THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR OFFERED FOR
SALE UNLESS REGISTERED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS
OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THIS WARRANT AND THE
SHARES OF COMMON STOCK PURCHASABLE HEREUNDER ARE ALSO BENEFITTED BY AND SUBJECT
TO A REGISTRATION RIGHTS AGREEMENT DATED OF EVEN DATE HEREWITH, BETWEEN FAMILY
GOLF CENTERS, INC. (THE "COMPANY") AND THE HOLDERS NAMED THEREIN, A COPY OF
WHICH IS ON FILE WITH THE COMPANY.
Dated: October 15, 1999
WARRANT A -__
To Purchase _______ Shares of Common Stock
FAMILY GOLF CENTERS, INC.
Expiring March 30, 2007
THIS IS TO CERTIFY THAT, for value received, ____________ or its registered
assigns (the "Holder") is entitled to purchase from Family Golf Centers, Inc., a
Delaware corporation (the "Company"), at any time or from time to time after
9:00 a.m., New York City time, on the date hereof and prior to 5:00 p.m., New
York City time, on the earlier of March 30, 2007, and the Business Day preceding
the date of redemption of this Warrant, at the place where a Warrant Agency is
located, at the Exercise Price, the number of shares of common stock, par value
$.01 per share (the "Common Stock"), of the Company shown above, all subject to
adjustment and upon the terms and conditions hereinafter provided and in the
Credit Agreement (as hereinafter defined), and is entitled also to exercise the
other appurtenant rights, powers and privileges hereinafter described.
This Warrant is one of several warrants (the "Warrants") of the same form
and having the same terms as this Warrant, entitling the holders initially to
purchase up to an aggregate of _______ shares of Common Stock. The Warrants have
been issued pursuant to the Amended and Restated Credit, Security, Guaranty and
Pledge Agreement dated as of December 2, 1998 as Amended and Restated as of
October 15, 1999 (the "Credit Agreement"), by and among the Company, the
guarantors named therein, the lenders named therein (the "Lenders") and the
Agent, and the Holder is entitled to certain benefits as set forth therein. The
Company shall keep a copy of the Credit Agreement, and all amendments thereto,
at the Warrant Agency and shall furnish, without charge, copies thereof to the
Holder upon request.
Certain terms used in this Warrant are defined in Article V.
ARTICLE I
Exercise of Warrants
1.1. Method of Exercise. To exercise this Warrant in whole or in part, the
Holder shall deliver on any Business Day to the Company, at the Warrant Agency,
(a) this Warrant, (b) a written notice, substantially in the form of the
Subscription Notice attached hereto, of such Holder's election to exercise this
Warrant, which notice shall specify the number of shares of Common Stock to be
purchased, the denominations of the share certificate or certificates desired
and the name or names in which such certificates are to be registered, and (c)
payment of the Exercise Price with respect to such shares. Such payment may be
made, at the option of the Holder, by cash, certified or bank cashiers check or
wire transfer.
The Company shall, as promptly as practicable and in any event within seven
days thereafter, execute and deliver or cause to be executed and delivered, in
accordance with such notice, a certificate or certificates representing the
aggregate number of shares of Common Stock specified in said notice together
with cash in lieu of any fractions of a share as provided in Section 1.3. The
share certificate or certificates so delivered shall be in such denominations as
may be specified in such notice or, if such notice shall not specify
denominations, in denominations of 100 shares each, and shall be issued in the
name of the Holder or such other name or names as shall be designated in such
notice. This Warrant shall be deemed to have been exercised and such certificate
or certificates shall be deemed to have been issued, and such Holder or any
other Person so designated to be named therein shall be deemed for all purposes
to have become a holder of record of such shares of Common Stock, as of the date
the aforementioned notice is received by the Company. If this Warrant shall have
been exercised only in part, the Company shall, at the time of delivery of such
certificate or certificates, deliver to the Holder a new Warrant evidencing the
rights to purchase the remaining shares of Common Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant, or, at the request of the Holder, appropriate notation may be made on
this Warrant which shall then be returned to the Holder. The Company shall pay
all expenses, taxes and other charges payable in connection with the
preparation, issuance and delivery of share certificates and new Warrants except
that, if share certificates or new Warrants shall be registered in a name or
names other than the name of the Holder, funds sufficient to pay all transfer
taxes payable as a result of such transfer shall be paid by the Holder or such
transferee at the time of delivery of the aforementioned notice of exercise or
promptly upon receipt of a written request of the Company for payment.
1.2. Shares to be Fully Paid and Nonassessable. All shares of Common Stock
issued upon the exercise of this Warrant shall be validly issued, fully paid and
nonassessable and,
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if the Common Stock is then listed on any national securities exchange (as
defined in the Exchange Act) or quoted on The Nasdaq Securities Market Inc.,
shall be duly listed or quoted thereon, as the case may be.
