Advisory Services Agreement - EZCORP Inc. and Madison Park LLC
MADISON PARK, L.L.C.
30 East 71st #1A
New York, NY 10021
(212) 717-0520
(212) 717-4263
as of October 1, 2004
CONFIDENTIAL
EZCORP, Inc.
1901 Capital Parkway
Austin, TX 78746
Gentlemen:
The purpose of this letter is to set forth the agreement and understanding as of
October 1, 2004 between EZCORP, Inc. ("EZCORP") and Madison Park, L.L.C.
("Madison Park") regarding advisory services to be rendered by Madison Park to
EZCORP (the "Agreement").
1. EZCORP hereby engages Madison Park to provide the advisory services
related to EZCORP's current and on-going business as well as its
FY05-FY07 long term strategic plan, as modified by EZCORP from time to
time. The Exhibit "A" attached hereto and incorporated herein more
fully describes the advisory services.
2. Madison Park hereby accepts the engagement described in paragraph 1
above. As compensation for its services, EZCORP shall pay Madison Park
an annual retainer fee, payable in monthly installments (the
"Retainer"). The Retainer shall be $1,200,000 per annum.
3. The term of Madison Park's engagement shall extend from October 1,
2004 through September 30, 2007. The Agreement shall terminate on
September 30, 2007 unless terminated earlier as provided for herein.
Paragraph 5. herein shall survive any termination or expiration of this
Agreement.
4. EZCORP shall reimburse Madison Park for its out-of-pocket travel and
entertainment expenses incurred in order to render the services
contemplated to be provided by Madison Park pursuant to this Agreement.
Any other expenses must be agreed to by EZCORP in advance. The expenses
shall be documented in a similar manner applicable to EZCORP's
executive officers and paid by EZCORP within 30 days after receipt by
EZCORP of a detailed invoice including supporting documentation.
5. EZCORP, in its sole discretion, may terminate this Agreement with or
without cause upon 10 days written notice to Madison Park. Madison Park
may terminate this Agreement as follows: (1) upon 90 days advance
written notice to EZCORP, on September 30 of any year during the term
of this Agreement; or (2) for cause. In the event of termination,
EZCORP may offset any sum due or that becomes due under this Agreement
against any monies due EZCORP from Madison Park.
6. (a) EZCORP agrees to indemnify and hold harmless Madison Park, its
affiliates, the respective officers, directors, employees, consultants,
associates and agents of Madison Park and its
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affiliates, and any person controlling Madison Park or any of its
affiliates within the meaning of either Sections 15 of the Securities
Act of 1933 or Sections 9 of the Securities Exchange Act of 1934
(Madison Park, its affiliates and any such person being referred to
herein as an "indemnified person") in connection with this engagement
from and against all claims, costs, expenses, liabilities, losses and
damages (or actions in respect thereof) related to or arising out of
this engagement or Madison Park's connection therewith; provided,
however, that EZCORP shall not be responsible for any claims, costs,
expenses, liabilities, losses or damages of an indemnified person to
the extent that it is finally determined by a court or other tribunal
of competent jurisdiction that they resulted primarily from actions
taken or omitted to be taken by such indemnified person due to such
indemnified person's recklessness, willful misconduct or bad faith or
that they arose primarily out of or were based primarily upon any
untrue statement or omission made (i) in any document or writing in
reliance upon and in conformity with information furnished to EZCORP by
such indemnified person for use in such document or writing or (ii) in
any document in connection with the engagement without the prior
approval of EZCORP.
