BUTTERWINGS ENTERTAINMENT GROUP, INC.
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY
WARRANT AGENT
WARRANT AGREEMENT
Dated as of __________, 1997
TABLE OF CONTENTS
Section Page
------- ----
ss.1. Appointment of Warrant Agent......................................... 2
ss.2. Form of Warrant...................................................... 2
ss.3. Countersignature and Registration.................................... 2
ss.4. Transfers and Exchanges.............................................. 2
ss.5. Exercise of Warrants................................................. 3
ss.6. Mutilated or Missing Warrants........................................ 3
ss.7. Reservation and Registration of Common Stock......................... 4
ss.8. Warrant Price; Adjustments........................................... 4
ss.9. No Fractional Interests.............................................. 8
ss.10. Notice to Warrantholders............................................. 9
ss.11. Disposition of Proceeds on Exercise of Warrants...................... 10
ss.12. Redemption of Warrants............................................... 10
ss.13. Merger or Consolidation or Change of Name of Warrant Agent........... 11
ss.14. Duties of Warrant Agent.............................................. 11
ss.15. Change of Warrant Agent.............................................. 13
ss.16. Identity of Transfer Agent........................................... 13
ss.17. Notices.............................................................. 13
ss.18. Supplements and Amendments........................................... 14
ss.19. Successors........................................................... 14
ss.20. Merger or Consolidation of the Company............................... 14
ss.21. Texas Contract....................................................... 14
ss.22. Benefits of This Agreement........................................... 14
ss.23. Counterparts......................................................... 14
WARRANT AGREEMENT, dated as of __________, 1997, between Butterwings
Entertainment Group, Inc. , an Illinois Corporation (hereinafter called the
"Company"), and American Stock Transfer & Trust company, as warrant agent
(hereinafter called the "Warrant Agent");
WHEREAS, the Company proposes to issue 1,091,000 Redeemable Series A
Common Stock Purchase Warrants (hereinafter called the "Series A Warrants"),
entitling the holders thereof to purchase one share of Common Stock, $.01 par
value (hereinafter called the "Common Stock") for each Warrant, in connection
with the proposed issuance by the Company of 1,091,000 Units, each Unit
consisting of one share of Common Stock and one Warrant, and the Company also
proposes to issue up to 163,650 Warrants underlying the Underwriters'
over-allotment option and 109,100 Warrants underlying a warrant to purchase
Units to be granted to the Representative of the Underwriters; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
registration, transfer, exchange and exercise of Warrants;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
SS.1. APPOINTMENT OF WARRANT AGENT. The Company hereby appoints the Warrant
Agent to act as agent for the Company in accordance with the instructions
hereinafter in this Agreement set forth, and the Warrant Agent hereby accepts
such appointment.
SS.2. FORM OF WARRANT. The text of the Warrant and of the form of election
to purchase shares to be printed on the reverse thereof shall be substantially
as set forth in Exhibit A attached hereto. The Warrant Price to purchase one
share of Common Stock shall be as provided and defined inss.8. The Warrants
shall be executed on behalf of the Company by the manual or facsimile signature
of the present or any future Chairman of the Board or President or Vice
President of the Company, under its corporate seal, affixed or in facsimile,
attested by the manual or facsimile signature of the present or any future
Secretary or Assistant Secretary of the Company.
Warrants shall be dated as of the date of issuance thereof by the Warrant
Agent either upon initial issuance or upon transfer or exchange.
SS.3. COUNTERSIGNATURE AND REGISTRATION. The Warrant Agent shall maintain
books for the transfer and registration of the Warrants. The Warrants shall be
countersigned by the Warrant Agent (or by any successor to the Warrant Agent
then acting as warrant agent under this Agreement) and shall not be valid for
any purpose unless so countersigned. Warrants may be so countersigned, however,
by the Warrant Agent (or by its successor as warrant agent) and be delivered by
the Warrant Agent, notwithstanding that the persons whose manual or facsimile
signatures appear thereon as proper officers of the Company shall have ceased to
be such officers at the time of such countersignature or delivery.
SS.4. TRANSFERS AND EXCHANGES. The Warrant Agent shall transfer, from time
to time after the sale of the Units, any outstanding Warrants upon the books to
be maintained by the Warrant Agent for that purpose, upon surrender thereof for
transfer properly endorsed or accompanied by appropriate instructions for
transfer. Upon any such transfer, a new Warrant shall be issued to the
transferee and the surrendered Warrant shall be cancelled by the Warrant Agent.
Warrants so cancelled shall be delivered by the Warrant Agent to the Company
from time to time. The Warrants may be exchanged at the option of the holder
thereof, when surrendered at the office of the Warrant Agent, for another
Warrant, or other Warrants of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number of shares of
Common Stock. The Warrant Agent is hereby irrevocably authorized to countersign
in accordance with ss.3 of this Agreement the new Warrants required pursuant to
the provisions of this Section, and the Company, whenever required by the
Warrant Agent, will supply the Warrant Agent with Warrants duly executed on
behalf of the Company for such purpose.