1.3. No Fractional Shares to be Issued. The Company shall not be required
to issue fractions of shares of Common Stock upon exercise of this Warrant. If
any fraction of a share of Common Stock would, but for this Section, be issuable
upon any exercise of this Warrant, in lieu of such fractional share of Common
Stock the Company shall pay to the Holder, in cash an amount equal to the same
fraction of the Fair Market Value of the Company per share of outstanding Common
Stock on the Business Day immediately prior to the date of such exercise.
1.4. Share Legend. Each certificate for shares of Common Stock issued upon
exercise of this Warrant, unless at the time of exercise such shares are
registered under the Securities Act of 1933, shall bear the following legend:
"This security has not been registered under the Securities Act of 1933
and any applicable state securities laws and may not be sold or offered for
sale unless registered pursuant to such Act or unless an exemption from
such registration is available."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution pursuant to a registration statement under the
Securities Act of 1933) shall also bear such legend unless, in the opinion of
counsel selected by the holder of such certificate (who may be an employee of
such holder) and reasonably acceptable to the Company, the securities
represented thereby need no longer be subject to restrictions on resale under
the Securities Act of 1933.
1.5. Reservation. The Company has duly reserved and will keep available for
issuance upon exercise of the Warrants the total number of Conversion Shares
deliverable from time to time upon exercise of all Warrants from time to time
outstanding. The Company will not change the par value of the Common Stock.
ARTICLE II
Warrant Agent; Transfer, Exchange and
Replacement of Warrants
2.1. Warrant Agency. If, at any time, Holders of Warrants exercisable into
20% or more of the Conversion Shares subject to outstanding Warrants shall
request appointment of an independent warrant agency with respect to the
Warrants, the Company shall promptly appoint and thereafter maintain, at its own
expense, an agency in New York, New York (the "Warrant Agency") for certain
purposes specified herein, and shall give prompt notice of such appointment (and
appointment of any successor Warrant Agency) to the holders of all Warrants.
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Until an independent Warrant Agency is so appointed, the Company, as long as any
of the Warrants remain outstanding, shall perform the obligations of the Warrant
Agency provided herein at its address at 000 Xxxxxxxxxxx Xxxx, Xxxxxxxx, Xxx
Xxxx 00000 or such other address as the Company shall specify by notice to all
Warrantholders.
2.2. Ownership of Warrant. The Company may deem and treat the person in
whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by any person
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentment of this Warrant for registration of transfer
as provided in this Article II.
2.3. Transfer of Warrant. The Company agrees to maintain at the Warrant
Agency books for the registration of transfers of the Warrants, and transfer of
this Warrant and all rights hereunder shall be registered, in whole or in part,
on such books, upon surrender of this Warrant at the Warrant Agency, together
with a written assignment of this Warrant duly executed by the Holder or his
duly authorized agent or attorney, with (unless the Holder is a bank or an
institutional investor) signatures guaranteed by a bank or trust company or a
broker or dealer registered with the NASD, and funds sufficient to pay any
transfer taxes payable upon such transfer. Upon surrender and, if required, such
payment, the Company shall execute and deliver a new Warrant or Warrants in the
name of the assignee or assignees and in the denominations specified in the
instrument of assignment and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, and this Warrant shall
promptly be canceled. Notwithstanding the foregoing, a Warrant may be exercised
by a new holder without having a new Warrant issued.
2.4. Division or Combination of Warrants. This Warrant may be divided or
combined with other Warrants upon presentment hereof and of any Warrant or
Warrants with which this Warrant is to be combined at the Warrant Agency,
together with a written notice specifying the names and denominations in which
the new Warrant or Warrants are to be issued, signed by the holders hereof and
thereof or their respective duly authorized agents or attorneys. Subject to
compliance with Section 2.3, as to any transfer which may be involved in the
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
2.5. Loss, Theft, Destruction of Warrant Certificates. Upon receipt of
evidence satisfactory to the Company of the ownership of and the loss, theft,
destruction or mutilation of any Warrant and, in the case of any such loss,
theft or destruction, upon receipt of indemnity or security satisfactory to the
Company (the original Warrantholder's indemnity being satisfactory indemnity in
the event of loss, theft or destruction of any Warrant owned by such original
Holder), or, in the case of any such mutilation, upon surrender and cancellation
of such Warrant, the Company will make and deliver, in lieu of such lost,
stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and
representing the right to purchase the same aggregate number of shares of Common
Stock.
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2.6. Expenses of Delivery of Warrants. The Company shall pay all expenses,
taxes (other than transfer taxes) and other charges payable in connection with
preparation, issuance and delivery of Warrants hereunder.
