UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

Filed by the Registrant  ¨x                            Filed by a Party other than the Registrant  ¨

Check the appropriate box:

NICHOLAS FINANCIAL, INC.

2454 McMullen Booth Road

Building C

NOTICE OF ANNUAL GENERAL MEETING

To the Shareholders of Nicholas Financial, Inc:Inc.:

NOTICE IS HEREBY GIVEN that the 20142016 Annual General Meeting of Shareholders (the “Meeting”) of Nicholas Financial, Inc. (hereinafter called the “Company”) will be held at the Company’s corporate headquarters, located at 2454 McMullen Booth Road, Building C, Clearwater, Florida, on Tuesday, August 12, 2014,Thursday, September 8, 2016, at the hour of 10:00 AM10 a.m. (Clearwater, Florida time) for the following purposes:

Accompanying this Notice are a Proxy Statement and Information Circular and Form of Proxy.

Shareholders of record as of the close of business on June 24, 2014July 22, 2016 will be entitled to attend and vote at the Meeting, or any adjournment or postponement thereof. A shareholder entitled to attend and vote at the Meeting is entitled to appoint a proxy holder to attend and vote in his stead.

Your vote is important. If you are unable to attend the Meeting (or any adjournment or postponement thereof) in person, please read the Notes accompanying the Form of Proxy enclosed herewith and then complete and return the Proxy within the time set out in the Notes.

The enclosed Form of Proxy is solicited by the Board of Directors of the Company but, as set out in the Notes accompanying the Form of Proxy, you may amend it if you so desire by inserting in the space provided the name of the person you wish to represent you at the Meeting.

Important Notice Regarding the Availability of Proxy Materials for the Annual

General Meeting of Shareholders to be Held on August 12, 2014September 8, 2016

DATED at Clearwater, Florida, July 11, 2014.28, 2016.

BY ORDER OF THE BOARD OF DIRECTORS

Katie L. MacGillivary

Corporate Secretary

NICHOLAS FINANCIAL, INC

Building C

2454 McMullen Booth Road

Building C

Clearwater, FL 33759-1343

(727)726-0763

PROXY STATEMENT AND INFORMATION CIRCULAR

AS AT AND DATED JUNE 30, 2014JULY 28, 2016

This Proxy Statement and Information Circular accompanies the Notice of the 20142016 Annual General Meeting of Shareholders (the “Meeting”) of Nicholas Financial, Inc. (hereinafter called the “Company”) to be held on Tuesday, August 12, 2014,Thursday, September 8, 2016, at 10:0010 a.m. (Clearwater, Florida time), at the Company’s corporate headquarters, located at 2454 McMullen Booth Road, Building C, Clearwater, Florida, and is being furnished in connection with the solicitation of proxies on behalf of the Board of Directors of the Company (the “Board of Directors” or the “Board”) for use at that Meeting and at any adjournment thereof.

The Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 20142016 (the “Annual Report”), together with this Proxy Statement and Information Circular and the accompanying proxy form (“Proxy”), are first being mailed on or about July 11, 201428, 2016 to shareholders entitled to vote at the Meeting.Additional copies will be provided without charge upon written request to Katie L. MacGillivary, Corporate Secretary, Nicholas Financial, Inc., 2454 McMullen Booth Road, Building C, Clearwater, Florida 33759-1340. Exhibits filed with our Annual Report on Form 10-K will be provided upon written request, in the same manner noted above.

REVOCABILITY OF PROXY

If the accompanying Proxy is completed, signed and returned, the shares represented thereby will be voted at the Meeting. The giving of the Proxy does not affect the right to vote in person should the shareholder be able to attend the Meeting. The shareholder may revoke the Proxy at any time prior to the voting thereof. If you would like to obtain directions to attend the Meeting, please contact Katie L. MacGillivary at(727) 726-0763.

In addition to revocation in any other manner permitted by law, a proxy may be revoked by an instrument in writing executed by the shareholder or his attorney authorized in writing, or if the shareholder is a corporation, by a duly authorized officer or attorney thereof, and deposited either at the registered office of the Company at any time up to and including the last business day preceding the day of the Meeting, or any adjournment thereof, or, as to any matter in respect of which a vote shall not already have been cast pursuant to such proxy, with the Chairman of the Meeting on the day of the Meeting, or any adjournment thereof, and upon either of such deposits the proxy is revoked. If you file a notice of revocation, you may then vote (or abstain from voting) your shares in person at the Meeting.

If you are a shareholder of record, you also may revoke your proxy at any time before your shares are voted by submitting a duly executed proxy bearing a later date. If you submit a later dated proxy, then your shares will be voted in accordance with that later dated proxy.

1

PERSONS MAKING THE SOLICITATION

THE ENCLOSED PROXY IS BEING SOLICITED BY

THE BOARD OF DIRECTORS OF THE COMPANY

Solicitations will be made by mail and possibly supplemented by telephone or other personal contact to be made without special compensation by regular officers and employees of the Company. The Company may reimburse shareholders’ nominees or agents (including brokers holding shares on behalf of clients) for the cost incurred in obtaining

from their principals authorization to execute forms of proxy. No solicitation will be made by specifically engaged employees or soliciting agents. The cost of solicitation of proxies on behalf of the Board of Directors will be borne by the Company.

VOTING SHARES AND OWNERSHIP

OF MANAGEMENT AND PRINCIPAL HOLDERS

As of the date of this Proxy Statement and Information Circular, the Company is authorized to issue 50,000,000 Common Shares without par value and 5,000,000 Preference Shares without par value. As of the close of business on June 24, 2014,July 22, 2016, the record date for determining shareholders entitled to notice of and to vote at the Meeting, there were issued and outstanding 12,273,73412,490,031 Common Shares and no Preference Shares. At a GeneralOf the 12,490,031 outstanding Common Shares, 7,776,227 Common Shares are entitled to vote at the Meeting (the “Voting Common Shares”) and the remaining 4,713,804 Common Shares are held by an indirect subsidiary of the Company and, pursuant to applicable law, are not entitled to vote. At the Meeting, on a show of hands, every shareholder present in person and entitled to vote shall have one vote, and on a poll, every shareholder present in person or represented by proxy and entitled to vote shall have one vote for each share of which such shareholder is the registered holder. Shares represented by proxy will only be voted on a poll.

2

The following table sets forth certain information regarding the beneficial ownership of the Voting Common Shares as of June 24, 2014July 22, 2016 regarding (i) each of the Company’s directors (including the nominees for re-electionelection or reelection as directors), (ii) each of the Company’s executive officers, (iii) all directors and officers as a group, and (iv) each person known by the Company to beneficially own, directly or indirectly, more than 5% of the outstanding Voting Common Shares. Except as otherwise indicated, each of the persons listed below has sole voting and investment power over the shares beneficially owned.

* Less than 1%

3

2

4

The Board of Directors has determined that all shareholdersholders of record of Voting Common Shares as of the close of business on June 24, 2014July 22, 2016 (the “Record Date”) will be entitled to receive notice of and to vote at the Meeting. Those shareholders so desiring may be represented by proxy at the Meeting. The Proxy, and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy thereof, must be deposited either at the office of the Registrar and Transfer Agent of the Company, Computershare Investor Services, Inc., 100 University Avenue, 8^th8th Floor, Toronto, Ontario M5J 2Y1, or at the Corporate Headquarters of the Company at Building C, 2454 McMullen Booth Road, Building C, Clearwater, Florida33759-1343 not less than 48 hours, Saturdays and holidays excepted, prior to the time of the holding of the Meeting or any adjournment thereof.

Votes cast by proxy or in person at the Meeting will be tabulated by the inspector of elections appointed for the Meeting, who will also determine whether a quorum is present for the transaction of business. The Company’s current Articles provide that a quorum is present if two or more shareholders of the Company are present in person (or represented

3

by proxy) holding an aggregate of at least 33-1/3% of the total issued and outstanding sharesCommon Shares of the Company as of the Record Date for the Meeting. The number of issued and outstanding Common Shares currently equals the number of issued and outstanding Voting Common Shares, since the Common Shares held by the Company’s subsidiary are not considered to be “outstanding.” Abstentions will be counted as shares that are present and entitled to vote for purposes of determining whether a quorum is present. Shares held by nominees for beneficial owners will also be counted for purposes of determining whether a quorum is present if the nominee has the discretion to vote on at least one of the matters presented, even though the nominee may not exercise discretionary voting power with respect to other matters and even though voting instructions have not been received from the beneficial owner (a “broker non-vote”). Neither abstentions nor broker non-votes are counted in determining whether a proposal has been approved. The vote required for each proposal set forth herein, including the election of directors, is set forth under the discussion herein of such proposal.

Shareholders are urged to indicate their votes in the spaces provided on the Proxy. Proxies solicited by the Board of Directors of the Company will be voted in accordance with the directions given therein. Except as indicated below in connection with the election of directors, and the advisory vote on the frequency of the advisory vote on compensation of our named executive officers, where no instructions are indicated signed Proxies will be voted FOR each proposal listed in the Notice of the Meeting as set forth more completely herein. Returning your completed Proxy will not prevent you from voting in person at the Meeting should you be present and wish to do so.

If your shares are registered directly in your name with our transfer agent, Computershare Investor Services, Inc., then you are a “shareholder of record.” This Proxy Statement and Information Circular and related materials have been provided directly to you by the Company. You may vote by ballot at the meeting or vote by proxy. To vote by proxy, sign, date and return the enclosed proxy card or follow the instructions on the proxy card for voting by Internet.

5

If your shares are held for you in a brokerage, bank or other institutional account (that is, held in “street name”), then you are not a shareholder of record. Rather, the institution is the shareholder of record and you are the “beneficial owner” of the shares. The Proxy Statement and Information Circular and accompanying materials have been forwarded to you by that institution. If you complete and properly sign the accompanying Proxy and return it in the enclosed envelope, or follow the instructions on the Proxy for voting by Internet, the institution will cause your shares to be voted in accordance with your instructions. If you are a beneficial owner of shares and wish to vote in person at the Meeting, then you must obtain a proxy, executed in your favor, from the holder of record (the institution).

If you are a shareholder of record and attend the Meeting, you may vote in person by ballot at the Meeting. To vote by ballot, you must register and confirm your shareholder status at the meeting. If the shareholder of record is a corporation, partnership, limited liability company or other entity of which you are an officer or other authorized person, then you should bring evidence of your authority to vote the shares on behalf of the entity. If your shares are held for you in a brokerage, bank or other institutional account (that is, in “street name”), you must obtain a proxy, executed in your favor, from that institution (the holder of record) to vote your beneficially-owned shares by ballot at the Meeting. If you are a shareholder of record, then you may opt to deliver your completed Proxy in person at the Meeting.

You will receive separate Proxies when you own shares in different ways. For example, you may own shares individually, as a joint tenant, in an individual retirement account, in trust or in one or more brokerage accounts. You should complete, sign and return each Proxy you receive or follow the Internet instructions on each card. The instructions on each Proxy may differ. Be sure to follow the instructions on each card.

64

PROPOSAL 1:  ELECTION OF DIRECTORS

The Board of Directors recommends each of the nominees set forth below for election as a Directordirector and urges each shareholder to vote “FOR” each of the nominees. Proxies in the accompanying form will be voted at the Meeting, unless authority to do so is withheld, in favor of the election as a Directordirector of each of the nominees named below. Brokers or other nominees who hold shares for a Non-Registered Holder no longer“street name” holders do not have the discretionary authority to vote uninstructed shares in the election of directors.

The Company’s Board of Directors currently consists of five members divided into three classes, with the members of each class serving three-year terms expiring at the third Annual General Meeting of Shareholders after their election. Stephen Bragin retired as a member of the Board of Directors of the Company effective July 1, 2016 and, on that day, the Board of Directors appointed Todd B. Pfister as a director of the Company effective immediately to fill the vacancy left by Mr. Bragin’s resignation, to serve for the remainder of Mr. Bragin’s term, expiring at the 2017 Annual General Meeting of Shareholders of the Company, and until his successor has been duly elected and qualified. The Company’s Board of Directors, upon the recommendation of the Nominating/Corporate Governance Committee, has nominated: (i)nominated each of Ralph T. Finkenbrink and Kevin D. Bates to stand for re-election as a Directordirector at the Meeting, to hold office for a remaining term of two years expiring at the 2016 Annual General Meeting of Shareholders, and until his successor has been duly elected and qualified; and (ii) Stephen Bragin to stand for re-election as a Director of the Meeting, to hold office for a term of three years expiring at the 20172019 Annual General Meeting of Shareholders, and until his successor has been duly elected and qualified. No other person has been nominated by the Board to stand for election as a director at the Meeting.

Vote Required

Assuming a quorum is present, the election of each of Messrs. Finkenbrink Bates and BraginBates as a Directordirector requires that a plurality of the total votes cast with respect to Voting Common Shares present, or represented and entitled to vote at the Meetingby proxy, vote in favor of his election. (Please note that brokers or other nominees who hold shares for you no longerdo not have the discretionary authority to vote your uninstructed shares in the election of directors.) In the event Mr. Finkenbrink Mr. Bates, or Mr. BraginBates is unable to serve, the persons designated as proxies will cast votes for such other person in their discretion as a substitute nominee. The Board of Directors has no reason to believe that anyeither of the foregoing nominees will be unavailable, or if elected, will decline to serve.

