<PAGE>
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
FAMILY GOLF CENTERS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
FAMILY GOLF CENTERS, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
FAMILY GOLF CENTERS, INC.
225 BROADHOLLOW ROAD
MELVILLE, NEW YORK 11747
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Family Golf Centers, Inc.:
The Annual Meeting of Stockholders of Family Golf Centers, Inc. (the
"Company") will be held at Sports Plus, 110 New Moriches Road, Lake Grove, New
York 11755 at 10:00 a.m., Eastern Daylight Savings Time, on June 26, 1998 for
the following purposes:
1. To elect the Board of Directors for the ensuing year.
2. To ratify the appointment of Richard A. Eisner & Company, LLP as the
independent auditors and accountants for the Company for the year ending
December 31, 1998.
3. To consider and vote upon a proposal to adopt the Company's 1998 Stock
Option and Award Plan.
4. To transact such other business as may properly come before the meeting.
All stockholders are invited to attend the meeting. Stockholders of record
at the close of business on May 14, 1998, the record date fixed by the Board of
Directors, are entitled to notice of and to vote at the meeting. A complete list
of stockholders entitled to notice of and vote at the meeting will be open to
examination by stockholders beginning ten days prior to the meeting for any
purpose germane to the meeting during normal business hours at the office of the
Secretary of the Company at 225 Broadhollow Road, Melville, New York 11747.
Whether or not you intend to be present at the meeting, please sign and date
the enclosed proxy and return it in the enclosed envelope.
By Order of the Board of Directors
PAMELA S. CHARLES
SECRETARY
Melville, New York
May 15, 1998
<PAGE>
FAMILY GOLF CENTERS, INC.
225 BROADHOLLOW ROAD
MELVILLE, NEW YORK 11747
(516) 694-1666
------------------------
PROXY STATEMENT
------------------------
The accompanying proxy is solicited by the Board of Directors of Family Golf
Centers, Inc. (the "Company") for use at the Annual Meeting of Stockholders (the
"Annual Meeting") to be held at 10:00 a.m., Eastern Daylight Savings New York
time, on June 26, 1998 at Sports Plus, 110 New Moriches Road, Lake Grove, New
York 11755 and any adjournment thereof.
VOTING SECURITIES; PROXIES
The Company will bear the cost of solicitation of proxies. In addition to
the solicitation of proxies by mail, certain officers and employees of the
Company, without extra remuneration, may also solicit proxies personally by
telefax and by telephone. In addition to mailing copies of this material to
stockholders, the Company may request persons, and reimburse them for their
expenses in connection therewith, who hold stock in their names or custody or in
the names of nominees for others to forward such material to those persons for
whom they hold stock of the Company and to request their authority for execution
of the proxies.
The holders of a majority of the outstanding shares of Common Stock, par
value $.01 per share (the "Common Stock"), present in person or represented by
proxy shall constitute a quorum at the Annual Meeting. The approval of a
plurality of the outstanding shares of Common Stock present in person or
represented by proxy at the Annual Meeting is required for election of the
nominees as directors. In all matters other than the election of directors, the
affirmative vote of the majority of the outstanding shares of Common Stock
present in person or represented by proxy at the Annual Meeting is required for
the adoption of such matters.
The form of proxy solicited by the Board of Directors affords stockholders
the ability to specify a choice among approval of, disapproval of, or abstention
with respect to each matter to be acted upon at the Annual Meeting. Shares of
Common Stock represented by the proxy will be voted, except as to matters with
respect to which authority to vote is specifically withheld. Where the solicited
stockholder indicates a choice on the form of proxy with respect to any matter
to be acted upon, the shares will be voted as specified. Abstentions and broker
non-votes will not have the effect of votes in opposition to a director or
"against" any other proposal to be considered at the Annual Meeting.
All shares of Common Stock represented by properly executed proxies which
are returned and not revoked will be voted in accordance with the instructions,
if any, given therein. If no instructions are provided in a proxy, the shares of
Common Stock represented by such proxy will be voted FOR the Board's nominees
for director, FOR the approval of Proposals 2 and 3 and in accordance with the
proxy-holder's best judgment as to any other matters raised at the Annual
Meeting.
A stockholder who has given a proxy may revoke it at any time prior to its
exercise by giving written notice of such revocation to the Secretary of the
Company, executing and delivering to the Company a later dated proxy reflecting
contrary instructions or appearing at the Annual Meeting and taking appropriate
steps to vote in person.
At the close of business on May 14, 1998, 19,566,526 shares of Common Stock
were outstanding and eligible for voting at the meeting. Each stockholder of
record is entitled to one vote for each share of Common Stock held on all
matters that come before the Annual Meeting. Only stockholders of record at the
close of business on May 14, 1998 are entitled to notice of, and to vote at, the
Annual Meeting. All share and per share numbers included herein have been
retroactively adjusted to give effect to a three-for-two stock split in the form
of a stock dividend paid on May 4, 1998 to holders of record as of April 20,
1998 (the "1998 Stock Split").
NO DISSENTER'S RIGHTS
Under Delaware law, stockholders are not entitled to dissenter's rights of
appraisal with respect to Proposals 2 and 3.
This proxy material is first being mailed to stockholders commencing on or
about May 15, 1998.
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS AND MANAGEMENT INFORMATION
The number of directors of the Company is set by a resolution adopted by a
majority of the entire Board of Directors. The number of directors is currently
fixed at five. The number of directors to be elected at the Annual Meeting to
constitute the Board of Directors has also been fixed at five. The Board of
Directors currently consists of the five directors listed below. Each of these
five has agreed to stand for re-election at the Annual Meeting to hold office
for a period of one year until the next annual meeting, and in any event until a
successor is elected and qualified. It is intended that the accompanying proxy
will be voted in favor of the following persons to serve as directors, unless
the stockholder indicates to the contrary on the proxy.
The persons named in the accompanying proxy intend to vote for the election
as director of the nominees listed herein. Each nominee has consented to serve
if elected. The Board of Directors has no reason to believe that any nominee
will not serve if elected, but if any of them should become unavailable to serve
as a director, and if the Board of Directors designates a substitute nominee or
nominees, the persons named as proxies will vote for the substitute nominee or
nominees designated by the Board of Directors.
The following table sets forth certain information with respect to each
person who is currently a director of the Company and the individuals nominated
and recommended to be elected by the Board of Directors of the Company and is
based on the records of the Company and information furnished to it by such
persons. Reference is made to "Security Ownership of Certain Beneficial Owners
and Management" for information pertaining to stock ownership by each director
and executive officer of the Company and the nominees.
NOMINEES FOR ELECTION AS A DIRECTOR
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------ ----- ---------------------------------------------------------------
<S> <C> <C>
Dominic Chang............................. 47 Chairman of the Board and Chief Executive Officer
James Ganley.............................. 61 Director
Jimmy C.M. Hsu............................ 48 Director
Krishnan P. Thampi........................ 49 President, Chief Operating Officer, Assistant Secretary,
Treasurer and Director
Yupin Wang................................ 65 Director
</TABLE>
DOMINIC CHANG has been the Chairman of the Board and Chief Executive Officer
of the Company and its predecessors since 1991. Prior to March 1998, Mr. Chang
also held the title of President. From 1989 to 1992, Mr. Chang was a Senior Vice
President and Sector Executive for Corporate Real Estate and General Services
for The Bank of New York. He was responsible for the acquisition, management and
disposition of The Bank of New York's properties worldwide, facilities design
and construction, security and centralized administrative services. Mr. Chang
previously had over 15 years banking experience with Bankers Trust and Irving
Trust Company. He has a Masters Degree in Industrial Engineering from New York
University and a Bachelors Degree from the State University of New York at
Stonybrook.
JAMES GANLEY has been a director of the Company since 1994. From October
1988 until his retirement in 1990, Mr. Ganley was a Senior Executive Vice
President of The Bank of New York. Mr. Ganley was a member of the Senior
Management Steering Committee at The Bank of New York and was directly
responsible for the merger of the systems, products and operations of The Bank
of New York with Irving Trust Company. Prior to 1988, Mr. Ganley had held
various executive positions at Irving Trust Company and was Group Executive
responsible for Banking Operation activities, which comprised 13 divisions. He
2
<PAGE>
was also a member of Irving Trust Company's Senior Executive Management
Committee. Mr. Ganley received a Bachelors Degree in Economics from New York
University and was a participant in Harvard University's program for management
development.
JIMMY C.M. HSU has been a director of the Company since 1994. From 1995
until 1996, Mr. Hsu was the Vice Chairman of Russ Berrie and Company, Inc.
("Russ Berrie"), a New York Stock Exchange listed company which manufactures and
distributes toys and gifts to retail stores. Mr. Hsu joined Russ Berrie in 1979
as Vice President, Far East Operations. In 1987, he was appointed Senior Vice
President and Director of World-Wide Marketing of Russ Berrie. In 1991, he was
elected to the board of Russ Berrie and was appointed the position of Executive
Vice President. In 1995, Mr. Hsu became Vice Chairman of Russ Berrie. Mr. Hsu is
currently an independent investor.
KRISHNAN P. THAMPI has been the President, Chief Operating Officer,
Assistant Secretary and Treasurer of the Company since March 1998 and from 1992
through February 1998, Mr. Thampi was the Chief Financial Officer, Chief
Operating Officer, Executive Vice President, Assistant Secretary and Treasurer
of the Company and its predecessors. He became a director of the Company in
1994. From 1989 to 1992, he was a Senior Vice President for Administrative
Services at The Bank of New York. From 1988 to 1989, he was a Senior Vice
President for Systems Services at Irving Trust Company. He also performed
controller and personnel management functions while at Irving Trust Company. Mr.
Thampi has a Masters Degree in Business Administration from Columbia University
and a Bachelors Degree in Engineering from McGill University.
YUPIN WANG has been a director of the Company since 1994. Mr. Wang is
currently the President of W W International, a worldwide management consulting
firm. Prior to establishing W W International in 1992, Mr. Wang was a member of
the executive management team of International Business Machines Corp. ("IBM")
from 1962 to 1992. He had held various positions at IBM, including Director of
Marketing Operations, Director of Marketing Strategy and Director of Customer
Satisfaction. As Director of Customer Satisfaction, he established IBM's
Customer Satisfaction Management System, which contributed to IBM Rochester
winning the Malcolm Baldrige Award. Mr. Wang received a Bachelors Degree in
Economics from National Taiwan University and Masters Degrees from Oklahoma
State University and New York University.
Vacancies and newly-created directorships resulting from any increase in the
number of authorized directors may be filled by a majority vote of the directors
then in office. Officers are elected by, and serve at the pleasure of, the Board
of Directors.
STOCKHOLDER VOTE REQUIRED
Election of each director requires a plurality of the votes of the shares of
Common Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote on the election of directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES TO THE BOARD OF DIRECTORS OF THE COMPANY.
COMMITTEES OF THE BOARD--BOARD MEETINGS
The Board of Directors has established an audit, a compensation and a stock
option committee to assist it in the discharge of its responsibilities. The
principal responsibilities of each committee and the members of each committee
are described in succeeding paragraphs. Actions taken by any committee of the
Board of Directors are reported to the Board of Directors, usually at its next
meeting or by written report.
The Audit Committee of the Board of Directors currently consists of Dominic
Chang, James Ganley and Yupin Wang. The Audit Committee held one meeting during
the fiscal year ended December 31, 1997. The Audit Committee is responsible for
recommending the appointment of a firm of independent public
3
<PAGE>
accountants to examine the financial statements of the Company and its
subsidiaries for the coming year. In making this recommendation, it reviews the
nature of audit services rendered, or to be rendered, to the Company and its
subsidiaries. It reviews with representatives of the independent public
accountants the auditing arrangements and scope of the independent public
accountants' examination of the financial statements, results of those audits,
their fees and any problems identified by the independent public accountants
regarding internal accounting controls, together with their recommendations. It
also meets with the Company's Chief Financial Officer to review reports on the
functioning of the Company's programs for compliance with its policies and
procedures regarding financial controls and internal auditing. This includes an
assessment of internal controls within the Company and its subsidiaries based
upon the activities of the Company's internal auditing personnel as well as an
evaluation of the performance. The Audit Committee is also prepared to meet at
any time upon request of the independent public accountants or the Chief
Financial Officer to review any special situation arising in relation to any of
the foregoing subjects.
