<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 4, 1996
REGISTRATION STATEMENT NO. 333-12191
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
FLORIDA PANTHERS HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
FLORIDA 7941 65-0676005
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Code Number) Number)
H. WAYNE HUIZENGA
CHAIRMAN OF THE BOARD
FLORIDA PANTHERS HOLDINGS, INC.
100 NORTHEAST THIRD AVENUE, SECOND FLOOR 100 NORTHEAST THIRD AVENUE, SECOND FLOOR
FORT LAUDERDALE, FLORIDA 33301 FORT LAUDERDALE, FLORIDA 33301
(954) 768-1900 (954) 768-1900
(Address, including zip code, and telephone number, (Name, address, including zip code, and telephone
including number, including area code, of agent for service)
area code, of registrant's principal executive offices)
</TABLE>
------------------------
Copies to:
<TABLE>
<S> <C>
STEPHEN K. RODDENBERRY, ESQ. THOMAS J. MURPHY, ESQ.
AKERMAN, SENTERFITT & EIDSON, P.A. MCDERMOTT, WILL & EMERY
ONE S.E. THIRD AVENUE, 28TH FLOOR 227 WEST MONROE STREET
MIAMI, FLORIDA 33131-1704 CHICAGO, IL 60606-5096
(305) 374-5600 (312) 372-2000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of the Registration Statement.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED NOVEMBER 4, 1996
PROSPECTUS
, 1996
7,300,000 SHARES
FLORIDA PANTHERS HOLDINGS, INC.
[FLORIDA PANTHERS LOGO] CLASS A COMMON STOCK
All the shares of Class A Common Stock offered hereby are being sold by
Florida Panthers Holdings, Inc. Of the 7,300,000 shares offered hereby,
2,700,000 shares are being offered to the public in an Initial Public Offering
and 4,600,000 shares are being offered in a Concurrent Offering by the Company
directly to certain investors at a price per share equal to the Initial Public
Offering price per share less the underwriting discounts and commissions but
including the Placement Agent fee. See "Concurrent Offering." The consummation
of the Concurrent Offering and the Initial Public Offering are contingent upon
each other.
Prior to the Offerings, there has been no public market for the Class A
Common Stock. It is currently anticipated that the Initial Public Offering price
will be $10.00 per share. See "Underwriting" for a discussion of the factors to
be considered in determining the Initial Public Offering price. Application has
been made to have the Class A Common Stock listed on The Nasdaq National Market
under the symbol "PUCK."
The Company has two classes of Common Stock: Class A Common Stock, which is
offered hereby, and Class B Common Stock, all of which is currently owned by Mr.
H. Wayne Huizenga, the Company's principal shareholder and the Chairman of the
Board. Each share of Class A Common Stock is entitled to one vote, and each
share of Class B Common Stock is entitled to 10,000 votes, on all matters
submitted to the shareholders for approval. Accordingly, following the
consummation of the Offerings, Mr. Huizenga, as the sole holder of the Class B
Common Stock, will be able to control the management and policies of the Company
and substantially all the matters submitted to the shareholders for approval,
including the election of the directors. The shares of Common Stock are subject
to certain National Hockey League requirements and restrictions with respect to
ownership. THE SHARES OF CLASS B COMMON STOCK WERE ISSUED TO MR. HUIZENGA TO
SATISFY CERTAIN CONTROL REQUIREMENTS OF THE NATIONAL HOCKEY LEAGUE. See "The
National Hockey League -- Restriction on Ownership -- Control Requirement" and
"Description of Capital Stock."
THE SECURITIES TO BE OFFERED HEREBY SHOULD NOT BE PURCHASED WITH THE
EXPECTATION THAT THE MARKET PERFORMANCE OF THE COMPANY WILL BE COMPARABLE TO THE
PAST PERFORMANCE OF OTHER COMPANIES WITH WHICH MR. HUIZENGA HAS BEEN INVOLVED.
IN PARTICULAR, PROSPECTIVE PURCHASERS SHOULD BE AWARE THAT INVESTMENTS IN SPORTS
FRANCHISES HAVE NOT HISTORICALLY PROVIDED HIGH RATES OF RETURN COMPARED TO OTHER
INVESTMENTS OF SIMILAR RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE CLASS A COMMON STOCK OFFERED HEREBY.
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.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
PRICE UNDERWRITING PROCEEDS
TO THE DISCOUNTS AND TO THE
PUBLIC COMMISSIONS(1) COMPANY(2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share
Initial Public Offering.................. $ $ $
Concurrent Offering...................... $ $ $
Total(3)................................... $ $ $
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Donaldson, Lufkin & Jenrette Securities Corporation and Raymond James &
Associates, Inc. are also acting as the Company's Placement Agents in
connection with the Concurrent Offering, and the Company has agreed to pay
the Placement Agents a fee of $ per share. In addition, the Company
has agreed to indemnify the Underwriters and the Placement Agents against
certain liabilities, including liabilities under the Securities Act of
1933, as amended. See "Underwriting."
(2) Before deducting expenses payable by the Company, estimated at $590,000.
(3) The Company has granted the several Underwriters an option, exercisable
within 30 days of the date hereof, to purchase up to an aggregate of
405,000 additional shares of Class A Common Stock on the same terms as set
forth above solely to cover over-allotments, if any. If such option is
exercised in full, the total Price to Public, Underwriting Discounts and
Commissions and Proceeds to Company will be $ , $ and $ ,
respectively. See "Underwriting."
The shares of Class A Common Stock are being offered in the Initial Public
Offering by the several Underwriters named herein, subject to prior sale, when,
as, and if accepted by them, subject to certain prior conditions, including the
right of the Underwriters to reject orders in whole or in part. It is expected
that the delivery of shares of Class A Common Stock will be made in New York,
New York on or about , 1996.
DONALDSON, LUFKIN & JENRETTE RAYMOND JAMES & ASSOCIATES, INC.
SECURITIES CORPORATION
<PAGE> 3
[INSERT PHOTOS HERE]
The inside front cover will consist of a foldout of three pages each of which
has a number of pictures of the Florida Panthers players, the crowd at a hockey
game, Eastern Conference Championship Trophy, the Panthers' logo, the
scoreboard, the ice rink, the words "Power Play" and the 1996 Eastern Conference
championship flag.
------------------------------------------------------------
THE COMPANY INTENDS TO FURNISH ITS SHAREHOLDERS WITH ANNUAL REPORTS
CONTAINING AUDITED FINANCIAL STATEMENTS CERTIFIED BY ITS INDEPENDENT AUDITORS.
IN CONNECTION WITH THESE OFFERINGS, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A
COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET, OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Unless the context otherwise requires, all
information contained in this Prospectus assumes no exercise of the
over-allotment option. This Prospectus contains certain forward-looking
statements which may involve certain risks and uncertainties. The actual results
may differ materially from the results anticipated in these forward-looking
statements as a result of certain factors set forth under "Risk Factors" and
elsewhere in this Prospectus.
Florida Panthers Holdings, Inc. (the "Company") is a newly-formed Florida
corporation. The operations of the business described in this Prospectus are
presently conducted by Florida Panthers Hockey Club, Ltd. (the "Partnership"),
Arena Development Company, Ltd. ("Arena Development") and Arena Operating
Company, Ltd. ("Arena Operator"), all of which will be contributed to the
Company in connection with the Reorganization. Through its ownership of Decoma
Investment, Inc. I ("Decoma I") and Decoma Investment, Inc. II ("Decoma II"),
the Company will also own approximately 78% of the partnership interests (the
"Decoma Interests") in Decoma Miami Associates, Ltd., a Florida limited
partnership ("Decoma") which operates the Miami Arena. Unless the context
otherwise requires, prior to the completion of the Reorganization, references to
the "Company" throughout this Prospectus, including the financial information
contained herein, refer to the operations of the Partnership, Arena Development
and Arena Operator. After the completion of the Reorganization, references to
the "Company" refer to the operations of Florida Panthers Holdings, Inc. and its
subsidiaries. References herein to the "Offerings" include the 2,700,000 shares
of the Company's Class A Common Stock, par value $.01 per share (the "Class A
Common Stock"), being offered in an Initial Public Offering (the "Initial Public
Offering") as well as the 4,600,000 shares of Class A Common Stock to be sold by
the Company directly to certain investors concurrent with the Initial Public
Offering (the "Concurrent Offering"). See "Concurrent Offering."
THE COMPANY
The Company owns and operates the Florida Panthers, a professional hockey
team (the "Panthers") of the National Hockey League (the "NHL"), an
unincorporated not-for-profit association, Arena Development, a Florida limited
partnership formed for the purpose of developing a new multi-purpose,
state-of-the-art sports and entertainment center (the "Broward County Civic
Arena" or the "Facility") in Broward County, Florida and Arena Operator, a
Florida limited partnership formed for the purpose of managing and operating the
Broward County Civic Arena. In addition, the Company owns approximately 78% of
the partnership interests in Decoma, a Florida limited partnership which
operates the Miami Arena in which the Panthers currently play.
HOCKEY OPERATIONS
The Panthers commenced play in the NHL on October 5, 1993 and, in their
third season, reached the Stanley Cup Finals. Currently, the Company derives
substantially all of its revenue from its hockey operations. This revenue is
primarily derived from (i) the sale of tickets to the Panthers' home games, (ii)
contracts with broadcast organizations and (iii) advertising and promotions. A
large portion of the Company's annual revenue is determinable at the
commencement of each hockey season based on season ticket sales and contracts
with broadcast organizations and sponsors.
The Company believes that the NHL is poised for significant continued
growth as evidenced by record ticket sales estimated to total approximately
$520.0 million during the 1995-96 season (an estimated 23% increase in revenue
from the 1993-94 season) and an estimated increase, from approximately $18.0
million during the 1993-94 season to approximately $21.0 million during the
1995-96 season, in NHL Enterprises, L.P. ("NHLE") net revenue from retail sales
of NHL licensed merchandise. In addition, prior to the commencement of the
1994-95 season, the NHL (i) entered into a new, seven-year $275.0 million
television contract (the "Fox Contract") with Fox Broadcasting Co. ("Fox"), and
(ii) extended its existing contract with ESPN, Inc. ("ESPN") through the end of
the 1998-99 season (pursuant to which ESPN agreed to pay the NHL approximately
$65.0 million) for the national broadcast of certain NHL games in the U.S. The
3
<PAGE> 5
NHL also renewed its contract with Molson Breweries of Canada Limited ("Molson")
prior to the commencement of the 1994-95 season, pursuant to which Molson agreed
to pay the NHL approximately $171.0 million for the rights to broadcast certain
NHL games throughout Canada for four seasons. The Company shares equally with
the other 25 teams with respect to net revenue generated from NHL national
broadcast contracts and NHLE net revenue, which for the 1995-96 season were $2.8
million and $885,000, respectively. See "The National Hockey League -- Summary
of League Revenue and Expenses" and "Business -- Hockey Operations -- Sources of
Revenue." The NHL estimates that the aggregate number of television households
in the United States that tuned in to an NHL national telecast increased from
53.9 million during the 1993-94 season to 87.5 million during the 1995-96
season, an increase of 62%.
The Company intends to capitalize on the increasing popularity of hockey,
in general, and the success achieved by the Panthers during the 1995-96 season,
in particular, by continuing to advertise and market the Panthers as well as
continuing to enhance the service and entertainment provided at games.
ARENA DEVELOPMENT AND OPERATIONS
In June 1996, the Company entered into an agreement (the "Development
Agreement") with Broward County to develop the Broward County Civic Arena, which
will be owned by Broward County. Pursuant to the Development Agreement, Broward
County purchased a 135 acre parcel of land (the "Development Site"), which will
be used primarily for the development of the Facility and also for possible
future ancillary development. Broward County has agreed to provide up to $184.7
million for the development of the Broward County Civic Arena, including the
purchase of the Development Site. See "Risk Factors -- Arena Development and
Operations -- Development of the Broward County Civic Arena" and
"Business -- Arena Development and Operations -- Development of the Broward
County Civic Arena."
In connection with the development of the Broward County Civic Arena, the
Company entered into a 30-year license agreement (the "License Agreement") and
co-terminus operating agreement (the "Operating Agreement") with Broward County,
pursuant to which the Company will utilize and operate the Broward County Civic
Arena beginning on October 1, 1998, provided that construction is completed on a
timely basis. Under the License Agreement, the Company is entitled to retain 95%
of the revenue derived from the sale of general seating tickets to the Panthers'
home games, and all of certain other hockey related advertising and
merchandising revenue. Five percent of the revenue derived from the sale of
general seating tickets together with revenues from luxury suites, premium
seating and parking are considered Facility operating revenue in determining net
operating income. The Company is entitled to receive the first $14.0 million of
net operating income generated from the Broward County Civic Arena and 80% (with
Broward County receiving 20%) of the net operating income in excess of $14.0
million. The Company believes that successful operation of the Broward County
Civic Arena will significantly enhance the Company's total revenue. See
"Business -- Arena Development and Operations."
The Company owns approximately 78% of the partnership interests in Decoma.
Decoma derives all of its revenue from its Miami Arena operations. This revenue
is primarily derived from (i) seat use charges imposed on tickets sold at the
Miami Arena, (ii) net operating income and (iii) fixed and variable operating
payments generated from the Miami Arena. See "Risk Factors -- Litigation
Relating to Miami Arena."
The Company's principal executive offices are located at 100 Northeast
Third Avenue, Second Floor, Fort Lauderdale, Florida 33301 and its telephone
number is (954) 768-1900. The Company was incorporated in Florida on July 3,
1996.
4
<PAGE> 6
THE OFFERINGS
<TABLE>
<S> <C>
Class A Common Stock Offered
Initial Public Offering................. 2,700,000 shares
Concurrent Offering..................... 4,600,000 shares
-----------------
Total................................. 7,300,000 shares
Common Stock to be Outstanding after the
Offerings
Class A Common Stock(1)................. 12,320,678 shares
Class B Common Stock(2)................. 255,000 shares
Total................................. 12,575,678 shares
-----------------
Use of Proceeds.............................. To repay indebtedness and for working capital
and general corporate purposes. See "Use of
Proceeds."
