Exhibit 10.1

AMENDED AND RESTATED

SHAREHOLDERS AGREEMENT

by and among

REGIONAL MANAGEMENT CORP.,

PARALLEL 2005 EQUITY FUND, LP,

PALLADIUM EQUITY PARTNERS III, L.P.

and

THE SHAREHOLDERS LISTED ON ANNEX II

Dated as of March 27, 2012

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TABLE OF CONTENTS

 

              Page   I    Definitions      1       1.1.   Definitions      1   
   1.2.   Continuing Shareholder Representative      6       1.3.   Sponsor
Panel      7    II    Rights and Obligations with Respect to Transfer      7   
   2.1.   Transfers      7    III    Voting Agreements      9       3.1.   Board
     9    IV    Miscellaneous      10       4.1.   Headings      10       4.2.  
Entire Agreement      10       4.3.   Notices      10       4.4.   Applicable
Law      11       4.5.   Severability      11       4.6.   Termination      11
      4.7.   Successors, Assigns and Transferees      11       4.8.  
Amendments; Waivers      11       4.9.   Counterparts      11       4.10.  
Remedies      12       4.11.   Consent to Jurisdiction      12       4.12.  
WAIVER OF JURY TRIAL      12       4.13.   After-Acquired Stock      12      
4.14.   Adjustments      12       4.15.   Certain Interpretive Matters      12
      4.16.   Non-Occurrence of IPO      13       4.17.   Corporate Opportunity
     13    V    Registration Rights      14       5.1.   Demand Registration   
  14       5.2.   Piggy-Back Registration      16       5.3.   Holdback
Agreements      17       5.4.   Registrations on Form S-3      17   

 

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              Page VI    Registration Procedures    18    6.1.   Filings;
Information    18    6.2.   Registration Expenses    21    6.3.  
Indemnification by the Corporation    21    6.4.   Indemnification by
Shareholders    22    6.5.   Conduct of Indemnification Proceedings    22   
6.6.   Contribution    23

 

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List of Annexes

 

Annex I    Notices Annex II    Continuing Shareholders

 

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AMENDED AND RESTATED SHAREHOLDERS AGREEMENT

This AMENDED AND RESTATED SHAREHOLDERS AGREEMENT is dated as of this 27th day of
March, 2012, by and among:

(a) Regional Management Corp., a Delaware corporation (the “Corporation”);

(b) the shareholders of the Corporation listed on Annex II (such Persons,
together with any Continuing Shareholder Permitted Transferees (other than the
Sponsor Holders), the “Continuing Shareholders”); and

(c) each of Parallel 2005 Equity Fund, LP, a Delaware limited partnership
(“Parallel”), and Palladium Equity Partners III, L.P., a Delaware limited
partnership (“Palladium” and, together with Parallel, the “Sponsors”).

RECITALS

A. The Corporation has filed a registration statement on Form S-1 with the U.S.
Securities and Exchange Commission to cover the offer and sale of its Common
Stock in an initial public offering (the “IPO”).

B. The parties hereto desire to amend and restate that certain Shareholders
Agreement, dated as of March 21, 2007 (the “Original Shareholders Agreement”),
by and among the Corporation and the Shareholders party thereto, in its entirety
as set forth herein.

C. Certain capitalized terms used but not defined elsewhere in the text of this
Agreement are defined in Article I below. The Sponsors (together with any other
Sponsor Holders) and the Continuing Shareholders are from time to time referred
to in this Agreement as the “Shareholders”; and the Corporation and the
Shareholders will collectively be referred to as the “Parties.”

D. This Agreement sets forth the Parties’ understandings and agreements relating
to the voting for and designation of Directors of the Corporation and
registration rights of the Shareholders.

NOW, THEREFORE, the Parties hereto agree that, subject to Section 4.16 hereof,
the Original Shareholders Agreement is hereby amended and restated to read in
its entirety as follows:

I      DEFINITIONS

1.1. Definitions. In addition to the terms defined elsewhere in this Agreement,
the following terms have the following respective meanings when used in this
Agreement with initial capital letters:

“Adverse Effect”: as set forth in Section 5.1(c).

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“Affiliate”: with respect to any Person, any other Person directly or indirectly
controlling, controlled by or under common control with the first Person. For
the purposes of this definition, “control,” when used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise, and the
terms “controlling” and “controlled” have meanings correlative to the foregoing.
With respect to any natural Person, “Affiliate” will include such Person’s
parents, any descendants of such Person’s parents, such Person’s spouse, the
parents of such Person’s spouse, and any descendants of the parents of such
Person’s spouse (in each case, whether by blood, adoption or marriage).

“Agreement”: this Amended and Restated Shareholders Agreement, as the same may
be amended from time to time in accordance with the terms of this Agreement.

“Amended and Restated Stock Purchase Agreement”: the Amended and Restated Stock
Purchase Agreement, dated as of March 21, 2007 by and among Regional Holdings
LLC, the Corporation and the other parties thereto, as the same may be further
amended from time to time.

“Ancillary Agreements”: collectively, the “Ancillary Agreements” as defined in
the Amended and Restated Stock Purchase Agreement, and in each case as amended
from time to time.

“Board”: the Board of Directors of the Corporation.

“Business Day”: any day other than a Saturday or Sunday or a day on which the
Federal Reserve Bank of New York is closed.

“Bylaws”: the bylaws of the Corporation, as in effect from time to time.

“CEO”: as set forth in Section 4.17(a).

“Commission”: the Securities and Exchange Commission.

“Common Stock”: the Common Stock, par value $0.10 per share, of the Corporation.

“Committee”: as set forth in Section 4.17(a).

“Competitor”: any Person that derives a greater percentage of its consolidated
revenues from the Corporation’s Line of Business anywhere in the United States
than from any other source of revenue.

“Continuing Shareholder Permitted Transferee”: with respect to a Continuing
Shareholder, (a) any spouse or lineal descendant of such Continuing Shareholder,
(b) the heirs, executors, testamentary administrators, testamentary trustees,
testamentary legatees or testamentary beneficiaries of such Continuing
Shareholder or such Continuing Shareholder’s Affiliates, (c) a Person that was
formed solely for the purpose of estate planning by the transferring Continuing
Shareholder and in which all of the beneficial ownership interest is held by
such Continuing Shareholder, such Continuing Shareholder’s Affiliates, such
Continuing Shareholder’s Associates, or their spouses or their lineal
descendants, (d) any Sponsor Holder or

 

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any Sponsor Permitted Transferee, (e) a Person that is entitled to receive
Securities from such Continuing Shareholder as a result of any property
settlement entered into, or any order issued, in connection with any divorce
proceeding involving or relating to such Continuing Shareholder, provided that
the Transfer has been approved by an action of the Board, or (f) the
Corporation; provided that in the case of subclauses (a), (b), (c), (d) and (e),
such Person agrees to become a party to and to be bound by the provisions of
this Agreement that were binding on the transferor.

“Continuing Shareholders”: as set forth in the Preamble.

“Continuing Shareholder Representative”: as set forth in Section 1.2.

“Corporation”: as set forth in the Preamble.

“Corporation’s Line of Business”: the business of originating and collecting,
directly and/or indirectly, consumer installment loans in principal amounts of
up to $50,000 but excluding (i) loans secured by real property, (ii) credit and
debit cards and (iii) “payday” or deferred presentment loans as contemplated in
the South Carolina Deferred Presentment Services Act (Sections 34-39-110, et
seq. of the Code of Laws of South Carolina of 1976, as amended) and the
corresponding laws of other U.S. jurisdictions. For the avoidance of doubt, the
Corporation’s Line of Business does not include any other services related to
consumer lending such as but not limited to (a) retail sales businesses (such as
but not limited to automobile, furniture or appliance retailers and regardless
of whether sales are made from physical stores and/or from catalogue, internet,
telephone, direct mail or other similar solicitations, catalogues or
advertisements) where the retailer or an affiliate thereof provides financing to
the retailer’s own customers to finance purchases of the retailer’s own goods,
(b) check cashing businesses, (c) money transfer businesses, (d) financial
advisory services or (e) pawn shops.

“Demand Registration”: as set forth in Section 5.1(a).

“Director”: a member of the Board.

“Escrow Agent”: any third party reasonably selected and mutually agreed upon by
the Corporation and the Sponsor Panel for the purpose of holding in escrow
certain funds, certificates or other documents in the manner provided in this
Agreement.

