<PAGE>
REGISTRATION NO. 333-_____
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 23, 1998
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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FAMILY GOLF CENTERS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 11-3223246
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
DOMINIC CHANG, CHIEF EXECUTIVE OFFICER
FAMILY GOLF CENTERS, INC.
225 BROADHOLLOW ROAD
MELVILLE, NEW YORK 11747
(516) 694-1666
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES AND AGENT FOR SERVICE)
FAMILY GOLF CENTERS, INC.
1997 STOCK INCENTIVE PLAN
(FULL TITLE OF THE PLAN)
COPY TO:
KENNETH R. KOCH, ESQ.
SQUADRON, ELLENOFF, PLESENT & SHEINFELD, LLP
551 FIFTH AVENUE
NEW YORK, NEW YORK 10176
(212) 661-6500
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===================================== ====================== =================== ======================== =================
TITLE OF SECURITIES AMOUNT PROPOSED PROPOSED AMOUNT OF
TO BE REGISTERED TO BE MAXIMUM MAXIMUM REGISTRATION
REGISTERED (1) OFFERING PRICE AGGREGATE FEE
PER SHARE OFFERING PRICE
- ------------------------------------- ---------------------- ------------------- ------------------------ -----------------
<S> <C> <C> <C> <C>
COMMON STOCK, PAR 500,000 SHARES (3) $45.156(2) $22,578,000 $6,660.51
VALUE $.01 PER SHARE
- ------------------------------------- ---------------------- ------------------- ------------------------ -----------------
COMMON STOCK, PAR 12,500 (4) $4.00(5) $50,000 $14.75
VALUE $.01 PER SHARE
===================================== ====================== =================== ======================== =================
--------
$6,675.26
===================================== ====================== =================== ======================== =================
</TABLE>
(1) PLUS SUCH INDETERMINATE NUMBER OF SHARES PURSUANT TO RULE 416 AS MAY BE
ISSUED IN RESPECT OF STOCK SPLITS, STOCK DIVIDENDS AND SIMILAR
TRANSACTIONS.
(2) ESTIMATED SOLELY FOR THE PURPOSE OF CALCULATING THE REGISTRATION FEE
PURSUANT TO RULE 457(H) UNDER THE SECURITIES ACT OF 1933 ON THE AVERAGE
HIGH AND LOW PRICES FOR THE COMMON STOCK, AS REPORTED ON THE NASDAQ
NATIONAL MARKET ON APRIL 20, 1998.
(3) THE NUMBER OF SHARES OF COMMON STOCK BEING REGISTERED REPRESENTS
500,000 SHARES OF COMMON STOCK THAT MAY BE ISSUED ON THE DATE HEREOF
UNDER THE FAMILY GOLF CENTERS, INC. 1997 STOCK INCENTIVE PLAN (THE
"1997 PLAN") PURSUANT TO OPTIONS ISSUED OR TO BE ISSUED UNDER THE 1997
PLAN.
(4) THE NUMBER OF SHARES OF COMMON STOCK BEING REGISTRED REPRESENTS 12,500
SHARES OF COMMON STOCK THAT MAY BE ISSUED ON THE DATE HEREOF UNDER
STOCK OPTION AGREEMENTS (THE "STOCK OPTION AGREEMENTS") WITH THE
FOLLOWING INDIVIDUALS: CLAUDE LEMIEUX AND HOWARD SILBER.
(5) WITH RESPECT TO THE SHARES OF COMMON STOCK UNDERLYING OPTIONS ISSUED
PURSUANT TO THE STOCK OPTION AGREEMENTS, THE EXERCISE PRICES OF SUCH
OPTIONS WERE USED AS THE MAXIMUM OFFERING PRICES PER SHARE FOR THE
PURPOSE OF CALCULATING THE REGISTRATION FEE.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
A PROSPECTUS CONTAINING INFORMATION SPECIFIED BY PART I OF THIS FORM
S-8 REGISTRATION STATEMENT (THE "REGISTRATION STATEMENT") HAS BEEN OR WILL BE
SENT OR GIVEN TO PARTICIPANTS IN THE PLAN AS SPECIFIED IN RULE 428(B)(1)
PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). EACH SUCH
PROSPECTUS SHALL CONSTITUTE A SECTION 10(A) PROSPECTUS AND IS INCORPORATED BY
REFERENCE IN THIS REGISTRATION STATEMENT.
EXPLANATORY NOTE
THIS REGISTRATION STATEMENT INCLUDES A PROSPECTUS, PREPARED IN
ACCORDANCE WITH THE REQUIREMENTS OF PART I OF FORM S-3, WHICH, PURSUANT TO
GENERAL INSTRUCTION C OF FORM S-8, MAY BE USED FOR THE OFFER AND SALE BY CERTAIN
OFFICERS AND DIRECTORS OF THE COMPANY WHO MAY BE DEEMED TO BE "AFFILIATES" OF
THE COMPANY, AS THAT TERM IS DEFINED IN RULE 405 UNDER THE SECURITIES ACT, OF
SECURITIES REGISTERED HEREUNDER.
I-1
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PROSPECTUS
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FAMILY GOLF CENTERS, INC.
------------------------------------
500,000 SHARES OF COMMON STOCK UNDER FAMILY GOLF CENTERS, INC.
1997 STOCK INCENTIVE PLAN
This Prospectus relates to offers and sales of up to 500,000 shares
("Shares") of Common Stock, par value $.01 per share (the "Common Stock"), of
Family Golf Centers, Inc., a Delaware corporation (the "Company"), that have
been or will be acquired by certain officers and directors (the "Selling
Stockholders") who may be deemed to be "affiliates" of the Company, as defined
in Rule 405 under the Securities Act of 1933 (the "Securities Act"), upon
exercise of options (the "Options") granted pursuant to the Family Golf Centers,
Inc. 1997 Stock Incentive Plan (the "1997 Plan"). See "Selling Stockholders."
The Common Stock is quoted on the Nasdaq National Market(R) (the "Nasdaq
National Market") under the symbol "FGCI." The closing sales price for the
Common Stock on April 15, 1998 was $44.125 per share.
Shares covered by this Prospectus may be offered and sold from time to
time directly by the Selling Stockholders or through brokers on the Nasdaq
National Market or otherwise at prevailing market prices at the time of sale,
prices related to prevailing market prices, or negotiated prices. No
underwriting arrangements have been entered into by the Selling Stockholders. No
specified brokers or dealers have been designated by the Selling Stockholders,
and no agreement has been entered into in respect of brokerage commissions or
for the exclusive or coordinated sale of any securities which may be offered
pursuant to this Prospectus. The distribution of the Shares by the Selling
Stockholders may be effected in one or more transactions that may take place in
the over-the-counter market, including ordinary broker's transactions, privately
negotiated transactions, or through sales to one or more dealers for resale of
such Shares as principals. The net proceeds to the Selling Stockholders will be
the proceeds received by them upon such sales, less brokerage commissions, if
any. The Company will pay all expenses of preparing and reproducing this
Prospectus, but will not receive any of the proceeds from sales by any of the
Selling Stockholders. The Selling Stockholders, and any broker-dealers, or
agents, through whom the Shares are sold, may be deemed "underwriters" within
the meaning of the Securities Act with respect to securities offered by them,
and any profits realized or commissions received by them may be deemed
underwriting compensation. See "Plan of Distribution."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE COMMON STOCK OFFERED HEREBY INVOLVES A SUBSTANTIAL DEGREE OF RISK.
