<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 20, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REGISTRATION STATEMENT ON FORM S-3
UNDER
THE SECURITIES ACT OF 1933
------------------------------------
FAMILY GOLF CENTERS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 11-3223246
(State or jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
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)
Dominic Chang, Chief Executive Officer
Family Golf Centers, Inc.
225 Broadhollow Road
Melville, New York 11747
(516) 694-1666 / (516) 694-0918 (Fax)
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
Copies to:
Kenneth R. Koch, Esq.
Squadron, Ellenoff, Plesent & Sheinfeld, LLP
551 Fifth Avenue
New York, New York 10176
(212) 661-6500/ (212) 697-6686 (Fax)
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: FROM TIME TO TIME AFTER THE
EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
IF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED PURSUANT
TO DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING BOX. [ ]
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON A
DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933, OTHER THAN SECURITIES OFFERED ONLY IN CONNECTION WITH DIVIDEND OR
INTEREST REINVESTMENT PLANS, CHECK THE FOLLOWING BOX. [X]
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING
PURSUANT TO RULE 462(B) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING
BOX AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER
EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. [ ] _____________
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(C) UNDER
THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING. [ ] ________________.
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434,
PLEASE CHECK THE FOLLOWING BOX. [ ]
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=============================================================================================================================
PROPOSED
MAXIMUM
OFFERING PRICE PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) SHARE(2) PRICE(2) REGISTRATION FEE
- -------------------------------- ------------------------- -------------------- ------------------------ -------------------
<S> <C> <C> <C> <C>
Common Stock, par value 1,163,237 shares $27.4375 $31,916,315.19 $9,671.61
$.01 per share
================================ ========================= ==================== ======================== ===================
</TABLE>
(1) Registration Statement covers, in addition, such indeterminable number
of shares of Common Stock as may be issued on the exercise or
conversion of the Warrants by reason of adjustment of their respective
exercise prices upon certain contingencies. Since such additional
Common Stock, if issued, will be issued for no additional
consideration, no registration fee is required.
(2) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended
(the "Securities Act") on the basis of high and low bid prices of the
registrants Common Stock on the Nasdaq National Market on November 17,
1997.
----------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
==============================================================================
<PAGE>
PROSPECTUS SUBJECT TO COMPLETION, DATED NOVEMBER 20, 1997
FAMILY GOLF CENTERS, INC.
1,163,237 Shares of Common Stock
This Prospectus relates to the offering that may be made from time to
time of up to 1,163,237 shares (the "Shares") of common stock, par value $.01
per share (the "Common Stock"), of Family Golf Centers, Inc., a Delaware
corporation (the "Company"), by, or for the accounts of, the holders thereof
(the "Selling Security Holders"). See "Selling Security Holders." Of the
1,163,237 Shares being offered hereby, 293,600 are issuable upon the exercise
of certain warrants issued by the Company in connection with the Company's
public offering in December 1995 (the "Underwriters' Warrants") at $26.50 per
share and 55,537 are issuable upon the exercise of certain warrants issued in
connection with the Company's acquisition of Leisure Complexes, Inc. in July
1997 at $20.25 per share (the "Acquisition Warrants," and together with the
Underwriters' Warrants, the "Warrants").
The Common Stock is quoted on the Nasdaq National Market(R) (the
"Nasdaq National Market") under the symbol "FGCI." On November 17, 1997, the
last sale price of the Common Stock as reported by the Nasdaq National Market
was $27.50 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 5 HEREIN FOR A DISCUSSION OF
CERTAIN MATTERS THAT SHOULD BE CONSIDERED BY POTENTIAL INVESTORS.
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 Shares may be sold from time to time by the Selling Security
Holders or their transferees. No underwriting arrangements have been entered
into by the Selling Security Holders as of the date hereof. The distribution of
the Shares by the Selling Security Holders 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 such prevailing
market prices, or negotiated prices. Usual and customary or specifically
negotiated brokerage fees or commissions will be paid by the Selling Security
Holders in connection with sales of the Shares. To the extent required, the
number of Shares to be sold, the name of the Selling Security Holder, the
purchase price, the name of any agent or broker, and any applicable
commissions, discounts or otherwise constituting compensation to such agents or
brokers with respect to a particular offering will be set forth in a supplement
or supplements to this Prospectus (each, a "Prospectus Supplement").
See "Plan of Distribution."
The Company will receive proceeds upon the exercise of the Warrants,
but will not receive any proceeds from the sale of the Shares. By agreement
with the Selling Security Holders, the Company will pay all of the expenses
incident to the registration of the Shares under the Securities Act (other than
agent's commissions and discounts), estimated to be approximately $50,000.
The Selling Security Holders, 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.
The date of this Prospectus is November 20, 1997
<PAGE>
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 under the symbol "FGCI." 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-K, for the fiscal
year ended December 31, 1996; (2) the Company's Proxy Statement on Schedule 14A
filed with the Commission on April 30, 1997; (3) the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1997; (4) the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997; (5) the Company's
Current Report on Form 8-K, dated June 30, 1997; (6) the Company's Current
Report on Form 8-K dated July 25, 1997, as amended; (7) the Company's Current
Report on Form 8-K, dated October 6, 1997; (8) the Company's Current Report on
form 8-K dated October 16, 1997; (9) the Company's Current Report on Form 8-K
dated November 14, 1997; (10) the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1997 and (11) 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. 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 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.
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SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain statements included or incorporated by reference into this
Prospectus constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. All such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company,
or industry results, to be materially different from any future results,
performance, or achievements expressed or implied by such forward-looking
statements. Such factors include, among others, the following general economic
and business conditions: the Company's indebtedness; changes in business
strategy or development plans; competitive factors in the industry, including
additional competition from existing competitors or future entrants to the
industry; social and economic conditions; availability, terms and deployment of
capital; local, state and federal regulations; availability of qualified
personnel; and other factors referenced in this Prospectus and in the Company's
filings with the Commission.
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<PAGE>
THE COMPANY
The following summary is qualified in its entirety by reference to the
more detailed information and the financial statements and the related notes
appearing elsewhere in this Prospectus or incorporated herein by reference.
Each prospective investor is urged to read this Prospectus in its entirety.
Investment in the securities offered hereby involves a high degree of risk. See
"Risk Factors."
BUSINESS
The Company is a leading consolidator and operator of golf centers in
the United States. The Company's golf centers are 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 full-line pro shops, golf lessons instructed by PGA-certified
golf professionals and other amenities such as miniature golf and snack bars to
encourage family participation. The Company has a proven track record of
successfully identifying, acquiring and integrating golf centers, having grown
from one golf facility in 1992 to 51 as of October 31, 1997. As a result, the
Company has increased revenues from $2.6 million in 1993 to $55.5 million for
the twelve months ended September 30, 1997, and increased earnings per share
from a loss of $0.23 in 1993 to a profit of $0.75 for the twelve months ended
September 30, 1997.
RECENT DEVELOPMENTS
In addition to pursuing its activities as a consolidator and operator
of golf centers, the Company has identified the ice rink industry as having a
number of industry and operational dynamics similar to those of the golf center
industry. The Company intends to apply the skills and resources it has used in
the golf center industry to capitalize on such similarities by selectively
constructing, or acquiring and enhancing, ice rinks over the next twelve
months. In addition, the Company expects to selectively augment certain of its
existing golf centers with sports and entertainment amenities including ice
rinks, video and virtual reality games, children's rides, batting cages and
other entertainment activities to create family sports supercenters (the
"Family Sports Supercenters"). The Company believes that the addition of these
facilities expands on the Company's concept of family-oriented sports
entertainment, improves utilization by adding additional sources of revenues,
attracts a more diversified base of customers, increases visitation and per
capita spending and has the added benefit of being counter-seasonal to the
Company's core golf business.
In July 1997, the Company acquired Leisure Complexes, Inc. ("LCI"),
the operator of a family sports and entertainment supercenter which includes a
golf center, an 18-hole executive golf course, an ice rink and additional
family amusements, such as video and virtual reality games, a Lasertag arena,
children's rides, batting cages, an I-werks Motion Master Theatre, a 48-lane
bowling center, restaurants and an 18,000 square foot conference center. LCI
also owns and operates seven stand-alone bowling centers. In addition, in
September 1997, the Company acquired an ice rink facility which includes a
National Hockey League regulation-size ice rink and an additional half rink.
On November 17, 1997 the Company consummated the sale of six of the
seven stand-alone bowling centers it acquired in connection with its
acquisition of LCI. Proceeds from the sale consist of $15.5 million in cash,
which the Company intends to use to repay existing indebtedness, in the amount
of $10,000,000, with the remaining balance to be used for working capital and
to pay deferred corporate income taxes arising from this transaction.
The Company's principal executive offices are located at 225
Broadhollow Road, Melville, New York 11747 and its telephone number is (516)
694-1666. The Company's World Wide Web address is http://www.familygolf.com.
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<PAGE>
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 Shares offered hereby.