Proposed Nasdaq National Market Symbol....... PUCK
</TABLE>
- ------------------------------
(1) Does not include 2,600,000 shares of Common Stock reserved for issuance
under the Company's stock option plan, of which 862,765 shares are subject
to options to be granted upon consummation of the Offerings at an exercise
price per share equal to the Initial Public Offering price. See
"Management -- Stock Option Plan."
(2) All the outstanding shares of Class B Common Stock are currently owned by
Mr. Huizenga.
5
<PAGE> 7
SUMMARY FINANCIAL DATA
The summary financial data set forth below is derived from and should be
read in conjunction with the financial statements, including the notes thereto,
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" contained elsewhere in this Prospectus. Historical financial data
for Decoma I and Decoma II are not material to the results of operations of the
Company and have not been included in the historical data herein. The pro forma
financial data included herein are presented for informational purposes only and
may not reflect the Company's future results of operations and financial
position or what the results of operations and financial position of the Company
would have been had such transactions actually occurred as of the dates
indicated.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED JUNE 30,
----------------------------------------------------------------
1996
SEVEN MONTHS ------------------------------------------
ENDED PRO FORMA,
JUNE 30, 1993 1994 1995 ACTUAL PRO FORMA(1) AS ADJUSTED(2)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Tickets............................ $ -- $ 14,784 $ 9,559 $ 23,226 $ 23,226 $ 23,226
Television and radio............... -- 3,163 3,717 5,141 5,141 5,141
Advertising and promotions......... -- 1,534 1,297 2,192 2,192 2,192
NHL Enterprise rights.............. -- 761 846 885 885 885
Decoma arena operations............ -- -- -- -- 1,082 1,082
Other, primarily arena
concessions...................... -- 1,440 912 1,561 1,561 1,561
----- -------- -------- -------- -------- --------
Total revenue.................. -- 21,682 16,331 33,005 34,087 34,087
----- -------- -------- -------- -------- --------
Cost of Revenue:
Team operations.................... -- 17,691 15,652 32,639 32,258 32,258
Ticketing and arena operations..... -- 2,498 1,743 3,700 3,700 3,700
Selling, general and
administrative................... 768 5,512 5,351 7,814 8,371 8,371
----- -------- -------- -------- -------- --------
Total cost of revenue.......... 768 25,701 22,746 44,153 44,329 44,329
----- -------- -------- -------- -------- --------
Amortization and depreciation........ 2 6,444 5,980 9,427 9,741 9,741
----- -------- -------- -------- -------- --------
Operating loss................. (770) (10,463) (12,395) (20,575) (19,983) (19,983)
Interest income (expense), net....... (167) (2,463) (3,703) (4,908) (4,908) 122(3)
Minority Interest in Decoma.......... -- -- -- -- (98) (98)
----- -------- -------- -------- -------- --------
Net loss............................. $(937) $(12,926) $(16,098) $(25,483) $(24,989) $(19,959)
===== ======== ======== ======== ======== ========
PRO FORMA DATA:
Net loss per share................... $ (5.79)(4) $ (4.74)(5) $ (1.97)(6)
======== ======== ========
Weighted average shares
outstanding........................ 4,405(4) 5,276(5) 10,114(6)
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1996
----------------------------------------
PRO FORMA,
ACTUAL PRO FORMA(7) AS ADJUSTED(8)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Total current assets..................................................... $ 3,402 $ 3,756 $ 25,868
Total current liabilities................................................ 65,562 27,614 7,426
Total assets............................................................. 38,396 47,760 69,872
Long-term obligations.................................................... 28,277 28,277 3,277
Partners' deficit/shareholders' equity................................... (55,443) (8,131) 59,169
</TABLE>
- ------------------------------
(1) Adjusted to reflect the Reorganization as if it had occurred at the
beginning of the period presented.
(2) Adjusted to reflect the Reorganization and the Offerings (assuming an
Initial Public Offering price of $10.00 per share and a Concurrent Offering
price of $9.65 per share), and the application of a portion of the net
proceeds thereof to repay indebtedness as described under "Use of Proceeds"
as if such events had occurred at the beginning of the period presented.
(3) Does not give effect to additional interest expense the Company will incur
if it incurs debt under the New Credit Facility, which interest expense may
materially reduce net earnings or increase net loss. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
(4) Net loss per share and weighted average shares outstanding are determined
based on the 4,404,710 shares to be issued in connection with the
Reorganization (excluding the contribution of the Decoma Interests) as if
they had been outstanding for the entire period presented.
(5) Net loss per share and weighted average shares outstanding are determined
based on the 5,275,678 shares to be issued in connection with the
Reorganization as if they had been outstanding for the entire period
presented.
(6) Net loss per share and weighted average shares outstanding are determined
based on the 5,275,678 shares to be issued in connection with the
Reorganization and the 4,838,710 shares (of the 7,300,000 shares offered in
the Offerings) to be issued to repay the Company's outstanding indebtedness
as if they had been outstanding for the entire period presented.
(7) Adjusted to reflect the Reorganization as if it had occurred on June 30,
1996.
(8) Adjusted to reflect the Reorganization and the Offerings (assuming an
Initial Public Offering price of $10.00 and a Concurrent Offering price of
$9.65 per share) as if such events had occurred on June 30, 1996.
6
<PAGE> 8
RISK FACTORS
Prospective investors should consider carefully the following risk factors,
together with the other information contained in this Prospectus, in evaluating
an investment in the shares of Class A Common Stock offered hereby. The
following factors and other information set forth in this Prospectus contain
certain forward-looking statements involving risks and uncertainties. The
Company's actual results may differ materially from the results anticipated in
these forward-looking statements as a result of certain factors set forth in
this section and elsewhere in this Prospectus.
GENERAL
HISTORY OF LOSSES AND UNCERTAINTY OF FUTURE RESULTS
The Company has not generated any earnings to date and has incurred net
losses of approximately $937,000, $12.9 million, $16.1 million and $25.5 million
for the seven months ended June 30, 1993 and the years ended June 30, 1994, 1995
and 1996, respectively. As of June 30, 1996, the Company had a deficit of
approximately $55.4 million. The Panthers currently play in the Miami Arena,
which has a seating capacity of 14,703, one of the smallest arenas in the NHL.
Under the terms of the Panthers' current lease, the Miami Heat of the National
Basketball Association, as the primary tenant, controls revenue generated from
the sale of suites and a majority of the advertising, limiting the Company's
ability to generate certain revenue which is generally available to other NHL
franchises. In addition, the size of the Miami Arena limits the Company's
ability to generate revenue from the sale of additional tickets. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business -- Hockey Operations -- Miami Arena." It is currently
anticipated that the Panthers will incur net losses which could exceed $20.0
million per annum while playing at the Miami Arena. In the event the Broward
County Civic Arena is not completed in time for the 1998-99 season, the Company
could incur additional operating losses. There can be no assurance that the
Company will ever achieve a profitable level of operations or that
profitability, if achieved, can be sustained on an ongoing basis. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
NEED FOR ADDITIONAL CAPITAL
The continuing operations of the Company's business may require substantial
capital infusions on a continuing basis. The Company intends to use the net
proceeds of the Offerings, cash flow from operations and additional borrowings
to finance its operations. Whether or when the Company can achieve cash flow
levels sufficient to support its operations cannot be accurately predicted.
Unless such cash flow levels are achieved, the Company will require additional
borrowings or the sale of debt or equity securities, or some combination
thereof, to provide funding for its operations. In the event the Company cannot
generate sufficient cash flow from its operations, or is unable to borrow or
otherwise obtain additional funds to finance its operations, the Company's
financial condition or results of operations could be adversely affected. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
CONTROL BY H. WAYNE HUIZENGA; VOTING RIGHTS
The Company created a dual class of common stock in connection with the
Reorganization, comprised of Class A Common Stock and Class B Common Stock
(collectively, the "Common Stock"). The Company issued shares of Class B Common
Stock to Mr. Huizenga to satisfy certain control requirements of the NHL. In
accordance with the NHL Constitution and the Bylaws, a change in the controlling
shareholder must be approved by the NHL. As such, Mr. Huizenga is required to
maintain control of the Company unless the NHL approves the transfer of his
controlling interests. See "The National Hockey League -- Control Requirement."
Class A Common Stock and Class B Common Stock vote together on each matter
submitted to the shareholders for approval. Each share of Class A Common Stock
is entitled to one vote, and each share of Class B Common Stock is entitled to
10,000 votes. Consequently, Mr. Huizenga, as the sole holder (holding 255,000
shares) of the Class B Common Stock, will be able to control the management and
policies
7
<PAGE> 9
of the Company and the outcome of substantially all of the matters submitted to
the shareholders for approval, including the election of directors. See
"Management," "Certain Transactions," "Principal Shareholders," and "Shares
Eligible for Future Sale."
Neither the Company's charter nor its bylaws restrict the transfer of the
Class B Common Stock. Accordingly, subject to the requirements of federal and
state securities laws, the 180 day lock-up agreement with the Underwriters and
the approval of the NHL, shares of Class B Common Stock may be owned by persons
other than Mr. Huizenga. As a result, control of the Company may be transferred
by Mr. Huizenga to other persons without the approval of the holders of Class A
Common Stock and Mr. Huizenga may receive a control premium, which may be
significant, in connection with such sale.
LITIGATION RELATING TO MIAMI ARENA
On June 17, 1996, the Miami Sports and Exhibition Authority ("MSEA" or the
"Plaintiff") filed a lawsuit against, among others, Mr. Huizenga, Richard C.
Rochon, a director of the Company, the Panthers, Decoma, Arena Development and
Arena Operator (collectively, the "Defendants") in the United States District
Court of the Southern District of Florida. The suit alleges that the Defendants
have conspired to restrain trade in the South Florida sports and entertainment
facility market by monopolizing or attempting to monopolize such market in
violation of federal antitrust laws. The Plaintiff seeks, among other things, to
(i) nullify certain provisions of the Miami Arena Contract, dated as of December
13, 1990 (the "Miami Arena Contract"), by and between Decoma and MSEA,
specifically provisions restricting MSEA from developing a new state-of-the-art
arena in Miami (the "New Arena"), and (ii) force the Defendants to divest their
control over the Miami Arena and the Broward County Civic Arena. In addition,
the Plaintiff seeks treble damages as well as reimbursement for reasonable
attorneys' fees and costs. The Defendants believe that the suit is without merit
and intend to vigorously defend against this suit. An unfavorable outcome of
this litigation may have a material adverse effect on the Company's financial
condition or results of operations.
BUSINESS CONCENTRATION
Upon completion of the Offerings, the business of the Company will be to
own and operate the Panthers, Arena Development, Arena Operator and Decoma
(which will only be owned in part). The Company expects that a significant
portion of the Company's revenue will continue to be generated by the Panthers
following the consummation of the Offerings. The Panthers have not been
profitable since their inception. The failure on the part of the Company to (i)
maintain a winning hockey franchise, (ii) continue to receive revenue from its
Miami Arena operations, (iii) successfully develop the Broward County Civic
Arena on schedule or (iv) operate the Facility efficiently, could have a
material adverse effect on the Company's financial condition or results of
operations.
RISKS RELATING TO EXPANSION OF BUSINESS; USES OF EXCESS PROCEEDS
Although the Company is not presently engaged in negotiations to acquire
other businesses, it may, as part of its growth strategy, consider making future
acquisitions of certain sports-related or non-sports-related businesses as well
as certain commercial properties, such as ice rinks and other facilities which
can be utilized by the Panthers and the general public, including properties
which may be owned by Mr. Huizenga or his affiliates. The Company may make such
acquisitions with cash (including the proceeds derived from the Offerings) or
with stock or a combination thereof. If the Company does make any such
acquisitions, various associated risks may be encountered, including potential
dilution to the shares of Class A Common Stock then outstanding due to
additional shares of Common Stock (which may include shares of Class B Common
Stock) being issued in connection with the acquisitions, possible goodwill
amortization, diversion of management's attention, possible environmental and
other regulatory costs and unanticipated problems or liabilities, some or all of
which could have a material adverse effect on the Company's financial condition
or results of operations. In addition, transactions, including acquisitions,
which would result in the issuance of a significant number of shares of Common
Stock (which may include shares of Class B Common Stock) may require consent of
the NHL. There is no assurance that the Company will be able to obtain such
consent from
8
<PAGE> 10
the NHL. See "-- Hockey Operations -- Restrictions on the Company and Certain of
its Shareholders as a Result of League Membership."
DEPENDENCE ON KEY PERSONNEL
For the foreseeable future, the Company will be materially dependent upon
the services of Mr. Huizenga, the Chairman of the Board, Mr. Richard H. Evans,
President and Chief Operating Officer, and Mr. William A. Torrey, President of
Florida Panthers Hockey Club, Inc. The loss of the services of any of these
individuals could have a material adverse effect on the Company. See
"Management -- Executive Officers and Directors." The Company does not carry key
man life insurance on any of its officers.
SEASONALITY
The NHL season begins during the fall and ends in late spring. As a result,
the Company realizes the vast majority of its revenue and incurs the vast
majority of its expenses during that period.
DILUTION
The Offerings will result in an immediate and substantial dilution to
purchasers in the Initial Public Offering of $8.68 per share (assuming an
Initial Public Offering price of $10.00 per share and a Concurrent Offering
price of $9.65 per share) in net tangible book value from the Initial Public
Offering price. See "Dilution." In addition, the Company may undertake to raise
additional capital through sales of additional shares of Class A Common Stock.
Such sales could have a dilutive effect on the shares of Class A Common Stock
purchased in the Offerings.