“Exchange Act”: the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.

“GAAP”: generally accepted accounting principles in effect from time to time in
the United States of America, applied on a consistent basis.

“IPO”: as set forth in Recital A.

“Holders”: as set forth in Section 5.1(a)(ii).

“Law”: any federal, state, county, city, municipal, foreign or other government
statute, law, rule, regulation, ordinance, order, code or requirement (including
pursuant to any settlement agreement or consent decree) and any permit or
license granted under any of the foregoing, or any requirement under the common
law.

 

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“Opportunity”: as set forth in Section 4.17(a).

“Palladium”: as set forth in the Preamble.

“Parallel”: as set forth in the Preamble.

“Parties”: as set forth in Recital C.

“Person”: an individual, a corporation, a partnership, a limited liability
company, an association, a trust, a joint stock company, a joint venture, an
unincorporated organization, a business entity or any governmental authority.

“Piggy-Back Registration”: as set forth in Section 5.2(a).

“Piggy-Back Shareholders”: the Sponsor Holders and the Continuing Shareholders.

“Public Offering”: the sale of shares of any class of equity securities of the
Corporation to the public pursuant to an effective registration statement (other
than a registration statement on Form S-4 or S-8 or any similar or successor
form) filed under the Securities Act and underwritten by an investment banking
firm of national reputation reasonably acceptable to the Corporation and the
Sponsor Panel.

“Registering Shareholder”: as set forth in Section 6.1.

“Registrable Securities”: (a) all shares of Common Stock now held by or
hereafter issued to the parties to this Agreement, and (b) all securities
directly or indirectly issued or issuable with respect to the securities
referred to in clause (a) above by way of stock dividend or other distribution
with respect to, or in exchange for, or in replacement of, the shares referenced
in clause (a) above. As to any particular Registrable Securities, such shares
shall cease to be Registrable Securities when (i) a registration statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in accordance
with such registration statement, (ii) such securities shall have been
distributed to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act, (iii) subject to the provisions of Article II hereof,
such securities shall have been otherwise transferred, new certificates for them
not bearing a legend restricting further transfer shall have been delivered by
the Corporation, if such shares are certificated, and subsequent disposition of
them shall not require registration of them under the Securities Act, and such
securities may be distributed without volume limitation or other restrictions on
transfer under Rule 144 (including without application of paragraphs (c), (e),
(t) and (h) of Rule 144), or (iv) such securities shall have ceased to be
outstanding.

“Rule 144”: Rule 144 under the Securities Act, as such rule may be amended from
time to time.

 

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“Securities”: the Common Stock and all securities directly or indirectly issued
or issuable with respect to the Common Stock by way of stock dividend or other
distribution and all securities issued with respect to, or in exchange for, or
in replacement of any of the foregoing.

“Securities Act”: the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

“Shareholder Prospectus Delivery Failure”: as set forth in Section 6.3.

“Shareholder-Supplied Information”: as set forth in Section 6.3.

“Shareholders”: as set forth in Recital C.

“Significant Investment”: any investment in a Person by a Shareholder that
results in such Shareholder (i) designating one or more members to the board of
directors (or equivalent governing body) of such Person or (ii) otherwise
acquiring the ability to exercise control over such Person.

“Sponsor Close Affiliate”: the Sponsors or any of their Subsidiaries or any
successor thereto.

“Sponsor Panel”: as set forth in Section 1.3.

“Sponsor Holders”: the Sponsors, all Sponsor Permitted Transferees who hold (but
only to the extent they hold) Securities originally issued to Regional Holdings
LLC or Securities issued upon conversion or exchange of, or issued in respect
of, Securities originally issued to Regional Holdings LLC and any other Persons
who hold (but only to the extent they hold) Securities originally issued to
Regional Holdings LLC or Securities issued upon conversion or exchange of, or
issued in respect of, Securities originally issued to Regional Holdings LLC.

“Sponsor Permitted Transferee”: (a) any Sponsor Holder, (b) any Sponsor Close
Affiliate, (c) any beneficial owner (a “Fund Investor”) of securities of the
Sponsors who receives Securities in a distribution in accordance with the terms
of the partnership agreement, operating agreement or other organizational
documents of a Sponsor Holder to all of such Sponsor Holder’s security holders
or record provided the Fund Investor pays no consideration for the distribution,
or (d) a Person, the beneficial ownership interests of which are held only by
Sponsor Holders and Sponsor Close Affiliates, provided that in each case, such
Person agrees to become a party to and to be bound by the provisions of this
Agreement that were binding on the transferor.

“Sponsors”: as set forth in the Preamble.

“Subsidiary”: with respect to any Person, (a) any corporation, of which a
majority of the total voting power of shares of stock entitled (without regard
to the occurrence of any contingency) to vote generally in the election of
directors thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more of the other Subsidiaries of that Person or a
combination thereof or (b) any limited liability company, partnership,
association, or other business entity, of which a majority of the partnership or
other similar ownership interests

 

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thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more Subsidiaries of that Person or a combination thereof. For
purposes of this definition, a Person or Persons will be deemed to have a
majority ownership interest in a limited liability company, partnership,
association, or other business entity if such Person or Persons will be
allocated a majority of limited liability company, partnership, association, or
other business entity gains or losses, or is or controls any managing member or
general partner or a majority of the voting power of such limited liability
company, partnership, association, or other business entity.

“Transfer”: as set forth in Section 2.1(a).

“Transferee”: any Person to whom any Shareholder Transfers any Securities other
than in a sale pursuant to an effective registration statement filed by the
Corporation.

“Underwriter”: a securities dealer who purchases any Registrable Securities as a
principal in connection with a distribution of such Registrable Securities and
not as part of such dealer’s market-making activities.

1.2. Continuing Shareholder Representative. The Continuing Shareholders hereby
designate the “Continuing Shareholder Representative” to be the designated
representative of all of the Continuing Shareholders and authorize the
Continuing Shareholder Representative to exercise on their behalf all rights and
powers ascribed to the Continuing Shareholder Representative in this Agreement.
The initial Continuing Shareholder Representative will be Richard A. Godley, Sr.
Upon the death, permanent disability or resignation of the initial Continuing
Shareholder Representative, Jerry L. Shirley, Brenda F. Kinlaw and C. Glynn
Quattlebaum by vote of the majority of the voting power of the Securities held
by such persons remaining alive and mentally competent may designate a successor
Continuing Shareholder Representative, and if none of such persons remain alive
and mentally competent, the Continuing Shareholders holding a majority of the
voting power of the Securities held by the Continuing Shareholders may designate
a successor Continuing Shareholder Representative; provided, however, that if no
Person is acting as the Continuing Shareholder Representative as of the time any
action is otherwise to be taken under this Agreement by the Continuing
Shareholder Representative or the Continuing Shareholders, such action may be
taken on behalf of all Continuing Shareholders by written action or consent of
the holders of a majority of the voting power of the Securities then held by the
Continuing Shareholders. Any qualified change in the Continuing Shareholder
Representative will become effective upon notice to the Corporation and the
Sponsor Panel, in accordance with Section 4.3. Upon its becoming subject to this
Agreement, each of the Continuing Shareholders (i) will be deemed to have
released, acquitted, discharged and waived any rights, claims, demands, debts,
liabilities, costs, expenses, attorneys’ fees, charges, suits, proceedings,
actions or causes of action, of any kind, known or unknown, matured or
unmatured, absolute or contingent, at law or in equity arising out of or related
to, and (ii) shall be deemed to have agreed to indemnify and hold the
Corporation, each of the Sponsors and the Sponsor Holders harmless from, any
claim of or on behalf of any Continuing Shareholder arising out of any act or
omission by the Continuing Shareholder Representative in connection with the
actions contemplated by this Agreement. Any notice to be given to the Continuing
Shareholders as “Continuing Shareholders” shall instead be given to the
Continuing Shareholder Representative in accordance with Section 4.3. The
Continuing Shareholder Representative shall incur no responsibility whatsoever
to any Continuing Shareholder by reason of any error in

 

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judgment or other act or omission performed or omitted under this Agreement or
any other agreement, instrument or document, excepting only responsibility for
any act or failure to act that is finally adjudicated to constitute willful
misconduct or gross negligence, and (ii) the Continuing Shareholder
Representative shall be entitled to rely on the advice of counsel, public
accountants or other independent experts that he determines in good faith to be
experienced in the matter at issue, and any error in judgment or other act or
omission of the Continuing Shareholder Representative pursuant to such advice
shall in no event constitute gross negligence or willful misconduct that could
under any circumstances subject the Continuing Shareholder Representative to
liability to any Continuing Shareholder. The grant of authority to the
Continuing Shareholder Representative provided for herein is coupled with an
interest and shall be irrevocable and survive the death, incompetence,
bankruptcy or liquidation of any Continuing Shareholder.

