This Warrant has not been registered under the Securities Act of 1933, as
amended, (the "Act"), or under comparable provisions of the securities laws
of any state or other jurisdiction and is, therefore a "restricted
security" as defined under Rule 144 of the Act. This Warrant may not be
offered, sold or otherwise transferred unless it is registered or qualified
under the Act and applicable state securities laws unless the issuer is
satisfied by an opinion of counsel acceptable to the issuer that registration
or qualification is not required under any such laws.
No. of Shares: Warrant No. W-
COMMON STOCK PURCHASE WARRANT
FAMILY GOLF CENTERS, INC.
THIS IS TO CERTIFY THAT, for value received, (the
"Warrantholder"), is entitled to purchase from Family Golf Centers, Inc., a
Delaware corporation (the "Company"), at any time or from time to time after
the date hereof and prior to 5:00 p.m., Eastern Standard Time, on
shares (the "Shares") of duly authorized, validly issued, fully paid and
nonassessable shares of Common Stock, par value $1.00 per share ("Common
Stock"), of the Company, at a purchase price of $ per Share, subject to
adjustment as hereinafter provided (the "Exercise Price").
This Warrant is one of several warrants (the "Warrants") of the same form
and having the same terms (except as to the number of shares of Common Stock
purchasable thereunder) as this Warrant, which have been issued in connection
with that certain Agreement and Plan of Merger, dated as of July 25, 1997
(the "Merger Agreement"), among the Company, Lake Grove Family Golf Centers,
Inc., a New York corporation and a wholly owned subsidiary of the Company,
and Leisure Complexes, Inc., a New York corporation, and which entitle the
holders to purchase an aggregate of 55,537 shares of Common Stock.
1. Manner of Exercise. (a) This Warrant shall be exercised by the
Warrantholder as to all or any part of the Shares by giving written notice of
such exercise on a Warrant Exercise Form, a copy of which is attached hereto,
to the Company, specifying the number of Shares to be purchased and including
with such notice this Warrant and the aggregate Exercise Price for the Shares
for which this Warrant is then being exercised. Such notice shall contain
such representations as are reasonably satisfactory to the Company and are
customary in order to evidence compliance with applicable federal and state
securities laws. Such aggregate Exercise Price shall be payable in cash or by
certified check, bank draft or postal or express money order payable to the
order of the Company. In case the holder shall exercise this Warrant with
respect to less than all of the Shares that may be purchased hereunder, the
Company shall deliver to such holder a new Warrant evidencing the right of
such holder to purchase the remaining Shares called for by this Warrant,
which new Warrant shall in all other respects be identical with this Warrant,
or, at the request of such
1
holder, appropriate notation may be made on this Warrant and the same
returned to such holder. The Company shall pay all expenses, taxes and other
charges payable in connection with the preparation, issuance and delivery of
such new Warrant and of the stock certificate or certificates to be delivered
to the Warrantholder pursuant to Paragraph 2 hereof.
(b) Net Issue Exercise. Notwithstanding any provisions herein to the
contrary, if the Fair Market Value (as defined below) of one share of Common
Stock is greater than the Exercise Price (at the date of calculation as set
forth below), in lieu of exercising this Warrant for cash, the holder may
elect to receive shares equal to the value (as determined below) of this
Warrant (or the portion thereof being canceled) by surrender of this Warrant,
and the other documents referred to in Paragraph 1(a), together with notice
of such election (collectively, the "Required Documents"), in which event the
Company shall issue to the holder a number of shares of Common Stock computed
using the following formula:
Y (A-B)
X = -----------
A
Where X = the number of shares of Common Stock to be issued to the
holder
Y = the number of shares of Common Stock purchasable under
the Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being canceled (at
the date of such calculation)
A = the Fair Market Value of one share of the Common Stock
(at the date of such calculation)
B = Exercise Price (as adjusted to the date of such
calculation)
"Fair Market Value" shall mean (i) the last sale price (or, if no sale price
is reported on that day, the average of the bid and asked prices) of a share
of Common Stock on the National Market tier of The Nasdaq Stock Market on the
last trading day before all Required Documents are tendered to the Company,
or (ii), if the primary trading market for the Common Stock is not such
National Market tier, then the closing sale price regular way on such day,
or, in case no such sale takes place on such day, the reported closing
bid price regular way on such day, in each case on the principal exchange on
which such stock is traded, or (iii) if Fair Market Value cannot be
determined pursuant to one of the methods specified above, then Fair Market
Value shall mean the average of the bid and asked prices for the Common Stock
on such day as furnished by any New York Stock Exchange member firm selected
from time to time by the Board of Directors of the Company for that purpose.
