in clause (B), if higher than the average annual bonus for the TWO (2) full calendar years immediately preceding such termination. The Severance Payment shall be paid to the Employee in cash equivalent on the date that is sixty (60) days after the date of termination of the Employees employment; provided that, to the extent required to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the Code), all or a portion of the Severance Payment shall be delayed until the first day of the seventh (7 th ) month following the month in which the termination of the Employees employment occurs, without interest thereon.
(ii) If such termination of employment occurs during a Post-Change of Control Renewal Period, then the Employee will also receive the following benefits:
(a) (1) all restrictions on any restricted stock or restricted stock unit awards made to Employee by the Company or its affiliates on or after the Change of Control shall lapse such that Employee is
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fully and immediately vested in such awards upon such termination of employment; (2) any stock options or stock appreciation rights granted to Employee pursuant to the Companys or its affiliates equity-based incentive plan(s) on or after the Change of Control shall become fully and immediately vested upon such termination of employment; and (3) any performance shares, performance units or similar performance-based equity awards granted to Employee pursuant to the Companys or its affiliates equity-based incentive plan(s) on or after the Change of Control shall be deemed earned on a pro rated basis according to the portion of the performance period that has elapsed through the date of the termination of employment as if all performance requirements had been satisfied at the target level (or such higher level as would have been achieved if performance through the date of the termination of employment had continued through the end of the performance period).
(b) Until the earlier of eighteen (18) months after the date of Employees termination of employment or such time as Employee has obtained new employment and is covered by benefits which in the aggregate are at least equal in value to the following benefits, Employee shall continue to be covered, at the expense of the Company, by the same or equivalent life insurance, hospitalization, medical, dental and vision coverage as Employee received (or, if higher, as was required hereunder) immediately prior to Employees termination of employment, subject to the following: After the end of the COBRA continuation period, if such hospitalization, medical or dental coverage is provided under a health plan that is subject to Section 105(h) of the Code, benefits payable under such health plan shall comply with the requirements of Treasury regulation section 1.409A-3(i)(1)(iv) and, if necessary, the Company shall amend such health plan to comply therewith; and if provision of any such health benefits would subject the Company or its benefits arrangements to a penalty or adverse tax treatment, then the Company shall provide a cash payment to Employee in an amount reasonably determined by the Company to be equivalent to the COBRA premiums for similar benefits.
(c) The Employee shall receive until the end of the second calendar year following the calendar year in which the Employees termination of employment occurs, at the expense of the Company, outplacement services, on an individualized basis at a level of service commensurate with the Employees status with the Company immediately prior to the date of the Change of Control (or, if higher, immediately prior to the Employees termination of employment), provided by a nationally recognized executive placement firm selected by the Company; provided that the cost to the Company of such services shall not exceed 10% of the Employees annual base
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salary immediately prior to the date of the Change of Control (or, if higher, immediately prior to the Employees termination of employment).
(d) The Company shall bear up to $15,000 in the aggregate of fees and expenses of consultants and/or legal or accounting advisors engaged by the Employee to advise the Employee as to matters relating to the computation of benefits due and payable under this Section 5.
Notwithstanding anything to the contrary in this Agreement, if a Change of Control occurs and the Employees employment with the Company is terminated (other than a termination due to Employees death or as a result of Disability) during the period of 180 days prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by Employee that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise arose in connection with or in anticipation of a Change of Control, then for all purposes of this Agreement such termination of employment shall be deemed a termination following such Change of Control.
(g) Benefits. The following shall apply upon termination of the Employees employment: Notwithstanding anything to the contrary herein contained, the Employee shall receive all compensation and other benefits to which he was entitled under this Agreement or otherwise as an employee of the Company through the termination date, including payments of base salary accrued hereunder through the calendar month in which such termination occurs.
6. TAX PROVISIONS.
(a) Limitation on Parachute Payments. Notwithstanding any other provision of this Agreement, if any portion of the Severance Payment or any other payment under this Agreement, or payments to or for the benefit of the Employee under any other agreement or plan (collectively, the Change of Control Benefits), would constitute an excess parachute payment, then the Change of Control Benefits to be made to the Employee shall be reduced such that the value of the aggregate Change of Control Benefits that the Employee is entitled to receive shall be One Dollar ($1) less than the maximum amount which the Employee may receive without becoming subject to the tax imposed by Section 4999 of the Code (or any successor provision) or which the Company may pay without loss of deduction under Section 280G(a) of the Code (or any successor provision); provided that the foregoing reduction in the amount of Change of Control Benefits shall not apply if the after-tax value to the Employee of the Change of Control Benefits prior to reduction in accordance herewith is greater than the after-tax value to the Employee if the Change of Control Benefits are reduced in accordance herewith. For purposes of this Agreement, the terms excess parachute payment and parachute payments shall have the meanings assigned to them in Code Section 280G, and such parachute payments shall be valued as provided therein.
(b) Opinion. For purposes of this Section, within thirty (30) days after notice by one party to the other of its belief that there is a payment or benefit due the Employee that
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will result in an excess parachute payment as defined in Section 280G of the Code or any successor provision thereto, the Employee and the Company shall obtain, at the Companys expense, the opinion (which need not be unqualified) of nationally recognized tax counsel (Tax Counsel) selected by the Companys independent auditors and acceptable to the Employee, which sets forth (A) the base amount within the meaning of Section 280G; (B) the aggregate present value of the payments in the nature of compensation to the Employee as prescribed in Section 280G(b)(2)(A) (ii); (C) the amount and present value of any excess parachute payment within the meaning of Section 280G(b)(1) without regard to the limitations of this Section 6; (D) the after-tax value of the Change of Control Benefits if the reduction in Change of Control Benefits contemplated under this Section 6 did not apply; and (E) the after-tax value of the Change of Control Benefits taking into account the reduction in Change of Control Benefits contemplated under this Section 6. For purposes of determining the after-tax value of the Change of Control Benefits, the Employee shall be deemed to pay federal income taxes and employment taxes at the highest marginal rate of federal income and employment taxation in the calendar year in which the payment is to be made and state and local income taxes at the highest marginal rates of taxation in the state and locality of the Employees domicile for income tax purposes on the date the payment is to be made, net of the maximum reduction in federal income taxes that may be obtained from deduction of such state and local taxes.
In the event that a reduction is to be made under this Section 6, the Change of Control Benefits shall be reduced or eliminated by applying the following principles, in order: (i) the payment or benefit with the higher ratio of the parachute payment value to present economic value (determined using reasonable actuarial assumptions) shall be reduced or eliminated before a payment or benefit with a lower ratio; (ii) the payment or benefit with the later possible payment date shall be reduced or eliminated before a payment or benefit with an earlier payment date; and (iii) cash payments shall be reduced prior to non-cash benefits; provided, however, that if the foregoing order of reduction or elimination would violate Section 409A of the Code, then the reduction shall be made pro rata among the payments or benefits included in the Change of Control Benefits (on the basis of the relative present value of the parachute payments). For purposes of this Agreement, the value of any noncash benefits or any deferred payment or benefit, and all present economic values, shall be determined by the Companys independent auditors in accordance with the principles of Sections 280G, which determination shall be evidenced in a certificate of such auditors addressed to the Company and the Employee. Such opinion shall be dated as of the date of termination of the Employees employment and addressed to the Company and the Employee and shall be binding upon the Company and the Employee.
The provisions of this Section 6(b), including the calculations, notices and opinions provided for herein shall be based upon the conclusive presumption that the compensation earned by the Employee pursuant to the Companys compensation programs prior to a change of control is reasonable; provided, however, that in the event such Tax Counsel so requests in connection with the opinion required by this Section 6(b), the Company shall obtain at its expense, and Tax Counsel may rely on in providing the opinion, the advice of a firm of recognized Employee compensation consultants as to the reasonableness of any item of compensation to be received by the Employee.
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(c) Effect of Change in Law. In the event that the provisions of Sections 280G and 4999 of the Code (or any successor provisions) are repealed, this Section 6 shall cease to be effective on the effective date of such repeal. The parties to this Agreement recognize that final regulations promulgated under Section 280G of the Code may affect the amounts that may be paid under this Agreement and agree that, upon issuance of such final regulations, this Agreement may be modified as the parties hereto may in good faith deem necessary in light of the provisions of such regulations to achieve the purposes of this Agreement, and that consent to such modification shall not be unreasonably withheld.
7. SUCCESSORS.
(a) If the Company sells, assigns or transfers all or substantially all of its business and assets to any Person (as defined in Appendix A hereto) or if the Company merges into or consolidates or otherwise combines (where the Company does not survive such combination) with any Person (any such event, a Sale of Business), then the Company shall assign all of its right, title and interest in this Agreement as of the date of such event to such Person, and the Company shall cause such Person, by written agreement in form and substance reasonably satisfactory to the Employee, to expressly assume and agree to perform from and after the date of such assignment all of the terms, conditions and provisions imposed by this Agreement upon the Company. Failure of the Company to obtain such agreement prior to the effective date of such Sale of Business shall be a material breach of this Agreement. In case of such assignment by the Company and of assumption and agreement by such Person, as used in this Agreement, Company shall thereafter mean such Person which executes and delivers the agreement provided for in this Section 7 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law, and this Agreement shall inure to the benefit of, and be enforceable by, such Person. The Employee shall, in the Employees discretion, be entitled to proceed against any or all of such Persons, any Person which theretofore was such a successor to the Company (as defined in the first paragraph of this Agreement) and the Company (as so defined) in any action to enforce any rights of the Employee hereunder. Except as provided in this Subsection, this Agreement shall not be assignable by the Company. This Agreement shall not be terminated by the voluntary or involuntary dissolution of the Company.
(b) This Agreement and all rights of the Employee shall inure to the benefit of and be enforceable by the Employees personal or legal representatives, executors, administrators, heirs and beneficiaries. All amounts payable to the Employee under Sections 3, 5, and 7 of this Agreement if the Employee had lived shall be paid, in the event of the Employees death, to the Employees estate, heirs and representatives; provided, however, that the foregoing shall not be construed to modify any terms of any benefit plan of the Company, as such terms are in effect on the date of the Employees death, that expressly govern benefits under such plan in the event of the Employees death.
8. SEVERABILITY. The provisions of this Agreement shall be regarded as divisible, and the parties agree that if any of said provisions or any part hereof shall under any circumstances be deemed or declared invalid, inoperative or unenforceable, then the validity and enforceability of the remainder of such provisions or parts hereof and the applicability thereof shall not be affected thereby.
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9. AMENDMENT. This Agreement (as hereby amended and restated) may not be further amended or modified at any time except by written instrument executed by the Company and the Employee.
10. WITHHOLDING. The Company shall be entitled to withhold from amounts to be paid to the Employee hereunder any federal, state or local withholding or other taxes or charges which it is from time to time required to withhold; provided, that the amount so withheld shall not exceed the minimum amount required to be withheld by law (unless the Employee has otherwise indicated in writing). The Company shall be entitled to rely on an opinion of nationally recognized tax counsel if any question as to the amount or requirement of any such withholding shall arise.
11. NOTICE. For purposes of this Agreement, notices and all other communications provided for herein shall be in writing and shall be deemed to have been duly given when actually received, whether hand-delivered, sent by telecopier, facsimile transmission or other electronic means of transmitting written documents (as long as receipt is acknowledged) or mailed by United States certified or registered mail, return receipt requested, postage prepaid, addressed as follows:
If to the Employee, to:
Ralph T. Finkenbrink
4348 Hythe Court
Palm Harbor, FL 34685
(727) 943-2762
If to the Company, to:
Nicholas Financial, Inc.
2454 McMullen Booth Road
Building C
Clearwater, Florida 33759
Attn: Corporate Secretary
or to such other address as either party may have furnished to the other in writing in accordance herewith, except that a notice of change of address shall be effective only upon receipt.
12. NO WAIVER; ENTIRE AGREEMENT. No waiver by any party hereto of any breach of this Agreement by any other party hereto shall be deemed a waiver of any similar or dissimilar term or condition at the same or at any prior or subsequent time. This Agreement and any equity award agreements between the Company and the Employee constitute the entire agreement between the parties hereto with respect to the Employees employment by the Company and there are no agreements or representations, oral or otherwise, expressed or implied, with respect to or related to the employment of the Employee which are not set forth in this Agreement or such equity award agreements.
13. NO ASSIGNMENT. Except as expressly set forth herein, no party shall assign any of his or its rights under this Agreement without the prior written consent of the other party and any attempted assignment without such prior written consent shall be null and void and without legal effect.
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14. COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may be effective upon the execution and delivery by any party hereto of facsimile copies of signature pages hereto duly executed by such party; provided, however, that any party delivering a facsimile signature page covenants and agrees to deliver promptly after the date hereof two (2) original copies to the other party hereto.
15. GOVERNING LAW.
(a) The validity, interpretation, construction and performance of this Agreement shall be governed by the internal laws of the State of Florida, except that Section 15(b) shall be construed in accordance with the Federal Arbitration Act if arbitration is chosen by the Employee as the method of dispute resolution.
(b) Any dispute arising out of this Agreement shall, at the Employees election, be determined by either (i) arbitration under the rules of the American Arbitration Association then in effect (but subject to any evidentiary standards set forth in this Agreement), in which both parties shall be bound by the arbitration award, or (ii) by litigation. Whether the dispute is to be settled by arbitration or litigation, the venue for the arbitration or litigation shall be Tampa, Florida. The parties consent to personal jurisdiction in each trial court in the selected venue having subject matter jurisdiction notwithstanding their residence or situs, and each party irrevocably consents to service of process in the manner provided hereunder for the giving of notices.
16. CERTAIN RULES OF CONSTRUCTION; CODE SECTION 409A.
(a) No party shall be considered as being responsible for the drafting of this Agreement for the purpose of applying any rule construing ambiguities against the drafter or otherwise. No draft of this Agreement shall be taken into account in construing this Agreement. Any provision of this Agreement which requires an agreement in writing shall be deemed to require that the writing in question be signed by the Employee and an authorized representative of the Company.
(b) The Company and the Employee intend the terms of this Agreement to be in compliance with Section 409A of the Code and the regulations promulgated thereunder. To the maximum extent permissible, any ambiguous terms of this Agreement shall be interpreted in a manner that avoids a violation of Section 409A of the Code. The phrase termination of the Employees employment and similar phrases in this Agreement shall mean the Employees separation from service as defined in Section 409A of the Code. The Company does not guarantee the tax treatment or tax consequences associated with any payment or benefit, including but not limited to consequences related to Section 409A of the Code.
(c) If, after the date of a Change of Control of the Company, any payment amount or the value of any benefit under this Agreement is required to be included in the Employees income prior to the date such amount is actually paid or the benefit provided as a result of the failure of this Agreement (or any other arrangement that is required to be aggregated
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with this Agreement under Code Section 409A) to comply with Code Section 409A, then the Employee shall receive a distribution, in a lump sum, within 90 days after the date it is finally determined that the Agreement (or such other arrangement that is required to be aggregated with this Agreement) fails to meet the requirements of Section 409A of the Code; such distribution shall equal the lesser of (i) the amount required to be included in the Employees income as a result of such failure and (ii) the benefits otherwise due hereunder, and shall in any event reduce the amount of payments or benefits otherwise due hereunder.
17. HEADINGS. The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.
NICHOLAS FINANCIAL, INC. | ||
By: | /s/ Katie MacGillivary | |
Katie L. MacGillivary | ||
Vice President-Finance, Chief Financial Officer and Corporate Secretary |
EMPLOYEE: |
/s/ Ralph Finkenbrink |
Printed Name: Ralph T. Finkenbrink |
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APPENDIX A
For purposes of this Agreement, a Change of Control shall be deemed to have occurred upon the earlier of (a) any of the events constituting a Change of Control under the Companys 2015 Omnibus Incentive Plan, as such term is defined in such Plan as of the date of this Agreement, or (b) a determination by the Board of Directors of the Company, in view of the then current circumstances or impending events, that a change of control of the Company has occurred or is imminent, which determination shall be made for the specific purpose of triggering the operative provisions of this Agreement.
A-1
Exhibit 10.9
EMPLOYMENT AGREEMENT
As Amended and Restated
THIS AGREEMENT is amended and restated as of the 2 nd day of July, 2015 (as amended and restated, this Agreement), by NICHOLAS FINANCIAL, INC., a British Columbia, Canada corporation (the Company), and KEVIN D. BATES (the Employee).
W I T N E S S E T H:
WHEREAS, the Company and the Employee entered into an Employment Agreement as of June 30, 2014;
WHEREAS, the Company continues to recognize that circumstances may arise in which a change in control of the Company occurs, through acquisition or otherwise, thereby causing uncertainty about the Employees future employment with the Company without regard to the Employees competence or past contributions, which uncertainty may result in the loss of valuable services of the Employee to the detriment of the Company and its shareholders, and the Company and the Employee wish to provide reasonable security to the Employee against changes in the Employees relationship with the Company in the event of any such change in control;
WHEREAS, the Company and the Employee continue to be desirous that any proposal for a change in control or acquisition of the Company will be considered by the Employee objectively and with reference only to the best interests of the Company and its shareholders;
WHEREAS, the Employee will be in a better position to consider the Companys best interests if the Employee is afforded reasonable security, as provided in this Agreement, against altered conditions of employment which could result from any such change in control or acquisition; and
WHEREAS, the Employee desires to continue to be employed by the Company on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto covenant and agree as follows:
1. EMPLOYMENT AND DUTIES. Subject to the terms and conditions of this Agreement, the Company agrees to employ the Employee, and the Employee hereby agrees to serve the Company, as Senior Vice President Branch Operations. The Employee shall report directly to the Companys President and Chief Executive Officer and shall render to the Company such management and policy-making services of the type customarily performed by persons serving in similar capacities with other employers that are similar to the Company, together with such other duties with which he is charged by the Companys Articles or Notice of Articles (or any similar governance instruments) and subject to the overall direction and control of the Companys Board of Directors. The Employee accepts such employment and agrees to devote his best efforts
and substantially all of his business time, skill, labor and attention to the performance of such duties. The Employee agrees not to engage in or be concerned with any other commercial duties or pursuits during the Term (as hereinafter defined) of this Agreement; provided, however, that the Employee may be involved in a passive capacity in a non-competitive business subject to the prior written approval of the Companys Board of Directors. Furthermore, the Employee shall assume and competently perform such reasonable responsibilities and duties as may be assigned to him from time to time by the Chairman of the Board or the President and Chief Executive Officer of the Company. To the extent that the Company shall have any parent, subsidiary, affiliated corporations, partnerships, or joint venture (collectively Related Entities), the Employee shall perform such duties to promote these entities and their respective interests to the same extent as the interests of the Company without additional compensation. At all times, Employee agrees that he has read and will abide by, and prospectively will read and abide by, any employee handbook, policy, or practice that the Company or Related Entities has or hereafter adopts with respect to its employees generally.
2. TERM. The employment of the Employee under this Agreement commences on the date hereof and will continue through and including the close of business on the 2nd anniversary of the date hereof (the Initial Term), unless earlier terminated pursuant to the terms of this Agreement. After the end of the Initial Term, this Agreement shall continue to renew automatically on the anniversary of the last day of the Initial Term for successive 1-year terms (the Initial Term, as well as any such renewal(s) thereof, shall be referred to herein as the Term) unless the Company provides to the Employee, at least sixty (60) days prior to the expiration of any renewal Term, written notification that it intends not to renew this Agreement; and, provided, further, that this Agreement may be terminated in accordance with Section 5 hereof (with the exception of the obligations of the parties hereunder that shall survive any such termination). Notwithstanding the foregoing, if a Change of Control (as defined in Appendix A hereto) occurs prior to the end of the Initial Term or any renewal term, this Agreement shall be extended automatically for a two year renewal period beginning on the date of the Change of Control (a Post-Change of Control Renewal Period). Expiration of this Agreement will not affect the rights or obligations of the parties hereunder arising out of, or relating to, circumstances occurring prior to the expiration of this Agreement, which rights and obligations will survive the expiration of this Agreement.
3. COMPENSATION.
(a) Annual Base Salary and Bonus. As compensation for his services under this Agreement, the Employee shall receive, and the Company shall pay, an annual base salary of such amount as shall be determined by the Compensation Committee of the Companys Board of Directors (or other committee performing similar functions), but not less than $250,000 (U.S.). Such annual base salary shall be payable in equal installments in accordance with the policy then prevailing for the Companys Employees. Following a Change of Control, the Employees annual base salary shall not be decreased and, during the Post-Change of Control Renewal Period, the Employees base salary shall be increased on an annual basis by an amount at least equal to the average base salary increase, expressed as a percentage, provided to executives of the Company of comparable status and position to the Employee. The Employee also shall be entitled, during the Term, to an annual performance bonus as determined by the Compensation Committee of the Board of Directors (or other committee performing similar functions), and to participate in and receive payments from all other bonus and other incentive compensation plans
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as may be adopted by the Company as are made available to other Employees of the Company. On and after a Change of Control, to assure that the Employee will have an opportunity to earn incentive compensation, Employee shall be included in a bonus plan of the Company which shall satisfy the standards described below (such plan, the Bonus Plan). Bonuses under the Bonus Plan shall be payable with respect to achieving such financial or other goals reasonably related to the business of the Company as the Company shall establish (the Goals), all of which Goals shall be attainable, prior to the end of the Post-Change of Control Renewal Period, with approximately the same degree of probability as the most attainable goals under the Companys bonus plan or plans as in effect at any time during the 180-day period immediately prior to the Change of Control (whether one or more, the Company Bonus Plan) and in view of the Companys existing and projected financial and business circumstances applicable at the time. The amount of the bonus (the Bonus Amount) that Employee is eligible to earn under the Bonus Plan shall be no less than 100% of Employees target award provided in such Company Bonus Plan (such bonus amount herein referred to as the Targeted Bonus), and in the event the Goals are not achieved such that the entire Targeted Bonus is not payable, the Bonus Plan shall provide for a payment of a Bonus Amount equal to a portion of the Targeted Bonus reasonably related to that portion of the Goals which were achieved. Payment of the Bonus Amount shall not be affected by any circumstance occurring subsequent to the end of the Post-Change of Control Renewal Period, including termination of Employees employment.
(b) Payments. All amounts paid pursuant to this Agreement shall be subject to withholding or deduction by reason of the Federal Insurance Contribution Act, Federal income tax, state and local income tax, if any, and comparable laws and regulations.
(c) Other Benefits. The Employee shall be reimbursed by the Company for all reasonable and customary travel and other business expenses incurred by him in the performance of his duties hereunder in accordance with the Companys standard policy regarding expense verification practices. The Employee shall be entitled to that number of weeks paid vacation per year that is available to other Employees of the Company, and shall be eligible to participate in such pension, life insurance, health insurance, disability insurance and other employee benefits plans, if any, which the Company may from time to time make available to its Employees generally. On and after a Change of Control, the Employee shall be included: (i) to the extent eligible thereunder (which eligibility shall not be conditioned on Employees salary grade or on any other requirement which excludes persons of comparable status to Employee unless such exclusion was in effect for such plan or an equivalent plan immediately prior to the Change of Control), in any and all plans providing benefits for the Companys salaried employees in general (including but not limited to group life insurance, hospitalization, medical, dental, and long-term disability plans) and (ii) in plans provided to executives of the Company of comparable status and position to Employee (including but not limited to deferred compensation, split-dollar life insurance, supplemental retirement, stock option, stock appreciation, stock bonus, cash bonus and similar or comparable plans); provided that in no event shall the aggregate level of benefits under the plans described in clause (i) and the plans described in clause (ii), respectively, in which Employee is included be less than the aggregate level of benefits under plans of the Company of the type referred to in such clause, respectively, in which Employee was participating immediately prior to the Change of Control.
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4. NONCOMPETITION AND NON-DISCLOSURE REQUIREMENTS.
(a) Employee acknowledges that his services are of a special, unique, extraordinary and intellectual character, and his position with the Company places him in a position of confidence and trust with customers, suppliers and employees of the Company and other Related Entities. The Employee further acknowledges that the rendering of services under this Agreement necessarily requires the disclosure to him of confidential information (as defined below) of the Company and/or Related Entities. The Employee and the Company agree that both prior to and during his course of employment with the Company, the Employee had, has and will continue to develop personal relationships with the Companys financiers, customers, suppliers and employees, and that the Employee holds a position of substantial trust and confidence. As a consequence, the Employee agrees that it is reasonable and necessary for the protection of goodwill and legitimate business interests of the Company and Related Entities that the Employee make the covenants contained herein, that the covenants are a material inducement for the Company to employ the Employee and to enter into this Agreement, and that the covenants are given as an integral part of and incident to this Agreement.
