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SECURITIES PURCHASE AGREEMENT
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between
E-Z SERVE CORPORATION
and
PHEMUS CORPORATION
Dated
As of January 27, 1997
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TABLE OF CONTENTS
Page
1. TRANSACTIONS AND DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1. Series H Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2. Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.4. Investor Securities Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. SALE AND PURCHASE OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.1. Agreement to Sell and Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.3. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.4. Specifically Prohibited Applications of Proceeds . . . . . . . . . . . . . . . . . . . . . . 3
4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.1. Organization, Standing, Subsidiaries, etc . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.2. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.3. Reservation of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.4. No Legal Obstacle to Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.5. Foreign Trade Regulations; Government Regulations . . . . . . . . . . . . . . . . . . . . . . 4
4.6. Availability for Resale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.7. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5. INVESTMENT REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.1. Accredited Investor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.2. Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.3. Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.4. Authorization, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6. CONDITIONS TO PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6.1. Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6.2. Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6.3. Representations and Warranties; Officers' Certificate . . . . . . . . . . . . . . . . . . . . 6
6.4. Commitment Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6.5. Payment of Transaction Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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6.6. Proper Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6.7. Legality; Governmental Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.8. Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.9. Amendment to Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.10. Amendment to Stockholders Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.11. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7. COVENANTS APPLICABLE WHILE ANY INVESTOR SECURITIES ARE OUTSTANDING . . . . . . . . . . . . . . . . . . . . . . 7
7.2. Resale under Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7.3. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
8. COVENANTS APPLICABLE WHILE ANY SHARES OF SERIES H PREFERRED STOCK CONSTITUTING INVESTOR SECURITIES ARE
OUTSTANDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
8.1. Issuance of Additional Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
8.2. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
8.3. Resale Under Rule 144A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9. COVENANTS APPLICABLE WHILE ANY WARRANTS OR ADDITIONAL WARRANTS CONSTITUTING INVESTOR SECURITIES ARE
OUTSTANDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9.1. Reservation of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
10. PAYMENT ON INVESTOR SECURITIES; TRANSFER; REPLACEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
10.1. Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
10.2. Transfer and Exchange of Senior Preferred . . . . . . . . . . . . . . . . . . . . . . . . . 9
10.3. Transfer, Exchange, Exercise and Conversion of Warrants . . . . . . . . . . . . . . . . . . 10
10.4. Replacement of Lost Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11. RESTRICTIONS ON TRANSFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11.1. Restrictive Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11.2. Notice of Proposed Transfer; Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . 11
11.3. Termination of Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
12. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
12.1. Terms Defined Elsewhere . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
12.2. Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
12.3. Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
12.4. Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
12.5. By-laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
12.6. Charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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12.7. Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
12.8. Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
12.9. Contractual Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
12.10. Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
12.11. Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
12.12. Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
12.13. Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
12.14. Foreign Trade Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
12.15. Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
12.16. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
12.17. Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
12.18. Legal Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
12.19. Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
12.20. Major Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
12.21. Material Adverse Change; Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . 15
12.22. Members of the Immediate Family . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
12.23. Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
12.24. Public Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
12.25. Related Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
12.26. Required Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.27. Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.29. Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.30. Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.31. Subject Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.32. Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
13. EXPENSES, INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
13.1. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
13.2. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
14. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
15. SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
16. AMENDMENTS AND WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
17. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
18. SERVICE OF PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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19. APPLICABLE REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
20. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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SCHEDULES AND EXHIBITS
Schedule I Home Office Payments
Exhibit 2.1 Charter of Company
Exhibit 2.2 Warrant
Exhibit 6.9 Amendment No. 3 to Registration Rights Agreement
Exhibit 6.10 Amendment No. 1 to Amended and Restated Stockholders
Agreement
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E-Z SERVE CORPORATION
2550 NORTH LOOP WEST
HOUSTON, TEXAS 77092
TELEPHONE NUMBER: (713) 684-4300
As of January 27, 1997
PHEMUS CORPORATION
c/o Harvard Management Company
600 Atlantic Avenue
Boston, Massachusetts 02210
Ladies and Gentlemen:
In connection with the purchase and sale of securities provided for
herein, the undersigned E-Z Serve Corporation, a corporation duly incorporated
and validly existing under the laws of the State of Delaware (the "Company"),
hereby agrees with you as follows:
1. TRANSACTIONS AND DEFINITIONS. Subject to all of the terms and
conditions of this Agreement and in reliance on the representations and
warranties set forth or incorporated by reference herein, the Company proposes
to issue and sell to you the Investor Securities described herein, and to apply
the proceeds therefrom solely as specified in Section 3.3 hereof. Certain
terms are used in this Agreement as specifically defined herein. These
definitions are set forth or referred to in Section 12 hereof.
2. THE SECURITIES.
2.1. Series H Preferred Stock. The Company has authorized the
issuance and sale to you of 140,000 shares of its Series H Preferred Stock,
$0.01 par value (the "Series H Preferred Stock") with the terms specified in
the Company's Charter (the "Certificate") attached hereto as Exhibit 2.1. You
consent to the issuance of Series H Preferred Stock in your capacity as a
holder of the $6.00 Convertible Preferred Stock, Series C (the "Series C
Preferred Stock") of the Company.
2.2. Warrants. The Company has authorized the issuance and sale to
you of warrants, each in substantially the form of Exhibit 2.2 hereto, for the
purchase of an aggregate of 960,000
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shares of the Company's common stock, par value $0.01 per share ("Common
Stock"), at a per share exercise price of $0.01 (each such warrant, together
with any warrant or warrants issued in exchange therefor, being referred to
herein as a "Warrant" and collectively as the "Warrants"). In addition, the
Company shall issue you additional warrants (the "Additional Warrants")
pursuant to and in accordance with Section 8.1 hereof.
2.3. Aggregate Purchase Price. The aggregate purchase price for
the Series H Preferred Stock and the Warrants shall be 13,440,000.