LEVERAGE, DEBT SERVICE AND COVENANTS
As of October 31, 1997, the Company had approximately $131.5 million
aggregate principal amount of indebtedness outstanding. The Company's level of
indebtedness requires that a significant amount of its cash flow from
operations be applied to debt service, and there can be no assurance that the
Company's operations will generate sufficient cash flow to service this
indebtedness. Borrowings under the Company's $20.0 million credit facility (the
"Credit Facility"), of which no balance was outstanding as of October 31, 1997,
and approximately $27.0 million of term debt (the "Term Debt") incurred in
connection with the Company's acquisition of LCI, of which $26.8 million was
outstanding as of October 31, 1997, are at variable rates of interest, which
subjects the Company to fluctuations in interest rates.
The Credit Facility and the Term Debt include covenants that restrict
the operational and financial flexibility of the Company, including a limit on
the number of facilities that the Company may construct in any rolling twelve
month period and restrictions on indebtedness, liens, acquisitions and other
significant actions. Failure to comply with certain covenants would, among
other things, permit the Company's lenders to accelerate the maturity of the
obligations thereunder and could result in cross-defaults permitting the
acceleration of debt under other Company agreements. In addition, the Company
is required to maintain certain financial ratios.
EXPANSION STRATEGY AND NEW STRATEGY
The Company's ability to significantly increase revenues, operating
cash flow and net income over time depends in large part upon its success in
acquiring and improving or leasing or constructing additional facilities at
suitable locations upon satisfactory terms. There can be no assurance that
suitable 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 facilities may become more expensive in
the future to the extent that demand and competition increase. 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 facilities and improvements
to existing facilities, including delays in obtaining required permits.
To successfully implement its expansion strategy, the Company must
integrate acquired or newly opened facilities into its existing operations,
which may necessitate the implementation of enhanced operational and financial
systems and may require additional employees and management, operational,
financial and other resources. As part of its strategy, the Company has
recently entered the ice rink and Family Sports Supercenter industries, in
which the Company has only limited experience and which involve all the risks
commonly associated with the establishment of new lines of business. As the
Company grows, there can be no assurance that additional facilities can be
readily assimilated into the Company's operating structure. The Company's
inability to efficiently integrate facilities or to successfully enter the ice
rink and Family Sports Supercenter industries could have a material adverse
effect on the Company's financial condition and results of operations. In
addition, a number of the facilities which the Company has acquired have, and
facilities it may acquire in the future may have, experienced losses. On a pro
forma basis, giving effect to the acquisitions consummated after January 1,
1996 as if they had occurred as of January 1, 1996, the Company had net income
of $2.4 million (as compared to net income of $5.2 million on a historical
basis) for the year ended December 31, 1996 and pro forma net income of $8.9
million (as compared to net income of $8.9 million on a historical basis) for
the nine months ended September 30, 1997. As a result of the timing of the
Company's acquisitions, the seasonality of the acquired businesses, the
expansion of the Company's business to include ice rinks and Family Sports
Supercenters and other factors, the Company's historical, pro forma and
trailing twelve month results of operations referred to herein are not
necessarily indicative of future results. There can be no assurance that
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.
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DEPENDENCE ON THE GOLF INDUSTRY
Although the Company has begun expanding its business outside the golf
industry, the Company is highly dependent on the golf industry, and the
public's interest in utilizing golf practice centers, for the generation of its
revenues and earnings. Activities such as golf have, in the past, been
susceptible to increases and decreases in popularity that have materially
affected the financial condition and results of operations of companies
dependent on such activities, and there can be no assurance that the golf
industry will not suffer a material decrease in popularity, which would result
in a material adverse effect on the Company's business and operations. In
addition, customer spending on activities such as golf is generally considered
to be discretionary spending, which may be significantly decreased as a result
of regional or national economic downturns.
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 revenues 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, portions of the Company's facilities, including
the miniature golf courses, are outdoors and vulnerable to weather conditions.
In addition, golfers are less inclined to practice when weather conditions
limit their ability to play golf on outdoor courses. The Company expects its
expansion into ice rink facilities and Family Sports Supercenters to partially
offset such seasonality. The timing of new center openings and acquisitions may
also 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 price of the Common Stock and Notes (as defined) to fluctuate
following the release of interim results of operations or other information and
may have a material adverse effect on the price of the Common Stock and Notes.
COMPETITION
The golf center, ice rink and family entertainment industries are each
highly competitive and include competition from other golf centers, traditional
golf ranges, golf courses, other ice rinks and family entertainment outlets 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. The Company operates seven of
its golf centers under the name "Golden Bear" pursuant to a non-exclusive
license agreement (the "License Agreement") with Golden Bear Golf Centers, Inc.
(the "Licensor"). Golden Bear Golf, Inc., an affiliate of the Licensor, is a
competitor of the Company. The Licensor is permitted to establish, or license
others to establish, "Golden Bear" golf centers that compete with the Company's
golf centers, including the Company's Golden Bear Golf Centers. There can be no
assurance that competition will not adversely affect the Company's business or
ability to acquire additional properties. In addition, the Company's pro shop
business faces competition from pro shops at golf courses and other golf
centers or ice rinks, as the case may be, specialty retailers devoted to golf
or skating equipment and apparel, sporting goods and department stores.
DEPENDENCE ON CERTAIN AGREEMENTS
The future success of the business and operations of the Company is
dependent, in part, upon certain key operating agreements, including its real
property leases, management agreements with respect to certain municipal
facilities and the License Agreement. The termination of any of these
agreements may have a material adverse effect on the Company.
After giving effect to renewal options none of the Company's leases,
as of October 31, 1997, is expected to expire until October 31, 2001. However,
the leases may be terminated prior to their scheduled expiration should the
Company default in its obligations thereunder. 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.
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<PAGE>
The Company manages several facilities for municipalities pursuant to
concession licenses, three of which are terminable at will by the licensor. The
Company's concession license with the City of New York (the "City") for the
Douglaston, New York golf center, which was entered into in 1994 and which
expires on December 31, 2006, the concession license with the City for the
Randall's Island, New York golf center, which was entered into in 1992 and
which expires on March 1, 2007 and the concession license with the Metropolitan
Transportation Authority for the Bronx, New York golf center, currently under
construction, which was entered into in 1997 and which expires on December 31,
2009 (respectively, the "Douglaston License," "Randall's Island License" and
"Bronx License"), are terminable at will. Pursuant to the Douglaston License
and the Randall's Island License, the Company has made approximately $2.3
million and $1.4 million, respectively, of capital improvements. Pursuant to
the Bronx License, the Company is obligated to make a minimum of $3.0 million
of capital improvements. If any of these concession licenses are terminated,
the licensor 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 the partnership which was party to the
Douglaston License, both of which are currently being depreciated and amortized
over the life of the relevant concession license. In addition, the Company's
management agreement with the City of El Segundo for the El Segundo golf
facility terminates on February 14, 1999. The Company intends to seek a renewal
of this agreement.
As of October 31, 1997, the Company operated seven of its 51 golf
centers under the name "Golden Bear" pursuant to the License Agreement,
expiring August 2002, with 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 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. In addition, 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.
ADDITIONAL FINANCING REQUIREMENTS
The Company anticipates, based on its currently proposed expansion
plans and assumptions relating to its operations, that the net proceeds from
its sale of $115 million aggregate principal amount of 5 3/4% convertible
subordinated notes, due 2004 on October 16, 1997 and November 14, 1997 (the
"Notes"), together with availability under the 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 at least the next
twelve months. The Company also anticipates that it will need to raise
additional 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 facilities involve the use and limited
storage of various hazardous materials such as pesticides, herbicides, motor
oil, gasoline, heating oil and paint, as well as various chemicals used to
create, refrigerate and maintain the ice at its ice rinks. 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 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 State Department of
Environmental Conservation 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 October 31, 1997, the
Company had not incurred material costs of
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<PAGE>
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 facilities it owns, operates
or intends to acquire, in some cases only limited invasive procedures are
conducted on such properties and in a limited number of instances no
environmental studies are conducted. 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, Chief Executive Officer and President. 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. In
addition, it is an event of default under the Company's Credit Facility and
Term Debt if Mr. Chang is not the Chairman of the Board and Chief Executive
Officer of the Company and if he does not own at least 5% of the Company's
outstanding Common Stock. The Company will also be required to hire additional
personnel and professionals to staff the additional facilities 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 October 31, 1997, Dominic Chang beneficially owned 2,519,334
shares of Common Stock, constituting approximately 19.6% 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.
PREFERRED STOCK; POSSIBLE ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER, BY-LAW 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, $0.10 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 By-Laws
contain provisions requiring advance notice of stockholder proposals and
imposing certain procedural restrictions on stockholders wishing to call a
special meeting of stockholders. Under the Credit Facility and the Term Debt,
it is an event of default if Mr. Chang is not the Chairman of the Board, Chief
Executive Officer and beneficial owner of at least 5% of the outstanding Common
Stock of the Company. In addition, the Indenture with respect to the Notes
gives the holders of the Notes the right to have such Notes redeemed if there
is a Change of Control (as defined in the Indenture). The License Agreement may
be terminated by the Licensor if members of the Company's Board of Directors,
as of September 1995, do not constitute at least 50% of the Company's Board of
Directors. Accordingly, such provisions 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).