SEE "RISK FACTORS," COMMENCING ON PAGE 7.
No dealer, salesman, or any other person has been authorized to give
any information or to make any representation other than as contained or
incorporated by reference herein and, if given or made, such information or
representation must not be relied upon as having been authorized by the Company.
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy securities by anyone in any jurisdiction in which such offering may
not lawfully be made. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of the Company or the information herein since the
date hereof. See "Risk Factors."
-------------------------------------------------------
The date of this Prospectus is April 23, 1998
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), 450 Fifth Street, N.W., Washington, D.C. 20549, a Registration
Statement (the "Registration Statement") under the Securities Act with respect
to the offering and sale from time to time of the Shares. This Prospectus does
not contain all the information set forth in the Registration Statement and the
exhibits thereto, as permitted by the rules and regulations of the Commission.
For further information, reference is made to the Registration Statement and to
the exhibits filed therewith. Statements contained in this Prospectus as to the
contents of any contract or other document which has been filed or incorporated
by reference as an exhibit to the Registration Statement are qualified in their
entirety by reference to such exhibits for a complete statement of their terms
and conditions. Additionally, the Company is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, in accordance therewith, files reports, proxy statements, and other
information statements with the Commission. Copies of such materials may be
inspected without charge at the offices of the Commission, and copies of all or
any part thereof may be obtained from the Commission's public reference
facilities at 450 Fifth Street, N.W., Washington D.C. 20549 or at the regional
offices of the Commission located at 7 World Trade Center, New York, New York
10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, upon
payment of the fees prescribed by the Commission. In addition, the Commission
maintains a Web Site that contains reports, proxy and information statements and
other information regarding the Company (http://www.sec.gov). The Common Stock
is quoted on the Nasdaq National Market. Reports and other information
concerning the Company may be inspected at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated herein by reference and made a part of this Prospectus are
the following: (1) the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997; (2) the Company's Current Report on Form 8-K dated
April 2, 1998; and (3) the description of the Common Stock which is registered
under Section 12 of the Exchange Act, contained in the Company's Registration
Statement on Form 8-A dated November 8, 1994. All documents subsequently filed
by the Company with the Commission pursuant to Section 13(a), 13(c), 14, or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering made hereby will be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the respective dates
of filing of such documents. Any statement contained in any document
incorporated by reference shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained herein or
in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus. All information
appearing in this Prospectus is qualified in its entirety by the information and
financial statements (including notes thereto) appearing in the documents
incorporated herein by reference, except to the extent set forth in the
immediately preceding statement.
The Company will provide without charge to each person who receives a
Prospectus, upon written or oral request of such person, a copy of the
information that is incorporated by reference herein (not
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<PAGE>
including exhibits to the information that is incorporated by reference herein).
Requests for such information should be directed to: Family Golf Centers, Inc.,
225 Broadhollow Road, Melville, New York 11747, Attention: Chief Executive
Officer. The Company's telephone number is: (516) 694-1666.
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain statements included or incorporated by reference into this
Prospectus constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. All such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company,
or industry results, to be materially different from any future results,
performance, or achievements expressed or implied by such forward-looking
statements. Such factors include, among others, the following general economic
and business conditions: the Company's indebtedness; changes in business
strategy or development plans; competitive factors in the industry, including
additional competition from existing competitors or future entrants to the
industry; social and economic conditions; availability, terms and deployment of
capital; local, state and federal regulations; availability of qualified
personnel; and other factors referenced in this Prospectus and in the Company's
filings with the Commission.
THE COMPANY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
MORE DETAILED INFORMATION AND THE FINANCIAL STATEMENTS AND THE RELATED NOTES
APPEARING ELSEWHERE IN THIS PROSPECTUS OR INCORPORATED HEREIN BY REFERENCE. EACH
PROSPECTIVE INVESTOR IS URGED TO READ THIS PROSPECTUS IN ITS ENTIRETY.
INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS."
The Company is a leading consolidator and operator of golf centers in
the United States. The Company's golf centers are designed to provide a wide
variety of practice opportunities, including facilities for driving, chipping,
putting, pitching and sand play. In addition, the Company's golf centers
typically offer full-line pro shops, golf lessons instructed by PGA-certified
golf professionals and other amenities such as miniature golf and snack bars to
encourage family participation. The Company has a proven track record of
successfully identifying, acquiring and integrating golf centers, having grown
from one golf facility in 1992 to 60 as of December 31, 1997. As a result, the
Company has increased revenues from $2.6 million in 1993 to $64.8 million for
the twelve months ended December 31, 1997, and increased earnings per share from
a loss of $0.23 in 1993 to a profit of $0.84 for the twelve months ended
December 31, 1997.
In July 1997, the Company acquired Leisure Complexes, Inc. ("LCI"), the
operator of a family sports and entertainment supercenter, located in Lake
Grove, New York, which includes a golf center, an 18-hole executive golf course,
an ice rink and additional family amusements, such as video and virtual reality
games, a Lasertag arena, children's rides, batting cages, an I-werks Motion
Master Theatre, a 48-lane bowling center, restaurants and an 18,000 square foot
conference center. LCI also owned and operated seven stand-alone bowling
centers, six of which were subsequently sold by the Company. In addition, in
September 1997, the Company acquired an ice rink facility which includes a
National Hockey League regulation-size ice rink and an additional half rink. In
December 1997, the Company acquired another indoor family sports and
entertainment
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<PAGE>
supercenter, located in Cincinnati, Ohio, which includes two National Hockey
League regulation-size ice rinks, two soccer fields and additional family
amusements.