(b) The Employee covenants and agrees that during his employment by the Company (whether during the Term hereof or otherwise), and thereafter for a period of two (2) years following the termination of the Employees employment with the Company, he will not:
(i) directly or indirectly engage in, continue in or carry on the business of the Company or any Related Entity, or any business substantially similar thereto, including owning or controlling any financial interest in, any corporation, partnership, firm or other form of business organization which competes with or is engaged in or carries on any aspect of such business or any business substantially similar thereto;
(ii) directly or indirectly, assist, promote or encourage any employees or clients, or potential employees or clients, of the Company or Related Entities to terminate or discontinue their relationship in order to pursue opportunities or employment with any competitor of the Company or Related Entities;
(iii) consult with, advise or assist in any way, whether or not for consideration, any corporation, partnership, firm or other business organization which is now, becomes or may become a competitor of the Company or any Related Entity in any aspect of their respective businesses during the Employees employment with the Company, including, but not limited to: advertising or otherwise endorsing the products of any such competitor; soliciting customers or otherwise serving as an intermediary for any such competitor; or loaning money or rendering any other form of financial assistance to or engaging in any form of business transaction whether or not on an arms length basis with any such competitor; or
(iv) engage in any practice the purpose of which is to evade the provisions of this Agreement or to commit any act which is detrimental to the successful continuation of, or which adversely affects, the business or the Company;
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provided, however, that the foregoing shall not preclude the Employees ownership of not more than 5% of the equity securities of a corporation which has such securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the Exchange Act).
(c) The Employee acknowledges that the inventions, innovations, software, trade secrets, business plans, financial strategies, finances, and all other confidential or proprietary information with respect to the business and operations of the Company and Related Entities are valuable, special and unique assets of the Company. The Employee agrees not to, at any time during or after the Term of this Agreement, disclose, directly or indirectly, to any person or entity, or use or authorize or propose to authorize any person or entity to use any confidential or proprietary information with respect to the Company or Related Entities without the prior written consent of the Company including, without limitation, information as to the financial condition, results of operations, identities of clients or prospective clients, products under development, acquisition strategies or acquisitions under consideration, pricing or cost information, marketing strategies or any other information relating to the Company or any of the Related Entities which could be reasonably regarded as confidential. However, this does not include information which is or shall become generally available to the public other than as a result of disclosure by the Company or Related Entities or any of their agents, affiliates or representatives or a person to whom any of them has provided such information.
(d) The Employee agrees that the geographic scope of this covenant not to compete shall extend to (i) the states of Alabama, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Maryland, Michigan, Missouri, North Carolina, Ohio, South Carolina, Tennessee, Texas and Virginia, which constitute the geographic area in which the Company has operated its business at some time during the two years preceding the date of this Agreement; or (ii) such broader geographic area where the Company conducts business at any time during the Term of this Agreement.
(e) In the event of any breach of this covenant not to compete, the Employee recognizes that the remedies at law will be inadequate and that in addition to any relief at law which may be available to the Company for such violation or breach and regardless of any other provision contained in this Agreement, the Company shall be entitled to equitable remedies (including an injunction) and such other relief as a court may grant after considering the intent of this Section 4.
(f) In the event a court of competent jurisdiction determines that the provisions of this covenant not to compete are excessively broad as to duration, geographic scope, prohibited activities or otherwise, the parties agree that this covenant shall be reduced or curtailed to the extent necessary to render it enforceable.
5. TERMINATION.
(a) Death. The Employees employment hereunder shall terminate upon his death.
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(b) Disability. If, during the Term, the Employee becomes physically or mentally disabled in accordance with the terms and conditions of any disability insurance policy covering the Employee or, if due to such physical or mental disability, the Employee becomes unable for a period of more than one hundred eighty (180) consecutive days to perform his duties hereunder on substantially a full-time basis as determined by the Company in its sole reasonable discretion, the Company may, at its option, terminate the Employees employment hereunder upon not less than thirty (30) days written notice of termination.
(c) Cause. The Company may terminate this Agreement at any time with Cause. As used in this Agreement, Cause shall mean the following: (1) a material violation of the Companys policies or practices which reasonably justifies termination; (2) conviction of a felony, as evidenced by a binding and final judgment, order or decree of a court of competent jurisdiction; (3) the commission by the Employee of any act which would reasonably be expected to materially injure the reputation, business, or business relationships of the Company or Related Entities; or (4) any material breach by Employee of this Agreement. The Company may terminate this Agreement with Cause as defined in clauses (1) and (4) above upon fifteen (15) business days prior written notice (the Cause Notification Period) to Employee, but such termination shall only become effective in the event of Employees failure to cure the applicable breach or violation, to the reasonable satisfaction of Company, prior to the end of the Cause Notification Period. The Company may terminate this Agreement without notice at any time with Cause as defined in clause (2) or (3) above. Notwithstanding anything in the foregoing to the contrary, upon and after a Change of Control, the Company may terminate this Agreement with Cause only as defined in clause (2) or (4) above. In the event of a termination with Cause, the Company shall be relieved of all its obligations to the Employee provided for by this Agreement, and all payments to the Employees hereunder shall immediately cease and terminate. For the avoidance of doubt, the Company also may terminate the Employees employment hereunder at any time without Cause by written notice; provided, however, that the Company shall owe the Employee the Severance Payment (as defined below) following a termination of the Employees employment by the Company other than for Cause.
(d) Involuntary Termination by Employee. The Employee may terminate his employment hereunder upon (i) a good faith determination by the Employee that there has been a material breach of the Agreement by the Company, (ii) a material adverse change in the Employees working conditions or status, (iii) a significant relocation of the Employees principal office, or (iv) upon or within the two-year period following a Change of Control, a good faith determination by the Employee that there has been any of the following: a breach of the Agreement by the Company, any adverse change in the Employees working conditions, status, authority, duties, responsibilities (including but not limited to a requirement that the Employee report to a corporate officer instead of reporting directly to the board of directors) or any requirement that the Employee relocate his principal office to a location that is more than ten (10) miles from the location of the Employees principal office immediately prior to the Change of Control (any one of the preceding constituting Good Reason), by delivering written notice of termination to the Company indicating in reasonable detail the facts and circumstances alleged to provide a basis for such termination and shall cease performing the Employees duties hereunder on the date which is ten (10) days after delivery of the notice, which date shall also be the date of termination of the Employees employment.
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(e) Voluntary Termination by Employee. The Employee agrees to provide the Company with at least twenty (20) business days (Termination Notice Period) prior written notice of his intent to terminate employment voluntarily. Failure to provide such notice terminates the Employees entitlement to payment of accrued, unused benefits, such as vacation. However, the Company reserves the right to terminate the Employee before the end of the Termination Notice Period, provided that the Company pays the Employee the salary that he would have received from the date of the last payroll payment to the end of the Termination Notice Period. Such salary shall be paid in accordance with the Companys normal payroll procedures applicable to base salary. During the Termination Notice Period, the Employee agrees to make a good faith effort to perform the duties described hereunder. If, during the Term, the Employee voluntarily terminates his employment with the Company, the Companys obligations, including payment obligations, under this Agreement shall cease, except that the Company shall pay the Employee the amount of base salary that he would have received from the date of the last payroll payment to the end of the Termination Notice Period in accordance with the Companys normal payroll procedures applicable to base salary.
(f) Severance Payment and Post-Change of Control Benefits. In the event of a termination of the Employees employment (i) by the Company other than for Cause or (ii) by the Employee in a manner which satisfies Section 5(d):
(i) The Company shall pay the Employee (subject to the provisions of Section 6 of this Agreement) a one-time, lump-sum severance payment equal to TWO (2) times the sum of (A) the Employees annual base salary in effect at the time of such termination and (B) the Employees average annual bonus for the TWO (2) full calendar years immediately preceding such termination (Severance Payment). Notwithstanding the foregoing, if such termination of the Employees employment occurs during a Post-Change of Control Renewal Period, the Severance Payment shall be calculated using the Employees annual base salary in effect at any time during the period of 180 days prior to the date on which the Change of Control occurred in clause (A), if higher than the annual base salary in effect at the time of such termination, and the Employees average annual bonus for the TWO (2) full calendar years immediately preceding the Change of Control in clause (B), if higher than the average annual bonus for the TWO (2) full calendar years immediately preceding such termination. The Severance Payment shall be paid to the Employee in cash equivalent on the date that is sixty (60) days after the date of termination of the Employees employment; provided that, to the extent required to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the Code), all or a portion of the Severance Payment shall be delayed until the first day of the seventh (7 th ) month following the month in which the termination of the Employees employment occurs, without interest thereon.
(ii) If such termination of employment occurs during a Post-Change of Control Renewal Period, then the Employee will also receive the following benefits:
(a)(1) all restrictions on any restricted stock or restricted stock unit awards made to Employee by the Company or its affiliates on or after the Change of Control shall lapse such that Employee is
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fully and immediately vested in such awards upon such termination of employment; (2) any stock options or stock appreciation rights granted to Employee pursuant to the Companys or its affiliates equity-based incentive plan(s) on or after the Change of Control shall become fully and immediately vested upon such termination of employment; and (3) any performance shares, performance units or similar performance-based equity awards granted to Employee pursuant to the Companys or its affiliates equity-based incentive plan(s) on or after the Change of Control shall be deemed earned on a pro rated basis according to the portion of the performance period that has elapsed through the date of the termination of employment as if all performance requirements had been satisfied at the target level (or such higher level as would have been achieved if performance through the date of the termination of employment had continued through the end of the performance period).
(b) Until the earlier of eighteen (18) months after the date of Employees termination of employment or such time as Employee has obtained new employment and is covered by benefits which in the aggregate are at least equal in value to the following benefits, Employee shall continue to be covered, at the expense of the Company, by the same or equivalent life insurance, hospitalization, medical, dental and vision coverage as Employee received (or, if higher, as was required hereunder) immediately prior to Employees termination of employment, subject to the following: After the end of the COBRA continuation period, if such hospitalization, medical or dental coverage is provided under a health plan that is subject to Section 105(h) of the Code, benefits payable under such health plan shall comply with the requirements of Treasury regulation section 1.409A-3(i)(1)(iv) and, if necessary, the Company shall amend such health plan to comply therewith; and if provision of any such health benefits would subject the Company or its benefits arrangements to a penalty or adverse tax treatment, then the Company shall provide a cash payment to Employee in an amount reasonably determined by the Company to be equivalent to the COBRA premiums for similar benefits.
(c) The Employee shall receive until the end of the second calendar year following the calendar year in which the Employees termination of employment occurs, at the expense of the Company, outplacement services, on an individualized basis at a level of service commensurate with the Employees status with the Company immediately prior to the date of the Change of Control (or, if higher, immediately prior to the Employees termination of employment), provided by a nationally recognized executive placement firm selected by the Company; provided that the cost to the Company of such services shall not exceed 10% of the Employees annual base salary immediately prior to the date of the Change of Control (or, if higher, immediately prior to the Employees termination of employment).
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(d) The Company shall bear up to $15,000 in the aggregate of fees and expenses of consultants and/or legal or accounting advisors engaged by the Employee to advise the Employee as to matters relating to the computation of benefits due and payable under this Section 5.
Notwithstanding anything to the contrary in this Agreement, if a Change of Control occurs and the Employees employment with the Company is terminated (other than a termination due to Employees death or as a result of Disability) during the period of 180 days prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by Employee that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise arose in connection with or in anticipation of a Change of Control, then for all purposes of this Agreement such termination of employment shall be deemed a termination following such Change of Control.
(g) Benefits. The following shall apply upon termination of the Employees employment: Notwithstanding anything to the contrary herein contained, the Employee shall receive all compensation and other benefits to which he was entitled under this Agreement or otherwise as an employee of the Company through the termination date, including payments of base salary accrued hereunder through the calendar month in which such termination occurs.
6. TAX PROVISIONS.
(a) Limitation on Parachute Payments. Notwithstanding any other provision of this Agreement, if any portion of the Severance Payment or any other payment under this Agreement, or payments to or for the benefit of the Employee under any other agreement or plan (collectively, the Change of Control Benefits), would constitute an excess parachute payment, then the Change of Control Benefits to be made to the Employee shall be reduced such that the value of the aggregate Change of Control Benefits that the Employee is entitled to receive shall be One Dollar ($1) less than the maximum amount which the Employee may receive without becoming subject to the tax imposed by Section 4999 of the Code (or any successor provision) or which the Company may pay without loss of deduction under Section 280G(a) of the Code (or any successor provision); provided that the foregoing reduction in the amount of Change of Control Benefits shall not apply if the after-tax value to the Employee of the Change of Control Benefits prior to reduction in accordance herewith is greater than the after-tax value to the Employee if the Change of Control Benefits are reduced in accordance herewith. For purposes of this Agreement, the terms excess parachute payment and parachute payments shall have the meanings assigned to them in Code Section 280G, and such parachute payments shall be valued as provided therein.
(b) Opinion. For purposes of this Section, within thirty (30) days after notice by one party to the other of its belief that there is a payment or benefit due the Employee that
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will result in an excess parachute payment as defined in Section 280G of the Code or any successor provision thereto, the Employee and the Company shall obtain, at the Companys expense, the opinion (which need not be unqualified) of nationally recognized tax counsel (Tax Counsel) selected by the Companys independent auditors and acceptable to the Employee, which sets forth (A) the base amount within the meaning of Section 280G; (B) the aggregate present value of the payments in the nature of compensation to the Employee as prescribed in Section 280G(b)(2)(A) (ii); (C) the amount and present value of any excess parachute payment within the meaning of Section 280G(b)(1) without regard to the limitations of this Section 6; (D) the after-tax value of the Change of Control Benefits if the reduction in Change of Control Benefits contemplated under this Section 6 did not apply; and (E) the after-tax value of the Change of Control Benefits taking into account the reduction in Change of Control Benefits contemplated under this Section 6. For purposes of determining the after-tax value of the Change of Control Benefits, the Employee shall be deemed to pay federal income taxes and employment taxes at the highest marginal rate of federal income and employment taxation in the calendar year in which the payment is to be made and state and local income taxes at the highest marginal rates of taxation in the state and locality of the Employees domicile for income tax purposes on the date the payment is to be made, net of the maximum reduction in federal income taxes that may be obtained from deduction of such state and local taxes.
In the event that a reduction is to be made under this Section 6, the Change of Control Benefits shall be reduced or eliminated by applying the following principles, in order: (i) the payment or benefit with the higher ratio of the parachute payment value to present economic value (determined using reasonable actuarial assumptions) shall be reduced or eliminated before a payment or benefit with a lower ratio; (ii) the payment or benefit with the later possible payment date shall be reduced or eliminated before a payment or benefit with an earlier payment date; and (iii) cash payments shall be reduced prior to non-cash benefits; provided, however, that if the foregoing order of reduction or elimination would violate Section 409A of the Code, then the reduction shall be made pro rata among the payments or benefits included in the Change of Control Benefits (on the basis of the relative present value of the parachute payments). For purposes of this Agreement, the value of any noncash benefits or any deferred payment or benefit, and all present economic values, shall be determined by the Companys independent auditors in accordance with the principles of Sections 280G, which determination shall be evidenced in a certificate of such auditors addressed to the Company and the Employee. Such opinion shall be dated as of the date of termination of the Employees employment and addressed to the Company and the Employee and shall be binding upon the Company and the Employee.
The provisions of this Section 6(b), including the calculations, notices and opinions provided for herein shall be based upon the conclusive presumption that the compensation earned by the Employee pursuant to the Companys compensation programs prior to a change of control is reasonable; provided, however, that in the event such Tax Counsel so requests in connection with the opinion required by this Section 6(b), the Company shall obtain at its expense, and Tax Counsel may rely on in providing the opinion, the advice of a firm of recognized Employee compensation consultants as to the reasonableness of any item of compensation to be received by the Employee.
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(c) Effect of Change in Law. In the event that the provisions of Sections 280G and 4999 of the Code (or any successor provisions) are repealed, this Section 6 shall cease to be effective on the effective date of such repeal. The parties to this Agreement recognize that final regulations promulgated under Section 280G of the Code may affect the amounts that may be paid under this Agreement and agree that, upon issuance of such final regulations, this Agreement may be modified as the parties hereto may in good faith deem necessary in light of the provisions of such regulations to achieve the purposes of this Agreement, and that consent to such modification shall not be unreasonably withheld.
7. SUCCESSORS.
(a) If the Company sells, assigns or transfers all or substantially all of its business and assets to any Person (as defined in Appendix A hereto) or if the Company merges into or consolidates or otherwise combines (where the Company does not survive such combination) with any Person (any such event, a Sale of Business), then the Company shall assign all of its right, title and interest in this Agreement as of the date of such event to such Person, and the Company shall cause such Person, by written agreement in form and substance reasonably satisfactory to the Employee, to expressly assume and agree to perform from and after the date of such assignment all of the terms, conditions and provisions imposed by this Agreement upon the Company. Failure of the Company to obtain such agreement prior to the effective date of such Sale of Business shall be a material breach of this Agreement. In case of such assignment by the Company and of assumption and agreement by such Person, as used in this Agreement, Company shall thereafter mean such Person which executes and delivers the agreement provided for in this Section 7 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law, and this Agreement shall inure to the benefit of, and be enforceable by, such Person. The Employee shall, in the Employees discretion, be entitled to proceed against any or all of such Persons, any Person which theretofore was such a successor to the Company (as defined in the first paragraph of this Agreement) and the Company (as so defined) in any action to enforce any rights of the Employee hereunder. Except as provided in this Subsection, this Agreement shall not be assignable by the Company. This Agreement shall not be terminated by the voluntary or involuntary dissolution of the Company.
(b) This Agreement and all rights of the Employee shall inure to the benefit of and be enforceable by the Employees personal or legal representatives, executors, administrators, heirs and beneficiaries. All amounts payable to the Employee under Sections 3, 5, and 7 of this Agreement if the Employee had lived shall be paid, in the event of the Employees death, to the Employees estate, heirs and representatives; provided, however, that the foregoing shall not be construed to modify any terms of any benefit plan of the Company, as such terms are in effect on the date of the Employees death, that expressly govern benefits under such plan in the event of the Employees death.
8. SEVERABILITY. The provisions of this Agreement shall be regarded as divisible, and the parties agree that if any of said provisions or any part hereof shall under any circumstances be deemed or declared invalid, inoperative or unenforceable, then the validity and enforceability of the remainder of such provisions or parts hereof and the applicability thereof shall not be affected thereby.
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9. AMENDMENT. This Agreement (as hereby amended and restated) may not be further amended or modified at any time except by written instrument executed by the Company and the Employee.
10. WITHHOLDING. The Company shall be entitled to withhold from amounts to be paid to the Employee hereunder any federal, state or local withholding or other taxes or charges which it is from time to time required to withhold; provided, that the amount so withheld shall not exceed the minimum amount required to be withheld by law (unless the Employee has otherwise indicated in writing). The Company shall be entitled to rely on an opinion of nationally recognized tax counsel if any question as to the amount or requirement of any such withholding shall arise.
11. NOTICE. For purposes of this Agreement, notices and all other communications provided for herein shall be in writing and shall be deemed to have been duly given when actually received, whether hand-delivered, sent by telecopier, facsimile transmission or other electronic means of transmitting written documents (as long as receipt is acknowledged) or mailed by United States certified or registered mail, return receipt requested, postage prepaid, addressed as follows:
If to the Employee, to the Employee at the Employees address then reflected in the records of the Company.
If to the Company, to:
Nicholas Financial, Inc.
2454 McMullen Booth Road
Building C
Clearwater, Florida 33759
Attn: President
or to such other address as either party may have furnished to the other in writing in accordance herewith, except that a notice of change of address shall be effective only upon receipt.
12. NO WAIVER; ENTIRE AGREEMENT. No waiver by any party hereto of any breach of this Agreement by any other party hereto shall be deemed a waiver of any similar or dissimilar term or condition at the same or at any prior or subsequent time. This Agreement and any equity award agreements between the Company and the Employee constitute the entire agreement between the parties hereto with respect to the Employees employment by the Company and there are no agreements or representations, oral or otherwise, expressed or implied, with respect to or related to the employment of the Employee which are not set forth in this Agreement or such equity award agreements.
13. NO ASSIGNMENT. Except as expressly set forth herein, no party shall assign any of his or its rights under this Agreement without the prior written consent of the other party and any attempted assignment without such prior written consent shall be null and void and without legal effect.
14. COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may be effective upon the
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execution and delivery by any party hereto of facsimile copies of signature pages hereto duly executed by such party; provided, however, that any party delivering a facsimile signature page covenants and agrees to deliver promptly after the date hereof two (2) original copies to the other party hereto.
15. GOVERNING LAW.
(a) The validity, interpretation, construction and performance of this Agreement shall be governed by the internal laws of the State of Florida, except that Section 15(b) shall be construed in accordance with the Federal Arbitration Act if arbitration is chosen by the Employee as the method of dispute resolution.
(b) Any dispute arising out of this Agreement shall, at the Employees election, be determined by either (i) arbitration under the rules of the American Arbitration Association then in effect (but subject to any evidentiary standards set forth in this Agreement), in which both parties shall be bound by the arbitration award, or (ii) by litigation. Whether the dispute is to be settled by arbitration or litigation, the venue for the arbitration or litigation shall be Tampa, Florida. The parties consent to personal jurisdiction in each trial court in the selected venue having subject matter jurisdiction notwithstanding their residence or situs, and each party irrevocably consents to service of process in the manner provided hereunder for the giving of notices.
16. CERTAIN RULES OF CONSTRUCTION; CODE SECTION 409A.
(a) No party shall be considered as being responsible for the drafting of this Agreement for the purpose of applying any rule construing ambiguities against the drafter or otherwise. No draft of this Agreement shall be taken into account in construing this Agreement. Any provision of this Agreement which requires an agreement in writing shall be deemed to require that the writing in question be signed by the Employee and an authorized representative of the Company.
(b) The Company and the Employee intend the terms of this Agreement to be in compliance with Section 409A of the Code and the regulations promulgated thereunder. To the maximum extent permissible, any ambiguous terms of this Agreement shall be interpreted in a manner that avoids a violation of Section 409A of the Code. The phrase termination of the Employees employment and similar phrases in this Agreement shall mean the Employees separation from service as defined in Section 409A of the Code. The Company does not guarantee the tax treatment or tax consequences associated with any payment or benefit, including but not limited to consequences related to Section 409A of the Code.
(c) If, after the date of a Change of Control of the Company, any payment amount or the value of any benefit under this Agreement is required to be included in the Employees income prior to the date such amount is actually paid or the benefit provided as a result of the failure of this Agreement (or any other arrangement that is required to be aggregated with this Agreement under Code Section 409A) to comply with Code Section 409A, then the Employee shall receive a distribution, in a lump sum, within 90 days after the date it is finally determined that the Agreement (or such other arrangement that is required to be aggregated with
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this Agreement) fails to meet the requirements of Section 409A of the Code; such distribution shall equal the lesser of (i) the amount required to be included in the Employees income as a result of such failure and (ii) the benefits otherwise due hereunder, and shall in any event reduce the amount of payments or benefits otherwise due hereunder.
17. HEADINGS. The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.
NICHOLAS FINANCIAL, INC. | ||
By: | /s/ Ralph Finkenbrink | |
Ralph T. Finkenbrink | ||
President and Chief Executive Officer |
EMPLOYEE: | ||
/s/ Kevin Bates | ||
Printed Name: Kevin D. Bates |
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APPENDIX A
For purposes of this Agreement, a Change of Control shall be deemed to have occurred upon the earlier of (a) any of the events constituting a Change of Control under the Companys 2015 Omnibus Incentive Plan, as such term is defined in such Plan as of the date of this Agreement, or (b) a determination by the Board of Directors of the Company, in view of the then current circumstances or impending events, that a change of control of the Company has occurred or is imminent, which determination shall be made for the specific purpose of triggering the operative provisions of this Agreement.
A-1
Exhibit 10.10
EMPLOYMENT AGREEMENT
THIS AGREEMENT is dated as of the 2 nd day of July, 2015 (this Agreement), by NICHOLAS FINANCIAL, INC., a British Columbia, Canada corporation (the Company), and KATIE L. MACGILLIVARY (the Employee).