VOLATILITY OF PRICE OF COMMON STOCK
The trading price of the Company's Common Stock could be subject to
fluctuations in response to variations in quarterly operating results, the gain
or loss of significant contracts, changes in management, future announcements
concerning the Company, general trends in the industry and other events or
factors.
-8-
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the exercise of the Warrants are
estimated to be $7,472,667.50. The Company is unable to predict the time, if
ever, when the Warrants will be exercised. Accordingly, it is expected that the
net proceeds from the sale of the Shares underlying the Warrants will be used
by the Company for general corporate purposes. The Company will not receive any
proceeds from the sale of the Shares by the Selling Security Holders.
-9-
<PAGE>
SELLING SECURITY HOLDERS
The following table sets forth the ownership of the Common Stock by
the Selling Security Holders as of the date such information was provided to
the Company. Since the dates such information was provided to the Company, such
information may have changed. Any or all of the Shares listed below may be
offered for sale by the Selling Security Holders from time to time and
therefore no estimate can be given as to the number of Shares that will be held
by the Selling Security Holders upon termination of this offering (except that
in each case, such number will represent less than 1% of the Common Stock
outstanding, unless otherwise indicated ). The "Number of Shares of Common
Stock Owned before the Offering" listed below includes the "Number of Shares
Issuable upon Exercise of Warrants or Options" for each Selling Security
Holder. Except as otherwise indicated, the Selling Security Holders listed in
the table have sole voting and investment powers with respect to the Shares
indicated.
<TABLE>
<CAPTION>
NUMBER OF
NUMBER OF SHARES SHARES ISSUABLE NUMBER
OF COMMON STOCK UPON EXERCISE OF OF
OWNED BEFORE WARRANTS OR SHARES
NAME OF SELLING SECURITY HOLDER THE OFFERING (21) OPTIONS OFFERED
------------------------------- ------------------ --------- --------
<S> <C> <C> <C>
Alan R. Schriber (4) 1,041 208 (7) 833
Allison Flege (4) 3,125 625 (7) 2,500
Andrew R. and Stephani Whittaker (2) 6,356 6,356 (5) 6,356
Andromeda Agency, Inc. Profit Sharing Plan FBO
Howard L. Tomb (Howard L. Tomb, Trustee) (4) 1,041 208 (7) 833
Arthur J. Calace, Jr. (4) (8) (20) 170,834 16,804 (6) 170,834
B. Joel Stoudenmire (4) 3,946 0 3,946
Carl Peyser (4) (9) 5,646 555 (6) 5,646
Carol Durkin (4) 21,132 2,078 (6) 21,132
Carver Golf Enterprises, Inc. (3) 109,200 0 109,200
Charles F. Schierar Trust U/A dated 6/6/83 1,041 208 (7) 833
Chris M. Mary Ellen Kanoff (2) 6,356 6,356 (5) 6,356
Christopher O'Connell (2) 6,444 6,444 (5) 6,444
Christopher Allick and Alice P. Allick 6,356 6,356 (5) 6,356
Claude Lemieux 4,167 0 4,167
Curtis Burge, Trustee of Pension & Profit Plan; 401K
Trust dated 4/24/85 (4) 1,041 208 (7) 833
Daniel O. Conwill, IV (2) 6,356 6,356 (5) 6,356
David Wechsler (4) (10) 7,084 5,417 (7)(11) 1,667
David Handler (2) 8,000 8,000 (5) 8,000
David P. and Wendie E. St. Jean (2) 3,177 3,177 (5) 3,177
David L. Rose (2) 5,730 5,730 (5) 5,730
Dominick and Mary E. DeBari (4) 10,003 984 (6) 10,003
Dr. Vincent W. Shiel, Trustee U/A of Trustee dated
1/18/89 (4) 3,334 834 (7) 3,334
Dudley S. Taft (4) 2,084 417 (7) 1,667
Edward J. Malek (4) 14,200 0 13,756
Estate of Roslyn Shervan (4) 10,003 984 (6) 10,003
Ronald G. Orloff Trustee for the Marc Steven Orloff
Irrevocable Living Trust (4) 5,001 492 (6) 5,001
FHM, Inc. (4) 416 83 (7) 333
Frederick J. Caspar (4) 1,041 208 (7) 833
Gary Munafo (4) 2,084 417 (7) 1,667
Michael Jonathan Chill (2) 8,765 (12) 6,765 (5) 6,765
Richard K. Abbe (2) 23,106 (13) 18,706 (5) 18,706
Jeffrey M. Berman (2) 18,705 18,705 (5) 18,705
Leo Abbe (2) 18,706 18,706 (5) 18,706
</TABLE>
-10-
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
NUMBER OF SHARES SHARES ISSUABLE NUMBER
OF COMMON STOCK UPON EXERCISE OF OF
OWNED BEFORE WARRANTS OR SHARES
NAME OF SELLING SECURITY HOLDER THE OFFERING (22) OPTIONS OFFERED
------------------------------- ------------------ --------- --------
<S> <C> <C> <C>
James M. Gould (4) 416 83 (7) 333
Janet Rudnick (4) 10,003 984 (6) 8,133
Jay Haas (4) 3,947 0 3,947
Jean Schiear Meier Trust U/A dated 6/7/72 (4) 1,041 208 (7) 833
Jeff Rosenberg (4) 1,041 208 (7) 833
Jefferies & Company, Inc. (1) 61,707 61,707 (5) 61,707
Jeffrey C. Key (2) 4,000 4,000 (5) 4,000
Jeffrey Kent Weinhoff (2) 32,491 32,491 (5) 32,491
Jeffrey and Denise Feldman (4) 5,001 492 (6) 5,001
John D. Lafoy (4) 5,920 0 5,920
John C. Vance (4) 3,125 625 (7) 2,500
Jonah Kupietzky (4) 10,003 984 (6) 10,003
Joseph M. and Doris Fitzgerald (4) 70,271 6,912 (6) 57,136
Joseph F. Chiappetta (2) 6,800 6,800 (5) 6,800
Karen Calace (4) (14) 10,056 987 (6) 10,056
Kenneth W. Gurley (4) 14,570 4,950 (23) 9,620
Leonard Hefter (2) 6,800 6,800 (5) 6,800
Linda Calace (4) (15) (22) 159,380 15,677 (6) 129,589
Louis V. Bellucci (2) 6,800 6,800 (5) 6,800
M. Brent Stevens (2) 3,177 3,177 (5) 3,177
Marrianne Klekamp(4) 1,041 208 (7) 833
Mark Calace (4) (16) 11,076 1,091 (6) 11,076
Marvin Rosenberg (4) 4,002 1,501 (7) 2,501
Monness, Crespi, Hardt & Co., Inc (1) 15,000 15,000 (5) 15,000
Paul Ochs 4,800 0 4,800
Peter E. and Judy V. Ruel (2) 6,800 6,800 (5) 6,800
Philip M. Bell (4) 2,084 417 (7) 1,667
Rabiner Partners (4) 1,041 208 (7) 833
Raymond Travaglione(4) 56,800 0 56,800
Richard and Constance Pines (4) 10,003 984 (6) 10,003
Robert T. Colgan (2) 6,800 6,800 (5) 6,800
Ruth L. Conway (4) 6,252 1,251 (7) 5,001
Salem Realty, Inc. (4) 2,084 417 (7) 1,667
Sam Pate (4) 9,620 0 9,620
Samuel W. Tuten & Vicky R. Tuten (4) 1,041 208 (7) 833
Sharon Wahlke (4) 1,041 208 (7) 833
Stacy Hart (4) 87,583 0 12,583
Stefani Nelson (2) 6,800 6,800 (5) 6,800
Steve Contardi (4) 833 0 833
Steve H. Owings (4) 3,974 0 3,947
Susan W. Holmes 1951 Trust (4) 2,084 417 (7) 1,667
U.S. Golf and Entertainment, Inc. (2) 75,000 0 75,000
William Parks (4) (17) 19,440 1,912 (6) 19,440
William G. Reitzig (4) (18) 66,775 33,617 (6) (19) 36,775
Hampshire Securities Corporation (1) 17,007 17,007 (5) 17,007
John H. Starr (2) 7,761 7,761 (5) 7,761
</TABLE>
(1) An investment bank which has participated in underwritten public
offerings of the Company's securities.
(2) An employee of an investment bank which has participated in
underwritten public offerings of the Company's securities.
(3) A company, the assets of which have been acquired by the Company.
(4) A stockholder of a company, the assets of which have been acquired
by the Company.
(5) Shares issuable upon the exercise of the Underwriters' Warrants.