2.4. Investor Securities Defined. The Series H Preferred Stock and
the Warrants being issued to you hereunder, together with (i) any securities
issued with respect thereto (whether as a stock dividend or otherwise), upon
exercise, conversion or transfer thereof or in exchange therefor, including
without limitation the Additional Warrants and the Common Stock issued or
issuable upon exercise or conversion of the Warrants and the Additional
Warrants (the "Warrant Shares") and (ii) any securities issued with respect to,
upon exercise, conversion or transfer of or in exchange for the securities
described in the immediately preceding clause (i) or this clause (ii), are
collectively referred to herein as "Investor Securities"; provided, however,
that any such securities sold in a Public Sale shall cease to be Investor
Securities for all purposes hereof.
3. SALE AND PURCHASE OF SECURITIES.
3.1. Agreement to Sell and Purchase. Based on your representations
and warranties contained in Section 4 hereof, the Company hereby agrees to
issue and sell to you, and, subject to all of the terms and conditions hereof
and in reliance on the representations and warranties of the Company set forth
or otherwise referred to herein, you hereby agree to purchase from the Company,
at the Closing, the Series H Preferred Stock and the Warrants, at the purchase
price specified in Section 2.3.
3.2. Closing. The closing of the purchase and sale of the Investor
Securities (the "Closing") shall take place at 10:00 a.m., Boston time, at the
offices of Ropes & Gray, on or before January 27, 1997 or at such other place
as the Company and you may agree upon (the date on which the Closing occurs
being herein referred to as the "Closing Date"). At the Closing, the Company
will, unless otherwise requested, deliver to you a single certificate for the
Series H Preferred Stock evidencing the aggregate number of shares of Series H
Preferred Stock being issued to you by the Company hereunder, and a single
warrant evidencing the aggregate number of Warrants being issued to you by the
Company hereunder, each registered in your name, against payment of the
purchase price therefor by wire transfer of immediately available funds to a
single account of the Company specified by notice from the Company to you not
less than two Business Days prior to the Closing Date.
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3.3. Use of Proceeds. The Company covenants that it will apply the
proceeds of the Investor Securities to be issued and sold by it to you at the
Closing (a) to the payment of $3,550,000 principal due under a term loan from
certain senior lenders, (b) to the redemption of all of its outstanding shares
of Series C Preferred Stock for $100 per share, plus all accrued and unpaid
dividends thereon, and (c) any remaining proceeds shall be used for general
corporate purposes.
3.4. Specifically Prohibited Applications of Proceeds. In no event
shall the Company, directly or indirectly, apply any part of the proceeds from
the issuance and sale hereunder of the Investor Securities to any transaction
prohibited by the Foreign Trade Regulations.
4. REPRESENTATIONS AND WARRANTIES. In order to induce you to enter into
this Agreement and to purchase the Investor Securities to be purchased by you
hereunder, the Company hereby represents and warrants as follows with respect
to the Company and its Subsidiaries:
4.1. Organization, Standing, Subsidiaries, etc.
4.1.1. The Company. The Company is a duly
incorporated and validly existing corporation under the laws
of the State of Delaware, with all necessary power and
authority, corporate and otherwise, to execute, deliver and
perform this Agreement and each other Related Agreement to
which it is or will be a party, to issue, sell and perform the
Investor Securities, and to carry on the business now
conducted or currently proposed to be conducted by it. The
Company has taken all action, corporate and otherwise,
necessary to authorize this Agreement, the other Related
Agreements to which it is or will be a party and the issuance
of the Investor Securities and to make each such document the
legal, valid, binding and enforceable obligation it purports
to be, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally or by general
principles of equity. This Agreement, each other Related
Agreement to which the Company is or will be a party and the
Investor Securities have been (or, as applicable, will have
been at or prior to the Closing, to the extent deliverable at
Closing) duly executed and delivered by the Company.
4.1.2. Charter. Attached hereto as Exhibit 2.1 is
a correct and complete copy of the Charter of the Company
(including the Certificate of Designation for the Series H
Preferred Stock (the "Certificate")) as in effect at the
execution hereof and as it will be in effect at the Closing.
4.1.3. Qualification. The Company is duly
qualified to do business as a foreign corporation and is in
good standing as such in each jurisdiction in which it is
required to be
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so qualified and is duly authorized, qualified and licensed
under all laws, regulations, ordinances or orders of public
authorities, or otherwise, to carry on its business in the
places and in the manner presently conducted and proposed to
be conducted, except for such failures to be so qualified or
authorized, qualified and licensed that have not had and are
not reasonably expected to have a Material Adverse Effect.
4.2. Capitalization.
4.2.1. Capital Stock of the Company. The
authorized capital stock of the Company immediately after the
Closing will consist of 100,000,000 shares of Common Stock,
and 3,000,000 shares of preferred stock, with 200,000 shares
designated as Series C Preferred Stock, and 750,000 shares
designated as Series H Preferred Stock. Immediately after the
Closing and the application of the proceeds therefrom, the
Company will have outstanding 69,119,532 shares of Common
Stock and 140,000 shares of Series H Preferred Stock, all of
which have been validly issued and are fully paid and non-
assessable. Immediately after the Closing and the application
of the proceeds therefrom, no shares of Series C Preferred
Stock will be outstanding. When issued and paid for as
provided for in this Agreement, the Investor Securities will
be subject to no Lien, except restrictions on transfer imposed
by this Agreement and applicable securities laws and Liens, if
any, created by you.
4.3. Reservation of Common Stock. The shares of Common Stock
issuable upon exercise or conversion of the Warrants have been duly authorized
and reserved for issuance by all necessary corporate action on the part of the
Company, and such shares, when issued upon such exercise or conversion (as
applicable), will be duly and validly issued, fully paid and nonassessable.