The Compensation Committee of the Board of Directors currently consists of
Dominic Chang, James Ganley and Yupin Wang. The Compensation Committee held one
meeting during the fiscal year ended December 31, 1997. Generally, this
Committee is to make recommendations to the Board of Directors as to the
remuneration arrangements for directors and executive officers and other similar
matters with respect to employees of the Company. It is intended to review
guidelines for the administration of the Company's incentive programs. It also
is intended to review and approve or make recommendations to the Board of
Directors on any proposed plan or program which would benefit primarily the
senior executive group.
The Stock Option Committee of the Board of Directors, which shall be renamed
the Stock Option and Award Committee, currently consists of James Ganley and
Yupin Wang. The Stock Option and Award Committee held three meetings during the
fiscal year ended December 31, 1997. This Stock Option and Award Committee is
responsible for administering the Company's stock option plans and has such
power and authority as is granted to it under such stock option plans.
Specifically, the Stock Option and Award Committee determines the persons to be
granted options as well as the exercise price and term of such options. The
members of the Stock Option and Award Committee are not eligible to participate
in any stock option plan they administer, except that they receive annual grants
of non-qualified stock options to purchase 15,000 shares of Common Stock. The
Stock Option and Award Committee administers the Company's 1994 Stock Option
Plan, 1996 Stock Incentive Plan and 1997 Stock Incentive Plan. It is anticipated
that such Stock Option and Award Committee or the full Board of Directors will
initially administer the 1998 Stock Option and Award Plan (the "1998 Plan") if
the 1998 Plan is approved by the stockholders at the Annual Meeting.
The Board of Directors does not have a nominating committee. This function
is performed by the Board as a whole. The Board of Directors met or acted by
unanimous written consent on seven occasions during the fiscal year ended
December 31, 1997. All directors attended at least 75% of the meetings held by
the Board and committees of which they are members.
There are no family relationships among any of the directors or executive
officers of the Company. The Company's executive officers serve in such capacity
at the pleasure of the Board of Directors.
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation for
services in all capacities paid to Dominic Chang ("Mr. Chang"), the Company's
Chairman of the Board and Chief Executive Officer, and Krishnan P. Thampi ("Mr.
Thampi"), the Company's President, Chief Operating Officer, Assistant Secretary,
Treasurer and Director (the "Named Executives") during 1995, 1996 and 1997.
Other than the Named Executives, no other executive officer received
compensation exceeding $100,000 during
4
<PAGE>
1995, 1996 or 1997. The chart below reflects the positions held by Messrs. Chang
and Thampi during the relevant periods.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------- ----------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NAME AND RESTRICTED SECURITIES LONG-TERM
PRINCIPAL OTHER ANNUAL STOCK UNDERLYING INCENTIVE ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION AWARD(S) OPTIONS PLAN PAYOUTS COMPENSATION
- ----------------------------- --------- --------- --------- ------------- ----------- ----------- ------------ -------------
DOMINIC CHANG,...............
Chairman of the Board, 1997 $ 140,000
President and Chief 1996 $ 120,000 $ 9,000(1)(2)
Executive Officer 1995 $ 65,000 $ 9,000(1) 15,000(3)
KRISHNAN P. THAMPI,..........
Chief Financial Officer,
Chief Operating Officer,
Executive Vice, President, 1997 $ 120,000 90,132( (8)
Assistant Secretary, 1996 $ 100,000 $ 7,200(1)(7) 127,500( (5)
Treasurer and Director 1995 $ 60,000 $ 7,200(1) 45,000( (6)
</TABLE>
- ------------------------
(1) Includes amounts paid to lease a car.
(2) Does not include $650,000 earned by Mr. Chang as a contingent purchase price
relating to the purchase by the Company in November 1995 of The Practice
Tee, Inc.
(3) Stock options to purchase 15,000 shares of Common Stock were granted in
March 1995 at $4.50 per share (the fair market value of the Common Stock on
the date of such grant); these options became exercisable in March 1996.
(4) Stock options to purchase 52,500 shares of Common Stock were granted in July
1996 at $15.167 per share (the fair market value of the Common Stock on the
date of such grant); 17,450 of these options are currently exercisable.
(5) Stock options to purchase 75,000 shares of Common Stock were granted in
December 1996 at $15.167 per share (the fair market value of the Common
Stock on the date of such grant); 25,000 of these options are currently
exercisable.
(6) Stock options to purchase 30,000 shares of Common Stock were granted in
November 1995 at $9.92 per share (the fair market value of the Common Stock
on the date of such grant); 20,000 of these options are currently
exercisable.
(7) Stock options to purchase 37,632 shares of common stock were granted in
March 1997 at $11.583 per share (the fair market value of the Common Stock
on the date of such grant); 12,544 of these options are currently
exercisable.
(8) Stock options to purchase 52,500 shares of Common Stock were granted in
November 1997 at $17.709 per share (the fair market value of the Common
Stock on the date of such grant); these options are not currently
exercisable.
No options were granted to Mr. Chang during the fiscal year ended December
31, 1997. The following table sets forth certain information concerning options
granted to Mr. Thampi during the fiscal year ended December 31, 1997.
5
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
--------------------------------------------------------------- ------------------------
<S> <C> <C> <C> <C> <C> <C>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE
NAME GRANTED(1) FISCAL YEAR ($/SHARE) EXPIRATION DATE 5%($) 10%($)
- ---------------------------------- ----------- --------------- ----------- -------------------- ---------- ------------
Krishnan P. Thampi................ 37,632 7.6% $ 11.583 March 20, 2007 $ 274,138 $ 694,719
52,500 10.5% $ 17.709 November 3, 2007 $ 584,686 $ 1,481,710
</TABLE>
- ------------------------
(1) All options were granted pursuant to the 1997 Stock Incentive Plan.
AGGREGATED OPTION EXERCISES DURING THE FISCAL YEAR ENDED
DECEMBER 31, 1997 AND FISCAL YEAR END OPTION VALUES
The following table sets forth certain information concerning the number and
value of securities underlying exercisable and unexercisable stock options as of
the fiscal year ended December 31, 1997 by the Named Executives. No options were
exercised by the Named Executives during the fiscal year ended December 31,
1997.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END
-------------------------- ------------------------------
<S> <C> <C> <C> <C>
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------------------ ----------- ------------- -------------- --------------
Dominic Chang......................................... 15,000 -- $ 246,250(1) --
Krishnan P. Thampi.................................... 130,001 185,132 $ 1,686,250(1) $ 1,118,402(1)
</TABLE>
- ------------------------
(1) The value of unexercised options is determined by multiplying the number of
options held by the difference between the closing price of the Common Stock
of $20.92 at December 31, 1997 as reported by the Nasdaq National Market and
the exercise price of the options.
STOCK OPTION AND AWARD PLANS
On July 19, 1994, the Board of Directors of the Company and stockholders of
the Company adopted the Company's 1994 Stock Option Plan (the "1994 Plan"). The
1994 Plan provides for the grant of options to purchase up to 450,000 shares of
Common Stock to employees, officers, directors and consultants of the Company.
Options may be either "incentive stock options" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
non-qualified options. Incentive stock options may be granted only to employees
of the Company, while non-qualified options may be issued to non-employee
directors, consultants and others, as well as to employees of the Company. On
March 6, 1996 the Board of Directors of the Company adopted, and on June 7,
1996, the stockholders approved, the Company's 1996 Stock Incentive Plan (the
"1996 Plan"). The 1996 Plan is identical to the 1994 Plan, except that the 1996
Plan provides (i) for the grant of options to purchase up to 750,000 shares of
Common Stock and (ii) an automatic grant of non-qualified stock options to
purchase 15,000 shares to each non-employee director upon his election or
appointment to the Board of Directors and annual grants (commencing on the date
the 1996 Plan was approved by stockholders) to each non-employee director of
6
<PAGE>
non-qualified stock options to purchase 15,000 shares of Common Stock at the
fair market value of the Common Stock on the date of the grant. On April 25,
1997, the Board of Directors of the Company adopted, and on June 24, 1997 the
stockholders approved, the Company's 1997 Stock Incentive Plan (the "1997
Plan"). The 1997 Plan is identical to the 1996 Plan. On April 23, 1998, the
Board of Directors of the Company adopted, and at the Annual Meeting, the
stockholders will be asked to approve, the Company's 1998 Stock Option and Award
Plan (the "1998 Plan"). The 1998 Plan is identical to the 1997 Plan except that
(i) it provides for the grant of stock awards (either outright or for a price
determined) as well as options, (ii) it provides for grants of stock awards and
options for up to 1,500,000 shares of Common Stock to those employees, officers,
directors, consultants or other individuals or entities eligible under the Plans
(as defined) to receive stock awards or options (each, a "Plan Participant") and
(iii) no Plan Participant may receive more than an aggregate of 500,000 shares
of Common Stock by grant of options and/or stock awards during the term of the
Plan.
The 1994 Plan, the 1996 Plan, the 1997 Plan and the 1998 Plan (collectively,
the "Plans") are administered by the Stock Option and Award Committee, which
determines, among other things, those individuals who receive options, the time
period during which the options may be partially or fully exercised, the number
of shares of Common Stock issuable upon the exercise of each option and the
option exercise price. The 1994 Plan also provided for an automatic grant of
non-qualified stock options to purchase 7,500 shares of Common Stock to each
non-employee director upon his election or appointment to the Board of Directors
and annual grants of non-qualified stock options to purchase 3,000 shares of
Common Stock at the fair market value of the Common Stock on the date of such
grant. Effective on June 7, 1996, such automatic grants ceased and were replaced
by the automatic grants under the 1996 Plan consisting of an automatic grant of
non-qualified stock options to purchase 15,000 shares of Common Stock to each
non-employee director upon his or her election or appointment to the Board of
Directors and annual grants of non-qualified stock options to purchase 15,000
shares of Common Stock at the fair market value on the date of such grant.
Effective upon the exhaustion of all options authorized under the 1996 Plan,
such automatic grants ceased and were replaced by the automatic grants under the
1997 Plan consisting of an automatic grant of non-qualified stock options to
purchase 15,000 shares of Common Stock to each non-employee director upon his or
her election or appointment to the Board of Directors and annual grants of
non-qualified stock options to purchase 15,000 shares of Common Stock at the
fair market value on the date of such grant. Effective upon the exhaustion of
all options authorized under the 1997 Plan, such automatic grants will cease and
will be replaced by automatic grants under the 1998 Plan (subject to stockholder
approval thereof) consisting of an automatic grant of non-qualified stock
options to purchase 15,000 shares of Common Stock to each non-employee director
upon his or her election or appointment to the Board of Directors and annual
grants of non-qualified stock options to purchase 15,000 shares of Common Stock
at the fair market value on the date of such grant.
The exercise price per share of Common Stock subject to an incentive stock
option may not be less than the fair market value per share of Common Stock on
the date the option is granted. The per share exercise price of the Common Stock
subject to a non-qualified option may be established by the Board of Directors.
The aggregate fair market value (determined as of the date the option is
granted) of Common Stock for which any person may be granted incentive stock
options which first become exercisable in any calendar year may not exceed
$100,000. No person who owns, directly or indirectly, at the time of the
granting of an incentive stock option to such person, 10% or more of the total
combined voting power of all classes of stock of the Company (a "10%
Stockholder") shall be eligible to receive any incentive stock options under the
Plans, unless the exercise price is at least 110% of the fair market value of
the shares of Common Stock subject to the option, determined on the date of
grant. Non-qualified options are not subject to such limitation.
No stock option may be transferred by a Plan Participant other than by will
or the laws of descent and distribution, and, during the lifetime of a Plan
Participant, the option will be exercisable only by the Plan Participant. In the
event of termination of employment other than by death or disability, the Plan
7
<PAGE>
Participant will have no more than three months after such termination during
which the Plan Participant shall be entitled to exercise the option, unless
otherwise determined by the Stock Option and Award Committee. Upon termination
of employment of a Plan Participant by reason of death or permanent disability,
such Plan Participant's options remain exercisable for one year thereafter to
the extent such options were exercisable on the date of such termination.