Messrs. Finkenbrink Bates and BraginBates are residents of the United States. Certain information is set forth below for each of the nominees for Director,director, as well as for each Directordirector whose term of office will continue after the Meeting.

75

NOMINEES FOR DIRECTOR — TERM TO EXPIRE 20162019

86

NOMINEE FOR DIRECTORDIRECTORS CONTINUING IN OFFICE — TERM TO EXPIRE 20172018

9

DIRECTORS CONTINUING IN OFFICE — TERM TO EXPIRE 2015

107

DIRECTOR CONTINUING IN OFFICE — TERM TO EXPIRE 2017

8

PROPOSAL 2:  RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

The Board of Directors and Audit Committee recommend the ratification of the appointment of Dixon Hughes Goodman LLP as Independent Auditors of the Company for the fiscal year ending March 31, 2015,2017, and urge each shareholder to vote “FOR” such proposal. Executed and unmarked proxies in the accompanying form will be voted at the Meeting in favor of such proposal.

During the fiscal year ended March 31, 2014,2016, the Company engaged Dixon Hughes Goodman LLP to provide certain audit services, including the audit of the Company’s annual consolidated financial statements and internal control over financial reporting, quarterly reviews of the condensed consolidated financial statements included in the Company’s Forms 10-Q, services performed in connection with filing this Proxy Statement and Information Circular and the Annual Report on Form 10-K by the Company with the U. S. Securities and Exchange Commission (“SEC”), attendance at meetings with the Audit Committee and consultation on matters relating to accounting, tax and financial reporting. Dixon Hughes Goodman LLP has acted as the independent registered public accounting firm (“Independent Auditors”) for the Company since December 31, 2003.

The Audit Committee has appointed Dixon Hughes Goodman LLP as Independent Auditors of the Company for the fiscal year ending March 31, 2015,2017, and the Board of Directors and Audit Committee propose the ratification of such appointment. If our shareholders do not ratify the appointment of Dixon Hughes Goodman LLP at the Meeting, then the Audit Committee will reconsider its selection of Dixon Hughes Goodman LLP.LLP; however, it is not required to change its selection. No representative of Dixon Hughes Goodman LLP will be present at the Company’s Annual General Meeting or available at the Meeting to answer any questions or make any statements with respect to the Company.

Vote Required

Assuming a quorum is present, approval of the ratification of the appointment of Dixon Hughes Goodman LLP as Independent Auditors of the Company for the fiscal year ending March 31, 20152017 requires that a simple majority of the total votes cast with respect to Voting Common Shares present, or represented and entitled to vote at the Meetingby proxy, vote in favor of such proposal.

11

Fees for Audit and Non-Audit Related Matters

The fees charged by Dixon Hughes Goodman LLP for professional services rendered to the Company in connection with all audit and non-audit related matters were as follows:

9

The Audit Committee has concluded that Dixon Hughes Goodman LLP’s provision of the services described above is compatible with maintaining Dixon Hughes Goodman LLP’s independence. The Audit Committee pre-approved all of such services. The Audit Committee has established pre-approval policies and procedures with respect to audit and permittedpermissible non-audit services to be provided by the Company’s independent auditors.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by the Company’s independent auditors in order to assure that the provision of such services does not impair the auditor’s independence. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. Management is required to periodically report to the Audit Committee regarding the extent of services provided by the independent auditors in accordance with this pre-approval, and the fees for the services performed to date. During each of the fiscal years ended March 31, 20142016 and 2013,2015, respectively, all services were pre-approved by the Audit Committee in accordance with this policy.

1210

PROPOSAL 3:  ADVISORY VOTE ON COMPENSATION

OF NAMED EXECUTIVE OFFICERS

The Board of Directors recommends a vote “FOR” the approval of the compensation of our named executive officers as disclosed in the Executive Compensation Discussion Andand Analysis section and the accompanying compensation tables and narrative discussion contained in this Proxy Statement and Information Circular. Abstentions and broker nonvotes will not be counted for purposes of determining whether a majority of votes has been cast in favor of this proposal. Proxies solicited by the Board will be voted “FOR” approval of the compensation, unless a shareholder specifies otherwise.

Under legislation that Congress enacted in 2010, our shareholders may approve, on a non-binding, advisory basis, the compensation of our named executive officers as disclosed in accordance with the executive compensation disclosure rules contained in Item 402 of the U.S. Securities and Exchange Commission’s Regulation S-K. Accordingly, we are seeking input from shareholders with this advisory vote on the compensation of our named executive officers. The vote on this proposal is not intended to address any specific element of compensation; rather, the vote relates to the compensation of our named executive officers as disclosed in the Executive Compensation Discussion and Analysis section and the accompanying executive compensation tables and narrative discussion contained in this Proxy Statement and Information Circular. The Company asks that you support the compensation of our named executive officers as so disclosed. Because your vote is advisory, it will not be binding on the Compensation Committee, the Nominating/Corporate Governance Committee, the Board or the Company. However, the Board will review the voting results and take them into consideration when making future decisions regarding executive compensation.

The Company’s compensation philosophy emphasizes pay for performance. The goal is to proveprovide an opportunity for total compensation that is competitive and sufficient to attract and retain executives and is reflective of our overall executive compensation philosophy which is designed to:

13

We describe the individual elements that make up our total compensation more fully in the Executive Compensation Discussion and Analysis section of this Proxy Statement and Information Circular. We believe our executive compensation programs are structured to support the Company and its business objectives.

Accordingly, for the reasons discussed above, the Board recommends that shareholders vote in favor of the approval of the compensation of our named executive officers as disclosed pursuant to Item 402 of Regulation S-K, including the Executive Compensation Discussion and Analysis section, compensation tables and narrative discussion.

11

Vote Required

Assuming a quorum is present, approval of the compensation of our named executive officers requires that a simple majority of the total votes cast with respect to Voting Common Shares present, or represented and entitled to vote at the Meetingby proxy, vote in favor of such proposal.

BOARD OF DIRECTORS

Committees of the Board of Directors and Meeting Attendance

The Company has not adopted a formal policy that each Directordirector must attend each annual general meeting of shareholders, although Directorsdirectors are encouraged to do so. The Company expects all members of the Board to attend the Meeting barring other significant commitments or special circumstances. All of the Company’s Board members attended the Company’s 20122015 Annual General Meeting of Shareholders. The Company did not hold an Annual General Meeting in 2013. During the Company’s fiscal year ended March 31, 2014,2016, there were 23six meetings of the Board, and each incumbent Directordirector attended at least 75% of the aggregate number of Board meetings and meetings of all committees of the Board on which he served.

The Board of Directors of the Company has the standing committees listed below.

Audit Committee. The

On April 1, 2004, the Board of Directors has established an Audit Committee. From April 1, 2004 until June 30, 2005, the Audit Committee, which was comprised of twothree members namelyduring the fiscal year ended March 31, 2016: until August 13, 2015, the committee consisted of Messrs. Neal (Chair), Bragin and Bragin. Effective June 30, 2005,Fink, and effective August 13, 2015, Mr. Hastings replaced Mr. Neal as the sizeChair of the Audit Committee was expanded from two to three members, and Mr. Fink was added to the Audit Committee. The Audit Committee held five meetings during the fiscal year ended March 31, 2014.2016. Mr. Bragin resigned from the Board of Directors effective July 1, 2016 and the Board appointed Todd B. Pfister to fill the vacancy. Mr. Pfister succeeded Mr. Bragin as a member of the Board’s Audit Committee effective as of July 1, 2016. The Board has determined that Messrs. Neal, BraginHastings, Fink and FinkPfister, the current members of the Audit Committee, satisfy the independence requirements of current Securities and Exchange Commission rules and NASDAQ Global Select Market listing standards. The Board also has determined that Mr. FinkHastings qualifies as an audit committee financial expert as defined under these rules and listing standards.

The Audit Committee assists the Board of Directors with its responsibilities by (A) overseeing the Company’s accounting and financial reporting processes and the audits of the Company’s consolidated financial statements and (B) monitoring (i) the Company’s compliance with legal, risk management and regulatory requirements, (ii) the Company’s independent auditors’ qualifications and independence, (iii) the performance of the Company’s audit function and independent auditors, and (iv) the Company’s systems of internal control with respect to the integrity of financial records, adherence to its policies and compliance with legal requirements.

14

The Audit Committee: has sole responsibility to retain and terminate the Company’s independent auditors, subject to shareholder ratification; has sole authority to pre-approve all audit and non-audit services performed by the Company’s independent auditors and the fees and terms of each engagement; reviews the scope and results of each annual internal audit; and reviews the Company’s audited consolidated financial statements and related public disclosures, earnings press releases and other financial information and earnings guidance provided to analysts or rating agencies. The Audit Committee is governed by a written charter, which sets forth the specific functions and responsibilities of the Audit Committee. A copy of the current Audit Committee charter iswas included asAppendix A to thisthe Proxy Statement and Information Circular.Circular relating to the 2014 Annual General Meeting of Shareholders. The Audit Committee charter is not currently available on the Company’s web site.

12

Compensation Committee

Compensation Committee. On June 30, 2005, the Board of Directors established a Compensation Committee, which iswas comprised of three directors, namely Messrs. Bragin, Fink and Neal (Chair). The Compensation Committee held two meetingsmembers during the fiscal year ended March 31, 2014.2016: until August 13, 2015, the committee consisted of Messrs. Neal (Chair), Bragin and Fink, and effective August 13, 2015, Mr. Hastings succeeded Mr. Neal on the Compensation Committee, with the Chairperson role assumed by Mr. Fink on such date. The Compensation Committee held one meeting during the fiscal year ended March 31, 2016. Mr. Bragin resigned from the Board of Directors effective July 1, 2016 and the Board appointed Todd B. Pfister to fill the vacancy. Mr. Pfister succeeded Mr. Bragin as a member of the Board’s Compensation Committee effective as of July 1, 2016. The Board has determined that Messrs. Bragin, Fink, Hastings and NealPfister, the current members of the Compensation Committee, satisfy the independence requirements of current Securities and Exchange Commission rules and NASDAQ Global Select Market listing standards.standards, and that they are “non-employee directors” pursuant to Rule 16b-3 under the Securities Exchange Act of 1934, as amended.

The principal responsibilities of the Compensation Committee are to evaluate the performance and approve the compensation of the Company’s Chief Executive Officer and other executive officers; prepare an annual report on executive compensation for inclusion in proxy statements of the Company; and oversee the Company’s compensation and benefit plans for key employees and non-employee directors.

The Compensation Committee reviews and approves corporate goals and objectives relevant to the Company’s Chief Executive Officer’s compensation, evaluates the Chief Executive Officer’s performance in light of these goals and objectives and establishes his compensation levels based on its evaluation. This Committeecommittee is also responsible for administration of the Nicholas Financial, Inc. Equity Incentive Plan the Nicholas Financial, Inc. Employee Stock Option Plan and the Nicholas Financial, Inc. Non-Employee Director Stock Option2015 Omnibus Incentive Plan. The specific functions and responsibilities of the Compensation Committee are set forth in its written charter. A copy of the current Compensation Committee charter iswas included asAppendix B to thisthe Proxy Statement and Information Circular.Circular relating to the 2014 Annual General Meeting of Shareholders. The Compensation Committee charter is not currently available on the Company’s web site.

The Compensation Committee may designate one or more subcommittees, each of which must consist of one or more members of the Compensation Committee. Each subcommittee will have and may exercise all the powers and authority of the Compensation Committee, to the extent provided in the committee’s resolutions and to the extent not limited by applicable law or listing standard. The Compensation Committee has designated a subcommittee consisting of Messrs. Fink and Hastings and delegated to it the responsibilities of the Board and the Compensation Committee with respect to any compensation that is intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended, and to perform other duties delegated from time to time by the Board or the Compensation Committee. Each of Messrs. Fink and Hastings meets the requirements to be considered an “outside director” within the meaning of Section 162(m).

Nominating/Corporate Governance Committee.

On June 30, 2005, the Board of Directors established a Nominating/Corporate Governance Committee, which iswas comprised of two directors, namely Messrs. Bragin and Neal. The Nominating/Corporate Governance Committee held one meetingmembers during the fiscal year ended March 31, 2014.2016: until August 13, 2015, the committee consisted of Messrs. Neal (Chair) and Bragin, and effective August 13, 2015, Mr. Hastings succeeded Mr. Neal and Mr. Fink succeeded Mr. Bragin on the Compensation Committee, with the Chairperson role assumed by Mr. Fink on such date.

The Nominating/Corporate Governance Committee held two meetings during the fiscal year ended March 31, 2016. Mr. Pfister was appointed to the Company’s Nominating/Corporate Governance effective as of July 1, 2016 and thereafter assumed the role of Chairperson. The Board has determined that Messrs. BraginFink, Hastings and NealPfister, the current members of the Nominating/Corporate Governance Committee, satisfy the independence requirements of current NASDAQ Global Select Market listing standards. The Nominating/Corporate Governance Committee is governed by a written charter, which will be reviewed on an annual basis. A copy of the current Nominating/Corporate Governance Committee charter is included asAppendix C to this Proxy Statement and Information Circular. The Nominating/Corporate Governance Committee charter is not currently available on the Company’s web site.

