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THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE SUCH A REGISTRATION IS
IN EFFECT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SAID ACT.
E-Z SERVE CORPORATION
COMMON STOCK PURCHASE WARRANT
Houston, Texas
__________, 19__
E-Z Serve Corporation, a Delaware corporation (the "Company"), for
value received, hereby certifies that __________________, or registered
assigns, is entitled to purchase from the Company _______ duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock, par value
$0.01 per share (the "Common Stock"), of the Company at the purchase price per
share of $____ (the "Initial Warrant Price"), at any time or from time to time
prior to 5:00 P.M., Houston, Texas time, on January 27, 2009 (the "Expiration
Date"), all subject to the terms, conditions and adjustments set forth below in
this Warrant.
This Warrant is one of the warrants to purchase Common Stock (the
"Warrants", such term to include any such warrants issued in substitution
therefor) originally issued in connection with the execution and delivery of
the Securities Purchase Agreement dated as of January 27, 1997 (as from time to
time in effect, the "Securities Purchase Agreement") among the Company and
Phemus Corporation (the "Purchaser"). The Warrants originally so issued
evidence rights to purchase an aggregate of _______ shares of Common Stock,
subject to adjustment as provided herein. Certain capitalized terms used in
this Warrant are defined in Section 13 hereof.
1. EXERCISE OR CONVERSION OF WARRANT.
1.1. Manner of Exercise or Conversion; Payment.
1.1.1. Exercise. This Warrant may be exercised by the
holder hereof, in whole or in part, during normal business hours on
any Business Day on or prior to the Expiration Date, by surrender of
this Warrant to the Company at its office maintained pursuant to
Section 12.2(a) hereof, accompanied by a subscription in substantially
the form attached to
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this Warrant (or a reasonable facsimile thereof) duly executed by such
holder and accompanied by payment, in cash or by check payable to the
order of the Company (or by any combination of such methods), in the
amount obtained by multiplying (a) the number of shares of Common
Stock (without giving effect to any adjustment thereof) designated in
such subscription by (b) the Initial Warrant Price, and such holder
shall thereupon be entitled to receive the number of duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock
(or Other Securities) determined as provided in Sections 2 through 4
hereof.
1.1.2. Conversion. This Warrant may be converted by the
holder hereof, in whole or in part, into shares of Common Stock,
during normal business hours on any Business Day on or prior to the
Expiration Date, by surrender of this Warrant to the Company at its
office maintained pursuant to Section 12.2(a) hereof, accompanied by a
conversion notice in substantially the form attached to this Warrant
(or a reasonable facsimile thereof) duly executed by such holder, and
such holder shall thereupon be entitled to receive a number of duly
authorized, validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) equal to the quotient of:
(i) the excess of:
(a) an amount equal to (x) the number of shares
of Common Stock (or Other Securities)
determined as provided in Sections 2
through 4 hereof which such holder would be
entitled to receive upon exercise of this
Warrant for the number of shares of Common
Stock designated in such conversion notice
multiplied by (y) the Current Market Price
of each such share of Common Stock (or such
Other Securities) so receivable upon such
exercise
over
(b) an amount equal to (x) the number of shares
of Common Stock (without giving effect to
any adjustment thereof) designated in such
conversion notice multiplied by (y) the
Initial Warrant Price
divided by
(ii) such Current Market Price of each such share of
Common Stock (or Other Securities).
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For all purposes of this Warrant (other than this Section 1.1), any
reference herein to the exercise of this Warrant shall be deemed to
include a reference to the conversion of this Warrant into Common
Stock (or other Securities) in accordance with the terms of this
Section 1.1.2.
1.2. When Exercise Effective. Each exercise of this Warrant
shall be deemed to have been effected immediately prior to the close of
business on the Business Day on which this Warrant shall have been surrendered
to the Company as provided in Section 1.1 hereof, and at such time the Person
or Persons in whose name or names any certificate or certificates for shares of
Common Stock (or Other Securities) shall be issuable upon such exercise as
provided in Section 1.3 hereof shall be deemed to have become the holder or
holders of record thereof.
1.3. Delivery of Stock Certificates, etc. As soon as practicable
after each exercise of this Warrant, in whole or in part, and in any event
within five Business Days thereafter, the Company at its expense (including the
payment by it of any applicable issue taxes) will cause to be issued in the
name of and delivered to the holder hereof or, subject to Section 9 hereof, as
such holder (upon payment by such holder of any applicable transfer taxes) may
direct:
(a) a certificate or certificates for the number of duly
authorized, validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such holder shall be
entitled upon such exercise plus, in lieu of any fractional share to
which such holder would otherwise be entitled, cash in an amount equal
to the same fraction of the Market Price per share on the Business Day
next preceding the date of such exercise; and
(b) in case such exercise is in part only, a new Warrant or
Warrants of like tenor, dated the date hereof and calling in the
aggregate on the face or faces thereof for the number of shares of
Common Stock equal to the number of such shares (without giving effect
to any adjustment thereof) called for on the face of this Warrant
minus the number of such shares designated by the holder upon such
exercise as provided in Section 1.1 hereof.
1.4. Company to Reaffirm Obligations. The Company will, at the
time of each exercise of this Warrant, upon the request of the holder hereof,
acknowledge in writing its continuing obligation to afford to such holder all
rights (including without limitation any rights to registration, pursuant to
the Registration Agreement referred to in Section 8 hereof, of the shares of
Common Stock or Other Securities issued upon such exercise) to which such
holder shall continue to be entitled after such exercise in accordance with the
terms of this Warrant; provided, however, that if the holder of this Warrant
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford such rights to such holder.