1.3. Sponsor Panel. The Sponsors hereby designate the “Sponsor Panel” to be the
designated representative of the Sponsors with respect to all rights and powers
ascribed to the Sponsor Panel in this Agreement. The “Sponsor Panel” shall be
comprised of the individuals from time to time designated by the Sponsors in
accordance with the following sentence. Each of the Sponsors shall have the
right from time to time to designate a number of members of the Sponsor Panel
equal to the number of Directors such Sponsor then has the right to designate
pursuant to this Agreement. Any action of the Sponsor Panel shall be taken by a
vote of the majority of the members of the Sponsor Panel. For the avoidance of
doubt, the Parties acknowledge and agree that actions of the members of the
Sponsor Panel are not taken in their capacity as directors or other fiduciary of
the Corporation.

II      RIGHTS AND OBLIGATIONS WITH RESPECT TO TRANSFER

2.1. Transfers. (a) Each Shareholder agrees to execute a customary lock-up
agreement with the underwriters in connection with the IPO, provided that the
duration of the lock-up period shall not exceed 180 days. In addition, each
Shareholder agrees, other than as contemplated in the registration statement
therefore, (i) not to Transfer any of its Securities in a manner that would not
be permitted under the terms of the Original Shareholders Agreement, (ii) not to
take any other action that would not be permitted under the terms of the
Original Shareholders Agreement (or if action can only be taken with the consent
or approval of one or more Persons, not to take any such action without
obtaining the consent(s) or approval(s) of the Person(s) specified in the
Original Shareholders Agreement), or (iii) fail to take any action required to
be taken by the Original Shareholders Agreement, in each of such cases (i),
(ii) and (iii), prior to the earlier of (x) the consummation of the IPO and
(y) the date that is ten Business Days after the date of this Agreement. For the
avoidance of doubt, the ten Business Day time period set forth in clause (y) of
the immediately preceding sentence shall not expire before the ten Business Day
time period set forth in Section 4.16.

(b) Any and all rights and obligations under this Agreement that apply to a
Shareholder will apply with equal force to any Person to whom such Shareholder
Transfers (in compliance with this Agreement) Securities, and it will be a
condition to any Transfer of Securities otherwise permitted by this Agreement
that the Transferee execute an agreement by which the Transferee agrees to
become a party to and be bound by this Agreement, and acknowledges that the
Securities Transferred to such Transferee by a Shareholder will be subject

 

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to the terms of this Agreement, unless such Transfer is made (i) pursuant to an
offering registered under the Securities Act, or to the public through a broker,
dealer or market-maker pursuant to Rule 144 promulgated thereunder, (ii) in a
transaction that will result in the termination of this Agreement or (iii) by
any Sponsor Holder to the limited partners or other equity owners of such
Sponsor Holder.

(c) Any attempt by a Shareholder to Transfer any Securities not in compliance
with this Agreement will be null and void and any such improper Transfer will
not be registered, or otherwise recognized in the Corporation’s records. No
Shareholder will enter into any transaction or series of transactions for the
purpose or with the effect of, directly or indirectly, denying or impairing the
rights or obligations of any other Person under this Agreement, and any such
transaction will be null and void and, to the extent that such transaction
requires any action by the Corporation, it will not be registered or otherwise
recognized in the Corporation’s records or otherwise.

(d) For so long as the transfer restrictions set forth in this Section 2.1
remain in effect, each certificate or option representing a Security subject to
such restrictions and owned by any Shareholder, if certificated, will (unless
otherwise permitted by the provisions of this Section 2.1(d)) include one of the
following legends, as applicable, in addition to any other legends required by
applicable Law or agreement:

THE OFFER AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS AND THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
OFFERED OR SOLD EXCEPT IN COMPLIANCE THEREWITH. THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AND VOTING
AS SET FORTH IN A SHAREHOLDERS AGREEMENT, A COPY OF WHICH MAY BE OBTAINED FROM
THE CORPORATION.

THE OFFER AND SALE OF THIS OPTION AND THE SECURITIES REPRESENTED BY THIS OPTION
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS AND THIS OPTION AND THE SECURITIES REPRESENTED BY THIS
OPTION MAY NOT BE OFFERED OR SOLD EXCEPT IN COMPLIANCE THEREWITH. THIS OPTION
AND THE SECURITIES REPRESENTED BY THIS OPTION ARE SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AND VOTING AS SET FORTH IN A SHAREHOLDERS AGREEMENT, A
COPY OF WHICH MAY BE OBTAINED FROM THE CORPORATION.

If such Securities are not certificated, a similar notation will be made on the
books and records of the Corporation.

Any Shareholder may, upon providing evidence, including an opinion of counsel
reasonably satisfactory to the Corporation that such Securities either are not
“restricted

 

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securities” (as defined in Rule 144) or may be sold pursuant to Rule 144(b)(1),
exchange the certificate representing such Securities for a new certificate that
does not bear the first sentence of the applicable legend set forth in this
Section 2.1(d) or remove such notation from the books and records of the
Corporation. Upon termination or expiration of the provisions of this Agreement
restricting the Transfer and voting of the Securities, any Shareholder may
exchange its certificate(s) representing its Securities for a new certificate
that does not bear the legend set forth in the second sentence of the applicable
legend set forth in this Section 2.1(d) or such notation may be removed.

(e) In order to allow the Shareholders to fulfill any beneficial ownership
reporting obligations they may have, if a Shareholder acquires or disposes of
the registered or beneficial ownership (as such term is defined in Rule 13d-3 of
the Exchange Act) of any Securities, such Shareholder shall, within two Business
Days following consummation of such acquisition or disposition, deliver notice
thereof to the Corporation, which the Corporation shall promptly, and in any
event within two Business Days following receipt of such notice, forward to each
other Shareholder.

III      VOTING AGREEMENTS

3.1. Board. (a) Each Shareholder agrees to vote (and, if necessary, to call a
special meeting for that purpose) all Securities as to which it has or controls
the voting rights, and to cause all Persons designated by it to vote, and to
otherwise use its reasonable best efforts to cause the authorized number of
Directors of the Corporation to be at least five, and to elect or cause to be
elected to the Board and cause to be continued in office Directors in accordance
with this Section 3.1.

If the Shareholders collectively beneficially own more than 50% of the
outstanding shares of Common Stock, the Shareholders shall have the right to
designate the smallest whole number of Directors that would constitute a
majority of the Board. If the Shareholders collectively beneficially own 50% or
less but more than 25% of the outstanding shares of Common Stock, the
Shareholders shall have the right to designate a number of Directors that is one
fewer than the smallest whole number that would constitute a majority of the
Board. In either case, the Director designation rights will be allocated as
follows:

 

  (i) one of such Directors shall be designated by the Continuing Shareholder
Representative for so long as the Continuing Shareholders collectively
beneficially own at least 5% of the outstanding shares of Common Stock; and

 

  (ii) the remaining Directors to be designated by the Shareholders will be
divided between Parallel and Palladium in the ratio that most nearly matches the
ratio of their ownership of shares of Common Stock; provided that, unless and
until the ratio of the number of shares of Common Stock held by Parallel to the
number of shares of Common Stock held by Palladium is less than such ratio on
the date hereof, the number of Directors to be designated by Parallel will not
be fewer than one fewer than the number of Directors to be designated by
Palladium.

 

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If the Shareholders collectively beneficially own 25% or less of the outstanding
shares of Common Stock, Parallel will have the right to designate one Director
if Parallel owns at least 5% of the outstanding shares of Common Stock,
Palladium will have the right to designate one Director if Palladium
beneficially owns at least 5% of the outstanding shares of Common Stock, and the
Continuing Shareholder Representative will have the right to designate one
Director if the Continuing Shareholders collectively beneficially own at least
5% of the outstanding shares of Common Stock.