W I T N E S S E T H:
WHEREAS, the Company recognizes that circumstances may arise in which a change in control of the Company occurs, through acquisition or otherwise, thereby causing uncertainty about the Employees future employment with the Company without regard to the Employees competence or past contributions, which uncertainty may result in the loss of valuable services of the Employee to the detriment of the Company and its shareholders, and the Company and the Employee wish to provide reasonable security to the Employee against changes in the Employees relationship with the Company in the event of any such change in control;
WHEREAS, the Company and the Employee desire that any proposal for a change in control or acquisition of the Company will be considered by the Employee objectively and with reference only to the best interests of the Company and its shareholders;
WHEREAS, the Employee will be in a better position to consider the Companys best interests if the Employee is afforded reasonable security, as provided in this Agreement, against altered conditions of employment which could result from any such change in control or acquisition; and
WHEREAS, the Employee desires to continue to be employed by the Company on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto covenant and agree as follows:
1. EMPLOYMENT AND DUTIES. Subject to the terms and conditions of this Agreement, the Company agrees to employ the Employee, and the Employee hereby agrees to serve the Company, as Vice President-Finance, Chief Financial Officer. The Employee shall report directly to the Companys President and Chief Executive Officer and shall render to the Company such management and policy-making services of the type customarily performed by persons serving in similar capacities with other employers that are similar to the Company, together with such other duties with which she is charged by the Companys Articles or Notice of Articles (or any similar governance instruments) and subject to the overall direction and control of the Companys Board of Directors. The Employee accepts such employment and agrees to devote her best efforts and substantially all of her business time, skill, labor and attention to the performance of such duties. The Employee agrees not to engage in or be concerned with any other commercial duties or pursuits during the Term (as hereinafter defined) of this Agreement; provided, however, that the Employee may be involved in a passive capacity in a non-competitive business subject to the prior written approval of the Companys Board of Directors. Furthermore, the Employee shall assume and competently perform such reasonable responsibilities and duties as may be assigned to
her from time to time by the Chairman of the Board or the President and Chief Executive Officer of the Company. To the extent that the Company shall have any parent, subsidiary, affiliated corporations, partnerships, or joint venture (collectively Related Entities), the Employee shall perform such duties to promote these entities and their respective interests to the same extent as the interests of the Company without additional compensation. At all times, Employee agrees that she has read and will abide by, and prospectively will read and abide by, any employee handbook, policy, or practice that the Company or Related Entities has or hereafter adopts with respect to its employees generally.
2. TERM. The employment of the Employee under this Agreement commences on the date hereof and will continue through and including the close of business on the 2nd anniversary of the date hereof (the Initial Term), unless earlier terminated pursuant to the terms of this Agreement. After the end of the Initial Term, this Agreement shall continue to renew automatically on the anniversary of the last day of the Initial Term for successive 1-year terms (the Initial Term, as well as any such renewal(s) thereof, shall be referred to herein as the Term) unless the Company provides to the Employee, at least sixty (60) days prior to the expiration of any renewal Term, written notification that it intends not to renew this Agreement; and, provided, further, that this Agreement may be terminated in accordance with Section 5 hereof (with the exception of the obligations of the parties hereunder that shall survive any such termination). Notwithstanding the foregoing, if a Change of Control (as defined in Appendix A hereto) occurs prior to the end of the Initial Term or any renewal term, this Agreement shall be extended automatically for a two year renewal period beginning on the date of the Change of Control (a Post-Change of Control Renewal Period). Expiration of this Agreement will not affect the rights or obligations of the parties hereunder arising out of, or relating to, circumstances occurring prior to the expiration of this Agreement, which rights and obligations will survive the expiration of this Agreement.
3. COMPENSATION.
(a) Annual Base Salary and Bonus. As compensation for her services under this Agreement, the Employee shall receive, and the Company shall pay, an annual base salary of such amount as shall be determined by the Compensation Committee of the Companys Board of Directors (or other committee performing similar functions), but not less than $175,000 (U.S.). Such annual base salary shall be payable in equal installments in accordance with the policy then prevailing for the Companys Employees. Following a Change of Control, the Employees annual base salary shall not be decreased and, during the Post-Change of Control Renewal Period, the Employees base salary shall be increased on an annual basis by an amount at least equal to the average base salary increase, expressed as a percentage, provided to executives of the Company of comparable status and position to the Employee. The Employee also shall be entitled, during the Term, to an annual performance bonus as determined by the Compensation Committee of the Board of Directors (or other committee performing similar functions), and to participate in and receive payments from all other bonus and other incentive compensation plans as may be adopted by the Company as are made available to other Employees of the Company. On and after a Change of Control, to assure that the Employee will have an opportunity to earn incentive compensation, Employee shall be included in a bonus plan of the Company which shall satisfy the standards described below (such plan, the Bonus Plan). Bonuses under the Bonus Plan shall be payable with respect to achieving such financial or other goals reasonably related to the business of the Company as the Company shall establish (the Goals), all of which Goals
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shall be attainable, prior to the end of the Post-Change of Control Renewal Period, with approximately the same degree of probability as the most attainable goals under the Companys bonus plan or plans as in effect at any time during the 180-day period immediately prior to the Change of Control (whether one or more, the Company Bonus Plan) and in view of the Companys existing and projected financial and business circumstances applicable at the time. The amount of the bonus (the Bonus Amount) that Employee is eligible to earn under the Bonus Plan shall be no less than 100% of Employees target award provided in such Company Bonus Plan (such bonus amount herein referred to as the Targeted Bonus), and in the event the Goals are not achieved such that the entire Targeted Bonus is not payable, the Bonus Plan shall provide for a payment of a Bonus Amount equal to a portion of the Targeted Bonus reasonably related to that portion of the Goals which were achieved. Payment of the Bonus Amount shall not be affected by any circumstance occurring subsequent to the end of the Post-Change of Control Renewal Period, including termination of Employees employment.
(b) Payments. All amounts paid pursuant to this Agreement shall be subject to withholding or deduction by reason of the Federal Insurance Contribution Act, Federal income tax, state and local income tax, if any, and comparable laws and regulations.
(c) Other Benefits. The Employee shall be reimbursed by the Company for all reasonable and customary travel and other business expenses incurred by her in the performance of her duties hereunder in accordance with the Companys standard policy regarding expense verification practices. The Employee shall be entitled to that number of weeks paid vacation per year that is available to other Employees of the Company, and shall be eligible to participate in such pension, life insurance, health insurance, disability insurance and other employee benefits plans, if any, which the Company may from time to time make available to its Employees generally. On and after a Change of Control, the Employee shall be included: (i) to the extent eligible thereunder (which eligibility shall not be conditioned on Employees salary grade or on any other requirement which excludes persons of comparable status to Employee unless such exclusion was in effect for such plan or an equivalent plan immediately prior to the Change of Control), in any and all plans providing benefits for the Companys salaried employees in general (including but not limited to group life insurance, hospitalization, medical, dental, and long-term disability plans) and (ii) in plans provided to executives of the Company of comparable status and position to Employee (including but not limited to deferred compensation, split-dollar life insurance, supplemental retirement, stock option, stock appreciation, stock bonus, cash bonus and similar or comparable plans); provided that in no event shall the aggregate level of benefits under the plans described in clause (i) and the plans described in clause (ii), respectively, in which Employee is included be less than the aggregate level of benefits under plans of the Company of the type referred to in such clause, respectively, in which Employee was participating immediately prior to the Change of Control.
4. NONCOMPETITION AND NON-DISCLOSURE REQUIREMENTS.
(a) Employee acknowledges that her services are of a special, unique, extraordinary and intellectual character, and her position with the Company places her in a position of confidence and trust with customers, suppliers and employees of the Company and other Related Entities. The Employee further acknowledges that the rendering of services under this Agreement necessarily requires the disclosure to her of confidential information (as defined
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below) of the Company and/or Related Entities. The Employee and the Company agree that both prior to and during her course of employment with the Company, the Employee had, has and will continue to develop personal relationships with the Companys financiers, customers, suppliers and employees, and that the Employee holds a position of substantial trust and confidence. As a consequence, the Employee agrees that it is reasonable and necessary for the protection of goodwill and legitimate business interests of the Company and Related Entities that the Employee make the covenants contained herein, that the covenants are a material inducement for the Company to employ the Employee and to enter into this Agreement, and that the covenants are given as an integral part of and incident to this Agreement.
(b) The Employee covenants and agrees that during her employment by the Company (whether during the Term hereof or otherwise), and thereafter for a period of two (2) years following the termination of the Employees employment with the Company, she will not:
(i) directly or indirectly engage in, continue in or carry on the business of the Company or any Related Entity, or any business substantially similar thereto, including owning or controlling any financial interest in, any corporation, partnership, firm or other form of business organization which competes with or is engaged in or carries on any aspect of such business or any business substantially similar thereto;
(ii) directly or indirectly, assist, promote or encourage any employees or clients, or potential employees or clients, of the Company or Related Entities to terminate or discontinue their relationship in order to pursue opportunities or employment with any competitor of the Company or Related Entities;
(iii) consult with, advise or assist in any way, whether or not for consideration, any corporation, partnership, firm or other business organization which is now, becomes or may become a competitor of the Company or any Related Entity in any aspect of their respective businesses during the Employees employment with the Company, including, but not limited to: advertising or otherwise endorsing the products of any such competitor; soliciting customers or otherwise serving as an intermediary for any such competitor; or loaning money or rendering any other form of financial assistance to or engaging in any form of business transaction whether or not on an arms length basis with any such competitor; or
(iv) engage in any practice the purpose of which is to evade the provisions of this Agreement or to commit any act which is detrimental to the successful continuation of, or which adversely affects, the business or the Company; provided, however, that the foregoing shall not preclude the Employees ownership of not more than 5% of the equity securities of a corporation which has such securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the Exchange Act).
(c) The Employee acknowledges that the inventions, innovations, software, trade secrets, business plans, financial strategies, finances, and all other confidential or
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proprietary information with respect to the business and operations of the Company and Related Entities are valuable, special and unique assets of the Company. The Employee agrees not to, at any time during or after the Term of this Agreement, disclose, directly or indirectly, to any person or entity, or use or authorize or propose to authorize any person or entity to use any confidential or proprietary information with respect to the Company or Related Entities without the prior written consent of the Company including, without limitation, information as to the financial condition, results of operations, identities of clients or prospective clients, products under development, acquisition strategies or acquisitions under consideration, pricing or cost information, marketing strategies or any other information relating to the Company or any of the Related Entities which could be reasonably regarded as confidential. However, this does not include information which is or shall become generally available to the public other than as a result of disclosure by the Company or Related Entities or any of their agents, affiliates or representatives or a person to whom any of them has provided such information.
(d) The Employee agrees that the geographic scope of this covenant not to compete shall extend to (i) the states of Alabama, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Maryland, Michigan, Missouri, North Carolina, Ohio, South Carolina, Tennessee, Texas and Virginia, which constitute the geographic area in which the Company has operated its business at some time during the two years preceding the date of this Agreement; or (ii) such broader geographic area where the Company conducts business at any time during the Term of this Agreement.
(e) In the event of any breach of this covenant not to compete, the Employee recognizes that the remedies at law will be inadequate and that in addition to any relief at law which may be available to the Company for such violation or breach and regardless of any other provision contained in this Agreement, the Company shall be entitled to equitable remedies (including an injunction) and such other relief as a court may grant after considering the intent of this Section 4.
(f) In the event a court of competent jurisdiction determines that the provisions of this covenant not to compete are excessively broad as to duration, geographic scope, prohibited activities or otherwise, the parties agree that this covenant shall be reduced or curtailed to the extent necessary to render it enforceable.
5. TERMINATION.
(a) Death. The Employees employment hereunder shall terminate upon her death.
(b) Disability. If, during the Term, the Employee becomes physically or mentally disabled in accordance with the terms and conditions of any disability insurance policy covering the Employee or, if due to such physical or mental disability, the Employee becomes unable for a period of more than one hundred eighty (180) consecutive days to perform her duties hereunder on substantially a full-time basis as determined by the Company in its sole reasonable discretion, the Company may, at its option, terminate the Employees employment hereunder upon not less than thirty (30) days written notice of termination.
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(c) Cause. The Company may terminate this Agreement at any time with Cause. As used in this Agreement, Cause shall mean the following: (1) a material violation of the Companys policies or practices which reasonably justifies termination; (2) conviction of a felony, as evidenced by a binding and final judgment, order or decree of a court of competent jurisdiction; (3) the commission by the Employee of any act which would reasonably be expected to materially injure the reputation, business, or business relationships of the Company or Related Entities; or (4) any material breach by Employee of this Agreement. The Company may terminate this Agreement with Cause as defined in clauses (1) and (4) above upon fifteen (15) business days prior written notice (the Cause Notification Period) to Employee, but such termination shall only become effective in the event of Employees failure to cure the applicable breach or violation, to the reasonable satisfaction of Company, prior to the end of the Cause Notification Period. The Company may terminate this Agreement without notice at any time with Cause as defined in clause (2) or (3) above. Notwithstanding anything in the foregoing to the contrary, upon and after a Change of Control, the Company may terminate this Agreement with Cause only as defined in clause (2) or (4) above. In the event of a termination with Cause, the Company shall be relieved of all its obligations to the Employee provided for by this Agreement, and all payments to the Employees hereunder shall immediately cease and terminate. For the avoidance of doubt, the Company also may terminate the Employees employment hereunder at any time without Cause by written notice; provided, however, that the Company shall owe the Employee the Severance Payment (as defined below) following a termination of the Employees employment by the Company other than for Cause.
(d) Involuntary Termination by Employee. The Employee may terminate her employment hereunder upon (i) a good faith determination by the Employee that there has been a material breach of the Agreement by the Company, (ii) a material adverse change in the Employees working conditions or status, (iii) a significant relocation of the Employees principal office, or (iv) upon or within the two-year period following a Change of Control, a good faith determination by the Employee that there has been any of the following: a breach of the Agreement by the Company, any adverse change in the Employees working conditions, status, authority, duties, responsibilities (including but not limited to a requirement that the Employee report to a corporate officer instead of reporting directly to the board of directors) or any requirement that the Employee relocate her principal office to a location that is more than ten (10) miles from the location of the Employees principal office immediately prior to the Change of Control (any one of the preceding constituting Good Reason), by delivering written notice of termination to the Company indicating in reasonable detail the facts and circumstances alleged to provide a basis for such termination and shall cease performing the Employees duties hereunder on the date which is ten (10) days after delivery of the notice, which date shall also be the date of termination of the Employees employment.
(e) Voluntary Termination by Employee. The Employee agrees to provide the Company with at least twenty (20) business days (Termination Notice Period) prior written notice of her intent to terminate employment voluntarily. Failure to provide such notice terminates the Employees entitlement to payment of accrued, unused benefits, such as vacation. However, the Company reserves the right to terminate the Employee before the end of the Termination Notice Period, provided that the Company pays the Employee the salary that she would have received from the date of the last payroll payment to the end of the Termination Notice Period. Such salary shall be paid in accordance with the Companys normal payroll
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procedures applicable to base salary. During the Termination Notice Period, the Employee agrees to make a good faith effort to perform the duties described hereunder. If, during the Term, the Employee voluntarily terminates her employment with the Company, the Companys obligations, including payment obligations, under this Agreement shall cease, except that the Company shall pay the Employee the amount of base salary that she would have received from the date of the last payroll payment to the end of the Termination Notice Period in accordance with the Companys normal payroll procedures applicable to base salary.
(f) Severance Payment and Post-Change of Control Benefits. In the event of a termination of the Employees employment (i) by the Company other than for Cause or (ii) by the Employee in a manner which satisfies Section 5(d):
(i) The Company shall pay the Employee (subject to the provisions of Section 6 of this Agreement) a one-time, lump-sum severance payment equal to TWO (2) times the sum of (A) the Employees annual base salary in effect at the time of such termination and (B) the Employees average annual bonus for the TWO (2) full calendar years immediately preceding such termination (Severance Payment). Notwithstanding the foregoing, if such termination of the Employees employment occurs during a Post-Change of Control Renewal Period, the Severance Payment shall be calculated using the Employees annual base salary in effect at any time during the period of 180 days prior to the date on which the Change of Control occurred in clause (A), if higher than the annual base salary in effect at the time of such termination, and the Employees average annual bonus for the TWO (2) full calendar years immediately preceding the Change of Control in clause (B), if higher than the average annual bonus for the TWO (2) full calendar years immediately preceding such termination. The Severance Payment shall be paid to the Employee in cash equivalent on the date that is sixty (60) days after the date of termination of the Employees employment; provided that, to the extent required to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the Code), all or a portion of the Severance Payment shall be delayed until the first day of the seventh (7 th ) month following the month in which the termination of the Employees employment occurs, without interest thereon.
(ii) If such termination of employment occurs during a Post-Change of Control Renewal Period, then the Employee will also receive the following benefits:
(a) (1) all restrictions on any restricted stock or restricted stock unit awards made to Employee by the Company or its affiliates on or after the Change of Control shall lapse such that Employee is fully and immediately vested in such awards upon such termination of employment; (2) any stock options or stock appreciation rights granted to Employee pursuant to the Companys or its affiliates equity-based incentive plan(s) on or after the Change of Control shall become fully and immediately vested upon such termination of employment; and (3) any performance shares, performance units or similar performance-based equity awards granted to Employee pursuant to the Companys or its affiliates equity-based incentive
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plan(s) on or after the Change of Control shall be deemed earned on a pro rated basis according to the portion of the performance period that has elapsed through the date of the termination of employment as if all performance requirements had been satisfied at the target level (or such higher level as would have been achieved if performance through the date of the termination of employment had continued through the end of the performance period).
(b) Until the earlier of eighteen (18) months after the date of Employees termination of employment or such time as Employee has obtained new employment and is covered by benefits which in the aggregate are at least equal in value to the following benefits, Employee shall continue to be covered, at the expense of the Company, by the same or equivalent life insurance, hospitalization, medical, dental and vision coverage as Employee received (or, if higher, as was required hereunder) immediately prior to Employees termination of employment, subject to the following: After the end of the COBRA continuation period, if such hospitalization, medical or dental coverage is provided under a health plan that is subject to Section 105(h) of the Code, benefits payable under such health plan shall comply with the requirements of Treasury regulation section 1.409A-3(i)(1)(iv) and, if necessary, the Company shall amend such health plan to comply therewith; and if provision of any such health benefits would subject the Company or its benefits arrangements to a penalty or adverse tax treatment, then the Company shall provide a cash payment to Employee in an amount reasonably determined by the Company to be equivalent to the COBRA premiums for similar benefits.
(c) The Employee shall receive until the end of the second calendar year following the calendar year in which the Employees termination of employment occurs, at the expense of the Company, outplacement services, on an individualized basis at a level of service commensurate with the Employees status with the Company immediately prior to the date of the Change of Control (or, if higher, immediately prior to the Employees termination of employment), provided by a nationally recognized executive placement firm selected by the Company; provided that the cost to the Company of such services shall not exceed 10% of the Employees annual base salary immediately prior to the date of the Change of Control (or, if higher, immediately prior to the Employees termination of employment).
(d) The Company shall bear up to $15,000 in the aggregate of fees and expenses of consultants and/or legal or accounting advisors engaged by the Employee to advise the Employee as to matters relating to the computation of benefits due and payable under this Section 5.
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Notwithstanding anything to the contrary in this Agreement, if a Change of Control occurs and the Employees employment with the Company is terminated (other than a termination due to Employees death or as a result of Disability) during the period of 180 days prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by Employee that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise arose in connection with or in anticipation of a Change of Control, then for all purposes of this Agreement such termination of employment shall be deemed a termination following such Change of Control.
(g) Benefits. The following shall apply upon termination of the Employees employment: Notwithstanding anything to the contrary herein contained, the Employee shall receive all compensation and other benefits to which she was entitled under this Agreement or otherwise as an employee of the Company through the termination date, including payments of base salary accrued hereunder through the calendar month in which such termination occurs.
6. TAX PROVISIONS.
(a) Limitation on Parachute Payments. Notwithstanding any other provision of this Agreement, if any portion of the Severance Payment or any other payment under this Agreement, or payments to or for the benefit of the Employee under any other agreement or plan (collectively, the Change of Control Benefits), would constitute an excess parachute payment, then the Change of Control Benefits to be made to the Employee shall be reduced such that the value of the aggregate Change of Control Benefits that the Employee is entitled to receive shall be One Dollar ($1) less than the maximum amount which the Employee may receive without becoming subject to the tax imposed by Section 4999 of the Code (or any successor provision) or which the Company may pay without loss of deduction under Section 280G(a) of the Code (or any successor provision); provided that the foregoing reduction in the amount of Change of Control Benefits shall not apply if the after-tax value to the Employee of the Change of Control Benefits prior to reduction in accordance herewith is greater than the after-tax value to the Employee if the Change of Control Benefits are reduced in accordance herewith. For purposes of this Agreement, the terms excess parachute payment and parachute payments shall have the meanings assigned to them in Code Section 280G, and such parachute payments shall be valued as provided therein.
(b) Opinion. For purposes of this Section, within thirty (30) days after notice by one party to the other of its belief that there is a payment or benefit due the Employee that will result in an excess parachute payment as defined in Section 280G of the Code or any successor provision thereto, the Employee and the Company shall obtain, at the Companys expense, the opinion (which need not be unqualified) of nationally recognized tax counsel (Tax Counsel) selected by the Companys independent auditors and acceptable to the Employee, which sets forth (A) the base amount within the meaning of Section 280G; (B) the aggregate present value of the payments in the nature of compensation to the Employee as prescribed in Section 280G(b)(2)(A) (ii); (C) the amount and present value of any excess parachute payment
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within the meaning of Section 280G(b)(1) without regard to the limitations of this Section 6; (D) the after-tax value of the Change of Control Benefits if the reduction in Change of Control Benefits contemplated under this Section 6 did not apply; and (E) the after-tax value of the Change of Control Benefits taking into account the reduction in Change of Control Benefits contemplated under this Section 6. For purposes of determining the after-tax value of the Change of Control Benefits, the Employee shall be deemed to pay federal income taxes and employment taxes at the highest marginal rate of federal income and employment taxation in the calendar year in which the payment is to be made and state and local income taxes at the highest marginal rates of taxation in the state and locality of the Employees domicile for income tax purposes on the date the payment is to be made, net of the maximum reduction in federal income taxes that may be obtained from deduction of such state and local taxes.
In the event that a reduction is to be made under this Section 6, the Change of Control Benefits shall be reduced or eliminated by applying the following principles, in order: (i) the payment or benefit with the higher ratio of the parachute payment value to present economic value (determined using reasonable actuarial assumptions) shall be reduced or eliminated before a payment or benefit with a lower ratio; (ii) the payment or benefit with the later possible payment date shall be reduced or eliminated before a payment or benefit with an earlier payment date; and (iii) cash payments shall be reduced prior to non-cash benefits; provided, however, that if the foregoing order of reduction or elimination would violate Section 409A of the Code, then the reduction shall be made pro rata among the payments or benefits included in the Change of Control Benefits (on the basis of the relative present value of the parachute payments). For purposes of this Agreement, the value of any noncash benefits or any deferred payment or benefit, and all present economic values, shall be determined by the Companys independent auditors in accordance with the principles of Sections 280G, which determination shall be evidenced in a certificate of such auditors addressed to the Company and the Employee. Such opinion shall be dated as of the date of termination of the Employees employment and addressed to the Company and the Employee and shall be binding upon the Company and the Employee.
The provisions of this Section 6(b), including the calculations, notices and opinions provided for herein shall be based upon the conclusive presumption that the compensation earned by the Employee pursuant to the Companys compensation programs prior to a change of control is reasonable; provided, however, that in the event such Tax Counsel so requests in connection with the opinion required by this Section 6(b), the Company shall obtain at its expense, and Tax Counsel may rely on in providing the opinion, the advice of a firm of recognized Employee compensation consultants as to the reasonableness of any item of compensation to be received by the Employee.
(c) Effect of Change in Law. In the event that the provisions of Sections 280G and 4999 of the Code (or any successor provisions) are repealed, this Section 6 shall cease to be effective on the effective date of such repeal. The parties to this Agreement recognize that final regulations promulgated under Section 280G of the Code may affect the amounts that may be paid under this Agreement and agree that, upon issuance of such final regulations, this Agreement may be modified as the parties hereto may in good faith deem necessary in light of the provisions of such regulations to achieve the purposes of this Agreement, and that consent to such modification shall not be unreasonably withheld.
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7. SUCCESSORS.
(a) If the Company sells, assigns or transfers all or substantially all of its business and assets to any Person (as defined in Appendix A hereto) or if the Company merges into or consolidates or otherwise combines (where the Company does not survive such combination) with any Person (any such event, a Sale of Business), then the Company shall assign all of its right, title and interest in this Agreement as of the date of such event to such Person, and the Company shall cause such Person, by written agreement in form and substance reasonably satisfactory to the Employee, to expressly assume and agree to perform from and after the date of such assignment all of the terms, conditions and provisions imposed by this Agreement upon the Company. Failure of the Company to obtain such agreement prior to the effective date of such Sale of Business shall be a material breach of this Agreement. In case of such assignment by the Company and of assumption and agreement by such Person, as used in this Agreement, Company shall thereafter mean such Person which executes and delivers the agreement provided for in this Section 7 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law, and this Agreement shall inure to the benefit of, and be enforceable by, such Person. The Employee shall, in the Employees discretion, be entitled to proceed against any or all of such Persons, any Person which theretofore was such a successor to the Company (as defined in the first paragraph of this Agreement) and the Company (as so defined) in any action to enforce any rights of the Employee hereunder. Except as provided in this Subsection, this Agreement shall not be assignable by the Company. This Agreement shall not be terminated by the voluntary or involuntary dissolution of the Company.