BUSINESS STRATEGY
The Company's strategy is to continue to build upon its leadership
position in the golf center industry and expand its concept of family-oriented
sports entertainment as follows:
o CONSOLIDATION OF GOLF CENTERS. The Company will continue to
consolidate the golf center industry by increasing the number
of golf centers it owns, leases or manages by (i) identifying
and acquiring well-located, under performing ranges that have
the potential for improvement through better management and
facility enhancements and (ii) building new centers in
locations where suitable acquisition opportunities are not
available. The Company's principal acquisition strategy is to
target stand-alone ranges or golf centers in stable
communities with favorable demographics, generally in close
proximity to upscale urban and suburban areas, which generally
contain the highest concentration of golfers. In determining
which facilities may be suitable acquisition candidates,
management conducts demographic and competitive analyses and
considers such factors as ease of access, visibility from
major thoroughfares and potential for improvement in revenues
and operating cash flow through capital improvements.
o FACILITY AND SERVICE ENHANCEMENT. The Company typically
initiates a capital improvement plan after each acquisition to
broaden the scope of services and products offered. Such
improvements have historically increased revenues and improved
operating performance at the golf centers. Improvements may
include enclosing, heating or lighting play areas to lengthen
the season and hours of operation, adding tiers of hitting
tees, offering lessons from PGA-certified golf professionals
and adding amenities, such as batting cages, miniature golf,
restaurants, snack bars and video games, designed to appeal to
the whole family, generate additional revenues and increase
the frequency and duration of facility visitation. In
addition, employees undergo a comprehensive training program
emphasizing customer service. The Company believes that the
quality of its facilities and its emphasis on customer service
differentiates the Company from its competitors.
o LEVERAGE CENTRALIZED OPERATIONS. All purchasing, accounting,
insurance, cash management, finance and human resource
functions are managed centrally at the Company's headquarters.
Centralization improves facility performance by reducing
expenses and administrative burdens, allowing management to
focus on customer service and facility operations. In
addition, each facility receives the benefits of the Company's
purchasing power, enabling it to take advantage of quantity
discounts on merchandise sold through its pro shops and
equipment used at its facilities.
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<PAGE>
o DEVELOPMENT OF COMPLEMENTARY SPORTS AND FAMILY ENTERTAINMENT
FACILITIES. The Company has identified the ice rink industry
as having a number of industry and operational dynamics
similar to those of the golf center industry. The Company
intends to apply the skills and resources it has used in the
golf center industry to capitalize on such similarities by
selectively constructing, or acquiring and enhancing, ice
rinks over the next twelve months. In addition, the Company
expects to selectively augment certain of its existing golf
centers with sports and entertainment amenities including ice
rinks, video and virtual reality games, children's rides,
batting cages and other entertainment activities to create
family sports supercenters (the "Family Sports Supercenters").
The Company believes that the addition of these facilities
expands on the Company's concept of family-oriented sports
entertainment, improves utilization by adding additional
sources of revenues, attracts a more diversified base of
customers, increases visitation and per capita spending and
has the added benefit of being counter-seasonal to the
Company's core golf business.
RECENT DEVELOPMENTS
In January 1998, the Township of Woodbridge selected the Company's
proposal to lease, construct and operate an ice arena with two ice rinks and a
family entertainment center in Woodbridge, New Jersey. There can be no
assurance, however, that a lease with the Township of Woodbridge will be
executed.
In February 1998, the Company acquired: (i) MetroGolf Incorporated
("Metro"), the operator of eight golf facilities, through the successful
completion of a tender offer and subsequent merger of Family Golf Acquisition,
Inc., a wholly-owned subsidiary of the Company, with and into Metro; (ii) Blue
Eagle Golf Centers, Inc. ("Blue Eagle") the operator of three golf facilities;
(iii) an ice rink facility in Raleigh, North Carolina; and (iv) a golf facility
in Holbrook, Massachusetts. In March 1998, the Company signed a long-term lease
to construct and operate two National Hockey League regulation-size ice rinks
and a family entertainment center in a shopping mall in New Rochelle, New York.
The Company expects to commence operating this facility by the end of 1999.
In March 1998, the Company entered into a loan agreement with
Chinatrust Bank providing for a $10.0 million term loan secured by a mortgage on
five of the Company's existing properties. During the drawdown period, loan
proceeds are advanced to the Company upon its request. The loan matures in April
2003 and bears interest at the prime rate less 1% during the drawdown period and
at the prime rate during the paydown period. To date, no funds have been drawn
under this loan. The Company also obtained, in March 1998, a commitment from
ORIX USA Corporation to provide a $10.0 million term loan secured by a mortgage
on five of the Company's existing properties. To date, the Company has not
entered into a definitive loan agreement with respect to such commitment.
On April 2, 1998, the Company entered into a definitive merger
agreement pursuant to which Eagle Quest Golf Centers, Inc. ("Eagle Quest") will
become a wholly-owned subsidiary of the Company. Privately-held Eagle Quest is
the second largest owner, operator and manager of golf
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<PAGE>
driving ranges in North America, with 18 golf centers currently owned and
managed in the United States and Canada. Eagle Quest has signed letters of
intent to acquire eight additional golf centers. Pursuant to the terms of the
merger agreement, at the effective date of the merger, the Company will issue
approximately 1,152,860 shares of Common Stock, for all the outstanding shares,
options and warrants of Eagle Quest. The transaction, which will be accounted
for as a pooling of interest, is expected to close early in the third quarter of
1998. This transaction is subject to a number of conditions including Eagle
Quest shareholder approval, obtaining judicial approval under Canadian law,
Commission review of the pooling of interest accounting treatment, approval
under the Hart-Scott-Rodino Act, further due diligence and other customary
terms.
In addition, the Company declared a 3-for-2 stock split on its Common
Stock to be paid as a 50 percent stock dividend on May 4, 1998 to shareholders
of record as of April 20, 1998. Unless otherwise indicated, the numbers
representing shares of Common Stock contained herein have not been adjusted to
account for the proposed split.
The Company's principal executive offices are located at 225
Broadhollow Road, Melville, New York 11747 and its telephone number is (516)
694-1666. The Company's World Wide Web address is http://www.familygolf.com.
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<PAGE>
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE SPECIFIC FACTORS
SET FORTH BELOW, AS WELL AS THE OTHER INFORMATION INCLUDED IN THIS PROSPECTUS,
BEFORE DECIDING TO INVEST IN THE SHARES OFFERED HEREBY.
GROWTH AND EXPANSION STRATEGY
The Company's ability to significantly increase revenues, operating
cash flow and net income over time depends in large part upon its success in
acquiring and improving or leasing or constructing additional facilities at
suitable locations upon satisfactory terms. There can be no assurance that
suitable facility acquisition or lease opportunities will be available or that
the Company will be able to consummate acquisition or leasing transactions on
satisfactory terms. The acquisition of facilities may become more expensive in
the future to the extent that demand and competition increase. The likelihood of
the success of the Company must be considered in light of the problems,
expenses, difficulties, complications and delays frequently encountered in
connection with the construction and opening of new facilities and improvements
to existing facilities, including delays in obtaining required permits.
