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E-Z SERVE CORPORATION
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF
SERIES H PREFERRED STOCK
Pursuant to Section 151(g) of the General Corporation Law of the State of
Delaware
I, Neil H. McLaurin, President and Chief Executive Officer of E-Z
Serve Corporation, a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Corporation"), in accordance
with the provisions of Section 151(g) thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the Amended and Restated Certificate of Incorporation of the Corporation, as
amended, the Board of Directors of the Corporation on January 23, 1997 adopted
the following resolution creating 750,000 shares of preferred stock designated
as Series H Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its Amended
and Restated Certificate of Incorporation, a series of preferred stock of the
Corporation be, and it hereby is, created, and that the designation and amount
thereof and the voting powers, preferences and relative, participating,
optional and other special rights of shares of such series and the
qualifications, limitations or restrictions thereof are as follows:
Section 1. Designation and Number. The shares of such class shall
be designated "Series H Preferred Stock." The number of shares initially
constituting the Series H Preferred Stock shall be 750,000 which number may be
decreased (but not increased) by the Board of Directors without a vote of
stockholders; provided that such number may not be decreased below the number
of then outstanding shares of Series H Preferred Stock.
Section 2. Dividends.
2A. General Obligation. To the extent permitted by law, the
Corporation shall pay preferential dividends to the holders of the Series H
Preferred Stock as provided in this Section 2. Dividends on each share of the
Series H Preferred Stock (a "Share") shall accrue on a daily basis at the rate
of 13% per annum of the Liquidation Value thereof. Such dividends shall accrue
whether or not they have been declared and whether or not there are profits,
surplus or other funds of the Corporation legally available for the payment of
dividends, and such dividends shall be cumulative such that all accrued and
unpaid dividends shall be fully paid or declared with funds irrevocably set
apart for payment before any dividends, distributions, redemptions or other
payments may be made
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with respect to any Junior Securities. The date on which the Corporation
initially issues any Share (which in the case of shares issued as dividends in
kind, shall be their Dividend Reference Date (as defined below)) shall be
deemed to be its "date of issuance" regardless of the number of times transfer
of such Share is made on the stock records maintained by or for the Corporation
and regardless of the number of certificates which may be issued to evidence
such Share.
The Corporation shall pay such dividends solely by issuing additional
shares of Series H Preferred Stock. No fractional interest in shares of Series
H Preferred Stock shall be issued as a dividend payment. Each holder of Series
H Preferred Stock who otherwise would have been entitled to a fractional share
of Series H Preferred Stock as a dividend payment on the aggregate number of
shares of Series H Preferred Stock for which such holder is entitled to receive
dividends will receive, in lieu of such fractional share, a cash amount
determined by multiplying such fraction of a share by $100.
2B. Dividend Payment Dates. The dates at which dividends on the
Series H Preferred Stock shall be payable are January 20 and July 20 of each
year (each a "Dividend Reference Date"), beginning on July 20, 1997.
2C. Distribution of Partial Dividend Payments. Except as
otherwise provided herein, if at any time the Corporation pays less than the
total amount of dividends then accrued with respect to the Series H Preferred
Stock, such payment shall be distributed pro rata among the holders thereof
based upon the aggregate accrued but unpaid dividends on the Shares held by
each such holder.
Section 3. Liquidation.