SS.5. EXERCISE OF WARRANTS. Subject to the provisions of this Agreement,
each registered holder of Warrants shall have the right, which may be exercised
as in such Warrants expressed, to purchase from the Company (and the Company
shall issue and sell to such registered holder of Warrants) the number of fully
paid and nonassessable shares of Common Stock specified in such Warrants, upon
surrender of such Warrants to the Company at the office of the Warrant Agent,
with the form of election to purchase on the reverse thereof duly filled in and
signed, and upon payment to the Warrant Agent for the account of the Company of
the Warrant Price for the number of shares of Common Stock in respect of which
such Warrants are then exercised. Payment of such Warrant Price may be made in
cash, or by certified or official bank check, payable in United States dollars,
to the order of the Warrant Agent. No adjustment shall be made for any dividends
on any shares of Common Stock issuable upon exercise of a Warrant. Upon such
surrender of Warrants, and payment of the Warrant Price as aforesaid, the
Company shall issue and cause to be delivered with all reasonable dispatch to or
upon the written order of the registered holder of such Warrants and in such
name or names as such registered holder may designate, a certificate or
certificates for the number of full shares of Common Stock so purchased upon the
exercise of such Warrants. Such certificate or certificates shall be deemed to
have been issued and any person so designated to be named therein shall be
deemed to have become a holder of record of such shares as of the date of the
surrender of such Warrants and payment of the Warrant Price as aforesaid;
provided, however, that if, at the date of surrender of such Warrants and
payment of the Warrant Price, the transfer books for the Common Stock or other
class of stock purchasable upon the exercise of such Warrants shall be closed,
the certificates for the shares in respect of which such Warrants are then
exercised shall be issuable as of the date on which such books shall next be
opened and until such date the Company shall be under no duty to deliver any
certificate for such shares; provided further, however, that the transfer books
aforesaid, unless otherwise required by law, shall not be closed at any one time
for a period longer than 20 days. The rights of purchase represented by the
Warrants shall be exercisable, at the election of the registered holders
thereof, either as an entirety or from time to time for part only of the shares
specified therein, and in the event that any Warrant is exercised in respect of
less than all of the shares specified therein, a new Warrant or Warrants will be
issued for the remaining number of shares specified in the Warrant so
surrendered, and the Warrant Agent is hereby irrevocably authorized to
countersign and to deliver the required new Warrants pursuant to the provisions
of this Section and ofss.3 of this Agreement and the Company, whenever required
by the Warrant Agent, will supply the Warrant Agent with Warrants duly executed
on behalf of the Company for such purpose.
SS.6. MUTILATED OR MISSING WARRANTS. In case any of the Warrants shall be
mutilated, lost, stolen or destroyed, the Company will issue and the Warrant
Agent will countersign and deliver in exchange and substitution for and upon
cancellation of the mutilated Warrant, or in lieu of and substitution for the
Warrant lost, stolen or destroyed, a new Warrant of like tenor and representing
an equivalent right or interest; but only upon receipt of evidence satisfactory
to the Company and the Warrant Agent of such loss, theft or destruction of such
Warrant and indemnity, if requested, also satisfactory to them. Applicants for
such substitute Warrants shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company or the Warrant
Agent may prescribe.
SS.7. RESERVATION AND REGISTRATION OF COMMON STOCK.
A. There have been reserved, and the Company shall at all times keep
reserved, out of the authorized and unissued shares of Common Stock, a number of
shares sufficient to provide for the exercise of the rights of purchase
represented by the Warrants, and the Transfer Agent for the Common Stock and
every subsequent Transfer Agent for any shares of the Company's capital stock
issuable upon the exercise of any of the rights of purchase aforesaid are hereby
irrevocably authorized and directed at all times to reserve such number of
authorized and unissued shares as shall be requisite for such purpose. The
Company will keep a copy of this Agreement on file with the Transfer Agent for
the Common Stock and with every subsequent Transfer Agent for any shares of the
Company's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrants. The Warrant Agent is hereby irrevocably authorized
to requisition from time to time such Transfer Agent for stock certificates
required to honor outstanding Warrants. The Company will supply such Transfer
Agents with duly executed stock certificates for such purpose and will itself
provide or otherwise make available any cash which may be issuable as provided
in ss.9 of this Agreement. All Warrants surrendered in the exercise of the
rights thereby evidenced shall be cancelled by the Warrant Agent and shall
thereafter be delivered to the Company, and such cancelled Warrants shall
constitute sufficient evidence of the number of shares of stock which have been
issued upon the exercise of such Warrants.
