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Registration No. 333-_____
As filed with the Securities and Exchange Commission on December 5, 1996
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
Registration Statement
Under
The Securities Act of 1933
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FAMILY GOLF CENTERS, INC.
(Exact name of registrant as specified in its charter)
Delaware 11-3223246
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Dominic Chang, Chief Executive Officer
Family Golf Centers, Inc.
225 Broadhollow Road
Melville, New York 11747
(516) 694-1666
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices and agent for service)
FAMILY GOLF CENTERS, INC.
1996 STOCK INCENTIVE PLAN
(Full title of the Plan)
Copy to:
Kenneth R. Koch, Esq.
Squadron, Ellenoff, Plesent & Sheinfeld, LLP
551 Fifth Avenue
New York, New York 10176
(212) 661-6500
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=======================================================================================================
Proposed Proposed
Amount Maximum Maximum Amount of
Title of Securities To Be Offering Price Aggregate Registration
To Be Registered Registered (1) Per Share (2) Offering Price (2) Fee (2)
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<S> <C> <C> <C> <C>
Common Stock, par
value $.01 per share 548,500 shares (3) $30.375 $16,660,687.50 $5,048.69
=======================================================================================================
</TABLE>
(1) Plus such indeterminate number of shares pursuant to Rule 416 as may be
issued in respect of stock splits, stock dividends and similar
transactions.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h) under the Securities Act of 1933 on the average
high and low prices for the Common Stock, as reported on the Nasdaq
National Market on December 3, 1996.
(3) The number of shares of Common Stock being registered represents (i)
500,000 shares of Common Stock that may be issued on the date hereof
under the Family Golf Centers, Inc. 1996 Stock Incentive Plan (the "1996
Plan") pursuant to options issued or to be issued under the 1996 Plan and
(ii) 48,500 shares of Common Stock that may be issued to certain
employees of the Company pursuant to separate letter agreements between
the Company and such employees that incorporate by reference the terms of
the 1996 Plan.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
A prospectus containing information specified by Part I of this Form
S-8 Registration Statement (the "Registration Statement") has been or will be
sent or given to participants in the Plan as specified in Rule 428(b)(1)
promulgated by the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Securities Act"). Each such
prospectus shall constitute a Section 10(a) prospectus and is incorporated by
reference in this Registration Statement.
EXPLANATORY NOTE
This Registration Statement includes a Prospectus, prepared in
accordance with the requirements of Part I of Form S-3, which, pursuant to
General Instruction C of Form S-8, may be used for the offer and sale by
certain officers and directors of the Company who may be deemed to be
"affiliates" of the Company, as that term is defined in Rule 405 under the
Securities Act, of securities registered hereunder.
<PAGE>
PROSPECTUS
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FAMILY GOLF CENTERS, INC.
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500,000 SHARES OF COMMON STOCK UNDER FAMILY GOLF CENTERS, INC.
1996 STOCK INCENTIVE PLAN
This Prospectus relates to offers and sales of up to 500,000 shares
(the "Shares") of Common Stock, par value $.01 per share (the "Common Stock"),
of Family Golf Centers, Inc., a Delaware corporation (the "Company"), that
have been or will be acquired by certain officers and directors (the "Selling
Stockholders") who may be deemed to be "affiliates" of the Company, as defined
in Rule 405 under the Securities Act of 1933 (the "Securities Act"), upon
exercise of options (the "Options") granted pursuant to the Family Golf
Centers, Inc. 1996 Stock Incentive Plan (the "1996 Plan"). See "Selling
Stockholders." The Common Stock is quoted on the Nasdaq National Market(R)
(the "Nasdaq National Market") under the symbol "FGCI." The closing sales
price for the Common Stock on December 3, 1996 was $30.375 per share.
Shares covered by this Prospectus may be offered and sold from time
to time directly by the Selling Stockholders or through brokers on the Nasdaq
National Market or otherwise at prevailing market prices at the time of sale,
prices related to prevailing market prices, or negotiated prices. No
underwriting arrangements have been entered into by the Selling Stockholders.
No specified brokers or dealers have been designated by the Selling
Stockholders, and no agreement has been entered into in respect of brokerage
commissions or for the exclusive or coordinated sale of any securities which
may be offered pursuant to this Prospectus. The distribution of the Shares by
the Selling Stockholders may be effected in one or more transactions that may
take place in the over-the-counter market, including ordinary broker's
transactions, privately negotiated transactions, or through sales to one or
more dealers for resale of such Shares as principals. The net proceeds to the
Selling Stockholders will be the proceeds received by them upon such sales,
less brokerage commissions, if any. The Company will pay all expenses of
preparing and reproducing this Prospectus, but will not receive any of the
proceeds from sales by any of the Selling Stockholders. The Selling
Stockholders, and any broker-dealers, or agents, through whom the Shares are
sold, may be deemed "underwriters" within the meaning of the Securities Act
with respect to securities offered by them, and any profits realized or
commissions received by them may be deemed underwriting compensation. See
"Plan of Distribution."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THE COMMON STOCK OFFERED HEREBY INVOLVES A SUBSTANTIAL DEGREE OF RISK.
SEE "RISK FACTORS," COMMENCING ON PAGE 3.
No dealer, salesman, or any other person has been authorized to give
any information or to make any representation other than as contained or
incorporated by reference herein and, if given or made, such information or
representation must not be relied upon as having been authorized by the
Company. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy securities by anyone in any jurisdiction in
which such offering may not lawfully be made. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that there has been no change in the affairs of the Company or
the information herein since the date hereof. See "Risk Factors."
-------------------------------------------------------
The date of this Prospectus is December 5, 1996
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AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission
(the "Commission"), 450 Fifth Street, N.W., Washington, D.C. 20549, a
Registration Statement (the "Registration Statement") under the Securities Act
with respect to the offering and sale from time to time of the Shares. This
Prospectus does not contain all the information set forth in the Registration
Statement and the exhibits thereto, as permitted by the rules and regulations
of the Commission. For further information, reference is made to the
Registration Statement and to the exhibits filed therewith. Statements
contained in this Prospectus as to the contents of any contract or other
document which has been filed or incorporated by reference as an exhibit to
the Registration Statement are qualified in their entirety by reference to
such exhibits for a complete statement of their terms and conditions.
Additionally, the Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements, and other information
statements with the Commission. Copies of such materials may be inspected
without charge at the offices of the Commission, and copies of all or any part
thereof may be obtained from the Commission's public reference facilities at
450 Fifth Street, N.W., Washington D.C. 20549 or at the regional offices of
the Commission located at 7 World Trade Center, New York, New York 10048 and
500 West Madison Street, Suite 1400, Chicago, Illinois 60661, upon payment of
the fees prescribed by the Commission. In addition, the Commission maintains a
Web Site that contains reports, proxy and information statements and other
information regarding the Company (http://www.sec.gov). The Common Stock is
quoted on the Nasdaq National Market. Reports and other information concerning
the Company may be inspected at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated herein by reference and made a part of this Prospectus
are the following: (1) the Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1995; (2) the Company's Quarterly Report on
Form 10-QSB for the three months ended March 31, 1996; (3) the Company's
Quarterly Report on Form 10-QSB for the quarter ended June 30, 1996; (4) the
Company's Quarterly Report on Form 10-QSB for the quarter ended September 30,
1996; (5) the description of the Common Stock, which is registered under
Section 12 of the Exchange Act, contained in the Company's Registration
Statement on Form 8-A dated November 8, 1994; (6) the Current Report on Form
8-K dated February 28, 1996; (7) the Current Report on Form 8-K dated March 6,
1996; (8) the Current Report on Form 8-K dated April 8, 1996; (9) the Current
Report on Form 8-K dated May 20, 1996; (10) the Current Report on Form 8-K
dated June 7, 1996; (11) the Current Report on Form 8-K dated July 5, 1996;
(12) the Current Report on Form 8-K dated October 11, 1996; (13) the Current
Report on Form 8-K dated October 30, 1996; and (14) the Current Report on Form
8-K dated November 13, 1996. All documents subsequently filed by the Company
with the Commission pursuant to Section 13(a), 13(c), 14, or 15(d) of the
Exchange Act after the date of this Prospectus and prior to the termination of
the offering made hereby will be deemed to be incorporated by reference into
this Prospectus and to be a part hereof from the respective dates of filing of
such documents. Any statement contained in any document incorporated by
reference shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to
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<PAGE>
constitute a part of this Prospectus. All information appearing in this
Prospectus is qualified in its entirety by the information and financial
statements (including notes thereto) appearing in the documents incorporated
herein by reference, except to the extent set forth in the immediately
preceding statement.
The Company will provide without charge to each person who receives a
Prospectus, upon written or oral request of such person, a copy of the
information that is incorporated by reference herein (not including exhibits
to the information that is incorporated by reference herein). Requests for
such information should be directed to: Family Golf Centers, Inc., 225
Broadhollow Road, Melville, New York 11747, Attention: Chief Executive
Officer. The Company's telephone number is: (516) 694-1666.
RISK FACTORS
Prospective investors should carefully consider the specific factors
set forth below, as well as the other information included in this Prospectus,
before deciding to invest in the Common Stock offered hereby.
LIMITED OPERATING HISTORY
The Company opened its first golf center in March 1992 and,
accordingly, has only a limited history of operations. The Company generated
net income of approximately $488,000 during the year ended December 31, 1994,
approximately $1.1 million during the year ended December 31, 1995 and
approximately $ 4.8 million during the nine months ended September 30, 1996.
However, the Company experienced losses prior to 1994 and there can be no
assurance that the Company will operate profitably in the future or that
recent results of operations will be indicative of future results. See "Risk
Factors--Expansion Strategy".
EXPANSION STRATEGY
The Company's ability to significantly increase revenue, net income
and operating cash flow over time depends in large part upon its success in
acquiring or leasing and constructing additional golf facilities at suitable
locations upon satisfactory terms. There can be no assurance that suitable
golf facility acquisition or lease opportunities will be available or that the
Company will be able to consummate acquisition or leasing transactions on
satisfactory terms. The acquisition of golf facilities may become more
expensive in the future to the extent that demand and competition increases.
The likelihood of the success of the Company must be considered in light of
the problems, expenses, difficulties, complications and delays frequently
encountered in connection with the construction and opening of new golf
facilities. See "Risk Factors--Additional Financing Requirements," "Risk
Factors--Dependence Upon Key Employee; Recruitment of Additional Personnel."
To successfully implement its expansion strategy, the Company must
integrate acquired or newly-opened golf facilities into its existing
operations. As the Company grows, there can be no assurance that additional
golf facilities can be readily assimilated into the Company's operating
structure. Inability to efficiently integrate golf facilities could have a
material adverse effect on the Company's financial condition and results of
operations. In addition, a number of the golf facilities which the Company has
acquired have, and golf facilities it may acquire in the future may have,
experienced losses. On a pro forma basis, as adjusted to give effect to the
acquisitions consummated after January 1, 1995 as if they had occurred as of
January 1, 1995, the Company had a net loss before extraordinary item of
$435,000 (as compared to income before extraordinary item of $1.3 million a
historical basis) for the year ended December 31, 1995 and income of $1.9
million (as compared to net income of $4.8 million on a historical
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basis) for the nine months ended September 30, 1996. There can be no assurance
that golf facilities recently acquired by the Company or those that the
Company may acquire in the future will operate profitably and will not
adversely affect the Company's results of operations.
EXPIRATION AND TERMINATION OF LEASES
Although after giving effect to renewal options none of the Company's
leases, as of the date of this Prospectus, is expected to expire until 2007,
the leases may be terminated prior to their scheduled expiration should the
Company default in its obligations thereunder. Such obligations include the
Company's timely payment of rent and maintenance of adequate insurance
coverage. The termination of any of the Company's leases could have an adverse
effect on the Company. If any of the Company's leases were to be terminated,
there can be no assurance that the Company would be able to enter into leases
for comparable properties on favorable terms, or at all.