4.4. No Legal Obstacle to Agreement. Neither the execution and
delivery of this Agreement or any other Related Agreement, nor the consummation
of any transaction referred to herein or therein or contemplated hereby or
thereby, nor the fulfillment of the terms hereof or thereof or of any agreement
or instrument referred to in this Agreement or any other Related Agreement, has
constituted or resulted in or will constitute or result in (i) a breach of the
provisions of any Contractual Obligation to which any the Company is party or
by which it is bound or of its Charter or By-laws, or (ii) assuming the
accuracy of your representations and warranties in Section 5 hereof, a
violation of any Legal Requirement applicable to any Subject Entity, or (iii)
the creation under any Contractual Obligation of any Lien (other than liens
required by the Credit Agreement) upon any of the assets of the Company. No
approval, authorization or other action by any Governmental Authority or any
other Person is required to be obtained by the Company in connection with the
execution, delivery and performance of this Agreement or any other Related
Agreement or the Investor Securities or the transactions contemplated hereby or
thereby, except for such approvals as
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will have been obtained and shall be in full force and effect as of the Closing
Date, and copies of which shall have been furnished to you at or prior to the
Closing.
4.5. Foreign Trade Regulations; Government Regulations.
4.5.1. Foreign Trade Regulations. Neither the
execution and delivery of this Agreement or any other Related
Agreement, nor the issuance and sale of the Investor
Securities by the Company hereunder and the application of the
proceeds thereof, has constituted or resulted in or will
constitute or result in the violation of any Foreign Trade
Regulation.
4.5.2. Governmental Regulation. Neither the
Company nor any corporation controlling the Company or under
common control with the Company is subject to regulation under
the Public Utility Holding Company Act of 1935, the Investment
Company Act of 1940, the Interstate Commerce Act or the
Federal Power Act, or is subject to any Legal Requirement
(other than Legal Requirements applicable to borrowers or
issuers of securities generally) which regulates the incurring
of Indebtedness by the Company, or any of its Subsidiaries,
for money borrowed or the issuing by any of them of any equity
security. No approval or authorization of any governmental
authority is required to permit the execution, delivery or
performance by the Company of this Agreement or the
consummation of any of the transactions contemplated hereby.
4.6. Availability for Resale. The Series H Preferred Stock is
eligible for resale pursuant to the provisions of Rule 144A.
4.7. Disclosure. Neither this Agreement nor any agreement,
certificate, statement or document furnished by or on behalf of the Company in
connection herewith, contains any untrue statement of material fact or omits to
state a material fact necessary in order to make the statements contained
herein in light of the circumstances in which made not misleading. There is no
fact known to the Company which has had, or in the future is reasonably likely
to have (so far as the Company can now foresee), a Material Adverse Effect.
5. INVESTMENT REPRESENTATIONS. You hereby represent and warrant to the
Company with respect to the purchase by you of the Investor Securities as
follows; provided, however, that nothing contained in this Section 5 shall
prevent you from transferring such Investor Securities in compliance with the
provisions of Section 11 hereof; and provided, further, that the disposition of
your property shall at all times be and remain in your control.
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5.1. Accredited Investor. You are an "accredited investor" as such
term is defined in Rule 501(a) of Regulation D of the Securities Act.
5.2. Experience. You have substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Company so you are capable of evaluating the merits and risks of your
investment in the Company and have the capacity to protect your own interests
in making your investment in the Company. You have had access to and an
opportunity to inspect all relevant information relating to the Company,
including financial statements of the Company, sufficient to enable you to
evaluate the merits and risks of the purchase of the Investor Securities
hereunder. You also have had the opportunity to ask questions of officers of
the Company and have received satisfactory answers respecting, and have
obtained such additional information as you have desired regarding, the
business, financial condition and affairs of the Company.
5.3. Investment. You are acquiring the Investor Securities for
investment and not with the view to, or for resale in connection with, any
distribution thereof. You understand that the Investor Securities to be
purchased have not been, and will not be registered under the Securities Act by
reason of a specific exemption from the registration provisions of the
Securities Act, the availability of which depends upon, among other things, the
bona fide nature of your investment intent and the accuracy of your
representations as expressed herein.
5.4. Authorization, etc. You are a duly incorporated and validly
existing corporation under the laws of The Commonwealth of Massachusetts, with
all necessary power and authority, corporate and otherwise, to execute, deliver
and perform this Agreement and each other Related Agreement to which you are or
will be a party, and to carry on the business now conducted or currently
proposed to be conducted by you. You have the necessary power and authority to
enter into this Agreement and the Related Agreements, to perform your
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by you of this
Agreement and the Related Agreements and the performance by you of your
obligations hereunder and thereunder have been duly authorized by all requisite
corporate action, and this Agreement and the Related Agreements constitute your
legal, valid and binding obligations, enforceable in accordance with its and
their terms, subject to (a) applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors rights generally and (b) to
general principles of equity. This Agreement and each other Related Agreement
to which you are or will be a party have been (or, as applicable, will have
been at or prior to the Closing) duly executed and delivered by you.
6. CONDITIONS TO PURCHASE. Your obligation to purchase any of the
Investor Securities pursuant to this Agreement is subject to compliance by the
Company with its agreements herein
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13
contained, and to the satisfaction, simultaneously with or prior to the
Closing, of the following conditions, which may be waived by you in the
exercise of your sole discretion:
6.1. Credit Agreement. Certain of the lenders under the Credit
Agreement shall have entered into a letter agreement with you.
6.2. Legal Opinions. You shall have received from Bracewell &
Patterson, L.L.P., counsel to the Company, its opinions in form and substance
reasonably satisfactory to you.
6.3. Representations and Warranties. The representations and
warranties contained in Section 4 hereof shall be true and correct on and as of
the Closing with the same force and effect as though made on and as of the
Closing; between September 30, 1996 and the Closing there shall have been no
Material Adverse Effect as the result of any fire, flood, explosion, accident,
drought, strike, lockout, riot, sabotage, confiscation, condemnation or
purchase of any property by governmental authority, activities of armed forces
or acts of God or the public enemy, legislative or regulatory order or change,
judicial decision or any other event or development whether or not related to
those enumerated above.
6.4. General. All instruments and legal and corporate proceedings
in connection with the transactions contemplated by this Agreement shall be
reasonably satisfactory in form and substance to you, and you shall have
received copies of all documents, including without limitation records of
corporate proceedings and opinions of counsel, which you may have reasonably
requested in connection therewith, such documents where appropriate to be
certified by proper corporate or governmental authorities.