(b) In the event of any vacancy on the Board, each Shareholder agrees to vote
(and, if necessary, to call a special meeting for that purpose) all Securities
as to which it has or controls the voting rights, and to cause all Persons
designated by it to vote, and to otherwise use its reasonable best efforts to
fill such vacancy, so that the Board will be comprised of Directors designated
as provided in Section 3.1(a). Each Shareholder agrees to vote all Securities as
to which it has or controls the voting rights for the removal of a Director
whenever there shall be presented to the Board the written direction that such
Director be removed, signed by (i) Palladium, in the case of a Director
designated by Palladium, (ii) Parallel, in the case of a Director designated by
Parallel, or (iii) the Continuing Shareholder Representative, in the case of a
Director designated by the Continuing Shareholder Representative.

(c) The Corporation hereby agrees that it will take all necessary and desirable
actions within its control to cause the election and continuation in office of
the Directors designated in accordance with the foregoing provisions of this
Section 3.1.

IV      MISCELLANEOUS

4.1. Headings. The headings in this Agreement are for convenience of reference
only and will not control or affect the meaning or construction of any
provisions hereof.

4.2. Entire Agreement. This Agreement, the Amended and Restated Stock Purchase
Agreement and the Ancillary Agreements (including the Schedules, Exhibits and
Annexes hereto and thereto) constitute the entire agreement among the Parties
with respect to the subject matter of this Agreement. This Agreement, the
Amended and Restated Stock Purchase Agreement and the Ancillary Agreements
(including the Schedules, Exhibits and Annexes hereto and thereto) supersede all
prior agreements and understandings, both oral and written, among the Parties
with respect to the subject matter of this Agreement, the Amended and Restated
Stock Purchase Agreement and the Ancillary Agreements. None of this Agreement,
the Amended and Restated Stock Purchase Agreement and the Ancillary Agreements
is intended to confer upon any Person other than the parties hereto and thereto
any rights or remedies hereunder or thereunder.

4.3. Notices. Any notice, request, instruction or other document required or
permitted to be given under this Agreement by any Party to another Party will be
in writing and will be given to such Party (a) at its address set forth in Annex
I attached to this Agreement or, in the case of a Transfer permitted under this
Agreement, to the address of the permitted Transferee specified by it upon
notice given in accordance with the terms of this Agreement, or to such other
address as the Party to whom notice is to be given may provide in a written
notice to the Party giving such notice, a copy of which written notice will be
on file with the Secretary of the Corporation or (b) if such Party is a
Continuing Shareholder, at the address of the Continuing

 

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Shareholder Representative set forth in Annex I or at an address specified in a
written notice to the Corporation and the Shareholders by a successor Continuing
Shareholder Representative. Each such notice, request or other communication
will be effective (i) if given by certified mail, 72 hours after such
communication is deposited in the mails with certified postage prepaid addressed
as aforesaid, (ii) one Business Day after being furnished to a nationally
recognized overnight courier for next Business Day delivery, or (iii) on the
date sent if sent by electronic facsimile transmission, receipt confirmed.

4.4. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.

4.5. Severability. If any provision of this Agreement or the application of any
such provision to any Person or circumstance is held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
and such invalid, illegal or unenforceable provision will be reformed, construed
and enforced as if such provision had never been contained herein and there had
been contained in this Agreement instead such valid, legal and enforceable
provisions as would most nearly accomplish the intent and purpose of such
invalid, illegal or unenforceable provision.

4.6. Termination. This Agreement may be terminated at any time by an instrument
in writing signed by the Corporation, the Sponsor Panel and the holders of a
majority of the voting power of Common Stock held by the Continuing
Shareholders. This Agreement shall terminate if at any time each of Parallel,
Palladium and the Continuing Shareholders beneficially owns less than 5% of the
outstanding Common Stock.

4.7. Successors, Assigns and Transferees. The provisions of this Agreement will
be binding upon and inure to the benefit of the Parties and their respective
heirs, successors and permitted assigns. Except as expressly contemplated by
this Agreement, neither this Agreement nor any provision of this Agreement will
be construed so as to confer any right or benefit upon any Person other than the
Parties and their respective successors and permitted assigns.

4.8. Amendments; Waivers. (a) Except as otherwise provided herein, no failure or
delay on the part of any Party in exercising any right, power or privilege under
this Agreement will operate as a waiver thereof, nor will any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies provided in this
Agreement will be cumulative and not exclusive of any rights or remedies
provided by Law.

(b) The provisions of this Agreement, including the provisions of this sentence,
may not be amended, modified or supplemented, and waivers or consents to
departures from the provisions of this Agreement may not be given, unless the
Corporation has obtained the written consent of the Sponsor Panel and the
holders of a majority of the voting power of Common Stock held by the Continuing
Shareholders.

4.9. Counterparts. This Agreement may be executed in any number of counterparts,
each of which will be an original with the same effect as if the signatures on
each counterpart were upon the same instrument.

 

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4.10. Remedies. The Parties acknowledge that money damages would not be adequate
compensation for the damages that a Party would suffer by reason of a failure of
any other Party to perform any of its respective obligations under this
Agreement. Therefore, each Party agrees that specific performance is the only
appropriate remedy under this Agreement and hereby waives the claim or defense
that any other Party has an adequate remedy at Law.

4.11. Consent to Jurisdiction. Any suit, action or proceeding seeking to enforce
any provision of, or based on any matter arising out of or in connection with,
this Agreement or the transactions contemplated hereby may be brought in any
court of competent jurisdiction in Wilmington, DE or the Delaware District Court
and each of the Parties hereby consents to the jurisdiction of such courts (and
of the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any Party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each Party agrees that
service of process on such Party as provided in Section 4.3 will be deemed
effective service of process on such Party.

4.12. WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT.

4.13. After-Acquired Stock. Whenever any Shareholder becomes the record or
beneficial owner of additional securities of the Corporation, such securities
will be subject to all of the terms and conditions of this Agreement and the
Corporation will not, without the consent of a majority of the voting power of
the securities held by the Sponsor Holders and the consent of the Continuing
Shareholder Representative, issue any securities that, when issued, would be
held of record or beneficially by a Shareholder, unless the record and
beneficial owner of such securities expressly agrees to be bound by all the
terms and conditions of this Agreement.

4.14. Adjustments. In the event the Corporation shall declare a stock split,
stock dividend or other distribution of capital stock in respect of, or issue
capital stock in replacement of or exchange for, shares of Common Stock such
shares shall be subject to this Agreement and the provisions of this Agreement
providing for calculations based on the number of shares of Common Stock shall
include the shares issued in respect of the Common Stock.

4.15. Certain Interpretive Matters. (a) Unless the context otherwise requires,
(i) all references to Sections, Articles or Schedules are to be Sections,
Articles and Schedules of or to this Agreement, (ii) each of the Schedules will
apply only to the corresponding Section or subsection of this Agreement,
(iii) each term defined in this Agreement has the meaning assigned to it,
(iv) each capitalized term not otherwise defined in this Agreement has the
meaning assigned to it in the Amended and Restated Stock Purchase Agreement,
(v) words in the singular include the plural and vice versa, (vi) the term
“including” means “including without limitation,” (vii) all reference to $ or
dollar amounts will be to lawful currency of the United

 

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States, (viii) to the extent the term “day” or “days” is used, it will mean
calendar days, (ix) the pronoun “his” refers to the masculine, feminine and
neuter, (x) except to the extent expressly set forth in this Agreement, each
accounting term not otherwise defined in this Agreement has the meaning ascribed
to it in accordance with GAAP and (xi) the words “herein,” “hereby,” “hereof,”
“hereunder” and other words of similar import refer to this Agreement as a whole
and not to any particular Section, Article or other subdivision.

(b) No provision of this Agreement will be interpreted in favor of, or against,
any of the Parties by reason of the extent to which any such Party or its
counsel participated in the drafting of this Agreement or by reason of the
extent to which any such provision is inconsistent with any prior draft of this
Agreement or any provision of this Agreement.

(c) In the event any time period provided for in this Agreement expires on a day
that is not a Business Day, such time period shall be extended until the first
Business Day following the date upon which such time period would otherwise
expire.