-11-
<PAGE>
(6) Shares issuable upon the exercise of the Acquisition Warrants.
(7) Shares issuable upon the exercise of options granted in connection
with the acquisition of a golf center in Cincinnati, Ohio.
(8) Does not include shares beneficially owned by Arthur Calace's wife,
Linda Calace.
(9) Director of Management Information Services for Family Golf Centers,
Inc.
(10) Regional Manager for Southeastern District of Family Golf Centers, Inc.
(11) Includes 5,000 options granted under an employee stock option plan
(12) Includes 2,000 shares of unrestricted Common Stock purchased in the
open market.
(13) Includes 4,400 shares of unrestricted Common Stock purchased in the
open market.
(14) Does not include shares beneficially owned by Karen Calace's husband,
Mark Calace.
(15) Does not include shares beneficially owned by Linda Calace's husband,
Arthur Calace.
(16) Does not include shares beneficially owned by Mark Calace's wife,
Karen Calace.
(17) Director of Operations of Lake Grove Family Golf Centers, Inc.
(18) President and Chief Executive Officer of Lake Grove Family Golf
Centers, Inc.
(19) Includes 30,000 options granted under an employee stock option plan
(20) Selling Security Holder's beneficial ownership of Common Stock is 1.3%
of the Common Stock outstanding.
(21) Includes the following numbers of Shares held in escrow for the
following Selling Security Holders: Arthur J. Calace, Jr. -15,128;
Carl Peyser - 500; Carol Durkin - 1,871; Dominick and Mary E. DeBari
- 886; Edward J. Malek - 444; Estate of Roslyn Shervan - 886; Ronald
G. Orloff Irrevocable Living Trust - 443; Janet Rudnick - 886;
Jeffrey and Denise Feldman - 443; Jonah Kupietzky - 886; Joseph M.
and Doris Fitzgerald - 6,223; Karen Calace - 886; Linda Calace -
14,114; Mark Calace - 985; Raymond Travaglione - 1,776; Richard and
Constance Pines - 886; William Parks - 3,289; William G. Reitzig -
3,256.
(22) Selling Security Holder's beneficial ownership of Common Stock is 1.3%
of the Common Stock outstanding.
(23) Options issued under an employee stock option plan.
DESCRIPTION OF CAPITAL STOCK
A description of the Company's capital stock is contained in the
Company's registration statement on Form 8-A, which is incorporated by
reference herein. See "Incorporation of Certain Documents by Reference."
PLAN OF DISTRIBUTION
The Shares offered by this Prospectus may be sold from time to time by
the Selling Security Holders or by transferees thereof. No underwriting
arrangements have been entered into by the Selling Security Holders. The
distribution of the Shares by the Selling Security Holders 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. Discounts and usual and customary or
specifically negotiated brokerage fees or commissions may be paid by a Selling
Security Holder in connection with sales of the Shares. To the extent required,
the number of Shares to be sold, the name of the Selling Security Holder, the
purchase price, the name of any agent or broker, and any applicable
commissions, discounts or other compensation to such agents or brokers with
respect to a particular offering will be set forth in a Prospectus Supplement.
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.
In connection with distributions of the Shares or otherwise, the
Selling Security Holders may enter into hedging transactions with
broker-dealers. In connection with such transactions, broker-dealers may engage
in short sales of the Shares in the course of hedging the positions they assume
with Selling Security Holders. The Selling Security Holders may also sell
Shares short and redeliver the Shares to close out such short positions. The
Selling Security Holders may also enter into option or other transactions with
broker-dealers which require the delivery to the broker-dealer of the Shares
registered hereunder, which the broker-dealer may resell or otherwise transfer
pursuant to this Prospectus. The Selling Security Holders may also loan or
pledge the Shares to a broker-dealer and the broker-dealer may sell the Shares
so loaned, or upon a default, the broker-dealer may effect sales of the pledged
Shares pursuant to this Prospectus.
-12-
<PAGE>
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 one or
five business days prior to the commencement of such distribution. In addition
to, and without limiting, the foregoing, each of the Selling Security Holders
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, Regulation M, which provisions may
limit the timing of purchases and sales of any of the Shares by the Selling
Security Holders or any such other person. All of the foregoing may affect the
marketability of the Shares.
Pursuant to the Warrants and certain registration rights agreements,
the Company will pay all the fees and expenses incident to the registration of
the Shares (other than discounts and commissions, if any, and the Selling
Security Holders' counsel fees and expenses, if any).
In addition, the Company has agreed to indemnify the Selling Security
Holders against certain liabilities, including liabilities under the Securities
Act. In addition, each Selling Security Holder has agreed to indemnify the
Company against certain liabilities, including liabilities under the Securities
Act. Such agreements also provide for rights of contribution if such
indemnification is not available.
The Selling Security Holders, 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.
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 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 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 partner of Squadron, Ellenoff, Plesent &
Sheinfeld, LLP, holds options to purchase shares of the Company's Common Stock.
-13-
<PAGE>
EXPERTS
The consolidated financial statements of the Company as at December
31, 1996 and December 31, 1995 and for each of the years in the three year
period ended December 31, 1996, incorporated herein by reference to the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1996 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. The audited financial statements of
Carolina Capital Ventures, Ltd. as of December 31, 1996, incorporated herein by
reference to the Company's Current Report on Form 8-K dated July 25, 1997, as
amended, have been so incorporated in reliance on the report of Goldberg &
Davis, CPA's, independent auditors, given upon the authority of said firm as
experts in accounting and auditing. The audited financial statements of Divot
City, L.P. as of December 31, 1996, incorporated herein by reference to the
Company's Current Report on Form 8-K dated July 25, 1997, as amended, have been
so incorporated in reliance on the report of Ireland San Filippo, LLP,
independent auditors, given upon the authority of said firm as experts in
accounting and auditing. The audited financial statements of Darlington Driving
Range as of December 31, 1996, incorporated herein by reference to the
Company's Current Report on Form 8-K dated July 25, 1997, as amended, have been
so incorporated in reliance on the report of Weil & Company LLP, independent
auditors, given upon the authority of said firm as experts in accounting and
auditing. The audited financial statements of Randall's Island Practice Center
as of December 31, 1996, incorporated herein by reference to the Company's
Current Report on Form 8-K dated July 25, 1997, as amended, have been so
incorporated in reliance on the report of Weil & Company LLP, independent
auditors, given upon the authority of said firm as experts in accounting and
auditing. The audited financial statements of Green Oaks Golf Practice Center,
Inc. as of December 31, 1996, incorporated herein by reference to the Company's
Current Report on Form 8-K dated July 25, 1997, as amended, have been so
incorporated in reliance on the report of Gerard McEvoy, CPA, independent
auditors, given upon the authority of said firm as experts in accounting and
auditing. The audited financial statements of San Bruno Practice Center as of
December 31, 1996, incorporated herein by reference to the Company's Current
Report on Form 8-K dated July 25, 1997, as amended, have been so incorporated
in reliance on the report of Weil & Company LLP, independent auditors, given
upon the authority of said firm as experts in accounting and auditing. The
audited financial statements of Pinley Enterprises Ltd. as of December 31,
1996, incorporated herein by reference to the Company's Current Report on Form
8-K dated July 25, 1997, as amended, have been so incorporated in reliance on
the report of Hirschhorn, Fry & Associates, independent auditors, given upon
the authority of said firm as experts in accounting and auditing. The audited
financial statements of Southampton Family Golf Center, Inc. as of December 31,
1996, incorporated herein by reference to the Company's Current Report on Form
8-K dated July 25, 1997, as amended, have been so incorporated in reliance on
the report of Hirschhorn, Fry & Associates, independent auditors, given upon
the authority of said firm as experts in accounting and auditing. The audited
financial statements of Palm Royale Country Club Operations as of December 31,
1996, incorporated herein by reference to the Company's Current Report on Form
8-K dated July 25, 1997, as amended, have been so incorporated in reliance on
the report of Maryanov Madsen Gordon & Campbell, CPA's, independent auditors,
given upon the authority of said firm as experts in accounting and auditing.
The audited financial statements of Leisure Complexes, Inc. as of December 31,
1996, incorporated herein by reference to the Company's Current Report on Form
8-K dated July 25, 1997, as amended, have been so incorporated in reliance on
the report of Feldman, Gutterman, Meinberg and Company, CPA's, independent
auditors, given upon the authority of said firm as experts in accounting and
auditing.
-14-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
=============================================================== ====================================================
No dealer, salesman, or any other person has been authorized
to give any information or to make any representation not 1,163,237 SHARES
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 FAMILY GOLF
solicitation in such jurisdiction. Neither the delivery of this CENTERS, INC.
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.