(b) If any action or proceeding, including, but not limited to, any
governmental investigation, shall be brought or asserted against an
indemnified person in respect of which indemnity shall be sought from
EZCORP, such indemnified person shall notify EZCORP in writing within
five days of indemnified person's knowledge of such claim, action or
proceedings, and EZCORP shall assume the defense thereof, including,
but not limited to, the employment of counsel reasonably satisfactory
to such indemnified person and the payment of all fees and
disbursements of such counsel and all other expenses related to such
actions or proceeding. Such indemnified person shall have the right to
employ separate counsel in any such action or proceeding to participate
in defense thereof, but the fees and expenses of such separate counsel
shall be at the expense of such indemnified person unless (i) EZCORP
has agreed to pay such fees and expenses or (ii) EZCORP shall have
failed to timely assume the defense of such actions or proceeding, to
employ counsel reasonably satisfactory to such indemnified person in
any such action or proceeding and if requested by such indemnified
person, to confirm in writing that it is obligated to indemnify such
indemnified person against all claims, costs, expenses, liabilities,
losses and damages related to or arising out of such action or
proceeding in accordance with this agreement or (iii) counsel shall
determine that there is or could reasonably be expected to be a
conflict of interest by reason of having common counsel in any action
or proceeding, in which case, if such indemnified person notifies
EZCORP in writing that it elects to employ separate counsel at the
expense of EZCORP, EZCORP shall not have the right to assume the
defense of such action or proceeding on behalf of any such indemnified
person, it being understood, however, that EZCORP shall not, in
connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more
than one separate firm of attorneys (together with appropriate local
counsel) at any time for such indemnified person, which firm shall be
designated in writing by such indemnified person. EZCORP shall not be
liable for any settlement of any such action or proceeding effected
without EZCORP's written consent, which should not be unreasonably
withheld. If settled with EZCORP's prior written consent or if there be
a final and nonappealable judgment for the plaintiff in any such action
or proceeding, EZCORP agrees to indemnify and hold harmless such
indemnified person from and against any loss or liability to the extent
stated above by reason of such settlement or judgment.
(c) If for any reason the indemnification provided herein is
unavailable to an indemnified person under paragraph 5(b) above in
respect of any claims, costs, expenses, liabilities, losses or damages
referred to therein or if such indemnification shall be insufficient to
hold such indemnified person harmless from all such claims, costs,
expenses, liabilities, losses or damages, then EZCORP, in lieu of
indemnifying such indemnified person shall contribute to the amount
paid or payable by such indemnified person as a result of such claims,
costs, expenses, liabilities, losses or damages, (i) in such proportion
as is appropriate to reflect the relative benefits received by EZCORP
on the one hand and such indemnified person on the other hand or (ii)
if the
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allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) but also the relative fault
of EZCORP, on the one hand, and such indemnified person, on the other,
as well as any other relevant equitable consideration. The amount paid
or payable by a party as a result of the claims, costs, expenses,
liabilities, losses or damages, referred to above shall be deemed to
include, subject to the limitations set forth in paragraph 5(b) any
legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim.
Notwithstanding the provisions herein, Madison Park shall not be
required to contribute any amount in excess of the amount of fees
received by Madison Park under this Agreement
7. The terms of this Agreement and the advice provided under this
Agreement shall not be disclosed to any party without the express
written consent of Madison Park, except (i) any EZCORP regulatory
filing, (ii) a court proceeding, or (iii) as required by law.
8. This Agreement shall be governed by the laws of the State of New
York.
* * * * *
If the foregoing correctly sets forth the understanding and agreement between
Madison Park and EZCORP, please so indicate in the space provided below for this
purpose, whereupon this letter shall constitute a binding agreement.
MADISON PARK, L.L.C.
________________________________
By: Virginia D. Dodson
Title: Vice President
AGREED AND ACCEPTED ON THIS DAY OF _____________, 2004 and effective as of
October 1, 2004.
EZCORP, INC.
___________________________________________
By: Joseph R. Rotunda
Title: Chief Executive Officer and President
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EXHIBIT A: ADVISORY SERVICES
MERGER, ACQUISITIONS AND DIVESTITURES
1. Review acquisition and divestiture plans. Make recommendations that
strengthen acquisition and divestiture programs. Suggest other types of
business structures (e.g., including joint ventures, partnerships,
etc.) for acquisition targets.