Options under the Plans must be issued within 10 years from their respective
effective dates which is July 19, 1994 in the case of the 1994 Plan, June 7 1996
in the case of the 1996 Plan, April 25, 1997 in the case of the 1997 Plan, and
April 23, 1998 in the case of the 1998 Plan, subject to stockholder approval
thereof. Incentive stock options granted under the Plans, cannot be exercised
more than 10 years from the date of grant. Incentive stock options issued to a
10% Stockholder are limited to five-year terms. All options granted under the
Plans provide for the payment of the exercise price in cash or by delivery to
the Company of shares of Common Stock having a fair market value equal to the
exercise price of the options being exercised, or by a combination of such
methods. Therefore, a Plan Participant may be able to tender shares of Common
Stock to purchase additional shares of Common Stock and may theoretically
exercise all of such Plan Participant's stock options with no investment.
Any unexercised options that expire or that terminate upon an employee's
ceasing to be employed by the Company become available again for issuance under
the 1994 Plan, the 1996 Plan, the 1997 Plan or the 1998 Plan, as the case may
be.
As of March 23, 1998, options to purchase 1,499,063 shares of Common Stock
have been granted under the Plans, of which options to purchase 475,821 shares
have been exercised. In addition, on March 8, 1995, Messrs. Chang and Thampi
were each granted options outside of the 1994 Plan to purchase 15,000 shares of
Common Stock at $4.50 per share (the fair market value of the Common Stock on
the date of such grant) in connection with an amendment to their respective
employment agreements. These options became exercisable in March 1996 and are
still outstanding. In addition, on March 7, 1996, various employees of the
Company were granted options outside of the Plans to purchase an aggregate of
80,250 shares of Common Stock at $13.25 (the fair market value of the Common
Stock on the date of such grant), which options vest ratably over three years.
On September 22, 1997, 18,750 options were granted outside of the Plans to a
consultant at an exercise price of $15.083. No options or stock awards have yet
been granted under the 1998 Plan. On March 16, 1998 the Company did make an
award outside the 1998 Plan of 22,500 shares of restricted stock to Jeffrey Key.
Such award vests over three years and is not subject to stockholder approval.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements, each expiring on
December 31, 1999, with each of Mr. Chang and Mr. Thampi, pursuant to which each
will devote at least 95% of his business time to the affairs of the Company.
Pursuant to his employment agreement, Mr. Chang received a base salary of
$120,000 in 1996, a base salary of $140,000 in 1997 and will receive a base
salary of $140,000 and $160,000 in 1998 and 1999, respectively. Such base
salaries are subject to additional increase within the discretion of the Board
of Directors which will take into account, among other things, the performance
of the Company and the performance, duties and responsibilities of Mr. Chang.
Mr. Chang also receives use of a Company-leased automobile and will receive such
bonuses as may be determined by the Board of Directors throughout the term of
his employment agreement. The employment agreement also provides that Mr. Chang
will not compete with the Company for two years after the termination of his
employment.
Pursuant to his employment agreement, Mr. Thampi received a base salary of
$100,000 in 1996, a base salary of $120,000 in 1997 and will receive a base
salary of $120,000 and $140,000 in 1998 and 1999, respectively. Such base
salaries are subject to additional increase within the discretion of the Board
of Directors which will take into account, among other things, the performance
of the Company and the performance, duties and responsibilities of Mr. Thampi.
Mr. Thampi also receives use of a Company-
8
<PAGE>
leased automobile and will receive such bonuses as may be determined by the
Board of Directors throughout the term of his employment agreement. The
employment agreement also provides that Mr. Thampi will not compete with the
Company for two years after the termination of his employment.
In March 1998, the Company entered into a three-year employment agreement
with Jeffrey C. Key pursuant to which Mr. Key will serve as Chief Financial
Officer of the Company and will receive an annual base salary of $130,000,
$140,000 and $150,000 during each year of the three-year term, respectively.
Such base salary is subject to additional increase within the discretion of the
Board of Directors which will take into account, among other things, the
performance of the Company and the performance, duties and responsibilities of
Mr. Key. Mr. Key also received 90,000 stock options under the Company's 1997
Plan and 22,500 restricted shares of the Company's Common Stock, all of which
are subject to a three-year vesting schedule. Such restricted shares are
forfeited if Mr. Key is not employed by the Company on the date such shares are
scheduled to vest. The employment agreement also provides that Mr. Key will not
compete with the Company for one year after the termination of his employment.
In addition, the employment agreement provides that if following a change in
control of the Company (as defined in the employment agreement), Mr. Key
terminates his employment for good reason, he will be entitled to receive a lump
sum payment equal to his base salary for the remaining term of the employment
agreement, all previously earned and accrued benefits, continued full benefit
coverage under all of the Company's benefit plans and fully vested benefits
under all plans, including stock option plans.
The Company does not have written employment agreements with Messrs.
Hasslinger, Kelleher, Krause, Schickler or Potocki or with Ms. Charles or Ms.
Santorufo, its other officers.
DIRECTOR'S COMPENSATION
The Company's employee directors do not receive any additional compensation
for their services as directors. Non-employee directors do not receive a fee for
serving as such, but are reimbursed for expenses. In addition, non-employee
directors participate in the Company's Plans. The 1994 Plan provided for an
automatic grant of non-qualified stock options to purchase 7,500 shares of
Common Stock to each non-employee director upon his or her election or
appointment to the Board of Directors and annual grants of non-qualified stock
options to purchase 3,000 shares of Common Stock at the fair market value on the
date of such grant. Effective on June 7, 1996, such automatic grants ceased and
were replaced by the automatic grants under the 1996 Plan consisting of an
automatic grant of non-qualified stock options to purchase 15,000 shares of
Common Stock to each non-employee director upon his or her election or
appointment to the Board of Directors and annual grants of non-qualified stock
options to purchase 15,000 shares of Common Stock at the fair market value on
the date of such grant. Effective July 1, 1997, automatic grants under the 1996
Plan were terminated and were replaced by automatic grants under the 1997 Plan
consisting of an automatic grant of non-qualified stock options to purchase
15,000 shares of Common Stock to each non-employee director upon his or her
election or appointment to the Board of Directors and annual grants of
non-qualified stock options to purchase 15,000 shares of Common Stock at the
fair market value on the date of such grant. Upon stockholder approval of the
1998 Plan, such automatic grants will continue once the 1997 Plan is exhausted.
REPORT ON REPRICING OF STOCK OPTIONS
The Company did not adjust or amend the exercise price of stock options
previously awarded to Mr. Chang or Mr. Thampi during the last fiscal year.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee consists of Dominic Chang, James Ganley
and Yupin Wang, each of whom is a non-employee member of the Company's Board of
Directors, with the exception of Mr. Chang, who is also the Company's Chief
Executive Officer and Chairman of the Board.
9
<PAGE>
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
The Compensation Committee of the Board of Directors is responsible for
determining the compensation of executive officers of the Company, other than
compensation awarded pursuant to the Company's Plans which are administered by
the Stock Option and Award Committee of the Board of Directors. Mr. Chang
abstains from any vote regarding his compensation.
The Stock Option and Award Committee is responsible for granting and setting
the terms of stock options and awards under the 1994 Plan, the 1996 Plan, the
1997 Plan and, upon stockholder approval thereof, the 1998 Plan. Messrs. Ganley
and Wang serve on the Stock Option and Award Committee.
GENERAL POLICIES REGARDING COMPENSATION OF EXECUTIVE OFFICERS
The Company's executive compensation policies are intended (1) to attract
and retain high quality managerial and executive talent and to motivate these
individuals to maximize stockholder returns, (2) to afford appropriate
incentives for executives to produce sustained superior performance, and (3) to
reward executives for superior individual contributions to the achievement of
the Company's business objectives. The Company's compensation structure
typically consists of base salary and stock options or awards. Together, these
components link each executive's compensation directly to individual and Company
performance.
SALARY. Base salary levels reflect individual positions, responsibilities,
experience, leadership and potential contribution to the success of the Company.
Actual salaries vary based on the Compensation Committee's assessment of the
individual executive's performance and the Company's performance.
STOCK OPTIONS AND STOCK AWARDS. Stock options, which are granted at the
fair market value of the Common Stock on the date of grant, and stock awards,
which vest over time, are currently the Company's sole long-term compensation
vehicle. Such stock options and awards are intended to provide employees with
sufficient incentive to manage from the perspective of an owner with an equity
stake in the business.
In determining the size of individual options or stock grants, the Stock
Option and Award Committee considers the aggregate number of shares available
for grant, the number of individuals to be considered for an award, and the
range of potential compensation levels that the options and stock awards may
yield. The number and timing of grants to executive officers are decided by the
Stock Option and Award Committee based on its subjective assessment of the
performance of each grantee. In determining the size and timing of options and
stock awards, the Stock Option and Award Committee weighs any factors it
considers relevant and gives such factors the relative weight it considers
appropriate under the circumstances then prevailing. While an ancillary goal of
the Stock Option and Award Committee in awarding stock options and stock awards
is to increase the stock ownership of the Company's management, the Stock Option
and Award Committee does not, when determining the amount of awards, consider
the amount of stock already owned by an officer (except as required by the terms
of the 1998 Plan). The Stock Option and Award Committee believes that to do so
could have the effect of inappropriately or inequitably penalizing or rewarding
executives based upon their personal decisions as to stock ownership and option
exercises.
In 1993, the Internal Revenue Code was amended to limit the deductibility of
compensation paid to certain executives in excess of $1 million. Compensation
not subject to the limitation includes certain compensation payable solely
because an executive attains performance goals ("performance-based
compensation"). The Company intends that stock options granted under the Plans
with an exercise price equal to or greater than the fair market value of the
shares at the time of the grant will qualify as performance-based compensation.
Stock awards will not qualify as performance-based compensation. The Company's
compensation deduction for a particular executive's total compensation,
including compensation realized with respect to stock awards, will be limited to
$1 million. The Compensation Committee's philosophy with respect to the $1
million cap on the tax deductibility of executive compensation is to maximize
the benefit
10
<PAGE>
of tax laws by seeking performance-based exemptions and related stockholder
approval where consistent with the Company's compensation policies and
practices.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Mr. Chang's base salary for the fiscal year ended December 31, 1997 was
determined by the terms of his employment agreement with the Company which is
described elsewhere in this proxy statement. Additionally, Mr. Chang was granted
certain stock options in fiscal 1995 which are listed elsewhere in this proxy
statement. The members of the Compensation and Stock Option and Award Committees
of the Company believe that Mr. Chang's base salary level and stock option
grants are modest in comparison to the outstanding contributions Mr. Chang has
made to the Company's growth and financial position during the last fiscal year.
<TABLE>
<CAPTION>
COMPENSATION COMMITTEE STOCK OPTION AND AWARD COMMITTEE
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Dominic Chang James Ganley
James Ganley Yupin Wang
Yupin Wang
</TABLE>
11
<PAGE>
PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return on the
Common Stock for the last 37 months with the cumulative total return on the
NASDAQ Stock Market (U.S.) Index and the Dow Jones Other Recreational Products
Index over the same period (assuming the investment of $100 in the Common Stock,
the NASDAQ Stock Market-(U.S.) Index and the Dow Jones Other Recreational
Products Index on November 17, 1994, and the reinvestment of all dividends).
COMPARISON OF 37 MONTH CUMULATIVE TOTAL RETURN*
AMONG FAMILY GOLF CENTERS, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE DOW JONES OTHER RECREATIONAL PRODUCTS & SERVICE
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF 37 MONTH CUMULATIVE TOTAL RETURN*
<S> <C> <C>
AMONG FAMILY GOLF CENTERS, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE DOW JONES OTHER RECREATIONAL PRODUCTS INDEX
DOLLARS
FAMILY GOLF CENTERS, INC.