SHARES OF CLASS A COMMON STOCK ELIGIBLE FOR FUTURE SALE
Upon completion of the Offerings, the Company will have 12,320,678 shares
of Class A Common Stock outstanding, of which 7,300,000 shares of Class A Common
Stock (7,705,000 shares if the Underwriters' over-allotment option is exercised
in full) will be freely tradeable without restriction under the Securities Act
of 1933, as amended (the "Securities Act") unless purchased by "affiliates" of
the Company, as that term is defined in Rule 144 under the Securities Act. The
remaining 5,020,678 shares of Class A Common Stock (the "Huizenga Class A
Shares") are eligible for sale in the public market, subject to the registration
requirements of the Securities Act, or a valid exemption thereunder. The Company
intends to (i) cause a registration statement (the "Huizenga Registration
Statement"), registering the Huizenga Class A Shares, to be filed prior to the
consummation of the Offerings, and (ii) cause the Huizenga Registration
Statement to be declared effective and maintain the continued effectiveness of
the Huizenga Registration Statement, including filings of post-effective
amendments, in connection with the sale of Huizenga Class A Shares from time to
time on a continuous basis. The directors and officers of the Company have
agreed not to sell any shares of Common Stock held by them for a period of 180
days from the date of this Prospectus without the consent of Donaldson, Lufkin &
Jenrette Securities Corporation, subject to certain exceptions, including
pursuant to a foreclosure by a lender on a loan for which shares of Class A
Common Stock have been pledged as collateral. The Company intends to register
under the Securities Act the 2,600,000 shares of Common Stock reserved for
issuance under the Company's Stock Option Plan (the "Stock Option Plan"). In
addition, the Company may from time to time file registration statements
covering shares of Class A Common Stock which may be issued in connection with
potential future acquisitions and resales thereof by the recipients, although no
such acquisitions are currently contemplated. Shares so registered could be sold
in the public market. No predictions can be made as to the effect, if any, that
market sales of shares of Class A Common Stock or the availability of the shares
of Class A Common Stock for sale will have on the market price for shares of
Class A Common Stock prevailing from time to time. Sales of substantial amounts
of shares of Class A Common Stock in the public market following the Offerings
could adversely affect the market price of the Class A Common Stock and could
impair the Company's future ability to raise capital through an offering of
equity securities. See "Shares Eligible for Future Sale."
9
<PAGE> 11
NO PRIOR PUBLIC MARKET AND POSSIBLE VOLATILITY OF STOCK PRICE
Prior to the Offerings, there has been no public market for the Class A
Common Stock. Although the Company has applied for inclusion of the Class A
Common Stock on the Nasdaq National Market, there can be no assurance that an
active trading market will develop or be sustained following the Offerings.
There can be no assurance that the price at which the Class A Common Stock will
trade in the public market subsequent to the Offerings will not be lower than
the Initial Public Offering price. The Initial Public Offering price for the
Class A Common Stock will be determined by negotiations among the Company and
the Underwriters based on factors described in this Prospectus under
"Underwriting." The trading price of the Company's Class A Common Stock could be
subject to significant fluctuations in response to variations in quarterly
results and other factors. In addition, in recent years the stock market, in
general, and the market for the shares of companies with a small capitalization,
in particular, has experienced extreme price fluctuations which have often been
unrelated to the operating performance of affected companies. Because the
Company will be one of the first public companies primarily dedicated to
professional sports, the Representatives were not able to use the market prices
of other companies in the same industry as a benchmark in setting the Initial
Public Offering price.
ABSENCE OF DIVIDENDS
The Company does not intend to pay any cash dividends with respect to its
Common Stock in the foreseeable future. Furthermore, the Company's ability to
declare or pay dividends on its Common Stock is limited by the provisions of the
NHL Bylaws and is expected to be limited by the terms of its new credit
facility. See "Dividend Policy" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources".
HOCKEY OPERATIONS
COMPETITION
The Panthers compete for sports entertainment dollars not only with other
major league sports, but also with college athletics and other sports-related
entertainment. During parts of the hockey season, the Panthers experience
competition from professional basketball (the Miami Heat), professional football
(the Miami Dolphins) and professional baseball (the Florida Marlins). Mr.
Huizenga controls the Miami Dolphins and the Florida Marlins. In addition, the
colleges and universities in South Florida, as well as public and private
secondary schools, offer a full schedule of athletic events throughout the year.
The Panthers also compete for attendance and advertising revenue with a wide
range of other entertainment and recreational activities available in South
Florida.
DEPENDENCE ON COMPETITIVE SUCCESS OF THE PANTHERS
The financial results of the Company are expected to depend in part on the
Panthers continuing to achieve success in the NHL. By achieving and maintaining
success, the Panthers expect to generate greater fan enthusiasm, resulting in
higher ticket sales throughout the regular season and capturing greater shares
of the local television and radio audience. Furthermore, any participation in
the playoffs will provide the Panthers with additional revenue from sales of
tickets for home playoff games and from broadcasts of playoff games under local
media contracts. Conversely, revenue could be adversely affected by a poor
performance by the Panthers. There can be no assurance that the Panthers will
perform well or qualify for the playoffs.
UNCERTAINTIES OF INCREASES IN PLAYERS' SALARIES
Players' salaries in the NHL have increased significantly over the last two
seasons. The aggregate Panthers players' salaries nearly doubled from
approximately $10.2 million during the 1993-94 season to approximately $20.1
million during the 1995-96 season. In comparison, average aggregate players'
salaries for NHL teams have increased 48% from approximately $14.3 million
during the 1993-94 season to approximately $21.2 million during the 1995-96
season. The NHL Collective Bargaining Agreement is designed, in part, to control
the rate of increase in players' salaries. However, there can be no assurance
that the rate of
10
<PAGE> 12
increase in players' salaries will be effectively controlled. Significant
increases in players' salaries could have a material adverse effect on the
Company's financial condition or results of operations.
UNCERTAINTY REGARDING AVAILABILITY AND OCCUPANCY OF MIAMI ARENA
In May 1996, the Company entered into an amendment to the lease for the
Miami Arena (the "Lease Amendment"), extending the term of the lease (which was
scheduled to expire at the end of the 1995-96 season) to July 31, 1998, with two
one-year options for the 1998-99 season and the 1999-2000 season. The Lease
Amendment contained substantially the same economic terms as the existing Miami
Arena lease and was subject to the approval of MSEA, which approval, according
to the Miami Arena lease, could not be unreasonably withheld. In June 1996, MSEA
rejected the Lease Amendment and demanded that the Panthers vacate the Miami
Arena. Subsequently, the Company sought and obtained a preliminary injunction
enjoining MSEA from taking actions to prevent the Panthers from utilizing the
Miami Arena pursuant to the Lease Amendment. The Panthers are, therefore,
currently playing their home games at the Miami Arena. MSEA has recently
appealed the decision rendered by the court. Although the Company believes that
MSEA will not prevail in its appeal, if MSEA is successful, the Company may need
to find and enter into a lease for an alternative playing site, which may be
outside South Florida, until such time as the Broward County Civic Arena is
completed. In the event the Panthers are required to play outside South Florida,
the Company may incur additional operating costs (including travel costs) and
generate less revenue as a result of playing outside its local market. There can
be no assurance that the Company will be able to find and enter into a lease for
an alternative playing site or that the use of such alternative playing site
will not adversely affect the Company's financial condition or results of
operations.
The Company owns approximately 78% of the partnership interests in Decoma,
which derives all of its revenue from its Miami Arena operations. The City of
Miami recently announced that it intends to build the New Arena which will be
utilized by the Miami Heat. In the event that the New Arena is completed and
upon completion of the Broward County Civic Arena, the Miami Arena will not have
a base tenant and will compete with these new facilities for the rights to host
various events, including sports events and concerts. Decoma revenues for the
year ended December 31, 1995 directly attributable to the Panthers and Miami
Heat were approximately $320,000 and $254,000, respectively. Management plans to
seek other tenants to offset reduced revenues resulting from the potential loss
of the Miami Arena's base tenants. There can be no assurance that the Miami
Arena can successfully compete with the New Arena and the Broward County Civic
Arena. In the event the Miami Arena is unable to attract the various sports and
non-sports events, the results of operations of Decoma will be adversely
affected.
DEPENDENCE ON TALENTED PLAYERS
The success of the Panthers will depend, in part, upon their ability to
retain and attract talented players. The Panthers compete with other NHL and
non-NHL hockey teams for available players. There can be no assurance that the
Panthers will be able to retain players upon expiration of their contracts or
identify and obtain new players of adequate talent to replace players who retire
or are injured, traded or released. Even if the Panthers are able to retain or
obtain players who have had successful college or professional careers, there
can be no assurance of their quality of performance for the Panthers.
ABSENCE OF INSURANCE; RISK OF INJURIES
Player contracts generally provide that a player is entitled to receive his
salary even if, as a result of injuries sustained from hockey-related activities
during the course of his employment, he is unable to play. These salaries
represent significant financial commitments of the Panthers. Disability
insurance for NHL players (which provides for up to 80% of salary reimbursement
after 30 consecutive regular season games are missed) is costly to maintain, and
the Panthers carry it only for certain highly compensated players. In the event
an injured player is not insured or insurance does not cover the entire amount
of the injured player's salary, the Company may be obligated to pay all or a
portion, as the case may be, of the injured player's salary. In addition, the
Company would be required to pay the salary of a player who replaces the injured
player. To the extent that financial results of the Company are dependent on the
Panthers' competitive success (as
11
<PAGE> 13
discussed above), the likelihood of achieving such success is substantially
reduced by serious injuries to key players. There can be no assurance that key
players for the Panthers will not sustain serious injuries during any given
season.
UNCERTAINTIES RELATING TO LABOR RELATIONS IN PROFESSIONAL SPORTS
During the 1994-95 season, the NHL experienced labor relations difficulties
in the form of a player lock-out in a dispute over its collective bargaining
agreement, which adversely affected the Company's results of operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The NHL and the NHL Players' Association entered into a new
seven-year collective bargaining agreement (the "NHL Collective Bargaining
Agreement") on August 11, 1995 that took retroactive effect as of September 16,
1993. There can be no assurance that the NHL will not experience labor relations
difficulties in the future which could have a material adverse effect on the
Company's financial condition or results of operations. See "The National Hockey
League -- Collective Bargaining Agreement."
RESTRICTIONS ON THE COMPANY AND CERTAIN OF ITS SHAREHOLDERS AS A RESULT OF
LEAGUE MEMBERSHIP
Because the NHL is a joint venture, the Panthers and other members of the
NHL are generally jointly and severally liable for the debts and obligations of
the league. Any failure of other members of the NHL to pay their pro rata share
of any such debt or obligation could adversely affect the Panthers. The success
of the NHL and its members depends in part on the competitiveness of the teams
in the NHL and their ability to maintain fiscally sound franchises. Certain NHL
franchises have at times encountered financial difficulties, and there can be no
assurance that the NHL and its respective franchises will continue to be able to
operate on a fiscally stable and effective basis. In addition, the Panthers and
their personnel are bound by a number of rules, regulations and agreements,
including, but not limited to, the Constitution and Bylaws of the NHL, national
television contracts and the NHL Collective Bargaining Agreement. Any change to
the rules, regulations and agreements adopted by the NHL will be binding upon
the Panthers and their personnel, regardless of whether the Panthers agree or
disagree with such changes, and it is possible that any such change could
adversely affect the Panthers.
The Commissioner of the NHL (the "Commissioner") has the exclusive power to
interpret the Constitution, Bylaws, rules and regulations of the NHL, and his
interpretations are final and binding on the members of the NHL. In addition, a
member of the NHL is precluded from resorting to the courts to enforce or
maintain rights or claims against any other member. All disputes must be
submitted to the Commissioner for his determination, and such determination,
when rendered, is final and binding. See "The National Hockey
League -- Governance."
The NHL Constitution and Bylaws contain provisions which may in some
circumstances operate to prohibit a person from acquiring the Class A Common
Stock and affect the value of such Class A Common Stock. In general, any
acquisition of shares of Class A Common Stock which will result in a person or a
group of persons holding a 5% or more interest in the Company, and each
acquisition of shares of Class A Common Stock which will result in a person or a
group of persons holding any multiple of a 5% interest, will require the prior
approval of the NHL, which may be granted or withheld in the sole discretion of
the NHL. The prospective purchaser will be required to submit to the NHL an
application, in a form to be prescribed from time to time by the NHL, providing
certain information relating to that person's background. Upon receipt of such
application, the Commissioner shall have the right to conduct an investigation
with respect to the prospective purchaser, which may include an interview by the
Commissioner's office or one or more NHL owners and the submission of such
information about the prospective purchaser, whether or not confidential, as the
Commissioner shall deem relevant in his sole discretion. In addition, the NHL
may condition its approval upon the execution, delivery and performance by the
prospective purchaser of such documents as the Commissioner shall prescribe. The
expenses of the NHL's investigation must be paid by the prospective purchaser,
whether or not its application is approved. If and when a prospective purchaser
receives the NHL's consent to acquire a 5% or more interest in the Company, such
prospective purchaser will be required to acknowledge that the purchaser shall
be bound by the applicable provisions of the NHL Constitution and Bylaws.
12
<PAGE> 14
In addition, no person who directly or indirectly owns any interest in a
privately-held NHL team, or a 5% or more interest in any other publicly-held NHL
team, may own, directly or indirectly, a 5% or more interest in the Company,
without the prior approval of the NHL. The NHL Constitution and Bylaws also
contain provisions which would prohibit an owner of a 5% or more interest in the
Company from engaging in certain activities, such as wagering on any game in
which an NHL team participates. NHL players and referees and employees of the
NHL and its member clubs (other than the Company) are not eligible to purchase
or hold Common Stock. The NHL could in the future adopt different or additional
restrictions which could adversely affect the shareholders.
Furthermore, the grant of a security interest in any of the assets of the
Panthers, or any direct or indirect ownership interest in the Company, of 5% or
more, shall require the prior approval of the NHL, which may be withheld in the
NHL's sole discretion and, in that connection, the NHL will require a consent
agreement satisfactory to the NHL. NHL rules limit the amount of debt that may
be secured by the assets of, or ownership interests in, an NHL club and require
that the parties to any secured loan that is approved execute an agreement
limiting the rights of the lenders and the club (or shareholder) under certain
circumstances, including upon an event of default or foreclosure. These
limitations may adversely affect the rights of the club (or shareholder) under
certain circumstances.