13

The principal functions of the Nominating/Corporate Governance Committee are to: identify, consider and recommend to the Board qualified director nominees for election at the Company’s annual meeting; review and make recommendations on matters involving the general operation of the Board and its committees and recommend to the Board nominees for each committee of the Board; and develop and recommend to the Board the adoption and appropriate revision of the Company’s corporate governance practices. The Nominating/Corporate Governance Committee is governed by a written charter, which is reviewed on an annual basis. A copy of the current Nominating/Corporate Governance Committee charter was included as Appendix C to the Proxy Statement and Information Circular relating to the 2014 Annual General Meeting of Shareholders. The Nominating/Corporate Governance Committee charter is not currently available on the Company’s web site.

15

Nominations of Directors

The entire Board by majority vote selects the Directordirector nominees to stand for election at the Company’s annual general meetings of shareholders and to fill vacancies occurring on the Board, based on the recommendations of the Nominating/Corporate Governance Committee. In selecting nominees to recommend to the Board to stand for election as Directors,directors, the Nominating/Corporate Governance Committee will examine each Directordirector nominee on a case-by-case basis regardless of who recommended the nominee and take into account all factors it considers appropriate. While the Nominating/Corporate Governance Committee does not have a formal policy relating specifically to the consideration of diversity in its process to select and evaluate Directordirector nominees, the Committee does consider diversity as part of its overall evaluation of candidates for Directordirector nominees. Specifically, the Company’s Corporate Governance Policies provide that the selection of potential directors should be based on all factors the Nominating/Corporate Governance Committee and the Board consider appropriate, which include issues of diversity, age, background and training, business or administrative experience or skills, dedication and commitment, business judgment, analytical skills, problem-solving abilities and familiarity with regulatory environment. To this end, the Nominating/Corporate Governance Committee believes that the following minimum qualifications must be met by a Directordirector nominee to be recommended to stand for election as Director:director:

The Nominating/Corporate Governance Committee may use various sources for identifying and evaluating nominees for Directors,directors, including referrals from the Company’s current Directors,directors, management and shareholders. The Nominating/Corporate Governance Committee will review the resume and qualifications of each candidate identified through any of the sources referenced above, and determine whether the candidate would add value to the Board. With respect to candidates that are determined by the Nominating/Corporate Governance Committee to be potential nominees, one or more members of the Committeecommittee will contact such

16

candidates to determine the candidate’s general availability and

14

interest in serving. Once it is determined that a candidate is a good prospect, the candidate will be invited to meet with the full Nominating/Corporate Governance Committee, which will conduct a personal interview with the candidate. During the interview, the Committeecommittee will evaluate whether the candidate meets the guidelines and criteria adopted by the Board as well as exploring any special or unique qualifications, expertise and experience offered by the candidate and how such qualifications, expertise and/or experience may complement that of existing Board members. If the candidate is approved by the Nominating/Corporate Governance Committee as a result of the Committee’scommittee’s determination that the candidate will be able to add value to the Board and the candidate expresses his or her interest in serving on the Board, the Committeecommittee will then review its conclusions with the Board and recommend that the candidate be selected by the Board to stand for election by the shareholders or fill a vacancy or newly created position on the Board.

Pursuant to the Nominating/Corporate Governance Committee charter as currently in effect, the Committeecommittee will investigate and consider shareholder recommendations for Directordirector nominations submitted in writing by a shareholder (or group of shareholders) owning 5% or more of the Company’s outstanding Common Shares for at least one year. Recommendations for Directordirector nominees to be considered by the Nominating/Corporate Governance Committee, including recommendations from shareholders of the Company, should be sent in writing, together with a description of each proposed nominee’s qualifications and other relevant biographical information concerning such proposed nominee, to the Nominating/Corporate Governance Committee of the Board of Directors, care of the Secretary of the Company, at the Company’s headquarters, and must be received at least 120 days prior to the anniversary date of the release of the proxy statement relating to the prior year’s Annual General Meeting of Shareholders.

Please refer to the section “Shareholder Proposals” for the deadlines by which shareholders must submit shareholder proposals under Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and outside of Rule 14a-8.

Leadership Structure and Role in Risk Oversight

Mr. Vosotas, the founder of the Company, served as both our Chief Executive Officer, or CEO, and Chairman of the Board from the Company’s inception in 1985 until May 31, 2014. From May 31, 2014 until Mr. Vosotas’ resignation as Chairman of the Board on June 25, 2014, Ralph T. Finkenbrink served as our President and CEO and Mr. Vosotas served as our Chairman of the Board. Since July 1, 2014, Mr. Finkenbrink has served as both our Chief Executive Officer, or CEO, and Chairman of the Board. Our Board does not have a policy on whether or not the roles of CEO and chairmanChairman should be separate; indeed, the Board has the authority to choose its chairmanChairman in any way it deems best for our Company at any given point in time. Accordingly, our Board reserves the right to vest the responsibilities of the CEO and chairmanChairman in the same person or in two different individuals, depending upon what it believes is in the best interests of the Company. Our Board currently believes that Mr. Finkenbrink is best qualified to serve as both our Chairman and CEO, given his long history with our Company, his ownership interest in the Company and the current size of both the Company and our Board. The Company does not have a lead independent director.

Our Board, and, in particular, the Audit Committee are involved on an ongoing basis in the general oversight of our material identified enterprise-related risks. Each of our CEO and Chief Financial Officer, with input as appropriate from other appropriate management members, reports and provides relevant information directly to either our Board and/or the Audit Committee on various types of identified material financial, reputational, legal and business risks to which we are or may be subject, as well as mitigation strategies for certain key identified material risks. Our Board’s and Audit Committee’s roles in our risk oversight process have not affected our Board leadership structure.

17

Communications with Board of Directors

Shareholders may communicate with the full Board or individual Directorsdirectors by submitting such communications in writing to Nicholas Financial, Inc., Attention: Board of Directors (or the individual Director(s)director(s)), Building C, 2454 McMullen Booth Road, Building C, Clearwater, Florida 33759. Such communications will be delivered directly to the appropriate Director(s)director(s).

15

Report of the Audit Committee⁽¹⁾

The Audit Committee (the “Committee”) oversees the Company’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the consolidated financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the Committee reviewed the audited consolidated financial statements in the Annual Report with management including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the consolidated financial statements.

The Committee reviewed with the Company’s Independent Auditors, who are responsible for expressing an opinion on the conformity of those audited consolidated financial statements with generally accepted accounting principles, their judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required to be discussed with the Committee under standards of the Public Company Accounting Oversight Board. The Audit Committee also discussed with the Company’s Independent Auditors matters related to the financial reporting process required to be discussed by Statement on Auditing StandardsStandard No. 61, “Communication with Audit Committees.”16 as adopted by the Public Company Accounting Oversight Board. In addition, the Audit Committee has received the written disclosures and the letter from the Independent Auditors required by Rule 3526 of the Public Company Accounting Standards Board, as currently in effect, and the Audit Committee discussed with the Independent Auditors that firm’s independence and considered the compatibility of nonaudit services with the Independent Auditors’ independence.

The Committee discussed with the Company’s Independent Auditors the overall scope and plans for their audit. The Committee meets with the independent auditors,Independent Auditors, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting. The Committee held five meetings during the fiscal year ended March 31, 2014.

In reliance on the reviews and discussions referred to above, the Committee recommended to the Board of Directors (and the Board has approved) that the audited consolidated financial statements be included in the Annual Report for filing with the Commission. The Committee and the Board have also recommended, subject to shareholder approval, the appointment ofappointed Dixon Hughes Goodman LLP as the Company’s Independent Auditors for the fiscal year ending March 31, 2015.

18

The foregoing report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates such report by reference therein.

Alton R. Neal,Robin J. Hastings, Audit Committee Chair

Scott Fink, Audit Committee Member

Stephen Bragin, Audit Committee Member (retired from the Audit Committee effective July 1, 2016)

June 14, 2016

16 2014

EXECUTIVE OFFICERS AND COMPENSATION

The Company currently has three (3) executive officers: Ralph T. Finkenbrink, President and Chief Executive Officer; Kevin D. Bates, Senior Vice President – Branch Operations; and Katie L. MacGillivary, Vice President – Finance, Chief Financial Officer and Corporate Secretary. For additional information regarding Messrs. Finkenbrink and Bates, see “Proposal 1: Election of Directors” above.

Ms. MacGillivary, age 35,37, joined the Company as Controller in April 2010 and has also served as Vice President – Finance since May 2012. Prior to joining the Company, Ms. MacGillivary served as the controller for Harden & Associates, an insurance and risk management provider in Jacksonville, Florida, from January 2009 to April 2010. Prior to 2009, she held several accounting positions with TECO Energy, Inc. in Tampa, Florida, and worked as an auditor at Ernst & Young LLP. Ms. MacGillivary received her B.S. degree in Accounting from the University of Central Florida in 20022001 and her M.B.A. degree from the University of Florida in 2008. She is a Certified Public Accountant licensed to practice in the State of Florida.

Executive Compensation Discussion and Analysis

Overview of Executive Compensation Philosophy

The primary objectives of the Compensation Committee of the Company’s Board of Directors with respect to executive compensation are to attract, motivate and retain the best executive talent available and to align the Company’s executive compensation structure with shareholder value creation. More specifically, the Compensation Committee believes that executive compensation should:

19

Role of the Compensation Committee

The Compensation Committee is responsible for:

Through this process, the Committee reviews and determines all aspects of compensation for the Named Executive Officers (as defined below) of the Company. The Named Executive Officers of the Company for the fiscal year ended March 31, 2014 and for the first two months of the fiscal year ending March 31, 2015 were: Peter L. Vosotas, Chairman of the Board, CEO and President; and Ralph T. Finkenbrink, Senior Vice President, Chief Financial Officer and Secretary. The Named Executive Officers of the Company since May 31, 2014 are: Ralph T. Finkenbrink, President and CEO; Kevin D. Bates, Senior Vice President – Branch Operations; and Katie L. MacGillivary, Vice President – Finance, Chief Financial Officer and Corporate Secretary.

17

Process for Determining Executive Compensation

The Compensation Committee is responsible for establishing and monitoring adherence to the Company’s compensation programs. When setting executive compensation, the Compensation Committee applies a consistent approach for all Named Executive Officers. It intends that the combination of elements of executive compensation closely align the executives’ interest with those of the Company’s shareholders. Target total compensation is generally comprised of base salary, annual cash bonus and long-term incentive compensation in the form of equity grants. The Compensation Committee generally reviews and adjusts executive target total compensation levels annually, in February and March ofapproves the base salary, annual cash bonus and incentive equity awards for each year. Given the senior management changes effective May 31, 2014, however, the review and adjustment of executive target compensation levels for fiscal year 2015 was completed in June, 2014. Neither the Board of Directors nor the Compensation Committee has retained any independent compensation consultants since 2007.Named Executive Officer.

The Compensation Committee currently initiates the compensation process, seeking input and information from the CEO and the full Board of Directors before finalizing any salary increases, employment contracts, bonus plans or long-term incentive equity awards for Named Executive Officers. In considering the appropriate compensation for each of the Named Executive Officers, the Compensation Committee takes into consideration, among other things, the CEO’s recommendations, the executive pay for executive officers in comparable positions for companies in the Company’s peer group, the level of inherent risk associated with the position, the specific circumstances of the executive, and the advisory votes of the Company’s shareholders with respect to the compensation of the Named Executive Officer for prior fiscal years. TheIn addition, in May 2016, the Compensation Committee approvesdirectly retained Frederic W. Cook & Co., Inc. as an independent compensation consultant to, among other things, review the base salary, annual cash bonusdesign of the Company’s executive and long-term incentive equity awards fordirector compensation programs and make recommendations on the CEO and for each Named Executive Officer belowbasis of that review in order to achieve the CEO level.

The Compensation Committee has reviewed the aggregate amounts and mix of all components of the CEO’s and the other Named Executive Officer’sOfficers’ compensation, including base salary, annual cash bonus, long-termequity incentive compensation (with no grants made during the fiscal year ended March 31, 2016), accumulated (realized and unrealized) stock option and restricted stock gains, the value to the executive and cost to the Company of all perquisites and other personal benefits and the actual projected payout obligations for severance and change-in-control scenarios. A tally sheet setting forth all the above components was prepared affixing dollar amounts under the various payout scenarios for the CEO and the other Named Executive Officer and was reviewed by the Compensation Committee.

Compensation Components

The Company’s executive compensation program currently consists of three key elements: base salary, annual incentive bonus and long-term equity incentive compensation.

Base Salary.

The Compensation Committee establishes base salaries for the Company’s Named Executive Officers based on the scope of their responsibilities, taking into account competitive market compensation paid by other companies in the

18

Company’s peer group for similar positions. Generally, the Compensation Committee believes that executive base salaries should be targeted near the median of the range of salaries for executives in similar positions and with similar responsibilities at comparable companies in line with our compensation philosophy.