(b) This Agreement and all rights of the Employee shall inure to the benefit of and be enforceable by the Employees personal or legal representatives, executors, administrators, heirs and beneficiaries. All amounts payable to the Employee under Sections 3, 5, and 7 of this Agreement if the Employee had lived shall be paid, in the event of the Employees death, to the Employees estate, heirs and representatives; provided, however, that the foregoing shall not be construed to modify any terms of any benefit plan of the Company, as such terms are in effect on the date of the Employees death, that expressly govern benefits under such plan in the event of the Employees death.
8. SEVERABILITY. The provisions of this Agreement shall be regarded as divisible, and the parties agree that if any of said provisions or any part hereof shall under any circumstances be deemed or declared invalid, inoperative or unenforceable, then the validity and enforceability of the remainder of such provisions or parts hereof and the applicability thereof shall not be affected thereby.
9. AMENDMENT. This Agreement may not be further amended or modified at any time except by written instrument executed by the Company and the Employee.
10. WITHHOLDING. The Company shall be entitled to withhold from amounts to be paid to the Employee hereunder any federal, state or local withholding or other taxes or charges which it is from time to time required to withhold; provided, that the amount so withheld shall not exceed the minimum amount required to be withheld by law (unless the Employee has otherwise indicated in writing). The Company shall be entitled to rely on an opinion of nationally recognized tax counsel if any question as to the amount or requirement of any such withholding shall arise.
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11. NOTICE. For purposes of this Agreement, notices and all other communications provided for herein shall be in writing and shall be deemed to have been duly given when actually received, whether hand-delivered, sent by telecopier, facsimile transmission or other electronic means of transmitting written documents (as long as receipt is acknowledged) or mailed by United States certified or registered mail, return receipt requested, postage prepaid, addressed as follows:
If to the Employee, to the Employee at the Employees address then reflected in the records of the Company.
If to the Company, to:
Nicholas Financial, Inc.
2454 McMullen Booth Road
Building C
Clearwater, Florida 33759
Attn: President
or to such other address as either party may have furnished to the other in writing in accordance herewith, except that a notice of change of address shall be effective only upon receipt.
12. NO WAIVER; ENTIRE AGREEMENT. No waiver by any party hereto of any breach of this Agreement by any other party hereto shall be deemed a waiver of any similar or dissimilar term or condition at the same or at any prior or subsequent time. This Agreement and any equity award agreements between the Company and the Employee constitute the entire agreement between the parties hereto with respect to the Employees employment by the Company and there are no agreements or representations, oral or otherwise, expressed or implied, with respect to or related to the employment of the Employee which are not set forth in this Agreement or such equity award agreements.
13. NO ASSIGNMENT. Except as expressly set forth herein, no party shall assign any of her or its rights under this Agreement without the prior written consent of the other party and any attempted assignment without such prior written consent shall be null and void and without legal effect.
14. COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may be effective upon the execution and delivery by any party hereto of facsimile copies of signature pages hereto duly executed by such party; provided, however, that any party delivering a facsimile signature page covenants and agrees to deliver promptly after the date hereof two (2) original copies to the other party hereto.
15. GOVERNING LAW.
(a) The validity, interpretation, construction and performance of this Agreement shall be governed by the internal laws of the State of Florida, except that Section 15(b) shall be construed in accordance with the Federal Arbitration Act if arbitration is chosen by the Employee as the method of dispute resolution.
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(b) Any dispute arising out of this Agreement shall, at the Employees election, be determined by either (i) arbitration under the rules of the American Arbitration Association then in effect (but subject to any evidentiary standards set forth in this Agreement), in which both parties shall be bound by the arbitration award, or (ii) by litigation. Whether the dispute is to be settled by arbitration or litigation, the venue for the arbitration or litigation shall be Tampa, Florida. The parties consent to personal jurisdiction in each trial court in the selected venue having subject matter jurisdiction notwithstanding their residence or situs, and each party irrevocably consents to service of process in the manner provided hereunder for the giving of notices.
16. CERTAIN RULES OF CONSTRUCTION; CODE SECTION 409A.
(a) No party shall be considered as being responsible for the drafting of this Agreement for the purpose of applying any rule construing ambiguities against the drafter or otherwise. No draft of this Agreement shall be taken into account in construing this Agreement. Any provision of this Agreement which requires an agreement in writing shall be deemed to require that the writing in question be signed by the Employee and an authorized representative of the Company.
(b) The Company and the Employee intend the terms of this Agreement to be in compliance with Section 409A of the Code and the regulations promulgated thereunder. To the maximum extent permissible, any ambiguous terms of this Agreement shall be interpreted in a manner that avoids a violation of Section 409A of the Code. The phrase termination of the Employees employment and similar phrases in this Agreement shall mean the Employees separation from service as defined in Section 409A of the Code. The Company does not guarantee the tax treatment or tax consequences associated with any payment or benefit, including but not limited to consequences related to Section 409A of the Code.
(c) If, after the date of a Change of Control of the Company, any payment amount or the value of any benefit under this Agreement is required to be included in the Employees income prior to the date such amount is actually paid or the benefit provided as a result of the failure of this Agreement (or any other arrangement that is required to be aggregated with this Agreement under Code Section 409A) to comply with Code Section 409A, then the Employee shall receive a distribution, in a lump sum, within 90 days after the date it is finally determined that the Agreement (or such other arrangement that is required to be aggregated with this Agreement) fails to meet the requirements of Section 409A of the Code; such distribution shall equal the lesser of (i) the amount required to be included in the Employees income as a result of such failure and (ii) the benefits otherwise due hereunder, and shall in any event reduce the amount of payments or benefits otherwise due hereunder.
17. HEADINGS. The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement.
-13-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.
NICHOLAS FINANCIAL, INC. | ||
By: | /s/ Ralph Finkenbrink | |
Ralph T. Finkenbrink | ||
President and Chief Executive Officer |
EMPLOYEE: |
/s/ Katie MacGillivary |
Printed Name: Katie L. MacGillivary |
-14-
APPENDIX A
For purposes of this Agreement, a Change of Control shall be deemed to have occurred upon the earlier of (a) any of the events constituting a Change of Control under the Companys 2015 Omnibus Incentive Plan, as such term is defined in such Plan as of the date of this Agreement, or (b) a determination by the Board of Directors of the Company, in view of the then current circumstances or impending events, that a change of control of the Company has occurred or is imminent, which determination shall be made for the specific purpose of triggering the operative provisions of this Agreement.
A-1
Exhibit 10.11
FISCAL 2015/2016/2017 ANNUAL INCENTIVE BONUS PLAN SUMMARY
The Companys named executive officers are: Ralph T. Finkenbrink, President and Chief Executive Officer; Kevin D. Bates, Senior Vice President of Branch Operations; and Katie L. MacGillivary, Vice President of Finance, Chief Financial Officer and Corporate Secretary. The Company establishes annual incentive bonus programs for its named executive officers. The annual incentive bonus programs for the fiscal year ending March 31, 2017 (Fiscal 2017) have not been established as of the date of filing of the Annual Report on Form 10-K for the fiscal year ended March 31, 2016, but they are expected to be in place by the time of filing the Proxy Statement and Information Statement relating to the 2016 Annual General Meeting of Shareholders. Set forth below is a summary of the principal terms of such annual incentive bonus programs for the fiscal year ended March 31, 2015 (Fiscal 2015) and the fiscal year ended March 31, 2016 (Fiscal 2016):
Fiscal 2015
Discretionary Cash Bonuses . In addition to his or her annual base salary, each of Mr. Finkenbrink, Mr. Bates and Ms. MacGillivary was entitled to receive cash bonuses for Fiscal 2015 at the discretion of the Compensation Committee of the Companys Board of Directors. The Compensation Committee awarded cash bonuses for Fiscal 2015 of $35,000, $25,000 and $15,000 to Mr. Finkenbrink, Mr. Bates and Ms. MacGillivary, respectively. In determining such bonuses, the Compensation Committee considered various factors it deemed appropriate, such as (without limitation) profitability, portfolio growth, branch expansion, and competitive circumstances. The Compensation Committee granted Mr. Finkenbrink a $25,000 cash bonus upon his becoming President and Chief Executive Officer of the Company.
Equity Awards . The Companys current Named Executive Officers received the following equity awards under the Equity Plan as part of the Fiscal 2015 incentive bonus program:
Executive Officer |
Restricted Stock* |
Non-Qualified Stock Options** |
||
Ralph T. Finkenbrink |
20,000 | 40,000 | ||
Kevin D. Bates |
12,000 | 25,000 | ||
Katie L. MacGillivary |
8,000 | 15,000 |
* | These awards were granted effective June 13, 2014 will vest on March 31, 2017. |
** | These awards were granted effective June 13, 2014, will vest in five equal installments commencing as of the first anniversary of the date of grant, and expire on June 13, 2024. |
Fiscal 2016
Discretionary Cash Bonuses . In addition to his or her annual base salary, each of Mr. Finkenbrink, Mr. Bates and Ms. MacGillivary was entitled to receive cash bonuses for Fiscal 2016 at the discretion of the Compensation Committee of the Companys Board of Directors.
The Compensation Committee awarded cash bonuses for Fiscal 2016 of $32,500, $25,000 and $17,500 to Mr. Finkenbrink, Mr. Bates and Ms. MacGillivary, respectively. In determining such bonuses, the Compensation Committee considered various factors it deemed appropriate, such as (without limitation) profitability, portfolio growth, branch expansion, and competitive circumstances.
EXHIBIT 10.13
NICHOLAS FINANCIAL, INC.
2015 OMNIBUS INCENTIVE PLAN
STOCK OPTION AWARD
[Name]
[Address]
Dear :
You have been granted an option (the Option) to purchase shares of common stock of Nicholas Financial, Inc. (the Company) under the Nicholas Financial, Inc. 2015 Omnibus Incentive Plan (the Plan) with the following terms and conditions:
Grant Date: |
, 20 | |
Type of Option: |
[Nonqualified or Incentive Stock Option] | |
Number of Option Shares: |
|
|
Exercise Price per Share: |
U.S. $ | |
Termination Date: |
Earlier to occur of:
Close of business at the Company headquarters on the tenth (10 th ) anniversary of the Grant Date, and
Thirty (30) days after your termination of employment or service.
Your entire Option (whether vested or nonvested) is terminated immediately if your employment or service is terminated for Cause. In addition, if you have submitted a notice of exercise that has not yet been processed and you are terminated for Cause, your notice of exercise will be rescinded and your exercise price will be returned to you. |
|
Vesting: |
percent ( %) of your Option will vest on each of the first anniversaries of the Grant Date.
If your employment or service terminates prior to the date your Option is fully vested as a result of death, Disability or Retirement, your Option will become fully vested on the date of such termination.
Upon any other termination of employment from, or cessation of services to, the Company and its Affiliates, the unvested portion of your Option will terminate. |
Manner of Exercise: |
You may exercise this Option only to the extent vested and only if the Option has not terminated. To exercise this Option, you must complete the Notice of Stock Option Exercise form provided by the Company and return it to the address indicated on the form. The form will be effective when it is received by the Company. However, the Shares you are electing to purchase will not be delivered until the total exercise price and all applicable withholding taxes have been paid as provided in the Plan.
If someone else wants to exercise this Option after your death, that person must contact the Company and prove to the Companys satisfaction that he or she is entitled to do so.
Your ability to exercise the Option may be restricted by the Company if required by applicable law. |
|
Change of Control: |
Upon a Change of Control, this Option will be treated as set forth in the Plan. | |
Restrictions on Resale: |
By accepting this Option, you agree not to sell any Shares acquired under this Option at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale. | |
Notice of Sale: |
If this Option is designated as an incentive stock option, you must promptly report to the Secretary of the Company any disposition of the Shares acquired under this Option that is made within two (2) years from the Grant Date or within twelve (12) months from the date you acquired the Shares (the Notice Period). In addition, the Company may, at any time during the Notice Period, place a legend or legends on any certificate(s) for the Shares, or enter an appropriate stop transfer order if the Shares are in book entry form, requesting the Companys transfer agent to notify the Company of any transfer of the Shares. | |
Recoupment: |
This Option is subject to any recoupment or clawback policy that is adopted by, or any recoupment or similar requirement otherwise made applicable by law, regulation or listing standards to, the Company from time to time. | |
Miscellaneous: |
This Stock Option Award may be amended only by written consent signed by you and the Company, unless the amendment is not to your detriment or the amendment is otherwise permitted without your consent by the Plan.
The failure of the Company to enforce any provision of this Stock Option Award at any time shall in no way constitute a waiver of such provision or of any other provision hereof. |
In the event any provision of this Stock Option Award is held illegal or invalid for any reason, such illegality or invalidity shall not affect the legality or validity of the remaining provisions of this Stock Option Award, and this Stock Option Award shall be construed and enforced as if the illegal or invalid provision had not been included in this Option.
As a condition of the granting of this Option, you agree, for yourself and your legal representatives or guardians, that this Stock Option Award shall be interpreted by the Administrator and that any interpretation by the Administrator of the terms of this Stock Option Award and any determination made by the Administrator pursuant to this Stock Option Award shall be final, binding and conclusive.
This Stock Option Award may be executed in counterparts. |
This Option is granted under and governed by the terms and conditions of the Plan. Additional provisions regarding your Option and definitions of capitalized terms used and not defined in this Option can be found in the Plan.
BY SIGNING BELOW AND ACCEPTING THIS STOCK OPTION AWARD, YOU AGREE
TO ALL OF THE TERMS AND CONDITIONS DESCRIBED HEREIN AND IN THE PLAN.
YOU ALSO ACKNOWLEDGE RECEIPT OF THE PLAN AND THE
PROSPECTUS DESCRIBING THE PLAN.
NICHOLAS FINANCIAL, INC. | ||||
By: |
|
|||
Name: | Recipient | |||
Title: |
EXHIBIT 10.14
NICHOLAS FINANCIAL, INC.
2015 OMNIBUS INCENTIVE PLAN
RESTRICTED STOCK AWARD
[Name]
[Address]
Dear :
You have been granted a Restricted Stock Award for shares of common stock of Nicholas Financial, Inc. (the Company) under the Nicholas Financial, Inc. 2015 Omnibus Incentive Plan (the Plan) with the following terms and conditions:
Grant Date: |
, 20 | |
Number of Restricted Shares: |
Shares | |
Vesting Schedule: |
percent ( %) of your Restricted Shares will vest on each of the first anniversaries of the Grant Date.
If your employment or service terminates prior to the date your Restricted Shares are vested as a result of death or Disability, or if the Company terminates your employment for other than Cause, your Restricted Shares will become fully vested on the date of such termination. In addition, upon a Change of Control, all of your Restricted Shares will become fully vested.
Upon any other termination of employment or service, you will forfeit the Restricted Shares that have not yet vested. |
|
[Issuance by Certificate or Book Entry] [Escrow]: |
[Issuance:] The Company will issue certificate(s) or make an appropriate book entry in your name evidencing your Restricted Shares as soon as practicable following your execution of this Restricted Stock Award.
If the Restricted Shares are issued in certificated form, in addition to any other legends placed on the certificate(s), such certificate(s) will bear the following legend:
The sale or other transfer of the Shares represented by this certificate, whether voluntary or by operation of law, is subject to restrictions set forth in a Restricted Stock Award agreement, dated as of , by and between Nicholas Financial, Inc. and the registered owner hereof. A copy of such agreement may be obtained from the Secretary of Nicholas Financial, Inc.
If the Restricted Shares are issued in book-entry form, they will be subject to an appropriate stop-transfer order.
Upon the vesting of the Restricted Shares, you will be entitled to a new certificate for the Shares that have vested, without the foregoing legend, or to have such stop-transfer order removed, as applicable, upon request to the Secretary of the Company. |
[Escrow:] Your Restricted Shares will be held in escrow by the Company, as escrow agent. The Company will give you a receipt for the Shares held in escrow that will state that the Company holds such Shares in escrow for your account, subject to the terms of this Restricted Stock Award, and you will give the Company a stock power for such Shares duly endorsed in blank which will be used in the event such Shares are forfeited in whole or in part. As soon as practicable after the vesting date, the Restricted Shares will cease to be held in escrow, and the vested Shares will be issued in certificated or book entry form to you or, in the case of your death, to your estate. | ||
Transferability of Restricted Shares: |
You may not sell, transfer or otherwise alienate or hypothecate any of your Restricted Shares until they are vested. In addition, by accepting this Restricted Stock Award, you agree not to sell any Shares acquired under this Restricted Stock Award at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale. | |
Voting and Dividends: |
While the Restricted Shares are subject to forfeiture, you may exercise full voting rights and will receive all dividends and other distributions paid with respect to the Restricted Shares, in each case so long as the applicable record date occurs before you forfeit such Shares. If, however, any such dividends or distributions are paid in Shares, such Shares will be subject to the same risk of forfeiture, restrictions on transferability and other terms of this Restricted Stock Award as are the Restricted Shares with respect to which they were paid. | |
Tax Withholding: |
To the extent that the receipt of the Restricted Shares or the vesting of the Restricted Shares results in income to you for Federal, state or local income tax purposes, or the Company is otherwise obligated to withhold amounts in connection with the Restricted Shares, you shall deliver to the Company at the time the Company is obligated to withhold taxes in connection with such |
receipt or vesting, as the case may be, such amount as the Company requires to meet its withholding obligation under applicable tax laws or regulations, and if you fail to do so, the Company has the right and authority to deduct or withhold from other compensation payable to you an amount sufficient to satisfy its withholding obligations. If you do not make an election under Section 83(b) of the Internal Revenue Code of 1986, as amended, in connection with this Restricted Stock Award, you may satisfy the withholding requirement, in whole or in part, [if escrow: by electing to have the Company withhold for its own account that number of Restricted Shares otherwise deliverable to you from escrow hereunder on the date the tax is to be determined] [if issue: by electing to deliver to the Company that number of Restricted Shares (that would otherwise be vested on the date the tax is determined)] having an aggregate Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that the Company must withhold in connection with the vesting of such Shares. Your election must be irrevocable, in writing, and submitted to the Secretary of the Company before the applicable vesting date. The Fair Market Value of any fractional Share not used to satisfy the withholding obligation (as determined on the date the tax is determined) will be paid to you in cash. | ||
Miscellaneous: |
This Restricted Stock Award may be amended only by written consent signed by you and the Company, unless the amendment is not to your detriment or the amendment is otherwise permitted without your consent by the Plan.
The failure of the Company to enforce any provision of this Restricted Stock Award at any time shall in no way constitute a waiver of such provision or of any other provision hereof.
In the event any provision of this Restricted Stock Award is held illegal or invalid for any reason, such illegality or invalidity shall not affect the legality or validity of the remaining provisions of this Restricted Stock Award, and this Restricted Stock Award shall be construed and enforced as if the illegal or invalid provision had not been included in this Restricted Stock Award.
As a condition of the granting of this Restricted Stock Award, you agree, for yourself and your legal representatives or guardians, that this Restricted Stock Award shall be interpreted by the Administrator and that any interpretation by the Administrator of the terms of this Restricted Stock Award and any determination made by the Administrator pursuant to this Restricted Stock Award shall be final, binding and conclusive.
This Restricted Stock Award may be executed in counterparts. |
This Restricted Stock Award is granted under and governed by the terms and conditions of the Plan. Additional provisions regarding your Restricted Stock Award and definitions of capitalized terms used and not defined in this Restricted Stock Award can be found in the Plan.
BY SIGNING BELOW AND ACCEPTING THIS RESTRICTED STOCK AWARD, YOU
AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED HEREIN AND IN THE
PLAN. YOU ALSO ACKNOWLEDGE RECEIPT OF THE PLAN AND THE
PROSPECTUS DESCRIBING THE PLAN.
NICHOLAS FINANCIAL, INC. | ||||
By: |
|
|||
Name: | Recipient | |||
Title: |
EXHIBIT 10.15
NICHOLAS FINANCIAL, INC.
2015 OMNIBUS INCENTIVE PLAN
PERFORMANCE SHARE AWARD
[Name]
[Address]
Dear :
You have been granted a Performance Share Award for shares of common stock of Nicholas Financial, Inc. (the Company) under the Nicholas Financial, Inc. 2015 Omnibus Incentive Plan (the Plan) with the following terms and conditions:
Performance Period: |
, 20 through , 20 | |
Performance Criteria: |
You will earn a number of Shares based on the Companys achievement of the Performance Goal at the end of the Performance Period as follows:
Achievement Number of Performance Shares Earned % of Target % of Target Target % of Target % of Target |
|
The Target Performance Goal for the Performance Period is . | ||
If your employment or service terminates prior to the end of the Performance Period due to death or Disability, you will be eligible to receive a number of Performance Shares equal to the number of shares specified above assuming the Target Performance Goal had been met, multiplied by a fraction, the numerator of which is the number of days that have elapsed since the first day of the Performance Period to the date of your termination, and the denominator of which is equal to the number of days in the full Performance Period. For this purpose, Disability means that you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, as determined by the Administrator.
If your employment or service terminates prior to the end of the Performance Period for any other reason, this Performance Share Award will terminate in full on the date of such termination and you will not earn any Performance Shares. |
Issuance by Certificate or Book Entry: |
As soon as practicable (but in no event later than 2 1 ⁄ 2 months) after the end of the Performance Period, the Company will issue your earned Performance Shares in your name in certificated form or by book entry. If, however, you terminate employment or service due to death or Disability, the Company will issue your earned Performance Shares in certificated form or by book entry as soon as practicable (but in no event later than 2 1 ⁄ 2 months) after the date of your termination. | |
Rights as Shareholder: |
You will not be deemed for any purposes to be a shareholder of the Company with respect to any of the Shares subject to this Performance Share Award unless and until earned Performance Shares have been issued to you in certificated form or by book entry. Accordingly, until such issuance, you may not exercise any voting rights and you will not be entitled to receive any dividends, dividend equivalent payments or other distributions with respect to the Shares subject to this Performance Share Award. | |
Change of Control: |
Upon a Change of Control, the Performance Shares will be treated as set forth in the Plan. | |
Transferability of Shares: |
By accepting this Performance Share Award, you agree not to sell any Shares acquired under this Performance Share Award at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale. | |
Tax Withholding: |
To the extent that the Performance Shares result in income to you for Federal, state or local income tax purposes, or the Company is otherwise obligated to withhold amounts in connection with the Performance Shares, you shall deliver to the Company at the time the Company is obligated to withhold taxes in connection with such receipt, such amount as the Company requires to meet its withholding obligation under applicable tax laws or regulations, and if you fail to do so, the Company has the right and authority to deduct or withhold from other compensation payable to you an amount sufficient to satisfy its withholding obligations. You may satisfy the withholding requirement, in whole or in part, by electing to have the Company withhold for its own account that number of Performance Shares otherwise deliverable to you having an aggregate Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that the Company must withhold in connection with the vesting of such Shares. Your election must be irrevocable, in writing, and submitted to the Secretary of the Company before the date the Shares are distributed. The Fair Market Value of any fractional Share not used to satisfy the withholding obligation (as determined on the date the tax is determined) will be paid to you in cash. |
Recoupment: |
This Performance Share Award shall be subject to any recoupment or clawback policy that is adopted by, or any recoupment or similar requirement otherwise made applicable by law, regulation or listing standards to, the Company from time to time. | |
Miscellaneous: |
This Performance Share Award may be amended only by written consent signed by you and the Company, unless the amendment is not to your detriment or the amendment is otherwise permitted without your consent by the Plan.
The failure of the Company to enforce any provision of this Performance Share Award at any time shall in no way constitute a waiver of such provision or of any other provision hereof.
In the event any provision of this Performance Share Award is held illegal or invalid for any reason, such illegality or invalidity shall not affect the legality or validity of the remaining provisions of this Performance Share Award, and this Performance Share Award shall be construed and enforced as if the illegal or invalid provision had not been included in this Performance Share Award.
As a condition of the granting of this Performance Share Award, you agree, for yourself and your legal representatives or guardians, that this Performance Share Award shall be interpreted by the Administrator and that any interpretation by the Administrator of the terms of this Performance Share Award and any determination made by the Administrator pursuant to this Performance Share Award shall be final, binding and conclusive.
This Performance Share Award may be executed in counterparts. |
This Performance Share Award is granted under and governed by the terms and conditions of the Plan. Additional provisions regarding your Performance Share Award and definitions of capitalized terms used and not defined in this Performance Share Award can be found in the Plan.
BY SIGNING BELOW AND ACCEPTING THIS PERFORMANCE SHARE AWARD, YOU
AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED HEREIN AND IN THE
PLAN. YOU ALSO ACKNOWLEDGE RECEIPT OF THE PLAN AND THE
PROSPECTUS DESCRIBING THE PLAN.
NICHOLAS FINANCIAL, INC. | ||||||
By: | ||||||
Name: | Recipient | |||||
Title: |
Exhibit 10.19
NICHOLAS FINANCIAL, INC. | ||
Automobile Dealer Retail Agreement |
Non-Recourse Dealer Retail Agreement
The undersigned Dealer proposes to sell to the undersigned Nicholas Financial, Inc. (NFI), from time to time, Promissory Notes, Security Agreements, Retail Installment contracts, Conditional Sales Contracts, or other instruments hereinafter referred to as Contracts, evidencing installment payment obligations owing Dealer arising from the time sale of motor vehicle(s) and secured by such Contracts. It is understood that NFI shall have the sole discretion to determine which Contracts it will purchase from Dealer.
