Warrant to Purchase Shares of Common Stock - Buffalo Wild Wings Inc. and McDonald Investments Inc.
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, OR APPLICABLE STATE SECURITIES LAW. THESE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF, AND NO TRANSFER OF THE
SECURITIES WILL BE MADE BY THE COMPANY OR ITS TRANSFER AGENT, IN THE ABSENCE OF
SUCH REGISTRATION OR AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
WARRANT
TO PURCHASE SHARES OF COMMON STOCK OF
BUFFALO WILD WINGS, INC.
December 30, 1999
(Issuance Date)
FOR VALUE RECEIVED, McDonald Investments, Inc., A KeyCorp Company, or its
registered assigns (the "Holder"), is entitled to purchase from Buffalo Wild
Wings, Inc., a Minnesota corporation (the "Company"), at any time on or before
the five year anniversary of the issuance date of this Warrant, 60,969 shares of
the Company's common stock, $.01 par value per share (the "Common Stock") (such
shares of Common Stock as may be acquired upon exercise hereof being hereinafter
referred to as the "Warrant Shares"), at an exercise price equal to $2.788291
(the "Warrant Exercise Price").
This Warrant was issued pursuant to a General Financial Advisory Services
Agreement dated January 28, 1999, between the Company and the Holder (the
"Agreement").
This Warrant is subject to the following provisions, terms, and conditions:
1. The rights represented by this Warrant may be exercised by the Holder,
in whole or in part (but not as to a fractional share of Common Stock), by
written notice of exercise substantially in the form attached hereto, which
notice shall be delivered to the Company accompanied by the surrender of this
Warrant (properly endorsed if required) at the principal office of the Company
and upon payment to the Company, by cash, certified check or bank draft, of the
Warrant Exercise Price for such shares. The Company agrees that the Warrant
Shares so purchased shall be and are deemed to be issued as of the close of
business on the date on which this Warrant shall have been surrendered and
payment made for such Warrant Shares as aforesaid. Certificates for the Warrant
Shares so purchased shall be delivered to the Holder within thirty (30) days
after the rights represented by this Warrant shall have been so exercised, and,
unless this Warrant has expired, a new Warrant representing the number of
Warrant Shares, if any, with respect to which this Warrant has not been
exercised shall also be delivered to the Holder within such time.
Notwithstanding the foregoing, however, the Company shall not be required to
deliver any certificates for Warrant Shares, except in accordance with the
provisions and subject to the limitations of Section 5 below.
2. The Company covenants and agrees that all Warrant Shares that may be
issued upon the exercise of this Warrant will, upon issuance, be duly authorized
and issued, fully paid and nonassessable and free from all taxes, liens, and
charges with respect to the issuance thereof. The Company further
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covenants and agrees that until expiration of this Warrant, the Company will at
all times have authorized, and reserved for the purpose of issuance upon
exercise of this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise of this Warrant.
3. The provisions in this Warrant relating to the Warrant Exercise Price
and the number of Warrant Shares to be issued upon exercise of this Warrant
shall be subject to adjustment from time to time as hereinafter provided.
(a) In case the Company shall at any time subdivide its outstanding
Common Stock into a greater number of shares or declare a dividend payable
in Common Stock, the Warrant Exercise Price in effect immediately prior to
such subdivision shall be proportionately reduced and the number of shares
of Common Stock purchasable pursuant to this Warrant shall be
proportionately increased, and conversely, in case the Company's
outstanding Common Stock shall be combined into a smaller number of shares,
the Warrant Exercise Price in effect immediately prior to such combination
shall be proportionately increased and the number of shares of Common Stock
purchasable upon the exercise of this Warrant shall be proportionately
reduced.
(b) If any capital reorganization or reclassification of the capital
stock of the Company, 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 in such a way that holders of
Common Stock shall be entitled to receive stock, securities or assets
("Substituted Property") with respect to or in exchange for such Common
Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, the Holder shall have the right to purchase
and receive upon the basis and upon the terms and conditions specified in
this Warrant, and in lieu of the Common Stock of the Company immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby, such Substituted Property as would have been issued or
delivered to the Holder if it had exercised this Warrant and had received
upon exercise of this Warrant the Common Stock prior to such
reorganization, reclassification, consolidation, merger, or sale. The
Company shall not effect any such consolidation, merger, or sale, unless
prior to the consummation thereof the successor corporation (if other than
the Company) resulting from such consolidation or merger or the corporation
purchasing such assets shall assume by written instrument executed and
mailed to the Holder at the last address of the Holder appearing on the
books of the Company, the obligation to deliver to the Holder such
Substituted Property as, in accordance with the foregoing provisions, the
Holder may be entitled to purchase.