3A. Liquidation Payments. Upon any liquidation, dissolution or
winding up of the Corporation (whether voluntary or involuntary), each holder
of Series H Preferred Stock shall be entitled to be paid, before any
distribution or payment is made upon any Junior Securities, an amount equal to
the aggregate Liquidation Value of all Shares held by such holder (plus all
accrued and unpaid dividends thereon), and the holders of Series H Preferred
Stock shall not be entitled to any further payment. If upon any such
liquidation, dissolution or winding up of the Corporation, the Corporation's
assets to be distributed among the holders of the Series H Preferred Stock are
insufficient to permit payment to such holders of the aggregate amount which
they are entitled to be paid under this Section 3, then the entire assets
available to be distributed to the holders of the Series H Preferred Stock
shall be distributed pro rata among such holders based upon the aggregate
Liquidation Value (plus all accrued and unpaid dividends) of the Series H
Preferred Stock held by each such holder. Prior to the liquidation,
dissolution or winding up of the Corporation, the Corporation shall declare for
payment all accrued and unpaid dividends with respect to the Series H Preferred
Stock. Not less than 60 days prior to the payment date stated therein, the
Corporation
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shall mail written notice of any such liquidation, dissolution or winding up to
each record holder of Series H Preferred Stock, setting forth in reasonable
detail the amount of proceeds to be paid with respect to each Share, each share
of Common Stock and each other equity security of the Corporation in connection
with such liquidation, dissolution or winding up.
3B. Distribution Other Than Cash. Whenever the distribution
provided for in this Section 3 shall be payable in property other than cash,
the value of such distribution shall be the fair market value of such property
as determined in good faith by the Board of Directors; provided, however, that
if the holders of a majority of the then outstanding shares of Series H
Preferred Stock (the "Contesting Holders") notify the Board of Directors within
ten business days after receiving written notification of such determination of
fair market value that they disagree with such determination, then the Board of
Directors and the Contesting Holders shall have 30 days to agree upon a fair
market value of the relevant property. If, by the end of such 30-day period,
they are unable to agree on a fair market value, the fair market value shall be
determined by an appraisal, the cost of which shall be shared equally by the
Corporation, on one hand, and the Contesting Holders, on the other hand. All
appraisals shall be undertaken by two appraisers, one selected by the
Corporation and one selected by the Contesting Holders, which selections must
be made within 10 days after the expiration of the 30-day period described
above. If one selecting party fails to timely select its appraiser, the other
selecting party shall select both appraisers. The fair market value shall be
the fair market value arrived at by those appraisers within 60 days following
the appointment of the last appraiser to be appointed. In the event that the
two appraisers cannot agree on such fair market value within such a period of
time, (a) if the appraisers' valuations are within 10% of each other, the fair
market value shall be the average of the two valuations, and (b) if the
differences in the valuations are greater, the appraisers shall elect a third
appraiser who will calculate fair market value independently, and, except as
provided in the next sentence, the fair market value of the property shall in
each case be the average of the two fair market values arrived at by the
appraisers who are closest in amount. If one appraiser's valuation is the
average of the other two valuations, the average valuation shall be the fair
market value. In the event that the two original appraisers cannot agree upon
a third appraiser within 30 days following the end of the 60-day period
referred to above, the third appraiser shall be appointed by the American
Arbitration Association.
Section 4. Priority of Series H Preferred Stock on Dividends and
Redemptions.
So long as any Series H Preferred Stock remains outstanding, except as
permitted under the Corporation's existing stock option plans, without the
prior written consent of the holders of a majority of the outstanding shares of
Series H Preferred Stock, the Corporation shall not, nor shall it permit any
Subsidiary to, redeem, purchase or otherwise acquire directly or indirectly any
Junior Securities, nor shall the Corporation directly or indirectly pay or
declare any dividend or make any
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distribution (including, without limitation, in connection with a purchase,
redemption, or retirement) upon any Junior Securities, other than in additional
shares of Junior Securities.
Section 5. Redemptions.
5A. Mandatory and Optional Redemption. The Corporation shall
redeem each share of Series H Preferred Stock then outstanding (the "Mandatory
Redemption") upon the earlier of (a) the third anniversary of the date of the
Securities Purchase Agreement (the "Investment Date"), (b) the occurrence of a
Change in Ownership, and (c) the occurrence of a Fundamental Change. If the
Mandatory Redemption is prohibited by the Credit Agreement, the Corporation
shall make such Mandatory Redemption as soon as it is permitted to do so under
the Credit Agreement.
