Holdings Investments LLC – ‘SC 13D’ on 10/29/99 re: Bab Holdings Inc – EX-10.1

On:  Friday, 10/29/99   ·   Accession #:  1097677-99-4   ·   File #:  5-49439

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General Statement of Beneficial Ownership   —   Schedule 13D
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: SC 13D      General Statement of Beneficial Ownership              8±    30K 
 2: EX-10.1     Letter Agreement                                      11±    41K 

EX-10.1   —   Letter Agreement

    October 21, 1999

CONFIDENTIAL                                                                    
------------                                                                    

Keyway Investments Limited                                                      
Europlan House, 19 Havelock                                                     
Douglas, Isle of Man                                                            

Gentlemen:                                                                      

This letter (the "Agreement") sets forth our agreement concerning the sale by   
Keyway Investments Limited ("Keyway") of all of its shares of Series A          
Convertible Preferred Stock of BAB Holdings, Inc., an Illinois corporation      
("BAB Holdings"), consisting of 60,000 shares (hereinafter, the "Preferred      
Shares"), to Holdings Investments, LLC, a Delaware limited liability company    
("Purchaser"), as follows:                                                      

1.     Keyway hereby agrees to sell all of its right, title and interest in     
and to the Preferred Shares to Purchaser, including, without limitation, all    
rights with respect to accrued dividends, free and clear of all security        
interests, liens, claims, encumbrances, charges and restrictions of any nature  
(collectively, "Encumbrances"), and Purchaser hereby agrees to purchase all of  
the Preferred Shares from Keyway, on the terms and conditions set forth in the  
remainder of this Agreement.                                                    

2.     The consideration payable by Purchaser to Keyway for the Preferred       
Shares shall consist of (i) a cash payment from Purchaser to Keyway equal to    
$650,000(U.S.), against which the $50,000 (U.S.) payment previously made by     
Purchaser to Keyway shall be credited (the "Net Cash Portion"), and the         
issuance by Purchaser to Keyway of a Warrant to Purchase Common Shares of BAB   
Holdings (the "Common Stock"), in the form attached hereto as Exhibit A (the    
"Warrant").                                                                     

3.     Upon the execution of this Agreement by both parties hereto, the         
parties hereto shall make the following deliveries to one another:              

(a)  Keyway shall deliver (i) two (2) duplicate originals of this 
Agreement duly executed by Keyway, (ii) all original certificates representing  
the Preferred Shares, and (iii) duly executed stock powers or assignments       
separate from certificate relating to the Preferred Shares, with signatures     
guaranteed, executed in blank.  All such deliveries shall be made by Keyway     
via telecopier on or before the close of business on October 21, 1999, with     
originals sent by express mail, to Ehrenreich Eilenberg Krause & Zivian LLP,    
as escrow agent (the "Escrow Agent"), at 11 East 44th Street, 17th Floor, New   
York, New York  10017 (telecopier no. (212) 986-2399), Attention:  Adam D.      
Eilenberg, Esq., to be held in escrow by the Escrow Agent pending the Escrow    
Agent's receipt of the Net Cash Portion and the Warrant, at which time the      
Escrow Agent shall release to Purchaser the documents described in clauses (i)  
through (iii) of this paragraph 3(a); and                                       

  (b)  Purchaser shall deliver (i) two (2) duplicate originals of this
Agreement duly executed by Purchaser, and (ii) the Warrant, duly executed by    
Purchaser, to Keyway, to be held in escrow by the Escrow Agent pending its      
receipt of the Net Cash Portion.  Purchaser shall deliver copies of such items  
(i) and (ii) to the Escrow Agent by telecopier on or before the close of        
business on October 21, 1999, with originals sent by express mail to the        
address set forth above.  Purchaser shall deliver the Net Cash Portion by wire  
transfer to the Escrow Agent for the benefit of Keyway in accordance with wire  
transfer instructions supplied to Purchaser prior to the parties' execution of  
this Agreement, at such time as Purchaser has been advised of the Escrow        
Agent's receipt of the deliveries of Keyway set forth in paragraph 3(a) above.  