Failure by a holder of a 5% or more interest to comply with these
restrictions may result in a forced sale of such holder's interest in the
Company or the repurchase of such interests by the Company. The Company's
Articles of Incorporation provide that the Company may redeem, at the lower of
fair market value or cost, shares held by any person or entity who becomes the
owner of 5% or more of the Company's shares without the approval of the NHL.
These restrictions will be contained in a legend on each certificate issued
evidencing shares of Class A Common Stock.
Neither the NHL, any of its affiliates or members nor any of their
respective officers, employees or representatives, other than the Company, has
reviewed in advance the information being provided in this Prospectus or
elsewhere to potential investors in connection with the Offerings, or assumes
any responsibility for the accuracy of any representations made by the Company
to any potential investors.
POSSIBILITY OF INCREASED COMPETITION AS A RESULT OF NHL EXPANSION
It is currently anticipated that the NHL may grant additional franchises
within the next five years. While such expansion affords the NHL the opportunity
to expand into new markets, it also increases the competition for talented
players among the NHL teams. In the event the NHL expands, the expansion teams
are permitted to select in an expansion draft certain unprotected players
playing for the various NHL teams. There can be no assurance that the Panthers
will be able to retain all of their key players in the event of an expansion
draft or that the rules regarding the expansion draft will not change to the
detriment of the Company. In addition, to the extent the NHL teams share equally
in the revenue generated from national television contracts and sale of NHL
merchandise, the Company may receive less revenue from the NHL as the result of
the league expansion.
UNCERTAINTIES REGARDING RENEWAL OF MEDIA CONTRACTS
Prior to the commencement of the 1994-95 season, the NHL entered into the
Fox Contract and extended its existing contract with ESPN for the national
broadcast of certain games in the U.S. Under the Fox Contract, Fox may choose to
terminate the contract after five years. In addition, the NHL also renewed its
contract with Molson for the national broadcast of certain NHL games in Canada.
A percentage of the revenue generated from such contracts is divided equally
among the members of the NHL. For the year ended June 30, 1996, this revenue
constituted approximately 8% of the Company's total revenue. There can be no
assurance that Fox, after the initial five-year period, will choose to continue
its contract with the NHL or that the NHL, upon expiration of its contracts with
each of Fox, ESPN and Molson, will be able to enter into new agreements on terms
as favorable as those in the current contracts.
In August 1996, the Company entered into a letter of intent (the
"SportsChannel Letter of Intent") with SportsChannel Florida Associates, a
Florida limited partnership which is 50% owned by Mr. Huizenga
13
<PAGE> 15
("SportsChannel Florida"), for the proposed local broadcast (other than radio
broadcast) of the Panthers' pre-season, regular season and certain post-season
games. See "Certain Transactions." The obligations of the Company and
SportsChannel Florida are subject to the negotiation of a definitive agreement.
There can be no assurance that the Company and SportsChannel Florida will enter
into a definitive agreement.
In addition, in August 1996, the Company entered into a letter of intent
(the "Sunshine Letter of Intent") with Sunshine Wireless Company, Inc.
("Sunshine"), for the proposed local radio broadcast of all the Panthers games
during the 1996-97 hockey season. The obligations of the Company and Sunshine
are subject to negotiation of a definitive agreement. There can be no assurance
that the Company and Sunshine will enter into a definitive agreement.
ARENA DEVELOPMENT AND OPERATIONS
DEVELOPMENT OF THE BROWARD COUNTY CIVIC ARENA
The Company recently entered into the Development Agreement, pursuant to
which the Company will develop the Broward County Civic Arena. Construction
projects, such as the development of a new civic center, entail significant
risks, including regulatory and licensing requirements, shortages of materials
or skilled labor, unforeseen engineering, environmental or geological problems,
work stoppages, weather interferences, unanticipated cost increases and
challenges from local residents. There can be no assurance that the Company can
successfully develop the Broward County Civic Arena or that costs associated
with the development of the Facility will not exceed the $184.7 million to be
provided by Broward County. Under the Development Agreement, the Company will be
responsible for all costs relating to the development of the Broward County
Civic Arena in excess of $184.7 million. See "Business -- Arena Development and
Operations -- Development of the Broward County Civic Arena." Although the
Company anticipates that the Broward County Civic Arena will be completed in
time for the 1998-99 season, there can be no assurance that the Facility will be
completed within the contemplated time frame.
OPERATION OF THE BROWARD COUNTY CIVIC ARENA
In June 1996, the Company entered into the License Agreement and the
Operating Agreement pursuant to which the Company will utilize and operate the
Broward County Civic Arena. In connection therewith, Broward County will receive
revenue (the "County Preferred Revenue") from the operations of the Broward
County Civic Arena. See "Business -- Arena Development and
Operations -- Operation of the Broward County Civic Arena." The Company has
provided Broward County a guaranty pursuant to which the Company will be
obligated to pay Broward County any deficiency in the County Preferred Revenue
(the "County Preferred Revenue Obligation"). The Company believes that the
revenue generated from the operations of the Facility will be sufficient to
provide Broward County with the County Preferred Revenue. In the event such
revenue is not sufficient to provide Broward County with the County Preferred
Revenue, the Company will be required to meet its County Preferred Revenue
Obligation. There can be no assurance that the revenue generated from Broward
County Civic Arena will be sufficient to meet the Company's obligations to
Broward County.
14
<PAGE> 16
REORGANIZATION
Prior to the closing of the Offerings, the following events (collectively,
the "Reorganization") will occur: (i) Mr. Huizenga, as the sole shareholder of
Decoma III, will cause Decoma III to transfer all but 1% of its ownership
interest in Decoma to Decoma II, following which Decoma II will own a 51%
interest in Decoma, resulting in Decoma I and Decoma II collectively owning
approximately a 78% interest in Decoma, Decoma III owning a 1% interest in
Decoma and various unrelated third parties owning the remaining 21% interest in
Decoma; (ii) Mr. Huizenga will contribute (A) a note (the "Partnership Note"),
representing the outstanding amount which the Company borrowed from Mr. Huizenga
plus interest, and (B) all the outstanding capital stock of each of Decoma I and
Decoma II to the capital of the Partnership; (iii) Mr. Huizenga, as the sole
limited partner and the sole general partner (through his ownership of Florida
Panthers Hockey Club, Inc.) of the Partnership, will contribute all of the
partnership interests in the Partnership to the Company; and (iv) Mr. Huizenga,
as the sole limited partner (through his ownership of the Partnership) and the
sole general partner (through his ownership of the Arena Development Company,
Inc. and Arena Operating Company, Inc., respectively) of each of Arena
Development and Arena Operator, will contribute all of the limited partnership
interests in each of Arena Development and Arena Operator as well as all the
outstanding capital stock of each of Arena Development Company, Inc. and Arena
Operator Company, Inc. to the Company. In exchange for all of the foregoing
capital contributions, Mr. Huizenga will receive 5,275,678 shares of Common
Stock (the "Exchange Shares"), of which 5,020,678 shares will be Class A Common
Stock and 255,000 shares will be Class B Common Stock. The number of Exchange
Shares to be issued was derived by dividing by $9.30 (the assumed Initial Public
Offering price less underwriting discounts and commissions) the sum of (A) the
Partnership Note (approximately $41.0 million), which will result in the
issuance of 4,404,710 shares of Common Stock and (B) the approximately 78%
interest in Decoma (approximately $8.1 million, representing costs incurred by
Mr. Huizenga in acquiring the Decoma Interests), which will result in the
issuance of 870,968 shares of Common Stock.
Prior to the completion of the Reorganization, Decoma I and II own 66 2/3%
of the partnership interest of Decoma Venture. The remaining 33 1/3% of the
partnership interest in Decoma Venture is owned by Decoma III. Upon completion
of the Reorganization, Decoma I and Decoma II will own 99% of the partnership
interest in Decoma Venture which, through its ownership of Decoma Limited, will
own approximately a 78% interest in Decoma.
After the Offerings, operations of the business will be conducted by the
Company, which is a newly organized Florida corporation, and by the Partnership,
Florida Panthers Hockey Club, Inc., the general partner of the Partnership,
Arena Development, Arena Operator and Decoma. The hockey operations of the
Panthers will continue to be conducted by the Partnership, which will be owned
by the Company. Unless the context otherwise requires, references to the
"Company" refer to the operations of the Company and its subsidiaries.
15
<PAGE> 17
The following charts represent the ownership structure prior to the
consummation of the Reorganization and following the consummation of the
Reorganization.
[CHART]
[CHART]
16
<PAGE> 18
CONCURRENT OFFERING
Concurrent with the shares offered hereby in the Initial Public Offering,
the Company intends to sell to certain individuals (the "Concurrent Purchasers")
4,600,000 shares of Class A Common Stock at a price equal to the Initial Public
Offering price less underwriting discounts and commissions but including the
Placement Agent fee. The consummation of the Concurrent Offering and the Initial
Public Offering are conditioned upon each other. The Concurrent Offering will
not be consummated with respect to less than 4,600,000 shares. All proceeds of
the Concurrent Offering will be paid directly to the Company and will be
segregated in a separate non-interest bearing bank account established by the
Company pending the consummation of the Concurrent Offering. However, such
payment will not be accepted by the Company prior to the effectiveness of the
Registration Statement. Donaldson, Lufkin & Jenrette Securities Corporation and
Raymond James & Associates, Inc. are acting as the placement agents (the
"Placement Agents") in connection with the Concurrent Offering. The Placement
Agents will receive a fee of per share of Class A Common Stock sold in
the Concurrent Offering and will be indemnified by the Company against certain
liabilities, including liabilities under the Securities Act. See "Shares
Eligible for Future Sale" and "Underwriting."
USE OF PROCEEDS
The net proceeds to the Company from the sale of shares of Class A Common
Stock in the Offerings (assuming an Initial Public Offering price of $10.00 per
share and a Concurrent Offering price of $9.65 per share and after deducting
underwriting discounts and commissions, the Placement Agent fee and other
estimated offering expenses) are estimated to be approximately $67.3 million
(approximately $71.1 million if the Underwriters' over-allotment option is
exercised in full).
The Company expects the net proceeds of the Offerings to be applied to
their intended uses over approximately 24 months following the consummation of
the Offerings. The Company estimates that approximately $45.0 million of the net
proceeds will be used to repay its indebtedness outstanding under two term loans
(which were used to pay for the Company's cost of acquiring its NHL franchise),
with the balance of the net proceeds, estimated to be approximately $22.3
million, to be used for general working capital, including funding of net
operating losses, which could exceed $15.0 million per annum before
depreciation, amortization and interest until the completion of the Broward
County Civic Arena. The Company is in the process of negotiating a new revolving
line of credit (the "New Credit Facility"). It is anticipated that the New
Credit Facility will provide for a line of credit up to $50.0 million and will
be secured by all the tangible and intangible assets of the Company. The Company
believes that the net proceeds of the Offerings, together with its existing cash
and cash equivalents, revenue from its operations and borrowings under the New
Credit Facility, will be sufficient to enable it to maintain its current and
planned operations for at least the next 24 months. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and "Certain
Transactions."
The outstanding indebtedness under the two term loans to be repaid with a
portion of the proceeds of the Offerings bears interest at LIBOR plus 0.75% per
annum. The maturity date of the borrowings under one term loan is May 31, 2001,
and the maturity date for the other term loan is March 1, 1997.
Until required for specific purposes, the net proceeds of the Offerings
will be invested in short-term, investment-grade, interest-bearing investments.
DIVIDEND POLICY
The Company does not intend to pay any cash dividends with respect to its
Common Stock in the foreseeable future. It is expected that the New Credit
Facility will limit the Company's ability to pay cash dividends. In addition,
the NHL Bylaws prohibit the Company from the paying of cash dividends, unless
paying such cash dividends will not impair the Company's ability to (i) meet its
projected expenses for the ensuing 12 month period without the use of borrowed
funds, other than short-term borrowings, and (ii) maintain adequate reserves to
fund the future payment of all deferred player compensation and other deferred
obligations for past services. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
17
<PAGE> 19
DILUTION
The difference between the Initial Public Offering price per share of
Common Stock and the net tangible book value per share of the Company after the
Offerings constitutes the dilution to investors in the Initial Public Offering.
Net tangible book value per share is determined by dividing the net tangible
book value of the Company (tangible assets less total liabilities) by the number
of outstanding shares of Common Stock.
At June 30, 1996, the pro forma net tangible book value of the Company was
a deficit of $50.7 million, or $9.61 per share of Common Stock, after giving
effect to the Reorganization. After giving effect to the Offerings (assuming an
Initial Public Offering price of $10.00 per share and a Concurrent Offering
price of $9.65 per share and after deducting underwriting discounts and
commissions, the Placement Agent fee and estimated expenses), the pro forma, as
adjusted, net tangible book value of the Company at June 30, 1996 would have
been $16.6 million, or $1.32 per share, representing an immediate increase in
net tangible book value of $10.93 per share to the existing shareholders and an
immediate dilution of $8.68 per share to investors in the Initial Public
Offering.
The following table illustrates the foregoing information with respect to
dilution to investors in the Initial Public Offering on a per share basis:
<TABLE>
<S> <C> <C>
Initial Public Offering price........................................ $10.00
Pro forma net tangible book value (deficit) before the
Offerings(1).................................................... (9.61)
Increase attributable to purchases by investors in the Offerings... 10.93
------
Pro forma, as adjusted, net tangible book value after the
Offerings.......................................................... 1.32
------
Dilution in net tangible book value to investors in the Initial
Public Offering.................................................... $ 8.68
======
</TABLE>
- ------------------------------
(1) Represents the pro forma net tangible book value after giving effect to the
Reorganization.
The following table sets forth, after giving effect to the Reorganization,
with respect to Mr. Huizenga and investors in the Offerings, a comparison of the
number of shares of Common Stock received or acquired from the Company, the
percentage ownership of such shares, the total consideration paid, the average
price per share and the average proceeds per share to the Company.
<TABLE>
<CAPTION>
AVERAGE
PROCEEDS
SHARES PURCHASED TOTAL CONSIDERATION PER
---------------------- ---------------------- AVERAGE PRICE SHARE TO
NUMBER PERCENT AMOUNT PERCENT PER SHARE(1) THE COMPANY
<S> <C> <C> <C> <C> <C> <C>
Existing Shareholder -- Mr. Huizenga........ 5,275,678(2) 41.9%(3) $ 49,063,806 40.7% $ 9.30 $ 9.30
Investors in the Concurrent
Offering -- Huizenga Family............... 1,340,000(4) 10.7(3) 12,931,000 10.7 9.65 9.30
Investors in the Concurrent
Offering -- Other......................... 3,260,000(4) 25.9 31,459,000 26.2 9.65 9.30
Investors in the Initial Public Offering.... 2,700,000 21.5 27,000,000 22.4 10.00 9.30
---------- ----- ------------ -----
Total............................... 12,575,678 100.0% $120,453,806 100.0% $ 9.58 $ 9.30
========== ===== ============ =====
</TABLE>
- ------------------------------
(1) The average price per share in the Concurrent Offering is less than the
average price per share in the Initial Public Offering because only
Placement Agent fees and no underwriting discounts and commissions will be
paid on account of shares sold in the Concurrent Offering.
(2) Derived by dividing by $9.30 (the assumed Initial Public Offering price less
underwriting discounts and commissions) the sum of (a) the Partnership Note
(approximately $41.0 million), which results in the issuance of 4,404,710
shares of Common Stock, and (b) the approximately 78% interest in Decoma
(approximately $8.1 million representing costs incurred by Mr. Huizenga in
acquiring the Decoma Interests), which results in the issuance of 870,968
shares of Common Stock.
(3) It is estimated that Mr. Huizenga and his family will collectively own a
total of 52.6% of the outstanding shares of Common Stock after giving
effect to the Reorganization and the Offerings. Additionally, assuming the
underwriters' over-allotment option is exercised in full, Mr. Huizenga and
his family will own 51.0% of the outstanding shares of Common Stock.
(4) Represents an estimate of the number of shares to be purchased.
18
<PAGE> 20
CAPITALIZATION
The following table sets forth at June 30, 1996 (i) the actual
capitalization of the Partnership prior to the Reorganization, (ii) the pro
forma capitalization of the Company which gives effect to the Reorganization and
(iii) the pro forma as adjusted capitalization of the Company which, in addition
to the Reorganization, gives effect to the Offerings at an assumed Initial
Public Offering price of $10.00 per share and an assumed Concurrent Offering
price of $9.65 per share and the application of the net proceeds therefrom. This
table should be read in conjunction with the financial statements and notes
thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1996
----------------------------------------
PRO FORMA AS
ACTUAL PRO FORMA ADJUSTED
(IN THOUSANDS)
<S> <C> <C> <C>
Current debt:
Note payable -- related party............................ $ 40,172 $ -- $ --
Outstanding debt -- related party........................ 20,000 20,000 --
-------- ------- -------
Total current debt......................................... $ 60,172 $ 20,000 $ --
======== ======= =======
Long-term debt............................................. $ 25,000 $ 25,000 $ --
Partners' deficit.......................................... (55,443) -- --
Shareholders' equity:
Class A Common Stock, $.01 par value, 100,000,000 shares
authorized; no shares outstanding, actual; 5,020,678
shares outstanding, pro forma; 12,320,678 shares
outstanding pro forma, as adjusted.................... -- 50 123
Class B Common Stock, $.01 par value, 10,000,000 shares
authorized; 255,000 shares outstanding, pro forma..... -- 3 3
Additional paid-in capital............................... -- (8,184) 59,043
-------- ------- -------
Total shareholders' equity....................... -- (8,131) 59,169
-------- ------- -------
Total capitalization............................. $(30,443) $ 16,869 $ 59,169
======== ======= =======
</TABLE>
19
<PAGE> 21
SELECTED FINANCIAL DATA
The following information has been derived from the audited financial
statements of the Company. The financial statements of the Company as of and for
the periods ended June 30, 1993, 1994, 1995 and 1996 have been audited by Arthur
Andersen LLP, independent certified public accountants. The financial data set
forth below should be read in conjunction with the financial statements and
notes thereto contained elsewhere in this Prospectus. See also "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
Historical financial data for Decoma I and Decoma II are not material to the
results of operations of the Company and have not been included in the
historical financial data contained herein.
<TABLE>
<CAPTION>
SEVEN MONTHS FISCAL YEARS ENDED JUNE 30,
ENDED JUNE ------------------------------
30, 1993 1994 1995 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Tickets.......................................... $ -- $ 14,784 $ 9,559 $ 23,226
Television and radio............................. -- 3,163 3,717 5,141
Advertising and promotions....................... -- 1,534 1,297 2,192
NHL Enterprise rights............................ -- 761 846 885
Other, primarily arena concessions............... -- 1,440 912 1,561
----- -------- -------- --------
Total revenue............................ -- 21,682 16,331 33,005
----- -------- -------- --------
Cost of Revenue:
Team operations.................................. -- 17,691 15,652 32,639
Ticketing and arena operations................... -- 2,498 1,743 3,700
Selling, general and administrative.............. 768 5,512 5,351 7,814
----- -------- -------- --------
Total cost of revenue.................... 768 25,701 22,746 44,153
----- -------- -------- --------
Amortization and depreciation...................... 2 6,444 5,980 9,427
----- -------- -------- --------
Operating loss..................................... (770) (10,463) (12,395) (20,575)
Interest expense, net.............................. (167) (2,463) (3,703) (4,908)
----- -------- -------- --------
Net loss........................................... $ (937) $(12,926) $(16,098) $(25,483)
===== ======== ======== ========
PRO FORMA DATA(1):
Net loss per share................................. $ (5.79)
========
Weighted average shares outstanding................ 4,405
========
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,
---------------------------------------
1993 1994 1995 1996
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total current assets.................................... $ 9,117 $ 2,996 $ 2,713 $ 3,402
Total current liabilities............................... 15,605 17,712 47,820 65,562
Total assets............................................ 59,669 49,019 43,503 38,396
Long-term obligations................................... 45,000 45,169 25,643 28,277
Partners' deficit....................................... (937) (13,862) (29,960) (55,443)
</TABLE>
- ------------------------------
(1) Adjusted to reflect the Reorganization, excluding the contribution of the
Decoma Interests, as if it had occurred at the beginning of the period
presented.
20
<PAGE> 22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company was formed in December 1992 to own and operate the Panthers. In
April 1993, the NHL awarded the Company a hockey franchise, and the Panthers
commenced play in the NHL in October 1993. The Company currently derives
substantially all of its revenue from (i) the sale of tickets to home games,
(ii) contracts with broadcast organizations and (iii) advertising and promotion.
A large portion of the Company's annual revenue and operating expenses is
determinable at the commencement of each hockey season based on season ticket
sales and the Company's multi-year contracts with its players, broadcast
organizations and sponsors.
The operations of the Company are seasonal. The Company receives a
substantial portion of its receipts from the advance sale of regular season
tickets during the months of July and August, prior to the commencement of the
NHL regular season. For financial reporting purposes, hockey related revenue and
team operating expenses are recognized during the regular season, which extends
from early October through mid-April. In the event the Panthers participate in
the playoffs, additional revenue will be realized and additional expenses will
be incurred for each playoff series.
During the seven month period from inception on December 2, 1992 through
June 30, 1993, the Company did not realize revenue or incur expenses from hockey
operations. The Company incurred approximately $770,000 of various general and
administrative start-up costs during the seven month period.
The 1994-95 season was shortened (from the normal 84 game schedule to a 48
game schedule) as a result of a player lockout in a dispute over the then
existing collective bargaining agreement, and the results of operations for the
year ended June 30, 1995 reflect the reduced number of games played.
During the 1995-96 season, the Panthers participated in all four rounds of
the Stanley Cup playoffs (playing in 22 playoff games) and derived additional
revenue and incurred additional expenses as a result of their participation in
the playoffs.
The Company incurred net losses of approximately $12.9 million, $16.1
million and $25.5 million for the years ended June 30, 1994, 1995 and 1996. Such
net losses were primarily a result of the Company having entered into an
unfavorable lease with the Miami Arena which did not provide the Company with
certain sources of revenue, including revenue from the sale of suites and
parking and a majority of the advertising space, which are generally available
to other hockey franchises. The Miami Arena, with a seating capacity of 14,703,
is one of the smallest arenas in the NHL. These seating limitations have
precluded the Company from receiving additional revenue from the sale of
additional tickets. In addition, the Company's net losses were abnormally high
due to the amortization of the original franchise cost totaling approximately
$6.2 million, $5.7 million and $9.1 million for the years ended June 30, 1994,
1995 and 1996. Approximately $25.7 million of the Company's original franchise
cost was allocated to player contracts and is being amortized over approximately
six years, of which $19.2 million had been amortized as of June 30, 1996. The
remaining $24.3 million of the original franchise cost is being amortized over
40 years. Interest expense incurred during the three years ended June 30, 1994,
1995 and 1996 were approximately $2.5 million, $3.7 million and $5.0 million,
respectively. Such interest expense related to the two term loans and advances
from Mr. Huizenga. The bank term loans will be repaid upon consummation of the
Offerings. See "Use of Proceeds." The cumulative advances provided by Mr.
Huizenga will be contributed pursuant to the Reorganization. See
"Reorganization."
In May 1996, the Company entered into the Lease Amendment, extending the
term of the lease (which was scheduled to expire at the end of the 1995-96
season) to July 31, 1998, with two one-year options for the 1998-99 season and
the 1999-2000 season. The Lease Amendment contained substantially the same
economic terms as the existing Miami Arena lease and was subject to the approval
of MSEA, which approval, according to the Miami Arena lease, could not be
unreasonably withheld. In June 1996, MSEA rejected the Lease Amendment and
demanded that the Panthers vacate the Miami Arena. Subsequently, the Company
sought
21
<PAGE> 23
and obtained a preliminary injunction enjoining MSEA from taking actions to
prevent the Panthers from utilizing the Miami Arena pursuant to the Lease
Amendment. MSEA has recently appealed the decision rendered by the court.
Although the Company believes that MSEA will not prevail, if MSEA is successful,
the Company may need to find and enter into a lease for an alternative playing
site, which may be outside South Florida, until such time as the Broward County
Civic Arena is completed. In the event the Company is required to play outside
South Florida, the Company may incur additional operating costs (including
travel costs) and generate less revenue as a result of playing outside its local
market.
There can be no assurance that the Company will be able to find and enter
into a lease for an alternative playing site or that the use of such alternative
playing site will not adversely affect the Company's financial condition or
results of operations.
RESULTS OF OPERATIONS
YEAR ENDED JUNE 30, 1996 COMPARED TO YEAR ENDED JUNE 30, 1995
Revenue. Revenue from ticket sales increased 143%, or approximately $13.7
million. This increase was primarily attributable to the fact that the Panthers
(i) participated in all four rounds of the 1995-96 Stanley Cup playoffs which
generated ticket sales of approximately $6.6 million, of which the Company
retained approximately $4.6 million after the various league playoff
assessments, and (ii) played only 24 home games during the shortened 1994-95
regular season as compared to 41 home games during the 1995-96 regular season,
resulting in an increase in regular season ticket sales of approximately $7.1
million. Average ticket revenue, net of sales tax, per regular season home game
increased 8% to approximately $395,000. This increase was due to a 14% increase
in average ticket price, partially offset by an 8% decrease in average paid
attendance.
Television and radio revenue increased 38%, or approximately $1.4 million.
This increase was primarily attributable to the fact that 51 games (including 10
Stanley Cup playoff games) were televised during the 1995-96 season as compared
to 34 games during the shortened 1994-95 season.
Advertising and promotions revenue increased 69%, or approximately
$900,000, and other revenue, which consists primarily of the Company's share of
arena concessions, increased 71%, or approximately $650,000, both as a result of
the increase in the number of home games played. In addition, the NHL Enterprise
rights increased 5%, or approximately $40,000.
Cost of Revenue. Team operating costs, which consist primarily of players'
salaries, increased 109%, or approximately $17.0 million. Players' salaries were
approximately $11.8 million higher primarily because players were paid only 58%
(pro-rated for the shortened season) of their contracted salaries during the
1994-95 season and there were increases in the total compensation paid to the
first and second round draft picks during the 1995-96 season. The increase in
the number of games played during the 1995-96 season (including the Stanley Cup
playoffs) resulted in an increase in team travel costs of approximately $1.1
million, player insurance costs of approximately $220,000 and player benefit
costs of approximately $140,000. Other increases included approximately $2.0
million in league playoff assessments, $480,000 in league regular season
assessments, $500,000 in hockey personnel payroll costs and $410,000 in minor
league costs.
Ticketing and arena operating costs increased 112%, or approximately $2.0
million, as a result of the increase in the number of home games played
(including the Stanley Cup playoffs), with arena rent, which increased 145%, or
approximately $1.1 million, accounting for most of the increase.
Selling, general and administrative expenses increased 46%, or
approximately $2.5 million. This increase was attributable to approximately $1.3
million in playoff costs (which included overhead expenses related to additional
home playoff games, costs for certain corporate sponsor, VIP and fan
appreciation events, and additional game day promotional expenses), $400,000 in
computer consultation and legal fees, $200,000 in advertising and game day
promotional expenses, $200,000 in non-player salary cost increases, $200,000 of
predevelopment costs relating to the Broward County Civic Arena and an increase
of $160,000 in the management fee paid to Huizenga Holdings. See "Certain
Transactions."