Base salaries are reviewed annually, and may be adjusted to realign salaries with market levels after taking into account individual responsibilities, performance and experience.

The annual base salaries for Mr. Vosotas, the Company’s recently retired CEO, and Mr. Finkenbrink, the Company’s former Chief Financial Officer and current CEO, for the fiscal year ended March 31, 2014 (“Fiscal 2014”), and for the two months ended May 31, 2014, were $360,000 and $250,000, respectively. The current annual base salaries for Mr. Finkenbrink, the Company’s current CEO, Mr. Bates, the Company’s current Senior Vice President – Branch Operations, and Ms. MacGillivary, the Company’s current Chief Financial Officer, for the fiscal year ended March 31, 2016 (“Fiscal 2016”) were $375,000, $250,000 and $175,000, respectively. Effective April 1, 2016, the annual base salaries for Mr. Finkenbrink, Mr. Bates and Ms. MacGillivary increased to $385,000, $260,000 and $195,000, respectively, for the fiscal year ending March 31, 20152017 (“Fiscal 2015”2017”) are $325,000, $225,000 and $150,000, respectively.. The Compensation Committee believes that the current base salaries of the Company’s Named Executive Officers are generally competitive at the median salary ranges observed at comparable companies.

Annual Incentive Bonus. Annual cash incentive bonuses are intended to compensate the Named Executive Officers for achieving the Company’s annual financial goals.

21

For Fiscal 2014, the Company had in effect an annual incentive bonus program for each of its Named Executive Officers. In addition to his annual base salary, each Named Executive Officer was entitled to receive cash bonuses for Fiscal 2014 based upon the Company’s revenues and operating income exceeding certain target percentages. The tables below summarize the cash bonuses payable to each of the Named Executive Officers based upon meeting or exceeding the indicated growth targets:

Pursuant to the foregoing program, neither Mr. Vosotas nor Mr. Finkenbrink received any cash bonuses for Fiscal 2014.

In addition to his or her annual base salary, each of the current Named Executive Officers maywas entitled to receive cash bonuses for Fiscal 20152016 at the discretion of the Compensation Committee. The Compensation Committee awarded cash bonuses for Fiscal 2016 of the Company’s Board of Directors.$32,500, $25,000 and $17,500 to Mr. Finkenbrink, Mr. Bates and Ms. MacGillivary, respectively. In determining such bonuses, if any,the Compensation Committee considered various factors it deemed appropriate, including (without limitation) profitability, portfolio growth, branch expansion, and competitive circumstances.

Each of the Named Executive Officers is eligible to receive a cash bonus for Fiscal 2017, with maximum bonus amounts corresponding to 35% of annual base salary for Mr. Finkenbrink and 25% of annual base salary for Mr. Bates and Ms. MacGillivary. In Fiscal 2017, the cash bonus will be composed of two distinct components: a non-discretionary, or performance-based, component and a discretionary component.

Performance-Based Bonus

The amount of non-discretionary, or performance-based, cash bonus actually earned by a Named Executive Officer will be based on (i) the cash target allocation for such Named Executive Officer (the “Cash Target Allocation”) multiplied by (ii) the overall payout factor (the “Overall Payout Factor”).

The Cash Target Allocation for Fiscal 2017 is as follows: Mr. Finkenbrink: 17.5% of annual base salary; Mr. Bates: 12.5% of annual base salary; and Ms. MacGillivary: 12.5% of annual base salary.

The Overall Payout Factor, the performance metrics, and the “threshold,” “target,” and “maximum” levels of performance for the performance-based bonus are as described below under “Performance-Based Award.”

Discretionary Bonus

The discretionary component of the cash bonus will be no higher than 17.5% (in the case of Mr. Finkenbrink) and 12.5% (in the case of each of Mr. Bates and Ms. MacGillivary) of the Named Executive Officer’s current annual base salary. In determining the discretionary component, the Compensation Committee will consider various factors it deems appropriate, such as (without limitation) profitability, portfolio growth, branch expansion, and competitive circumstances. The

19

Equity Incentive Compensation Committee awarded Mr. Finkenbrink a $25,000 cash bonus in connection with his becoming President and CEO of the Company and entering into an amended and restated employment agreement to reflect, among other things, the change in his position. The Compensation Committee believed this bonus was appropriate to recognize Mr. Finkenbrink’s increased responsibilities in his new positions.

Long-Term Equity Compensation. The Compensation Committee believes that stock-based awards promote the long-term growth and profitability of the Company by providing executive officers of the Company with incentives to improve shareholder value and contribute to the success of the Company and by enabling the Company to attract, retain and reward the best available persons for executive officer positions. The

Prior to August 13, 2015, the Company currently maintains two long-term equity incentive plans for executive officers –maintained the Nicholas Financial, Inc. Equity Incentive Plan (the “Equity Plan”) and the Nicholas Financial, Inc. Employee Stock Option Plan (the “Employee Plan”). The EmployeeEquity Plan was terminated on August 9, 2006, and13, 2015. While no new awards will behave been granted under the Equity Plan since that date, awards previously granted under such plan, although stock optionsincluding awards granted under such planto the Named Executive Officers, remain outstanding. Effective August 13, 2015, the Company adopted the Nicholas Financial, Inc. 2015 Omnibus Incentive Plan (the “Omnibus Incentive Plan” or “Plan”). The Omnibus Incentive Plan allows for the grant of equity awards and still outstanding will continuecash incentive awards to be subjecteligible individuals, with up to all terms and conditions750,000 Common Shares reserved for the grant of such plan.

The Compensation Committee may grantequity awards under the EquityPlan. The administrator of the Omnibus Incentive Plan (currently the Compensation Committee of our Board of Directors) (the “Administrator”) may designate any of the following as a participant from time to time, to the extent of the Administrator’s authority: any officer (including the Named Executive Officers) or other salaried key employee of the Company or its affiliates. Asaffiliates (including the Named Executive Officers); any individual who the Company or one of its affiliates has engaged to become an officer or employee; any consultant or advisor who provides services to the Record Date, there were approximately five officers and 121 other salaried key employees (notCompany or its affiliates; or any director, including officers)a non-employee director. Currently, the persons eligible to participate in the Equity Plan.

NeitherPlan consist of approximately 335 employees and three non-employee directors. A more detailed description of the Company’sEquity Plan can be found below under the heading “Summary of Equity Plan” beginning on page 34. A more detailed description of the Omnibus Incentive Plan can be found below under the heading “Summary of Omnibus Incentive Plan” beginning on page 34.

No equity awards were granted to the Named Executive Officers received anyfor Fiscal 2016.

The equity awards for Fiscal 2014. The Company’s currentgranted to the Named Executive Officers received the following equity awards under the EquityOmnibus Incentive Plan as partfor Fiscal 2017 consist of two distinct components: a performance-based award and an award of time-vested stock.

Performance-Based Award

On July 12, 2016, the Fiscal 2015 incentive bonus program: (i) on June 13,

22

2014, Mr. Finkenbrink wasCompensation Committee awarded 20,000the Named Executive Officers performance units under the Omnibus Incentive Plan (the “Performance Unit Program”), with each performance unit representing the right to receive a number of shares of restricted stock, whichtogether with dividend equivalents, if applicable, based on (i) the equity target allocation (the “Equity Target Allocation”) multiplied by (ii) the Overall Payout Factor, both as described below. The earned shares of restricted stock, together with dividend equivalents, if applicable, underlying the performance units will vest on the second anniversary of the last day of the performance period (on March 31, 2019 for the Fiscal 2017 grant), and will be settled in Common Shares as soon as administratively feasible following the vesting date. The payout of the Common Shares does not affect any programs dependent on earned compensation. Earned awards are subject to the Company’s clawback policy.

The Equity Target Allocation for the Named Executive Officers is as follows: Mr. Finkenbrink: 11,704 shares of restricted stock; Mr. Bates: 6,367 shares of restricted stock; and Ms. MacGillivary: 4,682 shares of restricted stock.

There are two performance metrics under the Performance Unit Program: (i) the Company’s operating expenses as a percentage of the Company’s average finance receivables and (ii) the write-off to liquidation ratio. In calculating the Company’s operating expenses as a percentage of average finance receivables for purposes of the Performance Unit Program, the Company’s operating expenses would not include any costs relating to the implementation of a new loan servicing system. The write-off to liquidation ratio is defined as net charge-offs divided by liquidation. Liquidation is

20

defined as beginning receivable balance plus current period purchases minus voids and refinances minus ending receivable balance.

For each performance metric, a “threshold”, “target” and “maximum” level of performance is determined at grant. If performance is below the threshold level, the payout factor for that metric is 0% and no shares of restricted stock are earned. If performance is at the target level, the payout factor for that metric is 100%. If performance is at the maximum level, the payout factor for that metric is 150%. The payout factor for each metric is adjusted proportionally for performance that falls between the threshold and the maximum levels. Because each of the two performance metrics is weighted 50%, the Overall Payout Factor is calculated as a simple average of the payout factors for each metric.

The following table sets forth the payout factors for the specified levels of performance with respect to each metric:

As an example, if the Company’s operating expenses as a percentage of average finance receivables for Fiscal 2017 (calculated as described above) were 9.875%, and the write-off to liquidation ratio were 9.2%, the payout factors for such metrics would be 125% and 80%, respectively. The Overall Payout Factor would therefore be 102.5%, representing the simple average of the payout factors for the two metrics. Based on the Equity Target Allocation, the Named Executive Officers would therefore have earned the following number of shares of restricted stock under the Performance Unit Program: Mr. Finkenbrink: 11,997, Mr. Bates: 6,526 and Ms. MacGillivary: 4,799. Furthermore, with an Overall Payout Factor of 102.5%, the Named Executive Officers would also have earned the following performance-based cash bonuses: Mr. Finkenbrink: $66,059, Mr. Bates: $33,313 and Ms. MacGillivary: $24,984.

Award of Time-Vested Stock

On July 12, 2016, the Compensation Committee awarded to the Named Executive Officers the following number of shares of restricted stock together with dividend equivalents, if applicable, under the Omnibus Incentive Plan: Mr. Finkenbrink: 11,704; Mr. Bates: 6,367; and Ms. MacGillivary: 4,682. The shares of restricted stock will vest on March 31, 2017; (ii) on June 13, 2014, Mr. Finkenbrink was granted options to purchase 40,000 Common Shares, which options will vest in five equal installments commencing as of the first anniversary of the date of grant and expire on June 13, 2024; (iii) on June 13, 2014, Mr. Bates was awarded 12,000 shares of restricted stock, which shares will vest on March 31, 2017; (iv) on June 13, 2014, Mr. Bates was granted options to purchase 25,000 Common Shares, which options will vest in five equal installments commencing as of the first anniversary of the date of grant and expire on June 13, 2024; (v) on June 13, 2014, Ms. MacGillivary was awarded 8,000 shares of restricted stock, which shares will vest on March 31, 2017; and (vi) on June 13, 2014, Ms. MacGillivary was granted options to purchase 15,000 Common Shares, which options will vest in five equal installments commencing as of the first anniversary of the date of grant and expire on June 13, 2024.

The Company cannot currently determine the number or type of additional awards that may be granted to eligible participants under the Equity Plan in the future. Such determinations will be made from time to time by the Compensation Committee (or Board).2019.

Change inof Control

The Company has change inof control provisions in its employment agreements with two of its three current Named Executive Officers (Messrs. Finkenbrink and Bates)Bates and Ms. MacGillivary), the Equity Plan and the Employee Plan.Omnibus Incentive Plan (including under the Performance Unit Program). The Company has no additional change inof control contracts or arrangements with any of the Named Executive Officers. The current employment agreements with these twothe three Named Executive Officers were entered into on June 30, 2014.in July 2015. For further information regarding these employment agreements, see “Potential“Potential Payments Upon Termination or a Change-in-Control”Change of Control – Employment Agreements” beginning on page 3028 and “Summary“Summary of Employment Agreements With Named Executive Officers”Officers” beginning on page 36.32.

21

The change inof control provisions in the plans and the employment agreements are designed to make a change inof control transaction neutral to the economic interests of employees that might be involved in considering such a transaction. The employees subject to these provisions would likely not be in a position to influence the Company’s performance after a change inof control or may not be in a position to earn their incentive awards or vest in their equity awards after a change inof control. Thus, the provisions are meant to encourage employees that may be involved in considering a change inof control transaction to act in the interests of the Company’s shareholders rather than their own interests.

The change inof control provisions in the employment agreements with Named Executive Officers and under the Performance Unit Program are described starting on page 3028 under “Potential“Potential Payments Upon Termination or a Change-In-Control.Change of Control – Employment Agreements” and “– Equity Incentive Plans.” Generally, the Company’s equity compensation plans provide that restricted stock, restricted stock units and performance units will vest in full, and options to purchase Common Shares will become immediately exercisable, either upon a change inof control if the successor company does not assume or replace the award, or upon termination of employment without cause within one year after a change inof control.

