EXHIBIT 10.2
MERGER AGREEMENT
THIS MERGER AGREEMENT (this
“ Agreement ”), dated June 5, 2008, is made
by and between EZCORP, Inc., a Delaware corporation (“
EZCORP ”), Value Merger Sub, Inc., a Florida
corporation to be formed (the “ Merger Sub ”)
and Value Financial Services, Inc., a Florida corporation, (the
“ Company ”) (together, the “
Constituent Corporations ”).
RECITALS :
A. The boards of directors of
each of the Constituent Corporations have each determined that it
is advisable and in the best interests of their respective
shareholders for the Merger Sub and the Company to enter into a
business combination on the terms and subject to the conditions set
forth herein.
B. In furtherance of such
combination, the boards of directors of each of the Constituent
Corporations have each approved the merger of the Merger Sub, a
corporation to be formed as a wholly owned subsidiary of EZCORP,
with and into the Company (the “ Merger ”) in
accordance with the terms of this Agreement and the applicable
provisions of the Florida Business Corporation Act (“
FBCA ”).
C. This Merger is authorized by
Section 1101 of the FBCA.
AGREEMENT
NOW, THEREFORE , in
consideration of the mutual promises herein made, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Merger Sub, EZCORP and the
Company agree as follows:
1 Definitions
.
For purposes of this Agreement, the
following terms shall have the meanings set forth below and any
derivatives of the terms shall have correlative meanings:
“ Credit Facility
” shall mean the $37 million financing arrangement
between the Company and Fifth Third Bank, dated June 15,
2007.
“ Contracts ”
shall mean, collectively, all oral and written contracts,
agreements, instruments, documents, leases, indentures, insurance
policies, undertakings or other obligations.
“ Disclosure Schedule
” shall mean the disclosure schedule attached hereto and
incorporated herein.
“ EZCORP Shares ”
shall mean 1,625,000 shares of class A non-voting common stock to
be issued by EZCORP and exchanged in the Merger.
“ Financial Statements
” shall mean, collectively, the audited financial statements
(including balance sheets and statement of earnings,
stockholders’ equity and cash flow) of the Company for each
of its fiscal years ending December 31, 2004, through and
including December 31, 2007.
“ Governmental Authority
” shall mean the government of the United States or any
foreign jurisdiction, any state, county, municipality or other
governmental or quasi governmental unit, or any agency, board,
bureau, instrumentality, department or commission (including any
court or other tribunal) of
any of
the foregoing and any body exercising or entitled to exercise any
administrative, executive, judicial, legislative, police,
regulatory or taxing authority of any nature whatsoever.
“ Hart-Scott-Rodino Act
” shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
“ Knowledge ”
shall mean that an individual:
(1) is
actually aware of such fact or other matter, or
(2) a
prudent individual in the position of the Company could be expected
to discover or otherwise become aware of such fact or other matter
in the course of conducting a reasonable investigation concerning
the existence of such fact or other matter.
A Person other than an individual
will be deemed to have “Knowledge” of a particular fact
or matter if any individual who is serving as a director, officer,
partner, executor, or trustee of such Person (or in any similar
capacity) has, or at any time had, Knowledge of such fact or
matter.
“ Laws ” shall
mean, collectively, all federal, state, local, municipal, foreign
or international constitutions, laws, statutes, ordinances, rules,
regulations, codes, or principles of common law.
“ Leases ” shall
mean, collectively, leases, contracts, agreements and other
documents providing the Company with a right to use specified real
and/or personal property.
“ Licenses ” shall
mean, collectively, governmental, regulatory, administrative and
non governmental licenses, permits, approvals, certifications,
accreditations, notices and other authorizations.
“ Material Adverse
Change” or “Material Adverse Effect ” shall
mean any materially adverse change in or effect on the financial
condition, business, operations, assets, properties or results of
operations of the affected party; provided, however, that none of
the following shall be deemed to have caused, constitute, or be
taken into account in determining whether there has been a Material
Adverse Change or Material Adverse Effect: (1) any change or
effect arising from or relating to: (a) financial, banking or
securities markets (including any disruption thereof and any
decline in the price of any security or any market index);
(b) changes in United States generally accepted accounting
principles; (c) changes in the affected party’s general
industry or the economy of the U.S. as a whole; and
(d) adverse changes or effects arising from the announcement
or consummation of the transactions contemplated hereby;
(2) any change or effect in the Ordinary Course; and
(3) any change or effect that is cured before the earlier of
(a) the Closing Date and/or (b) the date on which this
Agreement is terminated pursuant to Section 0.