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2. ADJUSTMENT OF COMMON STOCK ISSUABLE UPON EXERCISE.
2.1. General; Number of Shares; Warrant Price. The number of
shares of Common Stock which the holder of this Warrant shall be entitled to
receive upon each exercise hereof shall be determined by multiplying the number
of shares of Common Stock which would otherwise (but for the provisions of this
Section 2) be issuable upon such exercise, as designated by the holder hereof
pursuant to Section 1.1 hereof, by the fraction of which (a) the numerator is
the Initial Warrant Price and (b) the denominator is the Warrant Price in
effect on the date of such exercise. The "Warrant Price" shall initially be
the Initial Warrant Price, shall be adjusted and readjusted from time to time
as provided in this Section 2 and, as so adjusted or readjusted, shall remain
in effect until a further adjustment or readjustment thereof is required by
this Section 2.
2.2. Adjustment of Warrant Price.
2.2.1. Issuance of Additional Shares of Common Stock. In
case the Company at any time or from time to time after the date
hereof shall issue or sell Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be issued
pursuant to Section 2.3 or 2.4 hereof) without consideration or for a
consideration per share less than the greater of the Current Market
Price or the Warrant Price in effect immediately prior to such issue
or sale, then, and in each such case, subject to Section 2.7 hereof,
such Warrant Price shall be reduced, concurrently with such issue or
sale, to a price (calculated to the nearest 0.0001 of a cent)
determined by multiplying such Warrant Price by a fraction:
(a) the numerator of which shall be the per share
consideration received by the Company for the Additional
Shares of Common Stock so issued or sold; and
(b) the denominator of which shall be the greater of
such Current Market Price and such Warrant Price.
2.2.2. Dividends and Distributions. In case the Company
at any time or from time to time after the date hereof shall declare,
order, pay or make a dividend or other distribution (including without
limitation any distribution of cash, other or additional stock or
other securities or property or Options, by way of dividend or
spin-off, reclassification, recapitalization or similar corporate
rearrangement or otherwise) on the Common Stock, other than a dividend
payable in Additional Shares of Common Stock, then, and in each such
case, subject to Section 2.7 hereof, the Warrant Price in effect
immediately prior to the close of business on the record date fixed
for the determination of holders of any class of securities entitled
to receive such dividend or distribution shall be reduced, effective
as of the close of
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business on such record date, to a price (calculated to the nearest
.001 of a cent) determined by multiplying such Warrant Price by a
fraction:
(x) the numerator of which shall be the Current
Market Price in effect on such record date or, if the Common
Stock trades on an ex-dividend basis, on the date prior to the
commencement of ex-dividend trading, less the amount of such
dividend or distribution (as determined in good faith by the
Board of Directors of the Company) applicable to one share of
Common Stock; and
(y) the denominator of which shall be such Current
Market Price.
2.3. Treatment of Options and Convertible Securities. In case the
Company at any time or from time to time after the date hereof shall issue,
sell, grant or assume, or shall fix a record date for the determination of
holders of any class of securities entitled to receive, any Options or
Convertible Securities, then, and in each such case, the maximum number of
Additional Shares of Common Stock (as set forth in the instrument relating
thereto, without regard to any provisions contained therein for a subsequent
adjustment of such number the purpose of which is to protect against dilution)
at any time issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issue, sale, grant or assumption or, in case such
a record date shall have been fixed, as of the close of business on such record
date (or, if the Common Stock trades on an ex-dividend basis, on the date prior
to the commencement of ex-dividend trading); provided, however, that such
Additional Shares of Common Stock shall not be deemed to have been issued
unless the consideration per share (determined pursuant to Section 2.5 hereof)
of such shares would be less than the greater of the Current Market Price or
the Warrant Price in effect on the date of and immediately prior to such issue,
sale, grant or assumption or immediately prior to the close of business on such
record date (or, if the Common Stock trades on an ex-dividend basis, on the
date prior to the commencement of ex- dividend trading), as the case may be;
and provided, further, that in any such case in which Additional Shares of
Common Stock are deemed to be issued:
(a) no further adjustment of the Warrant Price shall be made
upon the exercise of such Options or the conversion or exchange of
such Convertible Securities and the consequent issue or sale of
Convertible Securities or shares of Common Stock;
(b) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in
the consideration payable to the Company, or decrease in the number of
Additional Shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof (by change of rate or otherwise), the
Warrant Price computed
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upon the original issue, sale, grant or assumption thereof (or upon
the occurrence of the record date, or date prior to the commencement
of ex-dividend trading, as the case may be, with respect thereto), and
any subsequent adjustments based thereon, shall, upon any such
increase or decrease becoming effective, be recomputed to reflect such
increase or decrease insofar as it affects such Options, or the rights
of conversion or exchange under such Convertible Securities, which are
outstanding at such time;
(c) upon the expiration (or purchase by the Company and
cancellation or retirement) of any such Options which shall not have
been exercised, or the expiration of any rights of conversion or
exchange under any such Convertible Securities which (or purchase by
the Company and cancellation or retirement of any such Convertible
Securities the rights of conversion or exchange under which) shall not
have been exercised, the Warrant Price computed upon the original
issue, sale, grant or assumption thereof (or upon the occurrence of
the record date, or date prior to the commencement of ex-dividend
trading, as the case may be, with respect thereto), and any subsequent
adjustments based thereon, shall, upon (and effective as of) such
expiration (or such cancellation or retirement, as the case may be),
be recomputed as if:
(i) in the case of Options or Convertible
Securities, the only Additional Shares of Common Stock issued
or sold were the Additional Shares of Common Stock, if any,
actually issued or sold upon the exercise of such Options or
the conversion or exchange of such Convertible Securities and
the consideration received therefor was the consideration
actually received by the Company for the issue, sale, grant or
assumption of all such Options, whether or not exercised, plus
the consideration actually received by the Company upon such
exercise, or for the issue or sale of all such Convertible
Securities which were actually converted or exchanged, plus
the additional consideration, if any, actually received by the
Company upon such conversion or exchange, and
(ii) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually
issued or sold upon the exercise of such Options were issued
at the time of the issue, sale, grant or assumption of such
Options, and the consideration received by the Company for the
Additional Shares of Common Stock deemed to have then been
issued was the consideration actually received by the Company
for the issue, sale, grant or assumption of all such Options,
whether or not exercised, plus the consideration deemed to
have been received by the Company (pursuant to Section 2.5
hereof) upon the issue or sale of such Convertible Securities
with respect to which such Options were actually exercised;
and
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(d) no readjustment pursuant to clause (b) or (c)
above (either individually or cumulatively together with all
prior readjustments as made in respect of such Options or
Convertible Securities) shall have the effect of increasing
the Warrant Price by a proportion (relative to the Warrant
Price in effect immediately prior to such readjustment) in
excess of the inverse of the aggregate proportional adjustment
thereof made in respect of the issue, sale, grant or
assumption of such Options or Convertible Securities.