The Compensation Committee believes that the provisions provided for under both our employment agreements and equity compensation plans are appropriate since an employee’s position could be adversely affected by a change inof control even if he is not terminated. Our equity compensation plans provide, however, that the Compensation Committee may determine in advance of the change inof control event that the provisions would not apply and therefore no accelerated vesting would occur.

23

Other Compensation

Consistent with the Compensation Committee’s pay-for-performance compensation philosophy, the Company intends to continue to maintain modest executive benefits and perquisites for executive officers; however, the Compensation Committee, in its discretion, may revise, amend or add to the officer’s executive benefits and perquisites if it deems it advisable. The Compensation Committee believes these benefits and perquisites are currently at or below median competitive levels for companies in the Company’s peer group. The Company does not provide pension arrangements, post-retirement health coverage, or similar benefits for its executives or employees.

The following table generally illustrates the benefit plans and perquisites that the Company does and does not provide and identifies those employees who may be eligible to receive them. Perquisites for the Named Executive Officers are detailed withinin the footnotes ofto the summary compensation table.Summary Compensation Table.

22

24

23

Policy Regarding Retroactive Adjustments

Section 304 of the Sarbanes-Oxley Act of 2002 authorizes a company to claw back certain incentive-based compensation and stock profits of the Chief Executive Officer and Chief Financial Officer if the company is required to prepare an accounting restatement due to the material noncompliance of the company, as a result of misconduct, with any financial reporting requirement under the securities laws. The Compensation Committee does not otherwise have a formal policy regarding whether the Committee will make retroactive adjustments to, or attempt to recover, cash or share-based incentive compensation granted or paid to executive officers in which the payment was predicated upon the achievement of certain financial results that are subsequently the subject of a restatement. The Committee may seek to recover any amount determined to have been inappropriately received by the individual executive to the extent permitted by applicable law.

Tax, Accounting and Other Considerations

Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), limits the Company’s deduction of annual compensation paid to the Named Executive Officers to $1 million per employee, unless the compensation meets certain specific requirements to qualify as performance-based compensation. The Compensation Committee has considered the Company’s ability to deduct from taxable income certain performance based compensation under Section 162(m) of the Code. At the current compensation levels in effect for the Named Executive Officers, tax deductibility under Section 162(m) was not a determinative factor in the design of the Company’s compensation program.

Section 280G of the Code limits the Company’s ability to take a tax deduction for certain “excess parachute payments” (as defined in Code Section 280G) paid in connection with a change in control transaction, and Section 4999 of the Code imposes excise taxes on certain executives who receive “excess parachute payments.” The Compensation Committee considers the adverse tax liabilities imposed by Code Sections 280G and 4999, as well as other competitive factors, when it designs and implements arrangements that may be triggered upon a change in control for all potentially affected employees, including the Company’s Named Executive Officers.

Various rules under generally accepted accounting principles determine the extent to which and the manner in which the Company accounts for grants under its long term equity incentive plans in its financial statements. The Compensation Committee takes into consideration the accounting treatment under Financial Accounting Standards Board (“FASB”)

25

Accounting Standards Classification (“ASC”) Topic 718, “Stock Compensation” (formerly, FAS 123(R)) (“ASC Topic 718”), when determining the types of and value of grants under its long term equity incentive plans for all employees, including the Company’s Named Executive Officers. The accounting treatment of such grants, however, is not determinative of the type, timing, or amount of any particular grant of equity-based compensation to the Company’s employees.

Compensation Committee Report

The Compensation Committee of the Board of Directors has reviewed and discussed the foregoing “Executive Compensation Discussion and Analysis” with management of the Company and, based upon such review and discussion, has recommended to the Board that the “Executive Compensation Discussion and Analysis” be included in this Proxy Statement and Information Circular for incorporation by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2014.

Alton R. Neal, Compensation Committee Chair2016.

Scott Fink, Compensation Committee MemberChair

Stephen Bragin,Robin J. Hastings, Compensation Committee Member

Todd B. Pfister, Compensation Committee Member (appointed to the Compensation Committee effective July 1, 2016) July 12, 2016

24

Compensation Committee Interlocks and Insider Participation

During the fiscal year ended March 31, 2014,2016, the Compensation Committee was comprised, until August 13, 2015, of Messrs. Neal, Fink and Bragin, and effective August 13, 2015, of Messrs. Fink, Bragin and Hastings, none of whom is, or ever has been, an employee or officer of the Company or any of its subsidiaries.subsidiaries, and none of whom during such fiscal year had any relationship requiring disclosure under Item 404 of Regulation S-K. During the fiscal year ended March 31, 2014,2016, none of the Named Executive Officers of the CompanyCompany’s executive officers served on the board of directors or compensation committee (or other board committee performing equivalent functions) of any other entity, one of whose executive officers served on the Board of Directors and/or Compensation Committee of the Company.

Effective July 1, 2016, Todd B. Pfister replaced Mr. Bragin on the Compensation Committee. Mr. Pfister was a partner with the law firm Foley & Lardner LLP until his retirement from that firm in June 2016. Prior to July 1, 2016, Foley & Lardner LLP provided legal services to the Company from time to time. During the fiscal year ended March 31, 2016, the Company paid Foley & Lardner LLP $433,947 with respect to such services, and during the current fiscal year, the Company paid Foley & Lardner LLP $6,851 with respect to such services.

26

Summary Compensation Table

The following table sets forth for each of the Named Executive Officers: (i) the U.S. dollar value of base salary and bonus earned during each of the fiscal years ended March 31, 2014, 20132016, 2015 and 2012,2014, respectively; (ii) the aggregate grant date fair value (in U.S. dollars) of stock and option awards granted during each of such fiscal years, computed in accordance with ASC Topic 718; (iii) the U.S. dollar value of earnings for services pursuant to awards granted during each of such fiscal years under non-equity incentive plans; (iv) the change in pension value and non-qualified deferred compensation earnings during each of such fiscal years; (v) all other compensation for each of such fiscal years; and (vi) the U.S. dollar value of total compensation for each of such fiscal years.

Note:  All of the above compensation amounts are expressed in U.S. Dollars

Name and Principal Position		Fiscal   Year		Salary ($)				Bonus ($)				Stock Awards ($)				Option Awards ($)				All Other Compensation ($)				Total ($)
Ralph T. Finkenbrink President and Chief Executive Officer		2016 2015 2014		$  $  $	375,000  312,466  250,000				$32,500 $60,000				--           $287,400 (2)				--         $82,884 (3)				$  9,200 (1)    $  8,850 (4)    $  9,475 (5)			$416,700      $751,600      $259,475
Kevin D. Bates Senior Vice President-Branch Operations (14)		2016 2015		$  $	250,000  210,795				$25,000 $25,000				--          $177,440 (7)				--         $51,803 (8)				$  4,050 (6)    $  3,700 (9)			$279,050      $468,738
Katie L. MacGillivary Vice President-Finance, Chief Financial Officer and Corporate Secretary (15)		2016 2015		$  $	175,000  146,658				$17,500 $15,000				--           $114,960 (11)	��			--         $31,082 (12)				$  1,650 (10)  $  1,300 (13)			$194,150      $309,000

25

27

Grants of Plan-Based Awards

The following table sets forth information regarding all plan-based awards that were made to theNo Named Executive OfficersOfficer was granted a plan-based award during the fiscal year ended March 31, 2014 including incentive plan awards (equity-based and non-equity based) and other plan-based awards. Disclosure on a separate line item is provided for each grant of an award made to a Named Executive Officer during such fiscal year. The information supplements the dollar value disclosure of stock, option and non-stock awards in the Summary Compensation Table by providing additional details about such awards. Equity incentive-based awards are subject to a performance condition as such term is defined by ASC Topic 718. Non-equity incentive plan awards are not subject to ASC Topic 718 and are intended to serve as an incentive for performance to occur over a specified period.2016.

28

Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table

For the fiscal year ended March 31, 2014,2016, we maintained the following executive compensation programs for our Named Executive Officers:

We include further details regarding these programs, including information on performance criteria and vesting provisions, in the “Executive“Executive Compensation Discussion and Analysis”Analysis” section beginning on page 19.17.

26

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth information regarding outstanding option and stock awards held by the Named Executive Officers at March 31, 20142016 including the number of shares underlying both exercisable and unexercisable portions of each stock option as well as the exercise price and expiration date of each outstanding option.

2927

Option Exercises and Stock Vested

The following table sets forth information regarding each exercise of stock options and vesting of restricted stock during Fiscal 20142016 for each of the Named Executive Officers on an aggregated basis:

Pension Benefits

The Company does not provide pension arrangements or post-retirement health coverage for its executives or employees.

Nonqualified Deferred Compensation

The Company does not provide any nonqualified defined contribution or other nonqualified deferred compensation plans.

Potential Payments Upon Termination or a Change-in-ControlChange of Control

Employment Agreements

The Company has separate employment agreements with twoall three of its current Named Executive Officers, namely Ralph T. Finkenbrink, and Kevin D. Bates. The Company also had in effect an employment agreement with PeterBates and Katie L. Vosotas prior to his retirement as President and Chief Executive Officer of the Company on May 31, 2014.MacGillivary. Mr. Finkenbrink’s and Mr. Bates’ employment agreement wasagreements were in effect during Fiscal 20142016 and waswere amended and restated on June 30, 2014. Mr. Bates’ employment agreement wasJuly 2, 2015. Ms. MacGillivary entered into an agreement on June 30, 2014. He did not have an employment agreement during Fiscal 2014.July 2, 2015. The payments to be made to these Named Executive Officers pursuant to such employment agreements in the event of disability or death, involuntary termination without cause and termination following a change inof control are described below. These employment agreements are described in greater detail under “Summary of Employment Agreements with Named Executive Officers” beginning on page 36.32.

30

Payments Made Under the Employment Agreements Upon Death or Disability

In the event of the termination of employment due to his or her death or disability, a Named Executive Officer will receive only such compensation and other benefits to which he or she was entitled under his or her employment agreement, under the terms of his or her outstanding equity plan awards (as described further below), or otherwise as an employee of the Company through the termination date, including payments of base salary through the calendar month in which such termination occurs.

28

Payments Made Under the Employment Agreements Upon Termination Without Cause, or Constructive Termination or Change of Control

In the event of the termination of a Named Executive Officer’s employment (i) by the Company other than for cause (as defined in his or her employment agreement) or (ii) by the Named Executive Officer upon (a) a good faith determination by the Named Executive Officer that there has been a material breach of his or her employment agreement by the Company, (b) a material adverse change in the Named Executive Officer’s working conditions or status, (c) a significant relocation of the Named Executive Officer’s principal office, or (d) upon or within the two-year period following a change of control, of the Company, a good faith determination by him or her that there has been any of the following: a breach of his or her employment agreement by the Company, any adverse change in his or her working conditions, status, authority, duties, responsibilities (including reporting other than directly to the Board of Directors) or any requirement that he or she relocate his or her principal office to a location that is more than ten miles from the location of his or her principal office immediately prior to the change of control, then the Named Executive Officer will be paid (subject to the Section 280G cap described below), a one-time, lump-sum severance payment equal to two times the sum of (A) the Named Executive Officer’s annual base salary in effect at the time of such termination (or, following a change of control, the annual base salary, if higher, in effect during the 180 days prior to the change of control) and (B) the Named Executive Officer’s average annual bonus for the two full calendar years immediately preceding such termination.termination (or, following a change of control, the average annual bonus, if higher, for the two full calendar years immediately preceding the change of control). If such termination of employment occurs during the two years following a change of control, then the Named Executive Officer will also receive the following benefits:

(i)     all restricted stock, restricted stock unit awards, stock options and stock appreciation rights will become fully and immediately vested;

(ii)    any performance shares, performance units or similar performance-based equity awards will be deemed earned on a pro rated basis according 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);

(iii)   up to 18 months of benefits continuation;

(iv)   up to 2 years of outplacement services, capped at 10% of the Named Executive Officer’s annual base salary immediately prior to the date of the change of control (or, if higher, immediately prior to the Employee’s termination of employment); and

(v)    up to $15,000 of fees and expenses of consultants and/or legal or accounting advisors.

A “change of control” is defined in the employment agreements with the Named Executive Officers generally as the occurrence of any of the following:

(i)     any person, entity,events that would constitute a change of control under the Plan or group acting in concert (other than (A) the Company or any of its subsidiaries, (B) a trustee or other fiduciary holding securities under any employee benefit plan of the Company or any of its subsidiaries, (C) an underwriter temporarily holding securities pursuant to an offering of such securities or (D) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock in the Company), becomes the beneficial owner of securities of the Company which, together with securities previously owned, confer upon such person, entity or group the combined voting power, on any matters brought to a vote of shareholders, of twenty percent (20%) or more of the then outstanding shares of voting securities of the Company; or

(ii)    the sale, assignment or transfer of assets of the Company or any of its subsidiaries, in a transaction or series of transactions, in which the aggregate consideration received or to be received by the Company or any such subsidiary in connection with such sale, assignment or transfer is greater than fifty percent (50%) of the book value, as determined by the Company in accordance with generally accepted accounting principles, of the Company’s assets determined on a consolidated basis immediately before such transaction or the first of such transactions; or

31

(iii)   the merger, consolidation, share exchange or reorganization of the Company (or one or more direct or indirect subsidiaries of the Company) as a result of which the holders of all of the shares of capital stock of the Company as a group would receive less than fifty percent (50%) of the combined voting power of the voting securities of the Company or the voting securities of the surviving or resulting entity or any parent thereof immediately after such merger, consolidation, share exchange or reorganization; or

(iv)   the adoption of a plan of complete liquidation or the approval of the dissolution of the Company; or

(v) 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 the employment agreements.