“ Orders ” shall
mean all decisions, injunctions, writs, guidelines, orders,
arbitrations, awards, judgments, subpoenas, verdicts or decrees
entered, issued, made or rendered by any Governmental
Authority.
“ Ordinary Course
” shall mean the ordinary course of the Company’s
business, consistent with the past practices of the Company. The
Ordinary Course does not include any transaction with an officer,
director, shareholder or investor of the Company.
“ Person ” shall
mean any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization,
labor union, or other entity or Governmental Authority.
“ SEC ” shall mean
the United States Securities and Exchange Commission.
2 The Merger
.
2.1
Merger . Upon the terms and conditions set forth in this
Agreement, and in accordance with the applicable provisions of the
FBCA, at the Effective Date (defined in Section 2.2), the Merger
Sub shall be merged with and into the Company, which latter shall
be the surviving corporation (the Company is also sometimes called
the “ Surviving Corporation ” herein).
2.2
Continuing Corporate Existence . Except as may otherwise be
set forth herein, the corporate existence of the Company, with all
its purposes, powers, franchises, privileges, rights and
immunities, shall continue unaffected and unimpaired by the Merger,
and the corporate existence and identity of the Merger Sub, with
all its purposes, powers, franchises, privileges, rights and
immunities, at the Effective Date shall be merged with and into
that of the Company, and the separate corporate existence and
identity of the Merger Sub shall thereafter cease except to the
extent continued by statute.
2.3
Effective Date . The Merger shall become effective at the
date and time when the articles of merger are filed with the
Secretary of State of Florida (the “ Effective Date
”).
2.4
Corporate Governance .
(a) The
Articles of Incorporation of the Company, as amended in the
articles of merger on the Effective Date, shall become the Articles
of Incorporation of the Company as the surviving corporation.
(b) The
Bylaws of the Company, as amended on the Effective Date, shall
become the Bylaws of the Company as the surviving
corporation.
(c)
Those persons serving as directors and officers of the Merger Sub
on the Effective Date of the Merger shall become the directors and
officers of the Company as of the Effective Date.
(d)
Those persons serving as directors and officers of the Company on
the Effective Date of the Merger shall cease holding their
respective offices in the Company as of the Effective Date.
2.5
Rights and Obligations of the Company . At the Effective
Date, the Company as the Surviving Corporation shall have the
following rights and obligations.
(a) The
Company shall have all the rights, privileges, immunities and
powers and shall be subject to all the duties and liabilities of a
corporation organized under the laws of the State of Florida.
(b) The
Company shall possess all of the rights, privileges, immunities and
franchises, of either a public or private nature, of the Company
and the Merger Sub, and all property, real, personal and mixed, and
all debts due on whatever account, and all other chooses in action,
and every other interest of or belonging or due to the Merger Sub
and the Company shall be taken and deemed to be transferred to or
invested in the Company without further act or deed.
(c) At
the Effective Date, the Company shall thenceforth be responsible
and liable for all contracts, liabilities and obligations of the
Company and the Merger Sub, and any claim existing or action or
proceeding pending by or against the Company or the Merger Sub may
be prosecuted against the Company as if the Merger had not
occurred, or the Company may be substituted in its place. Neither
the rights of creditors nor any liens upon the property of the
Company.