If the consideration provided for in any Option or the additional
consideration, if any, payable upon the conversion or exchange of any
Convertible Security shall be reduced, or the rate at which any Option is
exercisable or any Convertible Security is convertible into or exchangeable for
shares of Common Stock shall be increased, at any time under or by reason of
provisions with respect thereto designed to protect against dilution, then,
effective concurrently with each such change, the Warrant Price then in effect
shall first be adjusted to eliminate the effects (if any) of the issuance (or
deemed issuance) of such Option or Convertible Security on the Warrant Price
and then readjusted as if such Option or Convertible Security had been issued
on the date of such change with the terms in effect after such change, but only
if as a result of such adjustment the Warrant Price then in effect hereunder is
thereby reduced.
2.4. Treatment of Stock Dividends, Stock Splits, etc. In case the
Company at any time or from time to time after the date hereof shall declare or
pay any dividend on the Common Stock payable in Common Stock, or shall effect a
subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in Common Stock), then, and in each such case, Additional Shares of
Common Stock shall be deemed to have been issued (a) in the case of any such
dividend, immediately after the close of business on the record date for the
determination of holders of any class of securities entitled to receive such
dividend, or (b) in the case of any such subdivision, at the close of business
on the day immediately prior to the day upon which such corporate action
becomes effective.
2.5. Computation of Consideration. For the purposes of this
Section 2:
(a) the consideration for the issue or sale of any Additional
Shares of Common Stock shall, irrespective of the accounting treatment
of such consideration:
(i) insofar as it consists of cash, be computed at
the amount of cash actually received by the Company net of any
expenses paid or incurred by the Company or any commissions or
compensations paid or concessions or discounts allowed to
underwriters, dealers or others performing similar services in
connection with such issue or sale;
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(ii) insofar as it consists of property (including
securities) other than cash actually received by the Company,
be computed at the fair value thereof at the time of such
issue or sale, as determined in good faith by the Board of
Directors of the Company;
(iii) insofar as it consists neither of cash nor of
other property, be computed as having no value; and
(iv) in case Additional Shares of Common Stock are
issued or sold together with other stock or securities or
other assets of the Company for a consideration which covers
both, be the portion of such consideration so received,
computed as provided in clauses (i), (ii) and (iii) above,
allocable to such Additional Shares of Common Stock, all as
determined in good faith by the Board of Directors of the
Company;
(b) Additional Shares of Common Stock deemed to have been
issued pursuant to Section 2.3 hereof shall be deemed to have been
issued for a consideration per share determined by dividing:
(i) the total amount of cash and other property, if
any, received and receivable by the Company as direct
consideration for the issue, sale, grant or assumption of the
Options or Convertible Securities in question, plus the
minimum aggregate amount of additional consideration (as set
forth in the instruments relating thereto, without regard to
any provision contained therein for a subsequent adjustment of
such consideration the purpose of which is to protect against
dilution) payable to the Company upon the exercise in full of
such Options or the conversion or exchange of such Convertible
Securities or, in the case of Options for Convertible
Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible
Securities, in each case computing such consideration as
provided in the foregoing clause (a),
by
(ii) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment
of such number the purpose of which is to protect against
dilution) issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities; and
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(c) Additional Shares of Common Stock deemed to have been
issued pursuant to Section 2.4 hereof shall be deemed to have been
issued for no consideration.
2.6. Adjustments for Combinations, etc. In case the outstanding
shares of Common Stock shall be combined or consolidated, by reclassification
or otherwise, into a lesser number of shares of Common Stock, the Warrant Price
in effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased.
2.7. Minimum Adjustment of Warrant Price. If the amount of any
adjustment of the Warrant Price required pursuant to this Section 2 would be
less than one-tenth (1/10) of one percent (1%) of the Warrant Price in effect
at the time such adjustment is otherwise so required to be made, such amount
shall be carried forward and adjustment with respect thereto made at the time
of and together with any subsequent adjustment which, together with such amount
and any other amount or amounts so carried forward, shall aggregate at least
one tenth (1/10) of one percent (1%) of such Warrant Price.