(c)  Upon receipt by the Escrow Agent of the original certificates
representing the Preferred Shares, and upon delivery of all other documents in  
conformity with paragraphs 3(a) and 3(b) above, the Escrow Agent shall deliver  
such original certificates to the transfer agent of BAB Holdings, together      
with a request from BAB Holdings that the shares of Common Stock issuable upon  
conversion of the Preferred Stock be represented by one certificate for         
3,192,116 shares to be delivered to the Purchaser and one certificate for       
1,718,832 shares to be delivered to the Escrow Agent, both certificates to be   
issued in the name of Purchaser and directing that such certificates be         
delivered as stated above.  Upon receipt of the certificate for 1,718,832       
shares of Common Stock, (the "Escrow Shares"), the Escrow Agent shall hold in   
escrow, together with a stock powers duly executed by Purchaser corresponding   
to the certificate representing the Escrow Shares (which Purchaser hereby       
covenants to execute and deliver within three business days of receipt of the   
stock certificate representing the 3,192,116 shares).  Upon request from        
Keyway, the certificate representing the Escrow Shares, together with the       
corresponding stock powers, shall be released by the Escrow Agent following     
its receipt from Keyway of a copy of a duly executed Warrant Exercise Form      
with respect to the exercise of all or a portion of the Warrant and a           
certification from Keyway that such Warrant Exercise Form has been tendered to  
Purchaser and that either the full exercise price with respect to the portion   
of the Warrant being exercised has been tendered to Purchaser or Keyway has     
relied on the cashless exercise provisions of the Warrant; provided, however,   
that if the Escrow Agent receives a notice from Purchaser within one business   
day of its receipt of the Warrant Exercise Form and Keyway's certification      
challenging Keyway's exercise of the Warrant, the Escrow Agent shall not        
release to Keyway the certificate representing all or part of the Escrow        
Shares (and the related stock powers).  In such event, the Escrow Agent shall   
only take action if directed in writing signed by both Keyway and Purchaser or  
pursuant to a final order of a court of competent jurisdiction.                 

   (d)  The Escrow Agent may rely and shall be fully protected in acting
or refraining from acting upon any notice or other document believed by the     
Escrow Agent in good faith to be genuine and to have been signed or presented   
by the proper person or entity.  The Escrow Agent shall have no duties or       
responsibilities except those expressly set forth herein.                       

   (e)  Keyway and Purchaser shall, jointly and severally, indemnify and
hold harmless the Escrow Agent and each of its partners, agents and employees   
("Agent Indemnitees") absolutely and forever, from and against any and all      
claims, actions, damages, suits, liabilities, obligations, costs, fees,         
charges, and any other expenses whatsoever, including reasonable attorneys'     
fees and costs, that may be asserted against any Agent Indemnitee in            
connection with this Agreement or the performance of the Escrow Agent or any    
Agent Indemnitee hereunder.  Except for intentional misrepresentation, gross    
negligence or intentional misconduct, the Escrow Agent shall not be liable to   
Keyway or Purchaser for any act, or failure to act, by the Escrow Agent in      
connection with this Agreement.  The Escrow Agent will not be liable for        
special, indirect, incidental or consequential damages hereunder.               

4.     Keyway hereby represents and warrants to Purchaser as follows:  (a)      
this Agreement, and the documents and instruments executed and/or delivered by  
Keyway in connection herewith, have been duly authorized by all necessary       
action on the part of Keyway and its governing body, and constitute the legal,  
valid and binding obligation of Keyway, enforceable against Keyway in           
accordance with their respective terms; (b) the Preferred Shares are free and   
clear of all Encumbrances; and (c) Keyway, which has held the Preferred Shares  
since their issuance, is familiar with the business and operations of BAB       
Holdings, has evaluated the risks of the acquisition of the Warrant, including  
the risks set forth in Exhibit B attached to this Agreement, and has relied     
solely on its own due diligence investigation in making its decision to         
acquire the Warrant.                                                            