ARTICLE III
Certain Rights
3.1. Registration of Rights. This Warrant is entitled to the benefits of
the Registration Rights Agreement dated of even date herewith (the "Registration
Rights Agreement") between the Company and each of the Holders identified
therein. The Company shall keep a copy of the Registration Rights Agreement, and
any amendments thereto, at the Warrant Agency and shall furnish, without charge,
copies thereof to the Holder upon request.
3.2. Contest and Appraisal Rights. Upon each determination of Fair Market
Value hereunder, the Company shall promptly give notice thereof to all
Warrantholders, setting forth in reasonable detail the method and basis of
determination of such Fair Market Value. If Holders of Warrants then exercisable
into a majority in interest of the Conversion Shares concerning which the
outstanding Warrants are then exercisable shall disagree with such determination
and shall, by notice to the Company given within 30 days after the Company's
notice of such determination, elect to dispute such determination, such dispute
shall be resolved through the Appraisal Procedure.
ARTICLE IV
Antidilution Provisions
4.1. Adjustment Generally. The Exercise Price and the number of shares of
Common Stock (or other securities or property) issuable upon exercise of this
Warrant shall be subject to adjustment from time to time upon the occurrence of
certain events as provided in this Article IV.
4.2. Common Share Reorganization. If the Company shall subdivide any of its
outstanding Common Shares into a greater number of shares or consolidate any of
its outstanding Common Shares into a smaller number of shares (any such event
being called a "Common Share Reorganization"), then (a) the Exercise Price shall
be adjusted, effective immediately after the effective date of such Common Share
Reorganization, to a price determined by multiplying the Exercise Price in
effect immediately prior to such effective date by a fraction, the numerator of
which shall be the number of Common Shares outstanding on such effective date
before giving effect to such Common Share Reorganization and the denominator of
which shall be the number of Common Shares outstanding after giving effect to
such Common Share Reorganization, and (b) the number of shares of Common Stock
subject to purchase upon exercise of this Warrant shall be adjusted, effective
at such time, to a number determined by multiplying the number of shares of
Common Stock subject to purchase immediately before such Common Share
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Reorganization by a fraction, the numerator of which shall be the number of
shares outstanding after giving effect to such Common Share Reorganization and
the denominator of which shall be the number of Common Shares outstanding
immediately before such Common Share Reorganization.
4.3. Common Share Distribution.
(a) If the Company, other than pursuant to a Common Share Reorganization or
upon exercise of Outstanding Options, Rights and Warrants, shall issue, sell or
otherwise distribute any Common Shares (any such event, including any event
described in paragraphs (b) and (c) below, being herein called a "Common Share
Distribution") for a consideration per share less than the Exercise Price then
in effect or less than the Fair Market Value of the Company per outstanding
Common Share on the date of such Common Share Distribution (before giving effect
to such Common Share Distribution), then, effective upon such Common Share
Distribution, the Exercise Price shall be reduced, if such consideration per
share shall be less than the Exercise Price then in effect but not less than
such Fair Market Value per share, to the lower of the prices (calculated to the
nearest one-thousandth of one cent) determined as provided in clauses (i) and
(ii) below or, if such consideration per share shall be less than such Fair
Market Value per share, to the lowest of the prices (calculated to the nearest
one-thousandth of one cent) determined as provided in clauses (i), (ii) and
(iii) below:
(i) if the Company shall receive any consideration for the Common
Shares issued, sold or distributed in such Common Share Distribution, the
consideration per Common Share received by the Company upon such issue,
sale or distribution;
(ii) by dividing (A) an amount equal to the sum of (1) the number of
Common Shares outstanding immediately prior to such Common Share
Distribution multiplied by the then existing Exercise Price, plus (2) the
consideration, if any, received by the Company upon such Common Share
Distribution by (B) the total number of Common Shares outstanding
immediately after such Common Share Distribution; and
(iii) by multiplying the Exercise Price in effect immediately prior to
such Common Share Distribution by a fraction, the numerator of which shall
be the sum of (A) the number of Common Shares outstanding immediately prior
to such Common Share Distribution multiplied by such Fair Market Value per
share on the date of such Common Share Distribution, plus (B) the
consideration received by the Company upon such Common Share Distribution,
and the denominator of which shall be the product of (1) the total number
of Common Shares outstanding immediately after such Common Share
Distribution multiplied by (2) such Fair Market Value per share on the date
of such Common Share Distribution.