1. | Dealer represents and warrants that Contracts submitted to NFI for purchase shall represent valid, bona fide sales for the respective amount therein set forth in such Contracts and that such Contracts represent sales of motor vehicles owned by the Dealer and are free and clear of all liens and encumbrances. |
2. | Upon purchase by NFI of any contracts hereunder from dealer, dealer shall endorse and assign to NFI the obligations and all pertinent security, security instruments, along with such provisional endorsements as may be stipulated for such contracts purchased by NFI. |
3. | This Agreement, and sums payable hereunder, may not be assigned by Dealer without written consent of NFI. |
4. | Dealer acknowledges that NFI charges an acquisition fee and a $75.00 loan processing charge on all contracts purchased and funded by NFI. The acquisition fee and loan processing charge are taken from Dealer Proceeds and are Non-Refundable. The amount is disclosed on each transaction and is set by Nicholas Financial, Inc. |
5. | Perfection of Security Interest: For each Contract purchased by NFI, Dealer shall, within 20 days of the date of the Contract or within a lesser time period if required by applicable law, file and record all documents necessary to properly perfect the valid and enforceable first priority security interest of NFI in the Vehicle and shall send NFI all security interest filing receipts. A Contract shall be subject to Repurchase for the life of the Contract if NFI suffers a loss due to the Dealerships failure to (1) file and record, within 20 days of the date of the Contract or within a lesser time period if required by applicable law, all documents required to properly perfect the valid and enforceable first priority security interest of NFI in the Vehicle; (2) send NFI the filing receipts reflecting said perfection. |
6. | Indemnity : As a separate and cumulative obligation, Dealer shall defend and hold NFI harmless from any and all claims, defenses, offsets, damages, suits, administrative or other proceedings, cost (including reasonable attorneys fees), expenses, losses, and liabilities. (Collectively Claims) arising out of connected with or relating to the Contract or the goods or services sold there under. Timing of indemnification is within 7 days of demand by NFI. |
7. | Add-on Products and Services: |
a. | Defined . Add-on Products and Services, or APS, shall mean service contracts, mechanical breakdown contracts, GAP contracts, credit life and credit accident and health insurance. In addition, the term shall include other products and services acceptable to and approved in writing by NFI from time to time. |
b. | Cancellation of APS . If APS has been sold by the Dealer and financed in a Contract purchased by NFI, Dealer agrees that such APS shall be cancelable upon demand by Buyer. Upon such cancellation, Dealer shall immediately notify NFI that the Buyer has canceled the APS. Upon cancellation, Buyer shall be entitled to a refund of the unearned portion of the cash price of the APS as provided in the APS Contract or as may otherwise be required by law, whichever is greater. As between NFI and Dealer, Dealer agrees to pay to NFI, as appropriate, any refund due to Buyer under the terms of an APS Contract. Dealers liability under this Section shall be limited to the amount Dealer collected and retained or otherwise received, directly or indirectly, in connection with the sale of the APS. |
8. | Privacy: Dealer shall not make any unauthorized disclosure of, or use any personal information of individual consumers which it receives from NFI or on NFIs behalf other than to carry out the purposes for which such information is received. NFI and Dealer shall comply in all respects with all applicable requirements of Title V of the Gramm-Leach-Bliley Act of 1999 and its implementing regulations. |
9. | No Provisions hereof may be modified, changed or supplemented, unless both parties agree to the amendment in writing. |
Nicholas Financial, Inc. | Dealer: | |||||||
By: | By: | |||||||
Date: | Date: |
DEALER NAME
123 AUTO LLC
12K & UNDER MOTORS
1ST AUTO SALES INC
1ST CHOICE AUTO FINANCING INC
1ST CHOICE AUTO SALES INC
1ST CHOICE CAROLINA CARS
1ST STOP MOTORS INC
1ST STOP USED AUTOS
247 AUTO SALES
27 MOTORS
2ND CHANCE AUTO OF ALABAMA LLC
31-W AUTO SALES LLC
360 MOTOR CORP
4042 MOTORS LLC
4042 MOTORSPORTS LLC
44 AUTO MART
5 POINTS AUTO MASTERS
5 STAR AUTO PLEX
5 STAR AUTO PLEX
5 STAR INDY AUTO LLC
83 AUTO SALES LLC
A & D MOTORS SALES CORP
A & D MOTORS, INC.
A & K WHOLESALER LLC
A & S AUTO AND TRUCK SALES LLC
A 2 Z AUTOS
A PLUS CAR SALES & RENTALS INC
A.R.J.S AUTO SALES, INC
A.Z. AUTOMOTIVE INC
A1 MOTORS INC
AAA AUTO WHOLESALE LLC
AACC AUTO CAR SALES, INC
ABBYS AUTOS, INC.
ABC AUTO TRADE USA, LLC
ABRAHAM AUTOS
ACCU-CAR EXPO INC
ACCURATE AUTO GROUP INC
ACCURATE AUTOMOTIVE OF
ACE MOTOR GROUP LLC
ACES AUTO MART
ACTION AUTO SALES
ACTION MOTORS, INC.
DEALER NAME
ACTIVE AUTO SALES
ACURA OF GAINSVILLE
ACURA OF ORANGE PARK
ADAM AUTO GROUP INC
ADAM RUE AUTO SALES INC
ADAMS AUTO SALES INC
ADAMSON FORD LLC
ADVANCE AUTO WHOLESALE, INC.
ADVANCED AUTO BROKERS, INC.
ADVENTURE STORE X4 LLC
ADVENTURE SUBARU LLC
AFFORDABLE AUTO MOTORS, INC
AFFORDABLE AUTO SALES
AFFORDABLE USED CARS & TRUCKS
AJ CAR SALES
AJ JR AUTO SALES
AJS AUTO
AJS AUTO IMPORTS
AK IMPORTS AUTO SALES
AL PIEMONTE SUZUKI INC
ALEXIS MOTORCAR LLC
ALFA AUTO MALL LLC
ALL ABOUT AUTOS INC
ALL AMERICAN AUTO MART
ALL AMERICAN AUTO SALES INC
ALL AMERICAN MOTORS
ALL CARS LLC
ALL CREDIT AUTO FINANCE, INC
ALL MAKES AUTO SALES INC
ALL SEASON AUTO SALES LLC
ALL STAR DODGE CHRYSLER JEEP
ALLAN VIGIL FORD
ALLEN TURNER AUTOMOTIVE
ALLEN TURNER CHEVROLET
ALLIANCE AUTO SALES LTD
ALLSTAR MOTORS, INC.
ALLSTATE LEASING & SALES INC
ALLURE AUTO SALES LLC
ALM MALL OF GEORGIA
ALPHA MOTORS LLC
ALS AUTO MART
ALTAMAHA MOTORS LLC
DEALER NAME
ALTERNATIVES
AMERICAN AUTO SALES
AMERICAN AUTO SALES WHOLESALE
AMERICAN MOTOR GROUP OF
AMERICAN SALES & LEASING INC
AMERIFIRST AUTO CENTER, INC.
AMG AUTO SALES INC
AMS CARS
ANDERSON MOTORS
ANDY MOHR FORD, INC.
ANDY MOHR NISSAN, INC.
ANDYS AUTO SALES
ANSWER ONE MOTORS
ANTHONY PONTIAC GMC BUICK INC
ANTHONY UNDERWOOD AUTOMOTIVE
ANTHONY WAYNE AUTO SALES
ANY CAR USA
APPLE FINANCE CO INC
APPROVAL AUTO CREDIT INC.
APPROVED AUTOS LLC
AR MOTORSPORTS INC
ARAK AUTO SALES & SERVICES INC
ARC AUTO LLC
ARCADIA CREEK AUTO SALES LLC
ARCHER AUTOMOTIVE INC
ARENA AUTO SALES
ARES FINANCIAL SERVICES LLC
ARI MOTORS INC
ARIA AUTO SALES INC
ARLAS USED CARS
ARMANDOS INC
ARMSTRONG FORD OF HOMESTEAD
ART MOEHN CHEVROLET, CO.
AS USED CARS INC
ASANKA CARS.COM
ASHEBORO NISSAN, INC
ATA TRUCK & AUTO SALES
ATCHINSON FORD SALES
ATL AUTOS .COM
ATLANTA AUTO BROKERS
ATLANTA AUTOMOTIVE GROUP
ATLANTA BEST CARS INC
DEALER NAME
ATLANTA LUXURY MOTORS INC
ATLANTA USED CARS CENTER, INC
ATLANTIS RENT A CAR AND
ATLAS AUTOPLEX
AUCTION DIRECT AUTO SALES
AUCTION DIRECT USA
AUFFENBERG USED CARS
AURORA MOTOR CARS
AUTO AMERICA
AUTO BANK
AUTO BOUTIQUE
AUTO BRIGHT AUTO SALES
AUTO BUY CENTER
AUTO CENTER OF GREER LLC
AUTO CENTERS ST CHARLES LLC
AUTO CENTRAL SALES INC
AUTO CITY AT CLAYTON
AUTO CITY LLC
AUTO CLUB OF MIAMI
AUTO CLUB OF SOUTHWEST FLORIDA
AUTO CONNECTION JAX LLC
AUTO CREDIT & FINANCE CORP
AUTO CREDIT CONNECTION, LLC
AUTO DEALER SOLUTIONS INC
AUTO DIRECT COLUMBUS OH
AUTO DIRECT PRE-OWNED
AUTO ELITE DFW
AUTO ENTERPRISE CO
AUTO EXCHANGE
AUTO EXCHANGE OF CENTRAL
AUTO EXCHANGE USA CORP
AUTO EXPO HOUSTON
AUTO EXPRESS ENTERPRISE INC
AUTO FINANCE OF TAMPA INC
AUTO FINDERS, INC.
AUTO GLOBAL
AUTO GROUP USA
AUTO HUB PLUS INC
AUTO JUNCTION LLC
AUTO KINGS
AUTO LIAISON INC
AUTO LIBERTY OF ARLINGTON
DEALER NAME
AUTO LINE, INC.
AUTO LIQUIDATORS OF TAMPA, INC
AUTO MAC 2
AUTO MAC CARS & CREDIT
AUTO MALL OF TAMPA INC
AUTO MART OF PASCO
AUTO MASTERS AUTO SALES LLC
AUTO MAX TOLEDO
AUTO MEGA STORE LLC
AUTO NATIONS INC
AUTO NETWORK OF THE TRIAD LLC
AUTO NETWORK, INC.
AUTO OPTION LLC
AUTO PASS SALES & SERVICE CORP
AUTO PLANET II INC
AUTO PLAZA
AUTO PLAZA INC
AUTO PLAZA MOTORS
AUTO PLAZA USA
AUTO POINT USED CAR SALES
AUTO PROFESSION CAR SALES 2
AUTO PROFESSIONAL CAR SALES
AUTO RITE, INC
AUTO SALES OF WINTER GARDEN
AUTO SALES USA
AUTO SEARCH ONE INC
AUTO SELECT
AUTO SELECT INC
AUTO SELECTION OF CHARLOTTE
AUTO SHOWCASE
AUTO SMART
AUTO SMART PINEVILLE INC
AUTO SOLUTIONS
AUTO SOLUTIONS MOTOR COMPANY
AUTO SOLUTIONS OF GREENSBORO
AUTO SOURCE CAROLINA LLC
AUTO SPA AUTOMOTIVE SALES INC
AUTO SPORT, INC.
AUTO STAR
AUTO STOP INC
AUTO STORE OF GARNER
AUTO TRADEMARK
DEALER NAME
AUTO TREE
AUTO TRUST LLC
AUTO UNION OF MIAMI INC
AUTO VILLA
AUTO VILLA OUTLET
AUTO VILLA WEST
AUTO VILLAGE
AUTO WAREHOUSE INC
AUTO WEEKLY SPECIALS
AUTO WISE AUTO SALES
AUTO WISE BUYING SERVICE INC
AUTO WORLD
AUTO WORLD INC
AUTOLAND
AUTOLINE INDY
AUTOLINK
AUTOMAC USA INC
AUTOMALL 59
AUTOMANIAC INC
AUTOMAR CAR SALES INC
AUTOMART LLC
AUTOMAX
AUTOMAX ATLANTA
AUTOMAX CHRYSLER DODGE JEEP
AUTOMAX KC LLC
AUTOMAX OF CHESTER COUNTY
AUTOMAXX OF SUMMERVILLE
AUTOMOBILE COMMODITY LLC
AUTOMONSTA
AUTOMOTIVE WHOLESALE CENTER
AUTONET GROUP LLC
AUTONOMICS
AUTO-ONE USA LLC
AUTOPLEX AUTO SALES &
AUTORAMA PREOWNED CARS
AUTORANGE INC
AUTORV MART
AUTOS DIRECT OF FREDERICKSBURG
AUTOS R US
AUTOSHOW SALES AND SERVICE
AUTOSPOT CAR SALES
AUTOTEAM INC
DEALER NAME
AUTOTEAM OF VALDOSTA LLC
AUTOVATION
AUTOWAY CAR SALES LLC
AUTOWAY NISSAN
AUTOWAY TOYOTA
AUTOWORLD OF GREENWOOD LLC
AUTOWORLD USA
AVERY AUTO SALES INC
AXELROD PONTIAC
AXIOM MOTORS
B AND B AUTO BROKERS LLC
BALLPARK AUTO LLC
BANK AUTO SALES
BARBIES AUTOS CORPORATION
BARGAIN SPOT CENTER
BARLEYS AFFORDABLE AUTO SALES
BARTS CAR STORE INC
BASELINE AUTO SALES, INC.
BATES FORD INC
BAUCOM MOTORS LLC
BAYSIDE AUTOMALL
BEACH AUTO BROKERS, INC
BEACH BOULEVARD AUTOMOTIVE INC
BECKHAM AUTOMOTIVE GROUP
BECKS AUTO GROUP
BEDFORD AUTO WHOLESALE
BEHLMANN BUICK GMC CADILLAC
BEHLMANN ST PETERS PREOWNED
BELAIR ROAD DISCOUNT AUTO
BELLAMY AUTOMOTIVE GROUP, INC
BELLS AUTO SALES
BEN MYNATT NISSAN
BENSON CADILLAC NISSAN, INC.
BENSON FORD MERCURY
BENSON NISSAN
BEREA AUTO MALL
BEREA MOTORS INC
BERGER CHEVROLET
BERT SMITH INTERNATIONAL
BESSEMER CHR LLC
BEST AUTO SELECTION INC
BEST BUY MOTORS LLC
DEALER NAME
BEST CAR FOR LESS
BEST CARS KC INC
BEST DEALS CARS INC
BEST DEALS ON WHEELS AUTO
BEST MOTORS, INC
BEST N VALUE AUTO SALES
BEST PRICE AUTO SALES
BEST PRICE DEALER INC
BEST VALUE AUTO SALES INC
BEST WAY MOTORS LLC
BESTWAY AUTO BROKERS LLC
BETTER AUTOMALL OF STUART
BETTER VALUE AUTOS, INC.
BEXLEY MOTORCAR COMPANY LLC
BIARTI AUTO SALES LLC
BIC MOTORS LLC
BICKEL BROTHERS AUTO SALES INC
BIG BLUE AUTOS, LLC
BIG BOYS TOYS FLORIDA LLC
BIG CHOICES AUTO SALES INC
BIG M CHEVROLET
BIG O DODGE OF GREENVILLE, INC
BIG STATE DISCOUNT
BILL BLACK CHEVROLET,
BILL BUCK CHEVROLET, INC
BILL KAY CHEVROLET GEO INC
BILL KAY FORD INC
BILL MAC DONALD FORD INC
BILL PENNEY TOYOTA
BILL STANFORD PONT CAD OLDS GM
BILLS & SON AUTO SALES INC
BILLS AUTO SALES & LEASING,LTD
BILLY HOWELL FORD-LINCOLN-
BILLY RAY TAYLOR AUTO SALES
BILLY WILLIAMS AUTO SALES INC
BILTMORE MOTOR CORP.
BIRMINGHAM WHOLESALE AUTO LLC
BLOOMINGTON AUTO CENTER
BLUE SPRINGD FORD SALES INC
BLUESLADE MOTOR CARS LLC
BLVD SELECT PREOWNED
BOB HOOK OF SHELBYVILLE, LLC
DEALER NAME
BOB KINGS MAZDA
BOB MAXEY FORD
BOB MAXEY LINCOLN-MERCURY
BOB PFORTE MOTORS
BOB PULTE CHEVROLET GEO, INC.
BOB STEELE CHEVROLET INC.
BOBB DUNN FORD, INC
BOBB SUZUKI
BOBBY LAYMAN CHEVROLET, INC.
BOBBY MURRAY TOYOTA
BOLUFE ENTERPRISES, INC.
BOMMARITO CHEVROLET MAZDA
BOOMERS TRUCKS & SUVS LLC
BORCHERDING ENTERPRISE, INC
BORN FREE SALES INC
BOWMAN AUTOMOTIVE INC
BRADLEY CHEVROLET, INC.
BRADS USED CARS
BRADYS AUTO SALES LLC
BRAMAN HONDA OF PALM BEACH
BRAMLETT PONTIAC INC
BRANDT AUTO BROKERS
BRANNAN AUTO SALES
BRAZIL AUTO MALL INC
BRECKENRIDGE MOTORS EAST LLC
BREVARD VALUE MOTORS
BRIDGEVIEW AUTO SALES INC
BRIGGS KIA
BROCKMAN AUTO LLC
BROGS AUTO
BROMAR LLC
BRONDES FORD MAUMEE LTD
BROOKS AUTO SALES
BROTHERS CHEVROLET OLDSMOBILE
BROWARD AUTO WHOLESALE LLC
BROWNS AUTO SALES
BRYANT AUTO SALES INC
BUCKEYE CHRYSLER JEEP DODGE
BUCKEYE FORD LINCOLN MERC OF O
BUCKEYE MOTORS
BUCKEYE NISSAN, INC.
BUD LAWRENCE INC
DEALER NAME
BUDGET CAR SALES & RENTALS
BUDGET MOTORCARS
BURLS USED CARS
BURNS AUTO MART LLC
BURNWORTH ZOLLARS INC
BUSH AUTO PLACE
BUTLER KIA
BUY IT RIGHT AUTO SALES #1 INC
BUY IT RIGHT AUTO SALES LLC
BUY NOW AUTO SALES INC
BUY RIGHT AUTO SALES INC
BUYERS CHOICE AUTO CENTER LLC
BUYING ALL CARS.COM
BUZZ KARZ LLC
BYERLY FORD-NISSAN, INC
BYERS CHEVROLET LLC
BYERS DELAWARE
BYERS DELAWARE AUTO LLC
BYERS IMPORTS
BYERS KIA
C & J AUTO WORLD LLC
C & N AUTO SALES LLC
C & S SALES
C&H AUTO SALES
C.W. MOTORS INC
CADILLAC OF NOVI INC
CALHOUN AUTO OUTLET, INC
CALIFORNIA AUTO CONNECTION INC
CALVARY CARS & SERVICE, INC
CAMARENA AUTO, INC
CANNON BUICK-MITSUBISHI
CAPITAL AUTO SALES
CAPITAL AUTO SPORTS CENTER LLC
CAPITAL AUTOMOTIVE SALES
CAPITAL BUICK PONTIAC GMC LLC
CAPITAL CITY IMPORTS
CAPITAL MOTORS
CAPITAL MOTORS LLC
CAPITAL ONE AUTO GROUP LLC
CAPITOL AUTO
CAR BAZAAR INC OF FRANKLIN
CAR BIZ LLC
DEALER NAME
CAR BIZ OF TENNESSEE
CAR BOSS LLC
CAR CENTRAL
CAR CHOICE
CAR CHOICE ENTERPRISE II INC
CAR CITY USA LLC
CAR COLLECTINO INC
CAR COLLECTION OF TAMPA INC.
CAR CONNECTION INC
CAR COUNTRY
CAR CREDIT INC
CAR DEPOT
CAR EX AUTO SALES
CAR FACTORY OUTLET
CAR LEGENDS
CAR MART FL.COM
CAR NATION
CAR NATION LLC
CAR POINT OF ORLANDO INC
CAR SMART
CAR SMILE
CAR SOURCE
CAR SOURCE, LLC.
CAR SPOT OF CENTRAL FLORIDA
CAR TOWN KIA USA
CAR WHOLESALERS
CAR XPRESS AUTO SALES
CAR ZONE
CAR ZONE INC
CARCITY
CARDINAL MOTORS INC
CARDIRECT LLC
CARENA MOTORS, CO.
CAREY PAUL HONDA
CARISMA AUTO GROUP
CARITE OF FT MYERS LLC
CARL GREGORY CHRYSLER-DODGE-
CARL STONE AUTO SALES LLC
CARMA AUTOMOTIVE GROUP
CARMART AUTO SALES
CARMART AUTO SALES INC
CARMART AUTO SALES INC
DEALER NAME
CARMART USA LLC
CARMEL MOTORS
CARNATION LLC
CAROLINA AUTO EXCHANGE
CAROLINA AUTO SALEZ LLC 1
CAROLINA AUTO SPORTS
CARPLEX
CARPLUS AUTO SALES INC
CARPORT SALES & LEASING, INC.
CARRICKS LLC
CARROLLTON MOTORS
CARS & CREDIT OF FLORIDA
CARS 4 YOU LLC
CARS CARS CARS LLC
CARS GONE WILD II LLC
CARS KONNECT INC
CARS N CARS, INC.
CARS OF SARASOTA LLC
CARS PLUS LLC
CARS TO GO AUTO SALES AND
CARS TRUCKS & CREDIT INC
CARS UNLIMITED
CARS.COM CARS & TRUCKS
CARSMART AUTO SALES LLC
CARSMART, INC.
CARTROPIX
CARZ4LESS
CARZONE USA
CAS SALES & RENTALS
CASCADE AUTO GROUP, LTD
CASH & DASH AUTO SALES INC
CASINO AUTOMOTIVE
CASTLE BUICK GMC
CAVALIER AUTO SALES INC
CC MOTORS INC
CC MOTORS INCORPORATED
CD S AUTOMOTIVE INC
CECIL CLARK CHEVROLET,INC.
CEDARCREST AUTO BROKERS LLC
CENTRAL FLORIDA EXPORTS, INC.
CENTRAL MOTOR WERKS, INC
CERTIFIED AUTO CENTER
DEALER NAME
CHAMPION CHEVROLET
CHAMPION CHEVROLET INC
CHAMPION OF DECATUR, INC.
CHAMPION PREFERRED AUTOMOTIVE
CHAMPS AUTO SALES INC
CHARLES BARKER PREOWNED OUTLET
CHARLOTTE MOTOR CARS LLC
CHASE AUTO GROUP
CHATHAM PARKWAY TOYOTA
CHECKERED FLAG HONDA
CHEIFS WHOLESALE AUTOS
CHERRY ROAD AUTO SALES
CHEVROLET OF SPARTANBURG
CHICAGO AUTO DEPOT INC
CHICAGO MOTORS INC
CHIEFLAND FORD
CHIPINQUE AUTO SALES INC
CHOICE AUTOMOTIVE GROUP
CHRIS BROOKS MOTORSPORTS, INC
CHRIS CARROLL AUTOMOTIVE
CHRIS LEITH AUTOMOTIVE INC
CHRIS SPEARS PRESTIGE AUTO
CHRYSLER DODGE JEEP RAM OF
CHRYSLER JEEP AT POSNER PARK
CHRYSLER JEEP OF DAYTON
CINCINNATI USED AUTO SALES
CIRCLE CITY ENTERPRISES, INC.
CITY AUTO SALES
CITY HYUNDAI
CITY MITSUBISHI
CITY STYLE IMPORTS INC
CITY TO CITY AUTO SALES, LLC
CITY USED CARS, INC
CITY WIDE AUTO CREDIT
CJS AUTO STORE
CLARK CARS INC
CLARKS SUNSHINE
CLARKSVILLE AUTO SALES
CLASSIC AUTO GROUP INC
CLASSIC AUTOHAUS
CLASSIC BUICK OLDSMOBILE
CLASSIC CHEVROLET SUGAR LAND
DEALER NAME
CLASSIC CONNECTIONS INC
CLASSIC KIA OF CARROLLTON
CLASSIC MOTOR GROUP
CLAY COOLEY TOYOTA OF HAZELWOO
CLEAN MOTORS OF ORLANDO LLC
CLEVELAND AUTO MART
CLICK SELECT AUTO SALES, INC
CLIFF & SONS AUTO SALES
CLINT HOLMES AUTOMOTIVE
CM AUTO SALES INC
COASTAL AUTO GROUP INC. DBA
COASTAL CHEVROLET, INC.