TERMINATION OF MANAGEMENT AGREEMENTS
The Company's management agreement with the City of New York (the
"City") for the Douglaston, New York golf center, which expires on December
31, 2006, is terminable by the City at will. During the year ended December
31, 1995, the management agreement accounted for 17% of the Company's total
revenue. Pursuant to the management agreement, the Company made approximately
$2.3 million of capital improvements to the Douglaston center. If the
management agreement is terminated, the City may retain, and is not obligated
to pay the Company for the value of, such capital improvements. Unless
reimbursed, for accounting purposes the Company would immediately have to
write off the undepreciated value of these capital improvements and the
goodwill related to its purchase of the limited partners' minority interest in
Alley Pond Associates, L.P. which are currently being depreciated and
amortized over the life of the management agreement. Accordingly, termination
of the management agreement with the City could have a material adverse effect
on the Company.
The Company's management agreement with the City of El Segundo for
the El Segundo golf facility terminates on June 30, 1998, unless earlier
terminated by either party, with or without cause, as of the end of any
operating year during the term of the agreement, upon at least 90 days prior
written notice. Termination of the management agreement with the City of El
Segundo may have an adverse effect on the Company.
GOLDEN BEAR LICENSE
As of November 1, 1996, the Company operated seven of its golf
centers, and intends to operate at least one additional golf center, under the
name "Golden Bear Golf Center" pursuant to a non-exclusive license agreement
(the "License Agreement"), expiring August 2002, with Golden Bear Golf
Centers, Inc. (the "Licensor"). The License Agreement is terminable by the
Licensor prior to August 2002 under certain circumstances, including if the
current directors of the Company at any time constitute less than 50% of the
Company's directors. The Company agreed to cure, and believes it has cured, an
alleged default of the License Agreement (principally by making certain
capital improvements by November 1996). Failure by the Company to cure
satisfactorily the alleged default could result in the termination of the
License Agreement. Termination of the License Agreement could adversely affect
the Company's Golden Bear Golf Centers and, possibly, the Company. The value
of the "Golden Bear" name is dependent, in part, upon the continued popularity
of Jack Nicklaus. Accordingly, the occurrence of any event which diminishes
the reputation of Mr. Nicklaus and the related "Golden Bear" symbol could
adversely affect the Company's Golden Bear Golf Centers. See "Risk
Factors--Competition".
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<PAGE>
COMPETITION
The golf center industry is highly competitive and includes
competition from other golf centers, traditional golf ranges, golf courses and
other recreational pursuits. The Company may face imitation and other forms of
competition and the Company cannot prevent or restrain others from utilizing a
similar operational strategy. Many of the Company's competitors and potential
competitors have considerably greater financial and other resources,
experience and customer recognition than does the Company. Until September
1995, the Company had the exclusive right to open Golden Bear Golf Centers in
certain territories. As a result of a recent change in the License Agreement,
the Licensor now is permitted to establish, or license others to establish,
"Golden Bear" golf centers that compete with the Company's golf centers,
including its Golden Bear Golf Centers. Golden Bear Golf, Inc., an affiliate
of the Licensor, has recently publicly indicated that it intends to focus its
efforts on the direct ownership and operation of golf facilities through the
acquisition or development of additional golf centers and to pursue new
licensees and enter into additional territorial development agreements only in
locations and territories where it and its affiliates do not intend to acquire
or develop their own facilities. There can be no assurance that such
competition will not adversely affect the Company's ability to acquire
additional properties.
VULNERABILITY TO WEATHER CONDITIONS AND SEASONAL RESULTS
Historically, the second and third quarters of the year have
accounted for a greater portion of the Company's operating revenue than have
the first and fourth quarters of the year. This is primarily due to an outdoor
playing season limited by weather. Although most of the Company's driving
ranges are designed to be all-weather facilities (including the domed
facility), portions of the Company's facilities, including the miniature golf
courses, are outdoors and vulnerable to weather conditions. Also, golfers are
less inclined to practice when weather conditions limit their ability to play
golf on outdoor courses. This seasonal pattern, as well as the timing of new
center openings and acquisitions, may cause the Company's results of
operations to vary significantly from quarter to quarter. Accordingly,
period-to-period comparisons are not necessarily meaningful and should not be
relied on as indicative of future results. In addition, variability in the
Company's results of operations could cause the Company's stock price to
fluctuate following the release of interim results of operations or other
information and may have a material adverse effect on the Company and its
stock price.
ADDITIONAL FINANCING REQUIREMENTS
In July 1996, the Company raised approximately $75 million of equity
capital. The Company anticipates, based on its currently proposed expansion
plans and assumptions relating to its operations, that such capital, together
with availability under its primary credit facility and cash flow from
operations, will be sufficient to permit the Company to conduct its operations
and to carry on its contemplated expansion through December 1997. The Company
also anticipates that it will need to raise substantial additional equity
capital in the future to continue its longer term expansion plans. There can
be no assurance that the Company will be able to obtain additional financing
on favorable terms or at all.
ENVIRONMENTAL REGULATION
Operations at the Company's golf facilities involve the use and
limited storage of various hazardous materials such as pesticides, herbicides,
motor oil, gasoline and paint. Under various federal, state and local laws,
ordinances and regulations, an owner or operator of real property is generally
liable for the costs of removal or remediation of hazardous substances that
are released on or in its property regardless of whether the property owner or
operator knew of, or was responsible for, the release of hazardous materials.
The Company has not been informed by any governmental authority of any
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non-compliance or violation of any environmental laws, ordinances or
regulations and the Company believes that it is in substantial compliance with
all such laws, ordinances and regulations applicable to its properties or
operations. However, the Company is aware of one notice of violation issued by
the New York Department of Environmental Conservation (the "DEC") against the
owner of the land leased by the Company in Elmsford, New York alleging that
certain hazardous materials were placed on the site. The owner has taken
remedial action and the Company does not believe it will be affected by the
alleged violation. As of the date of this Prospectus, the Company has not
incurred material costs of remediation and the Company knows of no material
environmental liability to which it may become subject. Although the Company
usually hires environmental consultants to conduct environmental studies,
including invasive procedures such as soil sampling or ground water analysis
on golf facilities it owns, operates or intends to acquire, in some cases only
limited invasive procedures are conducted on such properties. Accordingly,
there may be potential environmental liabilities or conditions of which the
Company is not aware.
DEPENDENCE UPON KEY EMPLOYEE; RECRUITMENT OF ADDITIONAL PERSONNEL
The Company is heavily dependent on the services of Dominic Chang,
its Chairman of the Board, President and Chief Executive Officer. The loss of
the services of Mr. Chang could materially adversely affect the Company. Mr.
Chang has entered into an employment agreement with the Company which
terminates on December 31, 1999. The Company owns, and is the sole beneficiary
of, key person life insurance in the amount of $1.5 million on the life of Mr.
Chang. The Company will also be required to hire additional personnel and
PGA-certified professionals to staff the golf centers it intends to acquire,
lease or construct. There can be no assurance that the Company will be able to
attract and retain qualified personnel.
CONTROL BY CURRENT STOCKHOLDER
As of the date of this Prospectus, Dominic Chang beneficially owned
2,549,334 shares of Common Stock, constituting approximately 21.5% of such
outstanding shares. Mr. Chang is, therefore, able to exercise significant
influence with respect to the election of the directors of the Company and all
matters submitted to a vote of the stockholders of the Company.
DEPENDENCE ON DISCRETIONARY CONSUMER SPENDING
The amount spent by consumers on discretionary items, such as family
and entertainment activities like those offered by the Company's golf
facilities, have historically been dependent upon levels of discretionary
income, which may be adversely affected by general economic conditions. A
decrease in consumer spending on golf could have an adverse effect on the
Company's financial condition and results of operations.
DIVIDEND POLICY
The Company has not paid any cash dividends on the Common Stock since
inception and does not intend to pay any dividends to its stockholders in the
foreseeable future. The Company currently intends to reinvest earnings, if
any, in the development and expansion of its business.
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SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
The sale, or availability for sale, of substantial amounts of Common
Stock in the public market pursuant to Rule 144 under the Securities Act
("Rule 144") or otherwise could materially adversely affect the market price
of the Common Stock and could impair the Company's ability to raise additional
capital through the sale of its equity securities or debt financing. In
general, under Rule 144 as currently in effect, a person (or persons whose
shares are aggregated), including a person who may be deemed to be an
"affiliate" of the Company as that term is defined under the Securities Act,
would be entitled to sell within any three month period a number of shares
beneficially owned for at least two years that does not exceed the greater of
(i) 1% of the then outstanding shares of Common Stock, or (ii) the average
weekly trading volume in the Common Stock during the four calendar weeks
preceding such sale. Sales under Rule 144 are also subject to certain
requirements as to the manner of sale, notice and the availability of current
public information about the Company. However, a person who is not deemed to
have been an affiliate of the Company during the 90 days preceding a sale by
such person and who has beneficially owned shares of Common Stock for at least
three years may sell such shares without regard to the volume, manner of sale
or notice requirements of Rule 144.
Of the 11,842,562 shares of Common Stock outstanding as of
November 29, 1996, 7,986,233 shares are freely tradeable without
restrictions currently, unless held by "affiliates" of the Company who are
subject to certain volume limitations and manner of sale restrictions, and
3,856,329 are "restricted securities" as that term is defined in Rule 144.
The two-year holding period for substantially all of the "restricted
securities" will have been met by November 1996 and such securities may,
subject to the agreements described below, be sold without registration under
the Securities Act, subject to volume limitations and other restrictions. The
holders of 3,161,950 shares of Common Stock have agreed not to publicly sell
or otherwise dispose of any securities of the Company without the prior
written consent of Jefferies & Company, Inc. (the underwriter of two of the
Company's public offerings) until December 13, 1996. As of November 1, 1996,
Mr. Chang has pledged 361,750 shares of Common Stock to banks, and may in the
future pledge additional shares to secure certain personal loans, which shares
are not, or would not be, subject to such agreements.
The holders of warrants to purchase 300,000 shares of Common Stock
(the "Representatives' Warrants") issued to the underwriters in the Company's
second public offering have certain demand and "piggyback" registration rights
with respect to such warrants and/or the shares of Common Stock underlying
such warrants, commencing December 12, 1996. In addition, the holders of an
aggregate of 28,400 shares of Common Stock have certain "piggyback"
registration rights.
PREFERRED STOCK; POSSIBLE ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER AND
CONTRACTUAL PROVISIONS
The Company's Certificate of Incorporation authorizes the Board of
Directors to issue up to 2,000,000 shares of preferred stock, $.10 par value
per share. The preferred stock may be issued in one or more series, the terms
of which may be determined at the time of issuance by the Board of Directors,
without further action by stockholders. Although no preferred stock is
currently outstanding and the Company currently has no plans for the issuance
of any preferred stock, there can be no assurance that the Company will not do
so in the future. The ability of the Board of Directors to issue preferred
stock could have the effect of delaying, deferring or preventing a change of
control of the Company or the removal of existing management and, as a result,
could prevent the stockholders of the Company from being paid a premium over
the market value for their shares of Common Stock. The Company's ByLaws
contain provisions requiring advance notice of stockholder proposals and
imposing certain procedural restrictions on stockholders wishing to call a
special meeting of stockolders. The License Agreement may be terminated by the
Licensor if members of the Company's Board of Directors, as of
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September 1995, do not constitute at least 50% of the Company's Board of
Directors. Accordingly, such provision could discourage possible future
attempts to gain control of the Company (which attempts, if stockholders were
offered a premium over the market value of their Common Stock, might be viewed
as beneficial to stockholders).
THE COMPANY
Family Golf Centers, Inc. operates golf centers designed to provide a
wide variety of practice opportunities, including facilities for driving,
chipping, putting, pitching and sand play. In addition, the Company's golf
centers typically offer golf lessons instructed by PGA-certified golf
professionals, full-line pro shops and other amenities to encourage family
participation. As of November 30, 1996, the Company owned, leased or managed
33 golf facilities (comprised of twenty-four golf centers and nine combination
golf center and golf course facilities) located in thirteen states. Of the
golf centers operated by the Company as of November 30, 1996, seven were
operated under the name "Golden Bear Golf Centers," licensed from Jack
Nicklaus' licensing company, Golden Bear Golf Centers, Inc. Of the nine
combination-golf center and golf course facilities as of November 30, 1996,
six include par-3 golf courses, generally designed to facilitate the practice
of golf, and three include regular 18-hole golf courses. The Company has
experienced significant recent growth, primarily through the acquisition or
opening of twenty-nine facilities since the Company's initial public offering
in November 1994. The Company's total revenue increased from $1.9 million in
1992 to $12.4 million for the 12-month period ended December 31, 1995. During
the same period, the Company's net income increased from a loss of $22,000 to
net income of $1.1 million.