If any Common Share Distribution shall require an adjustment to the
Exercise Price pursuant to the foregoing provisions of this paragraph (a)
including by operation of paragraph (b) or (c) below, then, effective at the
time such adjustment is made, the number of
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shares of Common Stock subject to purchase upon exercise of this Warrant shall
be increased to a number determined by multiplying the number of shares of
Common Stock subject to purchase immediately before such Common Share
Distribution by a fraction, the numerator of which shall be the number of Common
Shares outstanding immediately after giving effect to such Common Share
Distribution and the denominator of which shall be the sum of the number of
Common Shares outstanding immediately before giving effect to such Common Share
Distribution plus the number of Common Shares which the aggregate consideration
received by the Company with respect to such Common Share Distribution would
purchase at the Fair Market Value of the Company per outstanding Common Share on
the date of such Common Share Distribution (before giving effect to such Common
Share Distribution). In computing adjustments under this paragraph, fractional
interests in Common Shares shall be taken into account to the nearest
one-thousandth of a share.
The provisions of this paragraph (a), including by operation of paragraph
(b) or (c) below, shall not operate to increase the Exercise Price or reduce the
number of shares of Common Stock subject to purchase upon exercise of this
Warrant.
(b) If the Company shall issue, sell, distribute or otherwise grant in any
manner (including by assumption) any rights to subscribe for or to purchase, or
any warrants or options for the purchase of, Common Shares or any stock or
securities convertible into or exchangeable for Common Shares (such rights,
warrants or options, which shall not include any Outstanding Options, Rights and
Warrants, being herein called "Options" and such convertible or exchangeable
stock or securities being herein called "Convertible Securities"), whether or
not such Options or the rights to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per share for which Common
Shares are issuable upon the exercise of such Options or upon conversion or
exchange of such Convertible Securities (determined by dividing (i) the
aggregate amount, if any, received or receivable by the Company as consideration
for the granting of such Options, plus the minimum aggregate amount of
additional consideration payable to the Company upon the exercise of all such
Options, plus, in the case of Options to acquire Convertible Securities, the
minimum aggregate amount of additional consideration, if any, payable upon the
issue or sale of such Convertible Securities and upon the conversion or exchange
thereof, by (ii) the total maximum number of Common Shares issuable upon the
exercise of such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Options) shall be less
than the Exercise Price then in effect or less than the Fair Market Value of the
Company per outstanding Common Share on the date of granting such Options
(before giving effect to such grant), then, for purposes of paragraph (a) above,
the total maximum number of Common Shares issuable upon the exercise of such
Options or upon conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Options shall be
deemed to have been issued as of the date of granting of such Options and
thereafter shall be deemed to be outstanding and the Company shall be deemed to
have received as consideration such price per share, determined as provided
above, therefor. Except as otherwise provided in paragraph (d) below, no
additional adjustment of the Exercise Price shall be made upon the actual
exercise of such Options or upon conversion or exchange of such Convertible
Securities.
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(c) If the Company shall issue, sell or otherwise distribute (including by
assumption) any Convertible Securities (which shall not include any Outstanding
Options, Rights and Warrants), whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share for which Common
Shares are issuable upon such conversion or exchange (determined by dividing (i)
the aggregate amount received or receivable by the Company as consideration for
the issue, sale or distribution of such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the Company
upon the conversion or exchange thereof, by (ii) the total maximum number of
Common Shares issuable upon the conversion or exchange of all such Convertible
Securities) shall be less than the Exercise Price then in effect or less than
the Fair Market Value of the Company per outstanding Common Share on the date of
such issue, sale or distribution (before giving effect to such issue, sale or
distribution), then, for purposes of paragraph (a) above, the total maximum
number of Common Shares issuable upon conversion or exchange of all such
Convertible Securities shall be deemed to have been issued as of the date of the
issue, sale or distribution, of such Convertible Securities and thereafter shall
be deemed to be outstanding and the Company shall be deemed to have received as
consideration such price per share, determined as provided above, therefor.
Except as otherwise provided in paragraph (d) below, no additional adjustment of
the Exercise Price shall be made upon the actual conversion or exchange of such
Convertible Securities.
(d) If the exercise price provided for in any Option referred to in
paragraph (b) above, the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities referred to in paragraph
(b) or (c) above, or the rate at which any Convertible Securities referred to in
paragraph (b) or (c) above are convertible into or exchangeable for Common
Shares shall change at any time (other than under or by reason of provisions
designed to protect against dilution upon an event which results in a related
adjustment pursuant to this Article IV), the Exercise Price then in effect and
the number of shares of Common Stock subject to purchase on exercise of this
Warrant shall forthwith be readjusted (effective only with respect to any
exercise of this Warrant after such readjustment) to the Exercise Price and
number of shares of Common Stock which would then be in effect had the
adjustment made upon the issue, sale, distribution or grant of such Options or
Convertible Securities been made based upon such changed purchase price,
additional consideration or conversion rate, as the case may be, but only with
respect to such Options and Convertible Securities as then remain outstanding.