2
2. Certificates to be Delivered. Upon exercise of this Warrant in the
manner provided in Paragraph 1, the Company shall promptly cause certificates
for the Shares so purchased to be delivered (together with a new Warrant, in
the case of a partial exercise) to the Warrantholder in accordance with his
instructions. The Company shall not be required upon any exercise of this
Warrant to issue a certificate representing any fraction of a Share.
3. No Rights as Stockholder. The Warrantholder shall have no rights as a
stockholder of the Company with respect to the Shares purchasable upon
exercise of this Warrant until this Warrant has been delivered to the Company
upon exercise thereof, together with payment for the Exercise Price for such
Shares and any other documentation required to be delivered upon exercise of
this Warrant pursuant to Paragraph 1 above, and then only to the extent of
the number of Shares so purchased.
4. Anti-Dilution Provisions.
(a) Exercise Price Adjustments. The Exercise Price shall be subject to
adjustment if the Company shall, after July 25, 1997:
(1) pay a stock dividend or make a distribution on the outstanding
shares of Common Stock in shares of Common Stock,
(2) subdivide or split the outstanding shares of Common Stock into a
greater number of shares,
(3) combine the outstanding shares of Common Stock into a smaller
number of shares, or
(4) pay a dividend or make a distribution on the outstanding shares
of Common Stock in shares of its capital stock (other than Common
Stock).
then, in any such event, the Exercise Price in effect immediately prior to
the opening of business on the record date for determination of
stockholders entitled to receive such dividend or distribution or the
effective date of such subdivision, split or combination, as the case may
be, shall be adjusted so that the holder of this Warrant shall thereafter
be entitled to receive, upon exercise of this Warrant, the number of shares
of Common Stock or other capital stock (or both) of the Company which such
holder would have owned or been entitled to receive immediately following
such action if such holder had exercised this Warrant immediately prior to
the record date for, or effective date of, as the case may be, such event.
The adjustment contemplated by this subparagraph (4)(a) shall be made
successively whenever any event listed above shall occur. For a dividend or
distribution, the adjustment shall become effective at the opening of
business on the Business Day next following the record date for such
dividend or distribution. For a subdivision, split or combination, the
adjustment shall become
3
effective immediately after the effectiveness of such subdivision, split or
combination. If after an adjustment pursuant to this subparagraph (4)(a)
the holder of this Warrant would be entitled to receive upon exercise
hereof shares of two or more classes or series of capital stock of the
Company, the Exercise Price shall thereafter be subject to adjustment upon
the occurrence of an action taken with respect to any such class or series
of capital stock other than Common Stock as is contemplated by this
Paragraph 4, on terms comparable to those applicable to the Common Stock
pursuant to this Paragraph 4.
(b) Deferral of Adjustment. In any case in which this Paragraph 4 shall
require that an adjustment be made in the Exercise Price, the Company may,
in its sole discretion, elect to defer the following until after the
occurrence of the event which requires such adjustment: (A) the issuance
by the Company to the holder of this Warrant, upon exercise thereof, of
the additional shares of Common Stock (or other shares of capital stock)
issuable upon such exercise over the shares of Common Stock issuable
before giving effect to such adjustment and (B) paying to such holder any
amount in cash in lieu of a fractional share of Common Stock; provided,
however, that the Company shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such
additional shares of Common Stock (or other shares of capital stock), and
such cash, upon the occurrence of the event requiring such adjustment.
(c) No Deminimus Adjustments. All adjustments to the Exercise Price shall
be calculated to the nearest xxxxx. No adjustment in the Exercise Price
shall be required unless such adjustment would require an increase or
decrease of at least one percent therein; provided, however, that any
adjustment which by reason of this subparagraph is not required to be made
shall be carried forward and taken into account in any subsequent
adjustment.
(d) Decrease in Exercise Price. The Company shall be entitled, to the
extent permitted by law, to make such decreases in the Exercise Price, in
addition to any otherwise required by the provisions of this Paragraph 4,
as the Company determines to be advisable in order that any stock
dividends, subdivisions of shares, reclassification or combination of
shares hereafter made by the Company to its stockholders shall not be
taxable.