11/17/94 100
12/94 98
12/95 298
12/96 492
12/97 512
*$100 INVESTED ON 11/17/94 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
<CAPTION>
COMPARISON OF 37 MONTH CUMULATIVE TOTAL RETURN*
<S> <C>
AMONG FAMILY GOLF CENTERS, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE DOW JONES OTHER RECREATIONAL PRODUCTS INDEX
DOLLARS
NASDAQ STOCK MARKET (U.S.)
11/17/94 100
12/94 98
12/95 139
12/96 171
12/97 210
*$100 INVESTED ON 11/17/94 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
<CAPTION>
COMPARISON OF 37 MONTH CUMULATIVE TOTAL RETURN*
AMONG FAMILY GOLF CENTERS, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE DOW JONES OTHER RECREATIONAL PRODUCTS INDEX
DOLLARS
DOW JONES OTHER RECREATIONAL PRODUCTS & SER-
VICES
11/17/94 100
12/94 104
12/95 137
12/96 164
12/97 203
*$100 INVESTED ON 11/17/94 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
</TABLE>
12
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 26, 1998
regarding the beneficial ownership of the Company's Common Stock by (i) each
person known by the Company to own beneficially more than 5% of the Company's
Common Stock, (ii) each director of the Company, including Messrs. Chang and
Thampi, and (iii) all directors and executive officers of the Company as a
group. Except as otherwise indicated and subject to community property laws
where applicable, the persons named in the table above have sole voting and
dispositive power with respect to the shares of Common Stock shown as
beneficially owned by them. Information as to The TCW Group, Inc., Scudder
Kemper Investments, Inc., Wells Fargo Bank, N.A. and ICM Asset Management Inc.
was derived from the Schedule 13G filed by each such stockholder, and, except
for the percentage of ownership, reflects the information contained in the
Schedule 13G as of the date such Schedule 13G was filed.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF
OF BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING SHARES
- ----------------------------------------------------- ----------------------- ---------------------------
<S> <C> <C>
Dominic Chang (1).................................... 3,749,001(2)(3) 19.2%
The TCW Group, Inc. (4).............................. 1,817,700 9.3%
Scudder Kemper Investments, Inc.(9).................. 1,555,620 7.9%
Wells Fargo Bank, N.A.(10)........................... 1,294,830 6.6%
ICM Asset Management, Inc.(11)....................... 1,156,650 5.9%
Krishnan P. Thampi (1)............................... 280,466(7) 1.4%
Jimmy C.M. Hsu (1)................................... 171,875(5)(6) *
James Ganley (1)..................................... 43,250(12) *
Yupin Wang (1)....................................... 5,000(13) *
All directors and executive officers of the Company
as a group (thirteen persons)...................... 4,378,584(2)(3) (8) 22.4%
</TABLE>
- ------------------------
* Less than 1%.
(1) The address of such stockholder is: c/o Family Golf Centers, Inc., 225
Broadhollow Road, Melville, New York 11747.
(2) Includes 1,500 shares of Common Stock owned by Mr. Chang's children.
Includes 15,000 shares of Common Stock issuable upon exercise of options
which are currently exercisable.
(3) Includes an aggregate of 1,107,501 shares pledged to banks to secure
personal loans to Mr. Chang.
(4) The address of The TCW Group, Inc. is: 865 Figueroa Street, Los Angeles,
California 90017.
(5) Does not include 99,375 shares of Common Stock beneficially owned by Mr.
Hsu's brother. Mr. Hsu disclaims beneficial ownership of his brother's
shares.
(6) Includes 15,500 shares of Common Stock issuable upon exercise of options
which are currently exercisable.
(7) Includes 142,541 shares of Common Stock issuable upon exercise of options
which are currently exercisable.
(8) Includes 127,194 shares of Common Stock in addition to those referred to in
notes (2) (3), (6), (7) above, issuable upon exercise of options which are
currently exercisable.
(9) The address of Scudder Kemper Investments ("SKI") is: 345 Park Avenue, New
York, NY 10154. SKI is an Investment Advisor registered under Section 208 of
the Investment Advisors Act of 1940. SKI provides investment advice to
individuals, institutional clients and investment companies registered under
Section 8 of the Investment Company Act of 1940 ("Managed Portfolios"). As a
result of its role of advisor to such entities, SKI may be deemed to be the
beneficial owner of the 1,555,620 shares
13
<PAGE>
of Common Stock in the Company, and has neither the right to receive
dividends from nor the proceeds from the sale of any such shares by the
Managed Portfolios. SKI Managed Portfolios have the right to receive all
dividends and proceeds from the sale of such shares of Common Stock. SKI
disclaims beneficial ownership of such shares.
(10) The address of the Wells Fargo Bank, NA is: 343 Sansome Street, 3rd Fl.,
San Francisco, CA 94163.
(11) The address of the ICM Asset Management, Inc. is: 601 W. Main Avenue, Suite
600, Spokane, WA 99201.
(12) Includes 15,500 shares of Common Stock issuable upon exercise of options
which are currently exercisable.
(13) Includes 5,000 shares of Common Stock issuable upon exercise of options
which are currently exercisable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Chang is a guarantor of $3,000,000 loaned to the Company by ORIX USA
Corporation in May 1995. Such loan matures in May 2000.
Mr. Hsu served as a consultant to the Company's retail area and ice rink
operation during the period from October 1, 1997 to December 31, 1997. Mr. Hsu
incurred development costs of $120,000 which were reimbursed by the Company by
December 31, 1997. Mr. Hsu is also entitled to $200,000 from the Company for
serving as a consultant, $12,000 of which was paid to him by December 31, 1997.
In November 1997, Mr. Hasslinger incurred indebtedness to the Company in the
amount of $10,000. Such indebtedness was repaid on in March 1998 without
interest. .
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who beneficially own more than ten percent of a registered class of the
Company's equity securities, to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of Common Stock
and the other equity securities of the Company. Officers, directors, and persons
who beneficially own more than ten percent of a registered class of the
Company's equities are required by the regulations of the Securities and
Exchange Commission to furnish the Company with copies of all Section 16(a)
forms they file. To the Company's knowledge, based solely on review of the
copies of such reports furnished to the Company and written representations that
no other reports were required, during the fiscal year ended December 31, 1997,
all Section 16(a) filing requirements applicable to its officers, directors, and
greater than ten percent beneficial owners were complied with, except one report
was filed late by Mr. Hasslinger.
PROPOSAL 2
RATIFICATION OF INDEPENDENT ACCOUNTANTS
Richard A. Eisner & Company, LLP has served as independent accountants for
the Company since its inception in 1994. The Board of Directors of the Company
has appointed Richard A. Eisner & Company, LLP as independent accountants for
the 1998 fiscal year and to render other professional services as required.
The appointment of Richard A. Eisner & Company, LLP is being submitted to
stockholders for ratification.
14
<PAGE>
Representatives of Richard A. Eisner & Company, LLP will be present at the
Annual Meeting, where they will have the opportunity to make a statement if they
desire to do so, and are expected to be available to respond to appropriate
questions.
STOCKHOLDER VOTE REQUIRED
The affirmative vote of a majority of the shares of the Company's voting
Common Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote with respect thereto is required to ratify the appointment of
public accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF RICHARD A.
EISNER & COMPANY, LLP AS INDEPENDENT AUDITORS OF THE COMPANY, WHICH IS
DESIGNATED AS PROPOSAL 2 ON THE ENCLOSED PROXY CARD.
PROPOSAL 3
INTRODUCTION OF THE
1998 STOCK OPTION AND AWARD PLAN
The Company's Board of Directors has recommended, and at the Annual Meeting
the stockholders will be asked to approve, the adoption of the 1998 Stock Option
and Award Plan (the "1998 Plan"). A description of the 1998 Plan, which Plan is
attached hereto as Annex A, appears below.
THE 1997 PLAN. If adopted by the stockholders, the 1998 Plan will
supplement any grants of options made under the Plans. Currently, 441,938 shares
of Common Stock remain available for future grant under the Plans, of which an
aggregate of 45,000 are intended to be granted to non-employee directors of the
Company immediately following the Annual Meeting pursuant to the automatic grant
provisions contained in the 1997 Plan.
STOCK OPTION AND AWARD PLAN
The 1998 Plan provides for the grant of options and stock awards for up to
1,500,000 shares of Common Stock to employees, officers, directors and
consultants of the Company. No Plan Participant (as defined) may receive more
than an aggregate of 500,000 shares of Common Stock by grant of options and/ or
stock awards under the 1998 Plan. Options may be either "incentive stock
options" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), or non-qualified options. Incentive stock options may
be granted only to employees of the Company or any Affiliate (as defined in the
1998 Plan), while non-qualified options or stock awards may be granted to any
director, employee, officer, agent, consultant, or independent contractor of the
Company or any Affiliate thereof, whether an individual or entity (each, a "Plan
Participant").
With respect to the grant of options, the terms of the 1998 Plan are
identical to the terms of the 1997 Plan, except that no Plan Participant may
receive more than an aggregate of 500,000 shares of Common Stock by grant of
options and/or stock awards under the 1998 Plan. Once no more options are
available under the 1997 Plan, then options will be granted under the 1998 Plan,
if approved.
Stock awards consist of the sale or transfer by the Company to a Plan
Participant of one or more shares of Common Stock which, unless otherwise
determined by the Stock Option and Award Committee, are subject to (i)
restrictions on their sale or other transfer by such Plan Participant, (ii) the
right of the Company to repurchase all or part of such shares from the Plan
Participant in the event that the conditions specified in the applicable award
are not satisfied prior to the end of the applicable restriction period
established for such award and (iii) such other conditions or restrictions as
the Committee may deem advisable. The Stock Option and Award Committee will
determine the terms of the transfer restrictions, the conditions of the
Company's right to repurchase and the price, if any, at which stock will be sold
to a
15
<PAGE>
Plan Participant. Such terms, conditions and price may vary from time to time
and among Plan Participants. In addition, the price at which stock may be sold
may be less than the fair market value of the shares at the date of sale. Stock
may also be transferred by the Company to a Plan Participant, without payment,
as additional compensation for services to the Company. The number of shares
sold or transferred pursuant to any award will be determined by the Stock Option
and Award Committee. Subject to these restrictions and the other requirements of
the 1998 Plan, a recipient of an award shall have all of the rights of a
stockholder as to those shares, including the right to vote and receive
dividends as to these shares.
The 1998 Plan will be administered by the Stock Option and Award Committee,
which determines, among other things, those individuals who receive options or
awards, the time period during which the options may be partially or fully
exercised, the terms of the restrictions, if any, on awards, the number of
shares of Common Stock issued as an award or issuable upon the exercise of each
option and the option exercise price and the award purchase and repurchase
prices. The 1998 Plan also provides for an automatic grant of non-qualified
stock options to purchase 15,000 shares of Common Stock to each non-employee
director upon his election or appointment to the Board of Directors and annual
grants of non-qualified stock options to purchase 15,000 shares of Common Stock
at the fair market value of the Common Stock on the date of such grant.
The exercise price per share of Common Stock subject to an incentive stock
option may not be less than the fair market value per share of Common Stock on
the date the option is granted. The per share exercise price of the Common Stock
subject to a non-qualified option may be established by the Board of Directors.
The aggregate fair market value (determined as of the date the option is
granted) of Common Stock for which any person may be granted incentive stock
options which first become exercisable in any calendar year may not exceed
$100,000. No person who owns, directly or indirectly, at the time of the
granting of an incentive stock option to such person, 10% or more of the total
combined voting power of all classes of stock of the Company (a "10%
Stockholder") shall be eligible to receive any incentive stock options under the
Plan unless the exercise price is at least 110% of the fair market value of the
shares of Common Stock subject to the option, determined on the date of grant.
Non-qualified options are not subject to such limitation.
No stock option may be transferred by a Plan Participant other than by will
or the laws of descent and distribution, and, during the lifetime of a Plan
Participant, the option will be exercisable only by the Plan Participant. In the
event of termination of employment other than by death or disability, the Plan
Participant will have no more than three months after such termination during
which the Plan Participant shall be entitled to exercise the option, unless
otherwise determined by the Stock Option and Award Committee. Upon termination
of employment of a Plan Participant by reason of death or permanent disability,
such Plan Participant's options remain exercisable for one year thereafter to
the extent such options were exercisable on the date of such termination.