6.5. Payment of Transaction Costs. At the time of the Closing, the
Company shall have paid all reasonable fees, expenses, and disbursements
incurred by you at or prior to the time of the Closing in connection with the
transactions contemplated by this Agreement and of the Related Agreements,
including, without limitation, the reasonable fees, expenses, and disbursements
of your counsel.
6.6. Proper Proceedings. All proper corporate proceedings shall
have been taken by the Company to authorize this Agreement and the transactions
contemplated hereby.
6.7. Legality; Governmental Authorization. Neither the purchase of
the Investor Securities nor the consummation of any of the transactions
contemplated hereunder shall be prohibited by any Legal Requirement, or shall
subject you to any penalty, special tax, or other onerous condition. All
necessary consents, approvals, licenses, permits, orders and authorizations of,
and registrations, declarations and filings with, any governmental or
administrative agency or any
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14
other Person with respect to any of the transactions contemplated by this
Agreement or the other Related Agreements shall have been duly obtained or made
and shall be in full force and effect.
6.8. Due Diligence. You shall have completed your due diligence
with respect to the Company to your complete satisfaction.
6.9. Amendment to Registration Rights Agreement. Amendment No. 3
(the "Registration Rights Amendment") to the Registration Rights Agreement
dated March 25, 1992 shall have been duly authorized, executed and delivered
and shall be in full force and effect in substantially the form of Exhibit 6.9
hereto with no term or condition thereof having been amended, modified or
waived without your prior written consent.
6.10. Amendment to Stockholders Agreement. Amendment No. 1 (the
"Stockholders Agreement Amendment") to the Amended and Restated Stockholders
Agreement dated June 1, 1994 shall have been duly authorized, executed and
delivered and shall be in full force and effect in substantially the form of
Exhibit 6.10 hereto with no term or condition thereof having been amended,
modified or waived without your prior written consent.
The Company's obligation to sell the Investor Securities pursuant to
this Agreement is subject to compliance by you with your agreements herein
contained, and to the continued accuracy in all material respects on the Closing
Date as though made on and as of the Closing Date, your representations
contained in this Agreement.
7. COVENANTS APPLICABLE WHILE ANY INVESTOR SECURITIES ARE OUTSTANDING.
The Company covenants that so long as any of the Investor Securities remains
outstanding it will comply with the following provisions:
7.1. Notice of Defaults. Promptly upon any senior officer of the
Company obtaining knowledge of any covenant hereunder having been breached or
of any Event of Noncompliance under the Certificate, the Company will furnish
to each Major Holder a notice specifying the nature and period of existence
thereof and what action the Company has taken, is taking or proposes to take
with respect thereto.
7.2. Resale under Rule 144. For so long as the Common Stock is
registered under the Securities Act, the Company, for as long as necessary for
you to comply with Rule 144 under the Securities Act in order to sell Common
Stock to the public without registration thereunder, will make available to you
the benefit of certain rules and regulations of the Commission which may permit
you to sell Common Stock to the public without registration under the
Securities Act by (1) making and keeping "current public information"
"available" (as both such terms are defined in Rule
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144 at all times, (2) timely filing with the Commission, in accordance with all
rules and regulations applicable thereto, all reports and other documents (x)
required of the Company for Rule 144, as it may be amended from time to time
(or any rule, regulation or statute replacing Rule 144), to be available and
(y) required to be filed under Section 15(d) of the Exchange Act,
notwithstanding that the Company's duty to file such reports or documents may
be suspended or otherwise terminated under the express terms of such provision,
and (3) upon request by you, furnishing you a written statement by the Company
that it has complied with the reporting requirements of the Exchange Act and
Rule 144, together with a copy of the most recent annual or quarterly report of
the Company and such reports and documents filed by the Company with the
Commission as may reasonably be requested by you in order that you may avail
yourself of any rule or regulation of the Commission allowing sales of Common
Stock without registration under the Securities Act.
7.3. Use of Proceeds. Contemporaneously with or immediately after
the Closing, the Company shall use the proceeds of the sale of Investor
Securities for the purposes described in Section 3.3(a) and (b), and shall file
a Certificate of Elimination with respect to the Series C Preferred Stock.
8. COVENANTS APPLICABLE WHILE ANY SHARES OF SERIES H PREFERRED STOCK
CONSTITUTING INVESTOR SECURITIES ARE OUTSTANDING.
8.1. Issuance of Additional Warrants. On each anniversary of the
Closing Date on which shares of Series H Preferred Stock are outstanding, the
Company shall issue within ten Business Days of such anniversary date without
consideration to each holder of each share of Series H Preferred Stock
outstanding on such anniversary date (including without limitation shares of
Series H Preferred Stock issued as dividends in kind) an Additional Warrant
substantially in the form of Exhibit 2.2 hereto to purchase the number of
shares of Common Stock indicated in the table below:
Anniversary Shares of Common Stock
----------- ----------------------
1st 16
2nd 24
3rd and thereafter 32
The shares of Common Stock in the table above shall be adjusted in accordance
with the rules contained in Section 2 of Exhibit 2.2 attached hereto.
The Company shall mail (by registered mail) the Additional Warrants to
each registered holder of Series H Preferred Stock at its address as listed in
the register maintained by the Company with respect to the Series H Preferred
Stock.
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8.2. Distributions. Neither the Company nor any of its
Subsidiaries shall make any Distribution with respect to the Common Stock.
8.3. Resale Under Rule 144A. The Company, at all times during
which it is neither subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, nor exempt from reporting pursuant to Rule 12g3-2(b)
under the Exchange Act, will provide in written form, upon the written request
of any holder of Investor Securities, or a prospective purchaser of securities
of the Company from such holder, all information required by Rule 144A(d)(4)(i)
of the General Regulations promulgated by the Commission under the Securities
Act ("144A Information"). With respect to the holder of Investor Securities,
the obligations of the Company under this Section 8.3 shall at all times be
contingent upon such holder's obtaining from a prospective purchaser an
agreement to take all reasonable precautions to safeguard the 144A Information
from disclosure to anyone other than employees, advisors or agents of the
prospective purchaser who required access to the 144A Information for the sole
purpose of evaluating its purchase of the Securities.