B. The Company represents that it has registered under the Securities Act
of 1933 the shares of Common Stock issuable upon exercise of the Warrants and
will use its best efforts to maintain the effectiveness of such registration by
post-effective amendment during the entire period in which the Warrants are
exercisable, and that it will use its best efforts to qualify such Common Stock
for sale under the securities laws of such states of the United States as may be
necessary to permit the exercise of the Warrants in the states in which the
Units are initially qualified and to maintain such qualifications during the
entire period in which the Warrants are exercisable.
SS.8. WARRANT PRICE; ADJUSTMENTS.
A. The price at which Common Stock shall be purchasable upon exercise of
Warrants at any time after the Common Stock and Warrants become separately
tradable until __________, 2002 (hereinafter called the "Warrant Price") shall
be $_____ per share of Common Stock or, if adjusted as provided in this Section,
shall be such price as so adjusted.
B. The Warrant Price shall be subject to adjustment from time to
time as follows:
(1) Except as hereinafter provided, in case the Company shall at any
time or from time to time after the date hereof issue any additional
shares of Common Stock for a consideration per share less than the Warrant
Price in effect immediately prior to the issuance of such additional
shares, or without consideration, then, upon each such issuance, the
Warrant Price in effect immediately prior to the issuance of such
additional shares shall forthwith be reduced to a price (calculated to the
nearest full cent) determined by dividing:
(a) An amount equal to (i) the total number of shares of
Common Stock outstanding immediately prior to such issuance
multiplied by the Warrant Price in effect immediately prior to such
issuance, plus (ii) the consideration, if any, received by the
Company upon such issuance, by
(b) The total number of shares of Common Stock outstanding
immediately after the issuance of such additional shares.
(2) The Company shall not be required to make any such adjustment of
the Warrant Price in accordance with the foregoing if the amount of such
adjustment shall be less than $.25 (adjustment will be made when
cumulative adjustment equals or exceeds $0.25) but in such case the
Company shall maintain a cumulative record of the Warrant Price as it
would have been in the absence of this provision (the "Constructive
Warrant Price"), and for the purpose of computing a new Warrant Price
after the next subsequent issuance of additional shares (but not for the
purpose of determining whether an adjustment thereof is required under the
terms of this paragraph) the constructive Warrant Price shall be deemed to
be the Warrant Price in effect immediately prior to such issuance.
(3) For the purpose of this ss.8 the following provisions shall also
be applicable:
(a) In the case of the issuance of additional shares of Common
Stock for cash, the consideration received by the Company therefor
shall be deemed to be the net cash proceeds received by the Company
for such shares before deducting any commissions or other expenses
paid or incurred by the Company for any underwriting of, or
otherwise in connection with, the issuance of such shares.
(b) In case of the issuance (otherwise than upon conversion or
exchange of shares of Common Stock) of additional shares of Common
Stock for a consideration other than cash or a consideration a part
of which shall be other than cash, the amount of the consideration
other than cash received by the Company for such shares shall be
deemed to be the value of such consideration as determined in good
faith by the Board of Directors of the Company, as of the date of
the adoption of the resolution of said Board, providing for the
issuance of such shares for consideration other than cash or for
consideration a part of which shall be other than cash, such fair
value to include goodwill and other intangibles to the extent
determined in good faith by the Board.
(c) In case of the issuance by the Company after the date
hereof of any security (other than the Warrants) that is convertible
into shares of Common Stock or of any warrants, rights or options to
purchase shares of Common Stock (except the options and warrants
referred to in subsection H of this ss.8), (i) the Company shall be
deemed (as provided in subparagraph (e) below) to have issued the
maximum number of shares of Common Stock deliverable upon the
exercise of such conversion privileges or warrants, rights or
options, and (ii) the consideration therefor shall be deemed to be
the consideration received by the Company for such convertible
securities or for such warrants, rights or options, as the case may
be, before deducting therefrom any expenses or commissions incurred
or paid by the Company for any underwriting of, or otherwise in
connection with, the issuance of such convertible security or
warrants, rights or options, plus (A) the minimum consideration or
adjustment payment to be received by the Company in connection with
such conversion, or (B) the minimum price at which shares of Common
Stock are to be delivered upon exercise of such warrants, rights or
options or, if no minimum price is specified and such shares are to
be delivered at an option price related to the market value of the
subject shares, an option price bearing the same relation to the
market value of the subject shares at the time such warrants, rights
or options were granted; provided that as to such options such
further adjustment as shall be necessary on the basis of the actual
option price at the time of exercise shall be made at such time if
the actual option price is less than the aforesaid assumed option
price. No further adjustment of the Warrant Price shall be made as a
result of the actual issuance of the shares of Common Stock referred
to in this subparagraph (c). On the expiration of such warrants,
rights or options, or the termination of such right to convert, the
Warrant Price shall be readjusted to such Warrant Price as would
have pertained had the adjustments made upon the issuance of such
warrants, rights, options or convertible securities been made upon
the basis of the delivery of only the number of shares of Common
Stock actually delivered upon the exercise of such warrants, rights
or options or upon the conversion of such securities.