22
<PAGE> 24
Amortization of Player Contracts and NHL Franchise Costs. The Company was
required to pay a $50.0 million franchise fee to the NHL when the expansion
franchise was granted, of which approximately $25.7 million was allocated to the
contracts of players selected in the 1993 expansion draft and is being amortized
over the estimated useful lives of such contracts, which have been determined to
be approximately six years. The remaining portion of the franchise fee is being
amortized over 40 years. For the year ended June 30, 1996, amortization of
player contracts increased $3.4 million, or 67%. Amortization of player
contracts was approximately $8.5 million, including $4.9 million related to the
write-off of unamortized player costs as a result of four contracts terminated
due to buy-outs or player releases and adjustments to remaining balances to
better reflect the current values. For the year ended June 30, 1995,
amortization of the player contracts was approximately $5.1 million, which
included approximately $960,000 related to the write-off of three players'
contracts.
Amortization on the remaining portion of the franchise cost totaled
approximately $640,000 for both years.
Depreciation. Depreciation on capital assets was comparable between the
two years because there were no major additions to or write-offs of capital
assets.
Net Interest Expense. For the years ended June 30, 1996 and 1995, interest
expense consisted of interest accrued on long-term debt and interest accrued on
accumulated borrowings from Mr. Huizenga at the prime rate. Net interest expense
increased 33%, or approximately $1.2 million, primarily as a result of the
increase in accumulated borrowings from Mr. Huizenga which were used to fund
operating losses. The Company has entered into a series of swap agreements which
synthetically fix the interest rates on the long-term debt arrangements at 4.85%
and 5.19%. The Company uses these agreements as a hedge against future increases
in interest rates. For the year ended June 30, 1996, interest rates were above
the fixed swap rate at all times resulting in the Company earning interest
income of approximately $350,000 to offset against interest expense. For the
year ended June 30, 1995, interest rates were both below and above the fixed
swap rates and resulted in approximately $270,000 of net interest income which
reduced net interest expense.
YEAR ENDED JUNE 30, 1995 COMPARED TO YEAR ENDED JUNE 30, 1994
Revenue. Revenue from ticket sales decreased 35%, or approximately $5.2
million. This decrease was primarily attributable to the fact that ticket
revenue for the year ended June 30, 1995 included only 24 regular season home
games while ticket revenue for the year ended June 30, 1994 included 41 home
games. Average net ticket revenue increased 10% to approximately $365,000 per
game, primarily as a result of increased ticket prices.
Television and radio revenue increased 18%, or approximately $550,000. This
increase was primarily attributable to national broadcasting revenue of $700,000
from the Fox and ESPN contracts during the 1994-95 season.
Advertising and promotions revenue decreased 15%, or approximately
$240,000, and other revenue, primarily from concessions, decreased 37%, or
approximately $530,000, both as a result of fewer home games. In addition, NHL
Enterprise rights increased by 11% or $85,000.
Cost of Revenue. Team operating costs decreased 12%, or approximately $2.0
million. This decrease was primarily the result of the decrease in players'
salaries of 15%, or approximately $1.5 million, which was due to $5.8 million
reduction in actual salaries paid as a result of the shortened season, partially
offset by annual player contract increases of $4.3 million.
Ticketing and arena operating costs decreased 30%, or approximately
$760,000, as a result of playing fewer home games.
Selling, general and administrative costs decreased 3%, or approximately
$160,000. This net decrease was partially attributable to approximately $750,000
in inaugural season start-up costs including logo development, uniform
unveiling, extraordinary opening day ceremony costs, advertising and legal fees
for the year ended June 30, 1994, offset in part by costs associated with arena
development, which increased approximately
23
<PAGE> 25
$700,000 in the year ended June 30, 1995. The shortened 1994-95 season accounted
for the remaining decrease in these costs.
Amortization of Player Contracts and NHL Franchise Costs. For the years
ended June 30, 1995 and 1994, the amortization of player contracts totaled
approximately $5.1 million and $5.6 million, respectively, of which
approximately $960,000 and $1.5 million, respectively, related to the write-off
of unamortized player contract costs due to the release of players or
termination of players' contracts. Additionally, amortization on the remaining
portion of the franchise cost totaled approximately $640,000 for both years.
Depreciation. Depreciation on capital assets was comparable between the
two years because there were no major additions to or write-offs of capital
assets.
Net Interest Expense. Net interest expense increased 50%, or approximately
$1.2 million. Interest expense relating to the accumulated borrowings from Mr.
Huizenga increased approximately $490,000 as the Company's operating losses
accumulated. Net interest expense relating to the Company's long-term debt
increased 35%, or approximately $720,000, as a result of rising interest rates.
For the year ended June 30, 1995, interest rates were both below and above the
fixed swap rates and resulted in approximately $270,000 of net interest income,
which reduced net interest expense. For the year ended June 30, 1994, interest
rates were below the fixed swap rates since the start of the swap agreements in
March 1994, which resulted in approximately $130,000 of additional interest
expense.
LIQUIDITY AND CAPITAL RESOURCES
Since its formation, the Company has financed net operating losses
primarily with loans from Mr. Huizenga. Such loans, including interest thereon
accrued through September 30, 1996, currently total approximately $41.0 million.
The Company has used approximately $11.6 million, $10.6 million and $18.6
million in cash for its operations for the years ended June 30, 1994, 1995 and
1996, respectively. Capital expenditures of approximately $1.3 million, $161,000
and $140,000 were made during the years ended June 30, 1994, 1995 and 1996. Cash
flow from financing activities consisted entirely of borrowings and repayments
of the loans from Mr. Huizenga for the years ended June 30, 1994, 1995 and 1996.
The Company does not anticipate borrowing any additional funds from Mr. Huizenga
following the consummation of the Offerings. Additionally, Decoma I and Decoma
II made distributions to their minority owners of approximately $546,000,
$237,000 and $798,000 during the period from January 1, 1994 to August 5, 1994,
the period from August 6, 1994 to December 31, 1994 and the year ended December
31, 1995. Future cash distributions to minority owners of Decoma I and Decoma II
will not have any impact on the Company.
As of June 30, 1996 the Company had two term loans outstanding, totaling
approximately $45.0 million. The funds from these loans were used to finance a
portion of the $50.0 million NHL expansion franchise fee paid in June 1993. The
loan agreements contain certain financial covenants regarding the financial
performance of the Company, certain reporting requirements, a limitation on the
amount of annual capital expenditures and limitations on the assumption of
additional debt. The loan agreements also provide for repayment of all debt in
the event of a material adverse change in the business or a change in control.
Substantially all of the Company's assets are pledged as collateral for amounts
borrowed under the loan agreements. As of June 30, 1996, the Company was in
compliance with all of the requirements of the term loans. The Company plans to
repay its indebtedness under the loan agreements with the proceeds of the
Offerings and subsequently enter into the New Credit Facility. Upon repayment of
the two outstanding term loans, the Company will have approximately $22.3
million available in cash from the proceeds of the Offerings to be used as
working capital. See "Use of Proceeds".
The Company is in the process of negotiating a New Credit Facility. It is
anticipated that the New Credit Facility will provide for a line of credit up to
$50.0 million and will be secured by all tangible and intangible assets of the
Company. The New Credit Facility is expected to limit the Company's ability to
pay cash dividends. In addition, the NHL's Bylaws preclude any one of its
members from paying cash dividends, unless paying such cash dividends will not
impair the member's ability to (i) meet its projected expenses for the
24
<PAGE> 26
ensuing 12 month period without the use of borrowed funds, other than short-term
borrowings, and (ii) maintain adequate reserves to fund the future payment of
all deferred player compensation and other deferred obligations for past
services.
The grant of a security interest in any of the assets of the Panthers, or
any direct or indirect ownership interest in the Company, of 5% or more, shall
require the prior approval of the NHL, which may be withheld in the NHL's sole
discretion and, in that connection, the NHL will require a consent agreement
satisfactory to the NHL. NHL rules limit the amount of debt that may be secured
by the assets of, or ownership interests in, an NHL club and require that the
parties to any secured loan that is approved execute an agreement limiting the
rights of the lenders and the club (or shareholder) under certain circumstances,
including upon an event of default or foreclosure. These limitations may
adversely affect the rights of the club (or shareholder) under certain
circumstances.
The contemplated reduction of indebtedness with the net proceeds of the
Offerings is expected to improve the Company's liquidity by reducing both the
Company's interest expense and the principal amount of the indebtedness required
to be repaid in the future. The Company believes that cash flow from operations
along with borrowing availability under the New Credit Facility will be
sufficient to satisfy the Company's anticipated working capital requirements
over the next 24 months. The Company anticipates that cash flow will improve if
the Broward County Civic Arena is constructed and the Panthers play there.
ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" ("SFAS No. 121"). SFAS No. 121 requires
that long-lived assets and certain identifiable intangibles to be disposed of be
recorded at the lower of carrying amount or fair value less cost to sell. The
Company adopted the provisions of this statement, effective July 1995. Such
adoption did not have a material effect on the Company's financial statements.
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation" ("SFAS No. 123"). Under SFAS No. 123, companies can either measure
the compensation cost of equity instruments issued under employee compensation
plans using a fair value based method, or can continue to recognize compensation
cost under the provisions of Accounting Principles Board Opinion No. 25
("Opinion No. 25"). However, if the provisions of Opinion No. 25 are utilized,
pro forma disclosures of net income and earnings per share must be presented in
the financial statements as if the fair value method had been applied. The
Company intends to recognize compensation costs under the provisions of Opinion
No. 25, and, upon adoption of SFAS No. 123, will disclose the effects of SFAS
No. 123 on net earnings and earnings per share for the years ended June 30, 1995
and 1996.
25
<PAGE> 27
THE NATIONAL HOCKEY LEAGUE
GENERAL
The Company believes that the NHL is poised for significant continued
growth as evidenced by record ticket sales estimated to total $520.0 million
during the 1995-96 season (an estimated 23% increase in revenue from the 1993-94
season) and an estimated increase, from approximately $18.0 million during the
1993-94 season to approximately $21.0 million during the 1995-96 season, in NHLE
net revenue from retail sales of NHL licensed merchandise. In addition, prior to
the commencement of the 1994-95 season, the NHL (i) entered into a new, seven
year $275.0 million television contract with Fox and (ii) extended its existing
contract with ESPN through the end of the 1998-99 season (pursuant to which ESPN
agreed to pay the NHL approximately $65.0 million) for the broadcast of certain
NHL games in the U.S. The NHL also renewed its contract with Molson prior to
commencement of the 1994-95 season, pursuant to which Molson agreed to pay the
NHL approximately $171.0 million for the rights to broadcast certain NHL games
throughout Canada for four seasons. The NHL estimates that the aggregate number
of television households in the United States that tuned in to an NHL national
telecast increased from 53.9 million during the 1993-94 season to 87.5 million
during the 1995-96 season, an increase of 62%.
TEAMS
For the 1996-1997 season, the NHL includes the following teams, which are
currently aligned into two conferences, with two divisions in each conference:
EASTERN CONFERENCE
<TABLE>
<S> <C>
ATLANTIC DIVISION NORTHEAST DIVISION
Florida Panthers Boston Bruins
New Jersey Devils Buffalo Sabres
New York Islanders Hartford Whalers
New York Rangers Montreal Canadiens
Philadelphia Flyers Ottawa Senators
Tampa Bay Lightning Pittsburgh Penguins
Washington Capitals
</TABLE>
WESTERN CONFERENCE
<TABLE>
<S> <C>
CENTRAL DIVISION PACIFIC DIVISION
Chicago Blackhawks Calgary Flames
Dallas Stars Colorado Avalanche
Detroit Red Wings Edmonton Oilers
Phoenix Coyotes Los Angeles Kings
St. Louis Blues Mighty Ducks of Anaheim
Toronto Maple Leafs San Jose Sharks
Vancouver Canucks
</TABLE>
REGULAR SEASON AND PLAYOFFS
During the NHL regular season, which extends from early October to
mid-April, each team plays a total of 82 games against teams from both
conferences. Half of the games are played at home, and half are played away. At
the end of the regular season, 16 of the 26 teams (consisting of the four
division winners and six other teams from each conference with the highest
number of points accumulated during the course of the regular season) qualify
for the NHL playoffs to determine the NHL's Stanley Cup Champion for that
season. The playoffs consist of three rounds in each conference, with the fourth
and final round matching the winners of the Eastern and Western Conferences in
the Stanley Cup Finals to determine the Stanley Cup Champion. Each round is a
best of seven games series. Any team qualifying for the playoffs can be assured
of at least two
26
<PAGE> 28
home games during each round of the playoffs and, depending upon its success in
the playoffs, its regular season record and the length of each series, may play
up to 16 home games during the playoffs.
GATE RECEIPTS AND NHL ASSESSMENTS AND DISTRIBUTIONS
NHL teams are entitled to keep all gate receipts from pre-season and
regular season home games and do not share in the gate receipts from away games.
Each NHL member is required to pay an annual assessment to the NHL which is
equal to 1/26 of the league's annual operating costs. Each team's assessment is
generally funded by its share of the NHL's revenue derived from its national
television contracts and from the sale of NHL licensed merchandise. Each team
participating in the playoffs pays a league playoff assessment for each home
game played during the playoffs. These assessments are used to pay players'
regular season and playoff awards, officiating costs and other playoff related
expenses. Additionally, if the playoff series goes beyond four games, each team
hosting an extra game contributes to an extra game pool an amount up to
approximately 60% of the average net gate receipts per game for that series.
After deducting the league's playoff assessments, the balance of the extra game
pool is distributed 60% to the winning team and 40% to the losing team of each
series.
NHL ENTERPRISES
NHLE, the official licensing entity of the NHL, operates a league-wide
licensing program on behalf of its members. This program consists of national
licensing activities in the U.S., Canada and Europe in which product
manufacturers sign agreements allowing them to use the names and logos of all 26
clubs, the league and the league's special events (including the All-Star games
and the Stanley Cup playoffs) in exchange for royalty and guarantee payments to
NHLE. For the years ended June 30, 1994, 1995 and 1996, the Company's share of
net revenues from NHLE were approximately $761,000, $846,000 and $885,000,
respectively, which, in turn, were credited against the NHL assessment for each
such period. The Company's share of net revenues is equal to 1/26 of NHLE's net
revenue. In addition, each member is permitted to license its club identified
products locally for sale at its arena or at team owned and operated stores
within a 75 mile radius of the arena and through team catalogs.