Options under the 1998 Plan must be issued within 10 years from the
effective date of the Plan which will be April 23, 1998 if the stockholders of
the Company approve the adoption of the 1998 Plan. Incentive stock options
granted under the 1998 Plan cannot be exercised more than 10 years from the date
of grant. Incentive stock options issued to a 10% Stockholder are limited to
five-year terms. All options granted under the Plan provide for the payment of
the exercise price in cash or by delivery to the Company of shares of Common
Stock having a fair market value equal to the exercise price of the options
being exercised, or by a combination of such methods. Therefore, a Plan
Participant may be able to tender shares of Common Stock to purchase additional
shares of Common Stock and may theoretically exercise all of such Plan
Participant's stock options with no investment.
Any unexercised options that expire or that terminate upon an employee's
ceasing to be employed by the Company and any restricted stock awards
repurchased or otherwise forfeited to the Company become available again for
issuance under the 1998 Plan.
16
<PAGE>
The 1998 Plan may be terminated or amended at any time by the Board of
Directors except that stockholder approval is required if the amendment is
within 12 months before or after adoption of the Plan and such approval is
necessary to comply with any applicable tax or regulatory requirement, including
any such approval as may be necessary to satisfy the requirements for exemptive
relief under Rule 16b-3 of the Exchange Act or any successor provision. The 1998
Plan shall terminate on April 22, 2008, unless terminated prior thereto by
action of the Board. No further grants shall be made from the 1998 Plan after
termination; provided, however, that termination shall not affect the right of
any Plan Participant with respect to grants made prior to termination.
The vesting of outstanding options or restricted stock awards under the 1998
Plan will be subject to acceleration upon certain changes in the ownership or
control of the Company. The acceleration of the vesting of options or restricted
stock awards in the event of such changes in control may be seen as an anti-
takeover provision and may have the effect of discouraging a merger proposal, a
takeover attempt or other efforts to gain control of the Company.
It is estimated that approximately 400 individuals are currently eligible to
participate in the 1998 Plan.
REGISTRATION OF SHARES ISSUED UNDER THE 1998 PLAN
The Company has registered the 450,000 shares authorized under the 1994
Plan, the 750,000 shares authorized under the 1996 Plan and the 750,000 shares
authorized under the 1997 Plan under the Securities Act of 1933, as amended (the
"Securities Act"). The Company intends that the 1,500,000 shares to be reserved
for and issued under the 1998 Plan, for which approval is now sought, will be
registered under the Securities Act. Such registration, if completed, would in
most cases permit the unrestricted resale in the public market of shares issued
pursuant to the 1998 Plan.
NEW PLAN BENEFITS--1998 STOCK OPTION AND AWARD PLAN
The Company has not issued any options or awards to purchase shares of
Common Stock under the 1998 Plan. The Company has not issued any options or
awards under the 1998 Plan to (i) the Company's Chief Executive Officer,
Chairman of the Board and President, (ii) any current executive officer, (iii)
any current director who is not an executive officer, (iv) any director or
nominee for election as a director and (v) any associate of any of the persons
referenced in (i) through (iv) above. The Company does not currently know nor is
it determinable the number of options or awards that the Company will grant
under the 1998 Plan to any of the aforementioned persons, except for the annual
automatic grant of options to purchase 15,000 shares of Common Stock to each
non-employee director of the Company at the fair market value of the Common
Stock on the date of such grant. On March 16, 1998, the Company did make an
award outside the 1998 Plan of 22,500 shares of restricted stock to Jeffrey Key.
Such award vests over three years and is not subject to stockholder approval.
17
<PAGE>
NEW PLAN BENEFITS
1998 STOCK OPTION AND AWARD PLAN
<TABLE>
<CAPTION>
NUMBER OF
SHARES UNDERLYING
NAME AND POSITION DOLLAR VALUE OPTIONS
- --------------------------------------------------------------------------------- ----------------- ---------------------
<S> <C> <C>
Dominic Chang.................................................................... 0 --
Chairman of the Board and Chief Executive Officer
Krishnan P. Thampi............................................................... 0 --
President, Chief Operating Officer, Assistant Secretary, Treasurer and Director
Executive officers as a group.................................................... 0 --
Non-executive-directors as a group............................................... 0 --
Nominees for election as directors as a group.................................... 0 --
Non-executive employees as a group............................................... 0 --
</TABLE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE 1998 PLAN UNDER CURRENT LAW
The following discussion is only a summary of the principal federal income
tax consequences of the grant of incentives under the 1998 Plan and is based on
existing federal law, which is subject to change, in some cases retroactively.
This discussion is also qualified by the particular circumstances of each Plan
Participant, which may substantially alter or modify the federal income tax
consequences herein discussed.
The Taxpayer Relief Act of 1997 (the "1997 Tax Act") significantly changed
the tax treatment of long-term capital gains for individuals. Under the 1997 Tax
Act, the maximum capital gains tax rates for individuals are: (i) 20% on gains
from the sales of capital assets held for more than 18 months, and (ii) 28% on
gains from sales of capital assets held for more than 12 months but not more
than 18 months. In contrast, the maximum individual ordinary income tax rate is
39.6%. The following discussion assumes that the shares of Common Stock acquired
directly or upon exercise of an option constitute capital assets in the Plan
Participant's hands.
INCENTIVE STOCK OPTIONS. A Plan Participant will recognize no taxable income
at the time an incentive stock option is granted, vests or is exercised. If the
Plan Participant makes no disposition of the acquired shares within two years
after the date of grant of the incentive stock option, or within one year after
the transfer of such shares to the Plan Participant, any gain or loss that is
realized on a subsequent disposition of such shares will be treated as long-term
capital gain or loss. As to options exercised, the excess, if any, of the fair
market value of the shares on the date of exercise over the option price will be
an item of tax preference for purposes of computing the Plan Participant's
alternative minimum tax.
If the foregoing holding period requirements are not satisfied, the Plan
Participant will realize (i) ordinary income for federal income tax purposes in
the year of the disqualifying disposition in an amount equal to the lesser of
(a) the excess, if any, of the fair market value of the shares on the date of
exercise over the option price thereof, or (b) the excess, if any, of the
selling price over the Plan Participant's adjusted basis of such shares
(provided that the disqualifying disposition is a sale or exchange with respect
to which a loss (if sustained) would be recognized by such individual) and (ii)
provided that the disqualifying disposition is made more than one year after the
shares are transferred to the Plan Participant, long-term capital gain equal to
the excess, if any, of the amount realized upon the disposition of shares over
the fair market value of such shares on the date of exercise.
NON-QUALIFIED OPTIONS. A Plan Participant will recognize no taxable income
at the time a non-qualified stock option is granted or vests. A Plan Participant
will realize ordinary income in the year of exercise of a non-qualified stock
option measured by the difference between the fair market value on the exercise
date of the shares transferred and the option price.
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<PAGE>
STOCK AWARDS. A purchaser or recipient of restricted stock normally will
recognize no taxable income at the time such award is granted. A purchaser or
recipient of such award normally will realize taxable income on the date the
shares become transferable or are no longer subject to a substantial risk of
forfeiture or on the date of their earlier disposition. The amount of such
taxable income will equal the amount by which the fair market value of the
shares of Common Stock on the date such restrictions lapse (or any earlier date
on which the shares are disposed of) exceeds their purchase price, if any. An
employee may elect under Section 83(b) of the Code, however, to include in
income in the year of purchase or grant the excess of the fair market value of
the shares of Common Stock (without regard to any restrictions) on the date of
purchase or grant over its purchase price.
A purchaser or recipient of Common Stock transferred without restrictions
will realize ordinary income in the year of the award in an amount equal to the
amount by which the fair market value of the shares of Common Stock on the date
of the award exceeds their purchase price, if any.
DEDUCTIONS FOR FEDERAL INCOME TAX PURPOSES. The Company will be entitled
(provided it satisfies certain reporting requirements) to a deduction for
federal income tax purposes at the same time and in the same amount as the Plan
Participant is considered to be in receipt of compensation income in connection
with the exercise of non-qualified stock options or, in the case of an incentive
stock option, a disqualifying disposition of shares received upon exercise
thereof. If the holding period requirements outlined above are met, no deduction
will be available to the Company in connection with an incentive stock option.
In the case of a stock award, the Company will be entitled (provided it
satisfies certain reporting requirements) to a deduction for federal income tax
purposes at the same time and in the same amount as the stock award recipient is
considered to be in receipt of compensation income in connection with the
receipt of unrestricted stock, the lapse of restrictions with respect to
restricted stock or the election by the employee in the year of the award to
include the appropriate amount with respect to such award in income under
Section 83(b) of the Code. In addition, the Company will be entitled to a
deduction with respect to dividends paid on stock awards prior to the vesting of
such awards and with respect to which no Section 83(b) election has been made by
the recipient.
Under the Revenue Reconciliation Act of 1993, for fiscal years beginning
after January 1, 1994, the Company may not be able to deduct compensation to
certain employees to the extent compensation exceeds one million dollars per tax
year per individual employee. Covered employees include the chief executive
officer and the four other highest compensated officers of the Company for that
tax year. Certain performance-based compensation including stock options are
exempt provided that, among other things, the stock options are granted by a
compensation committee of the Board of Directors which is comprised solely of
two or more outside directors; the Plan under which the option is granted states
the maximum number of shares with respect to which options may be granted during
a specified period to any employee; and the plan under which the options are
granted is approved by stockholders. The Company intends that stock options
issued under the 1998 Plan with an exercise price equal to or greater than the
fair market value of the shares at the time of the grant will qualify as
performance-based compensation. Stock awards issued under the 1998 Plan will not
qualify as performance-based compensation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE COMPANY'S
1998 STOCK OPTION AND AWARD PLAN, WHICH IS DESIGNATED AS PROPOSAL 3 ON THE
ENCLOSED PROXY CARD.
ANNUAL REPORT
The Annual Report of the Company for the fiscal year ended December 31, 1997
is being mailed to stockholders with this proxy statement.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be considered for inclusion in the proxy
statement for presentation at the Company's 1999 Annual Meeting of Stockholders
must be received at the Company's offices at 225
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Broadhollow Road, Melville, New York 11747 no later than February 15, 1999, for
inclusion in the Company's proxy statement and form of proxy relating to such
meeting. All proposals must comply with applicable Commission rules and
regulations.
OTHER MATTERS
The Board of Directors is not aware of any other matter other than those set
forth in this proxy statement that will be presented for action at the Annual
Meeting. If other matters properly come before the Annual Meeting, the persons
named as proxies intend to vote the shares they represent in accordance with
their best judgment in the interest of the Company.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1997 is incorporated herein by reference.
THE COMPANY UNDERTAKES TO PROVIDE ITS STOCKHOLDERS WITHOUT CHARGE A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES FILED THEREWITH. WRITTEN REQUESTS FOR SUCH REPORT SHOULD BE ADDRESSED
TO THE OFFICE OF THE SECRETARY, FAMILY GOLF CENTERS, INC., 225 BROADHOLLOW ROAD,
MELVILLE, NEW YORK 11747.
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<PAGE>
ANNEX A
FAMILY GOLF CENTERS, INC.
1998 STOCK OPTION AND AWARD PLAN
APPROVED AND ADOPTED BY THE BOARD OF DIRECTORS ON APRIL 23, 1998
SECTION 1. PURPOSE. The purpose of the Family Golf Centers, Inc. 1998
Stock Option and Award Plan (the "Plan") is to provide a means whereby directors
and selected employees, officers, agents, consultants, and independent
contractors of Family Golf Centers, Inc., a Delaware corporation (the
"Company"), or of any parent or subsidiary (as defined in subsection 5.5 hereof
and referred to hereinafter as "Affiliates") thereof, may be granted incentive
stock options and/or nonqualified stock options to purchase shares of common
stock, $.01 par value ("Common Stock") and/or restricted stock awards in order
to attract and retain the services or advice of such directors, employees,
officers, agents, consultants, and independent contractors and to provide
additional incentive for such persons to exert maximum efforts for the success
of the Company and its Affiliates by encouraging stock ownership in the Company.