8.4. Financial Reporting. The Company shall provide each Major
Holder of Series H Preferred Stock with the same financial information as it
provides to its lenders under Section 7.1.1 of the Credit Agreement.
9. COVENANTS APPLICABLE WHILE ANY WARRANTS OR ADDITIONAL WARRANTS
CONSTITUTING INVESTOR SECURITIES ARE OUTSTANDING.
9.1. Reservation of Common Stock. Upon each issuance of Additional
Warrants, the Company will use its best efforts to cause its Charter to be
amended if necessary to ensure that there is sufficient authorized Common Stock
to permit the exercise or conversion (as applicable) of such Additional
Warrants. The Company will not issue additional shares of Common Stock or
options exercisable or convertible into Common Stock (other than Additional
Warrants) if there is insufficient authorized Common Stock to permit the
exercise or conversion ( as applicable) of such Additional Warrants.
10. PAYMENT ON INVESTOR SECURITIES; TRANSFER; REPLACEMENT.
10.1. Payment. All payments made in respect of the Investor
Securities held by you shall be made in federal or other immediately available
funds in lawful money of the United States for credit, not later than 2:00
p.m., Eastern Standard Time, to you at your account set forth on Schedule I
hereto accompanied by sufficient information to identify the source and
application thereof or by such other method or at such other address as a
holder of Investor Securities shall have from time to time given timely notice
of to the Company.
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10.2. Transfer and Exchange of Series H Preferred Stock. The
Company shall keep at its principal office a register in which shall be entered
the names and addresses of the registered holders of shares of Series H
Preferred Stock issued by it and particulars of the respective shares of Series
H Preferred Stock held by them and of all transfers of such shares. Upon
surrender at such office of any certificate representing shares of Series H
Preferred Stock for registration of exchange or (subject to compliance with the
applicable provisions of Section 11), transfer, the Company shall issue, at its
expense, one or more new certificates, in such denomination or denominations as
may be requested, for shares of such Series H Preferred Stock and registered as
such holder may request. Any certificate representing shares of Series H
Preferred Stock surrendered for registration of transfer shall be duly
endorsed, or accompanied by a written instrument of transfer duly executed by
the holder of such certificate or his attorney duly authorized in writing.
10.3. Transfer, Exchange, Exercise and Conversion of Warrants. The
Company shall keep at its principal office a register in which shall be entered
the names and addresses of the holders of the Warrants and particulars of the
Warrants held by them and of all transfers, exchanges, conversions and
redemptions of Warrants. Upon surrender at such office or such other place as
shall be duly specified by the Company of any Warrant for redemption,
conversion, exercise, exchange or (subject to compliance with the applicable
provisions of this Agreement, including without limitation the conditions set
forth in Section 11 hereof) transfer, the Company shall issue at its expense
one or more new Warrants in such denomination or denominations as may be
requested, and registered as such holder may request. Any Warrant surrendered
for registration of transfer shall be duly endorsed, or accompanied by a
written instrument of transfer duly executed by the holder of such certificate
or his attorney duly authorized in writing. The Company will pay shipping and
insurance charges, from and to each holder's principal office, upon any
transfer, exchange, conversion or redemption provided for in this Section 10.3.
10.4. Replacement of Lost Securities. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of a security and, in the case of any such loss, theft or
destruction, upon delivery of an indemnity bond in such reasonable amount as
the Company may determine (or, in the case of a security held by you or another
institutional holder or by the nominee of you or such other institutional
holder, of an unsecured indemnity agreement from you or such other holder
reasonably satisfactory to the Company) or, in the case of any such mutilation,
upon the surrender of the security for cancellation to the Company at its
principal office, the Company at its expense will execute and deliver or will
cause to be executed and delivered in lieu thereof a new security of like
tenor. Any security in lieu of which any such new security has been so
executed and delivered or caused to be executed and delivered by the Company
shall not be deemed to be an outstanding security for any purpose.
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11. RESTRICTIONS ON TRANSFER. The Investor Securities shall be
transferable only upon satisfaction of the applicable conditions specified in
this Section 11
11.1. Restrictive Legend. Except as otherwise permitted by Section
11.3 hereof, each Warrant shall bear a legend in substantially the form of the
legend set forth at the beginning of Exhibit 2.2 hereto, and each certificate
representing Warrant Shares or shares of Series H Preferred Stock shall bear a
legend in substantially the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or under the securities
laws of any state, and may not be sold, or otherwise transferred, in
the absence of such registration or an exemption therefrom under such
Act and under any such applicable state laws. Furthermore, such
shares may be sold or otherwise transferred only in compliance with
the conditions specified in the Securities Purchase Agreement dated as
of January 27, 1997 among the issuer hereof and the other parties
thereto. Complete and correct copies of such Agreement (including the
Exhibits thereto) are available for inspection at the principal office
of the issuer hereof and will be furnished without charge to the
holder of such shares upon written request."
11.2. Notice of Proposed Transfer; Opinions of Counsel. Prior to
any transfer of any Investor Securities other than pursuant to an effective
registration statement under the Securities Act, the holder thereof will give
not less than three Business Days' prior written notice to the Company of such
holder's intention to effect such transfer, describing in reasonable detail the
manner of the proposed transfer. No holder of Investor Securities shall
transfer any Investor Securities other than pursuant to an effective
registration statement under the Securities Act until (i) such holder delivers
to the Company an opinion of Ropes & Gray or other counsel reasonably
acceptable to the Company addressed to the Company to the effect that the
proposed transfer may be effected without registration of such Investor
Securities under the Securities Act or applicable state securities laws, and
(ii) the transferee agrees in writing to be bound by all of the terms of this
Agreement and the Investor Securities to be transferred, and thereupon such
holder shall be entitled, within 30 days thereafter, to transfer such Investor
Securities in accordance with the terms of this Agreement and the notice
delivered by such holder to the Company.
11.3. Termination of Restrictions. The restrictions imposed by this
Section 11 upon the transferability of Investor Securities shall cease and
terminate as to any particular Investor Securities and any securities issued in
exchange therefor or upon transfer thereof (i) when, (in the case of Sections
11.1 and 11.2 hereof) in the written opinion (addressed to the Company) of
Ropes & Gray or other counsel reasonably acceptable to the Company, such
restrictions are no longer required in order to assure compliance with the
Securities Act, or (ii) when such Investor Securities are being or have been
sold pursuant to a Public Sale. Whenever any of such
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restrictions shall cease and terminate as to any Investor Securities, the
holder thereof shall be entitled to receive, without expense, from the Company,
new certificates not bearing that part of the legend specified in Section 11.1
hereof that is no longer applicable.
12. DEFINITIONS. For purposes of this Agreement:
12.1. Terms Defined Elsewhere. The following terms defined
elsewhere in this Agreement in the Sections set forth below shall have the
respective meanings therein defined:
Term Definition
"Additional Warrants" Section 2.2
"Certificate" Section 4.1.2
"Closing" Section 3.2
"Closing Date" Section 3.2
"Common Stock" Section 2.2
"Company" Preamble
"Investor Securities" Section 2.4
"Registration Rights Amendment" Section 6.9
"Series C Preferred Stock" Section 2.1
"Series F Preferred Stock" Section 4.2
"Series G Preferred Stock" Section 4.2
"Series H Preferred Stock" Section 2.1
"Stockholders Agreement Amendment" Section 6.10
"Warrants" Section 2.2
"Warrant Shares" Section 2.4
"144A Information" Section 8.3
Certain other terms are defined in the Exhibits hereto and are used therein
with the meanings so defined.
12.2. Action. The term "Action" shall mean any claim, action, cause
of action or suit (in contract or tort or otherwise), arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
12.3. Business Day. The term "Business Day" shall mean any day on
which banking institutions in Boston, Massachusetts and New York, New York are
customarily open for the purpose of transacting business.
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20
12.4. By-laws. The term "By-laws" shall include all written rules,
regulations, procedures and by-laws and all other documents relating to the
management, governance or internal regulation of a Person other than an
individual, or interpretive of the Charter of such Person, each as from time to
time amended or modified.
12.5. Charter. The term "Charter" shall include the articles or
certificate of incorporation (including any certificate of designation),
statute, constitution, joint venture or partnership agreement or articles or
other charter of any Person other than an individual, each as from time to time
amended or modified.
12.6. Commission. The term "Commission" shall mean the Securities
and Exchange Commission or any other federal agency at the time administering
the Securities Act, the Exchange Act or both.
12.7. Consolidated. The term "consolidated" shall mean, when used
with reference to any term, that term as applied to the accounts of the Company
(or other indicated Person) and each of its Subsidiaries, consolidated in
accordance with generally accepted accounting principles after eliminating all
inter-company items and with appropriate deductions for minority interests in
Subsidiaries.
12.8. Credit Agreement. The term "Credit Agreement" shall mean 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.
12.9. Distribution. The term "Distribution" shall mean (i) the
declaration or payment of any dividend or other distribution on or in respect
of any Equity Security of any Subject Entity, other than dividends payable on
Common Stock solely in shares of Common Stock and (ii) the purchase, redemption
or other retirement of any Equity Security of any Subject Entity, whether
directly or indirectly through a Subsidiary or otherwise.
12.10. Exchange Act. The term "Exchange Act" shall mean the
Securities Exchange Act of 1934, or any successor federal statute, and the
rules and regulations of the Commission thereunder, all as the same shall be in
effect from time to time.
12.11. Equity Securities. The term "Equity Securities" shall mean,
with respect to any Person which is not a natural person, all shares of capital
stock or other equity or beneficial interests issued by or created in or by
such Person, all stock appreciation or similar rights or grants of, or other
Contractual Obligation for, any right to share in the equity, income, revenues
or cash flow of such Person, and all securities or other rights, warrants or
other Contractual
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Obligations to acquire any of the foregoing, whether by conversion, exchange,
exercise, preemptive right or otherwise.
12.12. Foreign Trade Regulations. The term "Foreign Trade
Regulations" means (a) any act that prohibits or restricts, or empowers the
President or any executive agency of the United States of America to prohibit
or restrict, exports to or financial transactions with any foreign country or
foreign national, (b) the regulations with respect to certain prohibited
foreign trade transactions set forth at 15 C.F.R. Parts 730 et seq., 22 C.F.R.
Parts 120-130 and 31 C.F.R. Parts 500 et seq. and (c) any order, regulation,
ruling, interpretation, direction, instruction or notice relating to any of the
foregoing, all as from time to time in effect.
12.13. Governmental Authority. The term "Governmental Authority"
shall mean any U.S. federal, state or local or any foreign government,
governmental authority, regulatory or administrative agency, governmental
commission, court or tribunal (or any department, bureau or division thereof)
or any arbitral body.
12.14. Indebtedness. The term "Indebtedness" shall have the same
meaning as under the Credit Agreement.
12.15. Legal Requirement. The term "Legal Requirement" shall mean
any federal, state, local or foreign law, statute, standard, ordinance, code,
order, rule, regulation, resolution, promulgation, or any order, judgment or
decree of any court, arbitrator, tribunal or governmental authority, or any
license, franchise, permit or similar right granted under any of the foregoing,
or any similar provision having the force and effect of law.
12.16. Lien. The term "Lien" shall mean (a) any mortgage, pledge,
lien, charge, security interest or other similar encumbrance or restriction of
any kind upon any property or assets of any character, or upon the income or
profits therefrom or upon the transfer thereof; (b) any acquisition of or
agreement to have an option to acquire any property or assets upon conditional
sale or other title retention agreement, device or arrangement (including a
capitalized lease); or (c) any sale, assignment, pledge or other transfer for
security of any accounts, general intangibles or chattel paper, with or without
recourse.
12.17. Major Holder. The term "Major Holder" with respect to any
class of Investor Securities shall mean (i) you, so long as you hold that class
of Investor Securities, or (ii) any holder of 25% or more of the securities
constituting Investor Securities of that class of Investor Securities then
outstanding
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12.18. Material Adverse Change; Material Adverse Effect. The terms
"Material Adverse Change" and "Material Adverse Effect" shall mean,
respectively, any adverse change in or effect on the business, operations,
assets, prospects or condition, financial or otherwise, of any Subject Entity
which, when considered either singly or together with all other adverse changes
and effects with respect to which either such phrase is used in this Agreement,
is material to the Subject Entities considered as one enterprise.
12.19. Person. The term "Person" shall mean an individual,
partnership, limited liability company, corporation, association, trust, joint
venture or unincorporated organization, and any government, governmental
department or agency or political subdivision thereof.
12.20. Public Sale. The term "Public Sale" shall mean a distribution
pursuant to a registration statement under the Securities Act.
12.21. Related Agreements. The term "Related Agreements" shall mean
the Registration Rights Amendment and the Stockholders Agreement Amendment.
12.22. Required Holders. The term "Required Holders" shall mean,
with respect to any class or type of Investor Securities, the holder or holders
at the relevant time (excluding the Subject Entities) of more than 50% of the
number of outstanding shares, as the case may be, of the specified class or
type of Investor Securities.
12.23. Rule 144. The term "Rule 144" shall mean Rule 144 of the
Commission's rules and regulations promulgated under the Securities Act, and
any successor rule or regulation thereto, and in the case of any referenced
section of such Rule, any successor section thereto, collectively and as from
time to time amended and in effect.
12.24. Rule 144A. The term "Rule 144A" shall mean Rule 144A of the
Commission's rules and regulations promulgated under the Securities Act, and
any successor rule or regulation thereto, and in the case of any referenced
section of such Rule, any successor section thereto, collectively and as from
time to time amended and in effect.
12.25. Securities Act. The term "Securities Act" shall mean the
Securities Act of 1933, as amended, or any successor federal statute, and the
rules and regulations of the Commission thereunder, all as the same shall be in
effect from time to time.
12.26. Stockholder. The term "Stockholder" shall mean each Person
who holds any Equity Security of the Company.
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12.27. Subject Entity. The term "Subject Entity" shall mean the
Company and each of its Subsidiaries.
12.28. Subsidiary. The term "Subsidiary" shall mean any Person of
which the Company or any other specified Person now or hereafter shall at the
time own directly or indirectly through a Subsidiary at least a majority of the
outstanding capital stock (or other shares of beneficial interest) entitled to
vote generally.
13. EXPENSES, INDEMNITY.
13.1. Expenses. Whether or not the transactions contemplated by
this Agreement shall be consummated, the Company hereby agrees to pay on demand
all reasonable out-of-pocket expenses incurred by you in connection with such
transactions and operations hereunder (other than expenses incurred in the
normal course of investment monitoring) and in connection with any amendments
or waivers (whether or not the same become effective) hereof and of the other
Related Agreements and all expenses incurred by any of you or any holder of any
Investor Securities issued hereunder in connection with the enforcement in good
faith of any rights hereunder, under any other Related Agreement or under the
Charter of the Company, including without limitation: (a) the reasonable cost
and expenses of preparing and duplicating this Agreement; (b) the reasonable
cost of delivering to your principal office, insured to your reasonable
satisfaction, the Investor Securities sold to you hereunder and any Investor
Securities delivered to you in exchange therefor or upon any conversion or
substitution thereof, in any such case insured to your satisfaction; (c) the
reasonable fees, expenses and disbursements of Ropes & Gray in connection with
the transactions contemplated by this Agreement; (d) all taxes (other than
taxes determined with respect to income and transfer taxes that may be payable
upon a transfer), including any recording fees and filing fees and documentary
stamp and similar taxes at any time payable in respect of this Agreement, any
other Related Agreement, or the issuance of any of the Investor Securities;
provided, however, that you and each holder of Investor Securities shall bear
the fees and disbursements of counsel for such of you or such holder in
connection with all opinions rendered by such counsel pursuant to Section 11
hereof.
13.2. Indemnity.
13.2.1. The Company hereby further agrees to indemnify,
exonerate and hold you and each of your stockholders, officers,
directors, employees and agents free and harmless from and against any
and all Actions, losses, liabilities and damages, and any
investigation or proceeding instituted by any Governmental Authority
or any other Person, and reasonable expenses in connection therewith,
including without limitation reasonable attorneys' fees and
disbursements, incurred in any capacity by the indemnitee or any of
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them as a result of, or arising out of, or relating to any transaction
financed or to be financed in whole or in part directly or indirectly
with proceeds from the sale by the Company of any of the Investor
Securities, except for any of such indemnified liabilities arising on
account of any indemnitee's gross negligence, willful misconduct or
bad faith.
13.2.2. Each of the Company and you hereby agree to
indemnify each other against and hold each other harmless from any
claim, demand or liability for any broker's, finder's or placement
fees or lender's incentive fees alleged to have been incurred by the
Company or you, as the case may be, in connection with the
transactions contemplated by this Agreement, including without
limitation reasonable legal fees arising in connection with any such
claim, demand or liability; provided, however, that the Company shall
bear the fees and expenses referred to in Section 13.1.
13.3. The obligations of the Company to you under this Section 13
shall survive the redemption, repurchase or transfer of any or all of the
Investor Securities.