COBBS CAR COMPANY INC
COBBS CAR COMPANY INC
COBRA SALES LLC
COCONUT CREEK HYUNDAI
COLE FORD LINCOLN LLC
COLON AUTO SALES INC
COLUMBUS AUTO RESALE, INC
COLUMBUS AUTO SOURCE
COLUMBUS CAR TRADER
COMBS & CO
COMMONWEALTH DODGE LLC
COMMUNITY AUTO SALES
COMPASS MOTORS OF ANDERSON
CONCOURS AUTO SALES, INC.
CONWAY HEATON INC
CONWAY IMPORTS AUTO SALES
COOK & REEVES CARS INC
COOK MOTOR COMPANY
COOPERATIVE AUTO BROKERS INC
COPELAND MOTOR COMPANY
CORAL WAY AUTO SALES INC
CORLEW CHEVROLET CADILLAC OLDM
CORPORATE CARS INC
CORPORATE FLEET MANAGEMENT
COUCH MOTORS LLC
COUGHLIN AUTOMOTIVE- PATASKALA
COUGHLIN FORD- JOHNSTOWN
COUGHLIN FORD OF CIRCLEVILLE
COUNTRY HILL MOTORS INC
COUNTRY HILL MOTORS, INC.
DEALER NAME
COUNTY MOTOR CO., INC.
COURTESY AUTOMOTIVE
COURTESY CHRYSLER JEEP DODGE
COURTESY FORD
COURTESY NISSAN
COURTESY PALM HARBOR HONDA
COURTESY TOYOTA
COX AUTO SALES
COX CHEVROLET INC
COYLE CHEVROLET
CRABBS AUTO SALES
CRAIG & LANDRETH INC
CRAMER HONDA OF VENICE
CREDIT APPROVAL AUTO GROUP INC
CREDIT SOLUTION AUTO SALES INC
CRENCOR LEASING & SALES
CRESTMONT CADILLAC
CRESTMONT HYUNDAI, LLC
CRM MOTORS, INC.
CRONIC CHEVROLET OLDSMOBILE
CRONIC CHEVROLET, OLDSMOBILE-
CROSS AUTOMOTIVE
CROSS KEYS AUTO INC
CROSS MOTORS CORPORATION
CROSS STATE MOTORS LLC
CROSSROADS AUTO MART INC
CROSSROADS AUTO SALES INC
CROWN ACURA
CROWN AUDI
CROWN AUTO SALES AND FINANCE
CROWN BUICK GMC
CROWN HONDA
CROWN KIA
CROWN KIA
CROWN MOTORS INC
CROWN NISSAN GREENVILLE
CRUISER AUTO SALES
CRYSTAL LAKE CHRYSLER JEEP INC
CULLMAN AUTO MALL
CUTIE CARS LLC
D & G CARS SALE CORP
DAILEY AUTO SALES LLC
DEALER NAME
DAILEYS USED CAR SALES LLC
DAN CUMMINS CHV BUICK PONTIAC
DAN TOBIN PONTIAC BUICK GMC
DAN TUCKER AUTO SALES
DAN VADEN CHEVROLET, INC.
DANES AUTO SALES LLC
DANNY MOTORS INC
DARCARS WESTSIDE PRE-OWNED
DAS AUTOHAUS LLC
DAVE GILL PONTIAC GMC
DAVE SINCLAIR LINCOLN
DAVES JACKSON NISSAN
DAVID SMITH AUTOLAND, INC.
DAWSONS AUTO & CYCLE LLC
DAWSONS AUTO & TRUCK SALES INC
DAYTON ANDREWS INC.
DBA AUTONATION CHEVROLET
DEACON JONES AUTO PARK
DEALER SERVICES FINANCIAL CTR
DEALS 4U AUTO LLC
DEALS FOR WHEELS
DEALS ON WHEELS
DEALZ AUTO TRADE
DEALZ ON WHEELZ LLC
DEAN SELLERS, INC.
DECENT RIDE.COM
DEECOS AUTO SALES INC
DEEP SOUTH SPECIALTIES LLC
DELRAY MAZDA
DENNIS AUTO POINT
DEPUE AUTO SALES INC
DESTINYS AUTO SALES
DFW AUTO FINANCE AND SALES
DIAMOND K MOTORS LLC
DICK BROOKS HONDA
DICK DEAN ECONOMY CARS INC
DICK MASHETER FORD, INC.
DICK NORRIS BUICK
DICK SCOTT DODGE
DIMMITT CHEVROLET
DIRECT AUTO EXCHANGE, LLC
DIRECT AUTO SALES
DEALER NAME
DIRECT AUTOMOTIVE
DIRECT MOTORSPORT LLC
DIRECT SALES & LEASING
DISCOUNT AUTO MART INC
DISCOUNT CARS OF MARIANNA INC
DISCOVERY AUTO CENTER LLC
DIXIE IMPORT INC
DIXIE WAY MOTORS INC
DM MOTORS, INC.
DODGE OF ANTIOCH INC
DOGWOOD AUTO WORKS INC
DON AYERS PONTIAC INC
DON BROWN CHEVROLET, INC.
DON FRANKLIN FORD, INC
DON HERRING MITSUBISHI
DON HINDS FORD, INC.
DON JACKSON CHRYSLER DODGE
DON MARSHALL CHYSLER CENTER
DON REID FORD INC.
DON SITTS AUTO SALES INC
DONLEY FORD LINCOLN
DORAL CARS OUTLET
DOUGLAS AUTO SALES INC
DOUGS AUTO SALES INC
DOWNTOWN BEDFORD AUTO
DOWNTOWN HYUNDAI
DRAKE MOTOR COMPANY
DREAM CAR 4 U OF LAKELAND, LLC
DRIVE AUTO SALES
DRIVE NOW AUTO SALES
DRIVE OUT AUTO INC
DRIVE WITH PRIDE INC
DRIVEMAX, INC.
DRIVEN AUTO SALES
DRIVEN AUTO SALES LLC
DRIVER SEAT AUTO SALES LLC
DRIVERIGHT AUTO SALES, INC.
DRIVERS WORLD
DRIVEWAYCARS.COM
DUBLIN CADILLAC NISSAN GMC
DULUTH AUTO EXCHANGE
DUNN CHEVROLET OLDS INC.
DEALER NAME
DURAN MOTOR SPORTS INC
DURHAM MOTORS LLC
DURHAMS AUTO MART
DUTCH ISHMAEL CHEVROLET INC
DUVAL CARS LLC
DUVAL FORD
DYNAMIC AUTO WHOLESALES INC
DYNAMIC MOTOR COMPANY LLC
DYNASTY MOTORS
E & R AUTO SALES INC
E AUTO BROKERS OF FLORIDA INC
E AUTO SOLUTIONS
E CAR SUPERSTORE INC
E Z PAY AUTO SALE INC
EAGLE CAR & TRUCK INC
EAGLE ONE AUTO SALES
EASLEY MITSUBISHIS THE
EAST ANDERSON AUTO SALES
EAST BEACH AUTO SALES
EAST LAKE AUTO SALES INC.
EAST LIMESTONE AUTOPLEX INC
EASTERN AUTO SALES NC LLC
EASTERN SHORE AUTO BROKERS INC
EASTGATE MOTORCARS, INC
EASTPOINTE AUTO SALES INC
EASY AUTO AND TRUCK
ECONO AUTO SALES INC
ECONOMIC AUTO SALES INC
ECONOMY MOTORS LLC
ED KOEHN FORD OF WAYLAND
ED MORSE AUTO PLAZA
ED MORSE MAZDA LAKELAND
ED NAPLETON OAK LAWN IMPORTS
ED TILLMAN AUTO SALES
ED VOYLES HONDA
ED VOYLES HYUNDAI
ED VOYLES KIA OF CHAMBLEE
EDDIE ANDRESON MOTORS
EDDIE MERCER AUTOMOTIVE
EDEN AUTO SALES
EDGE AUTO
EDGE AUTO
DEALER NAME
EDGE MOTORS
EDWARDS CHEVROLET CO
EJS AUTO WORLD, INC.
EJS QUALITY AUTO SALES, INC.
ELEPHANT AUTOGROUP
ELITE AUTO SALES OF ORLANDO
ELITE AUTO SOLUTIONS
ELITE AUTO WHOLESALE
ELITE AUTOMALL LLC
ELITE IMPORTS LLC
ELITE LEVEL AUTO INC
ELITE MOTOR MALL
ELITE MOTORS
ELITE MOTORS, INC.
ELYRIA BUDGET AUTO SALES INC
EMJ AUTOMOTIVE REMARKETING
EMPIRE AUTO GALLERY CORPORATIO
EMPIRE AUTO SALES & SERVICE
EMPIRE AUTOMOTIVE GROUP
EMPIRE EXOTIC MOTORS, INC
ENCINOMAN INC
ENTERPRISE CAR SALES
ENTERPRISE CAR SALES
ENTERPRISE CAR SALES
ENTERPRISE CAR SALES
ENTERPRISE LEASING COMPANY
ENTERPRISE LEASING COMPANY
EON AUTO LLC
ERNEST MOTORS, INC.
ERNIE PATTI AUTO LEASING &
ETTLESON HYUNDAI LLC
EVANS AUTO EXCHANGE
EVANS AUTO SALES
EVOLUTION CARS
EXCEL AUTO SALES
EXCEL MOTORS
EXCELLENCE AUTO DIRECT
EXCLUSIVE AUTO WHOLESALE LLC
EXCLUSIVE MOTOR CARS LLC
EXECUTIVE AUTO SALES
EXECUTIVE CARS LLC
EXECUTIVE MOTORS
DEALER NAME
EXOTIC MOTORCARS
EXPRESS AUTO SALES LLC
EXPRESS CAR SALES
EXPRESS MOTORS
EXPRESS MOTORS LLC
EXTREME DODGE DODGE TRUCK
EXTREME WINDOW TINTING SIGNS &
EZ CAR CONNECTION LLC
E-Z CAR CREDIT INC
F4 MOTORS
FACIDEAL AUTO CENTER INC
FACTORY DIRECT AUTO
FAIRLANE FORD SALES, INC.
FAITH MOTORS INC
FAMILY AUTO CENTER AND SERVICE
FAMILY KIA
FANELLIS AUTO
FANTASY AUTOMOTIVE
FASTLANE AUTO CREDIT INC
FAT SACK MOTORS, LLC
FATHER & SON AUTO SALES
FENTON NISSAN OF LEES SUMMIT
FERCO MOTORS CORP
FERMAN CHRYSLER JEEP DODGE AT
FERMAN FORD
FERMAN NISSAN
FIAT OF CREVE COEUR
FIAT OF SAVANNAH
FIAT OF SOUTH ATLANTA
FIAT OF WINTER HAVEN
FINAST AUTO SALES
FIREHOUSE MOTORS
FIRKINS C.P.J.S.
FIRST AUTO CREDIT
FIRST CHOICE AUTOMOTIVE INC
FIRST CLASS AUTO CHOICE
FIRST CLASS AUTO SALES LLC
FIRST CLASS MOTORS INC
FIRST COAST AUTO SALES INC
FIRST PLACE AUTO SALES
FIRST STOP AUTO SALES
FIRST UNION AUTOMOTIVE LLC
DEALER NAME
FISHER AUTO & RV SALES
FITZGERALD MOTORS, INC.
FIVE STAR AUTO SALES OF
FIVE STAR AUTOS INC
FIVE STAR CAR & TRUCK
FIVE STAR CHEVROLET CADILLAC
FIVE STAR FORD STONE MOUNTAIN
FIVE STARS SPORT CARS INC
FLAMINGO AUTO SALES
FLAMMER FORD OF SPRINGHILL
FLEET EXCHANGE INCORPORATED
FLETCHER CHRYSLER PRODUCTS INC
FLORENCE AUTO MART INC
FLORIDA AUTO EXCHANGE
FLORIDA AUTO SALES AND REPAIR
FLORIDA AUTO XCHANGE LLC
FLORIDA CARS USA
FLORIDA MOTORS
FLORIDA TRUCK SALES
FLOW HONDA
FLOW MOTORS
FMC AUTO SALES INC
FOOTHILL FORD
FORMULA ONE IMPORTS
FORT MYERS TOYOTA INC.
FORT PIERCE MOTORS, INC.
FORT WALTON BEACH
FORT WAYNE AUTO CONNECTION LLC
FORTUNE MOTOR GROUP
FOX MOTORS INC
FRANCO AUTO MOTORS LLC
FRANK LETA AUTOMOTIVE OUTLET
FRANK MYERS AUTO SALES, INC
FRANKLIN STREET MOTORS LLC
FRED ANDERSON KIA
FRED ANDERSON NISSAN OF RALEIG
FRED MARTIN FORD
FREEDOM AUTOMOTIVE GROUP LLC
FRENSLEY CHRYSLER PLYMOUTH
FRIENDLY FINANCE AUTO SALES
FRITZ ASSOCIATES
FRONTIER MOTORS INC
DEALER NAME
FROST MOTORS
FUSION AUTOPLEX LLC
FUTURE AUTO IMPORTS INC
G & J MOTORSPORTS INC
G & L MOTORS, INC
G & R AUTO SALES CORP
G BROTHERS AUTO BROKERS INC
G E A AUTO SALES
GAINESVILLE AUTO KI LLC
GAINESVILLE DODGE
GAINESVILLE MITSUBISHI
GALEANA CHRYSLER PLYMOUTH
GANLEY BEDFORD IMPORTS INC
GANLEY CHEVROLET, INC
GANLEY CHRYSLER JEEP DODGE INC
GANLEY LINCOLN MERCURY
GARLAND NISSAN LLC
GASTONIA CHRYSLER JEEP DODGE
GASTONIA NISSAN, INC
GATES CHEV PONT GMC BUICK
GATEWAY AUTO PLAZA
GATEWAY BUICK GMC
GATEWAY MOTORS OF TAMPA
GATOR CHRYSLER-PLYMOUTH, INC.
GATOR CITY MOTORS INC
GE MOTORS 1 LLC
GENERAL AUTO LLC
GENESIS AUTO SALES LLC
GENESIS OF SUMMERVILLE LLC
GEN-X CORP
GEOFF ROGERS AUTOPLEX
GEOFF ROGERS AUTOPLEX NORTH
GEORGE NAHAS CHEVROLET INC
GEORGE WEBER CHEVROLET CO
GEORGETOWN AUTO SALES
GEORGIA AUTO WORLD LLC
GEORGIA CHRYSLER DODGE
GEORGIA IMPORT AUTO
GERALDA AUTO SALES
GERMAIN NISSAN OF ALBANY, INC
GERMAIN TOYOTA
GERMAIN TOYOTA
DEALER NAME
GETTEL HYUNDAI
GETTEL TOYOTA
GINN MOTOR COMPANY
GISELLE MOTORS, CORP
GLADDING CHEVROLET, INC.
GLADSTONE AUTO INC
GLEN BURNIE AUTO EXCHANGE, INC
GLENBROOK DODGE, INC.
GLOBAL 1 AUTO INC
GLOBAL AUTO LEASING LLC CIRCLE
GLOBAL PRE-OWNED INC
GLOBE AUTO SALES
GLOVER AUTO SALES
GMOTORCARS INC
GMT AUTO SALES, INC
GO! AUTO STORE
GODZILLA MOTORS INC
GOLD KEY AUTO INC
GOLD RUSH REMARKETING
GOLDEN GATE AUTOMOTIVE LLC
GOLDEN OLDIES
GOLLING CHRYSLER JEEP
GOOD BAD NO CREDIT AUTO SALES
GOOD CARMA MOTORS
GOOD MOTOR COMPANY
GOOD MOTORS, INC.
GOOD RIDES INC
GOOD TO GO AUTO SALES, INC.
GR MOTOR COMPANY
GRACE AUTOMOTIVE LLC
GRAHAM MOTOR COMPANY
GRAINGER NISSAN
GRANT CAR CONCEPTS
GRANT MOTORS CORP.
GRAVITY AUTOS ATLANTA
GRAVITY AUTOS ROSWELL
GREAT BRIDGE AUTO SALES
GREAT LAKES CHEVROLET BUICK
GREAT LAKES CHRYSLER DODGE JEE
GREAT LAKES HONDA
GREEN AUTO SALES INC
GREEN LIGHT CAR SALES
DEALER NAME
GREENBRIER DODGE OF CHES, INC.
GREENS TOYOTA
GREER NISSAN
GREG COATS CARS AND TRUCKS
GREG SWEET CHEVY BUICK OLDS
GREG SWEET FORD INC
GREGS COMPLETE AUTO REPAIR AND
GRIFFIN FORD SALES, INC.
GRIMALDI AUTO SALES INC
GROTE AUTOMOTIVE INC
GROW AUTO FINANCIAL INC
GROW AUTOMOTIVE
GS AUTOMOTIVE
GUARANTEED CARS & CREDIT
GULF ATLANTIC WHOLESALE INC
GULF COAST AUTO BROKERS, INC.
GULF SOUTH AUTOMOTIVE
GULFSIDE MOTORS LLC
GWINNETT MITSUBISHI
GWINNETT PLACE NISSAN
GWINNETT SUZUKI
H & H AUTO SALES
H & H AUTO SALES
H GROUP AUTO SALES
H&M AUTO SALES
HAGGERTY BUICK GMC INC
HAIMS MOTORS INC
HAIMS MOTORS INC
HALE OF A DEAL AUTO GROUP INC
HALEY TOYOTA CERTIFIED
HALO AUTOSPORTS LLC
HAMILTON CHEVROLET INC
HAMMCO INC
HANNA IMPORTS
HANSELMAN AUTO SALES INC.
HAPPY AUTO MART
HAPPY CARS AUTO SALES
HAPPY HYUNDAI
HARBOR CITY AUTO SALES, INC.
HARBOR NISSAN
HARDIES USED CARS, LLC
HARDIN COUNTY HONDA
DEALER NAME
HARDY CHEVROLET
HARDY CHEVROLET INC.
HARRIET SALLEY AUTO GROUP LLC
HARRIGANS AUTO SALES
HATCHERS AUTO SALES
HATFIELD USED CAR CENTER
HAVANA FORD INC.
HEADQUARTER HONDA
HEADQUARTER TOYOTA
HEADQUARTERS AUTO GROUP
HEB AUTO SALES INC
HENDERSONVILLE AUTO BROKERS
HENDRICK CHEVROLET LLC
HENDRICK CHRYSLER DODGE JEEP
HENDRICK HONDA
HENKUIS MOTORSPORTS LLC
HENNESSY FORD LINCOLN ATLANTA
HENNESSY MAZDA PONTIAC
HERITAGE AUTOMOTIVE GROUP
HERITAGE NISSAN
HERRINGTON AUTOMOTIVE
HI LINE IMPORTS INC
HIALEAH MOTORS INC
HIGH POINT IMPORTS LLC
HIGH Q AUTOMOTIVE CONSULTING
HIGH QUALITY AUTO SALES, INC
HIGHESTCASHFORCARS LLC
HIGHLINE IMPORTS, INC.
HILL & HILL AUTOMOTIVE SALES
HILL KELLY DODGE, INC
HILLMAN MOTORS, INC.
HILLTOP MOTORS
HILLWOOD AUTO SALES & SERVICE
HILTON HEAD NISSAN
HINESVILLE FORD COMPANY
HOBSON CHEVROLET BUICK GMC LLC
HOLLYWOOD CHRYSLER PLYMOUTH
HOLLYWOOD MOTOR CO #1
HOLLYWOOD MOTOR CO #3
HOLLYWOOD MOTOR SALES
HOMESTEAD MOTORS INC
HONDA CARS OF BRADENTON
DEALER NAME
HONDA MARYSVILLE
HONDA OF CONYERS
HONDA OF FRONTENAC
HONDA OF GAINESVILLE
HONDA OF MUFREESBORO
HONDA OF OCALA
HONDA OF TIFFANY SPRINGS
HONEYCUTTS AUTO SALES, INC.
HOOSHS AUTO SALES, INC.
HOOSIER AUTO LLC
HOOVER AUTOMOTIVE LLC
HOOVER CHRYSLER PLYMOUTH DODGE
HOOVER MITSUBISHI CHARLESTON
HOOVER THE MOVER CAR AND
HORACE G ILDERTON
HOUSTON AUTO EMPORIUM
HOUSTON CAR SALES INC
HOUSTON DIRECT AUTO
HOWARD AUTO GROUP
HT MOTORS INC
HUBLER AUTO PLAZA
HUBLER CHEVROLET INC
HUBLER FINANCE CENTER
HUBLER FORD LINCOLN MERCURY
HUBLER MAZDA SOUTH
HUBLER NISSAN, INC.
HUFFINES CHRYSLER JEEP DODGE
HUGH WHITE HONDA
HUGH WILLIAMS AUTO SALES INC
HUNT AUTOMOTIVE, LLC
HUNTER NISSAN
HUSTON BUICK GMC CADILLAC INC
HUSTON MOTORS INC.
HVS CAPITAL GROUP
HWY 150 BUYERS WAY, INC.
HY-TECH AUTO SALE AND EXPORT
HYUNDAI OF GREER
HYUNDAI OF NEW PORT RICHEY
HYUNDAI OF NICHOLASVILLE
HYUNDIA OF ORANGE PARK
I 95 TOYOTA & SCION
I GOT A DEAL USED CARS
DEALER NAME
I-80 AUTO SALES INC
IAUTO INC
IDEAL USED CARS INC
IDRIVE FINANCIAL
IMAGINE CARS
IMAGINE POWERSPORTS
IMPERIAL MOTORS
IMPERIAL SALES & LEASING INC
IMPEX AUTO SALES
IMPORT AUTO BROKERS INC
IMPORTS LTD
INCREDIBLE AUTO BROKERS AND
INDEPENDENCE AUTO SOLUTIONS
INDIAN RIVER LEASING CO
INDY AUTO LAND LLC
INDY AUTO MAN LLC
INFINITI OF COLUMBUS, LLC
INLINE AUTO SALE INC
INTEGRITY MOTORS RVA LLC
INTEGRITY OF CHICAGO
INTERNATIONAL AUTO OUTLET
INTERNATIONAL AUTO WHOLESALERS
INTERNATIONAL AUTOMOBILES LLC
INTERNATIONAL MOTORS CO.
IONADI AUTO SALES
IPS MOTORS LLC
IVORY CHEVROLET, LLC
J & B AUTO GROUP LLC
J & C AFFORDABLE CARS LLC
J & J MOTORS INC
J & L AUTO SALES
J & M AFFORDABLE AUTO, INC.
J D MOTORS LLC
J&M AUTOMOBILES CORP
J.R. WHOLESALE LLC
JACK DEMMER FORD, INC.
JACK KAIN FORD, INC.
JACK MAXTON CHEVROLET INC
JACK MAXTON CHEVROLET, INC
JACK MAXTON USED CARS
JACK MILLER AUTO PLAZA LLC
JACK MILLER KIA
DEALER NAME
JACKIE MURPHYS USED CARS
JACKS USED CARS
JACK-SON AUTO SALES INC
JAKE SWEENEY KIA
JAKMAX
JANSON AUTOMOTIVE
JARRARD PRE-OWNED VEHICLES
JARRETT GORDON FORD INC
JARRETT-GORDON FORD OF WINTER
JAX AUTO WHOLESALE, INC.
JAX EXPORTS INC
JAY PONTIAC BUICK
JAY WOLFE AUTO OUTLET
JAY WOLFE HONDA
JAZCARS, INC.
JC AUTO MARKET LLC
JDF AUTO
JEFF DRENNEN FORD
JEFF WYLER CHEVROLET OF
JEFF WYLER DIXIE HONDA
JEFFERSON CHEVROLET CO.
JEFFREY P. HYDER
JEFFREYS AUTO EXCHANGE
JEMS AUTO SALES INC
JENKINS ACURA
JENKINS HYUNDAI
JENKINS MAZDA
JENKINS NISSAN, INC.
JENO AUTOPLEX
JENROC AUTO SALES
JEREMIAHS RIDES LLC
JEREMY FRANKLINS SUZUKI OF KAN
JERRY HUNT AUTO SALES
JERRY MOTORS, INC.
JERRY WILSONS MOTOR CARS
JEWEL AUTO SALES
JIDD MOTORS INC
JIM BURKE NISSAN
JIM BUTLER AUTO PLAZA
JIM M LADY OLDSMOBILE INC
JIM ORR AUTO SALES
JIMMY KAVADAS YOUR CREDIT MAN
DEALER NAME
JIMMY SMITH PONTIAC BUICK GMC
JK AUTOMOTIVE GROUP LLC
JKB AUTO SALES
JMC AUTO BROKERS INC
JOE RICCI AUTOMOTIVE
JOEY BLASINGAME AUTO SALES
JOHN BELL USED CARS INC
JOHN BLEAKLEY FORD
JOHN HINDERER HONDA
JOHN JENKINS, INC.
JOHN JONES AUTOMOTIVE
JOHN SNYDER AUTO MART, INC.