(e) Adjustment for Consolidation or Merger of Company. In case of any
consolidation or merger to which the Company is a party, or in the case of
any sale or transfer to another corporation of the property of the Company
as an entirety or substantially as an entirety, or in case of any
statutory exchange of securities with another corporation (other than in
connection with a merger or acquisition) (each of the foregoing being
referred to herein as a "Transaction"), in each case as a result of which
shares of Common Stock shall be reclassified or converted into the right
to receive stock, securities or other property (including cash or any
combination thereof), proper provision shall be made so that this Warrant
shall, after consummation of such Transaction, be exercisable for the kind
and amount of stock, securities or other property (including cash)
receivable upon consummation of such Transaction by a holder of the number
of shares of Common Stock (and other capital stock for which this Warrant
may be exercisable in accordance with the provisions of this Paragraph 4)
for which this Warrant might have been exercised immediately prior
4
to consummation of such Transaction (assuming in each case that such holder
of Common Stock (or other capital stock) failed to exercise rights of
election, if any, as to the kind or amount of stock, securities or other
property receivable upon consummation of such Transaction (provided that if
the kind or amount of stock, securities or other property receivable upon
consummation of such Transaction is not the same for each non-electing
share, then the kind and amount of stock, securities or other property
receivable upon consummation of such Transaction for each non-electing
share shall be deemed to be the kind and amount so receivable per share by
a plurality of the non-electing shares)). The kind and amount of stock or
securities into which this Warrant shall be exchangeable after consummation
of such Transaction shall be subject to adjustment, as nearly as may be
practicable, as described in this Paragraph 4 following the date of
consummation of such Transaction. The provisions of this subparagraph (e)
shall similarly apply to successive Transactions.
(f) Notice of Adjustments. Whenever the Exercise Price is adjusted as
herein provided, the Company shall:
(i) forthwith compute the adjusted Exercise Price in accordance
herewith and prepare a certificate signed by an officer of the Company
setting forth the adjusted Exercise Price, the method of calculation
thereof in reasonable detail and the facts requiring such adjustment
and upon which such adjustment is based, which certificate shall be
conclusive, final and binding evidence of the correctness of the
adjustment (absent manifest error); and
(ii) mail a notice to the holder of this Warrant that the Exercise
Price has been adjusted, the facts requiring such adjustment and upon
which such adjustment is based and setting forth the adjusted Exercise
Price, such notice to be mailed at or prior to the time the Company
mails an interim statement, if any, to its stockholders covering the
fiscal quarter during which the facts requiring such adjustment
occurred, but in any event within 45 days following the end of such
fiscal quarter.
(g) Notice of Certain Transactions. In case, at any time while this
Warrant is exercisable for any shares of Common Stock:
(i) the Company takes any action which would require an adjustment to
the Exercise Price; or
(ii) the Company shall authorize (x) any consolidation, merger or
binding share exchange to which the Company is a party and for which
approval of any stockholders of the Company is required (except for a
merger of the Company into one of its wholly owned subsidiaries solely
for the purpose of changing the corporate domicile of the Company to
another state of the United States and in connection with which there
is no substantive change in the rights or privileges of the Common
Stock other than changes resulting from differences in the corporate
statutes of the then existing and the new state of domicile), or (y)
the sale or transfer of all or substantially all of the assets of the
Company; or
5
(iii) the Company shall authorize the voluntary dissolution,
liquidation or winding up of the Company or the Company is the subject
of an involuntary dissolution, liquidation or winding up;
then the Company shall cause to be mailed to the holder of this Warrant, in
accordance with Paragraph 7 below, at least 10 days before the record date
(or other date set for definitive action if there shall be no record date),
a notice stating the action or event for which such notice is being given
and the record date for (or such other date) and the anticipated effective
date of such action or event; provided, however, that any notice required
hereunder shall in any event be given no later than the time that notice is
given to the holders of the Common Stock. The failure to give or receive
the notice required by this subparagraph (g) or any defect therein shall
not affect the legality or validity of any action or any vote thereon.