5.     Purchaser hereby represents and warrants to Keyway as follows:  (a)      
this Agreement, and the documents and instruments executed and/or delivered by  
Purchaser in connection herewith, have been duly authorized by all necessary    
action on the part of Purchaser and its managers, and constitute the legal,     
valid and binding obligation of Purchaser, enforceable against Purchaser in     
accordance with their respective terms and (b) Purchaser is not relying upon    
any information relating to BAB Holdings supplied by Keyway, whether orally or  
in writing.                                                                     

6.     Notwithstanding anything to the contrary contained herein, the Warrant   
may be exercised by Keyway only to the extent that, after giving effect to the  
shares of Common Stock issuable pursuant to the exercise of the Warrant, the    
total number of shares of Common Stock deemed beneficially owned by Keyway,     
together with all shares of Common Stock deemed beneficially owned by Keyway's  
"affiliates" (as defined in Rule 144 promulgated pursuant to the Securities     
Act of 1933, as amended) that would be aggregated for purposes of determining   
whether a group under Section 13(d) of the Securities Exchange Act of 1934, as  
amended, exists, would exceed 4.99% of the total issued and outstanding shares  
of Common Stock, provided that Keyway shall have the right to waive this        
restriction, in whole or in part upon 61 days' prior notice to Purchaser.  The  
delivery of a Warrant Exercise Form in the form attached to the Warrant shall   
be deemed a representation by Keyway that it is in compliance with this         
Section 6.  A transferee of the Warrant shall not be bound by this provision    
unless it expressly agrees to be so bound.  The term "deemed beneficially       
owned" as used in this Section 6 shall exclude shares that might otherwise be   
deemed beneficially owned by reason of the convertibility of the Warrant.       

7.     The parties to this Agreement hereby agree to hold the specific terms    
of the transaction in  strictest confidence and not to disclose said terms to   
any person, company, or organization outside of the respective parties and      
their officers, directors, agents, employees and members, unless said           
disclosure is required by rule, regulation or order of any competent judicial   
or regulatory agency having authority to require such disclosure.  This         
confidentiality requirement applies to the parties and all officers,            
directors, agents, employees and members of the parties.                        

8.     This Agreement shall be binding upon, and inure to the benefit of, the   
parties hereto and their respective successors and assigns.  This Agreement     
shall be governed by and construed in accordance with the laws of the State of  
Illinois. This Agreement may be executed in any number of counterparts with     
the same effect as if all parties hereto had signed the same document.  All     
counterparts shall be construed together and shall constitute one instrument.   
This Agreement, along with the exhibits hereto, constitutes the entire          
agreement among the parties hereto pertaining to the subject matter hereof and  
supersedes all prior agreements and understandings pertaining thereto,          
including, without limitation, the letter agreement between Keyway and Michael  
W. Evans and Michael K. Murtaugh dated September 8, 1999, as amended.           

If this Agreement correctly sets forth our mutual agreement, please so          
indicate by signing two (2) duplicate originals of this Agreement and           
returning them as aforesaid.                                                    

               Very truly yours,

                        HOLDINGS INVESTMENTS, LLC,
                                  a Delaware limited liability company

                     By:/s/ MICHAEL W. EVANS
                          ----------------------------
                       Michael W. Evans, Manager

                        By:/s/ MICHAEL K. MURTAUGH
                          ----------------------------
                          Michael K. Murtaugh, Manager

Accepted and agreed to this                                                     
21st day of October, 1999:                                                      

KEYWAY INVESTMENTS LIMITED                                                      

By:/s/ MARTIN PETERS                                                            
---------------------                                                     
Title: Director                                                           

EHRENREICH EILENBERG KRAUSE & ZIVIAN LLP,                                       
As Escrow Agent                                                                 

By:  /s/ ADAM EILENBERG                                                         
-------------------                                                     
Partner                                                                 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE     
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE           
"SECURITIES ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED,             
TRANSFERRED OR OTHERWISE DISPOSED OF, UNLESS REGISTERED PURSUANT TO THE         
PROVISIONS OF THE SECURITIES ACT OR AN OPINION OF COUNSEL IS OBTAINED STATING   
THAT SUCH DISPOSITION IS IN COMPLIANCE WITH AN AVAILABLE EXEMPTION FROM SUCH    
REGISTRATION.                                                                   