As of the end of Fiscal Year, the definition of “change of control” in Mr. Vosotas’ and Mr. Finkenbrink’s employment agreements also included the commencement of a tender or exchange offer which, if successful, would result in a change of control of the Company. This provision was eliminated in the amendment and restatement of Mr. Finkenbrink’s employment agreement on June 30, 2014, and was not included in Mr. Bates’ employment agreement.

As of the end of Fiscal 2014, the employment agreement of each of Mr. Vosotas and Mr. Finkenbrink provided that, ifIf any severance payment, either alone or when added to any other payment or benefit to which thea Named Executive Officer was entitled from the Company, exceeded the amount that may be paid by the Company without a loss of deduction under Section 280G of the Code, then the severance payment and any other such payment or benefit would be reduced to an amount that would not result in a loss of deduction.

The current employment agreements with Mr. Finkenbrink and Mr. Bates address Section 280G of the Code differently. They provide that, if any severance payment, either alone or when added to any other payment or benefit to which the officer is entitled from the Company exceeds the amount that may be paid by the Company without a loss of deduction under Section 280G of the Code, then, under the terms of his or her employment agreement, the severance payment and any other such payment or benefit will be either cut back, to a level below the level that would trigger the loss of deduction, or paid in full and subjected to the loss of deduction and excise taxes, whichever results in the better after-tax result to the executive officer.

29

Long Term Equity CompensationIncentive Plans

Payments Made Under the Equity Plan and Omnibus Incentive Plan Upon Death, Disability, Termination Without Cause or Constructive Termination

In the event of termination of a participant’s employment due to death or disability or termination without cause by the Company, all shares of restricted stock granted to such participant under the Equity Plan and the Omnibus Incentive Plan will generally become fully vested and the restrictions on transferability under the terms of the award will lapse. In the event of termination of a participant’s employment without cause by the Company, all shares of restricted stock underlying performance units awarded under the Performance Unit Program will become fully vested based on actual performance achieved and will be settled after the conclusion of the performance period. If such termination occurs following the end of the performance period, all earned shares of restricted stock vest immediately.

In the event of termination of a participant’s employment due to death, disability or retirement, all options granted to such participant under the Equity Plan and Omnibus Incentive Plan will become fully vested on the date of such termination and will be exercisable thereafter for a period of thirty days.

In the event of termination of a participant’s employment due to death or disability prior to the end of a performance period, performance share awards will generally be deemed earned immediately upon such termination in an amount equal to the amount that would have been earned had the target performance level for the performance period been met, and then prorated based on the number of days in the performance period that have elapsed to the date of termination of employment. In the event of termination of a participant’s employment due to death or disability prior to the end of a performance period, shares of restricted stock underlying performance units awarded under the Performance Unit Program will be deemed earned and vested immediately upon such termination in an amount equal to the amount that would have been earned had the target performance level for the performance period been met. In the event of termination of a participant’s employment due to death or disability following the end of a performance period, shares of restricted stock underlying performance units awarded under the Performance Unit Program will be deemed earned and vested immediately upon such termination in an amount equal to the amount that was earned based on actual performance achieved.

In all other cases of termination, non-vested equity awards under the Equity Plan and the Omnibus Incentive Plan will generally be forfeited.

A more detailed description of the Equity Plan can be found below under the heading “Summary of Equity Plan” beginning on page 34. A more detailed description of the Omnibus Incentive Plan can be found below under the heading “Summary of Omnibus Incentive Plan” beginning on page 34.

Payments Made Under the Equity Plan and Omnibus Incentive Plan Upon a Change of Control

Unless the Compensation Committee provides otherwise in any particular award agreement, and other than as stated below under “Performance Unit Program,” in the event of a change of control of the Company, awards may be assumed or

32

substitute awards may be made by the Company or its successor that contain similar terms and conditions as the awards issued under the Equity Plan,an equity compensation plan, without participant consent. If awards are assumed or if substitute awards are made, and if the Company or its successor in the change of control transaction terminates a participant within one year following the change of control, then the award will immediately vest on the date of such termination of employment or service, as applicable.

If the Company or its successor does not assume the awards or grant substitute awards, then:

30

For purposes of the Equity Plan,equity compensation plans, a “change of control” generally includes any of the following events:

Performance Unit Program

33

InUnder the eventPerformance Unit Program, if the change of termination of a participant’s employment due to death or disability or termination without cause by the Company, all restricted shares granted to such participant shall become fully vested and the restrictions on transferability under the terms of the award shall lapse.

In the event of termination of a participant’s employment due to death, disability or retirement, all options granted to such participant under the Equity Plan shall become fully vested on the date of such termination and shall be exercisable thereafter for a period of thirty days.

In the event of termination of a participant’s employment due to death or disability prior to the end ofcontrol occurs during a performance period, performance sharethe awards will be deemed earned immediately upon such termination in an amount equal toare converted into time-vested restricted stock of the amount that would have been earned hadacquiring company based on the target performance goal forlevel and, if the change of control occurs following a performance period, been met, and then proratedthe awards are converted into time-vested restricted stock of the acquiring company based on the number of daysactual performance level achieved. In either case, the awards would accelerate in the performance period that have elapsed toevent the dateNamed Executive Officer is terminated without cause or voluntarily terminates with good reason within twenty-four months of terminationthe change of employment.

In all other cases of termination, non-vested equitycontrol. If awards under the Equity Plan will be forfeited.

A more detailed description ofPerformance Unit Program are not assumed or converted by the Equity Plan can be found below under the heading “Summary of Equity Plan.”

Employee Plan

In the event of a change in control of the Company, options granted under the Employee Plan will become immediately exercisable in full, unless the Company or its successor inacquiring company, then, if the change inof control transaction assumesoccurs during a performance period, the options or substitutes substantially equivalent options. In that case,awards are subject to accelerated vesting based on the options will not be immediately exercisable, but will remain exercisable in accordance with their terms.

For purposestarget performance level, and if the change of control occurs following a performance period, the Employee Plan, a change in control generally includes any of the following events:awards are subject to accelerated vesting based on actual performance level achieved.

3431

In the event of termination of a participant’s employment due to death, disability or retirement with the consent of the Company, all options granted to such participant under the Employee Plan shall be exercisable for a period of three months (extendable to one year, at the discretion of the Special Committee), but only to the extent such options were exercisable as of the date of such termination.

In all other cases, options terminate immediately upon termination of employment.

Quantification of Termination/Change inof Control Payments

The table below reflects the amount of compensation that would have been paid to each of the Named Executive Officers of the Company holding office on March 31, 2014,2016, in the event of his or her disability or death, involuntary termination without cause or constructive termination, or termination upon a change inof control. The amounts assume that such termination was effective as of March 31, 20142016 and thus include amounts earned through such time and are estimates of the amounts that would have been paid out upon termination. Mr. Vosotas retired as President and Chief ExecutiveEach of the Company effective May 31, 2014 and, thus, is no longer entitledNamed Executive Officers was party to any such compensation. Mr. Finkenbrink became President and Chief Executive Officer of the Company on May 31, 2014, and entered into an amended and restated employment agreement with the Company on June 30, 2014.as of March 31, 2016. The amount of compensation currentlythat would have been payable to each of Mr. Finkenbrink, uponMr. Bates and Ms. MacGillivary assuming the occurrence of any such events as of March 31, 2016 is reflected in the second table below.

The table below reflects the amountFiscal 2016 Termination/Change of compensation to be paid to each of the current Named Executive Officers of the Company in the event of his or her disability or death, involuntary termination without cause or constructive termination, or termination upon a change in control. The amounts assume that such termination was effective as of July 1, 2014 (but the

35

value of the accelerated vesting of outstanding unvested restricted stock and stock options was determined using the closing price per Common Share on March 31, 2014) and, thus, are estimates of the amounts that would be paid out upon termination. The actual amounts to be paid out can only be determined at the time of separation from the Company and may be subject to limitations under the Code.

Summary of Employment Agreements Withwith Named Executive Officers

The following section provides information on theour employment agreements with two of ourthe three current Named Executive Officers noted in the Executive Compensation Discussion and Analysis or in the tables. For the convenience of the reader, we are putting the descriptions of these employment agreements in one location.

On June 30, 2014,July 2, 2015, the Company entered into an amended and restated employment agreement with Ralph T. Finkenbrink, President and Chief Executive Officer. The agreement currently provides for a minimum base salary of $325,000$375,000 and annual performance bonuses as determined by the Compensation Committee. The agreement has an initial term of two years. Thereafter, the agreement automatically renews on June 30 of each year, unless the Company provides to Mr. Finkenbrink, at least sixty days prior to such date, written notification that it intends not to renew this agreement. Upon a

32

change of control, the term of the agreement would be extended until the second anniversary of the change of control. The current term of Mr. Finkenbrink’s employment agreement will expire on June 30, 2016,July 2, 2017, unless automatically renewed as described above. Mr. Finkenbrink’s employment agreement provides that, if he is terminated by the Company without

36

cause, or if he terminates his employment upon (a) a good faith determination by him that the Company has materially breached his employment agreement, (b) a material adverse change in his working conditions or status, (c) a significant relocation of his principal office or (d) upon or within the two-year period following a change of control of the Company, a good faith determination by him that there has been any of the following: a breach of his employment agreement by the Company, any adverse change in his working conditions, status, authority, duties, responsibilities (including reporting other than directly to the Board of Directors) or any requirement that he relocate his principal office to a location that is more than ten miles from the location of his principal office immediately prior to the change of control, then he shall be entitled to a severance payment equal to two times the sum of his annual base salary in effect at the time of such termination and his average annual bonus for the two full calendar years immediately preceding such termination. On and after a change of control, the agreement gives Mr. Finkenbrink the right to receive a bonus opportunity at a level comparable to his bonus prior to the change of control. Additional protections are provided following a change of control, as described above under “Potential Payments Upon Termination or a Change of Control – Employment Agreements — Payments Made Upon Termination Without Cause or Constructive Termination.” Mr. Finkenbrink’s agreement further provides that, during the term of the agreement and for a period of two years thereafter, Mr. Finkenbrink will not, directly or indirectly, compete with the Company by engaging in certain proscribed activities.

On June 30, 2014,July 2, 2015, the Company entered into an amended and restated employment agreement with Kevin D. Bates, Senior Vice President – Branch Operations. The agreement currently provides for a minimum base salary of $225,000$250,000 and annual performance bonuses as determined by the Compensation Committee. The agreement has an initial term of two years. Thereafter, the agreement automatically renews on June 30 of each year, unless the Company provides to Mr. Bates, at least sixty days prior to such date, written notification that it intends not to renew this agreement. Upon a change of control, the term of the agreement would be extended until the second anniversary of the change of control. The current term of Mr. Bates’s employment agreement will expire on June 30, 2016,July 2, 2017, unless automatically renewed as described above. Mr. Bates’s employment agreement provides that, if he is terminated by the Company without cause, or if he terminates his employment upon (a) a good faith determination by him that the Company has materially breached his employment agreement, (b) a material adverse change in his working conditions or status, (c) a significant relocation of his principal office or (d) upon or within the two-year period following a change of control of the Company, a good faith determination by him that there has been any of the following: a breach of his employment agreement by the Company, any adverse change in his working conditions, status, authority, duties, responsibilities (including reporting other than directly to the Board of Directors) or any requirement that he relocate his principal office to a location that is more than ten miles from the location of his principal office immediately prior to the change of control, then he shall be entitled to a severance payment equal to two times the sum of his annual base salary in effect at the time of such termination and his average annual bonus for the two full calendar years immediately preceding such termination. On and after a change of control, the agreement gives Mr. Bates the right to receive a bonus opportunity at a level comparable to his bonus prior to the change of control. Additional protections are provided following a change of control, as described above under “Potential Payments Upon Termination or a Change of Control – Employment Agreements Payments Made Upon Termination Without Cause or Constructive Termination.” Mr. Bates’s agreement further provides that, during the term of the agreement and for a period of two years thereafter, Mr. Bates will not, directly or indirectly, compete with the Company by engaging in certain proscribed activities.

TheOn July 2, 2015, the Company had in place a similarentered into an employment agreement with PeterKatie L. VosotasMacGillivary, Vice President – Finance, Chief Financial Officer and Corporate Secretary. The agreement currently provides for a minimum base salary of $175,000 and annual performance bonuses as determined by the Compensation Committee. The agreement has an initial term of two years. Thereafter, the agreement automatically renews each year, unless the Company provides to Ms.