5. Authorization and Reservation of Shares. The Company represents and
warrants that the Shares to be issued by it upon the exercise of this Warrant
have been duly authorized and, when such Shares are issued upon exercise of
this Warrant, shall be validly issued, fully paid and nonassessable and free
from all taxes, liens and charges with respect to the issue thereof. The
Company shall at all times reserve or hold available a sufficient number of
shares of Common Stock to cover the number of Shares issuable upon exercise
of this Warrant.
6. Compliance with Securities Law.
(a) Warrant and Shares Not Registered. The Warrantholder represents and
warrants that he understands that this Warrant and the Shares to be issued
upon its exercise have not been registered for sale under federal or state
securities laws and that this Warrant and the Shares to be issued upon its
exercise are being offered and sold to the Warrantholder pursuant to one or
more exemptions from the registration requirements of such securities laws;
that, in order to satisfy such requirement, the Warrantholder must be
acquiring this Warrant and the shares to be purchased by him hereunder for
his own account for investment and that the representations and warranties
contained in this Paragraph 6 are given with the intention that the Company
may rely thereon for purposes of claiming such exemption (subject to any
requirement of law that the disposition of each Warrantholder's property
shall at all times be and remain within his control); and that the
Warrantholder understands that he must bear the economic risk of his
investment in this Warrant and the Shares purchased hereunder for an
indefinite period of time, as this Warrant and the Shares to be issued upon
its exercise have not been registered under federal or state securities laws
and, therefore, cannot be sold unless subsequently registered or qualified
under such laws, or unless an exemption from such registration or
qualification is available.
(b) Warrant and Shares Acquired For Investment: Limitations on
Dispositions. The Warrantholder represents and warrants that he is acquiring
this Warrant and will acquire the Shares issued upon exercise of this Warrant
for his own account for investment and not with a view to, or for sale in
connection with, any public distribution thereof in violation of the Securities
Act of 1933 (the "1933 Act") or any state securities laws. The Warrantholder
agrees not to sell, assign
6
or otherwise transfer this Warrant, and that any purported sale, assignment
or transfer of this Warrant shall be void. The Warrantholder further agrees
that the Shares issued upon exercise of this Warrant may not be sold,
assigned or otherwise transferred unless (a) a registration statement with
respect thereto has become effective under the 1933 Act and such Shares have
been qualified under applicable state security laws, or (b) there is
presented to the Company an opinion of counsel reasonably satisfactory to the
Company that such registration and qualification is not required. The
Warrantholder consents that any transfer agent of the Company may be
instructed not to transfer any Shares acquired upon exercise of this Warrant
unless it receives satisfactory evidence of compliance with the foregoing
provisions, and that there may be endorsed upon any certificate or other
instrument representing such Shares (and any certificates or instruments
issued in substitution therefor), a legend calling attention to the foregoing
restrictions on transferability of such Shares stating in substance:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR QUALIFIED
UNDER ANY STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED UNLESS THEY ARE REGISTERED UNDER THE ACT OR QUALIFIED
UNDER APPLICABLE STATE SECURITIES LAWS UNLESS THE ISSUER RECEIVES AN OPINION
OF COUNSEL ACCEPTABLE TO IT THAT SUCH REGISTRATION OR QUALIFICATION IS NOT
REQUIRED.
(c) The Company acknowledges that the Shares issued upon exercise of this
Warrant (but not the Warrant itself) are to be covered by the "shelf"
registration statement that the Company is obligated to file under the 1933
Act pursuant to that certain Registration Rights Agreement between the
Company, the Warrantholder and certain other persons.
7. General.
(a) Illegality. In the event that any one or more of the provisions
contained in this Warrant shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of this Warrant shall not, at the election of the party for whom
the benefit of the provision exists, be in any way impaired.
(b) Filing of Warrant. A copy of this Warrant shall be filed in the minute
book and among the records of the Company.
(c) Notice. Any notice or other document required to be given or delivered
to the Warrantholders shall be delivered at, or sent by certified or
registered mail to, such holder at the address shown beneath such holder's
signature on the signature page hereof or at a more recent address of which
the Warrantholder shall have notified the Company in writing. Any notice or
other
7
document required or permitted to be given or delivered to the Company shall
be delivered at, or sent by certified or registered mail to, the office of
the Company at 000 Xxxxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000, or such other
address as shall have been furnished by the Company to the Warrantholder.