If any such Option expires without being exercised or any such Convertible
Securities lapse or expire unexercised, the Exercise Price and the number of
shares of Common Stock subject to purchase on exercise of this Warrant shall
forthwith be readjusted (effective only with respect to any exercise of this
Warrant after such readjustment) to the Exercise Price and the number of shares
of Common Stock which would then be in effect had such unexercised Option or
lapsed or expired Convertible Securities never been issued.
(e) If the Company shall pay a dividend or make any other distribution upon
any capital stock of the Company payable in Common Shares, Options or
Convertible Securities,
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then, for purposes of paragraph (a) above, such Common Shares, Options or
Convertible Securities shall be deemed to have been issued or sold without
consideration.
(f) If any Common Shares, Options or Convertible Securities shall be
issued, sold or distributed for cash, the consideration received thereof shall
be deemed to be the amount received by the Company therefor, after deduction
therefrom of any expenses incurred and any underwriting commissions or
concessions paid or allowed by the Company in connection therewith (but only in
an amount equal to 50% of such commissions or concessions, to the extent such
commissions and concessions do not exceed 8% of the aggregate price at which the
Common Shares, Options or Convertible Securities are offered to the public, and
in an amount equal to 100% of such commissions or concessions, to the extent
such commissions or concessions exceed 8% of such aggregate price). If any
Common Shares, Options or Convertible Securities shall be issued, sold or
distributed for a consideration other than cash, the amount of the consideration
other than cash received by the Company shall be deemed to be the Fair Market
Value of such consideration, after deduction of any expenses incurred and any
underwriting commissions or concessions paid or allowed by the Company in
connection therewith. If any Common Shares, Options or Convertible Securities
shall be issued in connection with any merger in which the Company is the
surviving corporation, the amount of consideration therefor shall be deemed to
be the reasonable Fair Market Value of such portion of the assets and business
of the nonsurviving corporation as shall be attributable to such Common Shares.
Options or Convertible Securities, as the case may be. If any Options shall be
issued in connection with the issue and sale of other securities of the Company,
together comprising one integral transaction in which no specific consideration
is allocated to such Options by the parties thereto, such Options shall be
deemed to have been issued without consideration.
4.4. Special Dividends. If the Company shall issue or distribute to all or
substantially all holders of any class of Common Shares evidences of
indebtedness, any other securities of the Company or any cash, property or other
assets (excluding a Common Share Reorganization, a Common Share Distribution or
a cash dividend or cash distribution paid out of net profits legally available
therefor if the full amount thereof, together with the value of other dividends
and distributions made substantially concurrently therewith or pursuant to a
plan which includes payment thereof, is equivalent to not more than 5% of the
Company's net worth) any such nonexcluded event being herein called a "Special
Dividend"), (a) the Exercise Price shall be decreased, effective immediately
after the effective date of such Special Dividend, to a price determined by
multiplying the Exercise Price then in effect by a fraction, the numerator of
which shall be the Fair Market Value of the Company per outstanding Common Share
on such effective date less the then Fair Market Value of the evidences of
indebtedness, securities or property or other assets issued or distributed in
such Special Dividend with respect to one Common Share, and the denominator of
which shall be such Fair Market Value per Common Share and (b) the number of
shares of Common Stock subject to purchase upon exercise of this Warrant shall
be increased to a number determined by multiplying the number of shares of
Common Stock subject to purchase immediately before such Special Dividend by a
fraction, the numerator of which shall be the Exercise Price in effect
immediately before such Special Dividend and the denominator of which shall be
the Exercise Price in effect immediately after
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such Special Dividend. A reclassification of Common Shares (other than a change
in par value, or from par value to no par value or from no par value, to par
value) into Common Shares and shares of any other class of stock shall be deemed
a distribution by the Company to the holders of its Common Shares of such shares
of such other class of stock and, if the outstanding Common Shares shall be
changed into a larger or smaller number of Common Shares as part of such
reclassification, a Common Share Reorganization.
4.5. Capital Reorganizations. If there shall be any consolidation or merger
to which the Company is a party, other than a consolidation or a merger in which
the Company is the continuing corporation and which does not result in any
reclassification of, or change (other than a Common Share Reorganization) in,
outstanding Common Shares, or any sale or conveyance of the property of the
Company as an entirety or substantially as an entirety, or any recapitalization
of the Company (any such event being called a "Capital Reorganization"), then,
effective upon the effective date of such Capital Reorganization, the Holder
shall have the right to purchase, upon exercise of this Warrant, the kind and
amount of shares of stock and other securities and property (including cash)
which the Holder would have owned or have been entitled to receive after such
Capital Reorganization if this Warrant had been exercised immediately prior to
the effective date of such Capital Reorganization. As a condition to effecting
any Capital Reorganization, the Company or the successor or surviving
corporation, as the case may be, shall execute and deliver to each Warrantholder
and to the Warrant Agency an agreement as to the Warrantholders' rights in
accordance with this Section 4.5, providing for subsequent adjustments as nearly
equivalent as may be practicable to the adjustments provided for in this Article
IV. The provisions of this Section 4.5 shall similarly apply to successive
Capital Reorganizations.