2.6
Closing . Consummation of the transactions contemplated by
this Agreement (the “ Closing ”) shall take
place at the offices of Greenburg Traurig, P.A., in Orlando,
Florida commencing at 10:00 A.M. on or before July 15,
2008, or as soon as possible thereafter when each of the other
conditions of this Agreement have been satisfied or waived, and
shall proceed promptly to conclusion, at such place, time and date
as shall be determined by the parties hereto. The day on which the
Closing shall occur is herein called the “ Closing
Date .” Each of the Constituent Corporations will cause
to be prepared, executed, and delivered the Articles of Merger to
be filed with the Secretary of State of Florida and all other
appropriate and customary documents as any party or its counsel may
reasonably request for the purpose of consummating the transactions
contemplated by this Agreement. All actions taken at the Closing
shall be deemed to have been taken simultaneously at the time the
last of any such actions is taken or completed.
3 Conversion of
Securities.
3.1 On
the Effective Date, by virtue of the Merger and without any action
on the part of EZCORP, Merger Sub, the Company or the holders of
the common stock of the Company:
(a)
except as set forth in subsection 00 :
(1)
each share of common stock of the Company issued and outstanding
immediately prior to the Effective date shall be canceled and
automatically converted, subject to Section (c), into the right to
receive $11.00 per share of common stock of the Company (assuming
for all purposes in this Section 3 the exercise or conversion
of all then outstanding options, warrants, conversion rights,
commitments or other rights to acquire the Company’s common
stock, whether vested or unvested), calculated and paid as
follows:
A. up
to 15 of the Company’s shareholders, each of whom is listed
on Schedule 1 (as said Schedule may be amended by the Company
from time to time prior to the Merger) and each of whom must be
“accredited investors” as that term is defined in SEC
Rule 501, shall receive (i) a number of the EZCORP Shares
in the individual amounts set forth on Schedule 1, plus (ii) a
cash payment equal to $11.00 per common share owned by the
shareholder, minus the product of the number of the EZCORP Shares
received by the shareholder as set forth in Schedule 1 times
the closing price per share of EZCORP’s class A non-voting
common stock on the NASDAQ Stock Market on the business day
immediately prior to the Closing Date; and
B. the
remaining Company shareholders not listed on Schedule 1 shall
receive a cash payment of $11.00 per share;
(2)
each share of common stock of the Company held in treasury by the
Company or any Subsidiary of the Company immediately prior to the
Effective Date shall be canceled and extinguished without any
conversion thereof and no payment or distribution shall be made
with respect thereto;
(3)
each share of common stock of Merger Sub issued and outstanding
immediately prior to the Effective Date shall be converted into and
exchanged for one validly issued, fully paid and nonassessable
share of common stock of the Company; and
(4)
{Intentionally Left Blank.}
(b)
Notwithstanding any provisions of this Agreement to the contrary,
shares of the Company’s common stock which are issued and
outstanding immediately prior to the Effective Date and which are
held by any Person who has properly exercised their appraisal
rights under the FBCA (the “Appraisal Shares”) will not
be converted into or represent a right to receive the applicable
Merger Consideration pursuant to this Section 0. The holders
thereof will be entitled only to such rights as are granted by
Section 1302 of the FBCA. Each holder of Appraisal Shares who
becomes entitled to payment for such shares of Company common stock
pursuant to Section 1302 of the FBCA will receive payment
therefor from the Company in accordance with the FBCA;
provided , however , that (1) if any such holder
of Appraisal Shares fails to establish its entitlement to appraisal
rights as provided in Section 1323 of the FBCA, or (2) if
any such holder of Appraisal Shares effectively withdraws its
demand for appraisal of such shares of the Company’s common
stock or loses its right to appraisal and payment for its shares of
the Company’s common stock under Section 1323 or 1326 of
the FBCA, such holder will forfeit the right to appraisal of such
shares of the Company’s common stock and each such share of
the Company’s common stock will be treated as if such share
had been converted, as of the Effective Date, into a right to
receive the applicable Merger Consideration, without interest
thereon, as provided in subsection 00.
3.2
Exchange of Certificates.