JOHN WEISS TOYOTA SCION OF
JOHNNY WRIGHT AUTO SALES LLC
JOHNNYS MOTOR CARS LLC
JORDAN AUTO SALES
JOSEPH MOTORS
JOSEPH TOYOTA INC.
JOSES AUTO SALES INC
JP POWERCARS CORP
JPL AUTO EMPIRE
JT AUTO INC.
JUSTICE AUTOMOTIVE
JUST-IN-TIME AUTO SALES INC
JV AUTO WHOLESALES LLC
K & M MOTORS
K & M SUZUKI
K & O AUTO WHOLE SALE INC
K B AUTO EMPORIUM
K J N S ENTERPRISE LLC
K T AUTO SALES LLC
KACHARS USED CARS, INC.
KAHLER AUTO SALES LLC
KAHLO CHRYSLER JEEP DODGE INC
KALER LEASING SERVICES INC
KAR SELECT
KARGAR, INC.
KATHYS KARS
KC AUTOMOTIVE GROUP LLC
KC CAR GALLERY
KEFFER PRE-OWNED SOUTH
KEITH HAWTHORNE HYUNDAI, LLC
DEALER NAME
KEITH PIERSON TOYOTA
KELLEY BUICK GMC INC
KELLYS CARS 4 U INC
KELSEY CHEVROLET LLC
KEMET AUTO SALES
KENDALL TOYOTA
KENNYS AUTO SALES, INC
KENS AUTOS
KENS KARS
KERRY NISSAN, INC.
KEVIN POWELL MOTORSPORTS
KEVINS KARS LLC
KEY CHRYLSER PLYMOUTH INC
KIA COUNTRY
KIA COUNTRY OF SAVANNAH
KIA OF CANTON
KIA OF CLARKSVILLE
KIA OF GREER
KIA OF LEESBURG
KIA OF NORTH GRAND RAPIDS
KIA TOWN CENTER
KILBURN MOTOR COMPANY
KIM GRAHAM MOTORS
KIMP AUTOMOTIVE
KIN FOLK AUTO SALES
KING AUTOMOTIVE, LLC
KING BROTHERS USED CARS
KING MOTORS
KING SUZUKI OF HICKORY LLC
KINGDOM CHEVROLET INC
KINGS AUTO GROUP INC
KINGS AUTO SALES, INC
KINGS FORD, INC
KINGS HONDA
KINGS MAZDA
KINGS OF QUALITY AUTO SALES
KINGSWAY MOTOR CO
KIRTLAND CAR COMPANY, INC.
KKS AUTO SALES
KLASSIC CARS LLC
KMAX INC
KNE MOTORS, INC.
DEALER NAME
KNH WHOLESALE
KNOX BUDGET CAR SALES & RENTAL
KOE-MAK CORP
KRAFT MOTORCAR CO.
KUHN HONDA VOLKSWAGON
KUNES COUNTRY CHEVROLET
KUNES COUNTRY CHRYSLER DODGE
KUNES COUNTRY FORD LINCOLN INC
KUNES COUNTY FORD OF ANTIOCH
KZ AUTO SALES
L & J AUTO SALES & LEASING LLC
L4 MOTORS LLC
LA AUTO STAR, INC.
LAFONTAINE AUTO GROUP
LAFONTAINE BUICK GMC OF ANN
LAFONTAINE MOTORS, INC
LAGRANGE AUTO SALES
LAGRANGE MOTORS
LAGUNA NIGUEL AUTO SALES INC
LAKE HARTWELL HYUNDAI
LAKE NISSAN SALES, INC.
LAKE WALES CHRSYLER DODGE
LAKELAND AUTO MALL
LAKESIDE AUTO SALES, INC.
LAKESIDE MOTORS INC
LALLY ORANGE BUICK PONTIAC GMC
LANCASTER AUTO AND
LANCASTER AUTO SALES AND
LANCASTER AUTOMOTIVE
LANCASTERS AUTO SALES, INC.
LANDERS MCLARTY CHEVROLET
LANDERS MCLARTY SUBARU
LANDMARK AUTO INC
LANDMARK CDJ OF MONROE, LLC
LANDMARK MOTOR COMPANY
LANE 1 MOTORS
LANGDALE HONDA KIA OF
LANIGANS AUTO SALES
LARRY JAY IMPORTS, INC
LASCO FORD INC
LATIN MOTORS INTERNATIONAL LLC
LAW AUTO SALES, INC
DEALER NAME
LAWRENCE MOTORSPORTS INC
LCA AUTO WHOLESALES, LTD
LEBANON FORD LINCOLN
LEE KIA OF GREENVILLE
LEES AUTO SALES, INC
LEES SUMMIT DODGE CHRYSLER JEE
LEES SUMMIT HONDA
LEES SUMMIT SUBARU LLC
LEGACY AUTO BROKERS LLC
LEGACY AUTO SALES
LEGACY AUTO SALES, INC.
LEGACY AUTOS
LEGACY FORD MERCURY
LEGACY TOYOTA
LEOPARDI AUTO SALES
LEVEL UP AUTO SALES
LGE CORP
LIBERTY FORD LINCOLN MERC INC
LIBERTY FORD SOUTHWEST, INC
LIBERTY FORD, INC
LIBERTY MOTORS LLC
LIBERTY USED MOTORS INC
LIBERTYVILLE CHEVROLET LLC
LIFESTYLE MOTOR GROUP
LIGHTHOUSE AUTO SALES
LIONS MOTORS CORP
LJ USED CARS INC 2
LMN AUTO INC
LOCKHART CADILLAC INC
LOKEY NISSAN
LONDOFF JOHNNY CHEVROLET INC
LONESTAR MOTOR
LONGSTREET AUTO
LOT 1 AUTO SALES LLC
LOU FUSZ BUICK GMC
LOU FUSZ CHEROLET COMPANY
LOU FUSZ MITSUBISHI ST. PETERS
LOU FUSZ MOTOR CO
LOU SOBH AUTOMOTIVE OF
LOU SOBH KIA
LOVE FIELD AUTO SALES, LLC
LOWEST PRICE TRANSPORTATION
DEALER NAME
LOWPRICE AUTO MART LLC
LUCKY DOGS CREDIT & CARS LLC
LUCKY MOTORS INC
LUNA MOTOR GROUP CORP
LUNSFORD MOTORSPORTS, LLC
LUXURY AUTO LINE LLC
LUXURY AUTO SALES LLC
LUXURY CARS & FINANCIAL, INC.
LUXURY CARS OUTLET
LUXURY FLEET LEASING LLC
LUXURY IMPORTS AUTO SALES
LUXURY MOTOR CAR COMPANY
LYMAN AUTOMOTIVE
LYNCH CHEVROLET OF KENOSHA
LYNNHAVEN MOTOR COMPANY
M & M AUTO SUPER STORE
M & M AUTO WHOLESALERS, LLC
M & M AUTO, INC.
M & M MOTORS OF ROCK HILL INC
M & S AUTO SALES
MAC HAIK CHRYSLER DODGE JEEP
MAC HAIK PRE-OWNED
MACHADO AUTO SELL LLC
MACON AUTO SALES
MADISON AUTO SALES LLC
MADISON COUNTY FORD LINC MERC
MAGIC IMPORTS OF
MAGIC MOTORS CENTER
MAGIC MOTORS INC
MAHER CHEVROLET INC
MAINLAND AUTO SALES INC
MAINSTREAM AUTO SALES LLC
MAJESTIC AUTOS INC
MALCOLM CUNNINGHAM HYUNDAI
MALOY AUTOMOTIVE LLC
MANASSAS AUTOMOBILE GALLERY
MARANATHA AUTO
MARANATHA AUTO, INC.
MARCH MOTORS INC.
MARCHANT CHEVROLET INC
MARIANNA MOTOR CO
MARIETTA AUTO SALES
DEALER NAME
MARIETTA LUXURY MOTORS
MARK THOMAS FORD
MARKAL MOTORS INC
MARLOZ OF HIGH POINT
MARTIN COACHWORKS LLC
MARTINS AUTO BROKERS LLC
MARTINS USED CARS INC
MARVIN MOTORS INC
MASTER AUTO GROUP
MASTER CAR INTERNATIONAL, INC
MASTER CARS
MASTER CARS CO INC
MATHEWS FORD INC.
MATHEWS FORD OREGON, INC
MATHEWS HAROLD NISSAN
MATRIX AUTO SALES, INC.
MATT CASTRUCCI
MAUS MOTORS INC
MAX MOTORS INC
MAXIE PRICE CHEVROLETS OLDS,
MAXIMUM DEALS, INC.
MAYSVILLE AUTO SALES
MAYSVILLE PREMIER AUTO LLC
MAZDA OF ROSWELL
MAZDA SAAB OF BEDFORD
MCADENVILLE MOTORS
MCCLUSKYS CHEVROLET INC
MCCORMICK MOTORS INC
MCDANIELS ACURA OF CHARLESTON
MCFARLAND CHEVROLET-BUICK, INC
MCGHEE AUTO SALES INC.
MCHUGH INC
MCINERNEYS WOODHAVEN CHRYSLER
MCJ AUTO SALES OF CENTRAL
MCKENNEY CHEVROLET
MCKENZIE MOTOR COMPANY, INC,
MCLYMONT AFFORDABLE LUXURY AUT
MCNEILL NISSAN OF WILKESBORO
MCPHAILS AUTO SALES
MEACH AUTO SALES
MECHANICSVILLE TOYOTA
MEDINA AUTO BROKERS
DEALER NAME
MEDLIN BUICK GMC MAZDA
MEGA AUTO SALES LLC
MELRAY MOTORS CORP
MELROSE AUTO OUTLET INC
MEMBERS SALES AND LEASING INC
MEMORIAL HWY AUTO SALES AND
MERLIN AUTOS LLC
MEROLLIS CHEVROLET SALES
METRO IMPORTS INC
METRO USED CARS
MGM AUTO SALES
MI AUTO CENTER LLC
MIA ON WHEELS CORP
MIA REPOS LLC
MIAMI AUTO LIQUIDATORS INC
MIAMI AUTO SALES
MIAMI AUTO SHOW LLC
MIAMI AUTO WHOLESALE
MIAMI CARS INTERNATIONAL INC
MIAMI EMPIRE AUTO SALES CORP
MICHAELS AUTO SALES OF WEST
MICHAELS IMPORTS
MICHAELS MOTOR CO
MID AMERICA AUTO EXCHANGE INC
MID AMERICA AUTO GROUP
MID CITY MOTORS OF LEE COUNTY
MID FLORIDA WHOLESALERS INC
MID LAKE MOTORS INC.
MID RIVERS MOTORS
MIDCITY AUTO & TRUCK EXCHANGE
MIDDLE TENNESSEE AUTO MART LLC
MIDDLETOWN FORD, INC
MIDFIELD MOTOR COMPANY, INC.
MID-TOWN MOTORS LLC
MIDTOWN MOTORS OF RALEIGH LLC
MID-TOWNE AUTO CENTER, INC.
MIDWAY AUTO GROUP
MIDWAY AUTOGROUP
MIDWEST AUTO DIRECT
MIDWEST AUTO GROUP LLC
MIDWEST AUTO MART LLC
MIDWEST AUTO STORE LLC
DEALER NAME
MIDWEST FINANCIAL SERVICES
MIDWEST MOTORS
MIDWEST MOTORS & TIRES
MIDWEST MOTORSPORT SALES &
MIDWESTERN AUTO SALES, INC.
MIGENTE MOTORS INC
MIGHTY MOTORS
MIKANO AUTO SALES, INC.
MIKE ANDERSON USED CAR SUPER
MIKE BASS FORD
MIKE BELL CHEVROLET INC
MIKE CASTRUCCI CHEVY OLDS
MIKE CASTRUCCI FORD OF ALEX
MIKE CASTRUCCI FORD SALES
MIKE KEFFER CHRYSLER DODGE
MIKE PRUITT HONDA INC
MIKE SHAD FORD
MIKE WILSON CHEVROLET
MIKES TRUCKS AND CARS
MILES AUTO SALES
MILESTONE MOTORS, L.L.C.
MILLENIUM AUTO SALES
MILTON MARTIN HONDA
MINT AUTO SALES
MINT AUTO SALES
MINTON MOTOR CARS II LP
MIRA AUTO SALES LLC
MIRACLE CHRYSLER DODGE JEEP
MISSOURI MOTORS LLC
MJ AUTO SALES
MK AUTO BROKER INC
MMC AUTO SALES LLC
MO AUTO SALES
MODERN CORP
MODERN HYUNDAI OF CONCORD LLC
MODERN TOYOTA
MOMENTUM MOTOR GROUP LLC
MONARCH CAR CORP
MONROE DODGE/CHRYSLER INC.
MONROE MOTOR SPORT
MONZON AUTO SALES INC
MOODY AUTO SALES
DEALER NAME
MOORE NISSAN
MOORING AUTOMOTIVE GROUP LLC
MORRIS IMPORTS LLC
MOSS CURTAIN MOTORS LLC
MOTOR CAR CONCEPTS II
MOTOR CARS HONDA
MOTOR CARS OF STUART
MOTOR CITY AUTO INC
MOTOR CITY AUTO INC
MOTORCARS
MOTORCARS OF LANSING INC
MOTORCARS TOYOTA
MOTORHOUSE INC
MOTORMAX OF GRAND RAPIDS
MOTORS DRIVEN INC
MOTORS TRUST INC
MOTORSPORTS UNLIMITED INC
MOTORVATION MOTOR CARS
MOUNTAIN TOP MOTOR COMPANY INC
MOUNTAIN VIEW CDJR
MR AUTO INC
MR AUTO SALES
MR DEALS AUTO SALES & SERVICE
MR WHOLESALER INC
MS AUTO SALES LLC
MULDER AUTO SALES
MULLER HONDA OF GURNEE
MULLINAX FORD OF PALM BEACH
MUNN MOTORSPORTS HIGHLINE
MURPHY MOTOR CO
MURPHYS AUTO SALES INC
MURRAYS USED CARS
MUSIC CITY AUTOPLEX LLC
MWS WHOLESALE AUTO OUTLET
MY CAR LLC
MYEZAUTOBROKER.COM LLC
MYLENBUSCH AUTO SOURCE LLC
N & D AUTO SALES, INC.
NALLEY HONDA
NAPLETON SANFORD IMPORTS LLC
NASH CHEVROLET COMPANY
NASHVILLE CHRYSLER DODGE JEEP
DEALER NAME
NATIONAL AUTO CREDIT INC
NATIONAL AUTO SALES I LLC
NATIONAL CAR MART, INC
NATIONAL MOTORS, INC.
NATIONAL ROAD AUTOMOTIVE LLC
NATIONWIDE LUXURY CARS INC
NAVA MOTORS CORP
NAVARRE AUTO AND PAWN INC
NEIL HUFFMAN HONDA
NELSON AUTO SALES
NELSON MAZDA
NELSON MAZDA RIVERGATE
NEUHOFF AUTO SALES
NEW RIDE MOTORS
NEW RIDE MOTORS
NEWARK AUTO LLC
NEWPORT AUTO GROUP
NEWSED AUTO INC
NEWTONS AUTO SALES, INC.
NEXT CAR INC
NEXT RIDE AUTO SALES INC
NEXTCAR
NICE AUTO GROUP LLC
NICHOLAS ANGELO MOTORS LLC
NICHOLAS DATA SERVICES, INC.
NICHOLASVILLE NISSAN
NICKS AUTO MART
NILE AUTOMOTIVE LLC
NIMNICHT PONTIAC
NISSAN OF GALLATIN
NISSAN OF NEWNAN
NISSAN ON NICHOLASVILLE
NITRO MOTORS LLC
NOEL AUTOMOTIVE GROUP LLC
NORTH AMERICAN FLEET SALES INC
NORTH ATLANTA MOTORS LLC
NORTH BROTHERS FORD, INC
NORTH COAST AUTO SALES INC
NORTH COAST CAR CREDIT LLC
NORTH EAST AUTO SALES INC
NORTH MAIN MOTORS INC
NORTHEAST FLORIDA AUTO SOLUTIO
DEALER NAME
NORTHERN KY AUTO SALES LLC
NORTHGATE CHRYSLER JEEP INC
NORTHLAND CHRYSLER JEEP DODGE
NORTHSTAR AUTO GROUP
NORTHTOWNE OF LIBERTY SUZI,
NORTHWEST AUTO BROKERS LLC
NORTHWEST FINANCIAL LLC
NORTHWEST MOTORS INC
NOURSE CHILLICOTHE
NUMBER ONE IN RADIO ALARMS INC
NU-WAVE AUTO CENTER
OAKES AUTO INC
OASIS MOTORS
OBRIEN FORD MERCURY
OBRIENS AUTO EMPORIUM,LLC
OCEAN HONDA
OCONNORS AUTO OUTLER
OFF LEASE FINANCIAL, INC.
OFFLEASE AUTOMART LLC
OHARE MOTOR CARS
OHIO AUTO CREDIT LLC
OLATHE FORD SALES, INC.
OLD SOUTH SALES INC.
OLDHAM MOTOR COMPANY LLC
OLYMPIC MOTOR CO LLC
ON TRACK AUTO MALL, INC.
ONE SOURCE AUTOS INC
ORANGE PARK AUTO MALL
ORANGE PARK DODGE
ORANGE PARK MITSUBISHI
ORANGE PARK TRUCKS
ORCHARD LAKE MOTORS LLC
ORLANDO AUTO LOUNGE LLC
ORLANDO AUTOS
OSCAR MOTORS CORPORATION
OT AUTO SALES
OUR LOCAL DEALER
OV AUTO FARM
OXMOOR FORD LINCOLN MERCURY
OXMOOR MAZDA
OXMOOR TOYOTA
P & A MOBILITY ENTERPRISES INC
DEALER NAME
P S AUTO ENTERPRISES INC
PACE CAR
PALM BAY FORD
PALM BAY MOTORS
PALM BEACH AUTO DIRECT
PALM BEACH MOTORS
PALM CHEVROLET OF GAINESVILLE
PALMETTO FORD
PALMETTO WHOLESALE MOTORS
PAQUET AUTO SALES
PARADISE MOTOR SPORTS
PARAMOUNT AUTO
PARK AUTO MALL, INC
PARKS AUTOMOTIVE, INC
PARKS CHEVROLET, INC
PARKWAY FORD, INC.
PARKWAY MOTORS INC
PATRIOT AUTO INC.
PATRIOT AUTOMOTIVE LLC
PATRIOT PRE-OWNED AUTOS LLC
PAUL CERAME KIA
PAYDAY MOTOR SALES
PAYLESS MOTORS LLC
PC AUTO SALES LLC
PCT ENTERPRISES OF FLORIDA LLC
PEGGYS AUTO SALES
PENLAND AUTOMOTIVE LLC
PENNINGTON AUTOMOTIVE
PENSACOLA AUTO BROKERS, INC
PERFORMANCE CHEVROLET BMW
PERFORMANCE CHRYSLER JEEP
PERFORMANCE CHRYSLER JEEP
PERFORMANCE CHRYSLER JEEP DODG
PERFORMANCE MOTOR COMPANY LLC
PERFORMANCE TOYOTA
PETE MOORE CHEVROLET, INC
PETERS AUTO SALES, INC.
PFEIFFER LINCOLN MERCURY
PGF AUTOMOTIVE LLC
PHILLIPS BUICK PONTIAC GMC INC
PHILLIPS CHRYSLER-JEEP, INC
PHILLIPS TOYOTA
DEALER NAME
PHOENIX MOTORS
PHOENIX SPECIALTY MOTORS CORP
PIEMONTES DUNDEE CHEVROLET
PIERSON AUTOMOTIVE
PILES CHEV-OLDS-PONT-BUICK
PINELLAS MOTORS INC
PINELLAS PARK AUTO INC
PINEVILLE IMPORTS
PINNACLE AUTO SALES
PITTSBURGH AUTO DEPOT INC
PLAINFIELD AUTO SALES, INC.
PLANET SUZUKI
PLATINA CARS AND TRUCKS INC
PLATINUM AUTO EXCHANGE INC
PLATINUM WHOLESALES LLC
PLATTE CITY AIRPORT CHRYSLER D
PLATTNERS
PLAZA AUTO SALES
PLAZA LINCOLN MERCURY
POGUE CHEVROLET INC
PORT MOTORS
PORTAL AUTOMOTIVE INC
POWER MOTORS LLC
POWER ON AUTO LLC
POWERBUY MOTORS
PRADO AUTO SALES
PRATHER AUTOMOTIVE
PREFERRED AUTO
PREFERRED TREATMENT AUTO SALES
PREMIER AUTO BROKERS, INC.
PREMIER AUTO GROUP
PREMIER AUTO LOCATORS
PREMIER AUTO MART, INC
PREMIER AUTO SALES
PREMIER AUTO SALES OF BAY
PREMIER AUTOMOTIVE GROUP INC
PREMIER AUTOMOTIVE OF BONNER
PREMIER AUTOMOTIVE SALES INC
PREMIER AUTOWORKS SALES &
PREMIER DODGE CHRYSLER JEEP
PREMIER MOTORCAR GALLERY
PREMIERE MOTOR SPORTS LLC
DEALER NAME
PREMIUM AUTO EXCHANGE
PREMIUM AUTOS LLC
PREMIUM CARS OF MIAMI LLC
PRE-OWNED EXPRESS
PRESPA AUTO SALES
PRESTIGE AUTO BROKERS
PRESTIGE AUTO EXCHANGE
PRESTIGE AUTO GROUP
PRESTIGE AUTO MALL
PRESTIGE AUTO SALES & RENTALS
PRESTIGE ECONOMY CARS INC
PRESTON AUTO OUTLET
PRESTON HONDA
PRICE IS RIGHT AUTO SALES LLC
PRICE RIGHT STERLING HEIGHTS
PRICED RIGHT AUTO SALES LLC
PRICED RIGHT AUTO, INC.
PRICED RIGHT CARS, INC
PRIDE AUTO SALES LLC
PRIME AUTO EXCHANGE
PRIME CARS & TRUCKS LLC
PRIME MOTORS INC
PRIME TIME MOTORS
PRINCE AUTO SALES LLC
PRIORITY HONDA HUNTERSVILLE
PRISTINE CARS & TRUCKS INC
PRO SELECT AUTOS
PROCAR
PUBLIC AUTO BROKERS
PURE AUTOMOTIVE LLC
Q AUTOMOTIVE BRANDON FL LLC
Q AUTOMOTIVE FT MYERS FL LLC
Q MOTORCARS INC
QUALITY AUTO BROKERS
QUALITY AUTO CENTER
QUALITY AUTO SALES OF FL LLC
QUALITY CARS INC
QUALITY IMPORTS
QUALITY IMPORTS & CONSIGNMENT
R & B CAR COMPANY
R & M HOLDINGS GROUP INC
R & R AUTO SALES AND REPAIRS
DEALER NAME
RADER CAR CO INC
RAMOS AUTO LLC
RAMSEY MOTORS
RANDY CURNOW AUTO PLAZA/RC
RANDY SHIRKS NORTHPOINTE AUTO
RANKL & RIES MOTORCARS, INC
RAP AUTOMOTIVE LLC
RAPTOR AUTOMOTIVE
RAY CHEVROLET
RAY LAETHEM BUICK GMC INC
RAY PEARMAN LINCOLN MERCURY
RAY SKILLMAN EASTSIDE
RAY SKILLMAN WESTSIDE
RAYMOND CHEVROLET KIA
RCK AUTO SALES LLC
RE BARBER FORD INC
REALITY AUTO SALES INC
REASONABLE AUTO GROUP LLC
RED SHAMROCK LLC
REGAL MOTORS INC
REGAL PONTIAC, INC.
REGIONAL WHOLESALE
REICHARD BUICK PONTIAC, INC
REIDSVILLE NISSAN INC
REINEKE FORD LINCOLN MERCURY
RENEWIT CAR CARE
REVOLUTION MOTORS LLC
REXFORD AUTOMOTIVES
REYNOLDS AUTOMOTIVE LLC
RHOADES AUTOMOTIVE INCORPORATE
RHODES AUTO SALES
RICART FORD USED
RICE AUTO SALES
RICH AUTO SALES LTD
RICH FORD LINCOLN MERCURY
RICH MORTONS GLEN BURNIE
RICHARD HUGES AUTO SALES
RICHARD KAY AUTOMOTIVE
RICHMOND HONDA
RICK CASE CARS INC
RICK HENDRICK CHEVROLET
RICK HILL NISSAN INC
DEALER NAME
RIDE N DRIVE
RIDE TIME, INC.
