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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 8, 1997
REGISTRATION NO. 333-40693
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
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)
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Delaware 11-3223246
(State or jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
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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CALCULATION OF REGISTRATION FEE
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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 PRICE(2) REGISTRATION FEE
- -------------------------------- ------------------------- -------------------- ------------------------ -------------------
Common Stock, par value 1,163,237 shares $27.4375(2) $31,916,315.19 $9,671.61(3)
$.01 per share
- -------------------------------- ------------------------- -------------------- ------------------------ -------------------
Common Stock, par value 6,400 shares $28.50(4) $182,400 $55.27
$.01 per share
- -------------------------------- ------------------------- -------------------- ------------------------ -------------------
TOTAL 1,169,637 $32,098,715.19 $9,726.88
================================ ========================= ==================== ======================== ===================
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(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
registrant's Common Stock on the Nasdaq National Market on November
17, 1997.
(3) A registration fee with respect to these shares was paid upon the
filing of the registrant's Registration Statement on Form S-3
(Registration Statement No. 333-40693).
(4) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act on the basis of high
and low bid prices of the registrant's Common Stock on the Nasdaq
National Market on December 2, 1997.
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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 DECEMBER 8, 1997
FAMILY GOLF CENTERS, INC.
1,169,637 Shares of Common Stock
This Prospectus relates to the offering that may be made from time to
time of up to 1,169,637 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
1,169,637 Shares being offered hereby, 300,000 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 $20.25 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 $27.50 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 December 2, 1997, the
last sale price of the Common Stock as reported by the Nasdaq National Market
was $28.5625 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 December 8, 1997
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AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission
(the "Commission"), 450 Fifth Street, N.W., Washington, D.C. 20549, a
Registration Statement (the "Registration Statement") under the Securities Act
with respect to the offering and sale from time to time of the Shares. This
Prospectus does not contain all the information set forth in the Registration
Statement and the exhibits thereto, as permitted by the rules and regulations
of the Commission. For further information, reference is made to the
Registration Statement and to the exhibits filed therewith. Statements
contained in this Prospectus as to the contents of any contract or other
document which has been filed or incorporated by reference as an exhibit to
the Registration Statement are qualified in their entirety by reference to
such exhibits for a complete statement of their terms and conditions.
Additionally, the Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements, and other information
statements with the Commission. Copies of such materials may be inspected
without charge at the offices of the Commission, and copies of all or any part
thereof may be obtained from the Commission's public reference facilities at
450 Fifth Street, N.W., Washington D.C. 20549 or at the regional offices of
the Commission located at 7 World Trade Center, New York, New York 10048 and
500 West Madison Street, Suite 1400, Chicago, Illinois 60661, upon payment of
the fees prescribed by the Commission. In addition, the Commission maintains a
Web Site that contains reports, proxy and information statements and other
information regarding the Company (http://www.sec.gov). The Common Stock is
quoted on the Nasdaq National Market 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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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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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.
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<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the exercise of the Warrants are
estimated to be $7,602,267.50. 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.
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<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>
<S> <C> <C> <C>
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
------------------------------- ------------------- --------- --------
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
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
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
------------------------------- ------------------- --------------- --------
Leo Abbe (2) 18,706 18,706 (5) 18,706
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) 7,524 7,524 (5) 7,524
John H. Starr (2) 7,761 7,761 (5) 7,761
Leslie Abbey (2) 1,881 1,881 (5) 1,881
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
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
------------------------------- ------------------- --------- --------
Jonathan Abbey (2) 1,881 1,881 (5) 1,881
Howard B. Katz (2) 3,527 3,527 (5) 3,527
William E. Aaron (2) 1,258 1,258 (5) 1,258
Michael R. Stein (2) 1,258 1,258 (5) 1,258
Ceasar Fraschilla (2) 2,216 2,216 (5) 2,216
Morton D. Kurzrok (2) 335 335 (5) 335
Frank Garofalo (2) 1,176 1,176 (5) 1,176
Elliot Sloyer (2) 2,351 2,351 (2) 2,351
</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.
(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.
(15) Does not include shares beneficially owned by Karen Calace's husband,
Mark Calace.
(16) Does not include shares beneficially owned by Linda Calace's husband,
Arthur Calace.
(17) Does not include shares beneficially owned by Mark Calace's wife,
Karen Calace.
(18) Director of Operations of Lake Grove Family Golf Centers, Inc.
(19) President of Lake Grove Family Golf Centers, Inc.
(20) Includes 30,000 options granted under an employee stock option plan
(21) Selling Security Holder's beneficial ownership of Common Stock is
1.3% of the Common Stock outstanding.
(22) 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.
(23) Selling Security Holder's beneficial ownership of Common Stock is
1.3% of the Common Stock outstanding.
(24) 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
-12-
<PAGE>
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.
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
-13-
<PAGE>
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.
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, 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
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<PAGE>
Feldman, Gutterman, Meinberg and Company, CPA's, independent auditors, given
upon the authority of said firm as experts in accounting and auditing.
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<PAGE>
No dealer, salesman, or any other person has been authorized
to give any information or to make any representation not
contained in this Prospectus in connection with the offering
made hereby, and, if given or made, such information or
representation must not be relied upon as having been
authorized by the Company. This Prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy,
any of the securities offered hereby in any jurisdiction to any
person to whom it is unlawful to make such an offer or
solicitation in such jurisdiction. Neither the delivery of this
Prospectus nor any sale made hereunder shall under any
circumstances create any implication that there has been no
change in the affairs of the Company since the date hereof or
that the information contained herein is correct as of any time
subsequent to the dates as of which such information is
furnished.
--------------------
TABLE OF CONTENTS
Page
Available Information.........................................2
Incorporation of Certain Documents by Reference...............2
Special Note Regarding Forward Looking Statements.............3
The Company...................................................4
Risk Factors..................................................5
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
1,169,637 SHARES
----------------------
FAMILY GOLF
CENTERS, INC.
COMMON STOCK
----------------------
PROSPECTUS
---------------------
DECEMBER 8, 1997
<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):
SEC Registration Fee ......................................$ 9,726.88
Legal Fees and Expenses.................................... 15,000.00
Accounting Fees and Expenses............................... 5,000.00
Transfer Agent and Registrar Fees.......................... 1,000.00
Miscellaneous.............................................. 19,273.12
Total...................................................... 50,000.00
* 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.
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<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
(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)
- ----------
* 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).
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<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.
******* Previously filed
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 December 8, 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 Chang
------------------------- Chairman of the Board, President December 8, 1997
Dominic Chang and Chief Executive Officer
(Principal Executive Officer)
/s/ Krishnan P. Thampi
------------------------- Chief Financial Officer, Chief December 8, 1997
Krishnan P. Thampi Operating Officer and Director
(Principal Financial and
Accounting Officer)
/s/ James Ganley
------------------------- Director December 8, 1997
James Ganley
/s/ Jimmy C.M. Hsu
------------------------- Director December 8, 1997
Jimmy C.M. Hsu
/s/ Yupin Wang
-------------------------- Director December 8, 1997
Yupin Wang
</TABLE>
II-V
<PAGE>
Index to Exhibits
<TABLE>
<CAPTION>
<S> <C> <C>
Page In
Sequential
Numbering
Exhibit No. Exhibit System
- ----------- ------- ----------
*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)
- ----------
* 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).
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<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.
******* Previously filed.
II-VII
</TABLE>
<PAGE>
Exhibit 5.1
Squadron, Ellenoff, Plesent & Sheinfeld, LLP
551 Fifth Avenue
New York, New York 10176
(212) 661-6500
December 8, 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
1,169,637 shares (the "Shares") of common stock, par value $.01 per share, of
the Company (the "Common Stock"). Of such Shares, 355,537 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