4.16. Non-Occurrence of IPO. Notwithstanding any other provision of this
Agreement, in the event that the IPO is not consummated prior to the date that
is ten Business Days after the date of this Agreement, then this Agreement shall
automatically, with no action required by any Shareholder, on such date be
amended and restated in its entirety back to the Original Shareholders Agreement
and upon such automatic amendment and restatement of this Agreement, this
Agreement shall be of no force and effect. Notwithstanding any other provision
of this Agreement (including Section 4.8), this Section 4.16 may not be amended
prior to the consummation of the IPO.

4.17. Corporate Opportunity. (a) Notwithstanding any provision of the
Corporation’s Certificate of Incorporation (as it now exists or as it may be
subsequently amended or replaced) to the contrary, except as described in
clauses (b) or (c) below, prior to any Shareholder making any Significant
Investment in any Competitor, such Shareholder shall first notify the
Corporation’s Chief Executive Officer (the “CEO”) in writing of such investment
opportunity (an “Opportunity”). The CEO will then determine if the Opportunity
is in the interests of the Corporation and should be deemed an Opportunity that
the Corporation should pursue and, if so, the CEO will refer such Opportunity to
the Board and the Corporation’s management. If the CEO elects not to refer the
Opportunity to the Board, the CEO shall notify such Shareholder and such
Shareholder shall then be free to make such Significant Investment. Upon
receiving notice of any Opportunity from the CEO, the Board and the
Corporation’s management will evaluate the Opportunity with commercially
reasonable promptness, and the Board will then determine whether the Corporation
should pursue the Opportunity. If the Board is unable to determine whether the
Corporation should pursue the Opportunity, the decision of whether the
Corporation should pursue the Opportunity will be made by a majority vote of an
ad hoc committee (the “Committee”), which shall be composed of all of the
Directors who (x) are independent Directors pursuant to the rules of the New
York Stock Exchange and (y) do not have any material direct or indirect interest
in the Opportunity. Such Shareholder shall be free to make such Significant
Investment unless either the Board or the Committee notifies such Shareholder
not later than 21 days following the date of such Shareholder’s first
notification to the CEO of such Opportunity that the Board or the Committee has
determined to cause the Corporation to itself pursue the Opportunity.

 

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(b) Notwithstanding clause (a) above, any Shareholder may make any Significant
Investment in a Competitor without complying with the procedures in clause
(a) above if, from the time the Shareholder first learned of the opportunity to
make such Significant Investment until the Shareholder no longer holds such
Significant Investment, no Director designated by such Shareholder pursuant to
Section 3.1 serves on the Board (unless the Board shall otherwise determine).
For the avoidance of doubt, a Shareholder may make a Significant Investment in a
Competitor if the Corporation has determined not to pursue such opportunity,
whether or not any Director designated by such Shareholder is then serving on
the Board.

(c) This Section 4.17 shall cease to be of any further force and effect if the
Continuing Shareholders cease to beneficially own in the aggregate at least 5%
of the then outstanding Common Stock.

V      REGISTRATION RIGHTS

5.1. Demand Registration.

(a) Either of the Sponsors may, at any time, make a written request (together
with any other Sponsor Holder that such Sponsor includes in such request, the
“Demand Sellers”) that the Corporation effect the registration under the
Securities Act of all or any portion of any such Demand Sellers’ Registrable
Securities and specifying the intended method of disposition of such securities.
The Corporation will promptly give written notice of such requested registration
(a “Demand Registration”) at least 30 days prior to the anticipated filing date
of the registration statement relating to such Demand Registration to the other
Sponsor Holders and all Piggy-Back Shareholders. Any Sponsor may elect to join
in the request of a Demand Seller that the Corporation effect the registration
under the Securities Act of all or any portion of any Registrable Securities of
such Sponsor or any other Sponsor Holder that such Sponsor includes in such
request and specifying the intended method of disposition of such securities,
whereupon such Sponsor shall be deemed to be a Demand Seller on a pari passu
basis with the other Demand Sellers. Upon receiving such requests, the
Corporation will use its reasonable best efforts to effect, as expeditiously as
possible, the registration under the Securities Act of:

(i) the Registrable Securities then held by the Demand Sellers that the
Corporation has been so requested to register by the Demand Sellers; and

(ii) all other Registrable Securities that any other Shareholder entitled to
request the Corporation to include their Registrable Securities in a Piggy-Back
Registration (all such Shareholders, together with the Demand Sellers, the
“Holders”) has requested the Corporation to register by written request received
by the Corporation within 30 days after the receipt by such Holders of such
written notice given by the Corporation;

all to the extent necessary to permit the disposition (in accordance with the
intended methods thereof) of the Registrable Securities to be so registered.

 

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Promptly after the expiration of the 30-day period referred to in paragraph
(ii) of this Section 5.1(a), the Corporation will notify all the Holders to be
included in the Demand Registration of the other Holders and the number of
shares of Registrable Securities requested to be included therein. The Demand
Sellers requesting a registration under this Section 5.1(a) may, at any time
prior to the effective date of the registration statement relating to such
registration, revoke such request without liability to any of the other Holders
by providing a written notice to the Corporation revoking such request, in which
case such request shall not be considered a Demand Registration.

(b) A registration requested pursuant to this Section 5.1 shall not be deemed to
have been effected unless the registration statement relating thereto (i) has
become effective under the Securities Act and (ii) has remained effective for a
period of at least 90 days (or such shorter period in which all Registrable
Securities of the Holders included in such registration have actually been sold
thereunder).

(c) If a Demand Registration involves a Public Offering and the managing
Underwriter for such offering advises the Corporation and the Holders who have
requested to participate in such Public Offering, in writing, that, in its view,
the number of securities requested to be included in such registration, or the
type of securities requested to be included in such registration (including, in
each case, shares of Registrable Securities requested to be included by the
Demand Sellers and shares of Registrable Securities requested to be included by
other Holders pursuant to Section 5.2), would have an adverse effect on such
offering, including the price at which such securities can be sold (an “Adverse
Effect”), the Corporation will include in such registration the largest number
of Registrable Securities that, in the opinion of the managing Underwriter for
such offering, can be sold in the priorities listed below without causing an
Adverse Effect, as follows:

(i) first, all Registrable Securities requested to be included in such
registration by the Demand Sellers and any Continuing Shareholder (allocated, if
necessary not to cause an Adverse Effect on the offering, pro rata among such
Holders on the basis of the relative number of shares of Registrable Securities
requested to be included in such registration by such Holders); and

(ii) second, all Registrable Securities to be included in such registration by
any other Holder (allocated, if necessary not to cause an Adverse Effect on the
offering, pro rata among such other Holders on the basis of the relative number
of shares of Registrable Securities requested to be included in such
registration by such other Holders).

(d) The Corporation shall not be required to effect any Demand Registration if
the Board determines in good faith that due to business or market conditions or
the business or financial condition of the Corporation it is inappropriate at
such time to undertake a Public Offering; provided, that the Corporation may
elect not to effect registration on such grounds only once in any twelve-month
period beginning on the date of such election by the Corporation. If the
Corporation exercises its right pursuant to this Section 5.1(d), the Corporation
shall effect such registration within one year following the request for
registration.

 

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5.2. Piggy-Back Registration.

(a) If the Corporation proposes to file a registration statement under the
Securities Act with respect to an offering of any shares of Common Stock by the
Corporation (i) for its own account (other than a registration on Form S-8 or
Form S-4 (or any substitute form that may be adopted by the Commission)) or
(ii) for the account of any holder of Registrable Securities, then the
Corporation will give written notice of such proposed filing to Piggy-Back
Shareholders holding Registrable Securities as soon as practicable (but in any
event not less than 30 days before the anticipated filing date), and such notice
will offer such Piggy-Back Shareholders the opportunity, subject to the
limitations provided in Section 5.2(b), to register such number of shares of
Registrable Securities owned by Piggy-Back Shareholders as the Piggy-Back
Shareholders may request on the same terms and conditions as the registration of
the Corporation’s or other Holder’s Registrable Securities (a “Piggy-Back
Registration”). The Piggy-Back Shareholders will be permitted to withdraw all or
part of the Registrable Securities from a Piggy-Back Registration at any time
prior to the effective date of the Piggy-Back Registration. Subject to the
foregoing, upon the written request of any Piggy-Back Shareholder made within 30
days after the receipt of notice from the Corporation (which request shall
specify the number of Registrable Securities intended to be disposed of by such
Piggy-Back Shareholder), the Corporation will use its reasonable best efforts to
effect the registration under the Securities Act of all Registrable Securities
that the Corporation has been so requested to register by such Piggy-Back
Shareholders, to the extent required to permit the disposition of the
Registrable Securities to be so registered; provided, that (A) if such
registration involves a Public Offering, all such Piggy-Back Shareholders
requesting to be included in the Corporation’s registration must sell their
Registrable Securities to the Underwriters selected as provided in
Section 6.6(e) on the same terms and conditions as apply to the Corporation and
(B) if, at any time after giving written notice of its intention to register any
Registrable Securities pursuant to this Section 5.2(a) and prior to the
effective date of the registration statement filed in connection with such
registration, the Corporation shall determine for any reason not to register
such Registrable Securities, the Corporation shall give written notice to all
such Piggy-Back Shareholders and, thereupon, shall be relieved of its obligation
to register any Registrable Securities in connection with such registration
(without prejudice, however, to rights of the Shareholders under Section 5.1).
No registration effected under this Section 5.2 shall relieve the Corporation of
its obligations to effect a Demand Registration to the extent required by
Section 5.1.

