EXHIBIT 10.31
WARRANT AGREEMENT
MERITAGE HOSPITALITY GROUP INC. (the "Company"), and LASALLE BANK,
National Association (the "Warrant Agent"), agree as follows:
1. Purpose. The Company proposes to issue 208,333 Class A Warrants (the
"Class A Warrants") and 208,333 Class B Warrants (the "Class B Warrants," and
with the Class A Warrants, the "Warrants") to purchase common stock of the
Company (the "Common Stock") on the terms set forth in this Agreement.
2. Exercise Price of Warrants.
2.1 Each Class A Warrant will entitle the registered holder of
the Class A Warrant (the "Class A Warrant Holders") to purchase from
the Company one share of Common Stock at $6.00 per share ("Exercise
Price"), except as changed by Section 11 of this Agreement. A Warrant
Holder may exercise all or any number of Warrants resulting in the
purchase of a whole number of Shares.
2.2 Each Class B Warrant will entitle the registered holder of
the Class B Warrant (the "Class B Warrant Holders," and with the Class
A Warrant Holders, the "Warrant Holders") to purchase from the Company
one share of Common Stock at $9.00 per Share ("Exercise Price"), except
as changed by Section 11 of this Agreement. A Warrant Holder may
exercise all or any number of Warrants resulting in the purchase of a
whole number of Shares.
3. Exercise Period.
3.1 The Class A Warrants may be exercised at any time during
the period commencing December 19, 2004 (the "Exercise Date") and
ending at 5:00 p.m., New York, New York time on December 19, 2009 (the
"Class A Expiration Date"). After the Class A Expiration Date, any
unexercised Class A Warrants will be void and all rights of Class A
Warrant Holders shall cease.
3.2 The Class B Warrants may be exercised at any time during
the period commencing on the Exercise Date and ending at 5:00 p.m., New
York, New York time on December 19, 2012 (the "Class B Expiration
Date"). After the Class B Expiration Date, any unexercised Class A
Warrants will be void and all rights of Class B Warrant Holders shall
cease.
4. Certificates. The certificates representing Warrants (the "Warrant
Certificates") shall be in registered form only and shall be substantially in
the forms set forth in Exhibit A and Exhibit B attached to this Agreement.
Warrant Certificates shall be signed by, or shall bear the facsimile signature
of, the Chief Executive Officer of the Company and the Secretary of the Company.
If any person, whose facsimile signature has been placed upon any Warrant
Certificate as the signature of an officer of the Company, shall have ceased to
be such officer before such Warrant Certificate is countersigned, issued and
delivered, such Warrant Certificate shall be countersigned, issued and delivered
with the same effect as if such person had not ceased to be such officer. Any
Warrant Certificate may be signed by, or made to bear the
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facsimile signature of, any person who at the actual date of the preparation of
such Warrant Certificate shall be a proper officer of the Company to sign such
Warrant Certificate even though such person was not such an officer upon the
date of this Agreement.
5. Countersigning. Warrant Certificates shall be manually countersigned
by the Warrant Agent and shall not be valid for any purpose unless so
countersigned. The Warrant Agent hereby is authorized to countersign and deliver
to, or in accordance with the instructions of, any Warrant Holder any Warrant
Certificate which is properly issued.
6. Registration of Transfers and Exchanges. The Warrant Agent shall
from time to time register the transfer of any outstanding Warrant Certificate
upon records maintained by the Warrant Agent for such purpose upon surrender of
such Warrant Certificate to the Warrant Agent for transfer, accompanied by
appropriate instruments of transfer in form satisfactory to the Company and the
Warrant Agent and duly executed by the Warrant Holder or a duly authorized
attorney. Upon any such registration of transfer, a new Warrant Certificate
shall be issued in the name of and to the transferee and the surrendered Warrant
Certificate shall be canceled.
7. Exercise of Warrants.
7.1 Any one Warrant or any multiple of one Warrant evidenced
by any Warrant Certificate may be exercised upon any single occasion on
or after the Exercise Date and on or before the applicable Expiration
Date. A Warrant shall be exercised by the Warrant Holder by
surrendering to the Warrant Agent the Warrant Certificate evidencing
such Warrant with the exercise form on the reverse of such Warrant
Certificate duly completed and executed and delivering to the Warrant
Agent, by good check or bank draft payable to the order of the Company,
the Exercise Price for each share of Common Stock to be purchased.