The Company's strategy is to grow revenue and net income by (i)
increasing the number of golf centers it owns, leases or manages by (a)
identifying and acquiring well-located ranges that have the potential for
improvement under better management and with improved or expanded facilities,
including the addition of enclosed hitting areas, full-line pro shops,
miniature golf courses and other amenities and (b) building new centers in
locations where suitable acquisition opportunities are not available and (ii)
seeking to realize economies of scale through centralized purchasing,
accounting, management information systems and cash management.
According to the National Golf Foundation (the "NGF"), there were
approximately 25 million golfers in the United States in 1995. According to
the Golf Range and Recreational Association, there are currently between 1,900
and 2,300 stand-alone driving ranges in the United States. The NGF estimates
that in 1993 92% of all stand-alone driving ranges were managed by
owner-operators. The Company believes that many of these owner-operated ranges
are managed by individuals who may lack the experience, expertise and
financial resources to compete effectively. The Company believes this highly
fragmented industry presents numerous opportunities for the Company to
acquire, upgrade and renovate golf centers and driving ranges.
The Company believes that it attracts customers to its golf centers
primarily due to the quality, convenience and comfort of its facilities and
their appeal to the whole family. The Company's golf centers are designed
around a driving range with target greens, bunkers and traps to simulate golf
course conditions. The ranges are lighted to permit night play and the hitting
tees are enclosed or sheltered from above and from the rear in a
climate-controlled environment and, in one case, a portion of the range is
enclosed under an air inflated dome to permit all-weather play. There are
approximately 80 to 100 hitting tees in facilities with the two-tier design
and approximately 30 to 60 hitting tees at smaller golf centers. In addition
to the driving range, the Company's golf centers include a number of amenities
designed to appeal to golfers and their families, such as a 4,000-6,000 square
foot clubhouse (including a full-line pro shop, locker facilities, a
restaurant or snack bar and video games), PGA-certified golf instructors,
- 8 -
<PAGE>
landscaped 18-hole miniature golf courses and a short game practice area (with
putting green and sand traps). The Company's pro shops are stocked with clubs,
bags, shoes, apparel, videos and related accessories from a number of
suppliers, including brand name manufacturers such as Karsten Manufacturing
Corporation (Ping), Callaway Golf Company, Tommy Armour Golf, Wilson Golf
Company, Mizuno Golf Company, Spalding Sports Worldwide, Titleist and Footjoy
Worldwide (Division of American Brands, Inc.), Ashworth Clothing Company and
Nicklaus Golf Equipment Company.
The Company was incorporated in the State of Delaware on July 13,
1994. The Company operates through its wholly-owned subsidiaries, the first of
which was incorporated on March 27, 1991. The Company's principal executive
offices are located at 225 Broadhollow Road, Melville, New York 11747 and its
telephone number is (516) 694-1666.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the shares
of Common Stock offered by the Selling Stockholders hereby. All such proceeds
will be received by the Selling Stockholders.
SELLING STOCKHOLDERS
The address of each Selling Stockholder is Family Golf Centers, Inc.,
225 Broadhollow Road, Melville, New York 11747. The following table sets forth
the name and principal position(s) over the past three years with the Company
of each of the Selling Stockholders and (a) the number of shares of Common
Stock each Selling Stockholder beneficially owned as of November 25, 1996; (b)
the number of shares of Common Stock available to be acquired by each Selling
Stockholder pursuant to the 1996 Plan being registered hereby, some or all of
which shares may be sold pursuant to this Prospectus; and (c) the number of
shares of Common Stock and the percentage, if 1% or more, of the total class
of Common Stock outstanding to be beneficially owned by each Selling
Stockholder following this offering, assuming the sale pursuant to this
offering of all Common Stock acquired by such Selling Stockholder pursuant to
the 1996 Plan and registered hereby and assuming no additional shares of
Common Stock are acquired. There is no assurance, however, that any of the
Selling Stockholders will sell any or all of the shares of Common Stock
offered by them hereunder.
<TABLE>
<CAPTION>
Number of Shares of
Common Stock
Number of Shares of Number of Shares of Beneficially Owned
Common Stock Common Stock after this Offering
Selling Stockholders Position with Company Beneficially Owned Offered Hereby(1) Number Percent
- -------------------- --------------------- ------------------- ----------------- ------ -------
<S> <C> <C> <C> <C> <C>
Krishnan P. Thampi Chief Financial Officer, 138,616 35,000 138,616 1.2%
Chief Operating Officer,
Executive Vice President,
Secretary, Treasurer and
Director
James Ganley Director 18,833 10,000 18,833 *
Jimmy C.M. Hsu Director 144,083(2) 10,000 144,083 *
Yupin Wang Director 5,333 10,000 5,333 *
Robert J. Krause Senior Vice President - 10,650 10,000 10,650 *
Strategic Planning and
Development
Margaret M. Santorufo Controller 6,666 5,000 6,666 *
William Schickler Senior Vice President 9,999 25,000 9,999 *
</TABLE>
- -------------------
* Represents less than 1% of the number of shares outstanding.
(1) Includes shares of Common Stock underlying options which have been
granted to such Selling Stockholders, but which have not yet vested
and are not exercisable within 60 days of the date hereof.
- 9 -
<PAGE>
(2) Does not include 66,250 shares of Common Stock beneficially owned by
Mr. Hsu's brother. Mr. Hsu disclaims beneficial ownership of his
brother's shares.
As the names and amounts of securities to be sold by additional Selling
Stockholders become known, the following information will be included in a
prospectus supplement: the name and position(s) over the last three years with
the Company of each Selling Stockholder; the number of shares of Common Stock
owned by each Selling Stockholder; the number of shares of Common Stock
available to be acquired by each Selling Stockholder pursuant to the 1996 Plan
and being registered for resale by the Selling Stockholders; and the number of
shares of Common Stock and the percentage, if 1% or more, of the total class
of Common Stock outstanding to be beneficially owned by each Selling
Stockholder following the offering.
Certain non-affiliates may use this Prospectus for reoffers and resales,
each of whom may sell up to the lesser of 1,000 shares of Common Stock or 1%
of the shares of Common Stock issuable under the Plan.
PLAN OF DISTRIBUTION
The Shares offered by this Prospectus may be sold from time to time by
the Selling Stockholders or by transferees thereof. No underwriting
arrangements have been entered into by the Selling Stockholders. The
distribution of the Shares by the Selling Stockholders may be effected in one
or more transactions that may take place in the over-the-counter market,
including ordinary broker's transactions, privately negotiated transactions,
or through sales to one or more dealers for resale of such shares as
principals, at prevailing market prices at the time of sale, prices related to
prevailing market prices, or negotiated prices. Underwriter's discounts and
usual and customary or specifically negotiated brokerage fees or commissions
may be paid by a Selling Stockholder in connection with sales of the Shares.
In order to comply with certain state securities laws, if applicable, the
Shares will be sold in such jurisdictions only through registered or licensed
brokers or dealers. In certain states, the Shares may not be sold unless such
Shares have been registered or qualified for sale in such state or an
exemption from registration or qualification is available and is complied
with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Shares may not simultaneously engage in
market-making activities with respect to such Shares for a period of two or
nine business days prior to the commencement of such distribution. In addition
to, and without limiting, the foregoing, each of the Selling Stockholders and
any other person participating in a distribution will be subject to the
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including, without limitation, rules 10b-6 and 10b-7, which
provisions may limit the timing of purchases and sales of any of the Shares by
the Selling Stockholders or any such other person. All of the foregoing may
affect the marketability of the Shares. The Company will bear all expenses of
the offering, except that the Selling Stockholders will pay any applicable
brokerage fees or commissions and transfer taxes.
LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation limits the liability of
directors to the maximum extent permitted by Delaware law. Delaware law
provides that directors of a company will not be personally liable for
monetary damages for breach of their fiduciary duties as directors, except for
liability for (i) any breach of their duty of loyalty to the company or its
stockholders, (ii) acts or omissions not in good faith or involving
intentional misconduct or a knowing violation of law, (iii) unlawful payment
of dividends or
- 10 -
<PAGE>
unlawful stock repurchases or redemptions as provided in Section 174 of the
Delaware General Corporation Law or (iv) any transaction from which the
director derived an improper personal benefit.
The Company's Certificate of Incorporation provides that the Company
shall indemnify its officers, directors, employees and other agents to the
fullest extent permitted by Delaware law.
The Company maintains a policy of insurance under which the directors and
officers of the Company are insured, subject to the limits of the policy,
against certain losses arising from claims made against such directors and
officers by reason of any acts or omissions covered under such policy in their
respective capacities as directors or officers, including liabilities under
the Securities Act. Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission (the "Commission") such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
LEGAL MATTERS
The validity of the Shares has been passed upon for the Company by
Squadron, Ellenoff, Plesent & Sheinfeld, LLP, 551 Fifth Avenue, New York, New
York 10176. Kenneth R. Koch, Esq., a member of Squadron, Ellenoff, Plesent &
Sheinfeld, LLP, holds option to purchase shares of the Company's Common Stock.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1995 and for each of the years in the two year period then ended, incorporated
herein by reference to the Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1995 have been so incorporated in reliance on
the report of Richard A. Eisner & Company, LLP, independent auditors, given
upon the authority of said firm as experts in accounting and auditing.
- 11 -
<PAGE>
===============================================================================
No dealer, salesman, or any other person has been authorized to give any
information or to make any representation not contained in this Prospectus in
connection with the offering made hereby, and, if given or made, such
information or representation must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer to
sell, or a solicitation of an offer to buy, any of the securities offered
hereby in any jurisdiction to any person to whom it is unlawful to make such
an offer or solicitation in such jurisdiction. Neither the delivery of this
Prospectus nor any sale made hereunder shall under any circumstances create
any implication that there has been no change in the affairs of the Company
since the date hereof or that the information contained herein is correct as
of any time subsequent to the dates as of which such information is furnished.
--------------------
TABLE OF CONTENTS
Page
Available Information...................................... 2
Incorporation of Certain Documents by Reference............ 2
Risk Factors............................................... 3
The Company................................................ 8
Use of Proceeds............................................ 9
Selling Stockholders....................................... 9
Plan of Distribution....................................... 10
Limitation of Liability and Indemnification
of Directors and Officers............................... 10
Legal Matters.............................................. 11
Experts.................................................... 11
===============================================================================
===============================================================================
-----------------
FAMILY GOLF
CENTERS, INC.
COMMON STOCK
-----------------
PROSPECTUS
-----------------
DECEMBER 5, 1996
===============================================================================
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
--------------------------------------------------
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated herein by reference and made a part of this Prospectus
are the following: (1) the Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1995; (2) the Company's Quarterly Report on
Form 10-QSB for the three months ended March 31, 1996; (3) the Company's
Quarterly Report on Form 10-QSB for the quarter ended June 30, 1996; (4) the
Company's Quarterly Report on Form 10-QSB for the quarter ended September 30,
1996; (5) the description of the Common Stock, which is registered under
Section 12 of the Exchange Act, contained in the Company's Registration
Statement on Form 8-A dated November 8, 1994; (6) the Current Report on Form
8-K dated February 28, 1996; (7) the Current Report on Form 8-K dated March 6,
1996; (8) the Current Report on Form 8-K dated April 8, 1996; (9) the Current
Report on Form 8-K dated May 20, 1996; (10) the Current Report on Form 8-K
dated June 7, 1996; (11) the Current Report on Form 8-K dated July 5, 1996;
(12) the Current Report on Form 8-K dated October 11, 1996; (13) the Current
Report on Form 8-K dated October 30, 1996; and (14) the Current Report on Form
8-K dated November 13, 1996. All documents subsequently filed by the Company
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this Registration Statement and prior to the
termination of the offering made hereby will be deemed to be incorporated by
reference into this Registration Statement and to be a part hereof from the
date of filing of such documents.