--------------------
COMMON STOCK
TABLE OF CONTENTS
Page
Available Information.........................................2
Incorporation of Certain Documents by Reference...............2
Special Note Regarding Forward Looking Statements.............3 _________________
The Company...................................................4
Risk Factors..................................................5 PROSPECTUS
Use of Proceeds...............................................9
Selling Security Holders.....................................10 _________________
Description of Capital Stock.................................12
Plan of Distribution.........................................12
Limitation of Liability and Indemnification of Directors
and Officers............................................13
Legal Matters................................................13
Experts......................................................14
NOVEMBER 20, 1997
=============================================================== ====================================================
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemization of all expenses (subject to future
contingencies) incurred or expected to be incurred by the Company in connection
with the issuance and distribution of the securities being offered hereby
(items marked with an asterisk (*) represent estimated expenses):
<TABLE>
<CAPTION>
<S> <C>
SEC Registration Fee .................................... 9,671.61
Legal Fees and Expenses.................................. 15,000.00
Accounting Fees and Expenses............................. 5,000.00
Transfer Agent and Registrar Fees........................ 1,000.00
Miscellaneous............................................ 19,328.39
Total.................................................... 50,000.00
</TABLE>
* Estimate
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Delaware General Corporation Law, Section 102(b)(7), 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 or an
improper personal benefit is obtained. 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.
Article Eighth of the Certificate of Incorporation of the Company
permits indemnification of, and advancement of expenses to, among others,
officers and directors of the Corporation. Such Article provides as follows:
"(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 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) reasonable 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
II-I
<PAGE>
proceedings to enforce rights to indemnification, the Corporation shall
indemnify and 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.
(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
not 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 twenty
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 expenses 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 expense 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.
(e) The Corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee, or agent of the Corporation or
another corporation, partnership, joint venture, trust, or other enterprise
against any expense, liability, or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability, or
loss under the Delaware General Corporation Law.
(f) The Corporation's obligation, if any, to indemnify any person who
was or is serving as a director, officer, employee, or agent of any direct or
indirect subsidiary of the Corporation or, at the request of the Corporation,
of any other corporation or of a partnership, joint venture, trust, or other
enterprise shall be reduced by an amount such person may collect as
indemnification from such other corporation, partnership, joint venture, trust
or other enterprise.
II-II
<PAGE>
(g) Any repeal or modification of the foregoing provisions of this
Article Eighth shall not adversely affect any right or protection hereunder of
any person in respect of any act or omission occurring prior to the time of
such repeal or modification."
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
respect capacities as directors and officers.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
<S> <C>
(a) The following exhibits are filed herewith:
*3.1 Certificate of Incorporation, as amended.
**3.2 Amended and Restated Bylaws.
4.1 Form of Acquisition Warrant
***4.2 Form of Underwriters' Warrant
****4.3 Registration Rights Agreement, dated as of July 25, 1997, by
and between Family Golf Centers, Inc., Arthur J. Calace, Jr.,
as stockholder representative and certain Selling
Stockholders.
*****4.4 Registration Rights Agreement, dated as of July 29, 1997, by
and between Family Golf Centers, Inc. and Active Sports
Marketing, LLC.
******4.5 Registration Rights Agreement, dated as of June 30, 1997, by
and between Family Golf Centers, Inc. and Carver Golf
Enterprises, Inc.
5.1 Opinion of Squadron, Ellenoff, Plesent & Sheinfeld, LLP.
23.1 Consent of Richard A. Eisner & Company, LLP.
23.2 Consent of Goldberg & Davis, CPA's
23.3 Consent of Weil & Company, LLP
23.4 Consent of Gerard McEvoy
23.5 Consent of Hirschorn Fry & Associates
23.6 Consent of Maryanov Madsen Gordon & Campbell
23.7 Consent of Ireland San Filippo, LLP
23.8 Consent of Feldman, Gutterman, Meinberg and Company
23.9 Consent of Squadron, Ellenoff, Plesent & Sheinfeld, LLP
(contained in Opinion filed as Exhibit 5.1)
</TABLE>
- ----------
* 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).
II-III
<PAGE>
** Incorporated by reference to exhibit 3.2 to the Company's Registration
Statement on Form SB-2 filed on May 24, 1996 (Registration Statement
No. 333-4541).
*** Incorporated by reference to exhibit 3.2 to the Company's Registration
Statement on Form SB-2 filed on October 3, 1995 (Registration
Statement No. 33-97686).
**** Incorporated by reference to Exhibit 3 to the Company's Current Report
on Form 8-K dated July 25, 1997.
***** Incorporated by reference to Exhibit 10 to the Company's Current
Report on Form 8-K dated July 25, 1997.
****** Incorporated by reference to Exhibit 15 to the Company's Current
Report on Form 8-K dated July 25, 1997.
ITEM 17. 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.
(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-IV
<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 this Registration Statement on Form S-3
("Registration Statement") and authorized this Registration Statement to be
signed on its behalf by the undersigned, in the City of Melville, State of New
York on November 20, 1997.
FAMILY GOLF CENTERS, INC.
By: /s/ Krishnan P. Thampi
-------------------------------------
Krishnan P. Thampi
Chief Financial Officer, Chief Operating
Officer and Director (Principal Financial
and Accounting 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 and file (i) any and all
pre- or post-effective amendments to this Registration Statement, and other
documents in connection therewith, and (ii) a Registration Statement, and any
and all amendments thereto, relating to the offering covered hereby filed
pursuant to Rule 462(b) under the Securities Act of 1933, 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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Dominic Change Chairman of the Board, President November 20, 1997
----------------------- and Chief Executive Officer
Dominic Chang (Principal Executive Officer)
/s/ Krishnan P. Thampi Chief Financial Officer, Chief November 20, 1997
-------------------------- Operating Officer and Director
Krishnan P. Thampi (Principal Financial and
Accounting Officer)
/s/ James Ganley Director November 20, 1997
-------------------------
James Ganley
/s/ Jimmy C.M. Hsu Director November 20, 1997
-------------------------
Jimmy C.M. Hsu
/s/ Yupin Wang Director November 20, 1997
--------------------------
Yupin Wang
</TABLE>
II-V
<PAGE>
Index to Exhibits
<TABLE>
<CAPTION>
Page In
Sequential
Numbering
Exhibit No. Exhibit System
- ---------- ------- -----------
<S> <C> <C>
*3.1 Certificate of Incorporation, as amended.
**3.2 Amended and Restated Bylaws.
4.1 Form of Acquisition Warrant
***4.2 Form of Underwriters' Warrant
****4.3 Registration Rights Agreement, dated as of July 25, 1997, by
and between Family Golf Centers, Inc., Arthur J. Calace, Jr.,
as stockholder representative and certain Selling
Stockholders.
*****4.4 Registration Rights Agreement, dated as of July 29, 1997, by and
between Family Golf Centers, Inc. and Active Sports Marketing, LLC.
******4.5 Registration Rights Agreement, dated as of June 30, 1997, by and
between Family Golf Centers, Inc. and Carver Golf Enterprises, Inc.
5.1 Opinion of Squadron, Ellenoff, Plesent & Sheinfeld, LLP.
23.1 Consent of Richard A. Eisner & Company, LLP.
23.2 Consent of Goldberg & Davis, CPA's
23.3 Consent of Weil & Company, LLP
23.4 Consent of Gerard McEvoy
23.5 Consent of Hirschorn Fry & Associates
23.6 Consent of Maryanov Madsen Gordon & Campbell
23.7 Consent of Ireland San Filippo, LLP
23.8 Consent of Feldman, Gutterman, Meinberg and Company
23.9 Consent of Squadron, Ellenoff, Plesent & Sheinfeld, LLP
(contained in Opinion filed as Exhibit 5.1)
</TABLE>
- ----------
* 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
Statement No. 333-4541).
II-VI
<PAGE>
*** Incorporated by reference to exhibit 3.2 to the Company's Registration
Statement on Form SB-2 filed on October 3, 1995 (Registration
Statement No. 33-97686).
**** Incorporated by reference to Exhibit 3 to the Company's Current Report
on Form 8-K dated July 25, 1997.
***** Incorporated by reference to Exhibit 10 to the Company's Current
Report on Form 8-K dated July 25, 1997.
****** Incorporated by reference to Exhibit 15 to the Company's Current
Report on Form 8-K dated July 25, 1997.
II-VII
<PAGE>
This Warrant has not been registered under the Securities Act of 1933, as
amended, (the "Act"), or under comparable provisions of the securities laws
of any state or other jurisdiction and is, therefore a "restricted
security" as defined under Rule 144 of the Act. This Warrant may not be
offered, sold or otherwise transferred unless it is registered or qualified
under the Act and applicable state securities laws unless the issuer is
satisfied by an opinion of counsel acceptable to the issuer that registration
or qualification is not required under any such laws.
No. of Shares: Warrant No. W-
COMMON STOCK PURCHASE WARRANT
FAMILY GOLF CENTERS, INC.
THIS IS TO CERTIFY THAT, for value received, (the
"Warrantholder"), is entitled to purchase from Family Golf Centers, Inc., a
Delaware corporation (the "Company"), at any time or from time to time after
the date hereof and prior to 5:00 p.m., Eastern Standard Time, on
shares (the "Shares") of duly authorized, validly issued, fully paid and
nonassessable shares of Common Stock, par value $1.00 per share ("Common
Stock"), of the Company, at a purchase price of $ per Share, subject to
adjustment as hereinafter provided (the "Exercise Price").