Dated as of October 21, 1999                                                    

HOLDINGS INVESTMENTS, LLC   

(a Delaware limited liability company)  

Warrant to Purchase Shares of Common Stock of BAB Holdings, Inc.
----------------------------------------------------------------

No. WP-_____                                                                    

FOR VALUE RECEIVED, HOLDINGS INVESTMENTS, LLC, a Delaware limited liability     
company ("Holdings LLC"), hereby certifies that Keyway Investments Limited or   
registered assigns (the "Holder") is entitled, subject to the provisions of     
this Warrant, to purchase from Holdings LLC 1,718,832 fully paid and non-       
assessable shares (the "Warrant Shares") of common stock, no par value (the     
"Common Stock"), of BAB Holdings, Inc., an Illinois corporation (the            
"Company"), for an exercise price (the "Exercise Price") of $.01 per share.     
The number of shares of Common Stock to be received upon the exercise of this   
Warrant and the Exercise Price may be adjusted from time to time as             
hereinafter set forth.  The shares of Common Stock deliverable upon such        
exercise, and as adjusted from time to time, are hereinafter referred to as     
"Warrant Stock." The term "Other Securities" means any other equity or debt     
securities that may be issued by the Company in addition thereto or in          
substitution for the Warrant Stock.  The term "Company" means and includes BAB  
Holdings, Inc. as well as (i) any immediate or more remote successor            
corporation resulting from the merger or consolidation of such corporation or   
the sale of all, or substantially all, of the assets of the Company(or any      
immediate or more remote successor corporation of such corporation) with        
another corporation, or (ii) any corporation to which such corporation (or any  
immediate or more remote successor corporation of such corporation) has         
transferred its property or assets as an entirety or substantially as an        
entirety.                                                                       

Upon receipt by Holdings LLC of evidence reasonably satisfactory to it of the   
loss, theft, destruction or mutilation of this Warrant, and (in the case of     
loss, theft or destruction) of reasonably satisfactory indemnification, and     
upon surrender and cancellation of this Warrant, if mutilated, Holdings LLC     
shall execute and deliver a new Warrant of like tenor and date. Any such new    
Warrant executed and delivered shall constitute an additional contractual       
obligation on the part of Holdings LLC, whether or not this Warrant so lost,    
stolen, destroyed or mutilated shall be at any time enforceable by anyone.      
The Holder agrees with Holdings LLC that this Warrant is issued, and all the    
rights hereunder shall be held subject to, all of the conditions, limitations   
and provisions set forth herein.                                                

1.  Exercise of Warrant.                                                        

(a)  Subject to Section 1(b) below, this Warrant may be exercised in whole  
or in part at any time from and after November 1, 2001 and expiring on          
November 1, 2003 (the "Expiration Date"), by presentation and surrender of      
this Warrant to Holdings LLC at its principal office, with the Warrant          
Exercise Form attached hereto duly executed and, unless the Holder utilizes     
the cashless exercise option pursuant to Section 3 below, accompanied by        
payment (either in cash or by certified or official bank check or wire          
transfer, each payable to the order of Holdings LLC) of the Exercise Price for  
the number of shares specified in such form and instruments of transfer, if     
appropriate, duly executed by the Holder or his or her duly authorized          
attorney. If this Warrant should be exercised in part only, Holdings LLC        
shall, upon surrender of this Warrant for cancellation, execute and deliver a   
new Warrant evidencing the rights of the Holder thereof to purchase the         
balance of the shares purchasable hereunder. Upon receipt by Holdings LLC of    
this Warrant, together with the Exercise Price, if applicable, at its office,   
or by the stock transfer agent of Holdings LLC at its office, in proper form    
for exercise, the Holder shall be deemed to be the holder of record of the      
shares of Common Stock issuable upon such exercise.  Holdings LLC shall pay     
any and all documentary stamp or similar issue taxes payable in respect of the  
issue or delivery of shares of Common Stock on exercise of this Warrant,        
provided, that Holdings LLC shall not be required to pay any tax that may be    
payable in respect of any transfer that may be involved in the issuance and     
delivery of any certificate in a name other than that of the Holder of the      
Warrant exercised.                                                              