A copy of any and all of the information included in documents (but
not exhibits thereto except to the extent exhibits have been incorporated in
such documents) that have been incorporated by reference in this Registration
Statement but which are not delivered with this Prospectus will be provided by
the Company without charge to any person to whom this Prospectus is delivered,
upon the oral or written request of such person. Such requests should be
directed to Family Golf Centers, Inc., 225 Broadhollow Road, Melville, New
York 11747, Attention: Chief Executive Officer.
ITEM 4. DESCRIPTION OF SECURITIES
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The validity of the Common Stock issuable upon the exercise of
options granted pursuant to the Plan will be passed upon by Squadron,
Ellenoff, Plesent & Sheinfeld, LLP, 551 Fifth Avenue, New York, New York
10176. Kenneth R. Koch, Esq., a member of Squadron, Ellenoff, Plesent &
Sheinfeld, LLP, holds option to purchase shares of the Company's Common Stock.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Delaware General Corporation Law, Section 102(b)(7), subject to
certain exceptions, enables a corporation in its original certificate of
incorporation or an amendment thereto validly approved by stockholders to
eliminate or limit personal liability of members of its Board of Directors for
violations of a director's fiduciary duty of care. However, the elimination or
limitation shall not apply where there has been a breach of the duty of
loyalty, failure to act in good faith, intentional misconduct or a knowing
violation of a law, the payment of a dividend or approval of a stock
repurchase which is deemed illegal
<PAGE>
or an improper personal benefit is obtained. Article Nine of the Company's
Certificate of Incorporation includes the following language:
"No Director of the Corporation shall be liable to the Corporation or
any of its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that this provision does not eliminate the liability of the
director (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law. (iii)
under Section 174 of Title 8 of the Delaware Code, or (iv) for any transaction
from which the director derived an improper personal benefit. For purposes of
the prior sentence, the term "damages" shall, to the extent permitted by law,
include without limitation, any judgment, fine, amount paid in settlement,
penalty, punitive damages, excise or other tax assessed with respect to an
employee benefit plan, or expense of any nature (including, without
limitation, counsel fees and disbursements). Each person who serves as a
director of the Corporation while this Article NINTH is in effect shall be
deemed to be doing so in reliance on the provisions of this Article NINTH, and
neither the amendment or repeal of this Article NINTH, nor the adoption of any
provision of this Certificate of Incorporation inconsistent with this Article
NINTH, shall apply to or have any effect on the liability or alleged liability
of any director of the Corporation for, arising out of, based upon, or in
connection with any acts or omissions of such director occurring prior to such
amendment, repeal, or adoption of an inconsistent provision. The provisions of
this Article NINTH are cumulative and shall be in addition to and independent
of any and all other limitations on or eliminations of the liabilities of
directors of the Corporation, as such, whether such limitations or
eliminations arise under or are created by any law, rule, regulation, by-law,
agreement, vote of shareholders or disinterested directors, or otherwise."
Delaware General Corporation Law, Section 145, permits a corporation
organized under Delaware law to indemnify directors and officers with respect
to any matter in which the director or officer acted in good faith and in a
manner he reasonably believed to be not opposed to the best interests of the
Company, and, with respect to any criminal action, had reasonable cause to
believe his conduct was lawful. Article Eight of the Company's Certificate of
Incorporation includes the following language:
"A. Each person who was or is made a party or is threatened to
be made a party to or is otherwise involved in any action, suit, or
proceeding, whether civil, criminal, administrative, or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she is or was a
director, officer, employee, or agent of the Corporation or any of its direct
or indirect subsidiaries or is or was serving at the request of the
Corporation as a director, officer, employee, or agent of any other
corporation or of a partnership, joint venture, trust, or other enterprise,
including service with respect to an employee benefit plan (hereinafter an
"indemnitee"), whether the basis of such proceeding is alleged action in an
official capacity as a director, officer, employee, or agent or in any other
capacity while serving as a director, officer, employee, or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than permitted prior thereto), against all expense,
liability, and loss (including attorneys' fees, judgments, fines, excise or
other taxes assessed with respect to an employee benefit plan, penalties, and
amounts paid in settlement) reasonably incurred or suffered by such indemnitee
in connection therewith, and such indemnification shall continue as to an
indemnitee who has ceased to be a director, officer, employee, or agent and
shall inure to the benefit of the indemnitee's heirs, executors, and
administrators; provided, however, that, except as provided in Paragraph C of
this Article EIGHTH with respect to proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee
only if such proceeding (or part thereof) was authorized by the Board of
Directors of the Corporation.
II-2
<PAGE>
B. The right to indemnification conferred in Paragraph A of this
Article EIGHTH shall include the right to be paid by the Corporation the
expenses incurred in defending any proceeding for which such right to
indemnification is applicable in advance of its final disposition (hereinafter
an "advancement of expenses"); provided, however, that, if the Delaware
General Corporation Law requires, an advancement of expenses incurred by an
indemnitee in his or her capacity as a director or officer (and not in any
other capacity in which service was or is rendered by such indemnitee,
including, without limitation, service to an employee benefit plan) shall be
made only upon delivery to the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
this Article EIGHTH or otherwise.
C. The rights to indemnification and to the advancement of
expenses conferred in Paragraphs A and B of this Article EIGHTH shall be
contract rights. If a claim under Paragraph A or B of this Article EIGHTH is
not paid in full by the Corporation within sixty days after a written claim
has been received by the Corporation, except in the case of a claim for an
advancement of expenses, in which case the applicable period shall be 20 days,
the indemnitee may at any time thereafter bring suit against the Corporation
to recover the unpaid amount of the claim. If successful in whole or in part
in any such suit, or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the
indemnitee shall be entitled to be paid also the expense of prosecuting or
defending such suit. In (I) any suit brought by the indemnitee to enforce a
right to indemnification hereunder (but not in a suit brought by an indemnitee
to enforce a right to an advancement of expenses) it shall be a defense that
the indemnitee has not met any applicable standard for indemnification set
forth in the Delaware General Corporation Law, and (ii) any suit by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the Corporation shall be entitled to recover such expenses upon a
final adjudication that the indemnitee has not met any applicable standard for
indemnification set forth in the Delaware General Corporation Law. Neither the
failure of the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) to have made a determination prior to the
commencement of such suit that indemnification of the indemnitee is proper in
the circumstances because the indemnitee has met the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the indemnitee has not
met such applicable standard of conduct, shall create a presumption that the
indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or to such
advancement of expenses, under this Article EIGHTH or otherwise, shall be on
the Corporation.
D. The rights to indemnification and to the advancement of
expenses conferred in this Article EIGHTH shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute, this
certificate of incorporation, by-law, agreement, vote of stockholders or
disinterested directors, or otherwise."
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
II-3
<PAGE>
ITEM 8. EXHIBITS
(4.1) Certificate of Incorporation of the Company, as amended. *
(4.2) Amended and Restated By-Laws of the Company. **
(4.3) Family Golf Centers, Inc. 1996 Stock Option Plan.
(4.4) Form of Letter Agreement dated as of March 7, 1996 between the
Company and each of Janice C. Lee, Larry Griebenow, Bill
Wright and Ross Krocker.
(5) Opinion of Squadron, Ellenoff, Plesent & Sheinfeld, LLP dated
December 4, 1996.
(23.1) Consent of Squadron, Ellenoff, Plesent & Sheinfeld, LLP
(included in Opinion filed as Exhibit 5).
(23.2) Consent of Richard A. Eisner & Company, LLP.
(24) Power of Attorney executed by the Officers and Directors who
signed this Registration Statement set forth on page II-6
herein.
- -------------------
* Incorporated by reference to exhibit 3-1 filed in amendment No. 1 to the
Company's Registration Statement on Form SB-2, filed on June 12, 1996
(Registration No. 333-4541).
** Incorporated by reference to exhibit 3.2 to the Company's Registration
Statement on Form SB-2 filed on May 24, 1996 (Registration No. 333-4541).
ITEM 9. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) that, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-4
<PAGE>
(3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) That, for purposes of determining any lability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to section 13(a)
or section 15(d) of the Securities Exchange Act of 1934 that is incorporated
by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of
Registrant pursuant to the foregoing provisions, or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by Registrant
of expenses incurred or paid by a director, officer, or controlling person of
Registrant in the successful defense of any action, suit, or proceeding) is
asserted by such director, officer, or controlling person in connection with
the securities being registered, Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
II-5
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in The City of Melville, New York on December 4,
1996.
FAMILY GOLF CENTERS, INC.
By:
------------------------------
Dominic Chang
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Dominic Chang and Krishnan P. Thampi,
or any one of them, his true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him and in his name, place,
and stead, in any and all capacities, to sign any and all pre- or
post-effective amendments to this Registration Statement, and to file the same
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform each
and every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitutes, may lawfully do or cause
to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
Signature Title Date
--------- ----- ----
Chairman of the Board, December 4, 1996
- ---------------------- President, Chief Executive
Dominic Chang Officer (Principal Executive
Officer)
Chief Financial Officer and December 4, 1996
- ----------------------
Krishnan P. Thampi Director (Principal Financial
and Accounting Officer)
Director December 4, 1996
- ----------------------
James Ganley
Director December 4, 1996
- ----------------------
Jimmy C.M. Hsu
Director December 4, 1996
- ----------------------
Yupin Wang
II-6
<PAGE>
Exhibit Index
Exhibit Description Page
Number ----------- ----
- -------
(4.1) Certificate of Incorporation of the Company, as amended. *
(4.2) Amended and Restated By-Laws of the Company. **
(4.3) Family Golf Centers, Inc. 1996 Stock Incentive Plan.
(4.4) Form of Letter Agreement dated as of March 7, 1996 between the
Company and each of Janice C. Lee, Larry Griebenow, Bill
Wright and Ross Krocker
(5) Opinion of Squadron, Ellenoff, Plesent & Sheinfeld LLP dated
December 4, 1996.
(23.1) Consent of Squadron, Ellenoff, Plesent & Sheinfeld LLP
(included in Opinion filed as Exhibit 5).
(23.2) Consent of Richard A. Eisner & Company, LLP.
(24) Power of Attorney executed by the Officers and Directors who
signed this Registration Statement set forth on page II-6
herein.
- --------------
* Incorporated by reference to exhibit 3-1 filed in amendment No.
1 to the Company's Registration Statement on Form SB-2, filed on
June 12, 1996 (Registration No. 333-4541).
** Incorporated by reference to exhibit 3-2 to the Company's
Registration Statement on Form SB-2 filed on May 24, 1996
(Registration No. 333-4541).
II-7
<PAGE>
FAMILY GOLF CENTERS, INC.
1996 STOCK INCENTIVE PLAN
APPROVED AND ADOPTED BY THE BOARD OF DIRECTORS ON MARCH 6, 1996
SECTION 1. PURPOSE. The purpose of the Family Golf Centers, Inc. 1996
Stock Incentive Plan (the "Plan") is to provide a means whereby directors and
selected employees, officers, agents, consultants, and independent contractors
of Family Golf Centers, Inc., a Delaware corporation (the "Company"), or of any
parent or subsidiary (as defined in subsection 5.7 hereof and referred to
hereinafter as "Affiliates") thereof, may be granted incentive stock options
and/or nonqualified stock options to purchase shares of common stock, $.01 par
value ("Common Stock") in order to attract and retain the services or advice of
such directors, employees, officers, agents, consultants, and independent
contractors and to provide additional incentive for such persons to exert
maximum efforts for the success of the Company and its Affiliates by
encouraging stock ownership in the Company.
SECTION 2. ADMINISTRATION. Subject to Section 2.3 hereof, the Plan
shall be administered by the Board of Directors of the Company (the "Board")
or, in the event the Board shall appoint and/or authorize a committee of two or
more members of the Board to administer the Plan, by such committee. The
administrator of the Plan shall hereinafter be referred to as the "Plan
Administrator".