In addition, the Corporation may, at its option, at any time and from
time to time, redeem all or any portion of the Shares of Series H Preferred
Stock then outstanding (the "Optional Redemption"). Upon either a Mandatory
Redemption or an Optional Redemption, the Corporation shall pay a price per
Share equal to the Liquidation Value thereof (plus all accrued and unpaid
dividends thereon, whether or not declared). No Optional Redemption may be
made for fewer than 1,000 Shares (or such lesser number of Shares then
outstanding).
5B. Redemption Payments. For each Share which is to be redeemed
hereunder, the Corporation shall be obligated on the Redemption Date to pay to
the holder thereof (upon surrender by such holder at the Corporation's
principal office of the certificate representing such Share) an amount in
immediately available funds equal to the redemption price described in Section
5A. If the funds of the Corporation legally available for redemption of Shares
on any Redemption Date are insufficient to redeem the total number of Shares to
be redeemed on such date, those funds which are legally available shall be used
to redeem the maximum possible number of Shares pro rata among the holders of
the Shares to be redeemed based upon the aggregate redemption price pursuant to
Section 5A of such Shares held by each such holder. At any time thereafter
when additional funds of the Corporation are legally available for the
redemption of Shares, such funds shall immediately be used to redeem the
balance of the Shares which the Corporation has become obligated to redeem on
any Redemption Date but which it has not redeemed.
5C. Notice of Redemption. Except as otherwise provided herein,
the Corporation shall mail written notice of each redemption of any Series H
Preferred Stock to each record holder thereof not more than 60 nor less than 30
days prior to the date on which such redemption is to be made. In case fewer
than the total number of Shares represented by any certificate are redeemed, a
new certificate representing the number of unredeemed Shares shall be issued to
the holder thereof without cost to such holder within five business days after
surrender of the certificate representing the redeemed Shares.
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5D. Determination of the Number of Each Holder's Shares to be
Redeemed. The number of Shares of Series H Preferred Stock to be redeemed from
each holder thereof in any Optional Redemption hereunder shall be the number of
Shares determined by multiplying the total number of Shares to be redeemed by a
fraction, the numerator of which shall be the total number of Shares then held
by such holder and the denominator of which shall be the total number of Shares
then outstanding.
5E. Dividends After Redemption Date. No Shares shall be entitled
to any dividends accruing after the date on which the redemption price of such
Share pursuant to Section 5A is paid to the holder of such Share. On such
date, all rights of the holder of such Share shall cease, and such Share shall
no longer be deemed to be issued and outstanding.
5F. Redeemed or Otherwise Acquired Shares. Any Shares which are
redeemed or otherwise acquired by the Corporation shall be canceled and retired
to authorized but unissued shares and shall not be reissued, sold or
transferred.
5G. Other Redemptions or Acquisitions. The Corporation shall not,
nor shall it permit any Subsidiary to, redeem or otherwise acquire any Shares
of Series H Preferred Stock, except as expressly authorized herein or as
contemplated by the terms of the Securities Purchase Agreement.
5H. Payment of Accrued Dividends. The Corporation may not redeem
any Series H Preferred Stock, unless all dividends accrued on the outstanding
Series H Preferred Stock through the immediately preceding Dividend Reference
Date have been declared and paid in full.
Section 6. Voting and Other Rights.
6A. Voting. Except as otherwise provided herein and as otherwise
required by applicable law, the Series H Preferred Stock shall have no voting
rights; provided, however, that each holder of Series H Preferred Stock shall
be entitled to notice of all stockholders meetings at the same time and in the
same manner as notice is given to all stockholders entitled to vote at such
meetings. The number of shares of Series H Preferred Stock entitled to vote on
any matter shall be determined as of the record date for the determination of
shareholders entitled to vote on such matter or, if no such record date is
established, at the date such vote is taken or any written consent of
shareholders is solicited. Except as otherwise expressly provided for herein
or as required by law, the holders of Series H Preferred Stock shall vote
together as a single class on all matters.