7.2 Upon receipt of a Warrant Certificate with the exercise
form thereon duly executed together with payment in full of the
Exercise Price for the shares of Common Stock for which Warrants are
then being exercised, the Warrant Agent shall requisition from any
transfer agent for the shares of Common Stock, and upon receipt shall
make delivery of, certificates evidencing the total number of whole
shares of Common Stock for which Warrants are then being exercised in
such names and denominations as are required for delivery to, or in
accordance with the instructions of, the Warrant Holder. Such
certificates for the shares of Common Stock shall be deemed to be
issued, and the person to whom such shares of Common Stock are issued
of record shall be deemed to have become a holder of record of such
shares of Common Stock, as of the date of the surrender of such Warrant
Certificate and payment of the Exercise Price, whichever shall last
occur, provided that if the books of the Company with respect to the
shares of Common Stock shall be deemed to be issued, and the person to
whom such shares of Common Stock are issued of record shall be deemed
to have become a record holder of such shares of Common Stock, as of
the date on which such books shall next be open (whether before, on or
after the Expiration Date) but at the Exercise Price, whichever shall
have last occurred, to the Warrant Agent.
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7.3 If less than all the Warrants evidenced by a Warrant
Certificate are exercised upon a single occasion, a new Warrant
Certificate for the balance of the Warrants not so exercised shall be
issued and delivered to the Warrant Holder in accordance with any
transfer instructions given by the Warrant Holder.
7.4 All Warrant Certificates surrendered upon exercise of
Warrants shall be canceled.
7.5 Upon the exercise of any Warrant, the Warrant Agent shall
promptly deliver the funds to the Company. Once the funds are
determined by the Company to be collected, the Warrant Agent shall
cause the share certificate(s) representing the Common Stock acquired
upon exercise to be issued.
8. Taxes. The Company will pay all taxes attributable to the initial
issuance of Shares upon exercise of Warrants. The Company shall not, however, be
required to pay any tax which may be payable in respect to any transfer involved
in any issue of Warrant Certificates or in the issue of any certificates of
Shares in the name other than that of the Warrant Holder upon the exercise of
any Warrant.
9. Mutilated or Missing Warrant Certificates. If any Warrant
Certificate is mutilated, lost, stolen or destroyed, the Company and the Warrant
Agent, on such terms of satisfactory indemnification (which shall, in the case
of a mutilated Warrant Certificate, include the surrender thereof), and upon
receipt of evidence satisfactory to the Company and the Warrant Agent of such
mutilation, loss, theft or destruction, issue a substitute Warrant Certificate
of like denomination, tenor and date as the Warrant Certificate so mutilated,
lost, stolen or destroyed. All costs and expenses incurred in connection with
the issuance of a substitute Warrant Certificate under this Section 9 shall be
paid by the Warrant Holder requesting such issuance.
10. Reservation of Shares. The Company shall reserve for issuance and
delivery upon exercise of Warrants all shares of Common Stock or other shares of
capital stock of the Company (and other securities) from time to time receivable
upon exercise of Warrants. All such shares (and other securities) shall be duly
authorized and, when issued upon exercise, shall be validly issued, fully paid
and non-assessable.
11. Adjustments.
11.1 Stock Splits, Dividends, Etc. 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 a Warrant immediately prior to such subdivision shall be
proportionately increased, and if the Company shall at any time combine
the outstanding shares of Common Stock by recapitalization,
reclassification, reverse stock split, or combination thereof, the
number of shares of Common Stock subject to a Warrant immediately prior
to such combination shall be proportionately decreased. Any such
adjustment and adjustment to the Exercise Price pursuant to this
Section shall be effective at the close of business on the effective
date of
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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.