(a)
Exchange Agent . EZCORP shall deposit, or shall cause to be
deposited, with American Stock & Transfer Company or such other
bank or trust company that may be designated by EZCORP and is
reasonably satisfactory to the Company (the “ Exchange
Agent ”), for the benefit of the holders of shares of the
Company’s common stock, for exchange in accordance with this
Section 0 through the Exchange Agent, cash and certificates
representing the EZCORP Shares issuable pursuant to Section 0
as of the Effective Date, the aggregate of such cash and
certificates for the EZCORP Shares, being hereinafter referred to
as the “ Exchange Fund ”). If requested by the
Exchange Agent, the Company and EZCORP will enter into a mutually
acceptable exchange agent agreement which will set forth the
duties, responsibilities and obligations of the Exchange Agent. The
Exchange Agent shall, pursuant to irrevocable instructions, deliver
the EZCORP Shares contemplated to be issued pursuant to
Section 0, out of the Exchange Fund. Except as contemplated by
Section 3.2(f) hereof, the Exchange Fund shall not be used for
any other purpose. A
(b)
Exchange Procedures . As promptly as practicable after the
Effective Date (but in any event within five business days after
the Effective Date), EZCORP shall cause the Exchange Agent to mail
to each holder of record of a certificate or certificates which
immediately prior to the Effective Date represented outstanding
shares of Company’s common stock (the “
Certificates ”) (1) a letter of transmittal
(which shall be in customary form and shall specify that delivery
shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the
Exchange Agent) and (2) instructions for use in effecting the
surrender of the Certificates in exchange for cash and certificates
representing EZCORP Shares. Upon surrender to the Exchange Agent of
a Certificate for cancellation, together with such letter of
transmittal, duly executed and completed in accordance with the
instructions thereto, and such other documents as may be reasonably
required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor cash
and a certificate representing that number of whole EZCORP class A
non-voting common stock which such holder has the right to receive
in respect of the shares of Company’s common stock formerly
represented by such Certificate (after taking into account all
shares of the Company’s common stock then held by such
holder) to which such holder is entitled pursuant to Section 0 (the
EZCORP Shares and cash being, collectively, the “ Merger
Consideration ”), and the Certificate so surrendered
shall forthwith be canceled. In the event of a transfer of
ownership of shares of Company common stock which is not registered
in the transfer records of the Company, the applicable Merger
Consideration may be issued to a transferee if the Certificate
representing such shares of Company common stock is properly
endorsed and presented to the Exchange Agent, accompanied by all
documents required
to evidence and
effect such transfer and by evidence satisfactory to EZCORP that
any applicable share transfer taxes have been paid. Until
surrendered as contemplated by this Section, each Certificate shall
be deemed at all times after the Effective Date to represent only
the right to receive upon such surrender the applicable Merger
Consideration. No interest shall be paid or shall accrue on the
cash payable upon surrender of any Certificate.
(c)
No Further Rights in Company Common Stock . The Merger
Consideration paid and issued (and represented by certificates
delivered) upon conversion of the shares of the Company’s
common stock in accordance with the terms hereof shall be deemed to
have been issued in full satisfaction of all rights pertaining to
such shares of the Company’s common stock.
(d)
No Fractional Shares . No certificates or scrip representing
fractional EZCORP class A non-voting common stock shall be issued
upon the surrender for exchange of Certificates. In lieu of any
such fractional share, each holder of Company common stock who
would otherwise have been entitled to a fraction of a EZCORP class
A non-voting common stock upon surrender of Certificates for
exchange shall be entitled to have the number of shares such holder
is to receive rounded up to the next whole number of shares.
(e)
Termination of Exchange Fund . Any portion of the Exchange
Fund which remains undistributed to the holders of shares of
Company common stock for twelve months after the Effective Date
shall be delivered to EZCORP, upon demand, and any holders of
shares of Company common stock who have not theretofore complied
with this Section 0 shall thereafter look only to EZCORP for
the applicable Merger Consideration. Any portion of the Exchange
Fund remaining unclaimed by holders of shares of Company common
stock as of a date which is immediately prior to such time as such
amounts would otherwise escheat to or become property of any
government entity shall, to the extent permitted by applicable Law,
become the property of EZCORP free and clear of any claims or
interest of any person previously entitled thereto.
(f)
No Liability . None of EZCORP, Merger Sub, or the Company
shall be liable to any holder of shares of Company common stock for
any such Merger Consideration delivered to a public official
pursuant to any abandoned property, escheat or similar Laws.