(d) For the purposes hereof, any additional shares of Common
Stock issued as a stock dividend shall be deemed to have been issued
for no consideration.
(e) The number of shares of Common Stock at any time
outstanding shall include the aggregate number of shares deliverable
in respect of the convertible securities, rights and options
referred to in subparagraph (c) of this paragraph; provided that
with respect to shares referred to in clause (i) of subparagraph
(c), to the extent that such warrants, options, rights or conversion
privileges are not exercised, such shares shall be deemed to be
outstanding only until the expiration dates of the warrants, rights,
options or conversion privileges or the prior cancellation thereof.
C. In case the Company shall at any time subdivide its outstanding shares
of Common Stock into a greater number of shares, the Warrant Price in effect
immediately prior to such subdivision shall be proportionately reduced and, in
case the outstanding shares of the Common Stock of the Company shall be combined
into a smaller number of shares, the Warrant Price in effect immediately prior
to such combination shall be proportionately increased.
D. Upon each adjustment of the Warrant Price pursuant to the provisions of
this ss.8, the number of shares issuable upon the exercise of each Warrant shall
be adjusted by multiplying the Warrant Price in effect prior to the adjustment
by the number of shares of Common Stock covered by the Warrant and dividing the
product so obtained by the adjusted Warrant Price.
E. Except upon consolidation or reclassification of the shares of Common
Stock of the Company as provided for in subsection (C) hereof and except for
readjustment of the Warrant Price upon expiration of warrants, rights or options
as provided for in subparagraph (c) of paragraph 3 of subsection (B) hereof, the
Warrant Price in effect at any time may not be adjusted upward or increased in
any manner whatsoever.
F. Irrespective of any adjustment or change in the Warrant Price or the
number of shares of Common Stock actually purchasable under the several
Warrants, the Warrants theretofore and thereafter issued may continue to express
the Warrant Price per share and the number of shares purchasable thereunder as
the Warrant Price per share and the number of shares purchasable were expressed
in the Warrants when initially issued.
G. If any capital reorganization or reclassification of the capital stock
of the Company (other than a distribution of stock in accordance with ss.10(B))
or consolidation or merger of the Company with another corporation or the sale
of all or substantially all of its assets to another corporation shall be
effected, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provision shall be made
whereby the holder of each Warrant then outstanding shall thereafter have the
right to purchase and receive upon the basis and upon the terms and conditions
specified herein and in the Warrants and in lieu of the shares of the Common
Stock of the Company immediately theretofore purchasable and receivable upon the
exercise of the rights represented by each such Warrant, such shares of stock,
securities or assets as may be issued or payable with respect to or in exchange
for a number of outstanding shares of such Common Stock equal to the number of
shares of such Common stock immediately theretofore purchasable and receivable
upon the exercise of the rights represented by each such Warrant had such
reorganization, reclassification, consolidation, merger or sale not taken place,
and in any such case appropriate provisions shall be made with respect to the
rights and interest of the holder of each Warrant then outstanding to the end
that the provisions thereof (including without limitation provisions for
adjustment of the Warrant Price and of the number of shares purchasable upon the
exercise of each Warrant then outstanding) shall thereafter be applicable as
nearly as may be in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise of each Warrant.
H. No adjustment of the Warrant Price shall be made in connection with the
issuance or sale of shares of Common Stock issuable pursuant to currently
outstanding options and warrants granted to officers, directors, employees,
advisory directors, or affiliates of the Company.
I. Whenever the Warrant Price is adjusted as herein provided, the Company
shall (a) forthwith file with the Warrant Agent a certificate signed by the
Chairman of the Board or the President or a Vice President of the Company and by
the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Company, showing in detail the facts requiring such adjustment
and the Warrant Price and the number of shares of Common Stock purchasable upon
exercise of the Warrants after such adjustment and (b) cause a notice stating
that such adjustment has been effected and stating the adjusted Warrant Price
and the number of shares of Common Stock purchasable upon exercise of the
Warrants to be published at least once a week for two consecutive weeks in a
newspaper of general circulation in Dallas, Texas and in New York, New York. The
Company, at its option, may cause a copy of such notice to be sent by first
class mail, postage prepaid, to each registered holder of Warrants at his
address appearing on the Warrant register. The Warrant Agent shall have no duty
with respect to any such certificate filed with it except to keep the same on
file and available for inspection by holders of Warrants during reasonable
business hours. The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of a Warrant to determine whether any facts exist
which may require any adjustment of the Warrant Price, or with respect to the
nature or extent of any adjustment of the Warrant Price when made, or with
respect to the method employed in making such adjustment.