Whenever the number of shares of Common Stock purchasable upon
the exercise of a Warrant is adjusted, as provided in this Section 11,
the Exercise Price shall be adjusted to the nearest cent by multiplying
such Exercise Price immediately prior to such adjustment by a fraction
(x) the numerator of which shall be the number of shares of Common
Stock purchasable upon the exercise immediately prior to such
adjustment, and (y) the denominator of which shall be the number of
shares of Common Stock so purchasable immediately thereafter.
11.2 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 a Warrant) or if the Company (or any such other
corporation) 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 Warrant Holder of a
Warrant upon the exercise as provided in Section 7 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 a Warrant prior to such
consummation, the securities or property to which such Warrant Holder
would have been entitled upon such consummation if such Warrant Holder
had exercised a Warrant immediately prior thereto; in each such case,
the terms of a Warrant shall be applicable to the securities or
property received upon the exercise of a Warrant after such
consummation.
11.3 Certificate as to Adjustments. In each case of an
adjustment in the number of shares of Common Stock receivable on the
exercise of a Warrant, the Company at its expense shall promptly
compute such adjustment in accordance with the terms of the Warrant and
prepare a certificate executed by an officer of the Company setting
forth such adjustment and showing the facts upon which such adjustment
is based. The Company shall forthwith mail a copy of each such
certificate to each Warrant Holder.
11.4 Notices of Record Date, Etc. The Company shall take a
record of the holders of its Common Stock (or other securities at the
time receivable upon the exercise of the Warrant) for the purpose of
entitling them to receive any dividend (other than a cash dividend at
the same rate as the rate of the last cash dividend theretofore paid)
or other distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other
securities, or to receive any other right; or
In case of any voluntary or involuntary dissolution,
liquidation or winding-up of the Company, then, and in each such case,
the Company shall mail or cause to be mailed to each Warrant Holder a
notice specifying, as the case may be, (A) the date on which a record
is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or
right, or (B) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or
winding-up is to take place, and the time, if any, to be fixed, as to
which
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the holders of record of Common Stock (or such other securities at the
time receivable upon the exercise of a Warrant) shall be entitled to
exchange their shares of Common Stock (or such other securities) for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, conveyance, dissolution,
liquidation or winding-up. Such notice shall be mailed at least ten
(10) days prior to the date therein specified, and this Warrant may be
exercised prior to said date during the term of the Warrant.
12. Rights of Warrant Holders. No Warrant Holder, as such, shall have
any rights of a shareholder of the Company, either at law or equity, and the
rights of the Warrant Holders, as such, are limited to those rights expressly
provided in this Agreement or in the Warrant Certificates. The Company and the
Warrant Agent may treat the registered Warrant Holder in respect of any Warrant
Certificate as the absolute owner thereof for all purposes notwithstanding any
notice to the contrary.
13. No Fractional Shares. No fractional shares or script representing
fractional shares shall be issued upon the exercise of a Warrant, but the
Company shall pay the Warrant 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 a Warrant. For purposes of a Warrant,
the fair market value of a share of Common Stock shall equal the closing sale
price (or if not available, the average of the closing bid and asked prices) on
the business day prior to exercise of a Warrant, or, if the Common Stock is then
not publicly traded, then the price determined in good faith by the Board of
Directors of the Company.
14. Officer's Certificate. Whenever the number or kind of securities
purchasable upon exercise of a Warrant or the Exercise Price shall be adjusted
as required by the provisions hereof, the Company shall forthwith file with its
Secretary or Assistant Secretary at its principal office and with its stock
transfer agent, if any, an officer's certificate showing the adjusted number or
kind of securities purchasable upon exercise of the Warrant and the adjusted
Exercise Price determined as herein provided and setting forth in reasonable
detail such facts as shall be necessary to show the reason for and the manner of
computing such adjustments. Each such officer's certificate shall be made
available at all reasonable times for inspection by the Warrant Holder and the
Company shall, forthwith after each such adjustment, mail by certified mail a
copy of such certificate to the Warrant Holder.
15. Warrant Agreement. The Company hereby appoints the Warrant Agent to
act as the agent of the Company and the Warrant Agent hereby accepts such
appointment upon the following terms and conditions by all of which the Company
and every Warrant Holder, by acceptance of his Warrants, shall be bound:
15.1 Statements contained in this Agreement and in the Warrant
Certificates shall be taken as statements of the Company. The Warrant
Agent assumes no responsibility for the correctness of any of the same
except such as describes the Warrant Agent or for action taken or to be
taken by the Warrant Agent.