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6B. Other Rights. In addition to any rights provided by law,
without the written consent of the holders of a majority of shares of Series H
Preferred Stock then outstanding, the Corporation shall not:
(i) effect any amendment to, or modification of, the
Corporation's Certificate of Incorporation (including Certificates of
Designation thereunder) or Bylaws, which amendment or modification adversely
affects the rights and preferences of the Series H Preferred Stock;
(ii) authorize, issue or sell, or obligate itself to
authorize, issue or sell, (a) any additional shares of Series H Preferred Stock
(other than pursuant to Section 2A), or (b) any equity securities that are
senior to or pari passu with the Series H Preferred Stock with respect to
dividends, liquidation preferences or redemption rights;
(iii) issue or sell, or authorize itself to issue or sell
any Common Stock or options to acquire Common Stock (other than the Additional
Warrants contemplated by Section 8.1 of the Securities Purchase Agreement) if
there is insufficient authorized Common Stock to permit the exercise or
conversion (as applicable) of all Additional Warrants issued or issuable
pursuant to Section 8.1 of the Securities Purchase Agreement.
(iv) reclassify any shares of Series H Preferred Stock or
any Junior Securities;
(v) declare or pay any dividends, return any capital to
its stockholders as such, or make any distribution of assets to its
stockholders as such, other than (a) with respect to the Series H Preferred
Stock as provided herein, and (b) with respect to the $6.00 Convertible
Preferred Stock, Series C ("Series C Preferred Stock") as provided in Section
6B(vi);
(vi) redeem or repurchase or otherwise acquire for value
any shares of its capital stock (or rights, options or warrants to purchase
such shares) or other equity interests, except for (a) the redemption by the
Corporation of the Series H Preferred Stock pursuant to Section 5 hereof, (b)
the redemption of the Series C Preferred Stock of the Corporation as provided
in Section 3.3 of the Securities Purchase Agreement, and (c) as permitted
under the Corporation's existing stock option plans.
(vii) effect, or obligate itself to effect, (a) any merger
or consolidation with or into any other Person (as defined below) or (b) the
sale, assignment, lease or other disposition of, whether in one transaction or
a series of transactions, all or substantially all of its assets or (c) the
liquidation, dissolution or winding up of the Corporation;
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(viii) permit any Subsidiary to merge or consolidate with or
into any other Person (other than (a) the Corporation or (b) a Wholly-Owned
Subsidiary (as defined below)) or sell, assign, lease or otherwise dispose of,
or voluntarily part with the control of, whether in one transaction or a series
of transactions (other than to the Corporation or a Wholly-Owned Subsidiary),
all or substantially all of its assets;
(ix) permit any Subsidiary to redeem or repurchase or
otherwise acquire for value any shares of the Corporation's capital stock (or
rights, options or warrants to purchase such shares) or other equity interests;
(x) sell or otherwise dispose of any shares of capital
stock or other equity interests of any Subsidiary, except to a Wholly-Owned
Subsidiary (other than specific transactions approved by the Corporation's
Board of Directors as of the date hereof);
(xi) permit any Subsidiary to sell or otherwise dispose of
any shares of capital stock or other equity interests of the Corporation or any
other Subsidiary, except to the Corporation or a Wholly-Owned Subsidiary;
(xii) principally participate in any businesses other than
the businesses in which the Company is principally engaged on the date hereof;
(xiii) permit any Subsidiary to principally participate in
any businesses other than the businesses in which such Subsidiary is
principally engaged on the date hereof;
(xiv) make any acquisition with a purchase price of more
than $200,000 of any assets or securities or other equity interests of any
other Person;
(xv) permit any Subsidiary to make any acquisition with a
purchase price of more than $200,000 of any assets or securities or other
equity interests of any other Person;
(xvi) create any Subsidiary other than a Wholly-Owned
Subsidiary;
(xvii) incur, directly or indirectly through any of its
Subsidiaries, any additional indebtedness (including, without limitation,
guarantees of indebtedness and pledges of assets in support of indebtedness) in
excess of the threshold specified in Section 7.2.2(i) of the Credit Agreement,
other than accounts payable to suppliers incurred in the ordinary course of
business and borrowings under the revolving credit facility of the Credit
Agreement.