To successfully implement its expansion strategy, the Company must
integrate acquired or newly opened facilities into its existing operations,
which may necessitate the implementation of enhanced operational and financial
systems and may require additional employees and management, operational,
financial and other resources. As part of its strategy, the Company has recently
entered the ice rink and Family Sports Supercenter industries, in which the
Company has only limited experience and which involve all the risks commonly
associated with the establishment of new lines of business. As the Company
grows, there can be no assurance that additional facilities can be readily
assimilated into the Company's operating structure. The Company's inability to
efficiently integrate facilities or to successfully enter the ice rink and
Family Sports Supercenter industries could have a material adverse effect on the
Company's financial condition and results of operations. In addition, a number
of the facilities which the Company has acquired have, and facilities it may
acquire in the future may have, experienced losses. On a pro forma basis, giving
effect to the acquisitions consummated after January 1, 1997 as if they had
occurred as of January 1, 1997, the Company had net income of $10.5 million (as
compared to net income of $10.6 million on a historical basis) for the year
ended
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<PAGE>
December 31, 1997. As a result of the timing of the Company's acquisitions, the
seasonality of the acquired businesses, the expansion of the Company's business
to include ice rinks and Family Sports Supercenters and other factors, the
Company's historical, pro forma and trailing twelve month results of operations
referred to herein are not necessarily indicative of future results. There can
be no assurance that facilities recently acquired by the Company or those that
the Company may acquire in the future will operate profitably and will not
adversely affect the Company's results of operations.
LEVERAGE, DEBT SERVICE AND COVENANTS
As of December 31, 1997, the Company had approximately $141.9 million
aggregate principal amount of indebtedness outstanding, including $115 million
aggregate principal amount of 5 3/4% convertible subordinated notes (the
"Notes") issued by the Company during the fourth quarter of 1997. The Company's
level of indebtedness requires that a significant amount of its cash flow from
operations be applied to debt service, and there can be no assurance that the
Company's operations will generate sufficient cash flow to service this
indebtedness. Approximately $16.6 million of term debt ("Term Debt")
incurred in connection with the Company's acquisition of LCI, is at a variable
rate of interest, which subjects the Company to fluctuations in interest rates.
The Company's credit facility with its principal lender ("Credit
Facility") and the Term Debt include covenants that restrict
the operational and financial flexibility of the Company, including a limit on
the number of facilities that the Company may construct in any rolling twelve
month period and restrictions on indebtedness, liens, acquisitions and other
significant actions. Failure to comply with certain covenants would, among other
things, permit the Company's lenders to accelerate the maturity of the
obligations thereunder and could result in cross-defaults permitting the
acceleration of debt under other Company agreements. In addition, the Company is
required to maintain certain financial ratios.
DEPENDENCE ON THE GOLF INDUSTRY
Although the Company has begun expanding its business outside the golf
industry, the Company is highly dependent on the golf industry, and the public's
interest in utilizing golf practice centers, for the generation of its revenues
and earnings. Activities such as golf have, in the past, been susceptible to
increases and decreases in popularity that have materially affected the
financial condition and results of operations of companies dependent on such
activities, and there can be no assurance that the golf industry will not suffer
a material decrease in popularity, which would result in a material adverse
effect on the Company's business and operations. In addition, customer spending
on activities such as golf is generally considered to be discretionary spending,
which may be significantly decreased as a result of regional or national
economic downturns.
VULNERABILITY TO WEATHER CONDITIONS AND SEASONAL RESULTS
Historically, the second and third quarters of the year have accounted
for a greater portion of the Company's revenues than have the first and fourth
quarters of the year. This is primarily due to an outdoor playing season limited
by weather. Although most of the Company's driving ranges are designed to be
all-weather facilities, portions of the Company's facilities, including the
miniature golf courses, are outdoors and vulnerable to weather conditions. In
addition, golfers are less inclined to practice when weather conditions limit
their ability to play golf on outdoor courses. The Company expects its expansion
into ice rink facilities and Family Sports Supercenters to partially offset such
seasonality. The timing of new center openings and acquisitions may also cause
the Company's results of operations to vary significantly from quarter to
quarter.
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<PAGE>
Accordingly, period-to-period comparisons are not necessarily meaningful and
should not be relied on as indicative of future results. In addition,
variability in the Company's results of operations could cause the price of the
Company's securities to fluctuate following the release of interim results of
operations or other information and may have a material adverse effect on the
price of the Company's securities.
COMPETITION
The golf center, ice rink and family entertainment industries are each
highly competitive and include competition from other golf centers, traditional
golf ranges, golf courses, other ice rinks and family entertainment outlets and
other recreational pursuits. The Company may face imitation and other forms of
competition and the Company cannot prevent or restrain others from utilizing a
similar operational strategy. Many of the Company's competitors and potential
competitors have considerably greater financial and other resources, experience
and customer recognition than does the Company. The Company operates seven of
its golf centers under the name "Golden Bear" pursuant to the License Agreement
with the Licensor. Golden Bear Golf, Inc., an affiliate of the Licensor, is a
competitor of the Company. The Licensor is permitted to establish, or license
others to establish, "Golden Bear" golf centers that compete with the Company's
golf centers, including the Company's Golden Bear Golf Centers. There can be no
assurance that competition will not adversely affect the Company's business or
ability to acquire additional properties. In addition, the Company's pro shop
business faces competition from pro shops at golf courses and other golf centers
or ice rinks, as the case may be, specialty retailers devoted to golf or skating
equipment and apparel, sporting goods and department stores.
DEPENDENCE ON CERTAIN AGREEMENTS
The future success of the business and operations of the Company is
dependent, in part, upon certain key operating agreements, including its real
property leases, management agreements with respect to certain municipal
facilities and the License Agreement. The termination of any of these agreements
may have a material adverse effect on the Company.
After giving effect to renewal options none of the Company's leases, as
of December 31, 1997, is expected to expire until December 31, 2002. However,
the leases may be terminated prior to their scheduled expiration should the
Company default in its obligations thereunder. The termination of any of the
Company's leases could have an adverse effect on the Company. If any of the
Company's leases were to be terminated, there can be no assurance that the
Company would be able to enter into leases for comparable properties on
favorable terms, or at all.
The Company manages several facilities for municipalities pursuant to
concession licenses, three of which are terminable at will by the licensor. The
Company's concession license with the City of New York (the "City") for the
Douglaston, New York golf center, which was entered into in 1994 and which
expires on December 31, 2006, the concession license with the City for the
Randall's Island, New York golf center, which was entered into in 1992 and which
expires on March 1, 2007 and the concession license with the Metropolitan
Transportation Authority for the Bronx, New York golf center, currently under
construction, which was entered into in 1997 and which expires on December 31,
2009 (respectively, the "Douglaston License," "Randall's Island License" and
"Bronx License"), are terminable at will. Pursuant to the Douglaston License and
the Randall's Island License, the Company has made approximately $3.1 million
and $774,000, respectively, of capital improvements as of December 31, 1997.
Pursuant to the Bronx License, the Company is obligated to make a minimum of
$3.0 million of capital improvements. If any of these concession licenses are
terminated other than a termination of the Bronx license during the first
eight years of such license, the licensor may retain, and is
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<PAGE>
not obligated to pay the Company for the value of, such capital improvements.