(c) If the Company takes any other action, or if any other event
occurs which does not come within the scope of the provisions of Sections 3
(a) or 3 (b), but which should result in an adjustment in the Warrant
Exercise Price and/or the number of shares subject to the Warrant in order
to fairly protect the purchase rights of the Holder, an appropriate
adjustment in such purchase rights shall be made by the Company. This
Section 3(c) is not intended to provide for adjustment in the event the
Company issues Common Stock or securities convertible into Common Stock at
a price per share less than the Exercise Price then in effect.
(d) Upon any adjustment of the Warrant Exercise Price or the number
of shares issuable upon exercise of this Warrant, the Company shall give
written notice thereof, by first-class mail, postage prepaid, addressed to
the Holder at the address of the Holder as shown on the books of the
Company, which notice shall state the Warrant Exercise Price resulting from
such adjustment and the increase or decrease, if any, in the number of
shares purchasable at such price upon the exercise of this Warrant, setting
forth in reasonable detail the method of calculation and the facts upon
which such calculation is based.
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4. This Warrant shall not entitle the Holder to any voting rights or
other rights as a shareholder of the Company.
5. The Holder, by acceptance hereof, represents and warrants that (a) it
is acquiring this Warrant for its own account for investment purposes only and
not with a view to its resale or distribution and (b) it has no present
intention to resell or otherwise dispose of all or any part of this Warrant.
Other than pursuant to registration under federal and applicable state
securities laws or an exemption from such registration, the availability of
which the Company shall determine in its sole discretion, neither this Warrant
nor any Warrant Shares may be sold, pledged, assigned, or otherwise disposed of
(whether voluntarily or involuntarily). The Company may condition such sale,
pledge, assignment, or other disposition on the receipt from the party to whom
this Warrant is to be so transferred or to whom Warrant Shares is to be issued
or so transferred of any representations and agreements requested by the Company
in order to permit such issuance or transfer to be made pursuant to exemptions
from registration under federal and applicable state securities laws. Each
certificate representing the Warrant (or any part thereof) and any Warrant
Shares shall bear appropriate legends setting forth these restrictions on
transferability. The Holder, by acceptance hereof, agrees to give written notice
to the Company before transferring this Warrant or any Warrant Shares of the
Holder's intention to do so, describing briefly the manner of any proposed
transfer. Within thirty (30) days after receiving such written notice, the
Company shall notify the Holder as to whether such transfer may be effected and
of the conditions to any such transfer.
6. This Warrant shall be transferable only on the books of the Company by
the Holder in person, or by duly authorized attorney, on surrender of the
Warrant, properly assigned.
7. Neither this Warrant nor any terms hereof may be changed, waived,
discharged, or terminated orally but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge, or
termination is sought.
8. The holder of this Warrant has the right to cause the Company to
register the Common Stock issued upon exercise hereof, under the Securities Act
and any blue sky or securities laws of any jurisdictions within the United
States at the time and in the manner specified in the Registration Rights
Agreement dated December 2, 1999.
9. Net Exercise Rights.
(a) In addition to and without limiting the rights of the Holder of this
Warrant with respect to other terms of this Warrant, the Holder of this Warrant
shall have the right (the "Conversion Right") to convert this Warrant or any
portion thereof into Warrant Shares as provided in this Section 9 at any time or
from time to time prior to its expiration, subject to the restrictions set forth
in paragraph (c) below. Upon exercise of the Conversion Right with respect to a
particular number of shares subject to this Warrant (the "Converted Warrant
Shares"), the Company shall deliver to the Holder of this Warrant, without
payment by the Holder of any exercise price or any cash or other consideration,
that number of Converted Warrant Shares equal to the quotient obtained by
dividing the Net Value (as hereinafter defined) of the Converted Warrant Shares
by the fair market value (as defined in paragraph (d) below) of a single Warrant
Share, determined in each case as of the close of business on the Conversion
Date (as hereinafter defined). The "Net Value" of the Converted Warrant Shares
shall be determined by subtracting the aggregate warrant purchase price of the
Converted Warrant Shares from the aggregate fair market value of the Converted
Warrant Shares. Notwithstanding anything in this Section 9 to the contrary, the
Conversion Right cannot be exercised with respect to a number of Converted
Warrant Shares having a Net Value below $100. No fractional shares shall be
issuable upon exercise of the Conversion Right, and if the number of shares to
be issued in accordance with the foregoing formula is other than a whole number,
the Company shall pay to
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the Holder of this Warrant an amount in cash equal to the fair market value of
the resulting fractional share.
