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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 27, 1997
E-Z SERVE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-10717 75-2168773
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
2550 NORTH LOOP WEST, SUITE 600
HOUSTON, TEXAS 77092
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 684-4300
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ITEM 5. OTHER EVENTS.
SECURITIES PURCHASE AGREEMENT
On January 27, 1997, E-Z Serve Corporation ("Company"), entered into
a Securities Purchase Agreement ("Purchase Agreement") with Phemus Corporation
("Phemus"), one of the Company's major stockholders. Pursuant to the Purchase
Agreement, the Company issued and sold to Phemus (i) 140,000 shares of its
Series H Preferred Stock, $0.01 par value ("Series H Preferred Stock"), (ii)
warrants ("Warrants") for the purchase of an aggregate of 960,000 shares of the
Company's common stock, $.01 par value ("Common Stock"), at a per share
exercise price of $0.01 and exercisable at any time prior to January 27, 2009,
and (iii) additional warrants issuable on each anniversary date of the Purchase
Agreement for each share of Series H Preferred Stock then outstanding
("Additional Warrants"). On January 31, 1997, Phemus sold 33,600 shares of the
Series H Preferred Stock and warrants to purchase 230,400 shares of Common
Stock for an aggregate of $2,144,724 to Intercontinental Mining & Resources
Incorporated ("IMR"), another major stockholder of the Company.
Net proceeds of $8,359,000 from the sale of the Series H Preferred
Stock and the Warrants were used by the Company to redeem all of the outstanding
75,656 shares of the Company's $6.00 Convertible Preferred Stock, Series C
("Series C Preferred Stock") and net proceeds of $5,081,000 were used for
general corporate purposes, including paying down a portion of amounts
outstanding under the Amended and Restated Credit and Guaranty Agreement
("Credit Agreement") dated as of October 7, 1995, as amended, among the Company,
its subsidiary, E-Z Serve Convenience Stores, Inc., and the Company's senior
bank lenders.
SERIES H PREFERRED STOCK
To effectuate the foregoing, the Company filed a Certificate of
Designation, Preferences and Rights of Series H Preferred Stock with the
Secretary of the State of Delaware ("Certificate of Designation") on January
24, 1997. The number of authorized shares initially constituting the Series H
Preferred Stock is 750,000, which number may be decreased (but not increased)
by the Board of Directors without a vote of the stockholders; provided that
such number of shares may not be decreased below the number of then outstanding
shares of Series H Preferred Stock.
The dividends on each share of Series H Preferred Stock shall accrue
on a daily basis at the rate of 13% per annum of the liquidation value, set at
$100 per Share ("Liquidation Value"). Dividends are payable semi-annually and
accrue whether or not they have been declared and whether or not there are
profits, surplus, or other funds of the Company available for payment. All
accrued and unpaid dividends shall be fully paid or declared with funds
irrevocably set apart for payment before any dividends (or other payments) may
be made with respect to any other capital stock or other equity securities of
the Company (collectively referred to as "Junior Securities"). Dividends shall
be paid solely by the issuance of additional shares of Series H Preferred Stock
(fractional shares shall be paid in cash).
Upon liquidation or dissolution of the Company, each holder of Series
H Preferred Stock shall be entitled to be paid an amount equal to the aggregate
Liquidation Value of such shares, plus all accrued and unpaid dividends, before
any distribution or payment is made upon any other Junior Securities.