2.8. Shares Deemed Outstanding. For all purposes of the
computations to be made pursuant to this Section 2, (i) there shall be deemed
to be outstanding all shares of Common Stock issuable pursuant to the exercise
of Options and conversion of Convertible Securities outstanding on January 27,
1997 excluding the $6.00 Convertible Preferred Stock, Series C and including
without limitation the Warrants, (ii) immediately after any Additional Shares
of Common Stock are deemed to have been issued pursuant to Section 2.3 or 2.4
hereof, such Additional Shares shall be deemed to be outstanding, (iii)
treasury shares shall not be deemed to be outstanding and (iv) no adjustment
shall be made in the Warrant Price upon the issuance of shares of Common Stock
pursuant to Options and Convertible Securities so deemed to be outstanding, but
this Section 2.8 shall not prevent other adjustments in the Warrant Price
arising by virtue of such outstanding Options or Convertible Securities
pursuant to the provisions of Section 2.3 hereof; provided, however, that, for
purposes of calculating adjustments to the Warrant Price, there shall be deemed
to be outstanding immediately after giving effect to any issuance of shares of
Common Stock, Options or Convertible Securities all shares of Common Stock
issuable upon the exercise of Options and conversion of Convertible Securities
then outstanding (including without limitation the Warrants) after giving
effect to antidilution provisions contained in all such outstanding Options and
Convertible Securities which cause an adjustment in the number of shares of
Common Stock so issuable, either by virtue of such issuance of shares of Common
Stock, Options or Convertible Securities or by virtue of the operation of such
antidilution provisions.
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3. CONSOLIDATION, MERGER, ETC.
3.1. Adjustments for Consolidation, Merger, Sale of Assets,
Reorganization, etc. In case the Company after the date hereof (a) shall
consolidate with or merge into any other Person and shall not be the continuing
or surviving corporation of such consolidation or merger, or (b) shall permit
any other Person to consolidate with or merge into the Company and the Company
shall be the continuing or surviving Person but, in connection with such
consolidation or merger, the Common Stock or Other Securities shall be changed
into or exchanged for stock or other securities of any other Person or cash or
any other property, or (c) shall transfer all or substantially all of its
properties or assets to any other Person, or (d) shall effect a capital
reorganization or reclassification of the Common Stock or Other Securities
(other than a capital reorganization or reclassification to the extent that
such capital reorganization or reclassification results in the issue of
Additional Shares of Common Stock for which adjustment in the Warrant Price is
provided in Section 2.2.1 or 2.2.2 hereof), then, and in the case of each such
transaction, proper provision shall be made so that, upon the basis and the
terms and in the manner provided in this Warrant, the holder of this Warrant,
upon the exercise hereof at any time after the consummation of such
transaction, shall be entitled to receive (at the aggregate Warrant Price in
effect at the time of such consummation for all Common Stock or Other
Securities issuable upon such exercise immediately prior to such consummation),
in lieu of the Common Stock or Other Securities issuable upon such exercise
prior to such consummation, the greatest amount of securities, cash or other
property to which such holder would actually have been entitled as a
shareholder upon such consummation if such holder had exercised the rights
represented by this Warrant immediately prior thereto, subject to adjustments
(subsequent to such consummation) as nearly equivalent as possible to the
adjustments provided for in Sections 2, 3 and 4 hereof; provided, however, that
if a purchase, tender or exchange offer shall have been made to and accepted by
the holders of more than 50% of the outstanding shares of Common Stock, and if
the holder of such Warrants so designates in a notice given to the Company on
or before the date immediately preceding the date of the consummation of such
transaction, the holder of such Warrants shall be entitled to receive the
greatest amount of securities, cash or other property to which such holder
would actually have been entitled as a shareholder if the holder of such
Warrants had exercised such Warrants prior to the expiration of such purchase,
tender or exchange offer and accepted such offer, subject to adjustments (from
and after the consummation of such purchase, tender or exchange offer) as
nearly equivalent as possible to the adjustments provided for in Sections 2, 3
and 4 hereof.
3.2. Assumption of Obligations. Notwithstanding anything contained
in the Warrants or in the Securities Purchase Agreement to the contrary, the
Company will not effect any of the transactions described in clauses (a)
through (d) of Section 3.1 hereof unless, prior to the consummation thereof,
each person (other than the Company) which may be required to deliver any
stock, securities, cash or property upon the exercise of this Warrant as
provided herein shall assume,
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by written instrument delivered to, and reasonably satisfactory to, the holder
of this Warrant, (a) the obligations of the Company under this Warrant (and if
the Company shall survive the consummation of such transaction, such assumption
shall be in addition to, and shall not release the Company from, any continuing
obligations of the Company under this Warrant), (b) the obligations of the
Company under the Registration Agreement and (c) the obligation to deliver to
such holder such shares of stock, securities, cash or property as, in
accordance with the foregoing provisions of this Section 3, such holder may be
entitled to receive, and such Person shall have similarly delivered to such
holder an opinion of counsel for such Person, which counsel shall be reasonably
satisfactory to such holder, stating that this Warrant shall thereafter
continue in full force and effect and the terms hereof (including without
limitation all of the provisions of this Section 3) shall be applicable to the
stock, securities, cash or property which such Person may be required to
deliver upon any exercise of this Warrant or the exercise of any rights
pursuant hereto. Nothing in this Section 3 shall be deemed to authorize the
Company to enter into any transaction not otherwise permitted by the Securities
Purchase Agreement.
4. OTHER DILUTIVE EVENTS. In case any event shall occur as to which the
provisions of Section 2 or 3 hereof are not strictly applicable but the failure
to make any adjustment would not, in the opinion of the holder of this Warrant,
fairly protect the purchase rights represented by this Warrant in accordance
with the essential intent and principles of such Sections, then, in each such
case, at the request of such holder, the Company shall appoint a firm of
independent investment bankers of recognized national standing (which shall be
completely independent of the Company and shall be satisfactory to the holder
of this Warrant), which shall give their opinion upon the adjustment, if any,
on a basis consistent with the essential intent and principles established in
Sections 2 and 3 hereof, necessary to preserve, without dilution, the purchase
rights represented by this Warrant. Upon receipt of such opinion, the Company
will promptly mail a copy thereof to the holder of this Warrant and shall make
the adjustments described therein.
5. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of its
certificate of incorporation or through any consolidation, merger,
reorganization, transfer of assets, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the rights
of the holder of this Warrant against dilution or other impairment. Without
limiting the generality of the foregoing, the Company (a) will not permit the
par value of any shares of stock receivable upon the exercise of this Warrant
to exceed the amount payable therefor upon such exercise, (b) will take all
such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of stock on the
exercise of the Warrants from time to time outstanding, (c) will not take any
action which results in any adjustment of the Warrant Price if the total number
of shares of Common Stock (or Other
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Securities) issuable after the action upon the exercise of all of the Warrants
would exceed the total number of shares of Common Stock (or Other Securities)
then authorized by the Company's certificate of incorporation and available for
the purpose of issue upon such exercise, and (d) will not issue any capital
stock of any class which is preferred as to dividends or as to the distribution
of assets upon voluntary or involuntary dissolution, liquidation or winding-up,
unless the rights of the holders thereof shall be limited to a fixed sum or
percentage of par value or a sum determined by reference to a formula based on
a published index of interest rates, an interest rate publicly announced by a
financial institution or a similar indicator of interest rates in respect of
participation in dividends and to a fixed sum or percentage of par value in any
such distribution of assets.
6. ACCOUNTANTS' REPORT AS TO ADJUSTMENTS. In each case of any adjustment
or readjustment in the shares of Common Stock (or Other Securities) issuable
upon the exercise of this Warrant, the Company at its expense will promptly
compute such adjustment or readjustment in accordance with the terms of this
Warrant and cause independent certified public accountants of recognized
national standing (which may be the regular auditors of the Company) selected
by the Company to verify such computation (other than any computation of the
fair value of property as determined in good faith by the Board of Directors of
the Company) and prepare a report setting forth such adjustment or readjustment
and showing in reasonable detail the method of calculation thereof and the
facts upon which such adjustment or readjustment is based, including a
statement of (a) the consideration received or to be received by the Company
for any Additional Shares of Common Stock issued or sold or deemed to have been
issued, (b) the number of shares of Common Stock outstanding or deemed to be
outstanding, and (c) the Warrant Price in effect immediately prior to such
issue or sale and as adjusted and readjusted (if required by Section 2 hereof)
on account thereof. The Company will forthwith mail a copy of each such report
to each holder of a Warrant and will, upon the written request at any time of
any holder of a Warrant, furnish to such holder a like report setting forth the
Warrant Price at the time in effect and showing in reasonable detail how it was
calculated. The Company will also keep copies of all such reports at its
office maintained pursuant to Section 12.2(a) hereof and will cause the same to
be available for inspection at such office during normal business hours by any
holder of a Warrant or any prospective purchaser of a Warrant designated by the
holder thereof.
7. NOTICES OF CORPORATE ACTION. In the event of
(a) any taking by the Company of a record of the holders of
any class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other
distribution, or any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities or
property, or to receive any other right, or
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(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger involving the Company and any
other Person or any transfer of all or substantially all the assets of
the Company to any other Person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
(d) any issuance of any Common Stock, Convertible Security or
Option by the Company,
the Company will mail to each holder of a Warrant a notice specifying (i) the
date or expected date on which any such record is to be taken for the purpose
of such dividend, distribution or right, and the amount and character of such
dividend, distribution or right, (ii) the date or expected date on which any
such reorganization, reclassification, recapitalization, consolidation, merger,
transfer, dissolution, liquidation or winding-up is to take place, the time, if
any such time is to be fixed, as of which the holders of record of Common Stock
(or Other Securities) shall be entitled to exchange their shares of Common
Stock (or Other Securities) for the securities or other property deliverable
upon such reorganization, reclassification, recapitalization, consolidation,
merger, transfer, dissolution, liquidation or winding-up and a description in
reasonable detail of the transaction and (iii) the date of such issuance,
together with a description of the security so issued and the consideration
received by the Company therefor. Such notice shall be mailed at least 5 days
prior to the date therein specified.
8. REGISTRATION OF WARRANTS AND COMMON STOCK. If any shares of Common
Stock required to be reserved for purposes of exercise of this Warrant require
registration with or approval of any governmental authority under any federal
or state law (other than the Securities Act) before such shares may be issued
upon exercise, the Company will, at its expense and as expeditiously as
possible, use its best efforts to cause such shares to be duly registered or
approved, as the case may be. This Warrant and the shares of Common Stock (and
Other Securities) issuable upon exercise of this Warrant shall constitute
Registrable Securities (as such term is defined in the Registration Agreement).
Each holder of this Warrant shall be entitled to all of the benefits afforded
to a holder of any such Registrable Securities under the Registration Agreement
and such holder, by its acceptance of this Warrant, agrees to be bound by and
to comply with the terms and conditions of the Registration Agreement
applicable to such holder as a holder of such Registrable Securities. At any
such time as or Common Stock is listed on any national securities exchange, the
Company will, at its expense, obtain promptly and maintain the approval for
listing on each such exchange, upon official notice of issuance, the shares of
Common Stock issuable upon exercise of the then outstanding Warrants and
maintain the listing of such shares after their issuance; and the Company
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will also list on such national securities exchange, will register under the
Exchange Act and will maintain such listing of, any Other Securities that at
any time are issuable upon exercise of the Warrants, if and at the time that
any securities of the same class shall be listed on such national securities
exchange by the Company.