SECTION 2. ADMINISTRATION. Subject to Section 2.3 hereof, the Plan shall
be administered by the Board of Directors of the Company (the "Board") or, in
the event the Board shall appoint and/or authorize a committee of two or more
members of the Board to administer the Plan, by such committee (the "Stock
Option and Award Committee"). The administrator of the Plan shall hereinafter be
referred to as the "Plan Administrator".
The foregoing notwithstanding, with respect to grants to be made to
directors: (a) the Plan Administrator shall be constituted so as to meet the
requirements of Section 16(b) of the Exchange Act and Rule 16b-3 thereunder,
each as amended from time to time, or (b) if the Plan Administrator cannot be so
constituted, no options or awards shall be granted under the Plan to any
directors.
2.1 PROCEDURES. The Board shall designate one of the members of the Plan
Administrator as chairman. The Plan Administrator may hold meetings at such
times and places as it shall determine. The acts of a majority of the members of
the Plan Administrator present at meetings at which a quorum exists, or acts
approved in writing by all Plan Administrator members, shall be valid acts of
the Plan Administrator.
2.2 RESPONSIBILITIES. Except for the terms and conditions explicitly set
forth herein, the Plan Administrator shall have the authority, in its
discretion, to determine all matters relating to the options and stock awards to
be granted under the Plan, including, without limitation, selection of whether
an option will be an incentive stock option or a nonqualified stock option,
selection of restrictions to be placed on awarded stock (if any), selection of
the individuals to be granted options and/or awards, the number of shares to be
subject to each option and/or stock award, the option exercise price per share,
the purchase price and/or repurchase price of restricted stock (if any), the
timing of grants and all other terms and conditions of the options and stock
awards. Grants under the Plan need not be identical in any respect, even when
made simultaneously. The Plan Administrator may also establish, amend, and
revoke rules and regulations for the administration of the Plan. The
interpretation and construction by the Plan Administrator of any terms or
provisions of the Plan or any option or stock award issued hereunder, or of any
rule or regulation promulgated in connection herewith, shall be conclusive and
binding on all interested parties, so long as such interpretation and
construction with respect to incentive stock options corresponds to the
requirements of Internal Revenue Code of 1986, as amended (the "Code") Section
422, the regulations thereunder, and any amendments thereto. The Plan
Administrator shall not be personally liable for any action made in good faith
with respect to the Plan or any option or stock award granted thereunder.
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<PAGE>
2.3 RULE 16B-3 AND SECTION 16(B) COMPLIANCE; BIFURCATION OF PLAN. It is
the intention of the Company that the Plan comply in all respects with Rule
16b-3 under the Securities Exchange Act of 1934 (the "Exchange Act") to the
extent applicable, and in all events the Plan shall be construed in favor of its
meeting the requirements of Rule 16b-3. If any Plan provision is later found not
to be in compliance with such Rule, such provision shall be deemed null and
void. Notwithstanding anything in the Plan to the contrary, the Board, in its
absolute discretion, may bifurcate the Plan so as to restrict, limit, or
condition the use of any provision of the Plan to participants who are officers
and directors or other persons subject to Section 16(b) of the Exchange Act
without so restricting, limiting, or conditioning the Plan with respect to other
participants.
SECTION 3. STOCK SUBJECT TO THE PLAN. The stock subject to this Plan shall
be the Common Stock, presently authorized but unissued or subsequently acquired
by the Company. Subject to adjustment as provided in Section 7 hereof, the
aggregate amount of Common Stock to be awarded as a stock award and to be
delivered upon the exercise of all options granted under the Plan shall not
exceed in the aggregate 1,500,000 shares as such Common Stock was constituted on
the effective date of the Plan. If any stock award shall be forfeited to or
repurchased by the Company or if any option granted under the Plan shall expire,
be surrendered, exchanged for another option, cancelled, or terminated for any
reason without having been exercised in full, the forfeit or repurchased shares
subject to such stock award or the unpurchased shares subject to such option, as
the case may be, shall thereupon again be available for purposes of the Plan,
including for replacement options or awards which may be granted in exchange for
such forfeit or repurchased stock awards or surrendered, cancelled, or
terminated options.
SECTION 4. ELIGIBILITY. An incentive stock option may be granted only to
any individual who, at the time the option is granted, is an employee of the
Company or any Affiliate thereof. A nonqualified stock option or stock award may
be granted to any director, employee, officer, agent, consultant, or independent
contractor of the Company or any Affiliate thereof, whether an individual or an
entity (each, a'Plan Participant").
A director shall in no event be eligible for the benefits of the Plan unless
at the time discretion is exercised in the selection of a director as a person
to whom options may be granted, or in the determination of the number of shares
which may be covered by options granted to the director, the Plan complies with
the requirements of Rule 16b-3 under the Exchange Act.
SECTION 5. TERMS AND CONDITIONS OF OPTIONS AND AWARDS. Options and awards
granted under the Plan shall be evidenced by written agreements which shall
contain such terms, conditions, limitations, and restrictions as the Plan
Administrator shall deem advisable and which are not inconsistent with the Plan.
No Plan participant may receive more than an aggregate of 500,000 shares of
Common Stock by grant of options and/or stock awards under the Plan.
Notwithstanding the foregoing, options and awards shall include or incorporate
by reference the following terms and conditions:
5.1 OPTIONS
5.1.1 NUMBER OF SHARES AND EXERCISE PRICE.
(a) Upon first election or appointment to the Board, each non-employee
director will be granted a non-qualified option to purchase 15,000 shares of
Common Stock at the fair market value of the Common Stock on the date of such
election or appointment; and
(b) Each non-employee director will be annually granted a non-qualified
option to purchase 15,000 shares of Common Stock at the fair market value of the
Common Stock on the date of such grant with the first such grant to occur at the
Annual Meeting of Stockholders following the Annual Meeting of Stockholders at
which this Plan is approved by the Company's stockholders (the "Approval"); and
(c) Notwithstanding subsections (a) and (b) hereof, the maximum number of
shares that may be purchased pursuant to the exercise of each option, and the
price per share at which such option is
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exercisable (the "exercise price"), shall be as established by the Plan
Administrator; provided, that the Plan Administrator shall act in good faith to
establish the exercise price which shall be not less than 100% of the fair
market value per share of the Common Stock at the time of grant of the option
with respect to incentive stock options; and provided, further, that, with
respect to incentive stock options granted to greater than ten percent
stockholders, the exercise price shall be as required by Section 6 hereof.
(d) Effective upon the exhaustion of all options authorized under the 1997
Plan, such automatic grants will cease and will be replaced by the automatic
grants under the 1998 Plan.
5.1.2 TERM AND MATURITY. Subject to the restrictions contained in Section
6 hereof with respect to granting stock options to greater than ten percent
stockholders, the term of each stock option shall be as established by the Plan
Administrator and, if not so established, shall be ten years from the date of
its grant, but in no event shall the term of any incentive stock option exceed a
ten year period. To ensure that the Company or Affiliate will achieve the
purpose and receive the benefits contemplated in the Plan, any option or stock
award granted to any Plan Participant hereunder shall, unless the condition of
this sentence is waived or modified in the agreement evidencing the option or by
resolution adopted by the Plan Administrator, be exercisable or shall, in the
case of awards, be vested or repurchased and not subject to forfeiture,
according to the following schedule:
<TABLE>
<CAPTION>
PERIOD OF PLAN PARTICIPANT'S
CONTINUOUS RELATIONSHIP
WITH THE COMPANY OR PORTION OF TOTAL OPTION
AFFILIATE FROM THE DATE WHICH IS EXERCISABLE OR
THE OPTION IS GRANTED AWARD WHICH IS VESTED
- ------------------------------------------------------------- -------------------------
<S> <C>
1 year....................................................... 33%
2 years...................................................... 67%
3 years...................................................... 100%
</TABLE>
5.1.3 EXERCISE. Subject to the vesting schedule described in subsection
5.2 hereof, each option may be exercised in whole or in part; provided, that
only whole shares may be issued pursuant to the exercise of any option. Subject
to any other terms and conditions herein, the Plan Administrator may provide
that an option may not be exercised in whole or in part for a stated period or
periods of time during which such option is outstanding; provided, that the Plan
Administrator may rescind, modify, or waive any such limitation (including by
the acceleration of the vesting schedule upon a change in control of the
Company) at any time and from time to time after the grant date thereof. During
a Plan Participant's lifetime, any incentive stock options granted under the
Plan are personal to such Plan Participant and are exercisable solely by such
Plan Participant. Options shall be exercised by delivery to the Company of
notice of the number of shares with respect to which the option is exercised,
together with payment of the exercise price in accordance with Section 5.1.4
hereof.
5.1.4 PAYMENT OF EXERCISE PRICE. Payment of the option exercise price
shall be made in full at the time the notice of exercise of the option is
delivered to the Company and shall be in cash, bank certified or cashier's
check, or personal check (unless at the time of exercise the Plan Administrator
in a particular case determines not to accept a personal check) for shares of
Common Stock being purchased.
The Plan Administrator can determine at the time the option is granted in
the case of incentive stock options, or at any time before exercise in the case
of nonqualified stock options, that additional forms of payment will be
permitted. To the extent permitted by the Plan Administrator and applicable laws
and regulations (including, without limitation, federal tax and securities laws
and regulations and state corporate law), an option may be exercised by:
(a) delivery of shares of Common Stock of the Company held by a Plan
Participant having a fair market value equal to the exercise price, such fair
market value to be determined in good faith by the Plan Administrator;
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<PAGE>
(b) delivery of a properly executed Notice of Exercise, together with
irrevocable instructions to a broker, all in accordance with the regulations of
the Federal Reserve Board, to promptly deliver to the Company the amount of sale
or loan proceeds to pay the exercise price and any federal, state, or local
withholding tax obligations that may arise in connection with the exercise;
(c) delivery of a properly executed Notice of Exercise, together with
instructions to the Company to withhold from the shares of Common Stock that
would otherwise be issued upon exercise that number of shares of Common Stock
having a fair market value equal to the option exercise price.
5.1.5 LIMITATION ON VALUE FOR INCENTIVE STOCK OPTIONS. As to all incentive
stock options granted under the terms of the Plan, to the extent that the
aggregate fair market value (determined at the time of the grant of the
incentive stock option) of the shares of Common Stock with respect to which
incentive stock options are exercisable for the first time by the Plan
Participant during any calendar year (under the Plan and all other incentive
stock option plans of the Company, an Affiliate thereof or a predecessor
corporation) exceeds $100,000, such options shall be treated as nonqualified
stock options. The foregoing sentence shall not apply, and the limitation shall
be that provided by the Code or the Internal Revenue Service, as the case may
be, if such annual limit is changed or eliminated by (a) amendment of the Code
or (b) issuance by the Internal Revenue Service of (i) a Revenue ruling, (ii) a
Private Letter ruling to any of the Company, any Plan Participant, or any
legatee, personal representative, or distributee of any Plan Participant, or
(iii) regulations.
5.1.6 VALUATION OF COMMON STOCK RECEIVED UPON EXERCISE.
5.1.6.1 EXERCISE OF OPTIONS UNDER SECTIONS 5.1.4(A) AND (C). The value of
Common Stock received by the Plan Participant from an exercise under Sections
5.1.4(a) and 5.1(c) hereof shall be the fair market value as determined by the
Plan Administrator, provided, that if the Common Stock is traded in a public
market, such valuation shall be the average of the high and low trading prices
or bid and asked prices, as applicable, of the Common Stock for the date of
receipt by the Company of the Plan Participant's delivery of shares under
Section 5.1.4(a) hereof or delivery of the Notice of Exercise under Section
5.1.4(c) hereof, determined as of the trading day immediately preceding such
date (or, if no sale of shares is reported for such trading day, on the next
preceding day on which any sale shall have been reported).
5.1.6.2 EXERCISE OF OPTION UNDER SECTION 5.1.4(B). The value of Common
Stock received by the Plan Participant from an exercise under Section 5.1.4(b)
hereof shall equal the sales price received for such shares.