(b) If a registration pursuant to this Section 5.2 involves a Public Offering
(other than in the case of a Public Offering requested by a Sponsor in a Demand
Registration, in which case the provisions of Section 5.1(c) shall apply) and
the managing Underwriter for such offering advises the Corporation that, in its
view, the number or type of securities intended to be included in such
registration could have an Adverse Effect on such offering, the Corporation will
include in such registration the largest number of Registrable Securities
entitled to be included and requested to be included in such offering that, in
the opinion of the managing Underwriter for such offering, can be sold without
causing an Adverse Effect in the following priority:

(i) first, all of the securities proposed to be sold by the Corporation;

 

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(ii) second, all Registrable Securities requested to be included in such
registration by the Sponsor Holders and any Continuing Shareholders (allocated,
if necessary not to cause an Adverse Effect on the offering, pro rata among such
Holders on the basis of the relative number of shares of Registrable Securities
so requested to be included in such registration by such Holders); and

(iii) third, all Registrable Securities requested to be included in such
registration by any other Holder (allocated, if necessary not to cause an
Adverse Effect on the offering, pro rata among such other Holders on the basis
of the relative number of shares of Registrable Securities so requested to be
included in such registration by such other Holders).

(c) Without the written consent of the holders of a majority of the voting power
of the outstanding Registrable Securities held by the Sponsor Holders and the
Continuing Shareholder Representative, the Corporation will not grant to any
Person the right to request the Corporation to register any securities of the
Corporation under the Securities Act unless the rights so granted are expressly
subordinate to the rights of the Sponsor Holders and the Continuing Shareholders
set forth in this Agreement, and, if exercised, would not otherwise conflict or
be inconsistent with the provisions of this Agreement.

5.3. Holdback Agreements. If any registration of Registrable Securities shall be
in connection with a Public Offering, the Corporation and the Shareholders agree
not to effect any sale or distribution, including any sale pursuant to Rule 144,
of any securities of the Corporation (other than as part of such Public
Offering) during the 14 days prior to the effective date of such registration
statement or during the period after such effective date equal to the lesser of
(i) such period of time as agreed between such managing Underwriter and the
Corporation and (ii) 180 days; provided, however, this Section 5.3 will not be
applied to prohibit the Shareholders from selling or distributing any securities
of the Corporation for more than 180 days in any 12-month period. The provisions
of this Section 5.3 will not apply to the actions of third-party investment
managers and advisers and other third-party fiduciaries in exercising
discretionary authority with respect to any assets of any qualified pension
trust or its Affiliates. The Corporation will use its reasonable best efforts to
ensure that all shares of its capital stock held by its officers and directors
will be subject to market stand-off or holdback agreements on terms
substantially similar to those described in this Section 5.3.

5.4. Registrations on Form S-3. (a) If (i) the Corporation shall receive a
written request (specifying that it is being made pursuant to this Section 5.4)
from a Shareholder that the Corporation file a registration statement on Form
S-3 (or any successor form to Form S-3 regardless of its designation) for a
public offering of Registrable Securities the reasonably anticipated price to
the public of which would equal or exceed $1,000,000 and (ii) the Corporation is
a registrant entitled to use Form S-3 to register such shares, then the
Corporation shall use its reasonable best efforts to cause such shares to be
registered on Form S-3 (or any successor form to Form S-3) and such request for
registration will not be deemed a Demand Registration request.

(b) If a registration pursuant to Section 5.4(a) is requested to be effected as
a “shelf’ registration, then, notwithstanding anything to the contrary contained
in this Agreement,

 

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the Corporation will keep the registration statement filed in respect of that
request effective until the earlier of (i) the date on which all Registrable
Securities included in such request have been sold and (ii) the date that is 12
months following the effective date of such registration statement.

(c) The rights of the Shareholders to registration under this Section 5.4 are in
addition to, and not in lieu of, their rights to registration under Section 5.1
and Section 5.2.

VI      REGISTRATION PROCEDURES

6.1. Filings; Information. Subject to the limitations set forth in Article V,
whenever any Shareholder (the “Registering Shareholder”) requests that any
Registrable Securities be registered pursuant to Section 5.1, Section 5.2 or
Section 5.4, the Corporation will use its reasonable best efforts to effect the
registration of such Registrable Securities as promptly as is practicable, and
in connection with any such request:

(a) The Corporation will as expeditiously as possible prepare and file with the
Commission a registration statement on any form for which the Corporation then
qualifies and that counsel for the Corporation deems appropriate and available
for the sale of the Registrable Securities to be registered thereunder in
accordance with the intended method of distribution thereof, and use its
reasonable best efforts to cause such filed registration statement to become and
remain effective for a period of not less than 180 days (or any longer period of
time required under this Agreement); provided, however, that if the Corporation
furnishes to the Registering Shareholder a certificate signed by the
Corporation’s Chief Executive Officer, President or any Vice President stating
that in his good faith judgment it would be detrimental or otherwise
disadvantageous to the Corporation or its Shareholders for such a registration
statement to be filed as expeditiously as possible, the Corporation will be
entitled to postpone the filing of such registration statement for a reasonable
period of time following the date on which the Corporation receives the
Registering Shareholder’s request for registration in accordance with
Section 5.1 or Section 5.4, but the aggregate of such periods of time shall not
exceed 90 days during any 12-month period unless the Corporation invokes its
rights under Section 5.1(d).

(b) The Corporation will, if requested by a Registering Shareholder, at least
five Business Days prior to filing such registration statement or prospectus or
any amendment or supplement thereto, furnish to the Registering Shareholder, if
any, copies of such documents, which documents will be subject to the review of
the Registering Shareholder and the applicable Underwriters, and the Corporation
will not file any registration statement or any amendment thereto, or any
prospectus or any supplement thereto (excluding any documents which, upon
filing, would be incorporated or deemed to be incorporated by reference therein)
to which the Registering Shareholder or the managing Underwriter, if any, may
reasonably object on a timely basis; and thereafter the Corporation will furnish
to the Registering Shareholder and each such Underwriter, if any, such number of
copies of such registration statement and any amendment and any supplement to
such registration statement (in each case including all exhibits to such
registration statement and documents incorporated by reference therein) and the
prospectus included in such registration statement (including each preliminary
prospectus) and any amendment or supplement thereto as the Registering
Shareholder or each such Underwriter may reasonably request in order to
facilitate the sale of the Registrable Securities. Notwithstanding the
foregoing, no Registering Shareholder shall be under any obligation to review or
comment

 

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upon any registration statement or prospectus or any amendments or supplements
thereto, except to the extent related to Shareholder-Supplied Information
supplied by or on behalf of such Registering Shareholder.

(c) The Corporation shall promptly take such action as may be necessary so that
(i) each registration statement and any amendment thereto and the prospectus
forming a part thereof and any amendment or supplement thereto (and each report
or other document incorporated therein by reference in each case) complies in
all material respects with the Securities Act and the Exchange Act and the
respective rules and regulations thereunder, as in effect at any relevant time,
(ii) each registration statements and any amendment thereto does not, when it
becomes effective, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and (iii) each prospectus forming a part of
any registration statement, and any amendment or supplement to such prospectus,
in the form delivered to purchasers of the Registrable Securities does not
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that nothing in this Agreement will impose liability or responsibility upon the
Corporation to the extent related to Shareholder-Supplied Information used in a
registration statement, prospectus or any amendment or supplement thereto
substantially in the form provided or approved by the Shareholder supplying the
Shareholder Supplied Information. After the filing of the registration
statement, the Corporation will promptly notify the Registering Shareholder of
any stop order issued or, to the Corporation’s knowledge, threatened to be
issued by the Commission and take all reasonable actions required to prevent the
entry of such stop order or to remove it if entered.