SUMMARY OF LEAGUE REVENUE AND EXPENSES
The following table summarizes, for the last three seasons, the Company's
share of the revenue derived from the NHL as well as NHL assessments incurred
during the regular season:
<TABLE>
<CAPTION>
SEASON
---------------------------
1993-94 1994-95 1995-96
(IN THOUSANDS)
<S> <C> <C> <C>
Revenue:
Net broadcasting revenue................................... $ 1,563 $ 2,251 $ 2,796
NHL Enterprise rights...................................... 761 846 885
------ ------ ------
Total revenue...................................... 2,324 3,097 3,681
Assessments:
Operating assessment....................................... 969 1,018 1,045
Amateur league costs....................................... 90 316 269
Other costs................................................ 39 48 467
------ ------ ------
Total assessments.................................. 1,098 1,382 1,781
------ ------ ------
Net revenue.................................................. $ 1,226 $ 1,715 $ 1,900
====== ====== ======
</TABLE>
GOVERNANCE
The NHL is generally responsible for regulating the conduct of its members.
The NHL establishes the regular season and playoff schedules of the teams. It
also negotiates, on behalf of its members, the league's national over-the-air
and cable television contracts and the collective bargaining agreement with the
NHL Players' Association. Because the NHL is a joint venture, each of its
members is, in general, jointly and
27
<PAGE> 29
severally liable for the league's liabilities and obligations and shares in its
profits. Under the terms of the Constitution and Bylaws of the NHL, league
approval is required under certain circumstances, including in connection with
the sale or relocation of a member.
The NHL is governed by a Board of Governors, which consists of one
representative from each member. Mr. Torrey serves as the Panthers'
representative on the Board of Governors. The Board of Governors selects the
Commissioner, who administers the daily affairs of the league, including
dealings with the NHL Players' Association, interpretation of playing rules and
arbitration of conflicts among members. The Commissioner also has the power to
impose sanctions, including fines and suspensions, for violations of league
rules. Mr. Gary B. Bettman has been the Commissioner of the NHL since 1993.
The Commissioner has the exclusive power to interpret the Constitution,
Bylaws, rules and regulations of the NHL, and his interpretations are final and
binding. Members of the NHL are precluded from resorting to the courts to
enforce or maintain rights or claims against other members. Instead, all
disputes must be submitted to the Commissioner for his determination, and, such
determination, when rendered, is final and binding.
RESTRICTION ON OWNERSHIP
The NHL Constitution and Bylaws contain provisions which may in some
circumstances operate to prohibit a person from acquiring the Class A Common
Stock and affect the value of such Class A Common Stock. In general, any
acquisition of shares of Class A Common Stock which will result in a person or a
group of persons holding a 5% or more interest in the Company, and each
acquisition of shares of Class A Common Stock which will result in a person or a
group of persons holding any multiple of a 5% interest, will require the prior
approval of the NHL, which may be granted or withheld in the sole discretion of
the NHL. The prospective purchaser will be required to submit to the NHL an
application, in a form to be prescribed from time to time by the NHL, providing
certain information relating to that person's background. Upon receipt of such
application, the Commissioner shall have the right to conduct an investigation
with respect to the prospective purchaser, which may include an interview by the
Commissioner's office or one or more NHL owners and the submission of such
information about the prospective purchaser, whether or not confidential, as the
Commissioner shall deem relevant in his sole discretion. In addition, the NHL
may condition its approval upon the execution, delivery and performance by the
prospective purchaser of such documents as the Commissioner shall prescribe. The
expenses of the NHL's investigation must be paid by the prospective purchaser,
whether or not its application is approved. If and when a prospective purchaser
receives the NHL's consent to acquire a 5% or more interest in the Company, such
prospective purchaser will be required to acknowledge that the purchaser shall
be bound by the applicable provisions of the NHL Constitution and Bylaws.
In addition, no person who directly or indirectly owns any interest in a
privately-held NHL team, or a 5% or more interest in any other publicly-held NHL
team, may own, directly or indirectly, a 5% or more interest in the Company,
without the prior approval of the NHL. The NHL Constitution and Bylaws also
contain provisions which would prohibit an owner of a 5% or more interest in the
Company from engaging in certain activities, such as wagering on any game in
which an NHL team participates. NHL players and referees and employees of the
NHL and its member clubs (other than the Company) are not eligible to purchase
or hold Common Stock. The NHL could in the future adopt different or additional
restrictions which could adversely affect the shareholders.
Furthermore, the grant of a security interest in any of the assets of the
Panthers, or any direct or indirect ownership interest in the Company, of 5% or
more, shall require the prior approval of the NHL, which may be withheld in the
NHL's sole discretion and, in that connection, the NHL will require a consent
agreement satisfactory to the NHL. NHL rules limit the amount of debt that may
be secured by the assets of, or ownership interests in, an NHL club and require
that the parties to any secured loan that is approved execute an agreement
limiting the rights of the lenders and the club (or shareholder) under certain
circumstances, including upon an event of default or foreclosure. These
limitations may adversely affect the rights of the club (or shareholder) under
certain circumstances.
28
<PAGE> 30
Failure by a holder of a 5% or more interest to comply with these
restrictions may result in a forced sale of such holder's interest in the
Company or the repurchase of such interests by the Company. The Company's
Articles of Incorporation provide that the Company may redeem, at the lower of
fair market value or cost, shares held by any person or entity who becomes the
owner of 5% or more of the Company's shares without the approval of the NHL.
These restrictions will be contained in a legend on each certificate issued
evidencing shares of Class A Common Stock.
CONTROL REQUIREMENT
In accordance with its Constitution and Bylaws, a change in the controlling
shareholder must be approved by the NHL. As such, Mr. Huizenga is required to
maintain control of the Company unless the NHL approves the transfer of his
controlling interests. In connection therewith, the Company issued to Mr.
Huizenga shares of Class B Common Stock. See "Risk Factors -- Control by H.
Wayne Huizenga; Voting Rights."
COLLECTIVE BARGAINING AGREEMENT
The NHL and the NHL Players' Association entered into a seven-year NHL
Collective Bargaining Agreement on August 11, 1995 that took retroactive effect
as of September 16, 1993. The NHL Collective Bargaining Agreement expires on
September 15, 2000.
FREE AGENTS
Under the NHL Collective Bargaining Agreement, when a player completes the
term of his contract, he becomes a free agent. Based upon the player's age,
experience and prior year's salary, he will either be classified as an
unrestricted or restricted free agent. The two main groups of unrestricted free
agents are as follows:
Group III Free Agent: Any player who is 32 years of age or older
(commencing with the 1997-98 season any player who is 31 years of age or
older) as of June 30 of the year he becomes a free agent and has been on an
NHL player roster for at least 40 games per season (30 games per season if
the player is a goalie) for at least four seasons.
Group V Free Agent: Any player who has played a minimum of 10 seasons as a
professional hockey player and whose salary in the final year of his
contract was less than that year's NHL average salary. A player may opt to
become a Group V Free Agent only once during his NHL career.
An unrestricted free agent is free to negotiate and sign with any other
team in the NHL following the expiration of his contract, and the team signing
such unrestricted free agent to a contract is not obligated to compensate the
player's former team.
A restricted free agent may also negotiate and sign with another team in
the NHL following the expiration of his contract; however, that player's current
team may exercise its right of first refusal and match the offers made by other
NHL teams. In the event the player's current team chooses not to exercise its
right of first refusal, it is entitled to draft pick(s) as compensation from the
player's new team. The compensation is dependent on the annual salary offer
secured by the restricted free agent.
As of October 5, 1996, the opening day of the regular season, the Panthers
did not have any NHL player eligible for restricted free agency.
NHL ENTRY DRAFT
Following the completion of the Stanley Cup playoffs, the NHL conducts its
annual draft in which each NHL team is given an opportunity to select top
amateur players from the U.S., Canada and Europe. The annual draft consists of
nine rounds. The 10 teams that did not qualify for the playoffs participate in a
draft lottery to determine the order of selections for the first 10 selections.
The drafting positions of the remaining teams for the first round, and the
positions of all teams for subsequent rounds of the draft, are assigned in
inverse order of the consolidated standings of each team during the preceding
NHL season.
29
<PAGE> 31
BUSINESS
GENERAL
The Company owns and operates the Panthers, Arena Development and Arena
Operator. In addition, the Company owns approximately 78% of the partnership
interests in Decoma.
The Panthers commenced play in the NHL on October 4, 1993 and, in their
third season, reached the Stanley Cup Finals. Currently, the Company derives
substantially all of its revenue from its hockey operations. This revenue is
primarily derived from (i) the sale of tickets to the Panthers' home games, (ii)
contracts with broadcasting organizations and (iii) advertising and promotions.
A large portion of the Company's annual revenue from its hockey operations is
determinable at the commencement of each hockey season based on season ticket
sales and the Company's contracts with broadcast organizations and sponsors.
The Company intends to capitalize on the growing popularity of hockey, in
general, and the success achieved by the Panthers during the 1995-96 season, in
particular, by continuing to advertise and market the Panthers as well as
continuing to enhance the service and entertainment provided at games.
In June 1996, the Company entered into the Development Agreement to develop
the Broward County Civic Arena. Pursuant to the Development Agreement, Broward
County purchased the Development Site which will be used primarily for the
development of the Facility and also for possible future ancillary development.
Broward County has agreed to provide up to $184.7 million for the development of
the Broward County Civic Arena, including the purchase of the Development Site.
In connection with the development of the Broward County Civic Arena, the
Company entered into the License Agreement and the Operating Agreement with
Broward County, pursuant to which the Company will utilize and operate the
Broward County Civic Arena beginning on October 1, 1998, provided that
construction is completed on a timely basis. Under the License Agreement, the
Company is entitled to retain 95% of the revenue derived from the sale of
general seating tickets to Panthers' home games and all of certain other hockey
related advertising and merchandising revenue. Five percent of the revenue
derived from the sale of general seating tickets together with revenues from
luxury suites, premium seating and parking are considered Facility operating
revenue in determining net operating income. The Company is entitled to receive
the first $14.0 million of net operating income generated from the Broward
County Civic Arena and 80% (with Broward County receiving 20%) of the net
operating income in excess of $14.0 million. The Company believes that
successful operation of the Broward County Civic Arena will significantly
enhance the Company's total revenue.
The Company owns approximately 78% of the partnership interests in Decoma.
Decoma derives all of its revenue from its Miami Arena operations. Such revenue
is derived from (i) seat use charges imposed on tickets sold at the Miami Arena,
and (ii) net operating income and (iii) fixed and variable operating payments
generated from the Miami Arena.
HOCKEY OPERATIONS
SOURCES OF REVENUE
The Company derives its hockey revenue principally from the sale of tickets
to home games, contracts with broadcast organizations and advertising and
promotions.
Ticket Sales. The Panthers play an equal number of home games and away
games during the 82 game NHL regular season. In addition, the Panthers play one
to two exhibition home games prior to the commencement of the regular season.
Under the NHL Constitution and Bylaws, the Company receives all revenue from the
sale of tickets to regular season home games and no revenue from the sale of
tickets to the Panthers' regular season away games. During the exhibition
season, the Company retains all the revenue from the Panthers' home games and
shares the revenue for certain exhibition games played at neutral sites. During
the last three seasons, the Company has sold an average of 8,300 season tickets.
Ticket prices for regular season home games during the 1995-96 season at the
Miami Arena ranged from $9 to $95 per game with an
30
<PAGE> 32
average paid ticket price of $35. The average individual ticket price is
approximately 14% higher than the average ticket price paid by season ticket
holders.
The following table shows certain information relating to the regular
season revenue generated by the sale of tickets for the periods indicated below:
<TABLE>
<CAPTION>
AVERAGE GROSS
SEASON TICKET AVERAGE PAID AVERAGE GROSS TICKET REVENUE
SEASON HOLDER BASE ATTENDANCE PAID TICKET PRICE PER GAME
<S> <C> <C> <C> <C>
1995-96(1)........................ 7,900 12,200 $ 34.51 $421,000
1994-95(2)........................ 9,400 13,300 30.30 403,000
1993-94........................... 7,500 13,200 26.89 355,000
</TABLE>
- ------------------------------
(1) Management believes that the decrease in the number of season ticket holders
as well as average paid attendance was primarily a result of the fans'
negative reaction to the announcement at the beginning of the season that
the Panthers would either relocate or be sold. Subsequently, as a result of
Broward County agreeing to construct the Broward County Civic Arena and
allowing the Panthers to play in that arena, the Company decided to remain
in South Florida. From October to November 1995, the Company sold an
average of 75% of all the seats available, while from December 1995 to
April 1996, the Company sold an average of 90% of all the seats available.
Of the last 25 regular season games, 14 games were sold out.
(2) The 1994-95 season was shortened from 84 games to 48 games as a result of
labor relations difficulties in the form of a player lock-out in a dispute
over the then existing NHL collective bargaining agreement.
National Television. In 1994, the NHL entered a new, seven-year $275.0
million contract with Fox pursuant to which the NHL granted Fox exclusive
commercial over-the-air television rights to broadcast certain NHL regular
season and playoff games within the U.S. Under the terms of the Fox Contract,
Fox may choose to terminate the contract after five seasons. In the event Fox
chooses to terminate the contract after five seasons, the NHL will be entitled
to receive an aggregate of $155.0 million over such period. In addition, in
1994, the NHL extended its existing contract with ESPN through the end of the
1998-99 season pursuant to which ESPN agreed to pay the NHL approximately $65.0
million for cable rights to broadcast certain NHL regular season and playoff
games within the U.S.
The NHL also renewed its contract with Molson prior to the commencement of
the 1994-95 season, pursuant to which the NHL granted Molson the rights to
broadcast certain NHL games throughout Canada for four seasons. In return,
Molson agreed to pay the NHL approximately $171.0 million.