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Section 7. Events of Noncompliance.
7A. Definition. An Event of Noncompliance shall have occurred if:
(i) the Corporation fails to pay a dividend when required
to do so hereunder;
(ii) the Corporation fails to make any redemption payment
with respect to the Series H Preferred Stock which it is required to make
hereunder, whether or not such payment is legally permissible or is prohibited
by any agreement to which the Corporation is subject;
(iii) the Corporation breaches or otherwise fails to
perform or observe any other material covenant, term, or agreement set forth
herein or in the Securities Purchase Agreement (including without limitation
Section 8.1 thereof);
(iv) any representation or warranty contained in the
Securities Purchase Agreement or any information contained in writing required
to be furnished by the Corporation or any Subsidiary to any holder of Series H
Preferred Stock, is false or misleading in any material respect on the date
made or furnished;
(v) the Corporation or any Subsidiary makes an assignment
for the benefit of creditors or admits in writing its inability to pay its
debts generally as they become due; or an order, judgment or decree is entered
adjudicating the Corporation or any Subsidiary is entered under the Federal
Bankruptcy Code; or the Corporation or any Subsidiary petitions or applies to
any tribunal for the appointment of a custodian, trustee, receiver or
liquidator of the Corporation or any Subsidiary or of any substantial part of
the assets of the Corporation or any Subsidiary, or commences any proceeding
(other than a proceeding for the voluntary liquidation and dissolution of a
Subsidiary) relating to the corporation or any Subsidiary under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction; or any such petition or application is
field, or any such proceeding is commenced, against the Corporation or any
Subsidiary and either (a) the Corporation or any such Subsidiary by any act
indicates its approval thereof, consent thereto or acquiescence therein or (b)
such petition, application or proceeding is not dismissed within 60 days;
(vi) a judgment in excess of $500,000 is rendered against
the Corporation or any Subsidiary and, within 60 days after entry thereof, such
judgment is not discharged or execution thereof stayed pending appeal, or
within 60 days after the expiration of any such stay, such judgment is not
discharged; or
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(vii) the Corporation or any Subsidiary defaults in the
performance of any obligation or agreement if the effect of such default is to
cause an amount exceeding $500,000 to become due prior to its stated maturity
or to permit the holder or holders of any obligation to cause an amount
exceeding $500,000 to become due prior to its stated maturity.
7B. Consequences of Events of Noncompliance.
(i) If an Event of Noncompliance has occurred and is
continuing, the dividend rate on the Series H Preferred Stock shall increase
immediately by an increment of 10 percentage point(s). Any increase of the
dividend rate resulting from the operation of this subparagraph shall terminate
as of the close of business on the date on which no Event of Noncompliance
exists, subject to subsequent increases pursuant to this paragraph.
(ii) If an Event of Noncompliance, other than an Event of
Noncompliance of the type described in subparagraph 7A(v), has occurred and is
continuing, the holder or holders of a majority of the Series H Preferred Stock
then outstanding may demand (by written notice delivered to the Corporation)
immediate redemption of all or any portion of the Series H Preferred Stock
owned by such holder or holders at a price per Share equal to the Liquidation
Value thereof (plus all accrued and unpaid dividends thereon). The Corporation
shall give prompt written notice of such election to the other holders of
Series H Preferred Stock (but in any event within five days after receipt of
the initial demand for redemption), and each such other holder may demand
immediate redemption of all or any portion of such holder's Series H Preferred
Stock by giving written notice thereof to the Corporation within seven days
after receipt of the Corporation's notice. Subject to the Credit Agreement,
the Corporation shall redeem all Series H Preferred Stock as to which rights
under this paragraph have been exercised within 15 days after receipt of the
initial demand for redemption.