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15.2 The Warrant Agent shall not be responsible for any
failure of the Company to comply with any of the Company's covenants
contained in this Agreement or in the Warrant Certificates.
15.3 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 Warrant Holder 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.
15.4 The Warrant Agent shall incur no liability or
responsibility to the Company or to any Warrant Holder for any action
taken in reliance upon 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.
15.5 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 that have been approved in advance by the
Company and to indemnify the Warrant Agent and save it harmless against
any and all liabilities, including judgments, costs and counsel fees,
for this Agreement except as a result of the Warrant Agent's gross
negligence or bad faith.
15.6 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
Warrant Holders shall furnish the Warrant Agent with reasonable
security and indemnity for any costs and expenses which may be incurred
in connection with such action, suit or legal proceeding, but this
provision shall not effect 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 Warrant Certificates 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 Warrant Holders as
their respective rights or interests may appear.
15.7 The Warrant Agent and any shareholder, 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 pecuniarily
interested in any transaction in which the Company may be interested,
or contract with or lend money to the Company 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.
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16. Successor Warrant Agent. Any corporation into which the Warrant
Agent may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion 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 of a
party or the parties hereto. In any such event or if the name of the Warrant
Agent is changed, the Warrant Agent or such successor may adopt the
countersignature of the original Warrant Agent and may countersign such Warrant
Certificates either in the name of the predecessor Warrant Agent or in the name
of the successor Warrant Agent.
17. Change of Warrant Agent. The Warrant Agent may resign or be
discharged by the Company from its duties under this Agreement by the Warrant
Agent or the Company, as the case may be, giving notice in writing to the other,
and by giving a date when such resignation or discharge shall take effect, which
notice shall be sent at least 30 days prior to the date so specified. If the
Warrant Agent shall resign, be discharged or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Warrant Agent. 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 and the former Warrant Agent shall
deliver and transfer to the successor Warrant Agent any property at the time
held by it thereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for effecting the delivery or transfer.
Failure to give 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. The Warrant Agent shall be paid any outstanding fees and expenses
prior to transferring any property to a successor warrant agent.
18. Notices. Any notice or demand authorized by this Agreement to be
given or made by the Warrant Agent or by any Warrant Holder to or on the Company
shall be sufficiently given or made if sent by mail, first class, certified or
registered, postage prepaid, addressed (until another address is filed in
writing by the Company with the Warrant Agent), as follows:
1971 East Beltline Avenue, N.E., Suite 200
Grand Rapids, Michigan 49525
Attention: James R. Saalfeld, Secretary
Any notice or demand authorized by this Agreement to be given or made by any
Warrant Holder or by the Company to or on the Warrant Agent shall be
sufficiently given or made if sent by mail, first class, certified or
registered, postage prepaid, addressed (until another address is filed in
writing by the Warrant Agent with the Company), as follows:
LaSalle Bank National Association
135 South LaSalle Street, Suite 1960
Chicago, Illinois 60603
Attention: Arlene M. Kaminski
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Any distribution, notice or demand required or authorized by this Agreement to
be given or made by the Company or the Warrant Agent to or on the Warrant
Holders shall be sufficiently given or made if sent by mail, first class,
certified or registered, postage prepaid, addressed to the Warrant Holders at
their last known addresses as they shall appear on the registration books for
the Warrant Certificates maintained by the Warrant Agent.
19. Supplements and Amendments. The Company and the Warrant Agent may
from time to time supplement or amend this Agreement without the approval of any
Warrant Holders in order to cure any ambiguity or to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions 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. Any supplement or amendment to this Agreement shall be
in writing signed by both the Company and the Warrant Agent.
20. Successors. All the covenants and provisions of this Agreement by
or for the benefit of the Company, Warrant Agent or the Warrant Holder shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
21. Termination. This Agreement shall terminate at the close of
business on the Class B Expiration Date or such earlier date upon which all
Warrants have been exercised; provided, however, that if exercise of the
Warrants is suspended pursuant to this Agreement and such suspension continues
past the Class B Expiration Date, this Agreement shall terminate at the close of
business on the business day immediately following the expiration of such
suspension.