(d) The Corporation will endeavor to qualify the Registrable Securities for
offer and sale under such other securities or blue sky laws of such
jurisdictions in the United States as the Registering Shareholder reasonably
requests; provided, however, that the Corporation will not be required to
(i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subsection (d), (ii) subject
itself to taxation in any such jurisdiction, or (iii) consent to general service
of process in any such jurisdiction.

(e) The Corporation will as promptly as is practicable notify the Registering
Shareholder at any time when a prospectus relating to the sale of the
Registrable Securities is required by Law to be delivered in connection with
sales by an Underwriter or dealer of the occurrence of any event requiring the
preparation of a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated in such prospectus or necessary to
make the statements in such prospectus, in the light of the circumstances under
which they were made, not misleading and promptly make available to the
Registering Shareholder and to the Underwriters any such supplement or
amendment. The Registering Shareholder agrees that, upon receipt of any notice
from the Corporation of the occurrence of any event of the kind described in the
preceding sentence, the Registering Shareholder will forthwith discontinue the
offer and sale of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until receipt by the Registering
Shareholder and the Underwriters of the copies of such supplemented or

 

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amended prospectus and, if so directed by the Corporation, the Registering
Shareholder will deliver to the Corporation all copies, other than permanent
file copies then in the Registering Shareholder’s possession, of the most recent
prospectus covering such Registrable Securities at the time of receipt of such
notice. If the Corporation gives such notice, the Corporation will extend the
period during which such registration statement will be continued effective as
provided in Section 5.1(a) by the number of days during the period from and
including the date of the giving of such notice to the date on which the
Corporation makes available to the Registering Shareholder such supplemented or
amended prospectus.

(f) The Corporation will enter into an underwriting agreement in customary form
and take such other actions as are reasonably required in order to expedite or
facilitate the sale of such Registrable Securities.

(g) The Corporation will use its reasonable efforts to furnish to each
Registering Shareholder and to each Underwriter a signed counterpart, addressed
to each such Registering Shareholder or such Underwriter, of (i) an opinion or
opinions of counsel to the Corporation and (ii) a comfort letter or comfort
letters from the Corporation’s independent public accountants, each in customary
form and covering such matters of the type customarily covered by opinions or
comfort letters, as the case may be, as the Registering Shareholder or the
managing Underwriter may reasonably request. If the Corporation receives any
such opinions or comfort letters, the Corporation will furnish them to each
Registering Shareholder and to each Underwriter, addressed to each Underwriter,
and the Corporation will use its reasonable efforts to cause any such opinions
and comfort letters to also be addressed to each Registering Shareholder.

(h) The Corporation will cooperate with the Registering Shareholders and the
managing Underwriters, if any, to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be sold and enable the
Registrable Securities to be in such denominations and registered in such names
as the managing Underwriters, if any, may request at least two Business Days
prior to any sale of Registrable Securities to the Underwriters.

(i) The Corporation will make available for inspection by a representative of
the Registering Shareholders, any Underwriter participating in any disposition
of Registrable Securities and any attorney or accountant retained by the
Registering Shareholders or Underwriter, all financial and other records,
pertinent corporate documents and properties of the Corporation and its
Subsidiaries, and cause the officers, directors and employees of the Corporation
and its Subsidiaries to supply all information reasonably requested by any such
representative, underwriter, attorney or accountant in connection with such
registration statement; provided, however, that any records, information or
documents that are designated by the Corporation in writing as confidential at
the time of delivery of such records, information or documents will be kept
confidential by those Persons unless (i) those records, information or documents
are in the public domain or otherwise publicly available, (ii) disclosure of
those records, information or documents is required by court or administrative
order or is necessary to respond to inquiries of regulatory authorities, or
(iii) disclosure of those records, information or documents, in the opinion of
counsel to such Person, is otherwise required by Law (including, without
limitation, pursuant to the requirements of the Securities Act).

 

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(j) The Corporation will make generally available to its security holders, as
soon as reasonably practicable, an earnings statement covering a period of 12
months, beginning within three months after the effective date of the
registration statement, which earnings statement will satisfy the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.

(k) The Corporation will use its reasonable best efforts to cause all such
Registrable Securities to be listed on each securities exchange on which similar
securities issued by the Corporation are then listed or, if not so listed, on a
national securities exchange.

(l) The Corporation will use its reasonable best efforts to cause its directors,
officers and other appropriate employees to participate in any presentations
regarding any Public Offering reasonably requested by the Registering
Shareholders or the managing Underwriter or Underwriters participating in the
disposition of those Registrable Securities.

(m) The Corporation may require the Registering Shareholder to promptly furnish
in writing to the Corporation such information regarding the Registering
Shareholder, the plan of distribution of the Registrable Securities and other
information as the Corporation may from time to time reasonably request or as
may be legally required in connection with such registration.

6.2. Registration Expenses. Except as otherwise provided in this Agreement,
expenses incurred in connection with any registration made or requested to be
made pursuant to Article V will be borne by the Corporation, whether or not any
such registration statement becomes effective, to the extent permitted by
applicable law. Each Shareholder will pay, on a pro rata basis based on the
number of such Shareholder’s Registrable Securities (in the case of convertible
securities, determined on an as-converted basis) included in the registration,
any underwriting fees, discounts or commissions attributable to the sale of such
Shareholder’s Registrable Securities.

6.3. Indemnification by the Corporation. The Corporation agrees to indemnify and
hold harmless each Shareholder registering shares pursuant to Section 5.1,
Section 5.2 or Section 5.4, its officers, partners, members and directors, and
each Person, if any, who controls each such Shareholder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and such
controlling Person’s officers, partners, members and directors from and against
any and all losses, claims, damages, liabilities and expenses (including but not
limited to attorneys’ fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation) arising out of, based upon or caused by any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus relating to the Registrable Securities (as
amended or supplemented if the Corporation will have furnished any amendments or
supplements to such registration statement or prospectus) or any preliminary
prospectus, or caused by any omission or alleged omission to state in such
registration statement or prospectus a material fact required to be stated in
such registration statement or prospectus or necessary to make the statements in
such registration statement or prospectus not misleading, except insofar as such
losses, claims, damages, liabilities or expenses are caused by any such untrue
statement or omission or alleged

 

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untrue statement or omission based upon and in conformity with information
furnished in writing (or not furnished as may be the case with omissions) to the
Corporation by or on behalf of such Shareholder expressly for use in such
registration statement or prospectus (“Shareholder-Supplied Information”);
provided, however, that the foregoing indemnity agreement with respect to any
preliminary prospectus will not inure to the benefit of any Shareholder if a
copy of the current prospectus was not provided to the applicable purchaser by
such Shareholder and such current copy of the prospectus would have cured the
defect giving rise to such loss, claim, damage or liability (“Shareholder
Prospectus Delivery Failure”). The Corporation also agrees to indemnify any
Underwriters of the Registrable Securities, their officers and directors and
each Person who controls such underwriters on substantially the same basis as
that of the indemnification of the Shareholders provided in this Section 6.3.

6.4. Indemnification by Shareholders. Each Shareholder registering shares
pursuant to Section 5.1, Section 5.2 or Section 5.4 agrees, severally, but not
jointly, to indemnify and hold harmless the Corporation, its officers and
directors and each Person, if any, who controls the Corporation (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
and such controlling Person’s officers and directors to the same extent as the
foregoing indemnity from the Corporation to such Shareholder, but only with
reference to information related to such Shareholder furnished in writing by or
on behalf of such Shareholder expressly for use in any registration statement or
prospectus relating to the Registrable Securities, or any amendment or
supplement thereto or any preliminary prospectus and only up to the amount of
net proceeds actually received by such Shareholder in the subject offering. Each
such Shareholder also agrees to indemnify and hold harmless any Underwriters of
the Registrable Securities, their officers and directors and each Person who
controls such Underwriters on substantially the same basis as that of the
indemnification of the Corporation provided in this Section 6.4.