2. Review progress in achieving its acquisition and divestiture goals.
3. Assist in identifying and screening potential acquisition targets in
light of corporate objectives. Review and evaluate the target's
historical and projected financial performance, including assumptions
used in the candidate's valuation and integration.
4. Assist in identifying relationship and operating integration risks and
issues associated with a candidate. Assist in identifying business
problems related to the candidate, including assumptions and strategies
related to resolving relationship and operating risks.
5. Review terms and conditions of an acquisition contracts and recommend
changes to terms and conditions where considered appropriate. Assist in
developing and formulating alternative negotiating positions.
Facilitate or participate, as requested, in negotiations.
6. Assist in divesting unprofitable stores or business segments. Provide
feedback on assumptions and strategies for divestitures.
STRATEGIC PLANNING AND CORPORATE DEVELOPMENT
1. Review long-term planning and annual budgeting. Recommend alternative
courses of action and strategy to strengthen these programs.
2. Assist in assessing operating and strategic objectives, including new
business development and financial proforma models. Recommend
alternatives and other strategies.
3. Assist in identifying potential new business ventures and partners. As
requested, assist in developing business plans and other financial
analyses to support negotiations with new business relationships.
4. Review external sources of information about EZCORP (e.g., industry
reports, competitors, industry associations, financial institutions,
internet databases, etc.). Assess strengths and weaknesses as suggested
by external sources. Recommend alternative courses of action and
strategies to address weaknesses.
5. Review major business factors in the industries in which EZCORP
operates, including trends and market growth with respect to
competitors and the market as a whole. Recommend initiatives to
increase market share in light of indicated trends (e.g., introduction
of new products, services, or markets, etc.).
6. As requested, advise as to senior management structure, compensation,
recruitment, retention, incentives, and development.
7. Review competitive product and service offerings. Recommend initiatives
to strengthen the Company's product and service offerings.
INVESTOR RELATIONS
1. Review current investor relations strategy, including the types of
information furnished to the investment community. Recommend
initiatives to improve and expand the current strategy, including
building new relationships with the investment community and
strengthening existing relationships.
2. Review research analyst relationships. Recommend initiatives to
strengthen existing analyst relationships. Assist in identifying new
analyst relationships.
3. Assist in developing investment communications strategy with the
investment community including one-on-one meetings, road shows, and
initiation of new coverage by investment banks, institutional and
international investors.
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TREASURY
1. Review liquidity and access to credit, capital, and other markets.
2. Review financial strengths and weaknessnes, including access to credit,
capital, and other markets. Recommend initiatives that enhance
liquidity and access to credit and capital markets.
3. Review current relationships with commercial banks, investment banks
and brokerage firms, and other financial institutions. Recommend
initiatives to improve and expand these relationships and, as
requested, assist in identifying, facilitating, structuring,
negotiating, modifying and developing such relationships.
4. As requested, review presentations to commercial banks, financial
institutions, institutional investors, investment banking and brokerage
firms. Advise as to the content of such presentations, including
assumptions and other relevant matters.
5. Assist in identifying new cash generation sources.
6. Review investment management strategies. Recommend initiatives to
strengthen investment practices and increase returns, as appropriate.
7. Assist in identifying debt, equity and other capital market raising
opportunities, domestic and international, including evaluating various
alternatives. Assist in analyzing and structuring debt and equity
transactions.
OTHER ADVISORY SERVICES
1. As requested, review tax practices and policies, and assist in
evaluating different alternatives or initiatives.
2. As requested, assist in evaluating operating performance, including
recommendations for improvement. Assist in evaluating future growth and
expansion plans (including key assumptions), store model development
and other market strategies such as site selection and requirements,
visual marketing and store design, etc.
3. Assist in evaluating cost structure, including service delivery costs.
Recommend alternatives to modify business models, improve service
capabilities and lower costs,.
4. Periodically review financial condition and results of operations to
evaluate strengths and weaknesses of financial performance. Recommend
improvements to financial performance.
5. Advise as to dividend policy and other corporate transactions,
including stock repurchases, stock splits, recapitalizations,
restructurings, etc.