(b) The Conversion Right may be exercised by the Holder of this Warrant by
the surrender of this Warrant at the principal office of the Company together
with a notice in the form attached hereto, specifying that the Holder thereby
intends to exercise the Conversion Right and indicating the number of shares
subject to this Warrant which are being surrendered (referred to in paragraph
(a) above as the Converted Warrant Shares) in exercise of the Conversion Right.
Such conversion shall be effective upon receipt by the Company of this Warrant
together with the aforesaid written statement, or on such later date as is
specified therein (the "Conversion Date"), but not later than the expiration
date of this Warrant. Certificates for the Converted Warrant Shares issuable
upon exercise of the Conversion Right, together with a check in payment of any
fractional share and, in the case of a partial exercise, a new warrant
evidencing the shares remaining subject to this Warrant, shall be issued as of
the Conversion Date and shall be delivered to the Holder of this Warrant within
15 days following the Conversion Date.
(c) In the event the Conversion Right would, at any time this Warrant
remains outstanding, be deemed by the Company's independent certified public
accountants to give rise to a charge to the Company's earnings for financial
reporting purposes, then the Conversion Right shall automatically terminate upon
the Company's written notice to the Holder of this Warrant of such adverse
accounting treatment.
(d) For purposes of this Section 9, the "fair market value" of a Warrant
Share as of a particular date shall be its "market price", calculated as of the
Conversion Date, as follows:
(i) if the capital stock into which the Warrants are exercisable is
traded on an exchange or is quoted on the Nasdaq National Market, then the
average closing or last sale prices, respectively, reported for the ten
(10) business days immediately preceding the Conversion Date, or
(ii) if the capital stock into which the Warrants are exercisable is
not traded on an exchange or on the Nasdaq National Market but is traded on
Nasdaq SmallCap Market or other over-the-counter market, then the average
closing bid and asked prices reported for the ten (10) business days
immediately preceding the Conversion Date, or
(iii) if the capital stock into which the Warrants are exercisable is
not traded on an exchange or on the Nasdaq National Market, Nasdaq SmallCap
Market or other over-the counter market, then the price per share
established by the Board of Directors of the Company.
10. Governing Law. This Warrant shall be construed and interpreted in
accordance with the laws of the State of Minnesota without regard to its choice
of law provisions.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed on
its behalf by its duly authorized officer as of the issuance date set forth
above.
Buffalo Wild Wings, Inc.
By /s/ Sally J. Smith
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Sally J. Smith, Chief Executive
Officer and President
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To: Buffalo Wild Wings, Inc.
NOTICE OF EXERCISE OF WARRANT -- To Be Executed by the Registered Holder
in Order to Exercise the Warrant
The undersigned hereby irrevocably elects to exercise the attached Warrant to
purchase for cash, _________________ of the shares issuable upon the exercise of
such Warrant, and requests that certificates for such shares (together with a
new Warrant to purchase the number of shares, if any, with respect to which this
Warrant is not exercised) shall be issued in the name of
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(Print Name)
Please insert social security
or other identifying number
of registered holder of
certificate (______________) Address:
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Date: _______________, 19______
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Signature*
*The signature on the Notice of Exercise of Warrant must correspond to the name
as written upon the face of the Warrant in every particular without alteration
or enlargement or any change whatsoever. When signing on behalf of a
corporation, partnership, trust or other entity, PLEASE indicate your
position(s) and title(s) with such entity.
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ASSIGNMENT FORM
To be signed only upon authorized transfer of Warrants.
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto
____________________________________________ the right to purchase the
securities of Buffalo Wild Wings, Inc. to which the within Warrant relates and
appoints ____________________, attorney, to transfer said right on the books of
Buffalo Wild Wings, Inc. with full power of substitution in the premises.
Dated:________________ ----------------------------------------
(Signature)
Address:
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CASHLESS EXERCISE FORM
(To be executed upon exercise of Warrant pursuant to Section 9)
The undersigned hereby irrevocably elects a cashless exercise of the right of
purchase represented by the within Warrant for, and to purchase thereunder,
____________________ Converted Warrant Shares, as provided for in Section 9
therein.
Please issue a certificate or certificates for such Converted Warrant
Shares in the name of, and pay any cash for any fractional share to:
Name
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(Please print Name)
Address
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Tax ID or Social Security No.
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Signature
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NOTE: The above signature should correspond exactly with the name on the
first page of this Warrant or with the name of the assignee appearing in the
assignment form below.
And if said number of shares shall not be all the shares purchasable under
the within Warrant, a new Warrant is to be issued in the name of said
undersigned for the balance remaining of the shares purchasable thereunder
rounded up to the next higher number of shares.