4.6. Certain Other Events. If any event occurs as to which the foregoing
provisions of this Article IV are not strictly applicable or, if strictly
applicable, would not, in the good faith judgment of the Board of Directors of
the Company, fairly protect the purchase rights of the Warrants in accordance
with the essential intent and principles of such provisions or would result in
an otherwise nontaxable dividend being treated as a taxable dividend by any
taxing authority, then such Board shall make such adjustments in the application
of such provisions, in accordance with such essential intent and principles, as
shall be reasonably necessary, in the good faith opinion of such Board, to
protect such purchase rights as aforesaid, but in no event shall any adjustment
have the effect of increasing the Exercise Price or decreasing the number of
shares of Common Stock subject to purchase upon exercise of this Warrant.
4.7. Adjustment Rules.
(a) Any adjustments pursuant to this Article IV shall be made successively
whenever an event referred to herein shall occur.
(b) No adjustment shall be made pursuant to this Article IV in respect of
the issuance from time to time of Common Shares upon the exercise of the
Warranty.
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(c) If the Company shall take a record of the holders of its Common Stock
or Common Shares for any purpose referred to in this Article IV, then (i) such
record date shall be deemed to be the date of the issue, sale, distribution or
grant in question and (ii) if the Company shall legally abandon such action
prior to effecting such action, no adjustment shall be made pursuant to this
Article IV in respect of such action.
4.8. Proceedings Prior to Any Action Requiring Adjustment. As a condition
precedent to the taking of any action which would require an adjustment pursuant
to this Article IV, the Company shall take any action which may be necessary,
including obtaining regulatory approvals or exemptions, in order that the
Company may thereafter validly and legally issue as fully paid and nonassessable
all shares of Common Stock which the holders of Warrants are entitled to receive
upon exercise thereof.
4.9. Notice of Adjustment. Not less than 15 nor more than 30 days prior to
the record date or effective date, as the case may be, of any action which
requires or might require an adjustment or readjustment pursuant to this Article
IV, the Company shall give notice to each Warrantholder of such event,
describing such event in reasonable detail and specifying the record date or
effective date, as the case may be, and, if determinable, the required
adjustment is not determinable at the time of such notice, the Company shall
give notice to each Warrantholder of such adjustment and computation promptly
after such adjustment becomes determinable.
ARTICLE V
Definitions
The following terms, as used in this Warrant, have the following meanings:
"Appraisal Procedure" means a procedure whereby two independent appraisers,
one chosen by the Company and one by a majority in interest of the
Warrantholders, shall mutually agree upon the determination then the subject of
appraisal. Each party shall deliver a notice to the other appointing its
appraiser within 15 days after the Appraisal Procedure is invoked, If within 30
days after appointment the two appraisers they are unable to agree upon the
amount in question, a third independent appraiser shall be chosen within 10 days
thereafter by the mutual consent of such first two appraisers or, if such first
two appraisers fail to agree upon the appointment of a third appraiser, such
appointment shall be made by the American Arbitration Association, or any
organization successor thereto, from a panel of arbitrators having experience in
the golfing, sports and family entertainment business and a familiarity with the
equipment used or operated in such business. The decision of the third appraiser
so appointed and chosen shall be given within 30 days after the selection of
such third appraiser. If three appraisers shall be appointed and the
determination of one appraiser is disparate from the middle determination by
more than twice the amount by which the other determination is disparate from
the middle determination, then the determination of such appraiser shall be
excluded, the remaining two determinations shall be averaged and such average
shall be binding and conclusive on the Company and the Warrantholders; otherwise
the average of all three
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determinations shall be binding and conclusive on the Company and the
Warrantholders. The costs of conducting any Appraisal Procedure shall be borne
equally by the Company and the Warrantholders requesting such Appraisal
Procedure, except that (a) costs separately incurred by the Company and by the
Warrantholders shall be separately borne by them and (b) if such Appraisal
Procedure shall result in a determination that is disparate by 5% or more from
the Company's initial determination, all costs of conducting such Appraisal
Procedure shall be borne by the Company.
"Business Day" means any day excluding Saturday, Sunday and any day on
which banking institutions located in New York are authorized by law or other
governmental action to be closed, unless there shall have been an offering of
the Common Stock registered under the Securities Act of 1933, in which case
"Business Day" means (a) if the Common Stock is listed or admitted to trading on
a national securities exchange or The Nasdaq Stock Market Inc., a day on which
the principal national securities exchange or The Nasdaq Stock Market Inc. on
which the Common Stock is listed or admitted to trading is open for business or
(b) if the Common Stock is not so listed or admitted to trading, a day on which
any New York Stock Exchange member firm is open for business.