(iii) If an Event of Noncompliance of the type described in
subparagraph 7A(v) has occurred, all of the Series H Preferred Stock then
outstanding shall be subject to immediate redemption by the Corporation
(without any action on the part of the holder of the Series H Preferred Stock)
at a price per Share equal to the Liquidation Value thereof (plus all accrued
and unpaid dividends thereon). The Corporation shall immediately redeem all
Series H Preferred Stock upon the occurrence of such Event of Noncompliance.
(iv) If any Event of Noncompliance has occurred and is
continuing, the number of directors constituting the Corporation's Board of
Directors shall, at the request of the holder of a majority of the Series H
Preferred stock then outstanding, be increased by one member, and the holders
of Series H Preferred Stock shall have the special right, voting separately as
a single class (with each Share being entitled to one vote) and to the
exclusion of all other classes of the
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Corporation's stock, to elect an individual to fill such newly created
directorship, to fill any vacancy of such directorship and to remove any
individual elected to such directorship. The newly created directorship shall
constitute a separate class of directors, and the director elected by the
holders of the Series H Preferred Stock shall be entitled to cast a number of
votes on each matter considered by the Board of Directors (including for
purposes of determining the existence of a quorum) equal to the sum of the
number of votes entitled to be cast by all of the other directors plus one.
The special right of the holder of Series H Preferred Stock to elect members of
the Board of Directors may be exercised at the special meeting called pursuant
to this subparagraph (iv), at any annual or other special meeting of
stockholders and, to the extent and in the manner permitted by applicable law,
pursuant to a written consent in lieu of a stockholders meeting. Such special
right shall continue until such time as there is no longer any Event of
Noncompliance in existence, at which time such special right shall terminate
subject to revesting upon the occurrence and continuation of any Event of
Noncompliance which gives rise to such special right hereunder.
At any times when such special right has vested in the holders of
Series H Preferred Stock, a proper officer of the Corporation shall, upon the
written request of the holder of at least a majority of the Series H Preferred
Stock then outstanding, addressed to the secretary of the Corporation, call a
special meeting of the holders of Series H Preferred Stock for the purpose of
electing a director pursuant to this subparagraph. Such meeting shall be held
at the earliest legally permissible date at the principal office of the
Corporation, or at such other place designated by the holders of at least a
majority of the Series H Preferred Stock then outstanding. If such meeting has
not been called by a proper officer of the Corporation within 24 hours after
personal service of such written request upon the secretary of the Corporation
or within 48 hours after mailing the same to the secretary of the Corporation
at its principal office, then the holders of at least a majority of the Series
H Preferred Stock then outstanding may designate in writing one of their number
to call such meeting at the expense of the Corporation, and such meeting may be
called by such Person so designated upon the notice required for annual
meetings of stockholders and shall be held at the Corporation's principal
office, or at such other place designated by the holders of at least a majority
of the Series H Preferred Stock then outstanding. Any holder of Series H
Preferred Stock so designated shall be given access to the stock record books
of the Corporation for the purpose of causing a meeting of stockholders to be
called pursuant to this subparagraph.
At any meeting or at any adjournment thereof at which the holders of
Series H Preferred Stock have the special right to elect directors, the
presence, in person or by proxy, of the holders of a majority of the Series H
Preferred Stock then outstanding shall be required to constitute a quorum for
the election or removal of any director by the holders of the Series H
Preferred Stock exercising such special right. The vote of a majority of such
quorum shall be required to elect or remove any such director.