This Warrant is one of several warrants (the "Warrants") of the same form
and having the same terms (except as to the number of shares of Common Stock
purchasable thereunder) as this Warrant, which have been issued in connection
with that certain Agreement and Plan of Merger, dated as of July 25, 1997
(the "Merger Agreement"), among the Company, Lake Grove Family Golf Centers,
Inc., a New York corporation and a wholly owned subsidiary of the Company,
and Leisure Complexes, Inc., a New York corporation, and which entitle the
holders to purchase an aggregate of 55,537 shares of Common Stock.
1. Manner of Exercise. (a) This Warrant shall be exercised by the
Warrantholder as to all or any part of the Shares by giving written notice of
such exercise on a Warrant Exercise Form, a copy of which is attached hereto,
to the Company, specifying the number of Shares to be purchased and including
with such notice this Warrant and the aggregate Exercise Price for the Shares
for which this Warrant is then being exercised. Such notice shall contain
such representations as are reasonably satisfactory to the Company and are
customary in order to evidence compliance with applicable federal and state
securities laws. Such aggregate Exercise Price shall be payable in cash or by
certified check, bank draft or postal or express money order payable to the
order of the Company. In case the holder shall exercise this Warrant with
respect to less than all of the Shares that may be purchased hereunder, the
Company shall deliver to such holder a new Warrant evidencing the right of
such holder to purchase the remaining Shares called for by this Warrant,
which new Warrant shall in all other respects be identical with this Warrant,
or, at the request of such
1
<PAGE>
holder, appropriate notation may be made on this Warrant and the same
returned to such holder. The Company shall pay all expenses, taxes and other
charges payable in connection with the preparation, issuance and delivery of
such new Warrant and of the stock certificate or certificates to be delivered
to the Warrantholder pursuant to Paragraph 2 hereof.
(b) Net Issue Exercise. Notwithstanding any provisions herein to the
contrary, if the Fair Market Value (as defined below) of one share of Common
Stock is greater than the Exercise Price (at the date of calculation as set
forth below), in lieu of exercising this Warrant for cash, the holder may
elect to receive shares equal to the value (as determined below) of this
Warrant (or the portion thereof being canceled) by surrender of this Warrant,
and the other documents referred to in Paragraph 1(a), together with notice
of such election (collectively, the "Required Documents"), in which event the
Company shall issue to the holder a number of shares of Common Stock computed
using the following formula:
Y (A-B)
X = -----------
A
<TABLE>
<CAPTION>
<S> <C> <C>
Where X = the number of shares of Common Stock to be issued to the
holder
Y = the number of shares of Common Stock purchasable under
the Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being canceled (at
the date of such calculation)
A = the Fair Market Value of one share of the Common Stock
(at the date of such calculation)
B = Exercise Price (as adjusted to the date of such
calculation)
</TABLE>
"Fair Market Value" shall mean (i) the last sale price (or, if no sale price
is reported on that day, the average of the bid and asked prices) of a share
of Common Stock on the National Market tier of The Nasdaq Stock Market on the
last trading day before all Required Documents are tendered to the Company,
or (ii), if the primary trading market for the Common Stock is not such
National Market tier, then the closing sale price regular way on such day,
or, in case no such sale takes place on such day, the reported closing
bid price regular way on such day, in each case on the principal exchange on
which such stock is traded, or (iii) if Fair Market Value cannot be
determined pursuant to one of the methods specified above, then Fair Market
Value shall mean the average of the bid and asked prices for the Common Stock
on such day as furnished by any New York Stock Exchange member firm selected
from time to time by the Board of Directors of the Company for that purpose.
2
<PAGE>
2. Certificates to be Delivered. Upon exercise of this Warrant in the
manner provided in Paragraph 1, the Company shall promptly cause certificates
for the Shares so purchased to be delivered (together with a new Warrant, in
the case of a partial exercise) to the Warrantholder in accordance with his
instructions. The Company shall not be required upon any exercise of this
Warrant to issue a certificate representing any fraction of a Share.
3. No Rights as Stockholder. The Warrantholder shall have no rights as a
stockholder of the Company with respect to the Shares purchasable upon
exercise of this Warrant until this Warrant has been delivered to the Company
upon exercise thereof, together with payment for the Exercise Price for such
Shares and any other documentation required to be delivered upon exercise of
this Warrant pursuant to Paragraph 1 above, and then only to the extent of
the number of Shares so purchased.
4. Anti-Dilution Provisions.
(a) Exercise Price Adjustments. The Exercise Price shall be subject to
adjustment if the Company shall, after July 25, 1997:
(1) pay a stock dividend or make a distribution on the outstanding
shares of Common Stock in shares of Common Stock,
(2) subdivide or split the outstanding shares of Common Stock into a
greater number of shares,
(3) combine the outstanding shares of Common Stock into a smaller
number of shares, or
(4) pay a dividend or make a distribution on the outstanding shares
of Common Stock in shares of its capital stock (other than Common
Stock).
then, in any such event, the Exercise Price in effect immediately prior to
the opening of business on the record date for determination of
stockholders entitled to receive such dividend or distribution or the
effective date of such subdivision, split or combination, as the case may
be, shall be adjusted so that the holder of this Warrant shall thereafter
be entitled to receive, upon exercise of this Warrant, the number of shares
of Common Stock or other capital stock (or both) of the Company which such
holder would have owned or been entitled to receive immediately following
such action if such holder had exercised this Warrant immediately prior to
the record date for, or effective date of, as the case may be, such event.
The adjustment contemplated by this subparagraph (4)(a) shall be made
successively whenever any event listed above shall occur. For a dividend or
distribution, the adjustment shall become effective at the opening of
business on the Business Day next following the record date for such
dividend or distribution. For a subdivision, split or combination, the
adjustment shall become
3
<PAGE>
effective immediately after the effectiveness of such subdivision, split or
combination. If after an adjustment pursuant to this subparagraph (4)(a)
the holder of this Warrant would be entitled to receive upon exercise
hereof shares of two or more classes or series of capital stock of the
Company, the Exercise Price shall thereafter be subject to adjustment upon
the occurrence of an action taken with respect to any such class or series
of capital stock other than Common Stock as is contemplated by this
Paragraph 4, on terms comparable to those applicable to the Common Stock
pursuant to this Paragraph 4.
(b) Deferral of Adjustment. In any case in which this Paragraph 4 shall
require that an adjustment be made in the Exercise Price, the Company may,
in its sole discretion, elect to defer the following until after the
occurrence of the event which requires such adjustment: (A) the issuance
by the Company to the holder of this Warrant, upon exercise thereof, of
the additional shares of Common Stock (or other shares of capital stock)
issuable upon such exercise over the shares of Common Stock issuable
before giving effect to such adjustment and (B) paying to such holder any
amount in cash in lieu of a fractional share of Common Stock; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such
additional shares of Common Stock (or other shares of capital stock), and
such cash, upon the occurrence of the event requiring such adjustment.
(c) No Deminimus Adjustments. All adjustments to the Exercise Price shall
be calculated to the nearest penny. No adjustment in the Exercise Price
shall be required unless such adjustment would require an increase or
decrease of at least one percent therein; provided, however, that any
adjustment which by reason of this subparagraph is not required to be made
shall be carried forward and taken into account in any subsequent
adjustment.
(d) Decrease in Exercise Price. The Company shall be entitled, to the
extent permitted by law, to make such decreases in the Exercise Price, in
addition to any otherwise required by the provisions of this Paragraph 4,
as the Company determines to be advisable in order that any stock
dividends, subdivisions of shares, reclassification or combination of
shares hereafter made by the Company to its stockholders shall not be
taxable.
(e) Adjustment for Consolidation or Merger of Company. In case of any
consolidation or merger to which the Company is a party, or in the case of
any sale or transfer to another corporation of the property of the Company
as an entirety or substantially as an entirety, or in case of any
statutory exchange of securities with another corporation (other than in
connection with a merger or acquisition) (each of the foregoing being
referred to herein as a "Transaction"), in each case as a result of which
shares of Common Stock shall be reclassified or converted into the right
to receive stock, securities or other property (including cash or any
combination thereof), proper provision shall be made so that this Warrant
shall, after consummation of such Transaction, be exercisable for the kind
and amount of stock, securities or other property (including cash)
receivable upon consummation of such Transaction by a holder of the number
of shares of Common Stock (and other capital stock for which this Warrant
may be exercisable in accordance with the provisions of this Paragraph 4)
for which this Warrant might have been exercised immediately prior
4
<PAGE>
to consummation of such Transaction (assuming in each case that such holder
of Common Stock (or other capital stock) failed to exercise rights of
election, if any, as to the kind or amount of stock, securities or other
property receivable upon consummation of such Transaction (provided that if
the kind or amount of stock, securities or other property receivable upon
consummation of such Transaction is not the same for each non-electing
share, then the kind and amount of stock, securities or other property
receivable upon consummation of such Transaction for each non-electing
share shall be deemed to be the kind and amount so receivable per share by
a plurality of the non-electing shares)). The kind and amount of stock or
securities into which this Warrant shall be exchangeable after consummation
of such Transaction shall be subject to adjustment, as nearly as may be
practicable, as described in this Paragraph 4 following the date of
consummation of such Transaction. The provisions of this subparagraph (e)
shall similarly apply to successive Transactions.
(f) Notice of Adjustments. Whenever the Exercise Price is adjusted as
herein provided, the Company shall:
(i) forthwith compute the adjusted Exercise Price in accordance
herewith and prepare a certificate signed by an officer of the Company
setting forth the adjusted Exercise Price, the method of calculation
thereof in reasonable detail and the facts requiring such adjustment
and upon which such adjustment is based, which certificate shall be
conclusive, final and binding evidence of the correctness of the
adjustment (absent manifest error); and
(ii) mail a notice to the holder of this Warrant that the Exercise
Price has been adjusted, the facts requiring such adjustment and upon
which such adjustment is based and setting forth the adjusted Exercise
Price, such notice to be mailed at or prior to the time the Company
mails an interim statement, if any, to its stockholders covering the
fiscal quarter during which the facts requiring such adjustment
occurred, but in any event within 45 days following the end of such
fiscal quarter.
(g) Notice of Certain Transactions. In case, at any time while this
Warrant is exercisable for any shares of Common Stock:
(i) the Company takes any action which would require an adjustment to
the Exercise Price; or
(ii) the Company shall authorize (x) any consolidation, merger or
binding share exchange to which the Company is a party and for which
approval of any stockholders of the Company is required (except for a
merger of the Company into one of its wholly owned subsidiaries solely
for the purpose of changing the corporate domicile of the Company to
another state of the United States and in connection with which there
is no substantive change in the rights or privileges of the Common
Stock other than changes resulting from differences in the corporate
statutes of the then existing and the new state of domicile), or (y)
the sale or transfer of all or substantially all of the assets of the
Company; or
5
<PAGE>
(iii) the Company shall authorize the voluntary dissolution,
liquidation or winding up of the Company or the Company is the subject
of an involuntary dissolution, liquidation or winding up;
then the Company shall cause to be mailed to the holder of this Warrant, in
accordance with Paragraph 7 below, at least 10 days before the record date
(or other date set for definitive action if there shall be no record date),
a notice stating the action or event for which such notice is being given
and the record date for (or such other date) and the anticipated effective
date of such action or event; provided, however, that any notice required
hereunder shall in any event be given no later than the time that notice is
given to the holders of the Common Stock. The failure to give or receive
the notice required by this subparagraph (g) or any defect therein shall
not affect the legality or validity of any action or any vote thereon.
5. Authorization and Reservation of Shares. The Company represents and
warrants that the Shares to be issued by it upon the exercise of this Warrant
have been duly authorized and, when such Shares are issued upon exercise of
this Warrant, shall be validly issued, fully paid and nonassessable and free
from all taxes, liens and charges with respect to the issue thereof. The
Company shall at all times reserve or hold available a sufficient number of
shares of Common Stock to cover the number of Shares issuable upon exercise
of this Warrant.
6. Compliance with Securities Law.
(a) Warrant and Shares Not Registered. The Warrantholder represents and
warrants that he understands that this Warrant and the Shares to be issued
upon its exercise have not been registered for sale under federal or state
securities laws and that this Warrant and the Shares to be issued upon its
exercise are being offered and sold to the Warrantholder pursuant to one or
more exemptions from the registration requirements of such securities laws;
that, in order to satisfy such requirement, the Warrantholder must be
acquiring this Warrant and the shares to be purchased by him hereunder for
his own account for investment and that the representations and warranties
contained in this Paragraph 6 are given with the intention that the Company
may rely thereon for purposes of claiming such exemption (subject to any
requirement of law that the disposition of each Warrantholder's property
shall at all times be and remain within his control); and that the
Warrantholder understands that he must bear the economic risk of his
investment in this Warrant and the Shares purchased hereunder for an
indefinite period of time, as this Warrant and the Shares to be issued upon
its exercise have not been registered under federal or state securities laws
and, therefore, cannot be sold unless subsequently registered or qualified
under such laws, or unless an exemption from such registration or
qualification is available.
(b) Warrant and Shares Acquired For Investment: Limitations on
Dispositions. The Warrantholder represents and warrants that he is acquiring
this Warrant and will acquire the Shares issued upon exercise of this Warrant
for his own account for investment and not with a view to, or for sale in
connection with, any public distribution thereof in violation of the Securities
Act of 1933 (the "1933 Act") or any state securities laws. The Warrantholder
agrees not to sell, assign
6
<PAGE>
or otherwise transfer this Warrant, and that any purported sale, assignment
or transfer of this Warrant shall be void. The Warrantholder further agrees
that the Shares issued upon exercise of this Warrant may not be sold,
assigned or otherwise transferred unless (a) a registration statement with
respect thereto has become effective under the 1933 Act and such Shares have
been qualified under applicable state security laws, or (b) there is
presented to the Company an opinion of counsel reasonably satisfactory to the
Company that such registration and qualification is not required. The
Warrantholder consents that any transfer agent of the Company may be
instructed not to transfer any Shares acquired upon exercise of this Warrant
unless it receives satisfactory evidence of compliance with the foregoing
provisions, and that there may be endorsed upon any certificate or other
instrument representing such Shares (and any certificates or instruments
issued in substitution therefor), a legend calling attention to the foregoing
restrictions on transferability of such Shares stating in substance:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR QUALIFIED
UNDER ANY STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED UNLESS THEY ARE REGISTERED UNDER THE ACT OR QUALIFIED
UNDER APPLICABLE STATE SECURITIES LAWS UNLESS THE ISSUER RECEIVES AN OPINION
OF COUNSEL ACCEPTABLE TO IT THAT SUCH REGISTRATION OR QUALIFICATION IS NOT
REQUIRED.
(c) The Company acknowledges that the Shares issued upon exercise of this
Warrant (but not the Warrant itself) are to be covered by the "shelf"
registration statement that the Company is obligated to file under the 1933
Act pursuant to that certain Registration Rights Agreement between the
Company, the Warrantholder and certain other persons.
7. General.
(a) Illegality. In the event that any one or more of the provisions
contained in this Warrant shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of this Warrant shall not, at the election of the party for whom
the benefit of the provision exists, be in any way impaired.
(b) Filing of Warrant. A copy of this Warrant shall be filed in the minute
book and among the records of the Company.
(c) Notice. Any notice or other document required to be given or delivered
to the Warrantholders shall be delivered at, or sent by certified or
registered mail to, such holder at the address shown beneath such holder's
signature on the signature page hereof or at a more recent address of which
the Warrantholder shall have notified the Company in writing. Any notice or
other
7
<PAGE>
document required or permitted to be given or delivered to the Company shall
be delivered at, or sent by certified or registered mail to, the office of
the Company at 225 Broadhollow Road, Melville, New York 11747, or such other
address as shall have been furnished by the Company to the Warrantholder.
(d) Limitation of Liability. No provision hereof, in the absence of
affirmative action by the holder hereof to purchase Shares, and no mere
enumeration herein of the rights or privileges of the holder hereof, shall
give rise to any liability of such holder for the purchase price of any
Shares, whether such liability is asserted by the Company or by creditors of
the Company.
(e) Loss, Destruction, etc. of Warrants. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
this Warrant, and in the case of any such loss, theft or destruction upon
delivery of a bond of indemnity in such form and amount as shall be
reasonably satisfactory to the Company, or in the event of such mutilation
upon surrender and cancellation of this Warrant, the Company will make and
deliver a new Warrant, of like tenor, in lieu of such lost, stolen, destroyed
or mutilated Warrant. Any Warrant issued under the provisions of this
subparagraph (e) in lieu of any Warrant alleged to be lost, destroyed or
stolen, or in lieu of any mutilated Warrant, shall constitute an original
contractual obligation on the part of the Company.
(f) Warrant Detachable. Any shares of Common Stock acquired by the
Warrantholder pursuant to the Merger Agreement may be transferred separately
and apart from this Warrant.
(g) Amendment and Waiver.
(1) No amendment or modification of this Warrant will be binding or
effective without the prior written consent of the Company and of the
holders of a majority of the Shares issuable upon exercise of the Warrants
outstanding at the time such action is taken.
(2) No amendment, modification or waiver of any provision of this Warrant
will extend to or affect any obligation not expressly amended, modified or
waived or impair any right consequent thereon. No course of dealing, and
no failure to exercise or delay in exercising any right, remedy, power or
privilege under this Warrant, will operate as a waiver, amendment or
modification of any provision of this Warrant.
