Item 1.01 — Entry into a Material Definitive Agreement
The Purchase Agreement
On December 7, 2022, EZCORP, Inc. (the “Company”) entered into a purchase agreement (the “Purchase Agreement”) with Morgan Stanley & Co. LLC, as representative (the “Representative”) of the initial purchasers (the “Initial Purchasers”), relating to the sale by the Company of $200,000,000 aggregate principal amount of its 3.75% convertible senior notes due 2029 (the “Notes”) in a private placement to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Notes Offering”). In addition, the Company granted the Initial Purchasers an option to purchase up to an additional $30,000,000 aggregate principal amount of the Notes on the same terms and conditions. The Initial Purchasers exercised their option in full on December 8, 2022.
The Purchase Agreement includes customary representations, warranties and covenants by the Company. Under the terms of the Purchase Agreement, the Company has agreed to indemnify the Initial Purchasers against certain liabilities.
The description of the Purchase Agreement contained herein is qualified in its entirety by reference to the full text of the Purchase Agreement, a copy of which is filed as Exhibit 10.1 hereto and incorporated herein by reference.
The Notes and the Indenture
On December 12, 2022, the Company issued $230,000,000 of the Notes pursuant to an indenture, dated as of December 12, 2022 (the “Indenture”), between the Company and Truist Bank, as trustee.
The Notes bear interest at a rate of 3.75% per year until maturity. Interest is payable in cash on June 15 and December 15 of each year, beginning on June 15, 2023. The Notes will mature on December 15, 2029, unless converted, redeemed or repurchased in accordance with their terms prior to such date. The initial conversion rate is 89.0313 shares of the Company’s Class A Non-Voting Common Stock, $.01 par value per share (“Class A common stock”), per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $11.23 per share of Class A common stock). The conversion rate, and thus the conversion price, may be adjusted under certain circumstances as described in the Indenture.
Prior to the close of business on the business day immediately preceding June 15, 2029, holders may convert their Notes only under the following circumstances:
•During any fiscal quarter commencing after the fiscal quarter ending on March 31, 2023 (and only during such fiscal quarter), if the last reported sale price of the Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day;
•During the five business day period after any five consecutive trading day period (the "measurement period") in which the trading price per $1,000 principal amount of Notes for each trading day of such measurement period was less than 98% of the product of the last reported sale price of the Company's Class A common stock and the conversion rate on such trading day;
•If the Company calls any or all of the Notes for redemption, at any time prior to the close of business on the business day immediately preceding the redemption date; or
•Upon the occurrence of specified corporate events described in the Indenture.
On or after June 15, 2029, until the close of business on the business day immediately preceding the maturity date, holders may convert their Notes, at their option, regardless of the foregoing circumstances. Upon conversion of a Note, the Company will pay or deliver, as the case may be, cash, shares of the Company’s Class A common stock or a combination thereof, at the Company’s election. If the Company satisfies its conversion obligation solely in cash or through payment and delivery, as the case may be, of a combination of cash and shares of the Company’s Class A common stock, the amount of cash and number of shares of the Company’s Class A common stock, if any, due upon conversion will be based on a daily conversion value (as described in the Indenture) calculated on a proportionate basis for each trading day in a 50 trading day observation period. Upon conversion, holders of Notes will not receive any separate cash payment for accrued and unpaid interest, if any, except in the limited circumstances described in the Indenture. The Company’s payment or delivery, as the case may be, to the holder of a Note of the amount of cash, shares of the Company’s Class A common stock or a combination thereof into which such Note is convertible will be deemed to satisfy in full the Company’s obligation to pay the principal amount of the Note and accrued and unpaid interest, if any, to, but excluding, the conversion date.
If holders elect to convert the Notes in connection with certain “make-whole fundamental change” transactions (as defined in the Indenture), or in connection with a redemption notice, as described in the Indenture, the Company will, under certain circumstances described in the Indenture, increase the conversion rate for the Notes so surrendered for conversion.
The Company may not redeem the Notes prior to December 21, 2026. The Company may redeem for cash all or any portion of the Notes (subject to the partial redemption limitation described in the Indenture), at its option, on or after December 21, 2026, if the last reported sale price of the Class A common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides the applicable redemption notice, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides the applicable redemption notice. The redemption price will be equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
If the Company undergoes a “fundamental change” (as defined in the Indenture), subject to certain conditions, holders will have the right to require the Company to repurchase for cash all or part of their Notes in principal amounts of $1,000 or an integral multiple thereof at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding the fundamental change repurchase date, subject to the terms of the Indenture.
The foregoing description of the Indenture does not purport to be complete and is qualified in its entirety by reference to the full text of the Indenture, a copy of which is filed as Exhibit 4.1 hereto and incorporated by reference herein.