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Any director so elected by the holders of Series H Preferred Stock
shall continue to serve as a director until the expiration of the lesser of (a)
a period of six months following the date on which there is no longer any Event
of Noncompliance in existence or (b) the remaining period of the full term for
which such director has been elected. After the expiration of such six-month
period or when the full term for which such director has been elected ceases
(provided that the special right to elect directors has terminated), as the
case may be, the number of directors constituting the board of directors of the
Corporation shall decrease to such number as constituted the whole board of
directors of the Corporation immediately prior to the occurrence of the Event
or Events of Noncompliance giving rise to the special right to elect directors.
(v) If any Event of Noncompliance exists, each holder of
Series H Preferred Stock shall also have any other rights which such holder is
entitled to under any contract or agreement at any time and any other rights
which such holder may have pursuant to applicable law.
7C. Registration of Transfer.
The Corporation shall keep at its principal office a register for the
registration of Series H Preferred Stock. Upon the surrender of any
certificate representing Series H Preferred Stock at such place, the
Corporation shall, at the request of the record holder of such certificate,
execute and deliver (at the Corporation's expense) a new certificate or
certificate in exchange therefor representing in the aggregate the number of
Shares represented by the surrendered certificate. Each such new certificate
shall be registered in such name and shall represent such number of Shares as
is requested by the holder of the surrendered certificate and shall be
substantially identical in form to the surrendered certificate, and dividends
shall accrue on the Series H Preferred Stock represented by such new
certificate form the date to which dividends have been fully paid on such
Series H Preferred Stock represented by the surrendered certificate.
Section 8. Replacement
Upon receipt of evidence reasonably satisfactory to the Corporation
(an affidavit of the registered holder shall be satisfactory) of the ownership
and the loss, theft, destruction or mutilation of any certificate evidencing
Shares of Series H Preferred Stock, and in the case of any such loss, theft or
destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation (provided that if the holder is a financial institution or other
institutional investor its own agreement shall be satisfactory), or, in the
case of any such mutilation upon surrender of such certificate, the Corporation
shall (at its expense) execute and deliver in lieu of such certificate a new
certificate of like kind representing the number of Shares of such class
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate, and
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dividends shall accrue on the Series H Preferred Stock represented by such new
certificate from the date to which dividends have been fully paid on such lost,
stolen, destroyed or mutilated certificate.
Section 9. Definitions.
"Change in Ownership" means any sale, transfer or issuance or series
of sales, transfers and/or issuances of Common Stock by the Corporation or any
holders thereof which results in any Person or group of Persons (as the term
"group" is used under the Securities Exchange Act of 1934), other than the
holders of Common Stock as of the date of the Stockholders Agreement, owning
more than 50% of the Common Stock outstanding at the time of such sale,
transfer or issuance of series of sales, transfers and/or issuances.
"Common Stock" means, collectively, the Corporation's common stock,
par value $0.01 per share, and any capital stock of any class of the
Corporation hereafter authorized which is not limited to a fixed sum or
percentage of par or stated value in respect to the rights of the holders
thereof to participate in dividends or in the distribution of assets upon any
liquidation, dissolution or winding up of the Corporation.
"Credit Agreement" means the Amended and Restated Credit and Guaranty
Agreement dated as of October 2, 1995 among E-Z Serve Convenience Stores, Inc.,
E-Z Serve Corporation, and Societe Generale, as Agent for certain lenders.
"Fundamental Change" means either (a) any sale or transfer of more
than 50% of the assets of the Corporation and its Subsidiaries on a
consolidated basis (measured either by book value in accordance with generally
accepted accounting principles consistently applied or by fair market value
determined in the reasonable good faith judgment of the Corporation's Board of
Directors) in any transaction or series of transactions (other than sales in
the ordinary course of business), (b) any merger or consolidation to which the
Corporation is a party, except for a merger in which the Corporation is the
surviving corporation, the terms of the Series H Preferred Stock are not
changed and the Series H Preferred Stock is not exchanged for cash, securities
or other property, and after giving effect to such merger, the holders of the
Corporation's outstanding capital stock possessing a majority of the voting
power (under ordinary circumstances) to elect a majority of the Corporation's
Board of Directors immediately prior to the merger shall continue to own the
Corporation's outstanding capital stock possessing the voting power (under
ordinary circumstances) to elect a majority of the Corporation's Board of
Directors or (c) any repayment of all outstanding borrowings under the Credit
Agreement.