Unless reimbursed, for accounting purposes the Company would immediately have to
write off the undepreciated value of these capital improvements and the goodwill
related to its purchase of the limited partners' minority interest in the
partnership which was party to the Douglaston License, both of which are
currently being depreciated and amortized over the life of the relevant
concession license. In addition, the Company's management agreement with the
City of El Segundo for the El Segundo golf facility terminates on February 14,
1999. The Company intends to seek a renewal of this agreement.
As of December 31, 1997, the Company operated seven of its 60 golf
centers under the name "Golden Bear" pursuant to the License Agreement, expiring
August 2002, with the Licensor. The License Agreement is terminable by the
Licensor prior to August 2002 under certain circumstances, including if the
current directors of the Company at any time constitute less than 50% of the
Company's directors. Termination of the License Agreement could adversely affect
the Company's Golden Bear Golf Centers and, possibly, the Company. In addition,
the value of the "Golden Bear" name is dependent, in part, upon the continued
popularity of Jack Nicklaus. Accordingly, the occurrence of any event which
diminishes the reputation of Mr. Nicklaus and the related "Golden Bear" symbol
could adversely affect the Company's Golden Bear Golf Centers.
ADDITIONAL FINANCING REQUIREMENTS
The Company anticipates that it will need to raise additional capital
in the future to continue its long term expansion plans. There can be no
assurance that the Company will be able to obtain additional financing on
favorable terms or at all.
ENVIRONMENTAL REGULATION
Operations at the Company's facilities involve the use and limited
storage of various hazardous materials such as pesticides, herbicides, motor
oil, gasoline, heating oil and paint, as well as various chemicals used to
create, refrigerate and maintain the ice at its ice rinks. Under various
federal, state and local laws, ordinances and regulations, an owner or operator
of real property is generally liable for the costs of removal or remediation of
hazardous substances that are released on or in its property regardless of
whether the property owner or operator knew of, or was responsible for, the
release of hazardous materials. The Company has not been informed by any
governmental authority of any non-compliance or violation of any environmental
laws, ordinances or regulations and the Company believes that it is in
substantial compliance with all such laws, ordinances and regulations applicable
to its properties or operations. However, the Company is aware of one notice of
violation issued by the New York State DEC against the owner of the land leased
by the Company in Elmsford, New York alleging that certain hazardous materials
were placed on the site. The owner has taken remedial action and the Company
does not believe it will be affected by the alleged violation. As of December
31, 1997, the Company had not incurred material costs of remediation and the
Company knows of no material environmental liability to which it may become
subject. Although the Company usually hires environmental consultants to conduct
environmental studies, including invasive procedures such as soil sampling or
ground water analysis on facilities it owns, operates or intends to acquire, in
some cases only limited invasive procedures are conducted on such properties and
in a limited number of instances no environmental studies are conducted.
Accordingly, there may be potential environmental liabilities or conditions of
which the Company is not aware.
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<PAGE>
DEPENDENCE UPON KEY EMPLOYEE; RECRUITMENT OF ADDITIONAL PERSONNEL
The Company is heavily dependent on the services of Dominic Chang, its
Chairman of the Board and Chief Executive Officer. The loss of the services of
Mr. Chang could materially adversely affect the Company. Mr. Chang has entered
into an employment agreement with the Company which terminates on December 31,
1999. The Company owns, and is the sole beneficiary of, key person life
insurance in the amount of $1.5 million on the life of Mr. Chang. In addition,
it is an event of default under the Company's Credit Facility and Term Debt if
Mr. Chang is not the Chairman of the Board and Chief Executive Officer of the
Company and if he does not own at least 5% of the Company's outstanding Common
Stock. The Company will also be required to hire additional personnel and
professionals to staff the additional facilities it intends to acquire, lease or
construct. There can be no assurance that the Company will be able to attract
and retain qualified personnel.
CONTROL BY CURRENT STOCKHOLDER
As of March 26, 1998, Dominic Chang beneficially owned 2,499,334 shares
of Common Stock, constituting approximately 19.2% of such outstanding shares.
Mr. Chang is, therefore, able to exercise significant influence with respect to
the election of the directors of the Company and all matters submitted to a vote
of the stockholders of the Company.
PREFERRED STOCK; POSSIBLE ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER, BY-LAW AND
CONTRACTUAL PROVISIONS
The Company's Certificate of Incorporation authorizes the Board of
Directors to issue up to 2,000,000 shares of preferred stock, $0.10 par value
per share. The preferred stock may be issued in one or more series, the terms of
which may be determined at the time of issuance by the Board of Directors,
without further action by stockholders. Although no preferred stock is currently
outstanding and the Company currently has no plans for the issuance of any
preferred stock, there can be no assurance that the Company will not do so in
the future. The ability of the Board of Directors to issue preferred stock could
have the effect of delaying, deferring or preventing a change of control of the
Company or the removal of existing management and, as a result, could prevent
the stockholders of the Company from being paid a premium over the market value
for their shares of Common Stock. The Company's By-Laws contain provisions
requiring advance notice of stockholder proposals and imposing certain
procedural restrictions on stockholders wishing to call a special meeting of
stockholders. Under the Credit Facility and the Term Debt, it is an event of
default if Mr. Chang is not the Chairman of the Board, Chief Executive Officer
and beneficial owner of at least 5% of the outstanding Common Stock of the
Company. In addition, the Indenture with respect to the Notes gives the holders
of the Notes the right to have such Notes redeemed if there is a Change of
Control (as defined therein). The License Agreement may be terminated by the
Licensor if members of the Company's Board of Directors, as of September 1995,
do not constitute at least 50% of the Company's Board of Directors. Accordingly,
such provisions could discourage possible future attempts to gain control of the
Company (which attempts, if stockholders were offered a premium over the market
value of their Common Stock, might be viewed as beneficial to stockholders).
VOLATILITY OF PRICE OF COMMON STOCK
The trading price of the Company's Common Stock could be subject to
fluctuations in response to variations in quarterly operating results, the gain
or loss of significant contracts, changes in management, future announcements
concerning the Company, general trends in the industry and other events or
factors.
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<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the shares
of Common Stock offered by the Selling Stockholders hereby. All such proceeds
will be received by the Selling Stockholders.