The foregoing notwithstanding, with respect to grants to be made to
directors: (a) the Plan Administrator shall be constituted so as to meet the
requirements of Section 16(b) of the Exchange Act and Rule 16b-3 thereunder,
each as amended from time to time, or (b) if the Plan Administrator cannot be
so constituted, no options shall be granted under the Plan to any directors.
2.1 PROCEDURES. The Board shall designate one of the members
of the Plan Administrator as chairman. The Plan Administrator may hold meetings
at such times and places as it shall determine. The acts of a majority of the
members of the Plan Administrator present at meetings at which a quorum exists,
or acts approved in writing by all Plan Administrator members, shall be valid
acts of the Plan Administrator.
2.2 RESPONSIBILITIES. Except for the terms and conditions
explicitly set forth herein, the Plan Administrator shall have the authority,
in its discretion, to determine all matters relating to the options to be
granted under the Plan, including, without limitation, selection of whether an
option will be an incentive stock option or a nonqualified stock option,
selection of the individuals to be granted options, the number of shares to be
subject to each option, the exercise price per share, the timing of grants and
all other terms and conditions of the options. Grants under the Plan need not
be identical in any respect, even when made simultaneously. The Plan
Administrator may also establish, amend, and revoke rules and regulations for
the administration of the Plan. The interpretation and construction by the Plan
Administrator of any terms or provisions of the Plan or any option issued
hereunder, or of any rule or regulation promulgated in connection herewith,
shall be conclusive and binding on all interested parties, so long as such
interpretation and construction with respect to incentive stock options
corresponds to the requirements of Internal Revenue Code of 1986, as amended
(the "Code") Section 422, the regulations thereunder, and any amendments
thereto. The Plan Administrator shall not be personally liable for any action
made in good faith with respect to the Plan or any option granted thereunder.
2.3 RULE 16B-3 AND SECTION 16(B) COMPLIANCE; BIFURCATION OF
PLAN. It is the intention of the Company that the Plan comply in all respects
with Rule 16b-3 under the Securities Exchange Act of 1934 (the "Exchange Act")
to the extent applicable, and in all events the Plan shall be construed in
favor of its meeting the requirements of Rule 16b-3. If any Plan provision is
later found not to be in compliance with such Rule, such provision shall be
deemed null and void. The Board of Directors may act under the Plan only if all
members thereof are "disinterested persons" as defined in Rule 16b-3 and
further described in Section 4 hereof; and no director or officer or other
Company "insider" subject to Section 16 of the Exchange Act may sell shares
received upon the exercise of an option during the six month period immediately
following the grant of the option.
<PAGE>
Notwithstanding anything in the Plan to the contrary, the Board, in its
absolute discretion, may bifurcate the Plan so as to restrict, limit, or
condition the use of any provision of the Plan to participants who are officers
and directors or other persons subject to Section 16(b) of the Exchange Act
without so restricting, limiting, or conditioning the Plan with respect to
other participants.
SECTION 3. STOCK SUBJECT TO THE PLAN. The stock subject to this Plan
shall be the Common Stock, presently authorized but unissued or subsequently
acquired by the Company. Subject to adjustment as provided in Section 7 hereof,
the aggregate amount of Common Stock to be delivered upon the exercise of all
options granted under the Plan shall not exceed in the aggregate 500,000 shares
as such Common Stock was constituted on the effective date of the Plan. If any
option granted under the Plan shall expire, be surrendered, exchanged for
another option, cancelled, or terminated for any reason without having been
exercised in full, the unpurchased shares subject thereto shall thereupon again
be available for purposes of the Plan, including for replacement options which
may be granted in exchange for such surrendered, cancelled, or terminated
options.
SECTION 4. ELIGIBILITY. An incentive stock option may be granted only
to any individual who, at the time the option is granted, is an employee of the
Company or any Affiliate thereof. A nonqualified stock option may be granted to
any director, employee, officer, agent, consultant, or independent contractor
of the Company or any Affiliate thereof, whether an individual or an entity.
Any party to whom an option is granted under the Plan shall be referred to
hereinafter as an "Optionee".
A director shall in no event be eligible for the benefits of
the Plan unless at the time discretion is exercised in the selection of a
director as a person to whom options may be granted, or in the determination of
the number of shares which may be covered by options granted to the director,
the Plan complies with the requirements of Rule 16b-3 under the Exchange Act.
SECTION 5. TERMS AND CONDITIONS OF OPTIONS. Options granted under the
Plan shall be evidenced by written agreements which shall contain such terms,
conditions, limitations, and restrictions as the Plan Administrator shall deem
advisable and which are not inconsistent with the Plan. Notwithstanding the
foregoing, options shall include or incorporate by reference the following
terms and conditions:
5.1 NUMBER OF SHARES AND PRICE.
(a) Upon first election or appointment to the Board, each
non-employee director will be granted a non-qualified option to purchase 10,000
shares of Common Stock at the fair market value of the Common Stock on the date
of such election or appointment; and
(b) Each non-employee director will be annually granted a
non-qualified option to purchase 10,000 shares of Common Stock at the fair
market value of the Common Stock on the date of such grant with the first such
grant to occur at the Annual Meeting of Stockholders at which this Plan is
approved by the Company's stockholders (the "Approval"); and
(c) Notwithstanding subsections (a) and (b) hereof, the maximum
number of shares that may be purchased pursuant to the exercise of each option,
and the price per share at which such option is exercisable (the "exercise
price"), shall be as established by the Plan Administrator; provided, that the
Plan Administrator shall act in good faith to establish the exercise price
which shall be not less than 100% of the fair market value per share of the
Common Stock at the time of grant of the option with respect to incentive stock
options; and provided, further, that, with respect to incentive stock options
granted to greater than ten percent stockholders, the exercise price shall be
as required by Section 6 hereof.
(d) The provisions of subparagraphs (a) and (b) hereof shall
supersede the provisions of the Family Golf Centers, Inc. 1994 Stock Option
Plan (the "1994 Plan") as to non-employee directors. After the Approval, no
options shall be granted to non-employee directors under the 1994 Plan.
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<PAGE>
5.2 TERM AND MATURITY. Subject to the restrictions contained
in Section 6 hereof with respect to granting stock options to greater than ten
percent stockholders, the term of each stock option shall be as established by
the Plan Administrator and, if not so established, shall be ten years from the
date of its grant, but in no event shall the term of any incentive stock option
exceed a ten year period. To ensure that the Company or Affiliate will achieve
the purpose and receive the benefits contemplated in the Plan, any option
granted to any Optionee hereunder shall, unless the condition of this sentence
is waived or modified in the agreement evidencing the option or by resolution
adopted by the Plan Administrator, be exercisable according to the following
schedule:
<TABLE>
<CAPTION>
Period of Optionee's
Continuous Relationship
With the Company or
Affiliate From the Date Portion of Total Option
the Option is Granted Which is Exercisable
--------------------- --------------------
<S> <C>
1 year 33%
2 years 67%
3 years 100%
</TABLE>
5.3 EXERCISE. Subject to the vesting schedule described in
subsection 5.2 hereof, each option may be exercised in whole or in part;
provided, that only whole shares may be issued pursuant to the exercise of any
option. Subject to any other terms and conditions herein, the Plan
Administrator may provide that an option may not be exercised in whole or in
part for a stated period or periods of time during which such option is
outstanding; provided, that the Plan Administrator may rescind, modify, or
waive any such limitation (including by the acceleration of the vesting
schedule upon a change in control of the Company) at any time and from time to
time after the grant date thereof. During an Optionee's lifetime, any incentive
stock options granted under the Plan are personal to such Optionee and are
exercisable solely by such Optionee. Options shall be exercised by delivery to
the Company of notice of the number of shares with respect to which the option
is exercised, together with payment of the exercise price in accordance with
Section 5.4 hereof.
5.4 PAYMENT OF EXERCISE PRICE. Payment of the option exercise
price shall be made in full at the time the notice of exercise of the option is
delivered to the Company and shall be in cash, bank certified or cashier's
check, or personal check (unless at the time of exercise the Plan Administrator
in a particular case determines not to accept a personal check) for shares of
Common Stock being purchased.
The Plan Administrator can determine at the time the option
is granted in the case of incentive stock options, or at any time before
exercise in the case of nonqualified stock options, that additional forms of
payment will be permitted. To the extent permitted by the Plan Administrator
and applicable laws and regulations (including, without limitation, federal tax
and securities laws and regulations and state corporate law), an option may be
exercised by:
(a) delivery of shares of Common Stock of the Company held by
an Optionee having a fair market value equal to the exercise price, such fair
market value to be determined in good faith by the Plan Administrator;
(b) delivery of a properly executed Notice of Exercise,
together with irrevocable instructions to a broker, all in accordance with the
regulations of the Federal Reserve Board, to promptly deliver to the Company
the amount of sale or loan proceeds to pay the exercise price and any federal,
state, or local withholding tax obligations that may arise in connection with
the exercise;
(c) delivery of a properly executed Notice of Exercise,
together with instructions to the Company to withhold from the shares of Common
Stock that would otherwise be issued upon exercise that number of shares of
Common Stock having a fair market value equal to the option exercise price.
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<PAGE>
5.5 WITHHOLDING TAX REQUIREMENT. The Company or any Affiliate
thereof shall have the right to retain and withhold from any payment of cash or
Common Stock under the Plan the amount of taxes required by any government to
be withheld or otherwise deducted and paid with respect to such payment. No
option may be exercised unless and until arrangements satisfactory to the
Company, in its sole discretion, to pay such withholding taxes are made. At its
discretion, the Company may require an Optionee to reimburse the Company for
any such taxes required to be withheld by the Company and withhold any
distribution in whole or in part until the Company is so reimbursed. In lieu
thereof, the Company shall have the right to withhold from any other cash
amounts due or to become due from the Company to the Optionee an amount equal
to such taxes or retain and withhold a number of shares having a market value
not less than the amount of such taxes required to be withheld by the Company
to reimburse the Company for any such taxes and cancel (in whole or in part)
any such shares of Common Stock so withheld. If required by Section 16(b) of
the Exchange Act, the election to pay withholding taxes by delivery of shares
of Common Stock held by any person who at the time of exercise is subject to
Section 16(b) of the Exchange Act shall be made either six months prior to the
date the option exercise becomes taxable or at such other times as the Company
may determine as necessary to comply with Section 16(b) of the Exchange Act.
Although the Company may, in its discretion, accept Common Stock as payment of
withholding taxes, the Company shall not be obligated to do so.
5.6 NONTRANSFERABILITY.
5.6.1 OPTION. Options granted under the Plan and the rights
and privileges conferred hereby may not be transferred, assigned, pledged, or
hypothecated in any manner (whether by operation of law or otherwise) other
than by will or by the applicable laws of descent and distribution or pursuant
to a qualified domestic relations order as defined in Section 414(p) of the
Code, or Title I of the Employee Retirement Income Security Act of 1974, as
amended, or the rules thereunder, and shall not be subject to execution,
attachment, or similar process. Any attempt to transfer, assign, pledge,
hypothecate, or otherwise dispose of any option under the Plan or of any right
or privilege conferred hereby, contrary to the Code or to the provisions of the
Plan, or the sale or levy or any attachment or similar process upon the rights
and privileges conferred hereby shall be null and void ab initio. The
designation by an Optionee of a beneficiary does not, in and of itself,
constitute an impermissible transfer under this subsection 5.6.1.
5.6.2 STOCK. The Plan Administrator may provide in the
agreement granting the option that (a) the Optionee may not transfer or
otherwise dispose of shares acquired upon exercise of an option without first
offering such shares to the Company for purchase on the same terms and
conditions as those offered to the proposed transferee or (b) upon termination
of employment of an Optionee the Company shall have a six month right of
repurchase as to the shares acquired upon exercise, which right of repurchase
shall allow for a maximum purchase price equal to the fair market value of the
shares on the termination date. The foregoing rights of the Company shall be
assignable by the Company upon reasonable written notice to the Optionee.