5.2. STOCK AWARDS.
5.2.1 NUMBER OF SHARES AND PRICE. The number of shares to be transferred
or sold by the Company to a Plan Participant shall be determined by the Plan
Administrator. The Plan Administrator shall determine the price, if any, at
which shares of restricted stock shall be sold to a Plan Participant, which may
vary from time to time and among Plan Participants and which may be below the
fair market value of such shares of Common Stock at the date of such sale. The
payment for such shares (if any) shall be in cash, bank certified or cashier's
check, or personal check (unless at the time of grant the Plan Administrator
determines not to accept a personal check or determines to accept some other
form of payment).
5.2.2 RESTRICTIONS. All shares representing stock awards transferred or
sold hereunder shall be subject to such restrictions as the Plan Administrator
may determine, including, without limitation any of the following:
(a) a prohibition against the sale, transfer, pledge or other encumbrance of
the shares of such stock, such prohibition to lapse at such time or times as the
Plan Administrator shall determine (whether in annual or more frequent
installments, at the time of the death, disability or retirement of the holder
of such shares, or otherwise);
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(b) a requirement that the holder of shares of restricted stock forfeit, or
(in the case of shares sold to a Plan Participant) resell back to the Company at
his or her cost, all or a part of such shares in the event of termination of his
or her employment during any period in which such shares are subject to
restrictions;
(c) such other conditions or restrictions as the Plan Administrator may deem
advisable.
5.2.3 ESCROW. In order to enforce the restrictions imposed by the Plan
Administrator pursuant to Section 5.2.2, the Plan Participant receiving
restricted stock shall enter into an agreement with the Company setting forth
the conditions of the grant. Shares of restricted stock shall be registered in
the name of the Plan Participant and deposited, together with a stock power
endorsed in blank, with the Company. Each such certificate shall bear a legend
in substantially the following form:
The transferability of this certificate and the shares of Common Stock
represented by it are subject to terms and conditions (including conditions of
forfeiture) contained in the 1998 Stock Option and Award Plan of Family Golf
Centers, Inc., and an agreement entered into between the registered owner and
Family Golf Centers, Inc. A copy of the Plan and the Agreement is on file in the
office of the Secretary of Family Golf Centers, Inc.
5.2.4 END OF RESTRICTIONS. Subject to Section 8, at the end of any time
period during which the shares of restricted stock are subject to forfeiture and
restrictions on transfer, such shares will be delivered free of all restrictions
to the Plan Participant or to the Plan Participant's legal representative,
beneficiary or heir.
5.3 WITHHOLDING TAX REQUIREMENT. The Company or any Affiliate thereof
shall have the right to retain and withhold from any payment of cash or Common
Stock under the Plan the amount of taxes required by any government to be
withheld or otherwise deducted and paid with respect to such payment. No option
may be exercised unless and until arrangements satisfactory to the Company, in
its sole discretion, to pay such withholding taxes are made. At its discretion,
the Company may require a Plan Participant to reimburse the Company for any such
taxes required to be withheld by the Company and withhold any distribution in
whole or in part until the Company is so reimbursed. In lieu thereof, the
Company shall have the right to withhold from any other cash amounts due or to
become due from the Company to the Plan Participant an amount equal to such
taxes or retain and withhold a number of shares having a market value not less
than the amount of such taxes required to be withheld by the Company to
reimburse the Company for any such taxes and cancel (in whole or in part) any
such shares of Common Stock so withheld. If required by Section 16(b) of the
Exchange Act, the election to pay withholding taxes by delivery of shares of
Common Stock held by any person who at the time of exercise is subject to
Section 16(b) of the Exchange Act shall be made either six months prior to the
date the option exercise becomes taxable or at such other times as the Company
may determine as necessary to comply with Section 16(b) of the Exchange Act.
Although the Company may, in its discretion, accept Common Stock as payment of
withholding taxes, the Company shall not be obligated to do so.
5.5 NONTRANSFERABILITY.
(a) OPTION. Options granted under the Plan and the rights and privileges
conferred hereby may not be transferred, assigned, pledged, or hypothecated in
any manner (whether by operation of law or otherwise) other than by will or by
the applicable laws of descent and distribution or pursuant to a qualified
domestic relations order as defined in Section 414(p) of the Code, or Title I of
the Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder, and shall not be subject to execution, attachment, or similar
process. Any attempt to transfer, assign, pledge, hypothecate, or otherwise
dispose of any option under the Plan or of any right or privilege conferred
hereby, contrary to the Code or to the provisions of the Plan, or the sale or
levy or any attachment or similar process upon the rights and privileges
conferred hereby shall be null and void ab initio. The designation by a Plan
Participant of a beneficiary does not, in and of itself, constitute an
impermissible transfer under this subsection 5.6.1.
(b) STOCK UNDERLYING OPTIONS. The Plan Administrator may provide in the
agreement granting the option that (a) the Plan Participant may not transfer or
otherwise dispose of shares acquired upon exercise
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of an option without first offering such shares to the Company for purchase on
the same terms and conditions as those offered to the proposed transferee or (b)
upon termination of employment of a Plan Participant the Company shall have a
six month right of repurchase as to the shares acquired upon exercise, which
right of repurchase shall allow for a maximum purchase price equal to the fair
market value of the shares on the termination date. The foregoing rights of the
Company shall be assignable by the Company upon reasonable written notice to the
Plan Participant.
(c) STOCK AWARDS. Subject to the restrictions imposed by the Plan
Administrator under Section 5.2.2 and the agreement entered into by the Plan
Participant and the Company, a Plan Participant receiving an award of stock may
sell, transfer, pledge or otherwise encumber such shares received under this
Plan.
5.6 TERMINATION OF RELATIONSHIP. If the Plan Participant's relationship
with the Company or any Affiliate thereof ceases for any reason other than
termination for cause, death, or total disability, and unless by its terms the
option sooner terminates or expires, then the Plan Participant may exercise, for
a three month period, that portion of the Plan Participant's option which is
exercisable at the time of such cessation, but the Plan Participant's option
shall terminate at the end of the three month period following such cessation as
to all shares for which it has not theretofore been exercised, unless, in the
case of a nonqualified stock option, such provision is waived in the agreement
evidencing the option or by resolution adopted by the Plan Administrator within
90 days of such cessation. If, in the case of an incentive stock option, a Plan
Participant's relationship with the Company or Affiliate thereof changes from
employee to nonemployee (i.e., from employee to a position such as a
consultant), such change shall constitute a termination of a Plan Participant's
employment with the Company or Affiliate and the Plan Participant's incentive
stock option shall terminate in accordance with this subsection 5.6. If, in the
case of a restricted stock award, the Plan Participant's relationship with the
Company or any Affiliate thereof ceases for any reason and unless by its terms
the period during which shares of restricted stock were subject to forfeiture or
restrictions on transfer has expired, then the Plan Participant will be required
to resell back to the Company at his or her cost, or forfeit the shares
remaining subject to such forfeiture or restrictions.
If a Plan Participant is terminated for cause, any option granted hereunder
shall automatically terminate as of the first discovery by the Company of any
reason for termination for cause, and such Plan Participant shall thereupon have
no right to purchase any shares pursuant to such option. "Termination for cause"
shall mean dismissal for dishonesty, conviction or confession of a crime
punishable by law (except minor violations), fraud, misconduct, or disclosure of
confidential information. If a Plan Participant's relationship with the Company
or any Affiliate thereof is suspended pending an investigation of whether or not
the Plan Participant shall be terminated for cause, all Plan Participant's
rights under any option granted hereunder likewise shall be suspended during the
period of investigation.
If a Plan Participant's relationship with the Company or any Affiliate
thereof ceases because of a total disability, the Plan Participant's option
shall not terminate or, in the case of an incentive stock option, cease to be
treated as an incentive stock option until the end of the 12 month period
following such cessation (unless by its terms it sooner terminates and expires).
Likewise, unless otherwise determined by the Plan Administrator, a prohibition
against the sale, transfer, pledge or other encumbrance of shares of restricted
stock awarded pursuant to this Plan, will not lapse by reason of the Plan
Participant's disability until the end of the 12 month period following the
cessation of the Plan Participant's relationship with the Company or any
Affiliate thereof. As used in the Plan, the term "total disability" refers to a
mental or physical impairment of the Plan Participant which is expected to
result in death or which has lasted or is, in the opinion of the Company and two
independent physicians, expected to last for a continuous period of 12 months or
more and which causes or is, in such opinion, expected to cause the Plan
Participant to be unable to perform his or her duties for the Company and to be
engaged in any substantial gainful activity. Total disability shall be deemed to
have occurred on the first day after the Company and the two independent
physicians have furnished their opinion of total disability to the Plan
Administrator.
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For purposes of this subsection 5.6, a transfer of relationship between or
among the Company and/or any Affiliate thereof shall not be deemed to constitute
a cessation of relationship with the Company or any of its Affiliates. For
purposes of this subsection 5.6, with respect to incentive stock options and
stock awards, employment shall be deemed to continue while the Plan Participant
is on military leave, sick leave, or other bona fide leave of absence (as
determined by the Plan Administrator). The foregoing notwithstanding, employment
shall not be deemed to continue beyond the first 90 days of such leave, unless
the Plan Participant's reemployment rights are guaranteed by statute or by
contract.
As used herein, the term "Affiliate" shall be defined as follows: (a) when
referring to a subsidiary corporation, "Affiliate" shall mean any corporation
(other than the Company) in an unbroken chain of corporations ending with the
Company if, at the time of the granting of the option, the stock possessing 50%
or more of the total combined voting power of all classes of stock of each of
the corporations other than the Company is owned by one of the other
corporations in such chain; and (b) when referring to a parent corporation,
"Affiliate" shall mean any corporation in an unbroken chain of corporations
ending with the Company if, at the time of the granting of the option, each of
the corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
5.7 DEATH OF PLAN PARTICIPANT. If a Plan Participant dies while he or she
has a relationship with the Company or any Affiliate thereof or within the three
month period (or 12 month period in the case of totally disabled Plan
Participants) following cessation of such relationship, (i) any option held by
such Plan Participant, to the extent that the Plan Participant would have been
entitled to exercise such option, may be exercised within one year after his or
her death by the personal representative of his or her estate or by the person
or persons to whom the Plan Participant's rights under the option shall pass by
will or by the applicable laws of descent and distribution, and (ii) any stock
awarded under this Plan, to the extent that the restrictions against transfer
have expired, shall be delivered to the Plan Participant's legal representative,
beneficiary or heir, free of all restrictions, unless otherwise determined by
the Plan Administrator.
5.8 STATUS OF STOCKHOLDER. Neither the Plan Participant nor any party to
which the Plan Participant's rights and privileges under an option may pass
shall be, or have any of the rights or privileges of, a stockholder of the
Company with respect to any of the shares issuable upon the exercise of any
option granted under the Plan unless and until such option has been exercised.
Subject to the terms and conditions of the Plan, each Plan Participant receiving
restricted stock shall have all the rights of a stockholder with respect to
shares of stock during any period in which such shares are subject to forfeiture
and restrictions on transfer, including without limitation, the right to vote
such shares. Dividends paid in cash or property other than Common Stock with
respect to shares of restricted stock shall be paid to the Plan Participant
currently.
5.9 CONTINUATION OF EMPLOYMENT. Nothing in the Plan or in any option or
stock award granted pursuant to the Plan shall confer upon any Plan Participant
any right to continue in the employ of the Company or of an Affiliate thereof,
or to interfere in any way with the right of the Company or of any such
Affiliate to terminate his or her employment or other relationship with the
Company at any time.
5.10 MODIFICATION AND AMENDMENT OF OPTION OR AWARD. Subject to the
requirements of Section 422 of the Code with respect to incentive stock options
and to the terms and conditions and within the limitations of the Plan,
including, without limitation, Section 9 hereof, the Plan Administrator may
modify or amend outstanding options and stock awards granted under the Plan. The
modification or amendment of an outstanding option or stock award shall not,
without the consent of the Plan Participant, impair or diminish any of his or
her rights or any of the obligations of the Company under such option or award.