SELLING STOCKHOLDERS
The address of each Selling Stockholder is c/o Family Golf Centers,
Inc., 225 Broadhollow Road, Melville, New York 11747. The following table sets
forth the name and principal position(s) over the past three years with the
Company of each of the Selling Stockholders and (a) the number of shares of
Common Stock each Selling Stockholder beneficially owned as of March 26, 1998;
(b) the number of shares of Common Stock available to be acquired by each
Selling Stockholder pursuant to the 1997 Plan being registered hereby, some or
all of which shares may be sold pursuant to this Prospectus; and (c) the number
of shares of Common Stock and the percentage, if 1% or more, of the total class
of Common Stock outstanding to be beneficially owned by each Selling Stockholder
following this offering, assuming the sale pursuant to this offering of all
Common Stock acquired by such Selling Stockholder pursuant to the 1997 Plan and
registered hereby and assuming no additional shares of Common Stock are acquired
or issued. There is no assurance, however, that any of the Selling Stockholders
will sell any or all of the shares of Common Stock offered by them hereunder.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
NUMBER OF SHARES OF NUMBER OF SHARES OF COMMON STOCK BENEFICIALLY
COMMON STOCK COMMON STOCK OWNED AFTER THIS OFFERING
SELLING STOCKHOLDERS POSITION WITH COMPANY BENEFICIALLY OWNED OFFERED HEREBY(1) NUMBER PERCENT
- -------------------- --------------------- ------------------ ----------------- ------ -------
<S> <C> <C> <C> <C> <C>
Krishnan P. Thampi President, Chief 186,977(2) 35,000 186,977(2) 1.4%
Operating Officer,
Assistant Secretary,
Treasurer and Director
James Ganley Director 28,833(3) 10,000 28,833(3) *
Jimmy C.M. Hsu Director 114,583(3)(4) 10,000 114,583(3)(4) *
Yupin Wang Director 3,333(5) 10,000 3,333(5) *
Robert J. Krause Senior Vice President - 64,317(6) 10,000 64,317(6) *
Strategic Planning and
Development
Margaret M. Santorufo Controller 1,668(7) 5,000 1,668(7) *
William Schickler Senior Vice President 34,498(8) 10,000 34,498(8) *
Pamela S. Charles Vice President,
Secretary and General 28,333(9) 10,000 28,337(9) *
Counsel
Jeffrey Key Chief Financial Officer 19,000(10) 60,000 19,000(10) *
</TABLE>
__________________________________
* Represents less than 1% of the number of shares outstanding.
(1) Includes shares of Common Stock underlying options which have been
granted to such Selling Stockholders, but which have not yet vested
and are not exercisable within 60 days of the date hereof.
(2) Includes 95,027 shares of Common Stock issuable upon exercise of
options which are currently exercisable.
(3) Includes 10,333 shares of Common Stock issuable upon exercise of
options which are currently exercisable.
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<PAGE>
(4) Does not include 66,250 shares of Common Stock beneficially owned by
Mr. Hsu's brother. Mr. Hsu disclaims beneficial ownership of his
brother's shares.
(5) Includes 3,333 shares of Common Stock issuable upon exercise of
options which are currently exercisable.
(6) Includes 54,317 shares of Common Stock issuable upon exercise of
options which are currently exercisable.
(7) Includes 1,667 shares of Common Stock issuable upon exercise of
options which are currently exercisable.
(8) Includes 34,498 shares of Common Stock issuable upon exercise of
options which are currently exercisable.
(9) Includes 28,333 shares of Common Stock issuable upon exercise of
options which are currently exercisable.
(10) Includes 4,000 shares of Common Stock issuable upon exercise of
warrants which are currently exercisable.
As the names and amounts of securities to be sold by additional Selling
Stockholders become known, the following information will be included in a
prospectus supplement: the name and position(s) over the last three years with
the Company of each Selling Stockholder; the number of shares of Common Stock
owned by each Selling Stockholder; the number of shares of Common Stock
available to be acquired by each Selling Stockholder pursuant to the 1997 Plan
and being registered for resale by the Selling Stockholders; and the number of
shares of Common Stock and the percentage, if 1% or more, of the total class of
Common Stock outstanding to be beneficially owned by each Selling Stockholder
following the offering.
Certain non-affiliates may use this Prospectus for reoffers and resales,
each of whom may sell up to the lesser of 1,000 shares of Common Stock or 1% of
the shares of Common Stock issuable under the 1997 Plan.
PLAN OF DISTRIBUTION
The Shares offered by this Prospectus may be sold from time to time by the
Selling Stockholders or by transferees thereof. No underwriting arrangements
have been entered into by the Selling Stockholders. The distribution of the
Shares by the Selling Stockholders may be effected in one or more transactions
that may take place in the over-the-counter market, including ordinary broker's
transactions, privately negotiated transactions, or through sales to one or more
dealers for resale of such shares as principals, at prevailing market prices at
the time of sale, prices related to prevailing market prices, or negotiated
prices. Underwriter's discounts and usual and customary or specifically
negotiated brokerage fees or commissions may be paid by a Selling Stockholder in
connection with sales of the Shares.
In order to comply with certain state securities laws, if applicable, the
Shares will be sold in such jurisdictions only through registered or licensed
brokers or dealers. In certain states, the Shares may not be sold unless such
Shares have been registered or qualified for sale in such state or an exemption
from registration or qualification is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Shares may not simultaneously engage in
market-making activities with respect to such Shares for a period of one or five
business days prior to the commencement of such distribution. In addition to,
and without limiting, the foregoing, each of the Selling Stockholders and any
other person participating in a distribution will be subject to the applicable
provisions of the Exchange Act and the rules and regulations thereunder,
including, without limitation, Regulation M, which provisions may limit the
timing of purchases and sales of any of the Shares by the Selling Stockholders
or any such other person. All of the foregoing
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<PAGE>
may affect the marketability of the Shares. The Company will bear all expenses
of the offering, except that the Selling Stockholders will pay any applicable
brokerage fees or commissions and transfer taxes.
LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation limits the liability of
directors to the maximum extent permitted by Delaware law. Delaware law provides
that directors of a company will not be personally liable for monetary damages
for breach of their fiduciary duties as directors, except for liability for (i)
any breach of their duty of loyalty to the company or its stockholders, (ii)
acts or omissions not in good faith or involving intentional misconduct or a
knowing violation of law, (iii) unlawful payment of dividends or unlawful stock
repurchases or redemptions as provided in Section 174 of the Delaware General
Corporation Law or (iv) any transaction from which the director derived an
improper personal benefit.
The Company's Certificate of Incorporation provides that the Company shall
indemnify its officers, directors, employees and other agents to the fullest
extent permitted by Delaware law.
The Company maintains a policy of insurance under which the directors and
officers of the Company are insured, subject to the limits of the policy,
against certain losses arising from claims made against such directors and
officers by reason of any acts or omissions covered under such policy in their
respective capacities as directors or officers, including liabilities under the
Securities Act. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
LEGAL MATTERS
The validity of the Shares has been passed upon for the Company by
Squadron, Ellenoff, Plesent & Sheinfeld, LLP, 551 Fifth Avenue, New York, New
York 10176. Kenneth R. Koch, Esq., a member of Squadron, Ellenoff, Plesent &
Sheinfeld, LLP, holds options to purchase shares of the Company's Common Stock.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1997 and for each of the years in the three year period then ended, incorporated
herein by reference to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997 have been so incorporated in reliance on the report
of Richard A. Eisner & Company, LLP, independent auditors, given upon the
authority of said firm as experts in accounting and auditing.
