UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ____)*
BAB Holdings, Inc.
_____________________________________________________________________________
(Name of Issuer)
Common Stock, no par value
_____________________________________________________________________________
(Title of Class of Securities)
055176101
_____________________________________________________________________________
(CUSIP Number)
Keith Shapiro, Esq.
Greenberg Traurig
227 W. Monroe Street, Suite 3500
Chicago, IL 60606
(312) 456-8400
_____________________________________________________________________________
(Name, Address and Telephone Number of Person Authorized tO
Receive Notices and Communications)
October 21, 1999
_____________________________________________________________________________
v (Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Sec. 240.13d-1(e), 240.13d-1 (f) or
240.13d-1 (g), check the following box [_].
Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Sec. 240.13d-7(b)
for other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).
SCHEDULE 13D
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CUSIP NO. 055176101 PAGE 2 OF 6 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Holdings Investments, LLC.
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4 WC
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6 Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 4,910,948
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
0
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 4,910,948
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
4,910,948
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
36.6%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
OO
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
SCHEDULE 13D
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CUSIP NO. 055176101 PAGE 3 OF 6 PAGES
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NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Michael W. Evans
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4 OO
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6 United States
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 818,542
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
4,910,948
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 818,542
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
4,910,948
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
5,729,490
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
42.2%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
SCHEDULE 13G
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CUSIP NO. 055176101 PAGE 4 OF 6 PAGES
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NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Michael K. Murtaugh
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4 OO
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6 United States
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 563,389
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
4,910,948
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 563,389
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
4,910,948
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
5,474,337
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
40.5%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
Page 5 of 6
Item 1. Security and Issuer
This statement on Schedule 13D (the "Statement") relates to the Common
Stock, no par value ("Common Stock"), of BAB Holdings, Inc., an Illinois
corporation (the "Company"). The principal executive offices of the Company
are located at 8501 West Higgins Road, Suite 320, Chicago, Illinois 60631.
Item 2. Identity and Background
The Statement is being filed by Holdings Investments, LLC., a Delaware
limited liability company ("LLC".) LLC was formed to acquire shares of the
Company's Common Stock as an investment. The business address of the LLC is
220 DeWindt Road, Winnetka, Illinois 60093.
This Statement is also being filed by Michael W. Evans and Michael K.
Murtaugh, members and co-managers of the LLC. Both Mr. Evans and Mr. Murtaugh
are officers and directors of the Company. Mr. Evans is the President and
Chief Executive Officer and Mr. Murtaugh is the Vice President and General
Counsel of the Company. Messrs. Evans and Murtaugh are citizens of the
United States.
During the last five years, none of LLC, Mr. Evans, or Mr. Murtaugh (i)
has been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) has been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
On October 21, 1999, the LLC acquired 60,000 shares of the Company's
series A convertible preferred stock, $25 par value, from Keyway Investments
Limited ("Keyway") for $650,000 in cash and a warrant to acquire 1,718,832
shares of the Company's Common Stock owned by the LLC. LLC has the right to
repurchase the warrant, in full or in part, at a price not to exceed
$350,000. The repurchase rights expire on May 31, 2000.
The LLC immediately converted the preferred shares, plus $348,000 of
dividends accrued thereon, to 4,910,948 shares of Common Stock of the Company.
Item 4. Purpose of the Transaction
LLC acquired the Common Stock of the Company as an investment for its own
account.
LLC, Mr. Evans or Mr. Murtaugh have no plans or proposals which would
relate to or result in any of the matters set forth in items (a) through (j)
of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a) LLC owns 4,910,948 shares of Common Stock of the Company representing
36.6% of the outstanding Common Stock of the Company. Mr. Evans beneficially
owns 5,729,290 shares of the Company's Common Stock, including 145,000 shares
issuable pursuant to currently exerciseable options and all of the shares
owned by the LLC (which he, as co-manager of the LLC, may be deemed to own).
Mr. Murtaugh beneficially owns 5,474,337 shares of the Company's Common
Stock, including 105,000 shares issuable pursuant to currently exerciseable
options and all of the shares owned by the LLC (which he, as co-manager of the
LLC, may be deemed to own). Mr. Evans' and Mr. Murtaugh's ownership of the
Common Stock of the Company is 42.2% and 40.5%, respectively, in each case
including the 36.6% owned by the LLC.
(b) Mssrs. Evans and Murtaugh, collectively, as co-managers of the LLC,
have shared power to vote and to dispose of all of the Common Stock owned by
the LLC.
(c) None of LLC, Mr. Evans or Mr. Murtaugh, has effected any transactions
in the Common Stock of the Company in the past sixty days.
(d) and (e) Not applicable.
Page 6 of 6
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
Except for the warrant issued to Keyway identified in Item 4. above,
none of LLC, Mr. Evans or Mr. Murtaugh is a party to any contract,
arrangement, understanding or relationship with respect to any securities of
the Company, including but not limited to transfer or voting of any of the
securities, finder's fees, joint ventures, loan or option agreements, puts
or calls, guarantees of profits, divisions of profit or losses or the
giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits
Exhibit 10.1 Letter agreement between Keyway Investments Limited,
Michael W. Evans and Michael K. Murtaugh dated
October 21, 1999
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Holdings Investments, LLC.
By: Michael W. Evans, Co-manager
10/29/99 By: /s/ MICHAEL W. EVANS
- -------- ----------------------------
By: Michael K. Murtaugh, Co-manager
10/29/99 By: /s/ MICHAEL K. MURTAUGH
- -------- ----------------------------
Michael W. Evans
10/29/99 /s/ MICHAEL W. EVANS
- -------- ---------------------------
Michael K. Murtaugh
10/29/99 /s/ MICHAEL K. MURTAUGH
- -------- ---------------------------
October 21, 1999
CONFIDENTIAL
- ------------
Keyway Investments Limited
Europlan House, 19 Havelock
Douglas, Isle of Man
Gentlemen:
This letter (the "Agreement") sets forth our agreement concerning the sale by
Keyway Investments Limited ("Keyway") of all of its shares of Series A
Convertible Preferred Stock of BAB Holdings, Inc., an Illinois corporation
("BAB Holdings"), consisting of 60,000 shares (hereinafter, the "Preferred
Shares"), to Holdings Investments, LLC, a Delaware limited liability company
("Purchaser"), as follows:
1. Keyway hereby agrees to sell all of its right, title and interest in
and to the Preferred Shares to Purchaser, including, without limitation, all
rights with respect to accrued dividends, free and clear of all security
interests, liens, claims, encumbrances, charges and restrictions of any nature
(collectively, "Encumbrances"), and Purchaser hereby agrees to purchase all of
the Preferred Shares from Keyway, on the terms and conditions set forth in the
remainder of this Agreement.
2. The consideration payable by Purchaser to Keyway for the Preferred
Shares shall consist of (i) a cash payment from Purchaser to Keyway equal to
$650,000(U.S.), against which the $50,000 (U.S.) payment previously made by
Purchaser to Keyway shall be credited (the "Net Cash Portion"), and the
issuance by Purchaser to Keyway of a Warrant to Purchase Common Shares of BAB
Holdings (the "Common Stock"), in the form attached hereto as Exhibit A (the
"Warrant").
3. Upon the execution of this Agreement by both parties hereto, the
parties hereto shall make the following deliveries to one another:
(a) Keyway shall deliver (i) two (2) duplicate originals of this
Agreement duly executed by Keyway, (ii) all original certificates representing
the Preferred Shares, and (iii) duly executed stock powers or assignments
separate from certificate relating to the Preferred Shares, with signatures
guaranteed, executed in blank. All such deliveries shall be made by Keyway
via telecopier on or before the close of business on October 21, 1999, with
originals sent by express mail, to Ehrenreich Eilenberg Krause & Zivian LLP,
as escrow agent (the "Escrow Agent"), at 11 East 44th Street, 17th Floor, New
York, New York 10017 (telecopier no. (212) 986-2399), Attention: Adam D.
Eilenberg, Esq., to be held in escrow by the Escrow Agent pending the Escrow
Agent's receipt of the Net Cash Portion and the Warrant, at which time the
Escrow Agent shall release to Purchaser the documents described in clauses (i)
through (iii) of this paragraph 3(a); and
(b) Purchaser shall deliver (i) two (2) duplicate originals of this
Agreement duly executed by Purchaser, and (ii) the Warrant, duly executed by
Purchaser, to Keyway, to be held in escrow by the Escrow Agent pending its
receipt of the Net Cash Portion. Purchaser shall deliver copies of such items
(i) and (ii) to the Escrow Agent by telecopier on or before the close of
business on October 21, 1999, with originals sent by express mail to the
address set forth above. Purchaser shall deliver the Net Cash Portion by wire
transfer to the Escrow Agent for the benefit of Keyway in accordance with wire
transfer instructions supplied to Purchaser prior to the parties' execution of
this Agreement, at such time as Purchaser has been advised of the Escrow
Agent's receipt of the deliveries of Keyway set forth in paragraph 3(a) above.
(c) Upon receipt by the Escrow Agent of the original certificates
representing the Preferred Shares, and upon delivery of all other documents in
conformity with paragraphs 3(a) and 3(b) above, the Escrow Agent shall deliver
such original certificates to the transfer agent of BAB Holdings, together
with a request from BAB Holdings that the shares of Common Stock issuable upon
conversion of the Preferred Stock be represented by one certificate for
3,192,116 shares to be delivered to the Purchaser and one certificate for
1,718,832 shares to be delivered to the Escrow Agent, both certificates to be
issued in the name of Purchaser and directing that such certificates be
delivered as stated above. Upon receipt of the certificate for 1,718,832
shares of Common Stock, (the "Escrow Shares"), the Escrow Agent shall hold in
escrow, together with a stock powers duly executed by Purchaser corresponding
to the certificate representing the Escrow Shares (which Purchaser hereby
covenants to execute and deliver within three business days of receipt of the
stock certificate representing the 3,192,116 shares). Upon request from
Keyway, the certificate representing the Escrow Shares, together with the
corresponding stock powers, shall be released by the Escrow Agent following
its receipt from Keyway of a copy of a duly executed Warrant Exercise Form
with respect to the exercise of all or a portion of the Warrant and a
certification from Keyway that such Warrant Exercise Form has been tendered to
Purchaser and that either the full exercise price with respect to the portion
of the Warrant being exercised has been tendered to Purchaser or Keyway has
relied on the cashless exercise provisions of the Warrant; provided, however,
that if the Escrow Agent receives a notice from Purchaser within one business
day of its receipt of the Warrant Exercise Form and Keyway's certification
challenging Keyway's exercise of the Warrant, the Escrow Agent shall not
release to Keyway the certificate representing all or part of the Escrow
Shares (and the related stock powers). In such event, the Escrow Agent shall
only take action if directed in writing signed by both Keyway and Purchaser or
pursuant to a final order of a court of competent jurisdiction.
(d) The Escrow Agent may rely and shall be fully protected in acting
or refraining from acting upon any notice or other document believed by the
Escrow Agent in good faith to be genuine and to have been signed or presented
by the proper person or entity. The Escrow Agent shall have no duties or
responsibilities except those expressly set forth herein.
(e) Keyway and Purchaser shall, jointly and severally, indemnify and
hold harmless the Escrow Agent and each of its partners, agents and employees
("Agent Indemnitees") absolutely and forever, from and against any and all
claims, actions, damages, suits, liabilities, obligations, costs, fees,
charges, and any other expenses whatsoever, including reasonable attorneys'
fees and costs, that may be asserted against any Agent Indemnitee in
connection with this Agreement or the performance of the Escrow Agent or any
Agent Indemnitee hereunder. Except for intentional misrepresentation, gross
negligence or intentional misconduct, the Escrow Agent shall not be liable to
Keyway or Purchaser for any act, or failure to act, by the Escrow Agent in
connection with this Agreement. The Escrow Agent will not be liable for
special, indirect, incidental or consequential damages hereunder.
4. Keyway hereby represents and warrants to Purchaser as follows: (a)
this Agreement, and the documents and instruments executed and/or delivered by
Keyway in connection herewith, have been duly authorized by all necessary
action on the part of Keyway and its governing body, and constitute the legal,
valid and binding obligation of Keyway, enforceable against Keyway in
accordance with their respective terms; (b) the Preferred Shares are free and
clear of all Encumbrances; and (c) Keyway, which has held the Preferred Shares
since their issuance, is familiar with the business and operations of BAB
Holdings, has evaluated the risks of the acquisition of the Warrant, including
the risks set forth in Exhibit B attached to this Agreement, and has relied
solely on its own due diligence investigation in making its decision to
acquire the Warrant.
5. Purchaser hereby represents and warrants to Keyway as follows: (a)
this Agreement, and the documents and instruments executed and/or delivered by
Purchaser in connection herewith, have been duly authorized by all necessary
action on the part of Purchaser and its managers, and constitute the legal,
valid and binding obligation of Purchaser, enforceable against Purchaser in
accordance with their respective terms and (b) Purchaser is not relying upon
any information relating to BAB Holdings supplied by Keyway, whether orally or
in writing.
6. Notwithstanding anything to the contrary contained herein, the Warrant
may be exercised by Keyway only to the extent that, after giving effect to the
shares of Common Stock issuable pursuant to the exercise of the Warrant, the
total number of shares of Common Stock deemed beneficially owned by Keyway,
together with all shares of Common Stock deemed beneficially owned by Keyway's
"affiliates" (as defined in Rule 144 promulgated pursuant to the Securities
Act of 1933, as amended) that would be aggregated for purposes of determining
whether a group under Section 13(d) of the Securities Exchange Act of 1934, as
amended, exists, would exceed 4.99% of the total issued and outstanding shares
of Common Stock, provided that Keyway shall have the right to waive this
restriction, in whole or in part upon 61 days' prior notice to Purchaser. The
delivery of a Warrant Exercise Form in the form attached to the Warrant shall
be deemed a representation by Keyway that it is in compliance with this
Section 6. A transferee of the Warrant shall not be bound by this provision
unless it expressly agrees to be so bound. The term "deemed beneficially
owned" as used in this Section 6 shall exclude shares that might otherwise be
deemed beneficially owned by reason of the convertibility of the Warrant.
7. The parties to this Agreement hereby agree to hold the specific terms
of the transaction in strictest confidence and not to disclose said terms to
any person, company, or organization outside of the respective parties and
their officers, directors, agents, employees and members, unless said
disclosure is required by rule, regulation or order of any competent judicial
or regulatory agency having authority to require such disclosure. This
confidentiality requirement applies to the parties and all officers,
directors, agents, employees and members of the parties.
8. This Agreement shall be binding upon, and inure to the benefit of, the
parties hereto and their respective successors and assigns. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Illinois. This Agreement may be executed in any number of counterparts with
the same effect as if all parties hereto had signed the same document. All
counterparts shall be construed together and shall constitute one instrument.
This Agreement, along with the exhibits hereto, constitutes the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining thereto,
including, without limitation, the letter agreement between Keyway and Michael
W. Evans and Michael K. Murtaugh dated September 8, 1999, as amended.
If this Agreement correctly sets forth our mutual agreement, please so
indicate by signing two (2) duplicate originals of this Agreement and
returning them as aforesaid.
Very truly yours,
HOLDINGS INVESTMENTS, LLC,
a Delaware limited liability company
By:/s/ MICHAEL W. EVANS
----------------------------
Michael W. Evans, Manager
By:/s/ MICHAEL K. MURTAUGH
----------------------------
Michael K. Murtaugh, Manager
Accepted and agreed to this
21st day of October, 1999:
KEYWAY INVESTMENTS LIMITED
By:/s/ MARTIN PETERS
---------------------
Title: Director
EHRENREICH EILENBERG KRAUSE & ZIVIAN LLP,
As Escrow Agent
By: /s/ ADAM EILENBERG
-------------------
Partner
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED,
TRANSFERRED OR OTHERWISE DISPOSED OF, UNLESS REGISTERED PURSUANT TO THE
PROVISIONS OF THE SECURITIES ACT OR AN OPINION OF COUNSEL IS OBTAINED STATING
THAT SUCH DISPOSITION IS IN COMPLIANCE WITH AN AVAILABLE EXEMPTION FROM SUCH
REGISTRATION.
Dated as of October 21, 1999
HOLDINGS INVESTMENTS, LLC
(a Delaware limited liability company)
Warrant to Purchase Shares of Common Stock of BAB Holdings, Inc.
----------------------------------------------------------------
No. WP-_____
FOR VALUE RECEIVED, HOLDINGS INVESTMENTS, LLC, a Delaware limited liability
company ("Holdings LLC"), hereby certifies that Keyway Investments Limited or
registered assigns (the "Holder") is entitled, subject to the provisions of
this Warrant, to purchase from Holdings LLC 1,718,832 fully paid and non-
assessable shares (the "Warrant Shares") of common stock, no par value (the
"Common Stock"), of BAB Holdings, Inc., an Illinois corporation (the
"Company"), for an exercise price (the "Exercise Price") of $.01 per share.
The number of shares of Common Stock to be received upon the exercise of this
Warrant and the Exercise Price may be adjusted from time to time as
hereinafter set forth. The shares of Common Stock deliverable upon such
exercise, and as adjusted from time to time, are hereinafter referred to as
"Warrant Stock." The term "Other Securities" means any other equity or debt
securities that may be issued by the Company in addition thereto or in
substitution for the Warrant Stock. The term "Company" means and includes BAB
Holdings, Inc. as well as (i) any immediate or more remote successor
corporation resulting from the merger or consolidation of such corporation or
the sale of all, or substantially all, of the assets of the Company(or any
immediate or more remote successor corporation of such corporation) with
another corporation, or (ii) any corporation to which such corporation (or any
immediate or more remote successor corporation of such corporation) has
transferred its property or assets as an entirety or substantially as an
entirety.
Upon receipt by Holdings LLC of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Warrant, if mutilated, Holdings LLC
shall execute and deliver a new Warrant of like tenor and date. Any such new
Warrant executed and delivered shall constitute an additional contractual
obligation on the part of Holdings LLC, whether or not this Warrant so lost,
stolen, destroyed or mutilated shall be at any time enforceable by anyone.
The Holder agrees with Holdings LLC that this Warrant is issued, and all the
rights hereunder shall be held subject to, all of the conditions, limitations
and provisions set forth herein.
1. Exercise of Warrant.
(a) Subject to Section 1(b) below, this Warrant may be exercised in whole
or in part at any time from and after November 1, 2001 and expiring on
November 1, 2003 (the "Expiration Date"), by presentation and surrender of
this Warrant to Holdings LLC at its principal office, with the Warrant
Exercise Form attached hereto duly executed and, unless the Holder utilizes
the cashless exercise option pursuant to Section 3 below, accompanied by
payment (either in cash or by certified or official bank check or wire
transfer, each payable to the order of Holdings LLC) of the Exercise Price for
the number of shares specified in such form and instruments of transfer, if
appropriate, duly executed by the Holder or his or her duly authorized
attorney. If this Warrant should be exercised in part only, Holdings LLC
shall, upon surrender of this Warrant for cancellation, execute and deliver a
new Warrant evidencing the rights of the Holder thereof to purchase the
balance of the shares purchasable hereunder. Upon receipt by Holdings LLC of
this Warrant, together with the Exercise Price, if applicable, at its office,
or by the stock transfer agent of Holdings LLC at its office, in proper form
for exercise, the Holder shall be deemed to be the holder of record of the
shares of Common Stock issuable upon such exercise. Holdings LLC shall pay
any and all documentary stamp or similar issue taxes payable in respect of the
issue or delivery of shares of Common Stock on exercise of this Warrant,
provided, that Holdings LLC shall not be required to pay any tax that may be
payable in respect of any transfer that may be involved in the issuance and
delivery of any certificate in a name other than that of the Holder of the
Warrant exercised.
(b) Notwithstanding the foregoing, this Warrant may be exercised, in whole
or in part, at any time upon the occurrence of the sale or merger of the
Company (including without limitation, the issuance by the Company of a
sufficiently large number of shares of Common Stock or other voting securities
or securities convertible into Common Stock to result in a change in control
of the Company) or the sale or other disposition of all, or substantially all,
of the Company's assets or in the event that the Company is unable, or admits
in writing its inability, to pay its debts, or has made any assignment for the
benefit of creditors, or the Company has commenced, or there has been
commenced against the Company, any case, proceeding, or other action seeking
to have an order for relief entered with respect to the Company, or to
adjudicate the Company as a bankrupt or insolvent and, in the case of
commencement against the Company, the Company shall indicate its approval
thereof or consent thereto or otherwise shall remain undismissed for a period
of sixty (60) days.
2. Fractional Shares.
No fractional shares or scrip representing fractional shares shall be issued
upon the exercise of this Warrant, but Holdings LLC shall pay the Holder an
amount equal to the fair market value of such fractional share of Common Stock
in lieu of each fraction of a share otherwise called for upon any exercise of
this Warrant. For purposes of this Warrant, the fair market value of a share
of Common Stock (the "Fair Market Value") shall be determined as follows:
(a) If the Common Stock is listed on a National Securities Exchange or
admitted to unlisted trading privileges on such exchange or listed for trading
on the NASDAQ system, the current market value shall be the last reported sale
price of the Common Stock on such exchange or system on the last business day
prior to the date of exercise of this Warrant or if no such sale is made on
such day, the average of the closing bid and asked prices for such day on such
exchange or system; or
(b) If the Common Stock is not so listed or admitted to unlisted trading
privileges, the current market value shall be the mean of the last reported
bid and asked prices reported by the National Quotation Bureau, Inc. on the
last business day prior to the date of the exercise of this Warrant; or
(c) If the Common Stock is not so listed or admitted to unlisted trading
privileges and bid and asked prices are not so reported, the current market
value shall be an amount, not less than book value thereof as at the end of
the most recent fiscal year of the Company ending prior to the date of the
exercise of the Warrant, determined in such reasonable manner as may be
prescribed by the managers of Holdings LLC.
3. Cashless Exercise.
In addition to the exercise of all or a portion of this Warrant by the payment
of the Exercise Price in cash or check as set forth in Section 1 above, and in
lieu of any such payment, the Holder or any assignee of Holder has the right
to exercise this Warrant, in full or in part, by surrendering this Warrant and
returning a duly executed Warrant Exercise Form to Holdings LLC, together with
a written notice that the Holder is exercising its rights to cashless exercise
pursuant to this Section 3, and the number of Warrant Shares which it will
receive will equal the product of (x) the number of Warrant Shares as to which
this Warrant is being exercised multiplied by (y) a fraction, the numerator of
which is the Fair Market Value, as determined in accordance with Section 2
herein, less the Exercise Price then in effect and the denominator of which is
the Fair Market Value.
4. Exchange, Transfer, Assignment or Loss of Warrant.
This Warrant is exchangeable, without expense, at the option of the Holder,
upon presentation and surrender hereof to Holdings LLC, for other Warrants of
different denominations, entitling the Holder or Holders thereof to purchase
in the aggregate the same number of shares of Common Stock purchasable
hereunder. Upon surrender of this Warrant to Holdings LLC, with the
Assignment Form annexed hereto duly executed and funds sufficient to pay any
transfer tax, Holdings LLC shall, without charge, execute and deliver a new
Warrant in the name of the assignee named in such instrument of assignment and
this Warrant shall promptly be cancelled. This Warrant may be divided or
combined with other Warrants that carry the same rights upon presentation
hereof at the office of Holdings LLC or at the office of its stock transfer
agent, if any, together with a written notice specifying the names and
denominations in which new Warrants are to be issued and signed by the Holder
hereof.
5. Rights of the Holder.
The Holder shall not, by virtue hereof, be entitled to any rights of a
shareholder in the Company or Holdings LLC, either at law or in equity, and
the rights of the Holder are limited to those expressed in this Warrant.
6. Anti-Dilution Provisions.
6.1. Adjustment for Recapitalization.
If the Company shall at any time subdivide its outstanding shares of Common
Stock (or Other Securities at the time receivable upon the exercise of the
Warrant) by recapitalization, reclassification or split-up thereof, or if the
Company shall declare a stock dividend or distribute shares of Common Stock to
its stockholders, the number of shares of Common Stock subject to this Warrant
immediately prior to such subdivision shall be proportionately increased and
the Exercise Price shall be proportionately decreased, and if the Company
shall at any time combine the outstanding shares of Common Stock by
recapitalization, reclassification or combination thereof, the number of
shares of Common Stock or Other Securities subject to this Warrant immediately
prior to such combination shall be proportionately decreased and the Exercise
Price shall be proportionately increased. Any such adjustments pursuant to
this Section 6.1 shall be effective at the close of business on the effective
date of such subdivision or combination or if any adjustment is the result of
a stock dividend or distribution then the effective date for such adjustment
based thereon shall be the record date therefor.
6.2. Adjustment for Reorganization, Consolidation, Merger, Etc.
In case of any reorganization of the Company (or any other corporation, the
securities of which are at the time receivable on the exercise of this
Warrant) or in the event the Company shall consolidate with or merge into
another corporation or convey all or substantially all of its assets to
another corporation, then, and in each such case, the Holder of this Warrant
upon the exercise thereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation, merger or conveyance,
shall be entitled to receive, in lieu of the securities and property
receivable upon the exercise of this Warrant prior to such consummation, the
securities or property to which such Holder would have been entitled upon such
consummation if such Holder had exercised this Warrant immediately prior
thereto; in each such case, the terms of this Warrant shall be applicable to
the securities or property receivable upon the exercise of this Warrant after
such consummation.
6.3. Certificate as to Adjustments.
In each case of an adjustment in the number of shares of Warrant Stock or
Other Securities receivable on the exercise of this Warrant, Holdings LLC at
its expense will promptly compute such adjustment in accordance with the terms
of this Warrant and prepare a certificate executed by an executive officer of
Holdings LLC setting forth such adjustment and showing in detail the facts
upon which such adjustment is based. Holdings LLC will forthwith cause to be
delivered a copy of each such certificate to the Holder.
7. Option of Holdings LLC to Retire Warrant.
At the option of Holdings LLC (the "Call Option") exercisable by service of
written notice upon the Holder at any time or from time to time prior to May
31, 2000 (the "Call Expiration Date"), Holdings LLC may retire this Warrant,
in whole or in part, and cause the Warrant or the applicable portion of same
to be cancelled, by making a payment to the Holder in an amount equal to
$0.20363 per share of Warrant Stock (as such price shall be adjusted to take
into account adjustments in the number of shares of Warrant Stock), whereupon
the Holder shall deliver the original Warrant to Holdings LLC for
cancellation. If such right of Holdings LLC shall be exercised for less than
all of the shares of Warrant Stock, Holdings LLC shall, upon surrender of this
Warrant for cancellation, execute and deliver to the Holder a new Warrant
evidencing the rights of the Holder thereof to purchase the balance of the
shares of Warrant Stock purchasable hereunder, subject to Holdings LLC's right
to further exercise the Call Option prior to the Call Expiration Date.