9. RESTRICTIONS ON TRANSFER.
9.1. Restrictive Legends. Except as otherwise permitted by this
Section 9, each certificate for Common Stock (or Other Securities) issued upon
the exercise of any Warrant, each certificate issued upon the direct or
indirect transfer of any such Common Stock (or Other Securities), all Warrants
originally issued pursuant to the Securities Purchase Agreement and each
Warrant issued upon direct or indirect transfer or in substitution for any
Warrant pursuant to Section 12 hereof shall be transferable only upon
satisfaction of the conditions specified in the Stockholders Agreement, Section
11 of the Securities Purchase Agreement and in this Section 9 and shall be
stamped or otherwise imprinted with legends in substantially the form required
by Section 11 of the Securities Purchase Agreement.
9.2. Notice of Proposed Transfer; Opinion of Counsel. Prior to any
transfer of any Restricted Securities which are not registered under an
effective registration statement under the Securities Act, the holder thereof
will give written notice to the Company of such holder's intention to effect
such transfer and to comply in all other respects with this Section 9.2. Each
such notice (a) shall describe the manner and circumstances of the proposed
transfer, and (b) shall designate counsel for the holder giving such notice
(who may be house counsel for such holder). The holder giving such notice will
submit a copy thereof to the counsel designated in such notice. The following
provisions shall then apply:
(i) If in the opinion of such counsel (reasonably acceptable
to the Company) the proposed transfer may be effected without
registration of such Restricted Securities under the Securities Act,
such holder shall thereupon be entitled to transfer such Restricted
Securities in accordance with the terms of the notice delivered by
such holder to the Company. Each certificate representing such
Restricted Securities issued upon or in connection with such transfer
shall bear the restrictive legends required by Section 9.1 hereof,
unless the related restrictions on transfer provided for in the
Securities Agreement shall have ceased and terminated as to such
Restricted Securities pursuant to Section 9.3 hereof.
(ii) If in the opinion of such counsel (reasonably acceptable
to the Company) the proposed transfer may not legally be effected
without registration of such Restricted Securities under the
Securities Act (such opinion to state the basis of the legal
conclusions
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reached therein), thereafter such holder shall not be entitled to
transfer such Restricted Securities until either (x) receipt by the
Company of a further notice from such holder pursuant to the foregoing
provisions of this Section 9.2 and fulfillment of the provisions of
clause (i) above or (y) such Restricted Securities have been
effectively registered under the Securities Act.
Notwithstanding any other provision of this Section 9 or of the
Securities Purchase Agreement, no opinion of counsel shall be necessary for a
transfer of Restricted Securities by the holder thereof to a subsidiary,
shareholder, partner or other affiliate of such holder, if the transferee
agrees in writing to be subject to the terms hereof to the same extent as if
such transferee were the original Purchaser hereof.
9.3. Termination of Restrictions. The restrictions imposed by this
Section 9 upon the transferability of Restricted Securities shall cease and
terminate as to any particular Restricted Securities (a) when such Restricted
Securities shall have been effectively registered under the Securities Act, or
(b) when, in the opinion of counsel (reasonably acceptable to the Company) for
the holder thereof, such restrictions are no longer required in order to insure
compliance with the Securities Act or Section 11 of the Securities Purchase
Agreement. Whenever such restrictions shall cease and terminate as to any
Restricted Securities, the holder thereof shall be entitled to receive from the
Company, without expense (other than applicable transfer taxes, if any), new
securities of like tenor not bearing the applicable legends required by Section
9.1 hereof.
10. AVAILABILITY OF INFORMATION. If the Company shall have filed a
registration statement pursuant to the requirements of Section 12 of the
Exchange Act or a registration statement pursuant to the requirements of the
Securities Act, the Company will comply with the reporting requirements of
Sections 13 and 15(d) of the Exchange Act and will comply with all other public
information reporting requirements of the Commission (including Rule 144
promulgated by the Commission under the Securities Act) from time to time in
effect and relating to the availability of an exemption from the Securities Act
for the sale of any Restricted Securities. The Company will also cooperate
with each holder of any Restricted Securities in supplying such information as
may be necessary for such holder to complete and file any information reporting
forms presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any
Restricted Securities. The Company will furnish to each holder of any
Warrants, promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent or made available
generally by the Company to its stockholders, and copies of all regular and
periodic reports and all registration statements and prospectuses filed by the
Company with any securities exchange or with the Commission.
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11. RESERVATION OF STOCK, ETC. The Company will at all times reserve and
keep available, solely for issuance and delivery upon exercise of the Warrants,
the number of shares of Common Stock of each class (or Other Securities) from
time to time issuable upon exercise of all Warrants at the time outstanding.
All shares of Common Stock (or Other Securities) issuable upon exercise of any
Warrants shall be duly authorized and, when issued upon such exercise, shall be
validly issued and, in the case of shares, fully paid and nonassessable with no
liability on the part of the holders thereof.
12. OWNERSHIP, TRANSFER AND SUBSTITUTION OF WARRANTS.
12.1. Ownership of Warrants. The Company may treat the person in
whose name any Warrant is registered on the register kept at the office of the
Company maintained pursuant to Section 12.2(a) hereof as the owner and holder
thereof for all purposes, notwithstanding any notice to the contrary, except
that, if and when any Warrant is properly assigned in blank, the Company may
(but shall not be obligated to) treat the bearer thereof as the owner of such
Warrant for all purposes, notwithstanding any notice to the contrary. Subject
to Section 9 hereof, a Warrant, if properly assigned, may be exercised by a new
holder without a new Warrant first having been issued.