22. Governing Law. This Agreement and each Warrant Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
Michigan and for all purposes shall be construed in accordance with the laws of
said state.
23. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give any person or corporation other than the Company, the Warrant
Agent and the Warrant Holders 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 Warrant Holders.
24. Counterparts. This Agreement may be executed in any number of
counterparts, each of such counterparts shall for all purposes be deemed to be
an original and all such counterparts shall together constitute but one and the
same instrument.
Date: December 31, 2003 MERITAGE HOSPITALITY GROUP INC.
By:__________________________________
SEAL Robert E. Schermer, CEO
ATTEST:
James R. Saalfeld, Corporate Secretary
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LASALLE BANK National Association
as Warrant Agent
By:___________________________________
Arlene M. Kaminski
Assistant Vice President
SEAL
ATTEST:
__________________________
EXHIBIT A
FORM OF CLASS A WARRANT
<Table>
WARRANTS NOT EXERCISED ON OR BEFORE 5:00 P.M. NEW YORK CITY TIME,
ON DECEMBER 19, 2009 SHALL BECOME VOID. ----------------
Warrants
MERITAGE HOSPITALITY GROUP INC.
----------------
CLASS A WARRANT CERTIFICATE
NUMBER
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CUSIP 59000K 11 9
WA SEE REVERSE FOR CERTAIN DEFINITIONS
--------------
This Warrant certificate certifies that
or registered assigns,
is the registered holder of
Class A Warrants (The "Warrants") expiring at 5:00 p.m., New York City Time, on December 19, 2009 (the
"Expiration Date"), to purchase Common Stock, $0.01 par value per share (the "Common Stock") of MERITAGE
HOSPITALITY GROUP INC., a Michigan corporation (the "Company"). The Warrants may be exercised at any time from
9:00 a.m., New York City time, on December 19, 2004 to 5:00 p.m., New York City time, on the Expiration Date.
Each Warrant entitles the holder upon exercise to receive from the Company, if exercised before 5:00 p.m., New
York City time, on the Expiration Date, one fully paid and nonassessable share of Common Stock (a "Warrant
Share") at the Exercise Price (as defined in the Warrant Agreement referred to on the reverse side hereof),
payable in lawful money of the United States of America, upon surrender of this Warrant Certificate and
payment of the Exercise Price at the office or agency of the Warrant Agent, but only subject to the conditions
set forth herein and in the Warrant Agreement, The Exercise Price and number of Warrant Shares issuable upon
exercise of the Warrants are subject to adjustment upon the occurrence of certain events as set forth in the
Warrant Agreement.
Reference is hereby made to the further provisions of this Warrant Certificate set forth on the
reverse 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, as such term is
used in the warrant agreement.
IN WITNESS WHEREOF, MERITAGE HOSPITALITY GROUP INC. has caused this Warrant Certificate to be duly
executed.
Dated:
MERITAGE HOSPITALITY GROUP INC.
COUNTERSIGNED:
LASALLE BANK NATIONAL ASSOCIATION
AS WARRANT AGENT
BY:
/s/ James R. Saalfeld /s/ Robert E. Schermer, Jr.
AUTHORIZED SIGNATORY Secretary Chief Executive Officer
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring on the Expiration Date entitling the
holder on exercise to receive shares of Common Stock of the Company and are
issued or to be issued pursuant to a Warrant Agreement dated as of December 1 9,
2003 (the "Warrant Agreement"), duly executed and delivered by the Company to
LASALLE BANK NATIONAL ASSOCIATION, as Warrant Agent (the "Warrant Agent"), which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Warrant Agent,
the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrant. In the event of a
conflict between the terms of this Warrant Certificate and the Warrant
Agreement, the terms of the Warrant Agreement shall prevail. A copy of the
Warrant Agreement may be obtained by the holder hereof upon written request to
the Company. By accepting initial delivery, transfer or exchange of this
Warrant, the duly registered holder shall be deemed to have agreed to the terms
of the Warrant Agreement as it may be in effect from time to time, including any
amendments or supplements duly adopted in accordance therewith.