8. Transfer to Comply with the Securities Act.
Notwithstanding any other provision contained herein, this Warrant and any
Warrant Stock or Other Securities may not be sold, transferred, pledged,
hypothecated or otherwise disposed of except as follows: (a) to a person who,
in the opinion of counsel to Holdings LLC, is a person to whom this Warrant or
the Warrant Stock or Other Securities may legally be transferred without
registration and without the delivery of a current prospectus under the
Securities Act with respect thereto and then only against receipt of an
agreement of such person to comply with the provisions of this Section 8 with
respect to any resale or other disposition of such securities; or (b) to any
person upon delivery of a prospectus then meeting the requirements of the
Securities Act relating to such securities and the offering thereof for such
sale or disposition, and thereafter to all successive assignees.
9. Legend.
Unless the shares of Warrant Stock or Other Securities have been registered
under the Securities Act, upon exercise of any of the Warrants and the
issuance of any of the shares of Warrant Stock or Other Securities, all
certificates representing such securities shall bear on the face thereof
substantially the following legend:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may
not be sold, offered for sale, assigned, transferred or otherwise
disposed of, unless registered pursuant to the provisions of that
Act or unless an opinion of counsel to the Corporation is obtained
stating that such disposition is in compliance with an available
exemption from such registration."
10. Notices.
All notices required hereunder shall be in writing and shall be deemed given
when faxed (with confirmation of receipt), delivered personally or by
overnight courier proffering a receipt against delivery or within two days
after mailing when mailed by certified or registered mail, return receipt
requested, to Holdings LLC at its principal office, or to the Holder at the
address set forth on the record books of Holdings LLC, or at such other
address of which Holdings LLC or the Holder has been advised by notice
hereunder.
11. Applicable Law.
The Warrant is issued under and shall for all purposes be governed by and
construed in accordance with the laws of the State of Illinois, without giving
effect to the choice of law rules thereof.
IN WITNESS HEREOF, Holdings LLC has caused this Warrant to be signed on its
behalf, in its corporate name, by its duly authorized officer, all as of the
day and year first above written.
HOLDINGS INVESTMENTS, LLC,
a Delaware limited liability company
By:/s/ MICHAEL W. EVANS
----------------------------
Michael W. Evans, Manager
By:/s/ MICHAEL K. MURTAUGH
----------------------------
Michael K. Murtaugh, Manager
WARRANT EXERCISE FORM
The undersigned hereby irrevocably elects to exercise the within Warrant to
the extent of purchasing ____ shares of Common Stock of BAB HOLDINGS, INC., an
Illinois corporation, and hereby either (i) exercises by cashless exercise or
(ii) makes payment of $____________ in payment therefor.
----------------------------
Name of entity
By: -----------------------
Name:
Title:
--------------------------
Signature, if jointly held
------------------------
Date
INSTRUCTIONS FOR ISSUANCE OF STOCK
(if other than to the registered holder of the within Warrant)
Name______________________________________________
(Please typewrite or print in block letters)
Address___________________________________________
Social Security or
Taxpayer Identification Number ____________________
ASSIGNMENT FORM
FOR VALUE RECEIVED,____________________________
hereby sells, assigns and transfers unto
Name ___________________________________________
(Please typewrite or print in block letters)
the right to purchase Common Stock of BAB HOLDINGS, INC., an Illinois
corporation, represented by this Warrant to the extent of shares as to which
such right is exercisable and does hereby irrevocably constitute and appoint
Attorney, to transfer the same on the books of BAB HOLDINGS, INC. with full
power of substitution in the premises.
DATED: ____________, _____.
_____________________________
Signature
_____________________________
Signature, if jointly held