5.7 TERMINATION OF RELATIONSHIP. If the Optionee's
relationship with the Company or any Affiliate thereof ceases for any reason
other than termination for cause, death, or total disability, and unless by its
terms the option sooner terminates or expires, then the Optionee may exercise,
for a three month period, that portion of the Optionee's option which is
exercisable at the time of such cessation, but the Optionee's option shall
terminate at the end of the three month period following such cessation as to
all shares for which it has not theretofore been exercised, unless, in the case
of a nonqualified stock option, such provision is waived in the agreement
evidencing the option or by resolution adopted by the Plan Administrator within
90 days of such cessation. If, in the case of an incentive stock option, an
Optionee's relationship with the Company or Affiliate thereof changes from
employee to nonemployee (i.e., from employee to a position such as a
consultant), such change shall constitute a termination of an Optionee's
employment with the Company or Affiliate and the Optionee's incentive stock
option shall terminate in accordance with this subsection 5.7.
If an Optionee is terminated for cause, any option granted
hereunder shall automatically terminate as of the first discovery by the
Company of any reason for termination for cause, and such Optionee shall
thereupon have no right to purchase any shares pursuant to such option.
"Termination for cause" shall mean
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<PAGE>
dismissal for dishonesty, conviction or confession of a crime punishable by law
(except minor violations), fraud, misconduct, or disclosure of confidential
information. If an Optionee's relationship with the Company or any Affiliate
thereof is suspended pending an investigation of whether or not the Optionee
shall be terminated for cause, all Optionee's rights under any option granted
hereunder likewise shall be suspended during the period of investigation.
If an Optionee's relationship with the Company or any
Affiliate thereof ceases because of a total disability, the Optionee's option
shall not terminate or, in the case of an incentive stock option, cease to be
treated as an incentive stock option until the end of the 12 month period
following such cessation (unless by its terms it sooner terminates and
expires). As used in the Plan, the term "total disability" refers to a mental
or physical impairment of the Optionee which is expected to result in death or
which has lasted or is, in the opinion of the Company and two independent
physicians, expected to last for a continuous period of 12 months or more and
which causes or is, in such opinion, expected to cause the Optionee to be
unable to perform his or her duties for the Company and to be engaged in any
substantial gainful activity. Total disability shall be deemed to have occurred
on the first day after the Company and the two independent physicians have
furnished their opinion of total disability to the Plan Administrator.
For purposes of this subsection 5.7, a transfer of
relationship between or among the Company and/or any Affiliate thereof shall
not be deemed to constitute a cessation of relationship with the Company or any
of its Affiliates. For purposes of this subsection 5.7, with respect to
incentive stock options, employment shall be deemed to continue while the
Optionee is on military leave, sick leave, or other bona fide leave of absence
(as determined by the Plan Administrator). The foregoing notwithstanding,
employment shall not be deemed to continue beyond the first 90 days of such
leave, unless the Optionee's reemployment rights are guaranteed by statute or
by contract.
As used herein, the term "Affiliate" shall be defined as
follows: (a) when referring to a subsidiary corporation, "Affiliate" shall mean
any corporation (other than the Company) in an unbroken chain of corporations
ending with the Company if, at the time of the granting of the option, the
stock possessing 50% or more of the total combined voting power of all classes
of stock of each of the corporations other than the Company is owned by one of
the other corporations in such chain; and (b) when referring to a parent
corporation, "Affiliate" shall mean any corporation in an unbroken chain of
corporations ending with the Company if, at the time of the granting of the
option, each of the corporations other than the Company owns stock possessing
50% or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain.
5.8 DEATH OF OPTIONEE. If an Optionee dies while he or she
has a relationship with the Company or any Affiliate thereof or within the
three month period (or 12 month period in the case of totally disabled
Optionees) following cessation of such relationship, any option held by such
Optionee, to the extent that the Optionee would have been entitled to exercise
such option, may be exercised within one year after his or her death by the
personal representative of his or her estate or by the person or persons to
whom the Optionee's rights under the option shall pass by will or by the
applicable laws of descent and distribution.
5.9 STATUS OF STOCKHOLDER. Neither the Optionee nor any party
to which the Optionee's rights and privileges under the option may pass shall
be, or have any of the rights or privileges of, a stockholder of the Company
with respect to any of the shares issuable upon the exercise of any option
granted under the Plan unless and until such option has been exercised.
5.10 CONTINUATION OF EMPLOYMENT. Nothing in the Plan or in
any option granted pursuant to the Plan shall confer upon any Optionee any
right to continue in the employ of the Company or of an Affiliate thereof, or
to interfere in any way with the right of the Company or of any such Affiliate
to terminate his or her employment or other relationship with the Company at
any time.
5.11 MODIFICATION AND AMENDMENT OF OPTION. Subject to the
requirements of Section 422 of the Code with respect to incentive stock options
and to the terms and conditions and within the limitations of
- 5 -
<PAGE>
the Plan, including, without limitation, Section 9.1 hereof, the Plan
Administrator may modify or amend outstanding options granted under the Plan.
The modification or amendment of an outstanding option shall not, without the
consent of the Optionee, impair or diminish any of his or her rights or any of
the obligations of the Company under such option. Except as otherwise provided
herein, no outstanding option shall be terminated without the consent of the
Optionee. Unless the Optionee agrees otherwise, any changes or adjustments made
to outstanding incentive stock options granted under the Plan shall be made in
such a manner so as not to constitute a "modification" as defined in Section
424(h) of the Code and so as not to cause any incentive stock option issued
hereunder to fail to continue to qualify as an incentive stock option as
defined in Section 422(b) of the Code.
5.12 LIMITATION ON VALUE FOR INCENTIVE STOCK OPTIONS. As to
all incentive stock options granted under the terms of the Plan, to the extent
that the aggregate fair market value (determined at the time of the grant of
the incentive stock option) of the shares of Common Stock with respect to which
incentive stock options are exercisable for the first time by the Optionee
during any calendar year (under the Plan and all other incentive stock option
plans of the Company, an Affiliate thereof or a predecessor corporation)
exceeds $100,000, such options shall be treated as nonqualified stock options.
The foregoing sentence shall not apply, and the limitation shall be that
provided by the Code or the Internal Revenue Service, as the case may be, if
such annual limit is changed or eliminated by (a) amendment of the Code or (b)
issuance by the Internal Revenue Service of (i) a Revenue ruling, (ii) a
Private Letter ruling to any of the Company, any Optionee, or any legatee,
personal representative, or distributee of any Optionee, or (iii) regulations.
5.13 VALUATION OF COMMON STOCK RECEIVED UPON EXERCISE.
5.13.1 EXERCISE OF OPTIONS UNDER SECTIONS 5.4(A) AND (C). The
value of Common Stock received by the Optionee from an exercise under Sections
5.4(a) and 5.4(c) hereof shall be the fair market value as determined by the
Plan Administrator, provided, that if the Common Stock is traded in a public
market, such valuation shall be the average of the high and low trading prices
or bid and asked prices, as applicable, of the Common Stock for the date of
receipt by the Company of the Optionee's delivery of shares under Section
5.4(a) hereof or delivery of the Notice of Exercise under Section 5.4(c)
hereof, determined as of the trading day immediately preceding such date (or,
if no sale of shares is reported for such trading day, on the next preceding
day on which any sale shall have been reported).
5.13.2 EXERCISE OF OPTION UNDER SECTION 5.4(B). The value of
Common Stock received by the Optionee from an exercise under Section 5.4(b)
hereof shall equal the sales price received for such shares.
SECTION 6. GREATER THAN TEN PERCENT STOCKHOLDERS.
6.1 EXERCISE PRICE AND TERM OF INCENTIVE STOCK OPTIONS. If
incentive stock options are granted under the Plan to employees who, at the
time of such grant, own greater than ten percent of the total combined voting
power of all classes of stock of the Company or any Affiliate thereof, the term
of such incentive stock options shall not exceed five years and the exercise
price shall be not less than 110% of the fair market value of the Common Stock
at the time of grant of the incentive stock option. This provision shall
control notwithstanding any contrary terms contained in an option agreement or
any other document. The term and exercise price limitations of this provision
shall be amended to conform to any change required by a change in the Code or
by ruling or pronouncement of the Internal Revenue Service.
6.2 ATTRIBUTION RULE. For purposes of subsection 6.1, in
determining stock ownership, an employee shall be deemed to own the stock
owned, directly or indirectly, by or for his or her brothers, sisters, spouse,
ancestors, and lineal descendants. Stock owned, directly or indirectly, by or
for a corporation, partnership estate, or trust shall be deemed to be owned
proportionately by or for its stockholders, partners, or beneficiaries. If an
employee or a person related to the employee owns an unexercised option or
warrant to purchase stock of the Company, the stock subject to that portion of
the option or warrant which is unexercised shall not be counted in determining
stock ownership. For purposes of this Section 6, stock owned by an employee
shall include all
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<PAGE>
stock owned by him or her which is actually issued and outstanding immediately
before the grant of the incentive stock option to the employee.
SECTION 7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The aggregate
number and class of shares for which options may be granted under the Plan, the
number and class of shares covered by each outstanding option, and the exercise
price per share thereof (but not the total price), and each such option, shall
all be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock of the Company resulting from a split or
consolidation of shares or any like capital adjustment, or the payment of any
stock dividend.
7.1. EFFECT OF LIQUIDATION, REORGANIZATION, OR CHANGE
IN CONTROL.
7.1.1 CASH, STOCK, OR OTHER PROPERTY FOR STOCK. Except as
provided in subsection 7.1.2 hereof, upon a merger (other than a merger of the
Company in which the holders of Common Stock immediately prior to the merger
have the same proportionate ownership of common stock in the surviving
corporation immediately after the merger), consolidation, acquisition of
property or stock, separation, reorganization (other than mere reincorporation
or creation of a holding company), or liquidation of the Company (each, an
"event"), as a result of which the stockholders of the Company receive cash,
stock, or other property in exchange for, or in connection with, their shares
of Common Stock, any option granted hereunder shall terminate, but the time
during which such options may be exercised shall be accelerated as follows: the
Optionee shall have the right immediately prior to any such event to exercise
such Optionee's option in whole or in part whether or not the vesting
requirements set forth in the option agreement have been satisfied.
7.1.2 CONVERSION OF OPTIONS ON STOCK FOR EXCHANGE STOCK. If
the stockholders of the Company receive capital stock of another corporation
("Exchange Stock") in exchange for their shares of Common Stock in any
transaction involving a merger (other than a merger of the Company in which the
holders of Common Stock immediately prior to the merger have the same
proportionate ownership of common stock in the surviving corporation
immediately after the merger), consolidation, acquisition of property or stock,
separation, or reorganization (other than mere reincorporation or creation of a
holding company), all options granted hereunder shall be converted into options
to purchase shares of Exchange Stock unless the Company and corporation issuing
the Exchange Stock, in their sole discretion, determine that any or all such
options granted hereunder shall not be converted into options to purchase
shares of Exchange Stock but instead shall terminate in accordance with the
provisions of subsection 7.1.1 hereof. The amount and price of converted
options shall be determined by adjusting the amount and price of the options
granted hereunder in the same proportion as used for determining the number of
shares of Exchange Stock the holders of the Common Stock receive in such
merger, consolidation, acquisition, separation, or reorganization. Unless the
Board determines otherwise, the converted options shall be fully vested whether
or not the vesting requirements set forth in the option agreement have been
satisfied.
7.2 FRACTIONAL SHARES. In the event of any adjustment in the
number of shares covered by an option, any fractional shares resulting from
such adjustment shall be disregarded and each such option shall cover only the
number of full shares resulting from such adjustment.
7.3 DETERMINATION OF BOARD TO BE FINAL. Except as otherwise
required for the Plan to qualify for the exemption afforded by Rule 16b-3 under
the Exchange Act, all adjustments under this Section 7 shall be made by the
Board, and its determination as to what adjustments shall be made, and the
extent thereof, shall be final, binding, and conclusive. Unless an Optionee
agrees otherwise, any change or adjustment to an incentive stock option shall
be made in such a manner so as not to constitute a "modification" as defined in
Section 424(h) of the Code and so as not to cause the incentive stock option
issued hereunder to fail to continue to qualify as an incentive stock option as
defined in Section 422(b) of the Code.
