Item 1.01 - Entry into a Material Definitive Agreement
On September 30, 2009, EZCORP, Inc. entered into an advisory services agreement
with Madison Park, LLC ("Madison Park"), a business and financial advisory firm
wholly-owned by Phillip E. Cohen, the beneficial owner of all of EZCORP's
outstanding Class B Voting Common Stock.
Summary of Terms - Pursuant to the agreement, Madison Park will provide advisory
services related to EZCORP's business and long term strategic plan, including
(a) identifying, evaluating, and negotiating potential acquisitions and
strategic alliances, (b) assessing operating and strategic objectives, including
new business development, (c) advising on investor relations and relations with
investment bankers, securities analysts, and other members of the financial
services industry, (d) assisting in international business development and
strategic investment opportunities, and (e) analyzing, evaluating, and advising
on various financial matters. In exchange for those services, EZCORP will pay
Madison Park a retainer fee of $300,000 per month and will reimburse Madison
Park for its out-of-pocket expenses incurred in connection with the engagement.
In addition, EZCORP will indemnify Madison Park (and its officers, directors,
employees, and affiliates) from and against all claims, costs, liabilities, and
damages related to or arising out of the engagement (except to the extent that
any claim, cost, liability, or damage results from the recklessness, willful
misconduct, or bad faith of the indemnified party).
The advisory services agreement is effective as of October 1, 2009, and the term
of the engagement runs through September 30, 2010. Either party may terminate
the agreement at any time on thirty days' written notice to the other party.
A copy of the agreement is filed as Exhibit 10.1.
Board Governance Process - The engagement of Madison Park pursuant to the
advisory services agreement was identified and acknowledged by the EZCORP Board
of Directors from the outset as a related party transaction. Consequently, the
Board of Directors implemented measures designed to ensure that the agreement
was considered, analyzed, negotiated, and approved objectively. Those measures
included the following:
• The Board of Directors appointed and commissioned a special committee
consisting of the independent members of the Board of Directors (the
"Independent Directors Committee") to (a) evaluate EZCORP's relationship with
Madison Park, including reviewing the advisory services provided to EZCORP by
Madison Park during fiscal 2009, (b) determine whether EZCORP should continue
utilizing Madison Park's services for fiscal 2010, and (c) determine whether
to enter into a new advisory agreement with Madison Park, and if so,
negotiate and agree upon the terms of such agreement. The Independent
Directors Committee was authorized to engage independent experts and advisers
to assist it in the discharge of its responsibilities.
• The Independent Directors Committee engaged a qualified, independent
financial advisory firm to evaluate the terms of the advisory services
agreement relative to the reasonable market rates for the services
contemplated by the agreement, and that firm counseled and advised the
committee in the course of its consideration and evaluation of the Madison
Park relationship and the proposed terms of the new advisory services
agreement.
• The Independent Directors Committee sought, received, and relied upon an
opinion from that independent financial advisory firm to the effect that the
consideration to be paid to Madison Park pursuant to the advisory services
agreement is fair to EZCORP from a financial point of view.
With those measures and after consideration and discussion of the relationships
and the interests of Mr. Cohen, the Independent Directors Committee concluded
that the advisory services agreement was fair to, and in the best interests of,
EZCORP and its stockholders and, on that basis, negotiated and approved the
engagement of Madison Park pursuant to the advisory services agreement.
Item 9.01 - Financial Statements and Exhibits.
(d) Exhibits.
10.1 Advisory Services Agreement, dated as of October 1, 2009, between
EZCORP, Inc. and Madison Park, LLC