33

MacGillivary, at least sixty days prior to such date, written notification that it intends not to renew this agreement. Upon a change of control, the term of the agreement would be extended until his retirementthe second anniversary of the change of control. The current term of Ms. MacGillivary’s employment agreement will expire on July 2, 2017, unless automatically renewed as President and Chief Executive Officerdescribed above. Ms. MacGillivary’s employment agreement provides that, if she is terminated by the Company without cause, or if she terminates her employment upon (a) a good faith determination by her that the Company has materially breached her employment agreement, (b) a material adverse change in her working conditions or status, (c) a significant relocation of her principal office or (d) upon or within the two-year period following a change of control of the Company, effective May 31, 2014.a good faith determination by her that there has been any of the following: a breach of her employment agreement by the Company, any adverse change in her working conditions, status, authority, duties, responsibilities (including reporting other than directly to the Board of Directors) or any requirement that she relocate her principal office to a location that is more than ten miles from the location of her principal office immediately prior to the change of control, then she shall be entitled to a severance payment equal to two times the sum of her annual base salary in effect at the time of such termination and her average annual bonus for the two full calendar years immediately preceding such termination. On and after a change of control, the agreement gives Ms. MacGillivary the right to receive a bonus opportunity at a level comparable to her bonus prior to the change of control. Additional protections are provided following a change of control, as described above under“Potential Payments Upon Termination or a Change of Control – Employment Agreements – Payments Made Under the Employment Agreements Upon Termination Without Cause, Constructive Termination or Change of Control.” Ms. MacGillivary’s agreement further provides that, during the term of the agreement and for a period of two years thereafter, Ms. MacGillivary will not, directly or indirectly, compete with the Company by engaging in certain proscribed activities.

37

Summary of Equity Plan

The Equity Plan was adopted by the Board of Directors of the Company on June 15, 2006, and approved by the shareholders of the Company on August 9, 2006. The Equity Plan was terminated on August 13, 2015; no new awards have been granted under such plan since that date, but awards granted under such plan remain outstanding. The purposes of the Equity Plan are:were:

A more detailed summary of the Equity Plan was included in Proposal 2 of the Company’s Proxy Statement for the 2006 Annual General Meeting and a copy of the Equity Plan was attached to such Proxy Statement as Appendix A, both of which are incorporated herein by reference.

Summary of Omnibus Incentive Plan

The EquityOmnibus Incentive Plan was adopted by the Board of Directors and subsequently approved by the shareholders of the Company on August 13, 2015. The purpose of this Omnibus Incentive Plan is to promote the best interests of the Company and its shareholders by providing key employees and non-employee directors of the Company and its affiliates with an opportunity to acquire a proprietary interest in the Company or receive other incentive compensation on the potentially favorable terms that the Plan provides. It is intended that the Plan will promote continuity of management and increased incentive and personal interest in the welfare of the Company and its affiliates by those key employees and

34

directors who are primarily responsible for shaping and carrying out the long-range plans of the Company and securing its continued growth and financial success, all of which benefits the shareholders.

The Omnibus Incentive Plan:

A more detailed summary of the Omnibus Incentive Plan was included in Proposal 3 of the Company’s Proxy Statement for the 2015 Annual General Meeting and a copy of the Equity Plan was attached to such Proxy Statement as Appendix A, both of which are incorporated herein by reference.

Director Compensation

The following table sets forth information regarding the compensation received by each of the Company’s non-employee directors during the fiscal year ended March 31, 2014:2016:

38

For the fiscal year ended March 31, 2014,2016, each Directordirector who was not an executive officer of the Company (“Non-Employee Director”) received an annual retainer of $21,000$25,000 ($30,00045,000 for the Chair of the Audit Committee), plus $1,000 per Board of Directors meeting or committee meeting attended ($350 if attending telephonically). For the fiscal year ending March 31, 2015, each Director who is a Non-Employee Director receives an annual retainer of $21,000 ($30,000 forCommittee and the Chair of the AuditNominating/Corporate Governance Committee), plus $1,000 per Board of Directors meeting or committee meeting attended ($350 if attending telephonically). Directors who are executive officers of the Company receive no additional compensation for service as a member of either the Board of Directors or any committee of the Board.

Prior to August 9, 2006,Commencing with the Company maintained the Nicholas Financial, Inc.fiscal year ending March 31, 2017, each Non-Employee Director Stock Option Plan (the “Director Plan”). The Director Plan was terminated on August 9, 2006, and no new awards will be granted under such plan toreceive an annual retainer of $45,000, with the chair of each standing committee receiving an additional $10,000. Non-Employee Directors although stock options granted under such plan and still outstanding will continueno longer receive a per meeting fee for ordinary-course Board meetings; however, they will receive a meeting fee of

35

$1,000 per non-ordinary course Board meeting (reduced to be subject to all terms and conditions of such plan.

Effective August 9, 2006, the Company adopted the Equity Plan, under which$750 for telephonic meetings), calculated separately for the Board of Directors may grant awards to any Non-Employee Director. Underand each committee. In addition, commencing with the Equity Plan,fiscal year ending March 31, 2017, each Non-Employee Director is currently entitled to receive an annual award of restricted stock with a value of $20,000, which award will vest on the earlier of the first anniversary of the date of grant and the date of options to purchase 5,000 Common Shares upon his or her election or re-election to the Board.following year’s annual general meeting of shareholders. Directors joining the Board of Directors mid-year will receive a pro-rated equity award vesting on the date of the following annual general meeting of shareholders.

Upon a change inof control of the Company, the awards granted to Non-Employee Directors are treated in the same manner as awards made to employees as described above.above under “Payments Made Under the Equity Plan and Omnibus Incentive Plan Upon a Change of Control.”

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s executive officers, directors and more than 10% shareholders (collectively for purposes of this paragraph only, “Reporting Persons”) to file reports of their beneficial ownership and changes in beneficial ownership of the Company’s Common Shares with the SEC and furnish copies of such reports to the Company. Based upon a review of copies of the reports filed with the SEC, we believe that no Reporting Person failed to file with the SEC on a timely basis during the fiscal year ended March 31, 2014,2016 any required report relating to transactions involving equity securities of the Company beneficially owned by them, except that: each of Peter L. Vosotas, Ralph T. Finkenbrink and Stephen BraginMr. Bates filed one Form 4 late report reporting one transaction on an untimely basis;exercise of stock options, and each of Alton R. NealMessrs. Hastings and Scott Fink filed twoone Form 4 late reports reporting a totalthe award of two transactions on an untimely basis.stock options and restricted stock.

39

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

No Directordirector or executive officer of the Company, no proposed nominee for election as a Directordirector of the Company, and no associate or affiliate of any of them, is or has been indebted to the Company or its subsidiaries at any time since the beginning of the Company’s last completed fiscal year.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transactions with Related Persons

SinceOther than as disclosed in the section “Compensation Committee Interlocks and Insider Participation” (which disclosure is incorporated herein by reference), since the beginning of the Company’s fiscal year ended March 31, 2014,2016, there have been no transactions with related persons, and there are no currently proposed transactions with related persons, required by applicable SEC rules and regulations to be disclosed hereunder.

Review, Approval, and/or Ratification of Transactions with Related Persons

The Company recognizes that transactions involving related persons can present potential or actual conflicts of interest and create the appearance that the Company’s business decisions are based on considerations other than the best interests of its shareholders. Therefore, in accordance with the terms of its charter, the Audit Committee of the Board will review and approve transactions involving related persons. The policy covers any transaction involving the Company and a related person, and is not limited solely to those transactions involving related persons that meet the minimum threshold for disclosure in the proxy statement under the relevant SEC rules (i.e., transactions involving amounts exceeding $120,000 in which a related person has a direct or indirect material interest).

36

General Policy

Transactions involving related persons must be approved, or ratified if pre-approval is not feasible, by the Audit Committee of the Board consisting solely of independent directors, who will approve or ratify the transaction only if they determine that it is in the best interests of the Company’s shareholders. In considering the transaction, the Audit Committee will consider all relevant factors, including, as applicable: (i) the business rationale for entering into the transaction; (ii) available alternatives to the transaction; (iii) whether the transaction is on terms no less favorable than terms generally available to an unrelated third-party under the same or similar circumstances; (iv) the potential for the transaction to lead to an actual or apparent conflict of interest and any safeguards imposed to prevent such actual or apparent conflicts; and (v) the overall fairness of the transaction. The Audit Committee will also periodically monitor ongoing transactions involving related persons to ensure that there are no changed circumstances that would render it advisable for the Company to amend or terminate the transaction.

Procedures

40

Ongoing transactions involving related persons shall be reviewed by the Audit Committee on an annual basis at the first regularly scheduled meeting of the fiscal year.

Since the beginning of the Company’s last fiscal year, there have been no transactions required to be reported under the applicable SEC rules where such policies and procedures did not require review, approval or ratification or where such policies and procedures were not followed.

INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON

No director or executive officer of the Company, no nominee for election as a director of the Company, no person who has been a director or executive officer of the Company since the commencement of the Company’s last completed fiscal year and no associate or affiliate of any of the foregoing has any material interest, direct or indirect, by way of beneficial ownership or securities or otherwise, in any matter to be acted upon at the Meeting.

SHAREHOLDER PROPOSALS

The deadline for submission of shareholder proposals pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (“Rule 14a-8”), for inclusion in the Company’s proxy statement for its 20152017 Annual General Meeting of Shareholders is March 30, 2017. After June 13, 2015. After May 27, 2015,2017, notice to the Company of a shareholder proposal submitted other than pursuant to Rule 14a-8 is considered untimely, and the persons named in proxies solicited by the Board of Directors of the Company for the 20152017 Annual General Meeting may exercise discretionary voting power with respect to any such proposal.

4137

OTHER MATTERS

MANAGEMENT KNOWS OF NO OTHER MATTERS TO COME BEFORE THE MEETING OTHER THAN THOSE REFERRED TO IN THE NOTICE OF MEETING. HOWEVER, SHOULD ANY OTHER MATTERS PROPERLY COME BEFORE THE MEETING, THE SHARES REPRESENTED BY THE PROXY SOLICITED HEREBY WILL, ON A POLL, BE VOTED ON SUCH MATTERS IN ACCORDANCE WITH THE BEST JUDGMENT OF THE PERSONS VOTING THE SHARES REPRESENTED BY THE PROXY.

Dated this 11th28th day of July, 20142016

BY ORDER OF THE BOARD OF DIRECTORS

/s/ Ralph T. Finkenbrink

Chairman of the Board

42

APPENDIX A            

NICHOLAS FINANCIAL, INC.

CHARTER OF THE

AUDIT COMMITTEE

The purpose of the Company’s Audit Committee (“Committee”) of Nicholas Financial, Inc. (“Company”) is:

1.1Assist the Board. To assist the Board of Directors (“Board”) with its responsibilities by:

(a) Overseeing the accounting and financial reporting processes of the Company and the audits of the financial statements of the Company; and

(b) Monitoring:

(i) the Company’s compliance with legal, risk management and regulatory requirements;

(ii) the independent auditors’ qualifications and independence;

(iii) the Company’s financial reporting process and independent auditors; and

(iv) the Company’s systems of internal control with respect to the integrity of financial records, adherence to Company policies and compliance with legal and regulatory requirements.

1.2Prepare Reports. To prepare any reports that Securities and Exchange Commission (“SEC”) rules require be included in the Company’s annual proxy statement; and

1.3Other Duties. To perform any other duties described in this Charter.

The Company’s management is ultimately responsible for preparing the Company’s financial statements and its independent auditors are ultimately responsible for auditing those statements. In adopting this Charter, the Board acknowledges that the Committee members are not Company employees and are not providing any expert or special assurance as to the Company’s financial statements or any professional certification as to the independent auditors’ work or auditing standards. Each Committee member is entitled to rely on the integrity of those persons and organizations within and outside the Company that provide information to the Committee, and the accuracy and completeness of the financial and other information so provided absent actual knowledge to the contrary.

A – 138

2.1Membership.The Committee shall be comprised of not fewer than three members of the Board, as shall be determined from time to time by the Board. The Board will appoint Committee members annually (or as necessary to fill vacancies) upon the recommendation of the Nominating/Corporate Governance Committee of the Board. Each member shall serve until his or her successor is duly elected and qualified or until his or her death, resignation or removal. The Board may remove any member of the Committee, with or without cause, by a majority vote of the Board.

2.2Committee Chair.The Board shall designate the Committee Chair. In the absence of a Chair, the Committee members may designate the Chair by majority vote of the full Committee membership.

2.3Other Companies’ Audit Committees.No Committee member shall simultaneously serve on the audit committees of more than two other public companies, unless the Board determines that this simultaneous service would not impair his/her ability to effectively serve on the Committee, and the Board discloses this determination in the Company’s annual proxy statement.

2.4Independence.Each member shall qualify as “independent” under the criteria set forth in any applicable law, regulation and/or listing standard, including those of The Nasdaq Stock Market Inc. (“NASDAQ”) and the SEC. Accordingly, the following persons willnot be considered “independent”:

(a) a director who is, or at any time during the past three years was, employed by the Company or by any of its parent or subsidiaries;

(b) a director who accepted or who has a Family Member (as defined by NASDAQ Rule 4200(14)) who accepted any payments from the Company or any parent or subsidiary of the Company in excess of $100,000 during any period of twelve consecutive months within the past three years, other than the following: (i) compensation for Board or Board committee service, (ii) payments arising solely from investments in the Company’s securities; (iii) compensation paid to a Family Member who is a non-executive employee of the Company or a parent or subsidiary of the Company; (iv) benefits under a tax-qualified retirement plan, or non-discretionary compensation; or (v) loans permitted under Section 13(k) of the Securities Exchange Act of 1934.