12.2. Office; Transfer and Exchange of Warrants.
(a) The Company will maintain an office (which may be an
agency maintained at a bank) in Houston, Texas where notices,
presentations and demands in respect of this Warrant may be made upon
it. Such office shall be maintained at 2550 North Loop West, Suite
600, Houston Texas 77092 until such time as the Company shall notify
the holders of the Warrants of any change of location of such office
within Houston, Texas.
(b) The Company shall cause to be kept at its office
maintained pursuant to Section 12.2(a) hereof a register for the
registration and transfer of the Warrants. The names and addresses of
holders of Warrants, the transfers thereof and the names and addresses
of transferees of Warrants shall be registered in such register. The
Person in whose name any Warrant shall be so registered shall be
deemed and treated as the owner and holder thereof for all purposes of
this Warrant, and the Company shall not be affected by any notice or
knowledge to the contrary.
(c) Upon the surrender of any Warrant, properly endorsed, for
registration of transfer or for exchange at the office of the Company
maintained pursuant to Section 12.2(a) hereof, the Company at its
expense will (subject to compliance with Section 9 hereof, if
applicable) execute and deliver to or upon the order of the holder
thereof a new Warrant or Warrants of like tenor, in the name of such
holder or as such holder (upon payment by such holder of any
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applicable transfer taxes) may direct, calling in the aggregate on the
face or faces thereof for the number of shares of Common Stock called
for on the face or faces of the Warrant or Warrants so surrendered.
12.3. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
any Warrant and, in the case of any such loss, theft or destruction of any
Warrant held by a Person other than a Purchaser or any institutional investor,
upon delivery of indemnity reasonably satisfactory to the Company in form and
amount or, in the case of any such mutilation, upon surrender of such Warrant
for cancellation at the office of the Company maintained pursuant to Section
12.2(a) hereof, the Company at its expense will execute and deliver, in lieu
thereof, a new Warrant of like tenor and dated the date hereof.
13. DEFINITIONS. As used herein, unless the context otherwise requires,
the following terms have the following respective meanings:
Additional Shares of Common Stock: All shares (including treasury
shares) of Common Stock issued or sold (or, pursuant to Section 2.3 or 2.4
hereof, deemed to be issued) by the Company after the date hereof, whether or
not subsequently reacquired or retired by the Company, other than the shares of
Common Stock issued upon the exercise of Warrants.
Business Day: Any day other than a Saturday or a Sunday or a day on
which commercial banking institutions in Boston, Massachusetts, New York, New
York or Houston, Texas are authorized by law to be closed. Any reference to
"days" (unless Business Days are specified) shall mean calendar days.
Commission: The Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
Common Stock: As defined in the introduction to this Warrant, such
term to include any stock into which such Common Stock shall have been changed
or any stock resulting from any reclassification of such Common Stock, and all
other stock of any class or classes (however designated) of the Company the
holders of which have the right, without limitation as to amount, either to all
or to a share of the balance of current dividends and liquidating dividends
after the payment of dividends and distributions on any shares entitled to
preference.
Company: As defined in the introduction to this Warrant, such term to
include any corporation which shall succeed to or assume the obligations of the
Company hereunder in compliance with Section 3 hereof.
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Convertible Securities: Any evidences of indebtedness, shares of
stock (other than Common Stock) or other securities directly or indirectly
convertible into or exchangeable for Additional Shares of Common Stock.
Securities Purchase Agreement: As defined in the introduction to this
Warrant.
Current Market Price: On any date specified herein, the average daily
Market Price during the period of the most recent 20 days, ending on such date,
on which the national securities exchanges were open for trading, except that
if no class of the Common Stock is then listed or admitted to trading on any
national securities exchange or quoted in the over-the-counter market, the
Current Market Price shall be the Market Price on such date.
Exchange Act: The Securities Exchange Act of 1934, or any similar
federal statute, and the rules and regulations of the Commission thereunder,
all as the same shall be in effect at the time.
Expiration Date: As defined in the introduction to this Warrant.
Market Price: On any date specified herein, the amount per share of
Common Stock equal to (a) the last sale price of Common Stock, regular way, on
such date or, if no such sale takes place on such date, the average of the
closing bid and asked prices thereof on such date, in each case as officially
reported on the principal national securities exchange on which Common Stock is
then listed or admitted to trading, or (b) if Common Stock is not then listed
or admitted to trading on any national securities exchange but is designated as
a national market system security by the NASD, the last trading price of Common
Stock on such date, or (c) if there shall have been no trading on such date or
if Common Stock is not so designated, the average of the closing bid and asked
prices of Common Stock on such date as shown by the NASD automated quotation
system, or (d) if Common Stock is not then listed or admitted to trading on any
national exchange or quoted in the over-the-counter market, the fair value
thereof determined in good faith by the Board of Directors of the Company as of
a date which is within 15 days of the date as of which the determination is to
be made.
NASD: The National Association of Securities Dealers, Inc.
Options: Rights, options or warrants to subscribe for, purchase or
otherwise acquire either Additional Shares of Common Stock or Convertible
Securities.
Other Securities: Any stock (other than Common Stock) and other
securities of the Company or any other person (corporate or otherwise) which
the holders of the Warrants at any time shall be entitled to receive, or shall
have received, upon the exercise of the Warrants, in lieu of or in addition
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to Common Stock, or which at any time shall be issuable or shall have been
issued in exchange for or in replacement of Common Stock or Other Securities
pursuant to Section 3 hereof or otherwise.
Person: A corporation, an association, a partnership, an
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.
Purchaser: As defined in the introduction to this Warrant.