6.5. Conduct of Indemnification Proceedings. In case any proceeding (including
any governmental investigation) is instituted involving any person in respect of
which indemnity may be sought pursuant to Section 6.3 or Section 6.4, such
Person will promptly notify the Person against whom such indemnity may be sought
in writing (provided that the failure to notify the indemnifying party shall not
relieve it from any liability that it may have under this Article VI, except to
the extent that it has been materially prejudiced by such failure) and the
indemnifying party upon request of the indemnified party will retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
will pay the fees and disbursements of such counsel related to the proceeding.
In any such proceeding, any indemnified party will have the right to retain its
own counsel, but the fees and expenses of such counsel will be at the expense of
such indemnified party unless (a) the indemnifying party and the indemnified
party have mutually agreed to the retention of such counsel or (b) the named
parties to any such proceeding (including any impleaded parties) include both
the indemnified party and the indemnifying party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them, in which case the fees and expenses of such
counsel will be paid by the Corporation. It is understood that the indemnifying
party will not, in connection with any proceeding or related proceedings in the
same jurisdiction, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) at any time
for all such indemnified parties, and that all such fees and expenses

 

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will be reimbursed as they are incurred. In the case of the retention of any
such separate firm for the indemnified parties, such firm will be designated in
writing by the indemnified parties. The indemnifying party will not be liable
for any settlement of any proceeding effected without its consent, but if
settled with such consent, or if there be a final judgment for the plaintiff,
the indemnifying party will indemnify and hold harmless such indemnified parties
from and against any loss or liability (to the extent stated above) by reason of
such settlement or judgment. No indemnifying party will, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding, unless (i) such settlement includes an unconditional
release of such indemnified party from all liability with respect to claims that
are the subject matter of such proceeding, (ii) such settlement does not include
a statement as to or an admission of fault, culpability or failure to act by or
on behalf of any indemnified party, and (iii) the indemnifying party confirms in
writing its indemnification obligations hereunder with respect to such
settlement, compromise or judgment.

6.6. Contribution.

(a) If the indemnification provided for in this Agreement is for any reason
unavailable to the indemnified parties in respect of any losses, claims,
damages, liabilities or expenses referred to in this Agreement, then each such
indemnifying party, in lieu of indemnifying such indemnified party, will
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses in such proportion as
is appropriate to reflect the relative fault of the indemnified party, on the
one hand, and the indemnifying party or indemnifying parties, on the other hand,
in connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of the indemnified party, on the
one hand, and the indemnifying party or indemnifying parties, on the other hand,
will be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by such party, and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.

(b) The Corporation and each Shareholder registering Registrable Securities
pursuant to Section 5.1, Section 5.2 or Section 5.4 agree that it would not be
just and equitable if contribution pursuant to this Section 6.6 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding
subsection. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or expenses referred to in the
immediately preceding subsection will be deemed to include, subject to the
limitations set forth above, any reasonable legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this Section 6.6, no
Underwriter will be required to contribute any amount in excess of the amount by
which the total price at which the Registrable Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages that such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission, and no
Shareholder registering shares pursuant to Section 5.1, Section 5.2 or
Section 5.4 will be required to contribute any amount in excess of the amount by
which the total

 

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price at which the Registrable Securities of such Shareholder were offered to
the public (less underwriters’ discounts and commissions) exceeds the amount of
any damages that such Shareholder has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.

(c) Participation in Underwritten Registrations. No Person may participate in
any underwritten registration unless such Person (i) agrees to sell such
Person’s securities on the basis provided in any underwriting arrangements
approved by the Persons entitled under this Agreement to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and these
registration rights.

(d) Rule 144. Subject to the restrictions on transfer set forth in this
Agreement, the Corporation will file any reports required to be filed by it
under the Securities Act and the Exchange Act and will take such further action
as the Sponsor Holders or the Continuing Shareholder Representative may
reasonably request to the extent required from time to time to enable the
Sponsor Holders or the Continuing Shareholders to sell securities of the
Corporation without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144 under the Exchange Act, as such rule may
be amended from time to time, or other appropriate rule or regulation adopted by
the Commission. Upon the request of the Sponsor Holders or the Continuing
Shareholder Representative, the Corporation will deliver to the Sponsor Holders
and the Continuing Shareholder Representative a written statement as to whether
the Corporation has complied with such reporting requirements.

(e) Selection of Underwriters. If any of the Registrable Securities are to be
sold in a Public Offering, the investment banker or investment bankers and
manager or managers that will manage the offering will be selected (i) in the
case of a Demand Registration pursuant to Section 5.1, by the Demand Sellers,
and (ii) in the case of a Piggy-Back Registration pursuant to Section 5.2, by
the Corporation; provided, in each case, that such investment banker or manager
shall be reasonably satisfactory to the holders of a majority of the voting
power of the Registrable Securities held by the Sponsor Holders.

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first above written.

 

REGIONAL MANAGEMENT CORP. By:  

/s/ Michelle Masters

  Name:   Michelle Masters   Title:   SVP/Corporate Secretary PARALLEL 2005
EQUITY FUND, LP By:  

/s/ F. Barron Fletcher, III

  Name:   F. Barron Fletcher   Title:   Authorized Person PALLADIUM EQUITY
PARTNERS III, L.P. By:   Palladium Capital Management III, L.L.C., its Advisor
By:  

/s/ Erik A. Scott

  Name:   Erik A. Scott   Title:   Managing Director

[SIGNATURE PAGE TO AMENDED AND RESTATED SHAREHOLDERS AGREEMENT]

--------------------------------------------------------------------------------

Richard A. Godley, Sr. Revocable Trust By:  

/s/ Richard A. Godley

  Richard A. Godley, Trustee

/s/ Vanessa Bailey Godley

Vanessa Bailey Godley

/s/ William T. Godley

William T. Godley

/s/ Cathleen McVeigh

Cathleen McVeigh, Sr. Vice President on behalf of U.S. Trust Company of
Delaware, solely in its capacity as trustee of the Tyler Godley 2011 Irrevocable
Trust

/s/ Jerry L Shirley

Jerry L. Shirley

/s/ Brenda F. Kinlaw

Brenda F. Kinlaw

/s/ C. Glynn Quattlebaum

C. Glynn Quattlebaum

/s/ Sherri Quattlebaum

Sherri Quattlebaum

/s/ Jesse W. Geddings

Jesse W. Geddings Pamela Denise Godley Revocable Trust By:  

/s/ Pamela Denise Godley

  Pamela Denise Godley, Trustee

[SIGNATURE PAGE TO AMENDED AND RESTATED SHAREHOLDERS AGREEMENT]

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ANNEX I

Notices

To the Corporation:

Regional Management Corp.

509 West Butler Road

Greenville, South Carolina 29607

Fax: (864) 422-8035

Attn: Thomas F. Fortin

with a copy to:

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017

Fax: (212) 455-2502

Attention: Joshua Ford Bonnie

To the Continuing Shareholder Representative:

Richard A. Godley, Sr.

2824 Knighton Chapel Road

Fountain Inn, South Carolina 29644

with a copy to:

Wyche, P.A.

44 E. Camperdown Way

Greenville, South Carolina 29601

Fax: (864) 239-8900

Attention: Eric K. Graben

To Parallel:

Parallel Investment Partners, LP

2100 McKinney Avenue, Suite 1200

Dallas, Texas 75201

Fax: (214) 740-3630

Attention: F. Barron Fletcher, III

with a copy to:

Jones Day

717 Texas, Suite 3300

Houston, Texas 77002

Fax: (832) 239-360

Attention: J. Mark Metts

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To Palladium:

Palladium Equity Partners III, L.P.

1270 Avenue of the Americas, 22nd Floor

New York, New York 10020

Fax: (212) 218-5155

Attention: David Perez and Erik A. Scott

with a copy to:

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017

Fax: (212) 455-2502

Attention: Joshua Ford Bonnie

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Annex II

Continuing Shareholders

Richard A. Godley, Sr. Revocable Trust

Vanessa Bailey Godley

William T. Godley

The Tyler Godley 2011 Irrevocable Trust, dated March 28, 2011

Jerry Shirley

Brenda F. Kinlaw

C. Glynn Quattlebaum and Sherri Quattlebaum

Jesse W. Geddings

Pamela Denise Godley Revocable Trust