The holder of Warrants evidenced by this Warrant Certificate may exercise
them by surrendering this Warrant Certificate, with the form of election to
purchase set forth hereon properly completed and executed, together with payment
of the Exercise Price in the manner described below at the office of the Warrant
Agent. In the event that upon any exercise of Warrants evidenced hereby the
number of Warrants exercised shall be less than the total number of Warrants
evidenced hereby, there shall be issued to the holder hereof or its assignee a
new Warrant Certificate evidencing the number of Warrants not exercised.
Payment of the Exercise Price may be made in cash by wire transfer to the
Warrant Agent for the account of the Company or by certified or official bank
check or checks to the order of the Company or by any combination thereof.
The Warrant Agreement provides that upon the occurrence of certain events
the number of shares of Common Stock issuable upon the exercise of each Warrant,
and the Exercise Price of each Warrant, may, subject to certain conditions, be
adjusted. No fractions of a share of Common Stock will be issued upon the
exercise of any Warrant, but the Company shall pay the cash value thereof
determined as provided in the Warrant Agreement.
Warrant Certificates, when surrendered at the office of the Warrant Agent
by the registered holder thereof in person or by legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) hereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
PURCHASE FORM
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The undersigned hereby irrevocably elects to exercise this Class A
Warrant, according to the terms and conditions hereof, to the extent of
purchasing _____________ shares of Common Stock and hereby makes payment of
$_____________ in payment of the exercise price thereof. If the number of shares
shall not be all of the shares purchasable under this Warrant, then a new
Warrant Certificate for the balance remaining shall be issued in the name of the
undersigned or its assignee as indicated on the Assignment Form.
Dated:
------------------------------------------------
INSTRUCTIONS FOR REGISTRATION OF STOCK
--------------------------------------
Name:
---------------------------------------------------------------------------
(please typewrite or print or block letters)
Address:
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Signature:
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Note: The signature must conform to all respects to name of
holder as specified on the face of this warrant
certificate
Signature Guaranteed:
ASSIGNMENT FORM
---------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
Name:
---------------------------------------------------------------------------
(please typewrite or print in block letters)
Address:
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its right to purchase ______ shares of Common Stock represented by this Class A
Warrant and does hereby irrevocably constitute and appoint
- --------------------------------------------------------------------------------
to transfer the same on the books of the Company, with full power of
substitution in the premises.
Dated:
-------------------------------------
Signature:
- ------------------------------------------- ------------------------
Social Security or other identifying number Note: The signature must
of holder conform in all aspects
to name of holder as
specified on the face of
this Warrant Certificate
Signature Guaranteed:
EXHIBIT B
FORM OF CLASS B WARRANT
<Table>
WARRANTS NOT EXERCISED ON OR BEFORE 5:00 P.M. NEW YORK CITY TIME,
ON DECEMBER 19, 20012 SHALL BECOME VOID. ----------------
Warrants
MERITAGE HOSPITALITY GROUP INC.
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CLASS B WARRANT CERTIFICATE
NUMBER
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CUSIP 59000K 12 7
WA SEE REVERSE FOR CERTAIN DEFINITIONS
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This Warrant certificate certifies that
or registered assigns,
is the registered holder of
Class B Warrants (The "Warrants") expiring at 5:00 p.m., New York City time, on December 1 9, 201 2 (the
"Expiration Date"), to purchase Common Stock, $0.01 par value per share (the "Common Stock"), of MERITAGE
HOSPITALITY GROUP INC., a Michigan corporation (the "Company"). The Warrants may be exercised at any time from
9:00 am., New York City time, on December 19 2004 to 5:00 p.m., New York City time, on the Expiration Date.
Each Warrant entitles the holder upon exercise to receive from the Company, if exercised before 5:00 p.m. ,
New York City time on the Expiration Date, one fully paid and nonassessable share of Common Stock (a "Warrant
Share") at the Exercise Price (as defined in the Warrant Agreement referred to on the reverse side hereof),
payable in lawful money of the United States of America, upon surrender of this Warrant Certificate and
payment of the Exercise Price at the office or agency of the Warrant Agent, but only subject to the conditions
set forth herein and in the Warrant Agreement. The Exercise Price and number of Warrant Shares issuable upon
exercise of the Warrants are subject to adjustment upon the occurrence of certain events as set forth in the
Warrant Agreement.