(b)  Notwithstanding the foregoing, this Warrant may be exercised, in whole 
or in part, at any time upon the occurrence of the sale or merger of the        
Company (including without limitation, the issuance by the Company of a         
sufficiently large number of shares of Common Stock or other voting securities  
or securities convertible into Common Stock to result in a change in control    
of the Company) or the sale or other disposition of all, or substantially all,  
of the Company's assets or in the event that the Company is unable, or admits   
in writing its inability, to pay its debts, or has made any assignment for the  
benefit of creditors, or the Company has commenced, or there has been           
commenced against the Company, any case, proceeding, or other action seeking    
to have an order for relief entered with respect to the Company, or to          
adjudicate the Company as a bankrupt or insolvent and, in the case of           
commencement against the Company, the Company shall indicate its approval       
thereof or consent thereto or otherwise shall remain undismissed for a period   
of sixty (60) days.                                                             

2.  Fractional Shares.                                                          

No fractional shares or scrip representing fractional shares shall be issued    
upon the exercise of this Warrant, but Holdings LLC shall pay the Holder an     
amount equal to the fair market value of such fractional share of Common Stock  
in lieu of each fraction of a share otherwise called for upon any exercise of   
this Warrant. For purposes of this Warrant, the fair market value of a share    
of Common Stock (the "Fair Market Value") shall be determined as follows:       

(a)  If the Common Stock is listed on a National Securities Exchange or     
admitted to unlisted trading privileges on such exchange or listed for trading  
on the NASDAQ system, the current market value shall be the last reported sale  
price of the Common Stock on such exchange or system on the last business day   
prior to the date of exercise of this Warrant or if no such sale is made on     
such day, the average of the closing bid and asked prices for such day on such  
exchange or system; or                                                          

(b)  If the Common Stock is not so listed or admitted to unlisted trading   
privileges, the current market value shall be the mean of the last reported     
bid and asked prices reported by the National Quotation Bureau, Inc. on the     
last business day prior to the date of the exercise of this Warrant; or         

(c)  If the Common Stock is not so listed or admitted to unlisted trading   
privileges and bid and asked prices are not so reported, the current market     
value shall be an amount, not less than book value thereof as at the end of     
the most recent fiscal year of the Company ending prior to the date of the      
exercise of the Warrant, determined in such reasonable manner as may be         
prescribed by the managers of Holdings LLC.                                     

3.  Cashless Exercise.                                                          

In addition to the exercise of all or a portion of this Warrant by the payment  
of the Exercise Price in cash or check as set forth in Section 1 above, and in  
lieu of any such payment, the Holder or any assignee of Holder has the right    
to exercise this Warrant, in full or in part, by surrendering this Warrant and  
returning a duly executed Warrant Exercise Form to Holdings LLC, together with  
a written notice that the Holder is exercising its rights to cashless exercise  
pursuant to this Section 3, and the number of Warrant Shares which it will      
receive will equal the product of (x) the number of Warrant Shares as to which  
this Warrant is being exercised multiplied by (y) a fraction, the numerator of  
which is the Fair Market Value, as determined in accordance with Section 2      
herein, less the Exercise Price then in effect and the denominator of which is  
the Fair Market Value.                                                          

4.  Exchange, Transfer, Assignment or Loss of Warrant.                          

This Warrant is exchangeable, without expense, at the option of the Holder,     
upon presentation and surrender hereof to Holdings LLC, for other Warrants of   
different denominations, entitling the Holder or Holders thereof to purchase    
in the aggregate the same number of shares of Common Stock purchasable          
hereunder.  Upon surrender of this Warrant to Holdings LLC, with the            
Assignment Form annexed hereto duly executed and funds sufficient to pay any    
transfer tax, Holdings LLC shall, without charge, execute and deliver a new     
Warrant in the name of the assignee named in such instrument of assignment and  
this Warrant shall promptly be cancelled.  This Warrant may be divided or       
combined with other Warrants that carry the same rights upon presentation       
hereof at the office of Holdings LLC or at the office of its stock transfer     
agent, if any, together with a written notice specifying the names and          
denominations in which new Warrants are to be issued and signed by the Holder   
hereof.                                                                         

5.  Rights of the Holder.                                                       

The Holder shall not, by virtue hereof, be entitled to any rights of a          
shareholder in the Company or Holdings LLC, either at law or in equity, and     
the rights of the Holder are limited to those expressed in this Warrant.        