RIGHT PRICE AUTO SALES OF
RIGHT WAY AUTOMOTIVE
RIGHTWAY AUTOMOTIVE CREDIT
RIGHTWAY AUTOMOTIVE CREDIT
RIGHTWAY AUTOMOTIVE CREDIT
RIGHTWAY AUTOMOTIVE CREDIT
RITCHIE AUTO SALES
RITEWAY AUTO SALES
RIVER BEND FORD
RIVER CITY AUTO SALES INC
RIVERSIDE MOTORS, INC
RIVIERA AUTO SALES SOUTH INC
RJS AUTO SALES
ROAD MASTER AUTO GROUP INC
ROB PARTELOS WINNERS
ROBERT-ROBINSON CHEVROLET
ROBERTS COMPANY MOTOR MART LLC
ROCK AUTO KC INC
ROCK BOTTOM AUTO SALES, INC.
ROCK ROAD AUTO PLAZA
ROD HATFIELD CHRYSLER DGE JEEP
ROGER WILSON MOTORS INC
ROME MOTOR SALES
RONS RIDES INC
ROSE AUTOMOTIVE INC
ROSE CITY MOTORS
ROSE CITY MOTORS
ROSE CITY MOTORS
ROSEDALE AUTO SALES INC
ROSELLE MOTORS INC
ROSEN HYUNDAI ENTERPRISES LLC
ROSEN HYUNDAI OF ALGONQUIN LLC
ROSEN MAZDA OF WAUKEGAN
ROSEVILLE CHRYSLER JEEP
ROSEWOOD AUTO SALES LLC
ROUEN CHRYSLER DODGE JEEP INC
ROUEN MOTORWORKS LTD
ROUTE 69 SALES, LLC
ROY OBRIEN, INC
ROYAL AUTO SALES
DEALER NAME
ROYAL FAMILY MOTORS CANTON LLC
ROYAL FAMILY MOTORS INC
ROYAL OAK FORD SALES, INC.
RPM AUTO SALES
S & B AUTO BROKERS LLC
S & M AUTO BROKERS INC
S S & M AUTOMOTIVE
S S AUTO INC
SABISTON MCCABE AUTO SOLUTIONS
SALTON MOTOR CARS INC
SAM GALLOWAY FORD INC.
SAM MOTOR SPORTS INC
SAND MOUNTAIN TOYOTA
SANDOVAL BUICK GMC INC
SANDY SANSING FORD LINCOLN LLC
SANFORD AUTOPARK
SANSING CHEVROLET, INC
SARASOTA FORD
SAVAGE AUTOMOTIVE GROUP
SAVANNAH AUTO
SAVANNAH AUTOMOTIVE GROUP
SAVANNAH HYUNDAI
SAVANNAH MOTORS INC
SAVANNAH TOYOTA & SCION
SAVANNAH VOLKSWAGEN
SC AUTO SALES
SCHAELL MOTORS
SCHIRRAS AUTO INC
SCOGGINS CHEVROLET OLDS BUICK
SCOPE AUTOMOTIVE LLC
SCOTTIS AUTO REPAIT AND SALES
SECOND CHANCE AUTO
SEHER ENTERPRISES INC
SELECT AUTO
SELECT AUTO GROUP LLC
SELECT AUTO NETWORK LLC
SELECT AUTO SALES
SELECT CARS OF CLEVELAND LLC
SELECT MOTORS OF TAMPA INC.
SENA MOTORS INC
SERRA VISSER NISSAN INC
SHAD MITSUBISHI
DEALER NAME
SHARP CARS OF INDY
SHAVER AUTOMOTIVE LLC
SHAVER MOTORS OF ALLEN CO INC
SHEARONS AUTO SALES
SHEEHY FORD INC
SHEEHY GLEN BURNIE INC.
SHERDAN ENTERPRISES LLC
SHERMAN DODGE
SHOALS UNIVERSITY KIA
SHOOK AUTO INC
SHORELINE AUTO CENTER INC
SHORELINE AUTO GROUP OF IONIA
SHORELINE MOTORS
SHOW ME AUTO MALL INC
SHOWROOM AUTO SALES OF
SHUTT ENTERPRISES INC
SIGN & DRIVE AUTO SALES LLC
SIGN AND DRIVE AUTO GROUP WILK
SIGN AND DRIVE AUTO SALES LLC
SIGNATURE FORD LINCOLN MERCURY
SIGNATURE MOTORS USA LLC
SIMMONS NISSAN
SIMPLE AUTO IMPORTS
SINA AUTO SALES, INC.
SINCLAIR DAVE LINCOLN MERCURY
SKAGGS RV OUTLET LLC
SLT MOTORS LLC
SMART CHOICE AUTO GROUP
SMH AUTO
SOBH AUTOMOTIVE
SOLID AUTOS LLC
SOMERSET MOTORS
SONS HONDA
SOURCE AUTOMOTIVE INC
SOUTH BEACH MOTOR CARS
SOUTH CHARLOTTE PREOWNED AUTO
SOUTH MOTORS HONDA
SOUTH SUBURBAN MITSUBISHI
SOUTHEAST JEEP EAGLE
SOUTHERN AUTO IMPORTS
SOUTHERN CHOICE AUTO LLC
SOUTHERN COUNTRY INC
DEALER NAME
SOUTHERN KENTUCKY AUTO & TRK
SOUTHERN LUXURY CARS
SOUTHERN MOTOR COMPANY
SOUTHERN POINTE AUTOMOTIVE
SOUTHERN STAR AUTOMOTIVE
SOUTHERN STATES HYUNDAI
SOUTHERN TRUST AUTO GROUP
SOUTHFIELD JEEP-EAGLE, INC.
SOUTHPORT MOTORS
SOUTHTOWN MOTORS HOOVER
SOUTHTOWNE MOTORS OF NEWNAN
SOUTHWEST AUTO SALES
SOUTHWEST AUTOMOTIVE (SWAG)
SPACE & ROCKET AUTO SALES
SPACE CITY AUTO CENTER
SPARKS MOTORS LLC
SPARTANBURG CHRYSLER JEEP INC
SPEEDWAY AUTO SALES LLC
SPEEDWAY MOTORS, INC
SPIRIT CHEVROLET-BUICK INC.
SPITZER AUTOWORLD SHEFFIELD
SPITZER DODGE
SPITZER KIA
SPORTS AND IMPORTS, INC.
SPORTS CENTER IMPORTS INC
SRQ AUTO LLC
ST GEORGE AUTO BROKERS LLC
ST. PETERS AUTO GROUP LLC
STANFIELD AUTO SALES
STANS CAR SALES
STAR AUTO
STAR AUTO SALES
STAR MOTORS
STARGATE AUTO SALES LLC
STARK AUTO SALES
STARMOUNT MOTORS LLC
STARRS CARS AND TRUCKS, INC
STATE LINE NISSAN INC.
STATELINE CHRYSLER DODGE JEEP
STEARNS MOTORS OF NAPLES
STEELY LEASE SALES
STEPHEN A FINN AUTO BROKER
DEALER NAME
STERLING AUTO SALES
STERLING AUTOMOTIVE LLC
STEVE JOHNSON AUTO WORLD INC
STEVE RAYMAN CHEVROLET, LLC
STEWART AUTO GROUP OF
STL CAR CREDIT
STOKES AUTOMOTIVE INC
STOKES BROWN TOYOTA SCION
STOKES BROWN TOYOTA SCION
STOKES HONDA CARS OF BEAUFORT
STOKES KIA
STOKES MAZDA
STOKES USED CAR CENTER
STONE MOUNTAIN NISSAN
SUBARU OF KENNESAW LLC
SUBARU OF PORT RICHEY INC
SUBARU OF WICHITA LLC
SUBURBAN AUTO SALES
SUBURBAN CHRYSLER JEEP DODGE
SUCCESS AUTO
SUFFIELD MOTORS
SULLIVAN BUICK GMC INC
SUMMIT AUTO LLC
SUMMIT AUTO SALES CORP
SUMMIT CITY CHEVROLET, INC.
SUMMIT PLACE KIA
SUMMIT PLACE KIA MT. CLEMENS
SUMTER CARS & TRUCKS
SUN HONDA
SUN TOYOTA
SUN TOYOTA
SUNBELTS FORD TWON OF ALBANY
SUNCOAST QUALITY CARS LLC
SUNDANCE CHEVROLET INC
SUNNY DAY AUTO SALES & SERVICE
SUNNY FLORIDA MOTORS, INC.
SUNNY KING TOYOTA
SUNRISE CHEVROLET
SUNSET MOTORS
SUNSHINE AUTO BROKERS INC
SUNTRUP HYUNDAI INC
SUNTRUP HYUNDAI WEST INC
DEALER NAME
SUNTRUP KIA OF WEST COUNTY
SUNTRUP NISSAN VOLKSWAGEN
SUPER AUTO SALES
SUPER CAR MIAMI LLC
SUPER DEAL AUTO SALES LLC
SUPERIOR ACURA
SUPERIOR BUICK GMC
SUPERIOR CHEVROLET
SUPERIOR HONDA
SUPERIOR HYUNDAI SOUTH
SUPERIOR MOTORS NORTH
SUPERIOR USED VEHICLES LLC
SUSAN SCHEIN CHRYSLER PLYMOUTH
SUSKIS AUTO SALES
SUTHERLAND CHEVROLET INC
SUTHERLIN NISSAN
SUTHERLIN NISSAN MALL OF GA.
SVG MOTORS LLC
SW PREMIER MOTOR GROUP INC
SWANNS RENTAL AND SALES INC
SWEENEY BUICK PONTIAC GMC
TAMERON AUTOMOTIVE GROUP
TAMIAMI FORD, INC.
TAMPA AUTO SOURCE INC
TARGET AUTOMOTIVE
TAYLOR AUTO SALES INC.
TAYLOR BUICK NISSAN INC
TAYLOR CHEVROLET INC
TAYLOR KIA OF LIMA
TAYLOR MORGAN INC
TD CAR SALES
TEAM AUTOMOTIVE
TEAM NISSAN OF MARIETTA
TED CIANOS USED CAR CENTER
TEDS AUTO SALES INC
TENA AUTOMOTIVE LLC
TENNESSEE AUTO GROUP & LEASING
TENNYSON CHEVROLET, INC.
TERRE HAUTE AUTO AND EQUIPMENT
TERRY LABONTE CHEVROLET
TERRY LEE HONDA
TESTAROSSA MOTORS
DEALER NAME
TEXAS AUTO SAVERS INC
TEXAS BAY AREA PRE-OWNED
TEXAS CAPITAL AUTO CREDIT
TEXAS CAPITAL AUTO SALES, INC
TEXAS PREOWNED AUTO GROUP
THE 3445 CAR STORE, INC.
THE AUTO BROKER
THE AUTO GROUP LLC
THE AUTO PARK INC
THE AUTO STORE
THE AUTO STORE
THE AUTO STORE
THE AUTO WAREHOUSE
THE AUTOBLOCK
THE BOULEVARD CAR LOT
THE CAR CABANA OF
THE CAR CENTER
THE CAR COMPANY
THE CAR COMPANY SUZUKI
THE CAR CONNECTION, INC.
THE CAR GUYS INC
THE CAR MAN LLC
THE CAR SHOPPE LLC
THE CAR STORE
THE CAR STORE
THE CAR STORE
THE CAR STORE
THE CHEVY EXCHANGE
THE LAST FRONTIER AUTOS LLC
THE LUXURY AUTOHAUS INC.
THE MONTGOMERY GROUP LLC
THE REPO STORE
THE RITE CAR
THE SUPER AUTO OUTLET
THE USED CAR FACTORY INC
THEE CAR LOT #2
THOMAS & SON INC.
THOMASVILLE TOYOTA
THORNTON CHEVROLET, INC
THORNTON ROAD CHRYSLER DODGE
THORNTON ROAD HYUNDAI
THOROUGHBRED FORD INC
DEALER NAME
THREE RIVERS AUTOMOTIVE
THRIFTY CAR SALES
TIDE AUTOS INC
TILLMAN AUTO LLC
TIM FRENCH SUPER STORES, LLC
TIM SHORT PREMIERE USED CARS
TIM TOMLIN AUTOMOTIVE GROUP
TIME TO BUY LLC
TIMS AUTO SALES
TINPUSHER LLC
TK AUTO SALES LLC
TKP AUTO SALES
TKP AUTO SALES INC
TMR AUTO SALES LLC
TNT AUTO SALES INC
TOM GILL CHEVROLET
TOM HOLZER FORD
TOM TEPE AUTOCENTER INC
TOM WOOD FORD
TOM WOOD NISSAN, INC.
TOMLINSON MOTOR COMPANY OF
TOMMYS AUTO SALES
TONY ON WHEELS INC
TONYS AUTO SALES OF
TONYS AUTO WORLD
TOP CHOICE AUTO LLC
TOP NOTCH AUTO BROKERS INC
TOP RELIABLE AUTO BROKERS LLC
TOTAL CYCLE CARE INC
TOVI MOTORS
TOWN & COUNTRY AUTO & TRUCK
TOWN & COUNTRY FORD, INC.
TOWN & COUNTRY FORD, INC.
TOWN & COUNTRY MOTORS II
TOWN CARS AUTO SALES
TOWNSEND FORD INC
TOWNSEND MOTORS, INC
TOWNSENDS MAGNOLIA
TOYOTA OF ELIZABETH CITY
TOYOTA OF GASTONIA
TOYOTA OF GREENVILLE, INC
TOYOTA OF HOLLYWOOD
DEALER NAME
TOYOTA OF LAKEWOOD
TOYOTA OF LOUISVILLE, INC.
TOYOTA OF MCDONOUGH
TOYOTA OF MUNCIE
TOYOTA OF TAMPA BAY
TOYOTA ON NICHOLASVILLE
TRADEWINDS MOTOR CENTER
TRADEWINDS MOTOR CENTER LLC
TRAVERS AUTOMOTIVE INC
TRI CITY MOTORS SUPERSTORE
TRI STATE USED AUTO SALES
TRIAD AUTO GROUP NC LLC
TRIAD AUTOPLEX
TRI-CITY AUTO MART
TRI-COUNTY MOTORS
TRINITY AUTOMOTIVE
TRIPLE C CAR CO., INC.
TRIPLE E AUTO LLC
TRISTATE AUTOMOTIVE GROUP INC
TROPICAL AUTO OUTLET
TROPICAL AUTO SALES
TROY AUTOMOTIVE GROUP
TROY FORD INC
TRUCK TOWN INC
TRUSSVILLE WHOLESALE AUTOS
TRUST CAPITAL AUTOMOTIVE GROUP
TRUST MOTORS LLC
TRUSTED MOTORS LLC
TSW FINANCIAL LLC
TUBBS AUTO SALES LLC
TUSCALOOSA WHOLESALE LLC
TWIN CITY CARS INC
TWO OS MOTOR SALES
TX CAR WORLD
TYSON MOTOR GROUP
U.S. AUTO GROUP, INC.
UCAR, INC.
ULTIMATE IMAGE AUTO, INC
UNITED AUTO BROKERS
UNITED AUTO INC
UNITED AUTO SALES
UNITED AUTO SALES AND
DEALER NAME
UNITED AUTO SALES OF FT PIERCE
UNITED LUXURY MOTORS LLC
UNITED MOTOR COMPANY INC
UNITED VEHICLE SALES
UNIVERSAL AUTO PLAZA
UNIVERSAL AUTO PLAZA LLC
UNIVERSITY CHRYSLER DODGE JEEP
UNIVERSITY HYUNDAI OF DECATUR
UNLIMITED AUTO GROUP INC
UNLIMITED AUTO SALE LLC
UNLIMITED AUTOMOTIVE
UPSTATE LIL BOYZ TOYZ LLC
US 1 CHRYSLER DODGE JEEP
US AUTO MART INC
US AUTO SALES AND SERVICE INC
US MOTOR SALES LLC
US OFF LEASE AUTOS
USA AUTO & LENDING INC
USA MOTORCARS
USA RV & AUTO SALES LLC
USED CAR SUPERMARKET
USED CARS FORSALE LLC
V & S AUTO SALES LLC
V & V AUTO CENTER INC
VA CARS INC
VADEN NISSAN OF HILTON HEAD
VADEN NISSAN, INC.
VAN PAEMEL SALES
VANN YORK BARGAIN CARS LLC
VANN YORK PONTIAC BUICK GMC
VANN YORK TOYOTA, INC
VANS AUTO SALES, LLC
VANTAGE MOTORS LLC
VARSITY LINCOLN MERCURY
VECTOR AUTOMOTIVE
VEHICLES 4 SALES, INC.
VELOCITY MOTORS INC
VENICE MOTORS SECOND, LLC
VERACITY MOTOR COMPANY LLC
VERACITY MOTOR COMPANY LLC
VESTAL PONTIAC BUICK GMC TRUCK
VESTAVIA HILLS AUTOMOTIVE
DEALER NAME
VIC BAILEY LINCOLN MERCURY
VICKERS AUTOMOTIVE INC
VICTORIA MOTORS, LLC
VICTORY AUTO INC
VILLAGE AUTO OUTLET INC
VILLAGE AUTO SALES
VILLAGE AUTO SALES LLC
VILLAGE AUTOMOTIVE
VILLAGE MOTOR SALES, INC.
VINCE WHIBBS PONTIAC-GMC
VININGS ENTERPRISES INC
VIP AUTO ENTERPRISES INC
VIP AUTO GROUP, INC.
VIP AUTO MALL
VIP AUTO SALES LLC
VISION AUTO
VISION AUTO LLC
VIZION AUTO
VMARK CARS
VOGUE MOTOR CO INC
VOLKSWAGEN OF OCALA
VOLVO OF FT. MYERS
VOLVO OF OCALA
VOSS CHEVROLET INC
VSA MOTORCARS LLC
VULCAN MOTORS LLC
VW SALE MASTER LLC.
W & S AUTO CENTER INC
WABASH AUTO CARE INC
WADE FORD INC
WAGNER SUBARU
WALDROP MOTORS INC
WALLACE AUTOMOTIVE MANAGEMENT
WALLEYS AUTO SALES
WALLYS WHEELS
WALTERBORO MOTOR SALES
WALTS LIVE OAK FORD
WANTED WHEELS INC
WARSAW BUICK GMC
WASHINGTON AUTO GROUP
WAYNESVILLE AUTO MART
WEB AUTO BROKERS
DEALER NAME
WEBBER AUTOMOTIVE LLC
WEEKS MOTORS
WEINE AUTO SALES EAST
WEINLE AUTO SALES
WESLEY CHAPEL NISSAN
WEST ALABAMA WHOLESALE
WEST CLAY MOTOR COMPANY LLC
WEST END AUTO SALES & SERVICE
WEST MAIN MOTORS
WESTERN AUTO SALES INC
WESTERN AVENUE NISSAN INC
WHEELS & DEALS AUTO SALES
WHEELS MOTOR SALES
WHITE ALLEN CHEVROLET SUBARU
WHITEWATER MOTOR COMPANY INC
WHITEWATER MOTORS INC
WHOLESALE, INC
WIDEWORLDOFCARS.NET LLC
WILDCAT AUTO SALES
WILLETT HONDA SOUTH
WILLS MOTOR SALES
WIN - WIN AUTO CENTER CORP
WINDY CITY MOTORSPORTS, INC
WISE MOTORS
WONDERGEM, INC
WOODBRIDGE MOTORS, INC.
WOODY ANDERSON FORD
WOODY BUICK GMC INC
WOODY SANDER FORD, INC.
WORLD AUTO NETWORK INC
WORLD AUTO, INC.
WORLD CAR CENTER & FINANCING
WORLD CLASS MOTORS LLC
WORLD KIA JOLIET
WORLDWIDE MOTORS LLC
WORLEY AUTO SALES
WORRY FREE AUTO GROUP, LLC
WOW CAR COMPANY
WRIGHTS AUTO SALES
XL1 MOTORSPORTS, INC
XPRESS AUTO MALL
XTREME CARS & TRUX LLC
DEALER NAME
XTREME MOTORS INC
YARK AUTOMOTIVE GROUP, INC
YERTON LEASING & AUTO SALES
YES AUTO SALES INC
YOU SELECT AUTO SALES LLC
YOUR DEAL AUTOMOTIVE
YOUR KAR CO INC
YPSILANTIS IMPORT AUTO SALES
Z AUTO PLACE
Z IMPORTS SALES & SERVICE INC
ZAPPIA MOTORS
ZEIGLER CHRYSLER DODGE JEEP
ZONEMOTORS COM INC
Exhibit 14
CODE OF ETHICS FOR CHIEF EXECUTIVE OFFICER
AND SENIOR FINANCIAL OFFICERS
Nicholas Financial, Inc. (hereinafter referred to as Nicholas Financial, Inc. or the Company) requires ethical conduct in the practice of financial management in all aspects of business activities.
The Nicholas Financial, Inc. Code of Ethical Conduct for Financial Managers applies to all senior officers serving in a financial role. The Chief Executive Officer, and the Chief Financial Officer, as well as the Senior Vice President of Branch Operations, hold an elevated role in corporate governance and are expected to act in accordance with the highest standards of personal and professional integrity, to comply with all applicable laws, rules, and regulations, to preserve and protect shareholders interests, and to abide by the Nicholas Financial, Inc. Code of Business Conduct and Ethics and other policies and procedures adopted by Nicholas Financial, Inc. that govern the conduct of its employees. This Code of Ethical Conduct is intended to supplement the Nicholas Financial, Inc. Code of Business Conduct and Ethics.
As the Chief Executive Officer, Chief Financial Officer, or Senior Vice President of Branch Operations, I certify to you that I adhere to and advocate the following principles governing my professional and ethical conduct in the fulfillment of my responsibilities. I agree to:
a. | Comply with the Companys internal policies and procedures; |
b. | Act at all times in accordance with the Companys Code of Business Conduct and Ethics which has been provided to me and with which I will comply; |
c. | Engage in and promote honesty, integrity and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; |
d. | Provide accurate, complete, objective, timely and understandable financial disclosures in regards to internal reports as well as documents filed or submitted to the Securities and Exchange Commission, any governmental, private or public regulatory agency, or used in public communications; |
e. | Comply with applicable federal, state, provincial, and/or local governmental laws, rules and regulations, as well as appropriate private and public regulatory agencies; |
f. | Respect the confidentiality of information acquired in the course of performing my work responsibilities except when authorized or otherwise legally obligated to disclose such information; |
g. | Act in good faith, responsibly, with due care, competence and diligence, without misrepresenting or omitting material facts or allowing my independent judgment to be compromised; |
h. | Avoid using confidential information acquired in the course of performing my job responsibilities for personal advantage; |
i. | Use and control assets and other resources employed or entrusted to my supervision in a responsible manner; |
j. | Keep abreast of emerging financial issues and/or skills relevant to shareholders and other constituents and share such knowledge with my peers; |
k. | Promptly report any possible violation of this Code to the Nominating and Corporate Governance Committee of the Nicholas Financial, Inc. Board of Directors; |
l. | Proactively promote ethical behavior as a responsible partner among peers in my work environment and community. |
By signing this statement, I acknowledge that I have read, understand, and agree to adhere to this Code of Ethical Conduct. Violation of this Code may be grounds for termination from the Company.
Printed Name:
Signature:
Date:
Exhibit 23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Nicholas Financial, Inc.
We consent to the incorporation by reference in the registration statement (No. 333-143245) on Form S-8 of Nicholas Financial, Inc. of our reports dated June 14, 2016, with respect to the consolidated financial statements of Nicholas Financial, Inc. and Subsidiaries and the effectiveness of internal control over financial reporting, which appear in the Annual Report (Form 10-K) for the year ended March 31, 2016.
/s/ Dixon Hughes Goodman LLP
Atlanta, Georgia
June 14, 2016
EXHIBIT 31.1
CERTIFICATION PURSUANT TO RULE 13A-14(A) OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Ralph T. Finkenbrink certify that:
1. | I have reviewed this annual report on Form 10-K of Nicholas Financial, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: June 14, 2016 | /s/ Ralph T. Finkenbrink | |||||
Ralph T. Finkenbrink | ||||||
President and Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION PURSUANT TO RULE 13A-14(A) OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Katie L. MacGillivary, certify that:
1. | I have reviewed this annual report on Form 10-K of Nicholas Financial, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: June 14, 2016 | /s/ Katie L. MacGillivary | |||||
Katie L. MacGillivary | ||||||
Chief Financial Officer and Vice President Finance (Principal Executive Officer) |
EXHIBIT 32.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
Pursuant to 18 U.S.C. § 1350
Solely for the purpose of complying with 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, the undersigned President and Chief Executive Officer of Nicholas Financial, Inc. (the Company), hereby certify that the Annual Report on Form 10-K of the Company for the fiscal year ended March 31, 2016 (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Ralph T. Finkenbrink |
Ralph T. Finkenbrink |
President and Chief Executive Officer |
Dated: June 14, 2016
EXHIBIT 32.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
Pursuant to 18 U.S.C. § 1350
Solely for the purpose of complying with 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, the undersigned Vice President-Finance and Chief Financial Officer of Nicholas Financial, Inc. (the Company), hereby certify that the Annual Report on Form 10-K of the Company for the fiscal year ended March 31, 2016 (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Katie L. MacGillivary |
Katie L. MacGillivary |
Chief Financial Officer and Vice President of Finance |
Dated: June 14, 2016