Reference is hereby made to the further provisions of this Warrant Certificate set forth on the reverse
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 as such term is used in the Warrant Agreement.
IN WITNESS WHEREOF, MERITAGE HOSPITALITY GROUP INC. has caused this Warrant
Certificate to be duly executed.
Dated:
MERITAGE HOSPITALITY GROUP INC.
COUNTERSIGNED:
LASALLE BANK NATIONAL ASSOCIATION
AS WARRANT AGENT
BY:
/s/ James R. Saalfeld /s/ Robert E. Schermer, Jr.
AUTHORIZED SIGNATORY Secretary Chief Executive Officer
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring on the Expiration Date entitling the
holder on exercise to receive shares of Common Stock of the Company and are
issued or to be issued pursuant to a Warrant Agreement dated as of December 19,
2003 (the "Warrant Agreement"), duly executed and delivered by the Company to
LASALLE BANK NATIONAL ASSOCIATION, as Warrant Agent (the "Warrant Agent"), which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Warrant Agent,
the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrant. In the event of a
conflict between the terms of this Warrant Certificate and the Warrant
Agreement, the terms of the Warrant Agreement shall prevail. A copy of the
Warrant Agreement may be obtained by the holder hereof upon written request to
the Company. By accepting initial delivery, transfer or exchange of this
Warrant, the duly registered holder shall be deemed to have agreed to the terms
of the Warrant Agreement as it may be in effect from time to time, including any
amendments or supplements duly adopted in accordance therewith.
The holder of Warrants evidenced by this Warrant Certificate may exercise
them by surrendering this Warrant Certificate, with the form of election to
purchase set forth hereon properly completed and executed, together with payment
of the Exercise Price in the manner described below at the office of the Warrant
Agent. In the event that upon any exercise of Warrants evidenced hereby the
number of Warrants exercised shall be less than the total number of Warrants
evidenced hereby, there shall be issued to the holder hereof or its assignee a
new Warrant Certificate evidencing the number of Warrants not exercised.
Payment of the Exercise Price may be made in cash by wire transfer to the
Warrant Agent for the account of the Company or by certified or official bank
check or checks to the order of the Company or by any combination thereof.
The Warrant Agreement provides that upon the occurrence of certain events
the number of shares of Common Stock issuable upon the exercise of each Warrant,
and the Exercise Price of each Warrant, may, subject to certain conditions, be
adjusted. No fractions of a share of Common Stock will be issued upon the
exercise of any Warrant, but the Company shall pay the cash value thereof
determined as provided in the Warrant Agreement.
Warrant Certificates, when surrendered at the office of the Warrant Agent
by the registered holder thereof in person or by legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) hereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
PURCHASE FORM
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The undersigned hereby irrevocably elects to exercise this Class B
Warrant, according to the terms and conditions hereof, to the extent of
purchasing _____________ shares of Common Stock and hereby makes payment of
$_____________ in payment of the exercise price thereof. If the number of shares
shall not be all of the shares purchasable under this Warrant, then a new
Warrant Certificate for the balance remaining shall be issued in the name of the
undersigned or its assignee as indicated on the Assignment Form.
Dated:
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INSTRUCTIONS FOR REGISTRATION OF STOCK
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Name:
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(please typewrite or print or block letters)
Address:
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Signature:
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Note: The signature must conform to all respects to name of
holder as specified on the face of this warrant
certificate
Signature Guaranteed:
ASSIGNMENT FORM
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FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
Name:
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(please typewrite or print in block letters)
Address:
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its right to purchase ______ shares of Common Stock represented by this Class B
Warrant and does hereby irrevocably constitute and appoint
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to transfer the same on the books of the Company, with full power of
substitution in the premises.
Dated:
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Signature:
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Social Security or other identifying number Note: The signature must
of holder conform in all aspects
to name of holder as
specified on the face of
this Warrant Certificate
Signature Guaranteed: