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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
June 30, 1998
FAMILY GOLF CENTERS, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 0-25098 11-3223246
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) No.)
538 Broadhollow Road
Melville, New York 11747
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(Address of principal executive offices)
Registrant's Telephone Number, including
area code: (516) 694-1666
Not Applicable
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(Former Address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
On June 30, 1998, Family Golf Centers, Inc., a Delaware
corporation (the "Company"), acquired all of the issued and outstanding stock
of Eagle Quest Golf Centers, Inc. ("Eagle Quest") through the Company's
wholly-owned subsidiary, Family Golf Acquisition, Inc., a Delaware corporation
("Merger Sub"), pursuant to an Agreement and Plan of Merger, dated April 2,
1998 (the "Merger Agreement"), by and among Eagle Quest, Merger Sub and the
Company (the "Eagle Quest Acquisition"). The Company believes that Eagle Quest
is the second largest operator of golf driving ranges in North America, with 20
golf centers (including two under construction) in Texas, Washington and
Canada.
In connection with the Eagle Quest Acquisition, the Company issued
1,384,735 shares (the "Shares") of common stock, par value $0.01 (the "Common
Stock"), subject to certain post-closing adjustments, of which 65,182 Shares
will be held in escrow subject to potential claims by the Company for
indemnification. In addition, the Company has entered a Registration Rights
Agreement which obligates the Company to register those Shares which are issued
to certain holders of Eagle Quest warrants within 190 days after June 30, 1998.
The Eagle Quest Acquisition will be accounted for as a
pooling-of-interests. Accordingly, the historical results of operations
of the Company will be restated for financial accounting purposes. Eagle
Quest's revenues as reported for the year ended December 31, 1997 and for
the period from inception (February 5, 1996) to December 31, 1996 were $8.2
million and $149,000, respectively, and Eagle Quest's net losses for such
periods were $7.3 million and $885,000, respectively. Eagle Quest's revenues
and net loss for the three months ended March 31, 1998 were $2.3 million and
$3.0 million, respectively, and Eagle Quest also experienced losses in the
second quarter of 1998. Restated to reflect the Eagle Quest Acquisition, the
Company had net income of $3.3 million (as compared to net income of $10.5
million on a historical basis) for the year ended December 31, 1997 and a net
loss of $1.7 million (as compared to net income of $1.3 million on a historical
basis) for the three months ended March 31, 1998. After giving effect to the
Eagle Quest Acquisition as of March 31, 1998, the Company would have had
approximately $25.8 million of additional indebtedness (the "Eagle Quest
Debt"), and other obligations of approximately $5.0 million. In addition, the
Company anticipates that its results for the second and third quarters of 1998
will reflect significant cash and non-cash charges in connection with the Eagle
Quest Acquisition relating to, among other things, the anticipated retirement
of certain Eagle Quest Debt, fees and expenses and severance charges. The
precise amount of such charges is not currently ascertainable; however, the
Company currently estimates that they will aggregate approximately $12.5
million. Such pooling restatements and charges relating to the Eagle Quest
Acquisition will adversely impact the Company's net income and could affect the
perception of the Company and the market value of the Common Stock.
The Company intends to continue operating Eagle Quest's business
operations in
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substantially the same manner as previously conducted.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Financial Statements of Business Acquired: The required
financial statements of Eagle Quest are hereby incorporated by reference to the
Company's Registration Statement on Form S-3, dated May 22, 1998 as amended by
Amendment No. 1 to the Registration Statement on Form S-3/A, dated July 2,
1998.
(b) Pro Forma Financial Information: The required pro forma
financial statements of are hereby incorporated by reference to the Company's
Registration Statement on Form S-3, dated May 22, 1998 as amended by Amendment
No. 1 to the Registration Statement on Form S-3/A, dated July 2, 1998.
(c) Exhibits:
(2) The Merger Agreement is incorporated by reference to the
Company's Registration Statement on Form S-3, dated
May 22, 1998.
(4) Registration Rights Agreement dated June 30, 1998, by
the Company.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
July 10, 1998
FAMILY GOLF CENTERS, INC.
By: /s/ Pamela S. Charles
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Pamela S. Charles,
Vice President and Secretary
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INDEX TO EXHIBITS
Exhibit No. Description
(2) The Merger Agreement is incorporated by reference to the
Company's Registration Statement on Form S-3, dated May 22, 1998.
(4) Registration Rights Agreement dated June 30, 1998, by the
Company.
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REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of June 30, 1998 (this
("Agreement"), by FAMILY GOLF CENTERS, INC., a Delaware corporation (the
"Company"), for the benefit of the Selling Stockholders (as defined below).
WHEREAS, Eagle Quest Golf Centers, Inc., a corporation organized under
the laws of British Columbia ("Eagle") was acquired by Family Golf Acquisition,
Inc., a Delaware corporation and wholly-owned subsidiary of the Company
("Merger Sub"), by means of a merger by way of arrangement pursuant to a Merger
Agreement among the Company, Merger Sub and Eagle, dated as of April 2, 1998
(the "Merger Agreement");
WHEREAS, the stockholders of Eagle will receive shares of common
stock, $.01 par value per share, of the Company ("Common Stock") upon
consummation of the transactions contemplated by the Merger Agreement (the
"Merger");
WHEREAS, certain holders of warrants (the "Warrants") of Eagle will
receive shares of Common Stock in exchange for the Warrants;
WHEREAS, certain shares of Common Stock issuable pursuant to the
Merger Agreement and in exchange for the Warrants may be "restricted
securities" (as defined in Rule 144 under the Securities Act of 1933, as
amended), and the Company has agreed to provide the Selling Stockholders with
the registration rights set forth herein with respect thereto; and
WHEREAS, the execution and delivery of this Agreement is a condition
precedent to the obligations of the Company to consummate the Merger;
NOW THEREFORE, in consideration of the premises and of the mutual
agreements and covenants hereinafter set forth, the parties hereto agree as
follows:
1. Certain Definitions.
Business Day: Any day other than a Saturday, Sunday or holiday on
which banking institutions located in New York, New York are authorized or
obligated by law, regulation or executive order to close.
Commission: The Securities and Exchange Commission, or any other
federal agency at the time administering the Securities Act and the Exchange
Act.
Common Stock: As defined in the preamble of this Agreement.
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Company: As defined in the preamble of this Agreement.
Company Indemnified Parties: As defined in Section 5(b).
Exchange Act: The Securities and Exchange Act of 1934, as amended, or
any successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, as they each may, from time to time, be in effect.
Losses: As defined in Section 5(a) hereof.
Prospectus: The prospectus included in the Registration Statement as
of the date it becomes effective under the Securities Act and, in the case of
references to the Prospectus as of a date subsequent to the effective date of
the Registration Statement, as amended or supplemented as of such date,
including all documents incorporated by reference therein, as amended, and each
prospectus supplement relating to the offering and sale of any of the
Registrable Shares.
Registrable Shares: Shares of Common Stock issuable to the Selling
Stockholders in connection with the Merger (including, without limitation, any
shares to be issued in exchange for Warrants to purchase stock of Eagle), and
any other shares of capital stock of the Company issued in respect of such
Registrable Shares as a result of stock splits, stock dividends,
reclassification, recapitalizations, mergers, consolidations or similar events.
Any Registrable Share will cease to be a Registrable Share when (x) a
registration statement covering such Registrable Share has been declared
effective by the Commission and such Registrable Share has been disposed of
pursuant to such effective registration statement, (y) such Registrable Share
may be publicly resold without registration under the Securities Act or any
rule or regulation promulgated by the Commission thereunder, or (z) such
Registrable Share is no longer held by a Selling Stockholder.
Registration Statement: A "shelf" registration statement of the
Company on any form for which the Company then qualifies which permits the
secondary resale thereunder of the Registrable Shares on a delayed or
continuous basis under Rule 415 of the Commission under the Securities Act, or
any successor rule that may be promulgated by the Commission under the
Securities Act, as they each may, from time to time, be in effect. The term
"Registration Statement" shall also include all exhibits and financial
statements and schedules and documents incorporated by reference in such
Registration Statement when it becomes effective under the Securities Act, and
in the case of references to the Registration Statement as of a date subsequent
to the effective date, as amended as of such date.
Securities Act: The Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, as they each may, from time to time, be in effect.
Selling Stockholders: Each holder of Common Stock received in the
Merger for Eagle Stock, and each holder of Common Stock received in the Merger
in exchange for the Warrants at the closing of and in connection with the
Merger.
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Stockholder Indemnified Parties: As defined in Section 5(a).
2. Shelf Registration.
(a) The Company shall:
(i) file, within 190 days after the Closing Date (as defined in the
Merger Agreement), the Registration Statement covering all remaining
Registrable Shares. The section of the Registration Statement entitled "Plan of
Distribution" shall provide that the Selling Stockholders may distribute
Registrable Shares pursuant to the Registration Statement only in the manner
set forth on Exhibit A hereto.
(ii) use its commercially reasonable efforts to cause the Registration
Statement to be declared effective by the Commission as promptly as practicable
after filing; and
(iii) subject to Section 3(b) and 3(c), use its commercially
reasonable efforts to keep the Registration Statement continuously effective
under the Securities Act until such time as the Registrable Shares become
eligible for resale under the Securities Act or any rules or regulations
promulgated thereunder, but in no event more than one (1) year.
(b) The Company shall amend the Registration Statement or supplement
the related Prospectus from time to time as necessary to comply with applicable
rules and regulations promulgated by the Commission under the Securities Act or
the instructions applicable to the form used for the Registration Statement.
3. Obligations with Respect to Registration.
(a) In connection with the obligations of the Company pursuant to
Section 2 hereof, the Company shall:
(i) prepare and file with the Commission the Registration
Statement;
(ii) notify the Selling Stockholders, (A) when the Registration
Statement becomes effective, (B) when the filing of a post-effective
amendment to the Registration Statement or a supplement to the
Prospectus is required, when the same is filed, and in the case of a
post-effective amendment, when the same becomes effective, (C) of any
request by the Commission or any state securities authority for any
amendment of or supplement to the Registration Statement or the
Prospectus relating thereto or for additional information, (D) of the
entry of any stop order suspending the effectiveness of the
Registration Statement or of the initiation of any proceedings for
that purpose, (E) of the happening of any event or the failure of any
event to occur or the discovery of any facts or otherwise that makes
any statement made in the Registration Statement or the Prospectus
relating thereto untrue in any
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material respect or that causes such Registration Statement or
Prospectus to omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading and (F) of the reasonable
determination by the Company that a post-effective amendment to the
Registration Statement would be appropriate;
(iii) use commercially reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of the
Registration Statement as soon as reasonably practicable;
(iv) furnish to the Selling Stockholders, upon request, a
conformed copy of the Registration Statement as declared effective by
the Commission and each post-effective amendment thereto, and such
number of copies of the final Prospectus and of each supplement
thereto as may reasonably be required to facilitate the distribution
of the Registrable Shares by the Selling Stockholders in accordance
with the methods of distribution described in the Registration
Statement;
(v) prepare, as soon as reasonably practicable, an appropriate
post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or file a Form 8-K or other
report that will be incorporated by reference into the Prospectus so
that, following the occurrence of any circumstance requiring such a
filing, the Prospectus included in the Registration Statement, as
thereafter delivered to the purchasers of Registrable Shares, will
not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading;
(vi) make generally available to its securityholders earning
statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule
promulgated under the Securities Act) no later than 45 days after the
end of the 12-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year), commencing on the first day
of the first fiscal quarter of the Company after the effective date
of the Registration Statement, which statements shall cover said
12-month period;
(vii) register or qualify the Registrable Shares covered by the
Registration Statement under the securities or blue sky laws of such
jurisdictions in the United States reasonably requested by the
Selling Stockholders, and do any and all other acts and things which
may be necessary to enable the Selling Stockholders to consummate the
disposition in such jurisdictions of Registrable Shares in accordance
with a method of distribution described in such Registration
Statement; provided, however, that the Company shall in no event be
required to qualify to do business as a foreign corporation or as a
dealer in any jurisdiction where it is not so qualified, to conform
its capitalization or the composition of its assets at the time to
the securities or blue sky laws of such jurisdiction, to execute or
file any general consent to service of process under the laws of any
jurisdiction, to take any action that would subject it to service of
process in suits other than those arising out of the
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offer and sale of the Registrable Shares covered by such Registration
Statement, or to subject itself to taxation in any jurisdiction where
it has not theretofore done so; and
(viii) cause the Registrable Shares covered by the Registration
Statement to be listed on the principal exchange or exchanges or
qualified for trading on the principal over-the-counter market on
which the shares of Common Stock are then listed or traded upon the
sale of Registrable Shares pursuant to the Registration Statement.
(b) Notwithstanding anything to the contrary contained herein, if at
any time after the filing of the Registration Statement or after it is declared
effective by the Commission, the Company determines, in its reasonable business
judgment, that such registration and the offering of Registrable Shares
thereunder would require the Company to disclose matters, that otherwise would
not be required to be disclosed at such time, and such disclosure would
interfere with or otherwise adversely affect any financing, acquisition,
corporate reorganization, or other material transaction or development
involving the Company, then the obligation of the Company under Section
2(a)(ii) or 2(a)(iii), as the case may be, shall be suspended upon the giving
of notice to the Selling Stockholders of such suspension; provided, however,
that any such suspension shall not last more than 180 days, or past the date on
which any Quarterly Report on Form 10-Q or Annual Report on Form 10-K is filed
by the Company, following the giving of such notice. Any such notice need not
specify the reasons for such suspension if the Company determines, in its
reasonable business judgment, that doing so would interfere with or adversely
affect such transaction or development or would result in the disclosure of
material non-public information.
(c) The Company's obligations under this Agreement to the Selling
Stockholders shall be conditioned upon the compliance by the Selling
Stockholders with the following:
(1) the Selling Stockholders shall cooperate with the Company in
connection with the preparation of the Registration Statement and
related Prospectus and, for so long as the Company is obligated to
keep the Registration Statement effective, the Selling Stockholders
shall provide to the Company, in writing, for use in the Registration
Statement and the Prospectus, all information regarding the Selling
Stockholders and such other information as may be reasonably required
to enable the Company to prepare the Registration Statement and
Prospectus covering the Registrable Shares and to maintain the
currency and effectiveness thereof;
(2) during such time as the Selling Stockholders may be engaged
in a distribution of the Registrable Shares, the Selling Stockholders
shall comply with all applicable laws, including, but not limited to,
Regulation M promulgated by the Commission under the Exchange Act and
pursuant thereto will, among other things: (A) not engage in any
stabilization activity in connection with the securities of the
Company in contravention of such rules; (B) distribute the
Registrable Shares solely in the manner described in the Registration
Statement; and (C) not bid for or purchase any securities of the
Company or attempt to induce any person to purchase any securities of
the Company other than as permitted under the Exchange Act;
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(3) at least three Business Days prior to any distribution by a
Selling Stockholder of Registrable Shares, such Selling Stockholder
shall advise the Company in writing of the dates on which the
distribution will commence and, to the best knowledge of such Selling
Stockholders at that time, the date on which the distribution will
terminate (which shall not be later than 30 days after such notice is
given), the number of Registrable Shares to be sold, the terms and
the manner of sale (including, to the extent applicable, the purchase
price, the name of any broker-dealer to or through whom such
distribution is being made, and the amount of any selling commissions
or other items constituting compensation to such broker-dealer) and
the number of shares of Common Stock that will be owned beneficially
by such Selling Stockholders after giving effect to such sale (the
notice referred to above shall be effective for no more than 30 days
and any distribution made after the termination of such 30-day period
shall require a new notice);
(4) on notice from the Company of the happening of any of the
events specified in clauses (B), (C), (D), (E) or (F) of Section
3(a)(ii), the Selling Stockholders shall cease offering or
distributing the Registrable Shares until such time as the Company
notifies the Selling Stockholders that offering and distribution of
the Registrable Shares may recommence; and
(5) on notice from the Company that (x) it is about to effect a
public offering of shares of Common Stock and (y) the managing
underwriter(s) for such offering have so requested in writing, then
each Selling Stockholder who, as of the date such notice is given,
owns in excess of 1% of the issued and outstanding shares of Common
Stock of the Company shall cease offering or distributing any of such
shares (including Registrable Shares owned by such Selling
Stockholders) during the 7 days prior to, and during the 30-day
period beginning on, the effective date of the registration statement
for such public offering.
4. Expenses of Registration.
All expenses in connection with the Registration Statement, any
qualification or compliance with federal or state laws required in connection
therewith, and the distribution of the Registrable Shares shall, as between the
Selling Stockholders and the Company, be borne as follows:
(a) The Company shall pay and be responsible for the registration fee
payable under the Securities Act, blue sky fees and expenses, if applicable
(subject to the limitations set forth in Section 3(a)(viii)), printing fees and
all fees and disbursements of the Company's counsel and accountants. Solely at
its discretion, the Company may, in lieu of engaging the services of a
financial printing company with respect to the Registration Statement or the
Prospectus, arrange for the photocopying thereof, in which event the Company
will bear the applicable photocopying costs.
(b) The Selling Stockholders shall pay all fees and disbursements of
their own counsel and advisers, all stock transfer fees (including the cost of
all transfer tax stamps) or
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expenses, if any, and all other expenses (including brokerage discounts,
commissions and fees) related to the distribution of the Registrable Shares
that have not expressly been assumed by the Company as set forth above.
5. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Selling
Stockholder and each person (if any) who controls such Selling Stockholder
within the meaning of either the Securities Act or the Exchange Act
(collectively, the "Stockholder Indemnified Parties") from and against any
losses, claims, damages or liabilities (collectively "Losses"), joint or
several, to which such Stockholder Indemnified Parties may become subject,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and, subject to
Section 5(c), the Company will reimburse such Stockholder Indemnified Parties
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such Losses; provided, however, that the Company
will not indemnify or hold harmless any Stockholder Indemnified Party from or
against any such Losses (i) that arise out of or are based upon any violation
of any federal or state securities laws, rules or regulations committed by any
of the Stockholder Indemnified Parties (or any person who controls any of them
or any agent, or broker-dealer engaged by them) or any failure by such Selling
Stockholder to give any purchaser of Registrable Shares, at or prior to the
written confirmation of sale, a copy of the most recent Prospectus or (ii) if
the untrue statement, omission or allegation thereof upon which Losses or
expenses are based (x) was made in reliance upon and in conformity with the
information provided by or on behalf of any Stockholder Indemnified Party for
use or inclusion in the Registration Statement or any Prospectus, or (y) was
made in any Prospectus used after such time as the Company advised such Selling
Stockholder that the filing of a post-effective amendment or supplement thereto
was required, except the Prospectus as so amended or supplemented, or (z) was
made in any Prospectus used after such time as the Registration Statement
ceases to be effective or current or has been withdrawn or abandoned or the use
of any such Registration Statement or Prospectus or any offering or
distribution pursuant thereto shall have been suspended or delayed hereunder.
(b) Each Selling Stockholder, individually and not jointly, agrees to
indemnify and hold harmless the Company, its directors and officers and each
person, if any, who controls the Company within the meaning of either the
Securities Act or the Exchange Act (the "Company Indemnified Parties"), from
and against any Losses, joint or several, to which the Company Indemnified
Parties may become subject, insofar as such Losses (or actions in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
the Prospectus, or any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, if
the statement or omission was made in reliance upon and in conformity with the
information provided in writing specifically by or on behalf of such Selling
Stockholder or any person who controls such Selling Stockholder for use in the
Registration Statement or any Prospectus, (ii) the use of any Prospectus after
such time as the Company has advised such Selling
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Stockholder that the filing of a post-effective amendment or supplement thereto
is required, except the Prospectus as so amended or supplemented, (iii) the use
of any Prospectus after such time as the Registration Statement ceases to be
effective or current or has been withdrawn or abandoned or the use of any such
Registration Statement or Prospectus or any offering or distribution pursuant
thereto shall have been suspended or delayed hereunder or (iv) any violation by
such Selling Stockholder or any person who controls such Selling Stockholder
within the meaning of either the Securities Act or the Exchange Act (or any
agent or broker-dealer engaged by such Selling Stockholder or any such
controlling person) of any federal or state securities law or rule or
regulation thereunder or any failure by such Selling Stockholder to give any
purchaser of Registrable Shares, at or prior to the written confirmation of
sale, a copy of the most recent Prospectus; and, subject to Section 5(c), such
Selling Stockholder will reimburse such Company Indemnified Parties for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such Losses. For purposes of clause (i) of the
preceding sentence and clause (ii) of the last sentence of Section 5(a), but
without limiting the generality thereof, any information concerning any
Stockholder Indemnified Party or plan of distribution included in any
Registration Statement or Prospectus which is provided to the Selling
Stockholder for review within a reasonable period before filing or use thereof
and to which information such Selling Stockholder has not promptly provided
written notice of objection to the Company shall be deemed to have been
provided by such Selling Stockholder specifically for use in such Registration
Statement or Prospectus.