"Capital Reorganization" is defined in Section 4.5.
"Closing Date" means October 15, 1999.
"Closing Price" on any day means (a) to the extent the Common Shares are
listed or admitted for trading on a national securities exchange, the reported
last sales price regular way or, if no such reported sale occurs on such day,
the average of the closing bid and asked prices regular way on such day, in each
case on the principal national securities exchange on which such Common Shares
are listed or admitted to trading and (b) to the extent the Common Shares are
not listed or admitted to trading on any national securities exchange, the
average of the closing bid and asked prices in the over-the-counter market on
such day as reported by The Nasdaq Stock Market Inc. or any comparable system
or, if not so reported, as reported by any New York Stock Exchange member firm
selected by the Company for such purpose.
"Common Share Distribution" is defined in Section 4.3(a).
"Common Share Reorganization" is defined in Section 4.2.
"Common Shares" means the common stock of the Company.
"Common Stock" is defined in the first paragraph of this Warrant.
"Company" is defined in the first paragraph of this Warrant.
"Conversion Shares" means the shares of Common Stock issuable upon the
exercise of the Warrants.
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"Convertible Securities" as defined in Section 4.3(b).
"Credit Agreement" is defined in the second paragraph of this Warrant.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
any similar or successor Federal statute, and the rules and regulations of the
Securities and Exchange Commission (or its successor) thereunder, all as the
same shall be in effect at the time.
"Exercise Price" means $.50 per share of Common Stock subject to adjustment
pursuant to Article IV.
"Fair Market Value" means the fair market value of the business or property
in question, as determined in good faith by the Board of Directors of the
Company and, in the case of the Fair Market Value of the Company, by a qualified
appraisal firm or an independent investment banking firm chosen by the holders
of a majority of the Warrants and Conversion Shares and reasonably acceptable to
the Company. The Fair Market Value of the Company shall take into account any
increase in such value expected to occur as a result of any public offering of
the Common Shares and shall be the greatest of (i) the Fair Market Value of the
Company and its subsidiaries as a going concern, (ii) the liquidation value of
the Company and its subsidiaries and (iii) the net worth of the Company and its
subsidiaries as shown on its latest available consolidated balance sheet.
Notwithstanding the foregoing, if, at any date of determination of the Fair
Market Value of the Company, any of the Common Shares shall then be publicly
traded, the Fair Market Value of the Company on such date shall be the greater
of (a) the amount determined as provided above and (b) the Market Price on such
date multiplied by the number of Common Shares then outstanding.
"Holder" is defined in the first paragraph of this Warrant.
"Market Price" as at any date of determination means the average of the
daily Closing Prices of a Common Share for the shorter of (i) the 20 consecutive
Business Days ending on the most recent Business Day prior to the Time of
Determination and (ii) the period commencing on the issuance, sale, distribution
or grant in question through such most recent Business Day prior to the Time of
Determination. "Time of Determination" means the time and date of the earlier of
(x) the determination of stockholders entitled to receive such issuance, sale,
distribution or grant and (y) the commencement of "ex-dividend" trading in
respect thereof.
"NASD" means The National Association of Securities Dealers, Inc.
"The Nasdaq Stock Market Inc." means The National Association of Securities
Dealers, Inc. Automated Quotation System.
"Options" is defined in Section 4.3(b).
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"Outstanding Options, Rights and Warrants" means those options, rights and
warrants to purchase Common Shares identified in Schedule 4.14 of the Credit
Agreement.
"Registration Rights Agreement" is defined in Section 3.1.
"Special Dividend" is defined in Section 4.4.
"Warrant Agency" is defined in Section 2.1.
"Warrantholder" means a holder of a Warrant.
"Warrants" is defined in the second paragraph of this Warrant.
ARTICLE VI
Purchase and Cancellation of Warrants
6.1. Purchase of Warrants by the Company. The Company shall have the right
to purchase or otherwise acquire Warrants at such times in such manner and for
such consideration as it and the holder or holders thereof may deem appropriate.
6.2. Cancellation. All Warrants purchased or otherwise acquired by the
Company shall thereupon be canceled and retired. All Warrants surrendered for
exercise or registration of transfer or exchange shall thereupon be canceled and
retired.
ARTICLE VII
Miscellaneous
7.1. Notices. Notices and other communications provided for herein shall be
in writing and shall, unless otherwise expressly required, be deemed given when
received or, if mailed, four Business Days after being deposited in the United
States mail with postage prepaid and properly addressed. In the case of the
Holder, such notices and communications shall be addressed to its address as
shown on the books maintained by the Warrant Agency, unless the Holder shall
notify the Company and the Warrant Agency that notices and communications should
be sent to a different address, in which case such notices and communications
shall be sent to the address specified by the Holder.