(c) a director who is a Family Member of an individual who is, or at any time during the past three years was, employed by the Company or by any parent or subsidiary of the Company as an executive officer;

(d) a director who is, or has a Family Member who is, a partner in, or a controlling shareholder or an executive officer of, any organization to which the Company made, or from which the Company received, payments for property or services in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross

A – 2

revenues for that year, or $200,000, whichever is more, other than the following: (i) payments arising solely from investments in the Company’s securities; or (ii) payments under non-discretionary charitable contribution matching programs;

(e) a director of the Company who is, or has a Family Member who is, employed as an executive officer of another entity where at any time during the past three years any of the executive officers of the Company serve on the compensation committee of such other entity; or

(f) a director who is, or has a Family Member who is, a current partner of the Company’s independent auditors, or was a partner or employee of the Company’s independent auditors who worked on the Company’s audit at any time during any of the past three years.

In addition, to serve as a member of the Committee, no person shall thereafter accept, directly or indirectly (other than in his or her capacity as a member of the Committee, the Board or any other Board committee), any consulting, advisory or other compensatory fee from the Company or its subsidiaries, except for fees associated with the receipt of fixed amounts of compensation under a retirement plan for prior service with the Company.

2.5Audit Committee Financial Expert. The Board shall appoint at least one member to the Committee who, in the Board’s business judgment, has accounting or related financial management expertise. This member will be an “Audit Committee Financial Expert” as that term may be defined from time to time by the SEC and demonstrates “financial sophistication” as defined in NASDAQ Rule 4350(d)(2)(A).

2.6Financial Literacy.All Committee members shall be financially literate, being able to read and understand fundamental financial statements, or must become financially literate within a reasonable period of time after his/her appointment to the Committee.

2.7No Involvement with Past Financial Statements.No Committee member shall have participated in the preparation of the Company’s financial statements, or those of any current subsidiary, at any time during the previous three years.

2.8Subcommittees. The Committee may, by resolution passed by a majority of its members, designate one or more subcommittees, each subcommittee to consist of one or more Committee members. Any such subcommittee to the extent provided in the Committee’s resolutions and to the extent not limited by applicable law or listing standard, shall have and may exercise all the powers and authority of the Committee subject to the terms of its appointment. The Committee will name each subcommittee. Each subcommittee shall keep regular minutes of its meetings and report them to the Committee when required.

The Committee shall meet at least quarterly, or more frequently as circumstances dictate. The Committee secretary shall maintain minutes of meetings and activities of the Committee in

A – 3

accordance with British Columbia law and the Company’s Articles, as may be amended and/or restated. Each regularly scheduled session shall conclude with an executive session of the Committee absent members of management and on those terms as the Committee may elect.

The Audit Committee shall have the following responsibilities and authority:

4.1Engage Independent Auditors. Annually, the Committee shall be directly responsible for the appointment, compensation, retention (subject to shareholder ratification, if that ratification is required) and supervision of the work of any registered public accounting firm engaged (including resolution of disagreements between management and the independent auditors regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company. The independent auditors shall audit the consolidated financial statements of the Company and the consolidated financial statements of selected subsidiaries for the fiscal year for which it is appointed and report directly to the Committee.

4.2Limits on Engagement. Except as otherwise stated in this Charter, the firm serving as the Company’s independent auditors may not be retained to provide non-audit related services to the Company or any of its subsidiaries. This also applies to non-audit related services received by the Company’s subsidiaries from other accounting firms serving as their independent auditors. If non-audit related services for a project can reasonably be provided only by the independent auditors due to expertise that is exclusive to that firm or for any other reason that the Committee deems necessary, and provided that the engagement for such non-audit related services is in compliance with all applicable legal and regulatory requirements promulgated by the SEC and NASDAQ, the Committee must specifically approve such arrangements before the independent auditors may be engaged to provide such service. Notwithstanding the foregoing, the independent auditors for the Company are prohibited from providing the following non-audit services to the Company or any of its subsidiaries:

(a) Bookkeeping or other services related to the accounting records or financial statements of the Company or any of its subsidiaries;

(b) Financial information systems design and implementation;

(c) Appraisal or valuation services, fairness opinions, or contribution-in-kind reports;

(d) Actuarial services;

(e) Internal audit outsourcing services;

(f) Management functions or human resources;

(g) Broker or dealer, investment advisor or investment banking services;

A – 4

(h) Legal services and expert services unrelated to the audit; and

(i) Any other services that the Public Accounting Oversight Board determines, by regulation, is impermissible.

The Committee must, with sole authority, pre-approve all terms and fees for audit services, audit-related services, tax services and other services to be performed for the Company by the independent auditors, subject tode minimus exceptions for non-audit services described in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934, that is not considered part of the annual audit and, to the extent required by applicable law, any non-audit service.

4.3Review Performance of Non-Audit Services. In connection with the Committee’s approval of non-audit services, the Committee shall consider whether the independent auditors’ performance of any non-audit services is compatible with the external auditors’ independence.

4.4Establish Hiring Policies. The Committee shall establish clear hiring policies for employees or former employees of the Company’s independent auditors.

4.5Review Independent Auditor’s Work.At least annually, and more often if required, the Committee shall meet with and obtain and review a formal written statement of the independent auditors to review the conduct and results of each audit and review of the Company’s financial statements, to discuss the matters in Statement of Accounting Standards (“SAS”) No. 61, “Communications with Audit Committees,” as amended by SAS 89 and 90, and any other communications required to be discussed with the Committee pursuant to applicable laws and regulations, including:

(a) the independent auditors’ internal quality control procedures;

(b) any material issues raised by the most recent internal quality control review or peer review of the independent auditors’ firm, or by any publicly disclosed inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the independent auditors’ firm, and the steps taken to deal with those issues; and

(c) all relationships between the independent auditors and the Company, including each non-audit service provided to the Company and the matters set forth in Independence Standards Board Standard No. 1, in order to assess the independent auditors’ independence.

4.6Review Auditing Decisions.Discuss with management and the independent auditors, and receive a report of the independent auditors, regarding the following:

(a) conclusions and recommendations on the adequacy of the internal controls of the Company, together with the responses of management, including the status of previous audit recommendations;

A – 5

(b) reasoning in accepting or questioning sensitive accounting estimates by management;

(c) reasoning in not recognizing material audit adjustments proposed by the independent auditors;

(d) judgments about the quality and appropriateness (not just the acceptability) of the Company’s critical accounting principles used, including the degree of aggressiveness or conservatism in the application of such principles in its financial reporting;

(e) views as to the adequacy and clarity of disclosures in the Company’s financial statements in relation to generally accepted accounting principles;

(f) views of how the use of generally acceptable alternatives to critical accounting and tax principles, disclosure practices and valuation policies, preferred by the independent auditors, would have affected the financial statements;

(g) conclusions regarding any serious disagreements, difficulties or disputes with management encountered during the course of the audit;

(h) any significant risks to which the Company is, or might be, exposed and the steps management has taken to minimize such risks;

(i) any significant changes to the audit plan;

(j) other matters related to the conduct of the audit required to be communicated to the Committee under generally accepted auditing standards;

(k) material written communications to the management of the Company such as any management letter or schedules of unrecognized audit adjustments; and

(l) non-audit services provided by the Company’s independent accountants to the Company’s affiliated investment advisor, if any, or any advisor affiliate that provides ongoing services to the Company, which services were not pre-approved by the Committee (and consideration by the Committee of whether the performance of such services is compatible with maintaining the independent accountant’s independence).

4.7Evaluate Auditors. After reviewing the foregoing report, the Committee shall evaluate the independent auditors’ qualifications, performance and independence, which shall include the review and evaluation of the lead partner of the independent auditors. In making its evaluation, the Committee shall take into account the opinions of management. The Committee shall present its conclusions with respect to the independent auditors to the Board.

4.8Ensure Required Rotation. The Committee shall ensure the regular rotation of the lead audit partner and concurring partner every five (5) years and consider whether it would be appropriate to implement a regular rotation of the independent auditors’ firm.

A – 6

4.9Meet With Auditors. The Committee shall also meet periodically with the independent auditors in separate executive sessions to discuss any other matters or communications required under applicable laws, or which they or the Committee deem advisable or appropriate to discuss.

4.10Financial Statements. The Committee shall review and discuss the annual audited financial statements and quarterly financial statements with management and the independent auditors, including the Company’s disclosures under the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s periodic reports filed with the SEC.

4.11Review Effect of Changes on Financials. The Committee, as a whole or through its Chair, shall review the impact on the financial statements of significant events, transactions or changes in accounting principles or estimates that potentially affect the quality of the financial reporting with management and the independent auditors prior to filing of the Company’s Annual Reports on Form 10-K or Quarterly Reports on Form 10-Q, or as soon as practicable if the communications cannot be made prior to its filing.

4.12Review Management Disclosures. The Committee shall review disclosures made to the Committee by the Company’s chief executive officer (“CEO”) and chief financial officer during their certification process for Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q regarding any significant deficiencies in the design or operation of internal controls or material weaknesses therein and any fraud involving management or other employees who have a significant role in the Company’s internal controls.

4.13Meet With Management Regarding Audit. In connection with its review of the Company’s financial statements, the Committee shall review and discuss not only with the independent auditors but also with management the matters relating to the conduct of the audit required to be discussed by SAS Nos. 61, 89 and 90 (Communications with Audit Committees), as they may be modified or supplemented.

4.14Review Audit Process. The Committee shall review with the independent auditors any audit problems or difficulties and management’s responses to them.

4.15Pass on Financial Statements. Based on its review and discussions with management and the independent auditors, the Committee shall recommend to the Board whether the Company’s financial statements should be included in the Company’s Annual Report on Form 10-K (or the annual report to shareholders if distributed prior to the filing of the Form 10-K).

4.16Review Press Releases on Financial Topics. Although the Committee shall not be required to pre-approve or discuss in advance each earnings release or each instance in which the Company may provide earnings guidance, the Committee shall review and discuss press releases related to the Company’s earnings, as well as financial information and earnings guidance provided to financial analysts and rating agencies.

A – 7

4.17Meet With Interested Parties. The Committee shall meet separately, on a periodic basis, with management and the independent auditors.

4.18Review and Approval of Related-Party Transactions. The Committee shall review and approve all transactions with related-parties (as defined by applicable rules and regulations of NASDAQ and the SEC).

4.19Review Internal Controls. The Committee shall periodically review with management the adequacy of the Company’s internal controls, including the Company’s computerized information system controls and security. The Committee shall discuss with the independent auditors any significant matters regarding internal controls over financial reporting that have come to their attention during the conduct of the audit.

4.20Review Expenses. The Committee shall consider and review directors’, officers’ and management’s Company-funded expenses.

4.21Review Risk Management. The Committee shall discuss generally the Company’s policies with respect to risk assessment and risk management.

4.22Review Adherence to Corporate Policies. Periodically, the Committee shall meet with the appropriate members of management to review adherence to corporate policies and review processes relating to training, monitoring and reporting of policy compliance. The Committee shall also periodically review the Company’s policies and procedures regarding compliance with the Company’s Employee Code of Business Conduct and the Company’s Employee Conflicts-of-Interest Policy.

4.23Establish Complaint Procedures. The Committee shall establish procedures for:

(a) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters; and

(b) the confidential, anonymous submission by the Company’s employees of concerns regarding accounting or auditing matters.

4.24Sponsor Educational Programs. The Committee may cause on-going educational programs related to appropriate financial and accounting practices to be made available to Committee members.

4.25Report to Board. The Committee shall communicate to the Board any issues with respect to the quality or integrity of the Company’s financial statements, the Company’s compliance with legal or regulatory requirements, the performance and independence of the Company’s independent auditors or the performance of any internal audit function.

4.26Prepare SEC Mandated Report. The Committee shall prepare the audit committee report required by SEC rules to be included in the Company’s annual proxy statement.

A – 8

4.27Report to Board Regarding Committee Activities. The Committee shall report regularly to the Board concerning its activities.

4.28Perform a Self-Evaluation. The Committee shall conduct an annual performance evaluation of the Committee and an annual assessment of the adequacy of this Charter.

4.29Keep Minutes of Meetings. The Committee shall ensure the minutes of each meeting be kept and filed with the minutes of the Company.

4.30Review of Charter. The Committee shall review this Charter at least annually, and recommend to the Board any necessary or advisable amendments.

4.31Other Actions. The Committee shall perform any other activities consistent with this Charter, the Company’s Articles and governing law, as the Committee or the Board reasonably deems necessary.

5.1Legal Counsel. In the course of its duties, the Committee shall have the authority, at the Company’s expense, to retain, replace and terminate independent legal counsel and other advisors, as it deems necessary to carry out its duties.