6.  Anti-Dilution Provisions.                                                   

6.1.  Adjustment for Recapitalization.                                          

If the Company shall at any time subdivide its outstanding shares of Common     
Stock (or Other Securities at the time receivable upon the exercise of the      
Warrant) by recapitalization, reclassification or split-up thereof, or if the   
Company shall declare a stock dividend or distribute shares of Common Stock to  
its stockholders, the number of shares of Common Stock subject to this Warrant  
immediately prior to such subdivision shall be proportionately increased and    
the Exercise Price shall be proportionately decreased, and if the Company       
shall at any time combine the outstanding shares of Common Stock by             
recapitalization, reclassification or combination thereof, the number of        
shares of Common Stock or Other Securities subject to this Warrant immediately  
prior to such combination shall be proportionately decreased and the Exercise   
Price shall be proportionately increased.  Any such adjustments pursuant to     
this Section 6.1 shall be effective at the close of business on the effective   
date of such subdivision or combination or if any adjustment is the result of   
a stock dividend or distribution then the effective date for such adjustment    
based thereon shall be the record date therefor.                                

6.2.  Adjustment for Reorganization, Consolidation, Merger, Etc.                

In case of any reorganization of the Company (or any other corporation, the     
securities of which are at the time receivable on the exercise of this          
Warrant) or in the event the Company shall consolidate with or merge into       
another corporation or convey all or substantially all of its assets to         
another corporation, then, and in each such case, the Holder of this Warrant    
upon the exercise thereof as provided in Section 1 at any time after the        
consummation of such reorganization, consolidation, merger or conveyance,       
shall be entitled to receive, in lieu of the securities and property            
receivable upon the exercise of this Warrant prior to such consummation, the    
securities or property to which such Holder would have been entitled upon such  
consummation if such Holder had exercised this Warrant immediately prior        
thereto; in each such case, the terms of this Warrant shall be applicable to    
the securities or property receivable upon the exercise of this Warrant after   
such consummation.                                                              

6.3.  Certificate as to Adjustments.                                            

In each case of an adjustment in the number of shares of Warrant Stock or       
Other Securities receivable on the exercise of this Warrant, Holdings LLC at    
its expense will promptly compute such adjustment in accordance with the terms  
of this Warrant and prepare a certificate executed by an executive officer of   
Holdings LLC setting forth such adjustment and showing in detail the facts      
upon which such adjustment is based.  Holdings LLC will forthwith cause to be   
delivered a copy of each such certificate to the Holder.                        

7.  Option of Holdings LLC to Retire Warrant.                                   

At the option of Holdings LLC (the "Call Option") exercisable by service of     
written notice upon the Holder at any time or from time to time prior to May    
31, 2000 (the "Call Expiration Date"), Holdings LLC may retire this Warrant,    
in whole or in part, and cause the Warrant or the applicable portion of same    
to be cancelled, by making a payment to the Holder in an amount equal to        
$0.20363 per share of Warrant Stock (as such price shall be adjusted to take    
into account adjustments in the number of shares of Warrant Stock), whereupon   
the Holder shall deliver the original Warrant to Holdings LLC for               
cancellation.  If such right of Holdings LLC shall be exercised for less than   
all of the shares of Warrant Stock, Holdings LLC shall, upon surrender of this  
Warrant for cancellation, execute and deliver to the Holder a new Warrant       
evidencing the rights of the Holder thereof to purchase the balance of the      
shares of Warrant Stock purchasable hereunder, subject to Holdings LLC's right  
to further exercise the Call Option prior to the Call Expiration Date.          