J. The Company may retain a firm of independent certified public
accountants of recognized standing (which may be the firm that regularly
examines the financial statements of the Company) selected by the Board of
Directors of the Company or the Executive Committee of said Board and approved
by the Warrant Agent, to make any computation required under this ss.8, and a
certificate signed by such firm shall be conclusive evidence of the correctness
of any computation made under this ss.8.
K. In case at any time conditions shall arise by reason of action taken by
the Company which, in the opinion of the Board of Directors of the Company, are
not adequately covered by the other provisions of this Agreement and which might
materially and adversely affect the rights of the holders of the Warrants, or in
case at any time any such conditions are expected to arise by reason of any
action contemplated by the Company, the Board of Directors of the Company shall
appoint a firm of independent certified public accountants of recognized
standing (which may be the firm that regularly examines the financial statements
of the Company), who shall give their opinion as to the adjustment, if any (not
inconsistent with the standards established in this ss.8), of the Warrant Price
and the number of shares of Common Stock purchasable pursuant hereto (including,
if necessary, any adjustment as to the property which may be purchasable in lieu
thereof upon exercise of the Warrants) which is, or would be, required to
preserve without dilution the rights of the holders of the Warrants. The Board
of Directors of the Company shall make the adjustment recommended forthwith upon
the receipt of such opinion or the taking of any such action contemplated, as
the case may be; provided, however, that no adjustment of the Warrant Price
shall be made which in the opinion of the accountant or firm of accountants
giving the aforesaid opinion would result in an increase of the Warrant Price to
more than the Warrant Price then in effect except as otherwise provided in
subsection E of this ss.8.
SS.9. NO FRACTIONAL INTERESTS. The Company shall not be required to issue
fractions of shares of Common Stock on the exercise of Warrants. If any fraction
of a share of Common Stock would, except for the provisions of this Section, be
issuable on the exercise of any Warrant (or specified portions thereof), the
Company shall purchase such fraction for an amount in cash equal to the current
value of such fraction (a) computed, if the Common Stock shall be listed or
admitted to unlisted trading privileges on any national or regional securities
exchange, on the basis of the last reported sale price of the Common Stock on
such exchange on the last business day prior to the date of exercise upon which
such a sale shall have been effected (or, if the Common Stock shall be listed or
admitted to unlisted trading privileges on more than one such exchange, on the
basis of such price on the exchange designated from time to time for such
purpose by the Board of Directors of the Company) or (b) computed, if the Common
Stock shall not be listed or admitted to unlisted trading privileges, on the
basis of the average of the high and low bid prices of the Common Stock in the
Nasdaq Stock Market, on the last business day prior to the date of exercise.
SS.10. NOTICE TO WARRANTHOLDERS.
A. Nothing contained in this Agreement or in any of the Warrants shall be
construed as conferring upon the holders thereof the right to vote or to consent
or to receive notice as stockholders in respect of the meetings of stockholders
for the election of directors of the Company or any other matters, or any rights
whatsoever as stockholders of the Company; provided, however, that in the event
that a meeting of stockholders shall be called to consider and take action on a
proposal for the voluntary dissolution of the Company, other than in connection
with a consolidation, merger or sale of all, or substantially all, of its
property, assets, business and goodwill as an entirety, then and in that event
the Company shall cause a notice thereof to be published at least once a week
for two consecutive weeks in a newspaper of general circulation in Dallas, Texas
and New York, New York, such publication to be completed at least 20 days prior
to the date fixed as a record date or the date of closing the transfer books for
the determination of the stock holders entitled to vote at such meeting. The
Company shall also cause a copy of such notice to be sent by first class mail,
postage prepaid, at least 20 days prior to said date fixed as a record date or
said date of closing the transfer books, to each registered holder of Warrants
at his address appearing on the Warrant register; but failure to mail or receive
such notice or any defect therein or in the mailing thereof shall not affect the
validity of any action taken in connection with such voluntary dissolution. If
such notice shall have been so given and if such a voluntary dissolution shall
be authorized at such meeting or any adjournment thereof, then for and after the
date on which such voluntary dissolution shall have been duly authorized by the
stockholders, the purchase rights represented by the Warrants and other rights
with respect thereto shall cease and terminate.
B. If the Company shall make any distribution on, or to holders of, its
Common Stock (or other property which may be purchasable in lieu thereof upon
the exercise of Warrants) of any property (other than a cash dividend), the
Company shall cause a notice of its intention to make such distribution to be
published at least once a week for two consecutive weeks in a newspaper of
general circulation in Dallas, Texas and New York, New York, such publication to
be completed at least 20 days prior to the date fixed as a record date or the
date of closing the transfer books for the determination of the stockholders
entitled to receive such distribution. The Company shall also cause a copy of
such notice to be sent by first class mail, postage prepaid, at least 20 days
prior to said date fixed as a record date or said date of closing the transfer
books, to each registered holder of Warrants at his address appearing on the
Warrant register; but failure to mail or to receive such notice or any defect
therein or in the mailing thereof shall not affect the validity of any action
taken in connection with such distribution.