Except as otherwise provided herein, no outstanding option shall be terminated
without the consent of the Plan Participant. Unless the Plan Participant agrees
otherwise, any changes or adjustments made to outstanding incentive stock
options or awards granted under the Plan shall be made in such a manner so as
not to constitute a "modification" as defined in Section 424(h) of the Code and
so as not to cause any incentive
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stock option issued hereunder to fail to continue to qualify as an incentive
stock option as defined in Section 422(b) of the Code.
SECTION 6. GREATER THAN TEN PERCENT STOCKHOLDERS.
6.1 EXERCISE PRICE AND TERM OF INCENTIVE STOCK OPTIONS. If incentive stock
options are granted under the Plan to employees who, at the time of such grant,
own greater than ten percent of the total combined voting power of all classes
of stock of the Company or any Affiliate thereof, the term of such incentive
stock options shall not exceed five years and the exercise price shall be not
less than 110% of the fair market value of the Common Stock at the time of grant
of the incentive stock option. This provision shall control notwithstanding any
contrary terms contained in an option agreement or any other document. The term
and exercise price limitations of this provision shall be amended to conform to
any change required by a change in the Code or by ruling or pronouncement of the
Internal Revenue Service.
6.2 ATTRIBUTION RULE. For purposes of subsection 6.1, in determining stock
ownership, an employee shall be deemed to own the stock owned, directly or
indirectly, by or for his or her brothers, sisters, spouse, ancestors, and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership estate, or trust shall be deemed to be owned
proportionately by or for its stockholders, partners, or beneficiaries. If an
employee or a person related to the employee owns an unexercised option or
warrant to purchase stock of the Company, the stock subject to that portion of
the option or warrant which is unexercised shall not be counted in determining
stock ownership. For purposes of this Section 6, stock owned by an employee
shall include all stock owned by him or her which is actually issued and
outstanding immediately before the grant of the incentive stock option to the
employee.
SECTION 7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The aggregate
number and class of shares for which options and stock awards may be granted
under the Plan, the number and class of shares covered by each outstanding
option and stock award, and the exercise price, purchase price or repurchase
price (if any) per share thereof (but not the total price), and each such option
and stock awards, shall all be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock of the Company resulting
from a split or consolidation of shares or any like capital adjustment, or the
payment of any stock dividend.
7.1. EFFECT OF LIQUIDATION, REORGANIZATION, OR CHANGE IN CONTROL.
7.1.1 CASH, STOCK, OR OTHER PROPERTY FOR STOCK. Except as provided in
subsection 7.1.2 hereof, upon a merger (other than a merger of the Company in
which the holders of Common Stock immediately prior to the merger have the same
proportionate ownership of common stock in the surviving corporation immediately
after the merger), consolidation, acquisition of property or stock, separation,
reorganization (other than mere reincorporation or creation of a holding
company), or liquidation of the Company (each, an "event"), as a result of which
the stockholders of the Company receive cash, stock, or other property in
exchange for, or in connection with, their shares of Common Stock, (i) any
option granted hereunder shall terminate, but the time during which such options
may be exercised shall be accelerated as follows: the Plan Participant shall
have the right immediately prior to any such event to exercise such Plan
Participant's option in whole or in part whether or not the vesting requirements
set forth in the option agreement have been satisfied and (ii) the restrictions
on all shares of restricted stock awarded under this Plan shall lapse
immediately.
7.1.2 CONVERSION OF OPTIONS ON STOCK FOR EXCHANGE STOCK. If the
stockholders of the Company receive capital stock of another corporation
("Exchange Stock") in exchange for their shares of Common Stock in any
transaction involving a merger (other than a merger of the Company in which the
holders of Common Stock immediately prior to the merger have the same
proportionate ownership of common stock in the surviving corporation immediately
after the merger), consolidation, acquisition of property or stock, separation,
or reorganization (other than mere reincorporation or creation of a holding
company), all options granted hereunder shall be converted into options to
purchase shares of Exchange Stock unless the
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Company and corporation issuing the Exchange Stock, in their sole discretion,
determine that any or all such options granted hereunder shall not be converted
into options to purchase shares of Exchange Stock but instead shall terminate in
accordance with the provisions of subsection 7.1.1 hereof. The amount and price
of converted options shall be determined by adjusting the amount and price of
the options granted hereunder in the same proportion as used for determining the
number of shares of Exchange Stock the holders of the Common Stock receive in
such merger, consolidation, acquisition, separation, or reorganization. Unless
the Board determines otherwise, the converted options shall be fully vested
whether or not the vesting requirements set forth in the option agreement have
been satisfied.
7.2 FRACTIONAL SHARES. In the event of any adjustment in the number of
shares covered by an option or stock award, any fractional shares resulting from
such adjustment shall be disregarded and each such option or stock award shall
cover only the number of full shares resulting from such adjustment.
7.3 DETERMINATION OF BOARD TO BE FINAL. Except as otherwise required for
the Plan to qualify for the exemption afforded by Rule 16b-3 under the Exchange
Act, all adjustments under this Section 7 shall be made by the Board, and its
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding, and conclusive. Unless a Plan Participant agrees
otherwise, any change or adjustment to an incentive stock option shall be made
in such a manner so as not to constitute a "modification" as defined in Section
424(h) of the Code and so as not to cause the incentive stock option issued
hereunder to fail to continue to qualify as an incentive stock option as defined
in Section 422(b) of the Code.
SECTION 8. SECURITIES LAW COMPLIANCE. Shares shall not be issued with
respect to an option or stock award granted under the Plan unless the grant of
the stock award or the exercise of such option and the issuance and delivery of
such shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, any applicable state securities laws, the
Securities Act of 1933, as amended (the "Act"), the Exchange Act, the rules and
regulations promulgated thereunder, and the requirements of any stock exchange
upon which the shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance, including,
without limitation, the availability of an exemption from registration for the
issuance and sale of any shares hereunder. Inability of the Company to obtain
from any regulatory body having jurisdiction, the authority deemed by the
Company's counsel to be necessary for the lawful issuance and sale of any shares
hereunder or the unavailability of an exemption from registration for the
issuance and sale of any shares hereunder shall relieve the Company of any
liability in respect of the nonissuance or sale of such shares as to which such
requisite authority shall not have been obtained.
As a condition to the exercise of an option or the award of any stock, if,
in the opinion of counsel for the Company, assurances are required by any
relevant provision of the aforementioned laws, the Company may require the Plan
Participant to give written assurances satisfactory to the Company at the time
of any such exercise or grant as to each or both of the following: (a) the Plan
Participant's knowledge and experience in financial and business matters (and/or
to employ a purchaser representative reasonably satisfactory to the Company who
is knowledgeable and experienced in financial and business matters) and that
such Plan Participant is capable of evaluating, either alone or with the
purchaser representative, the merits and risks of exercising the option and/or
(b) that the shares are being purchased only for investment and without any
present intention to sell or distribute such shares. The foregoing requirements
shall be inoperative if the issuance of the shares upon the exercise of the
option or grant of stock award has been registered under a then currently
effective registration statement under the Act.
At the option of the Company, a stop-transfer order against any shares may
be placed on the official stock books and records of the Company, and a legend
indicating that the stock may not be pledged, sold, or otherwise transferred
unless an opinion of counsel is provided (concurred in by counsel for the
Company) stating that such transfer is not in violation of any applicable law or
regulation, may be stamped on stock certificates in order to assure exemption
from registration. The Plan Administrator may also
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require such other action or agreement by the Plan Participants as may from time
to time be necessary to comply with the federal and state securities laws. NONE
OF THE ABOVE SHALL BE CONSTRUED TO IMPLY AN OBLIGATION ON THE PART OF THE
COMPANY TO UNDERTAKE REGISTRATION OF THE OPTIONS OR STOCK HEREUNDER.
Should any of the Company's capital stock of the same class as the stock
subject to options or stock awards granted hereunder be listed on a national
securities exchange or on the NASDAQ National Market, all stock issued hereunder
if not previously listed on such exchange or market shall, if required by the
rules of such exchange or market, be authorized by that exchange or market for
listing thereon prior to the issuance thereof.
SECTION 9. USE OF PROCEEDS. The proceeds received by the Company from the
sale of shares pursuant to the exercise of options or sale of stock granted
hereunder shall constitute general funds of the Company.
SECTION 10. AMENDMENT AND TERMINATION.
10.1 BOARD ACTION. The Board may at any time suspend, amend, or terminate
the Plan, provided, that no amendment shall be made without stockholder approval
within 12 months before or after adoption of the Plan if such approval is
necessary to comply with any applicable tax or regulatory requirement, including
any such approval as may be necessary to satisfy the requirements for exemptive
relief under Rule 16b-3 of the Exchange Act or any successor provision. Rights
and obligations under any option or award granted before amendment of the Plan
shall not be altered or impaired by any amendment of the Plan unless the Company
requests the consent of the person to whom the option or award was granted and
such person consents in writing thereto.
10.2 AUTOMATIC TERMINATION. Unless sooner terminated by the Board, the
Plan shall terminate ten years from the earlier of (a) the date on which the
Plan is adopted by the Board or (b) the date on which the Plan is approved by
the stockholders of the Company. No option or award may be granted after such
termination or during any suspension of the Plan. The amendment or termination
of the Plan shall not, without the consent of the Plan Participant, alter or
impair any rights or obligations under any option or award theretofore granted
under the Plan.
SECTION 11. EFFECTIVENESS OF THE PLAN. The Plan shall become effective
upon adoption by the Board so long as it is approved by the holders of a
majority of the Company's outstanding shares of voting capital stock at any time
within 12 months before or after the adoption of the Plan by the Board.
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FAMILY GOLF CENTERS, INC.
ANNUAL MEETING OF STOCKHOLDERS--JUNE 26, 1998
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder of Family Golf Centers, Inc. ("Company") hereby
constitutes and appoints Dominic Chang and Krishnan P. Thampi and each of them,
his true and lawful attorneys and proxies, with full power of substitution in
and for each of them, to vote all shares of the Company which the undersigned is
entitled to vote at the Annual Meeting of Stockholders to be held at Sports
Plus, 110 New Moriches Road, Lake Grove, New York 11755, on Friday, June 26,
1998 at 10:00 a.m., Eastern Daylight Savings Time, or at any postponement or
adjournment thereof, on any and all of the proposals contained in the Notice of
the Annual Meeting of Stockholders, with all the powers the undersigned would
possess if present personally at said meeting, or at any postponement or
adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE NOMINEES LISTED ON THE REVERSE SIDE AND FOR THE APPROVAL OF
PROPOSALS 2 AND 3.
/X/ PLEASE MARK YOUR VOTES AS THIS EXAMPLE.
- ----------
COMMON
THE DIRECTORS RECOMMEND A VOTE FOR THE NOMINEES AND PROPOSALS 2 AND 3.
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS FOR All nominees listed
(except as marked to the contrary, see instruction
below) / /
Dominic Chang Krishnan P. Thampi James Ganley Jimmy
C.M. Hsu Yupin Wang
Instruction: To withhold authority to vote for any individual nominee, line through
the name of the nominee above.
<CAPTION>
1. WITHHOLD AUTHORITY
left / /
Dominic C
C.M. Hsu
<CAPTION>
to vote for all nominees listed at
</TABLE>
(CONTINUED, AND TO BE SIGNED AND DATED ON THE OTHER SIDE)
<PAGE>
<TABLE>
<S> <C> <C>
2. Proposal to ratify Richard A. Eisner, LLP as independent auditors.
/ / FOR / / AGAINST / / ABSTAIN
3. Proposal to approve the Family Golf Centers, Inc. 1998 Stock Option and Award Plan
/ / FOR / / AGAINST / / ABSTAIN
<CAPTION>
2.
3.
</TABLE>
<TABLE>
<S> <C>
The above named proxies are granted the authority,
in their discretion, to act upon such other matters
as may properly come before the meeting or any
postponement or adjournment thereof.
Please sign exactly as your name appears in the
records of the Company and return this proxy
immediately in the enclosed stamped self-addressed
envelope.
Dated , 1998
---------------------------------------------------
Signature(s)
---------------------------------------------------
Signature(s)
</TABLE>