8.  Transfer to Comply with the Securities Act.                                 

Notwithstanding any other provision contained herein, this Warrant and any      
Warrant Stock or Other Securities may not be sold, transferred, pledged,        
hypothecated or otherwise disposed of except as follows:  (a) to a person who,  
in the opinion of counsel to Holdings LLC, is a person to whom this Warrant or  
the Warrant Stock or Other Securities may legally be transferred without        
registration and without the delivery of a current prospectus under the         
Securities Act with respect thereto and then only against receipt of an         
agreement of such person to comply with the provisions of this Section 8 with   
respect to any resale or other disposition of such securities; or (b) to any    
person upon delivery of a prospectus then meeting the requirements of the       
Securities Act relating to such securities and the offering thereof for such    
sale or disposition, and thereafter to all successive assignees.                

9.  Legend.                                                                     

Unless the shares of Warrant Stock or Other Securities have been registered     
under the Securities Act, upon exercise of any of the Warrants and the          
issuance of any of the shares of Warrant Stock or Other Securities, all         
certificates representing such securities shall bear on the face thereof        
substantially the following legend:                                             

"The securities represented by this certificate have not been         
registered under the Securities Act of 1933, as amended, and may                
not be sold, offered for sale, assigned, transferred or otherwise               
disposed of, unless registered pursuant to the provisions of that               
Act or unless an opinion of counsel to the Corporation is obtained              
stating that such disposition is in compliance with an available                
exemption from such registration."                                              

10.  Notices.                                                                   

All notices required hereunder shall be in writing and shall be deemed given    
when faxed (with confirmation of receipt), delivered personally or by           
overnight courier proffering a receipt against delivery or within two days      
after mailing when mailed by certified or registered mail, return receipt       
requested, to Holdings LLC at its principal office, or to the Holder at the     
address set forth on the record books of Holdings LLC, or at such other         
address of which Holdings LLC or the Holder has been advised by notice          
hereunder.                                                                      

11.  Applicable Law.                                                            

The Warrant is issued under and shall for all purposes be governed by and       
construed in accordance with the laws of the State of Illinois, without giving  
effect to the choice of law rules thereof.                                      

IN WITNESS HEREOF, Holdings LLC has caused this Warrant to be signed on its     
behalf, in its corporate name, by its duly authorized officer, all as of the    
day and year first above written.                                               

                        HOLDINGS INVESTMENTS, LLC,
                                  a Delaware limited liability company

                     By:/s/ MICHAEL W. EVANS
                          ----------------------------
                       Michael W. Evans, Manager

                        By:/s/ MICHAEL K. MURTAUGH
                          ----------------------------
                          Michael K. Murtaugh, Manager

WARRANT EXERCISE FORM       

The undersigned hereby irrevocably elects to exercise the within Warrant to     
the extent of purchasing ____ shares of Common Stock of BAB HOLDINGS, INC., an  
Illinois corporation, and hereby either (i) exercises by cashless exercise or   
(ii) makes payment of $____________ in payment therefor.                        

                                ----------------------------
                  Name of entity

                                By:  -----------------------
                   Name:
                    Title:

                                  --------------------------
                                  Signature, if jointly held

                                ------------------------
            Date

INSTRUCTIONS FOR ISSUANCE OF STOCK        
(if other than to the registered holder of the within Warrant)          

Name______________________________________________                              
(Please typewrite or print in block letters)                            

Address___________________________________________                              

Social Security or                                                              
Taxpayer Identification Number ____________________                             

ASSIGNMENT FORM   

FOR VALUE RECEIVED,____________________________                                 

hereby sells, assigns and transfers unto                                        

Name ___________________________________________                                
(Please typewrite or print in block letters)                          

the right to purchase Common Stock of BAB HOLDINGS, INC., an Illinois           
corporation, represented by this Warrant to the extent of shares as to which    
such right is exercisable and does hereby irrevocably constitute and appoint    
Attorney, to transfer the same on the books of BAB HOLDINGS, INC. with full     
power of substitution in the premises.                                          

DATED:  ____________, _____.                                                    

_____________________________                                                   
Signature                                                                       

_____________________________                                                   
Signature, if jointly held                                                      

Dates Referenced Herein

This ‘SC 13D’ Filing		Date		Other Filings
		11/1/03		None on these Dates
		11/1/01
		5/31/00
Filed on:		10/29/99
		10/21/99
		9/8/99
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