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<PAGE>
<TABLE>
<S> <C>
================================================================ ====================================================
No dealer, salesman, or any other person has been
authorized to give any information or to make any
representation not contained in this Prospectus in
connection with the offering made hereby, and, if given or
made, such information or representation must not be
relied upon as having been authorized by the Company. This
Prospectus does not constitute an offer to sell, or a 500,000 SHARES
solicitation of an offer to buy, any of the securities
offered hereby in any jurisdiction to any person to whom
it is unlawful to make such an offer or solicitation in FAMILY GOLF
such jurisdiction. Neither the delivery of this Prospectus
nor any sale made hereunder shall under any circumstances CENTERS, INC.
create any implication that there has been no change in
the affairs of the Company since the date hereof or that
the information contained herein is correct as of any time
subsequent to the dates as of which such information is
furnished.
COMMON STOCK
--------------------
TABLE OF CONTENTS
PAGE
Available Information....................................2
Incorporation of Certain Documents by Reference..........2
Special Note Regarding Forward Looking
Statements............................................3
The Company..............................................3
Risk Factors.............................................7
Use of Proceeds.........................................12
Selling Stockholders....................................12
Plan of Distribution....................................13
Limitation of Liability and Indemnification
of Directors and Officers............................14
Legal Matters...........................................14 _________________
Experts.................................................14
PROSPECTUS
_________________
APRIL 23, 1998
================================================================ ====================================================
</TABLE>
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3.INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated herein by reference and made a part of the Registration
Statement are the following documents filed by the Company with the Commission:
(1) the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1997; (2) the Company's Current Report on Form 8-K dated April 2, 1998; and
(11) the description of the Common Stock which is registered under Section 12 of
the Exchange Act, contained in the Company's Registration Statement on Form 8-A
dated November 8, 1994. All documents subsequently filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this Prospectus and prior to the termination of the offering
made hereby will be deemed to be incorporated by reference into this Prospectus
and to be a part hereof from the date of filing of such documents.
A copy of any and all of the information included in documents (but not
exhibits thereto except to the extent exhibits have been incorporated in such
documents) that have been incorporated by reference in this Prospectus but which
are not delivered with this Prospectus will be provided by the Company without
charge to any person to whom this Prospectus is delivered, upon the oral or
written request of such person. Such requests should be directed to Family Golf
Centers, Inc., 225 Broadhollow Road, Melville, New York 11747, Attention:
Chief Executive Officer. The Company's telephone number is (516) 694-1666.
ITEM 4.DESCRIPTION OF SECURITIES
Not Applicable.
ITEM 5.INTERESTS OF NAMED EXPERTS AND COUNSEL
The validity of the Common Stock issuable upon the exercise of options
granted pursuant to the Plans will be passed upon by Squadron, Ellenoff, Plesent
& Sheinfeld, LLP, 551 Fifth Avenue, New York, New York 10176. Kenneth R. Koch,
Esq., a member of Squadron, Ellenoff, Plesent & Sheinfeld, LLP, holds options to
purchase shares of the Company's Common Stock.
ITEM 6.INDEMNIFICATION OF DIRECTORS AND OFFICERS
Delaware General Corporation Law, Section 102(b)(7), subject to certain
exceptions, enables a corporation in its original certificate of incorporation
or an amendment thereto validly approved by stockholders to eliminate or limit
personal liability of members of its Board of Directors for violations of a
director's fiduciary duty of care. However, the elimination or limitation shall
not apply where there has been a breach of the duty of loyalty, failure to act
in good faith, intentional misconduct or a knowing violation of a law, the
payment of a dividend or approval of a stock repurchase which is deemed illegal
or an improper personal benefit is obtained. Article Nine of the Company's
Certificate of Incorporation includes the following language:
"No Director of the Corporation shall be liable to the Corporation or any
of its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that this provision does not eliminate the
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<PAGE>
liability of the director (i) for any breach of the director's duty of loyalty
to the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law.
(iii) under Section 174 of Title 8 of the Delaware Code, or (iv) for any
transaction from which the director derived an improper personal benefit. For
purposes of the prior sentence, the term "damages" shall, to the extent
permitted by law include without limitation, any judgment, fine, amount paid ln
settlement, penalty, punitive damages, excise or other tax assessed with respect
to an employee benefit plan, or expense of any nature (including, without
limitation, counsel fees and disbursements). Each person who serves as a
director of the Corporation while this Article NINTH is in effect shall be
deemed to be doing so in reliance on the provisions of this Article NINTH, and
neither the amendment or repeal of this Article NINTH, nor the adoption of any
provision of this Certificate of Incorporation inconsistent with this Article
NINTH, shall apply to or have any effect on the liability or alleged liability
of any director of the Corporation for, arising out of, based upon, or in
connection with any acts or omissions of such director occurring prior to such
amendment, repeal, or adoption of an inconsistent provision. The provisions of
this Article NINTH are cumulative and shall be in addition to and independent of
any and all other limitations on or eliminations of the liabilities of directors
of the Corporation, as such, whether such limitations or eliminations arise
under or are created by any law, rule, regulation, by-law, agreement, vote of
shareholders or disinterested directors, or otherwise."
Delaware General Corporation Law, Section 145, permits a corporation
organized under Delaware law to indemnify directors and officers with respect to
any matter in which the director or officer acted in good faith and in a manner
he reasonably believed to be not opposed to the best interests of the Company,
and, with respect to any criminal action, had reasonable cause to believe his
conduct was lawful. Article Eight of the Company's Certificate of Incorporation
includes the following language:
"A. Each person who was or is made a party or is threatened to be made a
party to or is otherwise involved in any action, suit, or proceeding, whether
civil, criminal, administrative, or investigative (hereinafter a "proceeding"),
by reason of the fact that he or she is or was a director, officer, employee, or
agent of the Corporation or any of its direct or indirect subsidiaries or is or
was serving at the request of the Corporation as a director, officer, employee,
or agent of any other corporation or of a partnership, joint venture, trust, or
other enterprise, including service with respect to an employee benefit plan
(hereinafter an "indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a director, officer, employee, or agent or in
any other capacity while serving as a director, officer, employee, or agent,
shall be indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than permitted prior thereto), against all expense liability, and loss
(including attorneys' fees, judgments, fines, excise or other taxes assessed
with respect to an employee benefit plan, penalties, and amounts paid in
settlement) reasonably incurred or suffered by such indemnitee in connection
therewith, and such indemnification shall continue as to an indemnitee who has
ceased to be a director, officer, employee, or agent and shall inure to the
benefit of the indemnitee's heirs, executors, and administrators; provided,
however, that, except as provided in Paragraph C of this Article EIGHTH with
respect to proceedings to enforce rights to indemnification, the Corporation
shall indemnify any such indemnitee in connection with a proceeding (or part
thereof) initiated by such indemnitee only if such proceeding (or part thereof)
was authorized by the Board of Directors of the Corporation.
B. The right to indemnification conferred in Paragraph A of this Article
EIGHTH shall include the right to be paid by the Corporation the expenses
incurred in defending any proceeding for which such right
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<PAGE>
to indemnification is applicable in advance of its final disposition
(hereinafter an "advancement of expenses"); provided, however, that, if the
Delaware General Corporation Law requires, an advancement of expenses incurred
by an indemnitee in his or her capacity as a director or officer (and not in any
other capacity in which service was or is rendered by such indemnitee,
including, without limitation, service to an employee benefit plan) shall be
made only upon delivery to the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
this Article EIGHTH or otherwise.
C. The rights to indemnification and to the advancement of expenses
conferred in Paragraphs A and B of this Article EIGHTH shall be contract rights.
If a claim under Paragraph A or B of this Article EIGHTH is not paid in full by
the Corporation within sixty days after a written claim has been received by the
Corporation, except in the case of a claim for an advancement of expenses, in
which case the applicable period shall be 20 days, the indemnitee may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim. If successful in whole or in part in any such suit, or in a suit
brought by the Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the indemnitee shall be entitled to be paid also the
expense of prosecuting or defending such suit. In (i) any suit brought by the
indemnitee to enforce a right to indemnification hereunder (but not in a suit
brought by an indemnitee to enforce a right to an advancement of expenses) it
shall be a defense that the indemnitee has not met any applicable standard for
indemnification set forth in the Delaware General Corporation Law, and (ii) any
suit by the Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the Corporation shall be entitled to recover such
expenses upon a final adjudication that the indemnitee has not met any
applicable standard for indemnification set forth in the Delaware General
Corporation Law. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification of the
indemnitee is proper in the circumstances because the indemnitee has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its Board of
Directors independent legal counsel, or its stockholders) that the indemnitee
has not met such applicable standard of conduct, shall create a presumption that
the indemnitee has not met the applicable standard of conduct or, ln the case of
such a suit brought by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or by {he Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or to such
advancement of expenses, under this Article EIGHTH or otherwise, shall be on the
Corporation.
D. The rights to indemnification and to the advancement of expenses
conferred in this Article EIGHTH shall not be exclusive of any other right which
any person may have or hereafter acquire under any statute, this certificate of
incorporation, by-law, agreement, vote of stockholders or disinterested
directors, or otherwise."
In addition, the Company maintains a directors' and officers' liability
insurance policy.
II-3
<PAGE>
ITEM 7.EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
ITEM 8.EXHIBITS
3.1 Certificate of Incorporation.(1)
3.2 By-Laws.(1)
4.1 Family Golf Centers, Inc. 1997 Stock Incentive Plan.(2)
5.1 Opinion of Squadron, Ellenoff, Plesent & Sheinfeld, LLP dated
April 23, 1998.(*)
23.1 Consent of Squadron, Ellenoff, Plesent & Sheinfeld, LLP
(included in Exhibit 5.1).(*)
23.2 Consent of Richard A. Eisner & Company, LLP.(*)
24.1 Power of Attorney (included on the signature page hereof).(*)
- --------------------
(1) Incorporated by reference to the Company's Registration Statement on
Form SB-2 dated September 12, 1994.
(2) Incorporated by reference to the Company's Proxy Statement on Schedule
14A filed with the Securities and Exchange Commission on April 30, 1997.
(*) Filed herewith.
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities
Act;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
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<PAGE>
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Melville, State of New York, on the 17th day of
April, 1998.
FAMILY GOLF CENTERS, INC.
By: /s/ Dominic Chang
-----------------------
Dominic Chang
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Dominic Chang and Krishnan P. Thampi or any one
of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place, and stead, in
any and all capacities, to sign any and all pre- or post-effective amendments to
this Registration Statement, and to file the same with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or their or his substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Dominic Chang
- ---------------------------- Chairman of the Board and Chief April 17, 1998
Dominic Chang Executive Officer
(Principal Executive Officer)
/s/ Krishnan P. Thampi
- ---------------------------- Chief Operating Officer, President, Assistant April 17, 1998
Krishnan P. Thampi Secretary, Treasurer and Director
/s/ James Ganley
- ---------------------------- Director April 17, 1998
James Ganley
/s/ Jimmy C.M. Hsu
- ---------------------------- Director April 17, 1998
Jimmy C.M. Hsu
/s/ Yupin Wang Director April 17, 1998
- ----------------------------
Yupin Wang
/s/ Jeffrey Key
- ---------------------------- Chief Financial Officer April 17, 1998
Jeffrey Key (Principal Financial Officer)
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
3.1 Certificate of Incorporation.(1)
3.2 By-Laws.(1)
4.1 Family Golf Centers, Inc. 1997 Stock Incentive Plan.(2)
5.1 Opinion of Squadron, Ellenoff, Plesent & Sheinfeld, LLP dated
April 23, 1998.(*)
23.1 Consent of Squadron, Ellenoff, Plesent & Sheinfeld, LLP
(included in Exhibit 5.1).(*)
23.2 Consent of Richard A. Eisner & Company, LLP.(*)
24.1 Power of Attorney (included on the signature page hereof).(*)
- --------------------
(1) Incorporated by reference to the Company's Registration Statement on
SB-2 dated September 12, 1994.
(2) Incorporated by reference to the Company's Proxy Statement on Schedule
14A filed with the Securities and Exchange Commission on April 30, 1997.
(*) Filed herewith.
II-7
<PAGE>
EXHIBIT 5.1
April 23, 1998
Family Golf Centers, Inc.
225 Broadhollow Road
Melville, New York 11747
Re: REGISTRATION ON FORM S-8
Ladies and Gentlemen:
We have acted as counsel to Family Golf Centers, Inc., a Delaware
corporation (the "Company"), in connection with the preparation of its
Registration Statement on Form S-8 under the Securities Act of 1933 (the
"Registration Statement"), to which this opinion is to be filed as an exhibit.
The Registration Statement relates to the issuance of (i) up to an aggregate of
500,000 shares (the "Plan Shares") of the Company's Common Stock, par value $.01
per share (the "Common Stock"), pursuant to the Family Golf Centers, Inc.'s 1997
Stock Incentive Plan (the "1997 Plan") and (ii) up to an aggregate of 12,500
shares of Common Stock (the "Other Shares" and, together with the Plan Shares,
the "Shares") pursuant to certain stock option agreements.
In so acting, we have examined such records and documents, including the
1997 Plan and made such examinations of law as we have deemed relevant in
connection with this opinion. This opinion relates only to the laws of the State
of New York, the corporate laws of the State of Delaware and the federal laws of
the United States of America in force on the date hereof.
Based upon the foregoing, and subject to the qualifications stated
herein, we are of the opinion that, when issued upon the exercise of and in
accordance with the terms of stock options duly and validly granted against
payment therefor, the Shares, which are then originally issued by the Company,
will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Registration Statement. In giving this consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act of 1933 and the rules and regulations of
the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Squadron, Ellenoff, Plesent & Sheinfeld, LLP
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
on Form S-8 of our report dated March 26, 1998 on our audit of the financial
statements of Family Golf Centers, Inc. and subsidiaries as at December 31,
1997 and for each of the years in the three-year period ended December 31,
1997. We also consent to the reference to our firm under the caption
"Experts."
/s/ Richard A. Eisner & Company, LLP
New York, New York
April 20, 1996