14. NOTICES. Any notice or other communication in connection with this
Agreement or the Investor Securities shall be deemed to be delivered if in
writing (or in the form of a telex or telecopy to be given only during the
recipient's normal business hours unless arrangements have otherwise been made
to receive such notice by telex or telecopy outside of normal business hours)
addressed as provided below and if either (a) actually delivered at said
address or (b) in the case of a letter, seven business days shall have elapsed
after the same shall have been deposited in the United States mails, postage
prepaid and registered or certified:
If to the Company, to it at the address set forth on page 1, with a
courtesy copy (not necessary to constitute notice hereunder) to Bracewell &
Patterson, L.L.P., South Tower, Pennzoil Place, 711 Louisiana Street, Suite
2900, Houston, Texas 77002 (Attention: John L. Keffer), or at such other
address as such Person shall have specified by notice actually received by you.
If to you, to your address set forth on page 1 hereof, or at such
other address as you shall have specified by notice actually received by the
Company, with a copy (not necessary to constitute notice hereunder) to Ropes &
Gray, One International Place, Boston, Massachusetts 02110-2624, Attention:
Larry J. Rowe, Esq.
If to any other holder of record of any Investor Security, to it at
its address set forth in the relevant registers of the Company.
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15. SURVIVAL. All covenants, agreements, representations and warranties
made herein or in any other document referred to herein or delivered to you
pursuant hereto or in connection herewith shall be deemed to have been material
and relied on by you, notwithstanding any investigation made by you or on your
behalf, and shall survive the execution and delivery to you of this Agreement
and of the Investor Securities.
16. AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively) only with
the written consent of the Company and Required Holders. Any amendment or
waiver effected in accordance with this Section 16 shall be binding upon each
holder of any Investor Securities and the Company.
17. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
WHICH CANNOT BE WAIVED, THE COMPANY AND YOU HEREBY WAIVE, AND COVENANT THAT
EACH OF THEM WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE),
ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND,
ACTION, OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR ANY
OTHER RELATED AGREEMENT OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY
OBLIGATION HEREUNDER OR THEREUNDER OR IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE HOLDERS OF INVESTOR SECURITIES OR THE COMPANY
OR ANY OF THEM IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE. EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE
OTHER THAT THE PROVISIONS OF THIS SECTION 17 CONSTITUTE A MATERIAL INDUCEMENT
UPON WHICH IT HAS RELIED, IS RELYING AND WILL RELY IN ENTERING INTO THIS
AGREEMENT, AND SUCH OF THE RELATED AGREEMENTS TO WHICH IT IS A PARTY. You or
the Company may file an original counterpart or a copy of this Section 17 with
any court as written evidence of the consent of the other party to the waiver
of its right to trial by jury.
18. SERVICE OF PROCESS. The Company, by its execution hereof, (a) hereby
irrevocably submits to the non-exclusive jurisdiction of the state courts of
the Commonwealth of Massachusetts and to the non-exclusive jurisdiction of the
United States District Court for the District of Massachusetts for the purpose
of any suit, action or other proceeding arising out of or based upon this
Agreement or any other Related Agreement or the subject matter hereof or
thereof brought by you or any of your successors or assigns, and (b) hereby
waives to the extent not prohibited by law, and agrees not to assert, by way of
motion, as a defense or otherwise, in any
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such proceeding, any claim that it is not subject personally to the
jurisdiction of the above-named courts, that its property is exempt or immune
from attachment or execution, that any such proceeding brought in one of the
above-named courts is improper or that this Agreement or the subject matter
hereof or thereof, may not be enforced in or by such court. The Company hereby
consents to service of process in any such proceeding in any manner permitted
by Massachusetts law and agrees that service of process by registered or
certified mail, return receipt requested, at its address referred to in or
specified pursuant to Section 14 hereof, is reasonably calculated to give
actual notice.
19. APPLICABLE REMEDIES. The Company hereby agrees that the holders of
the Investor Securities have no adequate remedy at law, for monetary
compensation or otherwise, for the damages that would be suffered if the
Company were to fail to comply with its obligations hereunder, and that the
Company therefore agrees that the holders of the Investor Securities shall be
entitled to obtain specific performance of the obligations of the Company
herein and therein contained.
20. MISCELLANEOUS. This Agreement, the other Related Agreements, and the
Charter of the Company set forth the entire understanding of the parties hereto
with respect to the transactions contemplated hereby and supersede any prior
written or oral understandings with respect thereto. The invalidity or
unenforceability of any term or provision hereof shall not affect the validity
or enforceability of any other term or provision hereof. The headings in this
Agreement are for convenience of reference only and shall not alter or
otherwise affect the meaning hereof. This Agreement is intended to take effect
as a sealed instrument and may be executed in any number of counterparts which
together shall constitute one instrument and shall be governed by and construed
in accordance with the domestic substantive laws of The Commonwealth of
Massachusetts without giving effect to any choice or conflict of law provision
or rule that would cause the application of the domestic substantive laws of
any other jurisdiction. This Agreement shall bind and inure to the benefit of
the parties hereto and their respective successors and assigns.
Whether or not any express assignment has been made in this Agreement,
provisions of this Agreement that are for your benefit as the holder of any
Investor Securities are also for the benefit of, and enforceable by, all
subsequent holders of Investor Securities, except as otherwise expressly
provided herein.
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If the foregoing corresponds with your understanding of our agreement,
kindly sign this letter and the accompanying copies thereof in the appropriate
space below and return one counterpart of the same to the Company whereupon this
letter shall become and be a binding agreement between you and the Company.
Very truly yours,
SEAL E-Z SERVE CORPORATION
Attest: /s/ John T. Miller By: /s/ Neil H. McLaurin
Title: Senior Vice President, Finance -----------------------------
& Chief Financial Officer Title: Chairman, President
& Chief Executive
Officer
Accepted and Agreed to:
PHEMUS CORPORATION
By: /s/ Michael R. Eisenson
---------------------------
Title: Authorized Signatory
By: /s/ Michael Thonis
---------------------------
Title: Authorized Signatory
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SCHEDULE I
Home Office Payments
Federal Reserve Wire Transfer Instructions
Bank: State Street Bank & Trust Company
Boston, MA 02110
ABA Routing No.: 011-000-028
Attn: Harvard College/Private Capital Group
Credit DDA: 3082-068-2
Prior Advisement to: Tami E. Nason at 617-720-4833
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