Registration Agreement: The Registration Rights Agreement dated as of
March 25, 1992 and as last amended on January 27, 1997, in the form of Exhibit
6.9 to the Securities Purchase Agreement, as from time to time in effect.
Restricted Securities: All of the following: (a) any Warrants
bearing the applicable legend or legends referred to in Section 9.1 hereof, (b)
any shares of Common Stock (or Other Securities) which have been issued upon
the exercise of Warrants and which are evidenced by a certificate or
certificates bearing the applicable legend or legends referred to in such
Section, (c) unless the context otherwise requires, any shares of Common Stock
(or Other Securities) which are at the time issuable upon the exercise of
Warrants and which, when so issued, will be evidenced by a certificate or
certificates bearing the applicable legend or legends referred to in such
Section.
Securities Act: The Securities Act of 1933, or any similar federal
statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
Stockholders Agreement: The Amended and Restated Stockholders
Agreement dated as of June 1, 1996 and as last amended on January 27, 1997, in
the form of Exhibit 6.10 to the Securities Purchase Agreement, as from time to
time in effect.
Warrant Price: As defined in Section 2.1 hereof.
Warrants: As defined in the introduction to this Warrant.
14. REMEDIES. The Company stipulates that the remedies at law of the
holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
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15. NO RIGHTS OR LIABILITIES AS STOCKHOLDER. Nothing contained in this
Warrant shall be construed as conferring upon the holder hereof any rights as a
stockholder of the Company or as imposing any obligation on such holder to
purchase any securities or as imposing any liabilities on such holder as a
stockholder of the Company, whether such obligation or liabilities are asserted
by the Company or by creditors of the Company.
16. NOTICES. Any notice or other communication in connection with this
Warrant shall be deemed to be delivered if in writing (or in the form of a
telex or telecopy) addressed as hereinafter provided and if either (x) actually
delivered at said address (evidenced in the case of a telex by receipt of the
correct answerback) or (y) in the case of a letter, three Business Days shall
have elapsed after the same shall have been deposited in the United States
mails, postage prepaid and registered or certified: (a) if to any holder of
any Warrant, at the registered address of such holder as set forth in the
register kept at the office of the Company maintained pursuant to Section
12.2(a) hereof; or (b) if to the Company, to the attention of its President at
its office maintained pursuant to Section 12.2(a) hereof; provided, however,
that the exercise of any Warrant shall be effective in the manner provided in
Section 1 hereof.
17. MISCELLANEOUS. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or
termination is sought. This Warrant shall be construed and enforced in
accordance with and governed by the laws of The Commonwealth of Massachusetts.
The section headings in this Warrant are for purposes of convenience only and
shall not constitute a part hereof.
E-Z SERVE CORPORATION
By: /s/ Neil H. McLaurin
-------------------------
Title: Chairman,
President & Chief
Executive Officer
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FORM OF SUBSCRIPTION
[To be executed only upon exercise of Warrant]
To E-Z SERVE CORPORATION
The undersigned registered holder of the within Warrant hereby
irrevocably exercises such Warrant for, and purchases thereunder, __________(1)
shares of the Common Stock and herewith makes payment of $ therefor, and
requests that the certificates for such shares be issued in the name of, and
delivered to , whose address is .
Dated:
---------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of Warrant)
---------------------------------
(Street Address)
---------------------------------
(City) (State) (Zip Code)
- ------------------------------
(1)Insert here the number of shares called for on the face of this Warrant
(or, in the case of a partial exercise, the portion thereof as to which this
Warrant is being exercised), in either case without making any adjustment for
Additional Shares of Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of this Warrant,
may be delivered upon exercise. In the case of a partial exercise, a new
Warrant or Warrants will be issued and delivered, representing the unexercised
portion of the Warrant, to the holder surrendering the Warrant.
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FORM OF CONVERSION NOTICE
[To be executed only upon conversion of Warrant]
To E-Z SERVE CORPORATION
The undersigned registered holder of the within Warrant hereby
irrevocably converts such Warrant with respect to __________(1) shares of the
Common Stock which such holder would be entitled to receive upon the exercise
hereof, and requests that the certificates for such shares be issued in the
name of, and delivered to , whose address is .
Dated: ---------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of Warrant)
---------------------------------
(Street Address)
---------------------------------
(City) (State) (Zip Code)
- ------------------------------
(1)Insert here the number of shares called for on the face of this Warrant
(or, in the case of a partial conversion, the portion thereof as to which this
Warrant is being converted), in either case without making any adjustment for
Additional Shares of Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of this Warrant,
may be delivered upon exercise. In the case of a partial conversion, a new
Warrant or Warrants will be issued and delivered, representing the unconverted
portion of the Warrant, to the holder surrendering the Warrant.
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FORM OF ASSIGNMENT
[To be executed only upon transfer of Warrant]
For value received, the undersigned registered holder of the within
Warrant hereby sells, assigns and transfers unto the right
represented by such Warrant to purchase _________(1) shares of Common Stock of
E-Z SERVE CORPORATION to which such Warrant relates, and appoints
Attorney to make such transfer on the books of E-Z SERVE CORPORATION maintained
for such purpose, with full power of substitution in the premises.
Dated: ---------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of Warrant)
---------------------------------
(Street Address)
---------------------------------
(City) (State) (Zip Code)
Signed in the presence of:
- ------------------------------
- ------------------------------
(1)Insert here the number of shares called for on the face of this Warrant
(or, in the case of a partial exercise, the portion thereof as to which this
Warrant is being exercised), in either case without making any adjustment for
Additional Shares of Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of this Warrant,
may be delivered upon exercise. In the case of a partial exercise, a new
Warrant or Warrants will be issued and delivered, representing the unexercised
portion of the Warrant, to the holder surrendering the Warrant.
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