(d) Limitation of Liability. No provision hereof, in the absence of
affirmative action by the holder hereof to purchase Shares, and no mere
enumeration herein of the rights or privileges of the holder hereof, shall
give rise to any liability of such holder for the purchase price of any
Shares, whether such liability is asserted by the Company or by creditors of
the Company.
(e) Loss, Destruction, etc. of Warrants. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
this Warrant, and in the case of any such loss, theft or destruction upon
delivery of a bond of indemnity in such form and amount as shall be
reasonably satisfactory to the Company, or in the event of such mutilation
upon surrender and cancellation of this Warrant, the Company will make and
deliver a new Warrant, of like tenor, in lieu of such lost, stolen, destroyed
or mutilated Warrant. Any Warrant issued under the provisions of this
subparagraph (e) in lieu of any Warrant alleged to be lost, destroyed or
stolen, or in lieu of any mutilated Warrant, shall constitute an original
contractual obligation on the part of the Company.
(f) Warrant Detachable. Any shares of Common Stock acquired by the
Warrantholder pursuant to the Merger Agreement may be transferred separately
and apart from this Warrant.
(g) Amendment and Waiver.
(1) No amendment or modification of this Warrant will be binding or
effective without the prior written consent of the Company and of the
holders of a majority of the Shares issuable upon exercise of the Warrants
outstanding at the time such action is taken.
(2) No amendment, modification or waiver of any provision of this Warrant
will extend to or affect any obligation not expressly amended, modified or
waived or impair any right consequent thereon. No course of dealing, and
no failure to exercise or delay in exercising any right, remedy, power or
privilege under this Warrant, will operate as a waiver, amendment or
modification of any provision of this Warrant.
(h) Governing Law. The provisions of this Warrant shall be governed by,
construed and enforced in accordance with, the laws of the State of New York
(without giving effect to the conflict of laws principles thereof).
8
(i) Descriptive Headings. The paragraph headings contained herein are for
reference purposes only and shall not in any way affect or limit the meaning
or interpretation of any of the provisions of this Warrant.
(j) Entire Agreement. The terms of this Warrant set forth the entire
agreement and understanding of the Company and the Warrantholder in respect
of the subject matter hereof and supersede all prior agreements, arrangements
and understandings relating to the subject matter hereof; provided, however,
that nothing herein shall be construed to limit the applicability of the
Registration Rights Agreement to the Shares issuable upon exercise of this
Warrant.
(k) Parties; Assignment. All of the terms and conditions of this Warrant
shall be binding upon, and inure to the benefit of and be enforceable by, the
parties hereto and their respective heirs, legal representatives and
successors. This Warrant may not be sold or assigned by the holder hereof
without the prior written consent of the Company, which consent may be
withheld in its sole discretion.
This Warrant shall not be valid for any purpose until it shall have been
signed and attested to by the President and Secretary or Assistant Secretary
of the Company, and until the Warrantholder has agreed to be bound by the
restrictions set forth in Paragraph 6 hereof by signing in the space provided
below.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed in its name and on its behalf by the signatures of its duly
authorized officers and affixation of its seal.
Dated: July 25, 1997
FAMILY GOLF CENTERS, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
ATTEST:
/s/
---------------------
Secretary
WARRANT EXERCISE FORM
(TO BE EXECUTED BY THE WARRANTHOLDER AT TIME OF EXERCISE OF
THIS COMMON STOCK PURCHASE WARRANT)
To: Family Golf Centers, Inc.
The undersigned, holder of the within Warrant, (i) exercises his right to
purchase of the shares of Common Stock of Family Golf Centers, Inc.,
which the undersigned is entitled to purchase under the terms of the within
Warrant, and (ii) makes payment in full for the number of shares of Common
Stock so purchased by payment of $ , as provided in the Warrant.
Please issue the certificate for shares of Common Stock (and a new Warrant
for unexercised Warrants, in the case of a partial exercise) in the name of
the undersigned as follows:
----------------------------------------------------------------
Print or type name
----------------------------------------------------------------
Social Security or Other Identifying Number
----------------------------------------------------------------
Street Address
----------------------------------------------------------------
City State Zip Code
and deliver it to the above address.
Dated: -------------------------------------------------------
-------------------------------------------
Signature
-------------------------------------------
Signature
(Signature must conform in all
respects to name
on face of this Warrant)