SECTION 8. SECURITIES LAW COMPLIANCE. Shares shall not be issued with
respect to an option granted under the Plan unless the exercise of such option
and the issuance and delivery of such shares pursuant thereto shall comply with
all relevant provisions of law, including, without limitation, any applicable
state securities laws,
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<PAGE>
the Securities Act of 1933, as amended (the "Act"), the Exchange Act, the rules
and regulations promulgated thereunder, and the requirements of any stock
exchange upon which the shares may then be listed, and shall be further subject
to the approval of counsel for the Company with respect to such compliance,
including, without limitation, the availability of an exemption from
registration for the issuance and sale of any shares hereunder. Inability of
the Company to obtain from any regulatory body having jurisdiction, the
authority deemed by the Company's counsel to be necessary for the lawful
issuance and sale of any shares hereunder or the unavailability of an exemption
from registration for the issuance and sale of any shares hereunder shall
relieve the Company of any liability in respect of the nonissuance or sale of
such shares as to which such requisite authority shall not have been obtained.
As a condition to the exercise of an option, if, in the opinion of
counsel for the Company, assurances are required by any relevant provision of
the aforementioned laws, the Company may require the Optionee to give written
assurances satisfactory to the Company at the time of any such exercise (a) as
to the Optionee's knowledge and experience in financial and business matters
(and/or to employ a purchaser representative reasonably satisfactory to the
Company who is knowledgeable and experienced in financial and business matters)
and that such Optionee is capable of evaluating, either alone or with the
purchaser representative, the merits and risks of exercising the option or (b)
that the shares are being purchased only for investment and without any present
intention to sell or distribute such shares. The foregoing requirements shall
be inoperative if the issuance of the shares upon the exercise of the option
has been registered under a then currently effective registration statement
under the Act.
At the option of the Company, a stop-transfer order against any shares
may be placed on the official stock books and records of the Company, and a
legend indicating that the stock may not be pledged, sold, or otherwise
transferred unless an opinion of counsel is provided (concurred in by counsel
for the Company) stating that such transfer is not in violation of any
applicable law or regulation, may be stamped on stock certificates in order to
assure exemption from registration. The Plan Administrator may also require
such other action or agreement by the Optionees as may from time to time be
necessary to comply with the federal and state securities laws. NONE OF THE
ABOVE SHALL BE CONSTRUED TO IMPLY AN OBLIGATION ON THE PART OF THE COMPANY TO
UNDERTAKE REGISTRATION OF THE OPTIONS OR STOCK HEREUNDER.
Should any of the Company's capital stock of the same class as the
stock subject to options granted hereunder be listed on a national securities
exchange or on the NASDAQ National Market, all stock issued hereunder if not
previously listed on such exchange or market shall, if required by the rules of
such exchange or market, be authorized by that exchange or market for listing
thereon prior to the issuance thereof.
SECTION 9. USE OF PROCEEDS. The proceeds received by the Company from
the sale of shares pursuant to the exercise of options granted hereunder shall
constitute general funds of the Company.
SECTION 10. AMENDMENT AND TERMINATION.
10.1 BOARD ACTION. The Board may at any time suspend, amend,
or terminate the Plan, provided, that no amendment shall be made without
stockholder approval within 12 months before or after adoption of the Plan if
such approval is necessary to comply with any applicable tax or regulatory
requirement, including any such approval as may be necessary to satisfy the
requirements for exemptive relief under Rule 16b-3 of the Exchange Act or any
successor provision. Rights and obligations under any option granted before
amendment of the Plan shall not be altered or impaired by any amendment of the
Plan unless the Company requests the consent of the person to whom the option
was granted and such person consents in writing thereto.
10.2 AUTOMATIC TERMINATION. Unless sooner terminated by the
Board, the Plan shall terminate ten years from the earlier of (a) the date on
which the Plan is adopted by the Board or (b) the date on which the Plan is
approved by the stockholders of the Company. No option may be granted after
such termination or during any suspension of the Plan. The amendment or
termination of the Plan shall not, without the consent of the option holder,
alter or impair any rights or obligations under any option theretofore granted
under the Plan.
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<PAGE>
SECTION 11. EFFECTIVENESS OF THE PLAN. The Plan shall become effective
upon adoption by the Board so long as it is approved by the holders of a
majority of the Company's outstanding shares of voting capital stock at any
time within 12 months before or after the adoption of the Plan by the Board.
- 9 -
<PAGE>
FAMILY GOLF CENTERS, INC.
[INCENTIVE][NONQUALIFIED] STOCK OPTION LETTER AGREEMENT
TO:
------------------------------
We are pleased to inform you that you have been selected by the Plan
Administrator of the Family Golf Centers, Inc. (the "Company") 1996 Stock
Incentive Plan (the "Plan") to receive a(n) [INCENTIVE] [NONQUALIFIED] option
for the purchase of shares of the Company's common stock, $.01 par
value, at an exercise price of $ per share (the "exercise price"). A copy
of the Plan is attached and the provisions thereof, including, without
limitation, those relating to withholding taxes, are incorporated into this
Agreement by reference.
The terms of the option are as set forth in the Plan and in this
Agreement. The most important of the terms set forth in the Plan are summarized
as follows:
Term. The term of the option is ten years from date of grant, unless
sooner terminated.
Exercise. During your lifetime only you can exercise the option. The
Plan also provides for exercise of the option by the personal representative of
your estate or the beneficiary thereof following your death. You may use the
Notice of Exercise in the form attached to this Agreement when you exercise the
option.
Payment for Shares. The option may be exercised by the delivery of:
(a) Cash, personal check (unless at the time of exercise the Plan
Administrator determines otherwise), or bank certified or cashier's checks;
(b) Unless the Plan Administrator in its sole discretion determines
otherwise, shares of the capital stock of the Company held by you having a fair
market value at the time of exercise, as determined in good faith by the Plan
Administrator, equal to the exercise price;
(c) Unless the Plan Administrator in its sole discretion determines
otherwise, a properly executed Notice of Exercise, together with instructions
to the Company to withhold from the shares that would otherwise be issued upon
exercise that number of shares having a fair market value equal to the option
exercise price; or
(d) Unless the Plan Administrator in its sole discretion determines
otherwise, a properly executed Notice of Exercise, together with irrevocable
instructions to a broker to promptly deliver to the Company the amount of sale
or loan proceeds to pay the exercise price.
Acceleration. Notwithstanding the vesting schedule for the option set
forth below, the option will be automatically exercisable for the total number
of shares the subject of the option upon a "Change in Control,"(as defined
below), or if advised by the Plan Administrator in writing, upon any
actually-anticipated "Change in Control," unless otherwise advised in writing
by the Plan Administrator, who has complete discretion in determining the
specific conditions upon which the option is to accelerate in connection with a
Change in Control.
Termination. The option will terminate: (i) immediately upon
termination for cause, as defined in the Plan, or three months after cessation
of your relationship as a director of the Company, unless cessation is due to
death or total disability, in which case the option shall terminate 12 months
after cessation of such relationship; (ii) three months after a "Change in
Control", unless otherwise advised in writing by the Plan Administrator, who
has complete discretion in determining the specific conditions upon which the
option is to terminate in connection with a Change in Control, if at all.
Transfer of Option. The option is not transferable except by will or
by the applicable laws of descent and distribution or pursuant to a qualified
domestic relations order.
- 1 -
<PAGE>
Vesting. The option is vested according to the following schedule:
<TABLE>
<CAPTION>
Period of Optionee's
Continuous Relationship
With the Company or
Affiliate From the Date Portion of Total Option
the Option is Granted Which is Exercisable
--------------------- --------------------
<S> <C>
1 year 33%
2 years 67%
3 years 100%
</TABLE>
Date of Grant. The date of grant of the option is .
A "Change of Control" will be deemed to occur (i) should a person or
related group of persons (other than the Company or its affiliates), who does
not own of record 10% or more (a "10% Acquisition") of the Company's
outstanding voting stock, which 10% Acquisition of the Company's outstanding
voting stock is not approved by the Board; and (ii) within any period of
twenty-four consecutive months or less from the date of such 10% Acquisition
(the "Period"), there is effected a change in the composition of the Board of
Directors such that a majority of the Board members (rounded up to the next
whole number) cease to be comprised of individuals who either (A) have been
members of the Board continuously before such 10% Acquisition and throughout
the Period or (B) have been elected or nominated for election as Board members
during the Period by at least a majority of the Board members described in
clause (A) who were still in office at the time such election or nomination was
approved by the Board.
YOUR PARTICULAR ATTENTION IS DIRECTED TO SECTION 8 OF THE PLAN WHICH
DESCRIBES CERTAIN IMPORTANT CONDITIONS RELATING TO FEDERAL AND STATE SECURITIES
LAWS THAT MUST BE SATISFIED BEFORE THE OPTION CAN BE EXERCISED AND BEFORE THE
COMPANY CAN ISSUE ANY SHARES TO YOU. THE COMPANY HAS NO OBLIGATION TO REGISTER
THE SHARES THAT WOULD BE ISSUED UPON THE EXERCISE OF YOUR OPTION, AND IF IT
NEVER REGISTERS THE SHARES, YOU WILL NOT BE ABLE TO EXERCISE THE OPTION UNLESS
AN EXEMPTION FROM REGISTRATION IS AVAILABLE. AT THE PRESENT TIME, EXEMPTIONS
FROM REGISTRATION UNDER FEDERAL AND STATE SECURITIES LAWS ARE VERY LIMITED AND
MIGHT BE UNAVAILABLE TO YOU PRIOR TO THE EXPIRATION OF THE OPTION.
CONSEQUENTLY, YOU MIGHT HAVE NO OPPORTUNITY TO EXERCISE THE OPTION AND TO
RECEIVE SHARES UPON SUCH EXERCISE. IN ADDITION, YOU SHOULD CONSULT WITH YOUR
TAX ADVISOR CONCERNING THE RAMIFICATIONS TO YOU OF HOLDING OR EXERCISING YOUR
OPTIONS OR HOLDING OR SELLING THE SHARES UNDERLYING SUCH OPTIONS.
IN ADDITION TO THE FOREGOING, (I) IF YOU WERE A DIRECTOR, OFFICER OR
STOCKHOLDER OF THE COMPANY ON NOVEMBER 6, 1994, YOU MAY NOT, PRIOR TO NOVEMBER
6, 1996, NOTWITHSTANDING ANY REGISTRATION OR OTHER RIGHTS THAT YOU MAY HAVE,
DIRECTLY OR INDIRECTLY, OFFER, SELL, CONTRACT TO SELL, GRANT ANY OPTION WITH
RESPECT TO, TRANSFER, ASSIGN, PLEDGE OR OTHERWISE DISPOSE OF (EITHER PURSUANT
TO RULE 144 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR OTHERWISE) ANY
SHARES WHICH YOU RECEIVE UPON THE EXERCISE OF ANY OPTIONS HEREUNDER, UNLESS YOU
RECEIVE THE WRITTEN CONSENT OF HAMPSHIRE SECURITIES CORPORATION, 919 THIRD
AVENUE, NEW YORK, NEW YORK 10022 AND (II) IF YOU WERE A DIRECTOR, OFFICER OR
HOLDER OF 5% OR MORE OF THE COMPANY'S CAPITAL STOCK ON DECEMBER 12, 1995, YOU
MAY NOT, PRIOR TO DECEMBER 13, 1996, NOTWITHSTANDING ANY REGISTRATION OR OTHER
RIGHTS THAT YOU MAY HAVE, DIRECTLY OR INDIRECTLY,
- 2 -
<PAGE>
OFFER, SELL, CONTRACT TO SELL, GRANT ANY OPTION WITH RESPECT TO, TRANSFER,
ASSIGN, PLEDGE OR OTHERWISE DISPOSE OF (EITHER PURSUANT TO RULE 144 UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR OTHERWISE) ANY SHARES WHICH YOU RECEIVE
UPON THE EXERCISE OF ANY OPTIONS HEREUNDER, UNLESS YOU RECEIVE THE WRITTEN
CONSENT OF JEFFERIES & COMPANY, INC., 650 FIFTH AVENUE, NEW YORK, NEW YORK
10019.