(c) Each party entitled to indemnification under this Section 5 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought,
and the Indemnifying Party may participate at its own expense in the defense,
or if it so elects, to assume the defense of any such claim and any action or
proceeding resulting therefrom, including the employment of counsel and the
payment of all expenses. The failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party from its obligations
to indemnify such Indemnified Party, except to the extent the Indemnified
Party's failure to so notify actually prejudices the Indemnifying Party's
ability to defend against such claim, action or proceeding. In the event that
the Indemnifying Party elects to assume the defense in any action or
proceeding, the Indemnified Party shall have the right to employ separate
counsel in any such action or proceeding and to participate in the defense
thereof, but the fees and expenses of such separate counsel shall be such
Indemnified Party's expense unless (i) the Indemnifying Party has agreed to pay
such fees and expenses or (ii) the named parties to any such action or
proceeding (including any impleaded parties) include an Indemnified Party and
the Indemnifying Party, and such Indemnified Party shall have been advised by
counsel in writing that there may be a conflict of interest between such
Indemnified Party and the Indemnifying Party in the conduct of the defense of
such action (in which case, if such Indemnified Party notifies the Indemnifying
Party in writing that it elects to employ separate counsel at the expense of
the Indemnifying Party, the Indemnifying Party shall not assume the defense of
such action or proceeding on such Indemnified Party's behalf, it being
understood, however, that the Indemnifying Party shall not, in connection with
any one such action or proceeding or separate but substantially similar or
related actions or proceedings arising
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out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for all Indemnified Parties, which firm shall be designated in writing by
the Selling Stockholder(s) or the Company, as the case may be). No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of the Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation. The Indemnifying Party
shall not be liable for any settlement of any such action or proceeding
effected without its written consent, but if settled with its written consent,
or if there be a final judgment for the plaintiff in any such action or
proceeding, the Indemnifying Party shall indemnify and hold harmless the
Indemnified Party from and against any loss or liability by reason of such
settlement or judgment.
(d) If the indemnification provided for under this Section 5 is
unavailable or insufficient to hold the Indemnified Party harmless under
subparagraphs (a) or (b) above in respect of any Losses referred to therein for
any reason other than as specified therein, then the Indemnifying Party shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the one
hand and such Indemnified Party on the other in connection with the statements
or omissions which resulted in such Losses as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by (or omitted to be supplied by) the Company
or the Selling Stockholders, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission
and any other equitable considerations appropriate under the circumstances. The
amount paid or payable by an Indemnified Party as a result of the Losses
referred to above in this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such Indemnified Party in connection
with investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
6. Notices. All notices, requests, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally or mailed, certified or registered mail with
postage prepaid, or sent by telecopier, as follows:
(a) if to the Company:
Family Golf Centers, Inc.
538 Broadhollow Road
Melville, New York 11747
Attention: General Counsel
Facsimile: 516-694-1935
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with a copy to:
Squadron Ellenoff Plesent & Sheinfeld, LLP
551 Fifth Avenue
New York, New York 10176
Attention: Kenneth R. Koch, Esq.
Facsimile: 212-697-6686
(b) if to the Selling Stockholders, to the addresses set forth in the
Company's stock register.
or to such other person or address as any party shall specify by notice in
writing to the other party. All notices and other communications given to a
party in accordance with the provisions of this Agreement shall be deemed to
have been given (i) three Business Days after the same are sent by certified or
registered mail, postage prepaid, return receipt requested, and (ii) when
delivered by hand or transmitted by telecopy (answer back received).
Notwithstanding the preceding sentence, notice of change of address shall be
effective only upon actual receipt thereof.
7. Amendment. Any provision of this Agreement may be amended or
modified in whole or in part at any time by an agreement in writing between the
Company and the Selling Stockholders. No consent, waiver or similar act shall
be effective unless in writing.
8. Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto and supersedes all prior agreements and
understandings, oral and written, among the parties hereto with respect to the
subject matter hereof.
9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
10. Governing Law. This Agreement shall be governed by and interpreted
in accordance with the internal laws of the State of New York, without giving
effect to principles of conflicts of laws.
11 Assignment. A Selling Stockholder may not assign its rights under
this Agreement without the prior written consent of the Company. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
FAMILY GOLF CENTERS, INC.
By: /s/ Robert J. Krause
------------------------------
Name: Robert J. Krause
Title: Senior Vice President
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EXHIBIT "A"
Plan of Distribution
The Registrable Shares may be sold by the Selling Stockholders
directly or through agents designated from time to time or to or through
broker-dealers designated from time to time. To the extent required, any such
agent or broker-dealer involved in the offer and sale of the Registrable Shares
and any applicable commissions, discounts or other items constituting
compensation to such agents or broker-dealers will be set forth in a Prospectus
Supplement.
The distribution of the Registrable Shares may be effected from time
to time in one or more transactions at a fixed price or prices, which may be
changed, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at prices determined on a negotiated or
competitive bid basis. Registrable Shares may be sold through a broker-dealer
acting as agent or broker for a Selling Stockholder, or to a broker-dealer
acting as principal. In the latter case, the broker-dealer may then resell such
Registrable Shares to the public at varying prices to be determined by such
broker-dealer at the time of resale.