(g)
Lost Certificates . If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact
by the person claiming such Certificate to be lost, stolen or
destroyed and, if required by the Company, the posting by such
person of a bond, in such reasonable amount as the Company may
direct, as indemnity against any claim that may be made against it
with respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate, the
applicable Merger Consideration.
3.3
Additional Consideration .
(a) The
parties contemplate that some or all of the EZCORP Shares will be
offered for sale by the Company shareholders listed on
Schedule 1 (the “ Selling EZCORP Shareholders
”) shortly after the Registration Statement becomes
effective. The Selling EZCORP Shareholders will be offered the
opportunity to sell 401,489 shares in one or more block trades or
negotiated transactions through Stephens, Inc. The Selling EZCORP
Shareholders will also be offered the opportunity to sell their
remaining EZCORP Shares in second and subsequent block trades or
negotiated transactions after the sale of the initial 401,489
shares is executed. The Selling EZCORP Shareholders will cause the
EZCORP Shares that they wish to sell to be deposited with Stephens,
Inc., as soon as practicable after Closing. Stephens, Inc., or
another broker designated by the Company will sell the shares so
deposited within five business days of the effective date of the
Registration Statement. Promptly after the settlement date for the
sale of
the 401,489
shares by Stephens, Inc., Stephens, Inc., will notify EZCORP and
the Selling EZCORP Shareholders of the per share sales price of the
shares. To the extent that the average sales price per share of the
initial 401,489 shares (after deducting any commissions, expenses
or discounts paid with respect to the sale) is less than the
closing market price per share of EZCORP’s class A non-voting
common stock on the business day immediately prior to the Closing
Date (the “ Sale Discount ”), EZCORP will pay
Sale Discount times 401,489 to the Selling EZCORP Shareholders, pro
rata according to the number of shares sold on behalf of each
Selling EZCORP Shareholder. EZCORP will cause the payment in
respect of the Sale Discount to be made within three business days
of the settlement date of the shares so sold.
3.4
Stock Transfer Books . At the Effective Date, the stock
transfer books of the Company shall be closed and there shall be no
further registration of transfers of shares of Company common stock
thereafter on the records of the Company. From and after the
Effective Date, the holders of Certificates representing shares of
Company common stock outstanding immediately prior to the Effective
Date shall cease to have any rights with respect to such shares of
Company common stock, except as otherwise provided in this
Agreement or by Law. On or after the Effective Date, any
Certificates presented to the Exchange Agent or EZCORP for any
reason shall be converted into the applicable Merger
Consideration.
3.5
Closing Certificates. At the Closing, (a) EZCORP shall
deliver to the Company a certificate, in form and substance
satisfactory to the Company and signed by its Chief Executive
Officer and Chief Financial Officer, certifying in reasonable
detail the calculation of the amount of fully diluted EZCORP
non-voting common stock on the Closing Date, together with all
supporting materials used in such calculation, and (b) the
Company shall deliver to EZCORP a certificate, signed by its Chief
Executive Officer and Chief Financial Officer, certifying in
reasonable detail the calculation of the aggregate number of
Company common stock, including common stock issued and outstanding
immediately prior to the Effective Date.
3.6
Changes in Capitalization. If, between the date of this
Agreement and the Effective Date, the outstanding shares of the
EZCORP’s class A non-voting common stock or the
Company’s common stock are changed into a different number or
class of shares by means of any stock split, division or
subdivision of shares, stock dividend, reverse stock split,
consolidation of shares, reclassification, recapitalization or
other similar transaction, then the Merger Consideration shall be
appropriately adjusted; provided that no adjustment shall be made
under this Section if the number of outstanding shares of the
Company’s common stock increases as a result of the exercise
of the Company’s stock options, warrants, conversion rights
or other rights to acquire the Company’s common stock.
3.7
Appraisal Shares . No more than ten (10) days after to
the Effective Date, the Surviving Corporation shall give notice in
writing to each holder of Appraisal Shares in the form required by
Section 1322 of the FBCA. Within forty (40) days after
the date on which notice is mailed, each holder of Appraisal Shares
must either accept the Company’s offer as stated in the
Company’s notice or, if t
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