SS.11. DISPOSITION OF PROCEEDS ON EXERCISE OF WARRANTS.
A. The Warrant Agent shall account promptly to the Company with respect to
Warrants exercised and concurrently pay to the Company all monies received by
the Warrant Agent for the purchase of shares of the Company's stock through the
exercise of such Warrants.
B. The Warrant Agent shall keep copies of this Agreement available for
inspection by holders of Warrants during normal business hours at its principal
office.
SS.12. REDEMPTION OF WARRANTS.
A. At any time on or after __________, 1998, the Company may, at its
option, redeem some or all of the outstanding Warrants at $0.05 per Warrant,
upon thirty (30) days prior written notice, if the closing sale price of the
Common Stock on any national securities exchange or the closing bid quotation on
the Nasdaq Small-Cap Market has equaled or exceeded $_____ for twenty (20)
consecutive trading days within the 30 day period immediately preceding the date
notice of redemption is given (the "Redemption Price"). In the event of an
adjustment in the Warrant Price pursuant to ss.8, the Redemption Price shall
also be automatically adjusted.
B. The election of the Company to redeem some or all of the Warrants
shall be evidenced by a resolution of the Board of Directors of the Company.
C. Warrants may be exercised at any time on or before the date fixed
for redemption (the "Redemption Date").
D. Notice of redemption shall be given by first class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each holder of Warrants, at his address appearing in the Warrant
register.
All notices of redemption shall state:
(1) The Redemption Date;
(2) That on the Redemption Date the Redemption Price will
become due and payable upon each Warrant;
(3) The place where such Warrants are to be surrendered for
redemption and payment of the Redemption Price; and
(4) The current Warrant Price of the Warrants, the place or places
where such Warrants may be surrendered for exercise, and the time at which
the right to exercise the Warrants will terminate in accordance with this
Agreement.
E. Notice of redemption of Warrants at the election of the Company
shall be given by the Company or, at the Company's request, by the Warrant
Agent in the name and at the expense of the Company.
F. Prior to any Redemption Date, the Company shall deposit with the
Warrant Agent an amount of money sufficient to pay the Redemption Price of all
the Warrants which are to be redeemed on that date. If any Warrant is exercised
pursuant to ss.5, any money so deposited with the Warrant Agent for the
redemption of such Warrant shall be paid to the Company.
G. Notice of redemption having been given as aforesaid, the Warrants so to
be redeemed shall, on the Redemption Date, become redeemable at the Redemption
Price therein specified and on such date (unless the Company shall default in
the payment of the Redemption Price), such Warrants shall cease to be
exercisable and thereafter represent only the right to receive the Redemption
Price. Upon surrender of such Warrants for redemption in accordance with said
notice, such Warrants shall be redeemed by the Company for the Redemption Price.
SS.13. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF WARRANT AGENT. Any
corporation into which the Warrant Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which the Warrant Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor warrant agent under
the provisions of ss.15 of this Agreement. In case at the time such successor to
the Warrant Agent shall succeed to the agency created by this Agreement and at
such time any of the Warrants shall have been countersigned but not delivered,
any such successor to the Warrant Agent may adopt the countersignature of the
Warrant Agent and deliver such Warrants so countersigned; and in case at the
time any of the Warrants shall not have been countersigned, any successor to the
Warrant Agent may countersign such Warrants either in the name of the
predecessor Warrant Agent or in the name of the successor warrant agent; and in
all such cases such Warrants shall have the full force provided in the Warrant
and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and at
such time any of the Warrants shall have been countersigned but not delivered,
the Warrant Agent may adopt the countersignature under its prior name and
deliver Warrants so countersigned; and in case at that time any of the Warrants
shall not have been countersigned, the Warrant Agent may countersign such
Warrants whether in its prior name or in its changed name; and in all such cases
such Warrants shall have the full force provided in the Warrants and in this
Agreement.
SS.14. DUTIES OF WARRANT AGENT. The Warrant Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Warrants, by their
acceptance thereof, shall be bound:
A. The statements contained herein and in the Warrants shall be taken as
statements of the Company, and the Warrant Agent assumes no responsibility for
the correctness of any of the same except such as describe the Warrant Agent or
action taken or to be taken by it. The Warrant Agent assumes no responsibility
with respect to the distribution of the Warrants except as herein otherwise
provided.
B. The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or in
the Warrants to be complied with by the Company.
C. The Warrant Agent may execute and exercise any of the rights or powers
hereby vested in it to perform any duty hereunder either itself or by or through
its attorneys, agents or employees.