The Company is required to redeem each outstanding share of Series H
Preferred Stock upon the earlier of (i) the third anniversary date of the
Purchase Agreement, (ii) the occurrence of a change in ownership whereby any
new investor owns more than 50% of the Common Stock, or (iii) the occurrence of
certain other fundamental changes in the Company. The Company may, at its
option, at any time redeem any
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or all of the outstanding Series H Preferred Stock. In either case, the Company
shall pay a redemption price per share of Series H Preferred Stock equal to the
Liquidation Value plus all accrued and unpaid dividends. The Series H Preferred
Stock, however, cannot be redeemed unless permitted by the Credit Agreement
The Series H Preferred Stock has no voting rights other than granted
by statute. However, the Company is prohibited from taking certain corporate
actions without the written consent of the holders of a majority of the Series
H Preferred Stock, including amendments and modifications to the Company's
Certificate of Incorporation, the sale of additional shares of Series H
Preferred Stock, the payment of dividends, the redemption of any shares of
capital stock of the Company and certain other actions. Upon the Company's
failure to comply with the terms of the Certificate of Designation, the holders
of the Series H Preferred Stock have certain remedies including (i) an automatic
increase in the dividend rate to 23%, (ii) the right to demand a redemption of
all outstanding shares of Series H Preferred Stock, subject to the Credit
Agreement, (iii) and the right to appoint one director to the Company's Board of
Directors who will have a majority of the votes of the Board of Directors.
AMENDMENTS TO CERTAIN AGREEMENTS
In connection with the issuance of the Series H Preferred Stock, the
Amended and Restated Stockholders Agreement by and among the Company, certain
stockholders and employees of the Company, entered into as of June 1, 1994, was
amended to permit the issuance of the Series H Preferred Stock, the redemption
of the Series C Preferred Stock and the provisions relating to the additional
director described above. Similarly, the Registration Rights Agreement dated as
of March 25, 1992, as amended, by and among the Company and certain
stockholders of the Company was amended to include the Common Stock issuable
upon the exercise of the Warrants and the Additional Warrants.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
Exhibit
Number Description of Exhibit
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4.1 Certificate of Designation, Preferences and Rights of Series H Preferred Stock of E-Z
Serve Corporation filed January 24, 1997.
4.2 Certificate of Elimination for $6.00 Convertible Preferred Stock, Series C of E-Z
Serve Corporation filed January 27, 1997.
4.3 Amendment No. 1 to Stockholders Agreement, dated January 27, 1997, by and
among E-Z Serve Corporation, Phemus Corporation, Intercontinental Mining &
Resources Incorporated, DLJ Capital Corporation and Tenacqco Bridge Partnership.
4.4 Third Amendment to Registration Rights Agreement, dated January 27,1997, by and
among E-Z Serve Corporation, Phemus Corporation and Intercontinental Mining &
Resources Incorporated.
4.5 Form of Common Stock Purchase Warrant of E-Z Serve Corporation issued pursuant
to the Securities Purchase Agreement, dated January 27, 1997, between E-Z Serve
Corporation and Phemus Corporation.
99.1 Securities Purchase Agreement, dated January 27, 1997, between E-Z Serve
Corporation and Phemus Corporation.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
E-Z SERVE CORPORATION
By: /s/ John T. Miller
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John T. Miller
Senior Vice President
Dated: February 10, 1997
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EXHIBIT INDEX
Exhibit
Number Description
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4.1 Certificate of Designation, Preferences and Rights of Series H
Preferred Stock of E-Z Serve Corporation filed January 24,
1997.
4.2 Certificate of Elimination for $6.00 Convertible Preferred
Stock, Series C of E-Z Serve Corporation filed January 27,
1997.
4.3 Amendment No. 1 to Stockholders Agreement, dated
January 27, 1997, by and among E-Z Serve Corporation, Phemus
Corporation, Intercontinental Mining & Resources
Incorporated, DLJ Capital Corporation and Tenacqco Bridge
Partnership.
4.4 Third Amendment to Registration Rights Agreement, dated
January 27, 1997, by and among E-Z Serve Corporation,
Phemus Corporation and Intercontinental Mining & Resources
Incorporated.
4.5 Form of Common Stock Purchase Warrant of E-Z Serve
Corporation issued pursuant to the Securities Purchase
Agreement, dated January 27, 1997, between E-Z Serve
Corporation and Phemus Corporation.
99.1 Securities Purchase Agreement, dated January 27, 1997,
between E-Z Serve Corporation and Phemus Corporation.