"Junior Securities" means any capital stock or other equity securities
of the Corporation, except for the Series C Preferred Stock of the Corporation.
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"Liquidation Value" of any Share as of any particular date shall be
equal to $100.
"Person" means an individual, a partnership, a corporation, a limited
liability company, a limited liability, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization and a governmental
entity or any department, agency or political subdivision thereof.
"Public Offering" means any offering by the Corporation of its capital
stock or equity securities to the public pursuant to an effective registration
statement under the Securities Act of 1933, as then in effect, or any
comparable statement under any similar federal statute then in force.
"Redemption Date" as to any Share means the date specified in the
notice of any redemption at the Corporation's option or at the holder's option;
provided that no such date shall be a Redemption Date unless the redemption
price provided in Section 5A of such Share is actually paid in full on such
date, and if not so paid in full, the Redemption Date shall be the date on
which such amount is fully paid.
"Securities Purchase Agreement" means the Securities Purchase
Agreement dated January 24, 1997 between the Corporation and Phemus
Corporation.
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a
majority of the partnership or other similar ownership interest thereof is at
the time owned or controlled, directly or indirectly, by any Person or one or
more Subsidiaries of that person or a combination thereof. For purposes
hereof, a Person or Persons shall be deemed to have a majority ownership
interest in a limited liability company, partnership, association or other
business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control the managing general partner of such
limited liability company, partnership, association or other business entity.
"Wholly-Owned Subsidiary" means any Subsidiary of which all of the
outstanding capital stock (or other shares of beneficial interest) is owned by
the Corporation, directly or indirectly through one or more Wholly-Owned
Subsidiaries.
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Section 10. Amendment and Waiver.
No amendment, modification or waiver shall be binding or effective
with respect to any provision hereof without the prior written consent of the
holders of a majority of the Series H Preferred Stock outstanding at the time
such action is taken; provided that no such action shall change (a) the rate at
which or the manner in which dividends on the Series H Preferred Stock accrue
or the times at which such dividends become payable or the amount payable on
redemption of the Series H Preferred Stock or the times at which redemption of
Series H Preferred Stock is to occur or (b) the percentage required to approve
any change described in clause (a) above, without the prior written consent of
the holders of at least 80% of the Series H Preferred Stock then outstanding;
and provided further that no change in the terms hereof may be accomplished by
merger or consolidation of the Corporation with another corporation or entity
unless the Corporation has obtained the prior written consent of the holders of
the applicable percentage of the Series H Preferred Stock then outstanding.
Section 11. Notices.
Except as otherwise expressly provided hereunder, all notices referred
to herein shall be in writing and shall be delivered by registered or certified
mail, return receipt requested and postage prepaid, or by reputable overnight
courier service, charges prepared, and shall be deemed to have been given when
so mailed or sent (i) to the Corporation, at its principal executive offices
and (ii) to any stockholder, at such holder's address as it appears in the
stock records of the Corporation (unless otherwise indicated by any such
holder).
Section 12. Adjustment.
All numbers and amounts set forth herein which refer to share prices
or amounts shall be appropriately adjusted to reflect stock splits, stock
dividends, combinations of shares and other recapitalizations affecting the
Series H Preferred Stock.
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IN WITNESS WHEREOF, I have executed and subscribed the Certificate of
Designation and do affirm the foregoing as true under the penalties of perjury
this 23rd day of January 1997.
/s/ Neil H. McLaurin
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Neil H. McLaurin
President and Chief Executive Officer
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