You understand that, during any period in which the shares which may
be acquired pursuant to your option are subject to the provisions of Section 16
of the Securities Exchange Act of 1934, as amended (and you yourself are also
so subject), in order for your transactions under the Plan to qualify for the
exemption from Section 16(b) provided by Rule 16b-3, a total of six months must
elapse between the grant of the option and the sale of shares underlying the
option.
Please execute the Acceptance and Acknowledgement set forth below on
the enclosed copy of this Agreement and return it to the undersigned.
Very truly yours,
FAMILY GOLF CENTERS, INC.
BY:
----------------------------
NAME:
TITLE:
- 3 -
<PAGE>
ACCEPTANCE AND ACKNOWLEDGEMENT
I, a resident of the State of , accept the stock option
described above granted under the Family Golf Centers, Inc. 1996 Stock
Incentive Plan, and acknowledge receipt of a copy of this Agreement, including
a copy of the Plan. I have read and understand the Plan, including the
provisions of Section 8 thereof.
Dated:
---------------------------------
- --------------------------------------- -----------------------------------
Taxpayer I.D. Number Signature
By his or her signature below, the spouse of the Optionee, if such
Optionee is legally married as of the date of such Optionee's execution of this
Agreement, acknowledges that he or she has read this Agreement and the Plan and
is familiar with the terms and provisions thereof, and agrees to be bound by
all the terms and conditions of this Agreement and the Plan.
Dated:
-------------------------------
------------------------------
Spouse's Signature
------------------------------
Printed Name
- 4 -
<PAGE>
NOTICE OF EXERCISE
The undersigned, pursuant to a nonqualified Stock Option Letter
Agreement (the "Agreement") between the undersigned and Family Golf Centers,
Inc. (the "Company"), hereby irrevocably elects to exercise purchase rights
represented by the Agreement, and to purchase thereunder shares (the
"Shares") of the Company's common stock, $.01 par value ("Common Stock"),
covered by the Agreement and herewith makes payment in full therefor.
1. If the sale of the Shares and the resale thereof has not, prior to
the date hereof, been registered pursuant to a registration statement filed and
declared effective under the Securities Act of 1933, as amended (the "Act"),
the undersigned hereby agrees, represents, and warrants that:
(a) the undersigned is acquiring the Shares for his or her own account
(and not for the account of others), for investment and not with a view to the
distribution or resale thereof;
(b) By virtue of his or her position, the undersigned has access to
the same kind of information which would be available in a registration
statement filed under the Act;
(c) the undersigned is a sophisticated investor;
(d) the undersigned understands that he or she may not sell or
otherwise dispose of the Shares in the absence of either (i) a registration
statement filed under the Act or (ii) an exemption from the registration
provisions thereof; and
(e) The certificates representing the Shares may contain a legend to
the effect of subsection (d) of this Section 1.
2. If the sale of the Shares and the resale thereof has been
registered pursuant to a registration statement filed and declared effective
under the Act, the undersigned hereby represents and warrants that he or she
has received the applicable prospectus and a copy of the most recent annual
report, as well as all other material sent to stockholders generally.
3. The undersigned acknowledges that the number of shares of Common
Stock subject to the Agreement is hereafter reduced by the number of shares of
Common Stock represented by the Shares.
Very truly yours,
------------------------------------
(type name under signature line)
Social Security No.
-----------------
Address:
----------------------------
------------------------------------
<PAGE>
FAMILY GOLF CENTERS, INC.
NON-QUALIFIED STOCK OPTION LETTER AGREEMENT
TO: ______________________
We are pleased to inform you that you have been selected by
the Board of Directors of Family Golf Centers, Inc. (the "Company")
to receive a nonqualified option for the purchase of ________ shares
of the Company's common stock, $.01 par value, at an exercise price
of $19.875 per share (the "exercise price"). Although the option has
been granted outside of the 1994 Stock Option Plan (the "Plan"), a
copy of the Plan is attached and the provisions thereof, including,
without limitation, those relating to withholding taxes, are
incorporated into this Agreement by reference.
The terms of the option are as set forth in the Plan and in
this Agreement. The most important of the terms set forth in the Plan
are summarized as follows:
TERM. The term of the option is ten years from date of
grant, unless sooner terminated.
EXERCISE. During your lifetime only you can exercise the
option. The Plan also provides for exercise of the option by the
personal representative of your estate or the beneficiary thereof
following your death. You may use the Notice of Exercise in the form
attached to this Agreement when you exercise the option.
PAYMENT FOR SHARES. The option may be exercised by the
delivery of:
(a) Cash, personal check (unless at the time of exercise the
Plan Administrator determines otherwise), or bank certified or
cashier's checks;
(b) Unless the Plan Administrator in its sole discretion
determines otherwise, shares of the capital stock of the Company held
by you having a fair market value at the time of exercise, as
determined in good faith by the Plan Administrator, equal to the
exercise price;
(c) Unless the Plan Administrator in its sole discretion
determines otherwise, a properly executed Notice of Exercise,
together with instructions to the Company to withhold from the shares
that would otherwise be issued upon exercise that number of shares
having a fair market value equal to the option exercise price; or
(d) Unless the Plan Administrator in its sole discretion
determines otherwise, a properly executed Notice of Exercise,
together with irrevocable instructions to a broker to promptly
deliver to the Company the amount of sale or loan proceeds to pay the
exercise price.
<PAGE>
TRANSFER OF OPTION. The option is not transferable except by
will or by the applicable laws of descent and distribution or
pursuant to a qualified domestic relations order.
VESTING. Your options will vest upon final approval and
signing of the contract with the City of Seattle for the Interbay
site.
DATE OF GRANT. The date of grant of the option is March 7, 1996.
YOUR PARTICULAR ATTENTION IS DIRECTED TO SECTION 8 OF THE
PLAN WHICH DESCRIBES CERTAIN IMPORTANT CONDITIONS RELATING TO FEDERAL
AND STATE SECURITIES LAWS THAT MUST BE SATISFIED BEFORE THE OPTION
CAN BE EXERCISED AND BEFORE THE COMPANY CAN ISSUE ANY SHARES TO YOU.
THE COMPANY HAS NO OBLIGATION TO REGISTER THE SHARES THAT WOULD BE
ISSUED UPON THE EXERCISE OF YOUR OPTION, AND IF IT NEVER REGISTERS
THE SHARES, YOU WILL NOT BE ABLE TO EXERCISE THE OPTION UNLESS AN
EXEMPTION FROM REGISTRATION IS AVAILABLE. AT THE PRESENT TIME,
EXEMPTIONS FROM REGISTRATION UNDER FEDERAL AND STATE SECURITIES LAWS
ARE VERY LIMITED AND MIGHT BE UNAVAILABLE TO YOU PRIOR TO THE
EXPIRATION OF THE OPTION. CONSEQUENTLY, YOU MIGHT HAVE NO OPPORTUNITY
TO EXERCISE THE OPTION AND TO RECEIVE SHARES UPON SUCH EXERCISE. IN
ADDITION, YOU SHOULD CONSULT WITH YOUR TAX ADVISOR CONCERNING THE
RAMIFICATIONS TO YOU OF HOLDING OR EXERCISING YOUR OPTIONS OR HOLDING
OR SELLING THE SHARES UNDERLYING SUCH OPTIONS.
IN ADDITION TO THE FOREGOING, PRIOR TO MAY 15, 1996 YOU MAY
NOT, NOTWITHSTANDING ANY REGISTRATION OR OTHER RIGHTS THAT YOU MAY
HAVE, DIRECTLY OR INDIRECTLY, OFFER, SELL, CONTRACT TO SELL, GRANT
ANY OPTION WITH RESPECT TO, TRANSFER, ASSIGN, PLEDGE OR OTHERWISE
DISPOSE OF (EITHER PURSUANT TO RULE 144 UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR OTHERWISE) ANY SHARES WHICH YOU RECEIVE UPON THE
EXERCISE OF ANY OPTIONS HEREUNDER, UNLESS YOU RECEIVE THE WRITTEN
CONSENT OF HAMPSHIRE SECURITIES CORPORATION, 919 THIRD AVENUE, NEW
YORK, NEW YORK 10022 AND (II) IF YOU WERE A DIRECTOR, OFFICER OR
HOLDER OF 5% OR MORE OF THE COMPANY'S CAPITAL STOCK ON DECEMBER 12,
1995, YOU MAY NOT, PRIOR TO DECEMBER 13, 1996, NOTWITHSTANDING ANY
REGISTRATION OR OTHER RIGHTS THAT YOU MAY HAVE, DIRECTLY OR
INDIRECTLY, OFFER, SELL, CONTRACT TO SELL, GRANT ANY OPTION WITH
RESPECT TO, TRANSFER, ASSIGN, PLEDGE OR OTHERWISE DISPOSE OF (EITHER
PURSUANT TO RULE 144 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
OTHERWISE)
<PAGE>
ANY SHARES WHICH YOU RECEIVE UPON THE EXERCISE OF ANY OPTIONS
HEREUNDER, UNLESS YOU RECEIVE THE WRITTEN CONSENT OF JEFFERIES &
COMPANY, INC., 650 FIFTH AVENUE, NEW YORK, NEW YORK 10019.
You understand that, during any period in which the shares
which may be acquired pursuant to your option are subject to the
provisions of Section 16 of the Securities Exchange Act of 1934, as
amended (and you yourself are also so subject), in order for your
transactions under the Plan to qualify for the exemption from Section
16(b) provided by Rule 16b-3, a total of six months must elapse
between the grant of the option and the sale of shares underlying the
option.
Please execute the Acceptance and Acknowledgement set forth
below on the enclosed copy of this Agreement and return it to the
undersigned.
Very truly yours,
FAMILY GOLF CENTERS, INC.
By:
---------------------------
Name:
Title:
<PAGE>
Exhibit 5
---------
December 4, 1996
Family Golf Centers, Inc.
225 Broadhollow Road
Melville, New York 11747
Re: Registration on Form S-8
Ladies and Gentlemen:
We have acted as counsel to Family Golf Centers, Inc., a
Delaware corporation (the "Company"), in connection with the
preparation of its Registration Statement on Form S-8 under the
Securities Act of 1933 (the "Registration Statement"), to which this
opinion is to be filed as an exhibit. The Registration Statement
relates to the issuance of up to an aggregate of 548,500 shares (the
"Shares") of the Company's Common Stock, par value $.01 per share
(the "Common Stock"), pursuant to the Family Golf Centers, Inc.'s
1996 Stock Incentive Plan (the "1996 Plan") or pursuant to letter
agreements between the Company and certain of its employees that
incorporate by reference the terms of the 1996 Plan (the "Letter
Agreements").
In so acting, we have examined such records and documents,
including the 1996 Plan and the Letter Agreements, and made such
examinations of law as we have deemed relevant in connection with
this opinion. This opinion relates only to the laws of the State of
New York, the corporate laws of the State of Delaware and the federal
laws of the United States of America in force on the date hereof.
Based upon the foregoing, and subject to the qualifications
stated herein, we are of the opinion that, when issued upon the
exercise of and in accordance with the terms of stock options duly
and validly granted pursuant to the terms and conditions of the 1996
Plan or the Letter Agreements, as the case may be, against payment
therefor, the Shares, which are then originally issued by the
Company, will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and to the reference to our
firm under the caption "Legal Matters" in the Registration Statement.
In giving this consent, we do not thereby admit that we are in the
category of persons whose consent is required under Section 7 of the
Securities Act of 1933 and the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Squadron, Ellenoff, Plesent & Sheinfeld, LLP
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this
Registration Statement on Form S-8 of our report dated March 15, 1996
on our audit of the financial statements of Family Golf Centers, Inc.
and subsidiaries as at December 31, 1995 and for each of the years in
the two-year period ended December 31, 1995. We also consent to the
reference to our firm under the caption "Experts."
New York, New York
December 2, 1996