7.2. Waivers; Amendments. No failure or delay of the Holder in exercising
any power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Holder are cumulative and not exclusive of any rights or
remedies which it would otherwise have. The provisions of this Warrant may be
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amended, modified or waived with (and only with) the written consent of the
Company and the holders of Warrants entitling such holders to purchase a
majority of the Common Stock subject to purchase upon exercise of such Warrants
at the time outstanding (exclusive of Warrants then owned by the Company or any
subsidiary or affiliate thereof); provided, however, that no such amendment,
modification or waiver shall, without the written consent of the holders of all
Warrants at the time outstanding, (a) change the number of shares of Common
Stock subject to purchase upon exercise of this Warrant, the Exercise Price or
provisions for payment thereof or (b) amend, modify or waive the provisions of
this Section or Article III or IV. The provisions of the Credit Agreement and
the Registration Rights Agreement may be amended, modified or waived only in
accordance with the respective provisions thereof.
Any such amendment, modification or waiver effected pursuant to this
Section or the applicable provisions of the Credit Agreement or the Registration
Rights Agreement shall be binding upon the holders of all Warrants and
Conversion Shares, upon each future holder thereof and upon the Company. In the
event of any such amendment, modification or waiver the Company shall give
prompt notice thereof to all holders of Warrants and Conversion Shares and, if
appropriate, notation thereof shall be made on all Warrants thereafter
surrendered for registration of transfer or exchange.
No notice or demand on the Company in any case shall entitle the Company to
any other or further notice or demand in similar or other circumstances.
7.3. Governing Law. This Warrant shall be construed in accordance with and
governed by the laws of New York, except to the extent that the laws of Delaware
shall be mandatorily applicable hereto.
7.4. Survival of Agreements; Representations and Warranties, etc. All
warranties, representations and covenants made by the Company or the Holder
herein or in any certificate or other instrument delivered by or on behalf of it
in connection with the Warrants shall be considered to have been relied upon by
the holder or the Company, respectively, and shall survive the issuance and
delivery of the Warrants, regardless of any investigation made by the Holder or
the Company, and shall continue in full force and effect so long as this Warrant
is outstanding. All statements in any such certificate or other instrument shall
constitute representations and warranties hereunder.
7.5. Covenants To Bind Successors and Assigns. All covenants, stipulations,
promises and agreements in this Warrant contained by or on behalf of the Company
or the Holder shall bind its successors and assigns, whether so expressed or
not.
7.6. Severability. In case any one or more of the provisions contained in
this Warrant shall be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good faith negotiations to replace the invalid,
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illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
7.7. Section Headings. The section headings used herein are for convenience
of reference only, are not part of this Warrant and are not to affect the
construction of or be taken into consideration in interpreting this Warrant.
7.8. No Rights as Stockholder. This Warrant shall not entitle the Holder to
any rights as a stockholder of the Company.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, Family Golf Centers, Inc. has caused this Warrant to be
executed in its corporate name by one of its officers thereunto duly authorized,
and its corporate seal to be hereunto affixed, attested by its Secretary or an
Assistant Secretary, all as of the date and year first above written.
FAMILY GOLF CENTERS, INC.
By:
----------------------------------------
Title: Chief Executive Officer
[CORPORATE SEAL]
Attest:
--------------------------
Title: Assistant Secretary
[SIGNATURE PAGE TO WARRANT]
SUBSCRIPTION NOTICE
To ________________:
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the attached Warrant for, and to purchase thereunder,
__________________ shares of Common Stock, as provided for therein, and tenders
herewith payment of the Exercise Price in full in the form of cash, certified or
bank cashier's check or wire transfer.
Please issue a certificate or certificates for such shares of Common Stock
in the following name or names and denomination or denominations.
If said number of shares shall not be all the shares issuable upon exercise
of the attached Warrant, a new Warrant is to be issued in the name of the
undersigned for the balance remaining of such shares less any fraction of a
share paid in cash.
Date: _____________, ____
--------------------------------------
NOTE: The above signature should
correspond exactly with the name
on the face of the attached
Warrant or with the name of the
assignee appearing in the
assignment form below.
ASSIGNMENT
For value received, __________________________________ hereby sells,
assigns, and transfer unto ______________________ the attached Warrant, together
with all right, title and interest therein, and does hereby irrevocably
constitute and appoint _________ ________________ attorney to transfer of said
Warrant on the books of _________________ _____________________ Company with
full power of substitution in the premises.
--------------------------------------
NOTE: The above signature should
correspond exactly with the name
on the face of the attached
Warrant
Date: ___________, ____