D. The Warrant Agent may consult at any time with counsel satisfactory to
it (who may be counsel for the Company) and the Warrant Agent shall incur no
liability or responsibility to the Company or to any holder of any Warrant in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in accordance with the opinion or the advice of such counsel, provided the
Warrant Agent shall have exercised reasonable care in the selection and
continued employment of such counsel.
E. The Warrant Agent shall incur no liability or responsibility to the
Company or to any holder of any Warrant for any action taken in reliance on any
notice, resolution, waiver, consent, order, certificate, or other paper,
document or instrument believed by it to be genuine and to have been signed,
sent or presented by the proper party or parties.
F. The Company agrees to pay to the Warrant Agent reasonable compensation
for all services rendered by the Warrant Agent in the execution of this
Agreement, to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charges of any kind and nature incurred by the
Warrant Agent in the execution of this Agreement and to indemnify the Warrant
Agent and save it harmless against any and all liabilities, including judgments,
costs and reasonable counsel fees, for anything done or omitted by the Warrant
Agent in the execution of this Agreement except as a result of the Warrant
Agent's negligence or bad faith.
G. The Warrant Agent shall be under no obligation to institute any action,
suit or legal proceeding or to take any other action likely to involve expense
unless the Company or one or more registered holders of Warrants shall furnish
the Warrant Agent with reasonable security and indemnity for any cost and
expense which may be incurred, but this provision shall not affect the power of
the Warrant Agent to take such action as the Warrant Agent may consider proper,
whether with or without any such security or indemnity. All rights of action
under this Agreement or under any of the Warrants may be enforced by the Warrant
Agent without the possession of any of the Warrants or the production thereof at
any trial or other proceeding relative thereto, and any such action, suit or
proceeding instituted by the Warrant Agent shall be brought in its name as
Warrant Agent, and any recovery of judgment shall be for the ratable benefit of
the registered holders of the Warrants, as their respective rights or interests
may appear.
H. The Warrant Agent and any stockholder, director, officer or employee of
the Warrant Agent may buy, sell or deal in any of the Warrants or other
securities of the Company or become peculiarly interested in any transaction in
which the Company may be interested, or contract with or lend money to or
otherwise act as fully and freely as though it were not Warrant Agent under this
Agreement. Nothing herein shall preclude the Warrant Agent from acting in any
other capacity for the Company or for any other legal entity.
I. The Warrant Agent shall act hereunder solely as agent and not in a
ministerial capacity, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not be liable for anything which it
may do or refrain from doing in connection with this Agreement except for its
own negligence or bad faith.
SS.15. CHANGE OF WARRANT AGENT. The Warrant Agent may resign and be
discharged from its duties under this Agreement by giving to the Company notice
in writing, and to the holders of the Warrants notice by publication, of such
resignation, specifying a date when such resignation shall take effect, which
notice shall be published at least once a week for two consecutive weeks in a
newspaper of general circulation in Dallas, Texas and New York, New York, prior
to the date so specified. The Warrant Agent may be removed by like notice to the
Warrant Agent from the Company and by like publication. If the Warrant Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Warrant Agent. If the Company shall
fail to make such appointment within a period of 30 days after such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Warrant Agent or by the registered holder of a
Warrant (who shall, with such notice, submit his Warrant for inspection by the
Company), then the registered holder of a Warrant may apply to any court of
competent jurisdiction for the appointment of a successor to the Warrant Agent.
Any successor warrant agent, whether appointed by the Company or by such a
court, shall be a bank or trust company having its principal office, and having
capital and surplus as shown by its last published report to its stockholders,
of at least $1,000,000. After appointment, the successor warrant agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Warrant Agent without further act or deed; but the
former Warrant Agent shall deliver and transfer to the successor warrant agent
any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Failure to
file or publish any notice provided for in this Section, however, or any defect
therein, shall not affect the legality or validity of the resignation or removal
of the Warrant Agent or the appointment of the successor warrant agent, as the
case may be.
SS.16. IDENTITY OF TRANSFER AGENT. Forthwith upon the appointment of any
Transfer Agent for the Common Stock or of any subsequent Transfer Agent for
shares of the Common Stock or other shares of the Company's capital stock
issuable upon the exercise of the rights of purchase represented by the
Warrants, the Company will file with the Warrant Agent a statement setting forth
the name and address of such Transfer Agent.
SS.17. NOTICES. Any notice pursuant to this Agreement to be given or made
by the Warrant Agent or the registered holder of any Warrant to or on the
Company shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing by the Company
with the Warrant Agent) as follows:
Butterwings Entertainment Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Any notice pursuant to this Agreement to be given or made by the Company or the
registered holder of any Warrant to or on the Warrant Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing by the Warrant Agent with
the Company) as follows:
American Stock Transfer & Trust Company
SS.18. SUPPLEMENTS AND AMENDMENTS. The Company and the Warrant Agent may
from time to supplement or amend this Agreement without the approval of any
holders of Warrants in order to cure any ambiguity or to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provision herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company and the Warrant Agent may deem
necessary or desirable and which shall not be inconsistent with the provisions
of the Warrants and which shall not adversely affect the interests of the
holders of Warrants.