(h) Governing Law. The provisions of this Warrant shall be governed by,
construed and enforced in accordance with, the laws of the State of New York
(without giving effect to the conflict of laws principles thereof).
8
<PAGE>
(i) Descriptive Headings. The paragraph headings contained herein are for
reference purposes only and shall not in any way affect or limit the meaning
or interpretation of any of the provisions of this Warrant.
(j) Entire Agreement. The terms of this Warrant set forth the entire
agreement and understanding of the Company and the Warrantholder in respect
of the subject matter hereof and supersede all prior agreements, arrangements
and understandings relating to the subject matter hereof; provided, however,
that nothing herein shall be construed to limit the applicability of the
Registration Rights Agreement to the Shares issuable upon exercise of this
Warrant.
(k) Parties; Assignment. All of the terms and conditions of this Warrant
shall be binding upon, and inure to the benefit of and be enforceable by, the
parties hereto and their respective heirs, legal representatives and
successors. This Warrant may not be sold or assigned by the holder hereof
without the prior written consent of the Company, which consent may be
withheld in its sole discretion.
This Warrant shall not be valid for any purpose until it shall have been
signed and attested to by the President and Secretary or Assistant Secretary
of the Company, and until the Warrantholder has agreed to be bound by the
restrictions set forth in Paragraph 6 hereof by signing in the space provided
below.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed in its name and on its behalf by the signatures of its duly
authorized officers and affixation of its seal.
Dated: July 25, 1997
FAMILY GOLF CENTERS, INC.
By: /s/ Robert J. Krause
-------------------------------
Name: Robert J. Krause
Title: Senior Vice President
ATTEST:
/s/
- ---------------------
Secretary
<PAGE>
WARRANT EXERCISE FORM
(TO BE EXECUTED BY THE WARRANTHOLDER AT TIME OF EXERCISE OF
THIS COMMON STOCK PURCHASE WARRANT)
To: Family Golf Centers, Inc.
The undersigned, holder of the within Warrant, (i) exercises his right to
purchase of the shares of Common Stock of Family Golf Centers, Inc.,
which the undersigned is entitled to purchase under the terms of the within
Warrant, and (ii) makes payment in full for the number of shares of Common
Stock so purchased by payment of $ , as provided in the Warrant.
Please issue the certificate for shares of Common Stock (and a new Warrant
for unexercised Warrants, in the case of a partial exercise) in the name of
the undersigned as follows:
----------------------------------------------------------------
Print or type name
----------------------------------------------------------------
Social Security or Other Identifying Number
----------------------------------------------------------------
Street Address
----------------------------------------------------------------
City State Zip Code
and deliver it to the above address.
Dated: -------------------------------------------------------
-------------------------------------------
Signature
-------------------------------------------
Signature
(Signature must conform in all
respects to name
on face of this Warrant)
<PAGE>
Exhibit 5.1
Squadron, Ellenoff, Plesent & Sheinfeld, LLP
551 Fifth Avenue
New York, New York 10176
(212) 661-6500
November 20, 1997
Family Golf Centers, Inc.
225 Broadhollow Road
Melville, New York 11747
Re: Registration Statement on Form S-3
-----------------------------------
Ladies and Gentlemen:
You have requested our opinion, as counsel for Family Golf Centers,
Inc., a Delaware corporation (the "Company"), in connection with the
registration statement on Form S-3 (the "Registration Statement"), filed with
the Securities and Exchange Commission under the Securities Act of 1933 (the
"Act"). The Registration Statement relates to an offering by certain selling
stockholders named therein (the "Stockholders") from time to time of up to
1,163,237 shares (the "Shares") of common stock, par value $.01 per share, of
the Company (the "Common Stock"). Of such Shares, 324,369 shares (the "Warrant
Shares") are issuable upon the exercise of certain warrants (the "Warrants")
issued by the Company in connection with the Company's public offering in
December 1995 and in connection with its acquisition of Leisure Complexes, Inc.
in July 1997.
We have examined such records and documents and made such examinations
of law as we have deemed relevant in connection with this opinion. We have
assumed that there will be no changes in applicable law between the date of
this opinion and the date the Shares proposed to be sold by the Stockholders
pursuant to the Registration Statement are actually sold. It is our opinion
that (i) the Warrant Shares have been duly authorized and, when issued and
delivered upon exercise of the Warrants in accordance with the terms of the
Warrants, will be validly issued, fully paid and non-assessable, and (ii) the
Shares (other than the Warrant Shares) have been duly authorized and validly
issued and are fully-paid and non-assessable.
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 so doing, we do not admit
that we are in the category of persons whose consent is required under Section
7 of the Act or the rules and regulations of the Securities and Exchange
Commission promulgated thereunder.
Very truly yours,
/s/ Squadron, Ellenoff,
Plesent & Sheinfeld, LLP
Squadron, Ellenoff, Plesent
& Sheinfeld, LLP
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
on Form S-3 of our report dated March 22, 1997 on our audit of the financial
statements of Family Golf Centers, Inc. and subsidiaries as at December 31,
1996 and December 31, 1995 and for each of the years in the three-year
period ended December 31, 1996 included in the Form 10-K annual report for
the year ended December 31, 1996. We also consent to the reference to our
firm under the caption "Experts".
/s/ Richard A. Eisner & Company, LLP
New York, New York
November 20, 1997
<PAGE>
[Goldberg & Davis, CPA's Letterhead]
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement
on Form S-3 of our report dated March 5, 1997 on our audit of the financial
statements of Carolina Capital Ventures, Ltd. as of December 31, 1996. We
also consent to the reference to our firm under the caption "Experts".
/s/ Goldberg & Davis
Charlotte, North Carolina
<PAGE>
[WEIL & COMPANY LLP LETTERHEAD]
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement
on Form S-3 of our report dated May 13, 1997 of our audit of the financial
statements of San Bruno Practice Center as of December 31, 1996. We
also consent to the reference to our firm under the caption "Experts".
/s/ Weil & Company LLP
WEIL & COMPANY LLP
Santa Monica, California
<PAGE>
[WEIL & COMPANY LLP LETTERHEAD]
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement
on Form S-3 of our report dated April 18, 1997 of our audit of the financial
statements of Randall's Island Practice Center as of December 31, 1996. We
also consent to the reference to our firm under the caption "Experts".
/s/ Weil & Company LLP
WEIL & COMPANY LLP
Santa Monica, California
<PAGE>
[WEIL & COMPANY LLP LETTERHEAD]
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement
on Form S-3 of our report dated April 18, 1997 of our audit of the financial
statements of Darlington Driving Range as of December 31, 1996. We
also consent to the reference to our firm under the caption "Experts".
/s/ Weil & Company LLP
WEIL & COMPANY LLP
Santa Monica, California
<PAGE>
[GERARD McEVOY LETTERHEAD]
CONSENT OF INDEPENDENT AUDITORS
I consent to the incorporation by reference in this Registration Statement
on Form S-3 of my report dated June 6, 1997 of my audit of the financial
statements of Green Oaks Golf Practice Center, Inc. as of December 31, 1996. I
also consent to the reference to my firm under the caption "Experts".
/s/ Gerard McEvoy
- ------------------
Gerard McEvoy, CPA
Dallas, Texas
<PAGE>
[HIRSCHHORN, FRY & ASSOCIATES LETTERHEAD]
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement
on Form S-3 of our report dated May 7, 1997 of our audit of the financial
statements of Southampton Family Golf Center, Inc. of as at December 31, 1996.
We also consent to the reference to our firm under the caption "Experts".
/s/ Hirschhorn, Fry & Associates
Philadelphia, PA
<PAGE>
[HIRSCHHORN, FRY & ASSOCIATES LETTERHEAD]
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement
on Form S-3 of our report dated May 7, 1997 of our audit of the financial
statements of Pinley Enterprises Ltd. of as at December 31, 1996.
We also consent to the reference to our firm under the caption "Experts".
/s/ Hirschhorn, Fry & Associates
Philadelphia, PA
<PAGE>
[Maryanov Madsen Gordon & Campbell Letterhead]
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement
on Form S-3 of our report dated June 9, 1997 of our audit of the financial
statements of Palm Royale Country Club Operations as at December 31, 1996. We
also consent to the reference to our firm under the caption "Experts".
/s/ Maryanov Madsen Gordon & Campbell
Indian Wells, California
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement on Form S-3 of our report dated
April 3, 1997, on the financial statements of Divot City, L.P. as of
December 31, 1996 and for the two years then ended, and to the reference
to our firm under the caption "Experts".
/s/ Ireland San Filippo, LLP
IRELAND SAN FILIPPO, LLP
November 19, 1997
<PAGE>
[FGM & CO.'s LETTERHEAD]
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement
on Form S-3 of our report dated June 27, 1997 of our audit of the financial
statements of Leisure Complexes, Inc. as at December 31, 1996. We
also consent to the reference to our firm under the caption "Experts".
/s/ Feldman, Gutterman, Meinberg & Co.
Manhasset, New York