SS.19. SUCCESSORS. All the covenants and provisions of this Agreement by or
for the benefit of the Company or the Warrant Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
SS.20. MERGER OR CONSOLIDATION OF THE COMPANY. The Company shall not effect
any consolidation or merger with, or sale of substantially all its property to,
any other corporation unless the corporation resulting from such merger (if not
the Company) or consolidation or the corporation purchasing such property shall
expressly assume, by supplemental agreement satisfactory in form to the Warrant
Agent and executed and delivered to the Warrant Agent, the due and punctual
performance and observance of each and every covenant and condition of this
Agreement to be performed and observed by the Company.
SS.21. TEXAS CONTRACT. This Agreement and each Warrant issued hereunder
shall be deemed to be a contract made under the laws of the State of Texas and
for all purposes shall be construed in accordance with the laws of said State.
SS.22. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company, the
Warrant Agent and the registered holders of the Warrants any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company, the Warrant Agent and the registered
holders of the Warrants.
SS.23. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes by deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
BUTTERWINGS ENTERTAINMENT GROUP, INC.
By:________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:________________________________________
EXHIBIT A
[FORM OF WARRANT]
No. _____ For the Purchase of ___
Shares of Common Stock
__________, 1997
BUTTERWINGS ENTERTAINMENT GROUP, INC.
REDEEMABLE SERIES A COMMON STOCK PURCHASE WARRANT
EXERCISABLE ON OR BEFORE 5: 00 P. M. , New York City Time 2002
This Warrant Certifies that ________________________________, or registered
assigns, is the holder of __________________Warrants expiring ___________, 2002,
to purchase Common Stock, $.01 par value per share (the "Common Stock"), of
Butterwings Entertainment Group, Inc., an Illinois corporation (the "Company").
Each Warrant entitiles the holder to purchase from the Company on or before 5:00
P. M. New York City time, on _________2002, (subject to extensions in the sole
discretion of the Company, the "Expiration Date") on fully-paid and
non-assessable share of Common Stock of the Company at the exercise price (the
"Exercise Price") of $____per share upon surrender of this Warrant Certificate
and payment of the Exercise Price at the office or agency of the Warrant Agent
in New York, New York, but only subject to the conditions set forth herein and
in the Warrant Agreement. Payment of the Exercise Price may be made in cash or
by certified check payable to the order of the Company. As used herein "shares"
refers to the Common Stock of the Company and, where appropriate, to the other
securities or property issuable upon exercise of a Warrant as provided for in
the Warrant Agreement upon the happening of certain events set forth in the
Warrant Agreement.
No Warrant may be exercised after 5:00 P. M., New York City time, on the
Expiration Date. To the extent not exercised by such time, the Warrants shall be
cancelled and retired notwithstanding delivery of the related Warrant
Certificate. All Warrants evidenced hereby shall thereafter be void.
Reference is hereby made to the further provisions of this Warrant Certificate
set forth on the reverse in hereof and such further provisions shall for all
purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by the
Warrant Agent
Dated: Butterwings
Entertainment Group, Inc.
By:
President
Countersigned By:
Warrant Agent Secretary
By:
Authorized Officer
[ FORM OF ]
ELECTION TO PURCHASE
Butterwings Entertainment Group, Inc.
c/o _______________________
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant for, and to purchase thereunder,_____
_____________________ shares of the stock provided for therein, and requests
that certificates for such shares shall be issued in the name of _______________
( Please Print )
________________________________________________________________________________
and be delivered to ____________________________________________________________
at _____________________________________________________________________________
and, if said number of shares shall not be all of the shares purchasable
thereunder, that a new Warrant for the balance remaining of the shares
purchasable under the within Warrant be registered in the name of, and delivered
to, the undersigned at the address stated below.
Dated:_______________________________,
Name of Warrantholder:____________________________________________________
( Please Print )
Address: ______________________________________________________________
Signature: ______________________________________________________________
Note: The above signature must correspond with the name as
written upon the face of this Warrant in every
particular, without alteration or enlargement or any
change whatsoever.
[ FORM OF ]
ASSIGNMENT
For value received _______________________________________________________
does hereby sell, assign and transfer unto _____________________________________
the within Warrant, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint attorney, to transfer said
Warrant on the books of the within-named Corporation, with full power of
substitution in the premises.
Date:________________________________,
Signature:________________________________________________________________
Note: The above signature must correspond with the name as
written upon the face of this Warrant in every
particular, without alteration or enlargement or any
change whatsoever.