The revenue from the foregoing broadcasting contracts allocated to the
Company (constituting 1/26 of the NHL's revenue from the broadcasting contracts)
are as follows:
<TABLE>
<CAPTION>
SEASON PANTHERS' SHARE
(IN THOUSANDS)
<S> <C>
1994-95................................................... $ 2,750
1995-96................................................... 2,980
1996-97................................................... 3,275
1997-98................................................... 3,697
1998-99................................................... 2,307(1)
-------
Total................................................ $15,009
=======
</TABLE>
- ------------------------------
(1) Does not include the broadcasting contract with Molson which expires after
the 1997-98 season.
Local Television, Cable and Radio. The Company had a three-year contract
with the Sunshine Network for the local media rights, consisting of television,
cable and radio broadcast of the Panthers' games pursuant to which the Company
derived revenue of approximately $1.7 million, $1.5 million and $2.4 million for
the 1993-94, 1994-95 and 1995-96 seasons, respectively. The contract with
Sunshine Network expired at the end of the 1995-96 season.
31
<PAGE> 33
In August 1996, the Company entered into the SportsChannel Letter of Intent
for the proposed local broadcast (other than radio broadcast) of the Panthers'
games. See "Certain Transactions." Under the terms of the SportsChannel Letter
of Intent, the Company shall grant to SportsChannel Florida broadcast rights
(other than radio broadcast rights) to a pre-determined number of the Panthers'
pre-season, regular season and certain post-season games during the 1996-97
season. The SportsChannel Letter of Intent provides that the Company shall have
the option to grant SportsChannel exclusive or nonexclusive broadcast rights. In
return, the Company shall be entitled to 11% (for the grant of exclusive
broadcast rights) or 5.5% (for the grant of non-exclusive broadcast rights) of
SportsChannel Florida's gross receipts for the 1996-97 season, provided that the
Company shall in no event receive less than $2.5 million or $1.2 million,
respectively. The obligations of the Company and SportsChannel Florida are
subject to the negotiation of a definitive agreement. There can be no assurance
that the Company and SportsChannel Florida will enter into a definitive
agreement.
In addition, in August 1996, the Company entered into the Sunshine Letter
of Intent for the proposed local radio broadcast of all the Panthers games
during the 1996-97 hockey season. Under the terms of the Sunshine Letter of
Intent, the Company shall grant to Sunshine local radio broadcast rights for
broadcast of all of the Panthers' pre-season, regular season and post-season
games during the 1996-97 season. The obligations of the Company and Sunshine are
subject to negotiation of a definitive agreement. There can be no assurance that
the Company and Sunshine will enter into a definitive agreement.
Advertising and Promotions. The Company also generates revenue from the
sale of advertising at certain limited locations at the Miami Arena as well as
in the game programs. In addition, the Company derives promotional revenue from
various sponsored events.
PERFORMANCE
The following table shows the performance of the Panthers during their
first three NHL seasons:
<TABLE>
<CAPTION>
SEASON SEASON RECORD FINISH IN DIVISION PLAYOFF RESULTS
<S> <C> <C> <C>
1995-96.............. 41-31-10 (92 pts.) 3rd Stanley Cup Finals
1994-95(1)........... 20-22-6 (46 pts.) 5th Missed participation by one point
1993-94.............. 33-34-17 (83 pts.) 5th Missed participation by one point
</TABLE>
- ------------------------------
(1) The 1994-95 season was shortened from 84 games to 48 games as a result of
labor relations difficulties in the form of a player lock-out in a dispute
over the then existing NHL collective bargaining agreement.
GENERAL MANAGER
Mr. Bryan Murray completed his second season as general manager of the
Panthers and is under contract through the 1997-98 season. Prior to joining the
Panthers, Mr. Murray was the head coach of the Detroit Red Wings from the
1990-91 season to the 1992-93 season as well as the general manager from the
1990-91 season to the 1993-94 season. Mr. Murray was the coach of the Washington
Capitals from the 1981-82 season to the 1988-89 season and was awarded the Jack
Adams Award as the NHL's Coach of the Year during the 1983-84 season. Mr. Murray
has a career coaching record of 467-337-112 (.571), placing him sixth on the
all-time victory list.
COACHES
The head coach of the Panthers is Mr. Doug MacLean. Mr. MacLean, who guided
the Panthers to a playoff berth as well as to the Stanley Cup Finals in his
first season as the head coach of the Panthers, was a finalist for the Jack
Adams Award, which is presented to the NHL's Coach of the Year. Mr. MacLean also
earned the right to coach the Eastern Conference in the 1995-96 All-Star game.
Mr. MacLean served as the Panthers' director of player development and head
scout during the 1994-95 season. Prior to joining the Panthers, he spent four
seasons with the Detroit Red Wings, working in a variety of capacities. Mr.
MacLean recently extended his contract with the Panthers through the end of the
1998-99 season.
Mr. Duanne Sutter has completed his first year as an assistant coach with
the Panthers. Prior to joining the Panthers, Mr. Sutter served as the head coach
of the Indianapolis Ice of the International Hockey League
32
<PAGE> 34
(the "IHL") for three seasons. Mr. Sutter also played 10 seasons with the New
York Islanders before retiring in 1990. Mr. Sutter is under contract with the
Panthers through the end of the 1996-97 season.
Mr. Lindy Ruff has completed his third season as an assistant coach with
the Panthers and is under contract with the Panthers through the end of the
1998-99 season. Mr. Ruff's responsibilities consist primarily of special teams
and defense. Mr. Ruff was a former player captain of the Buffalo Sabres (the
"Sabres") and played 691 games in the NHL with the Sabres and the New York
Rangers from the 1980-81 season to the 1991-92 season.
PLAYERS
In general, the rules of the NHL permit each team to maintain an active
roster of 24 hockey players during each regular season and to have up to 50
players under NHL contracts. The following table sets forth certain information
concerning the active roster of the Panthers' players as of October 5, 1996, the
opening day of the 1996-97 regular season.
<TABLE>
<CAPTION>
YEARS IN LAST SEASON
NAME POSITION THE NHL OF CONTRACT HEIGHT WEIGHT AGE
<S> <C> <C> <C> <C> <C> <C>
Stu Barnes......................... Center 5 1996-97 5'11" 174 lbs 25
Terry Carkner...................... Defense 10 1996-97 6'03" 210 lbs 30
Radek Dvorak....................... Left Wing Rookie 1997-98 6'02" 185 lbs 19
Tom Fitzgerald..................... Right Wing 8 1997-98 6'01" 191 lbs 27
Mark Fitzpatrick................... Goaltender 9 1996-97 6'02" 190 lbs 27
Johan Garpenlov.................... Left Wing 8 1996-97 5'11" 185 lbs 28
Per Gustafsson..................... Defense Rookie 1996-97 6'02" 190 lbs 26
Mike Hough......................... Left Wing 10 1996-97 6'01" 197 lbs 33
Jody Hull.......................... Right Wing 8 1997-98 6'02" 195 lbs 27
Ed Jovanovski...................... Defense Rookie 1998-99 6'02" 205 lbs 19
Paul Laus.......................... Defense 3 1997-98 6'01" 216 lbs 25
Bill Lindsay....................... Left Wing 5 1997-98 5'11" 190 lbs 25
Dave Lowry......................... Left Wing 11 1997-98 6'01" 200 lbs 31
Scott Mellanby..................... Right Wing 11 1997-98 6'01" 199 lbs 29
Gord Murphy........................ Defense 8 1997-98 6'02" 191 lbs 29
Rob Niedermayer.................... Center 3 1996-97 6'02" 200 lbs 21
Ray Sheppard(1).................... Right Wing 9 1998-99 6'01" 195 lbs 30
Brian Skrudland.................... Center 11 1996-97 6'00" 196 lbs 32
Brad Smyth......................... Right Wing Rookie 1997-98 6'00" 200 lbs 23
Martin Straka...................... Right Wing 4 1997-98 5'10" 178 lbs 23
Robert Svehla...................... Defense 2 1998-99 6'01" 190 lbs 27
John Vanbiesbrouck................. Goaltender 13 1997-98 5'08" 176 lbs 32
Rhett Warrener..................... Defense Rookie 1998-99 6'01" 209 lbs 20
Steve Washburn..................... Center Rookie 1997-98 6'02" 191 lbs 21
Jason Wooley(1).................... Defense 5 1996-97 6'00" 188 lbs 26
</TABLE>
- ------------------------------
(1) Player was on the injured reserved list as of opening day.
PLAYER DEVELOPMENT
The Panthers are currently affiliated with two minor league teams, the
Greensboro Monarchs ("Monarchs") of the American Hockey League (the "AHL") and
the Cincinnati Cyclones ("Cyclones") of the IHL. Under the terms of the
Company's respective agreements with the Monarchs and Cyclones, the Panthers are
obligated to provide the Monarchs and Cyclones with a certain number of players
and have the right to utilize such players on their NHL roster during the course
of the season.
The IHL, being comprised of many older, ex-NHL players, provides the
Panthers with the ability to call upon experienced players for short term
replacement. In contrast, by being affiliated with the Monarchs and the AHL, for
which the average player age is approximately 23, the Panthers have the
opportunity to develop young, newly signed players for future participation in
the NHL.
33
<PAGE> 35
Players assigned to the Panthers' minor league affiliates generally have
"two way" contracts which provide them with higher salaries in the event they
are called upon to play for the Panthers.
SALARIES
The NHL Bylaws require each team to enter into a uniform player contract
with each of its players. Players who sustain injuries from team sponsored or
approved hockey related activities are generally entitled to substantially all
of their salaries and signing bonuses. As of October 5, 1996, the Company was
required to make, in the aggregate, the following future payments to its present
and past NHL players.
<TABLE>
<CAPTION>
SIGNING
BASE BONUSES(1) DEFERRED COMPENSATION
SEASON COMPENSATION (IN PAYMENTS(2)
THOUSANDS)
<S> <C> <C> <C>
1996-97......................................... $ 17,060 $ 1,850 $ 678
1997-98......................................... 13,240 1,100 628
1998-99 and thereafter.......................... 4,585 50 558
</TABLE>
- ------------------------------
(1) Signing bonuses are amortized over the expected life of the player's
contract but are shown in the table on a cash basis.
(2) Represents payments to be made to four players, two of whom had their
contracts bought out by the Panthers and two of whom had been released by
the Panthers.
In addition to the salaries paid to its NHL players, the Company is
obligated to pay its non-NHL players (who play for the Panthers' minor league
affiliates) salaries pursuant to the terms of the players' respective contracts.
The Company is required to make, in the aggregate, the following future payments
to the Panthers' non-NHL players who have entered into contracts with the
Panthers as of October 5, 1996:
<TABLE>
<CAPTION>
MINOR LEAGUE PANTHERS' SALARIES(1)
SEASON SALARIES (IN THOUSANDS) CASH SIGNING BONUSES
<S> <C> <C> <C>
1996-97.............................. $ 1,797 $ 8,820 $878
1997-98.............................. 877 6,230 510
1998-99 and thereafter............... 353 2,690 50
</TABLE>
- ------------------------------
(1) The majority of non-NHL players have "two way" contracts with two levels of
compensation, one for playing in the minor league and the other for playing
in the NHL. This column represents the aggregate annual salaries of the
current non-NHL players, assuming that all such non-NHL players become
members of the Panthers and play a full season in the NHL.
MIAMI ARENA
The Panthers currently play in the Miami Arena, which has a seating
capacity of 14,703, one of the smallest arenas in the NHL. Under the terms of
the Panthers' current lease, the Miami Heat of the National Basketball
Association, as the primary tenant, controls revenue generated from the sale of
suites and a majority of the advertising, limiting the Company's ability to
generate certain revenue which is generally available to other NHL franchises.
In addition, the size of the Miami Arena limits the Company's ability to
generate revenue from the sale of additional tickets.
In May 1996, the Company entered into the Lease Amendment, extending the
term of the lease (which was scheduled to expire at the end of the 1995-96
season) to July 31, 1998, with two one-year options for the 1998-99 season and
the 1999-2000 season. The Lease Amendment contained substantially the same
economic terms as the existing Miami Arena lease and was subject to the approval
of MSEA, which approval, according to the Miami Arena lease, could not be
unreasonably withheld. In June 1996, MSEA rejected the Lease Amendment and
demanded that the Panthers vacate the Miami Arena. Subsequently, the Company
sought and obtained a preliminary injunction enjoining MSEA from taking actions
to prevent the Panthers from utilizing the Miami Arena pursuant to the Lease
Amendment. MSEA has recently appealed the decision rendered by the court.
Although the Company believes that MSEA will not prevail, if MSEA is successful,
34
<PAGE> 36
the Company may need to find and enter into a lease for an alternative playing
site until such time as the Broward County Civic Arena is completed. There can
be no assurance that the Company will be able to find and enter into a lease for
an alternative playing site or that the use of such alternative playing site
will not adversely affect the Company's financial condition and results of
operations.
The Company owns approximately 78% of the partnership interests in Decoma,
which derives all of its revenue from the Miami Arena operations. The City of
Miami recently announced that it intends to build the New Arena which will be
utilized by the Miami Heat. Upon its completion, the New Arena will compete with
the Miami Arena for the rights to host various events, including sports events
and concerts. There can be no assurance that the Miami Arena can successfully
compete with the New Arena. In the event the Miami Arena is unable to attract
the various sports and non-sports events, the results of operations of Decoma
will be adversely affected.
COMPETITION
The Panthers compete for sports entertainment dollars not only with other
major league sports, but also with college athletics and other sports-related
entertainment. During portions of its season, the Panthers experience
competition from professional basketball (the Miami Heat), professional football
(the Miami Dolphins) and professional baseball (the Florida Marlins). Mr.
Huizenga controls the Miami Dolphins and the Florida Marlins. In addition, the
colleges and universities in South Florida, as well as public and private
secondary schools, offer a full schedule of athletic events throughout the year.
The Panthers also compete for attendance and advertising revenue with a wide
range of other entertainment and recreational activities available in South
Florida. The Panthers compete with other NHL and non-NHL teams, professional and
otherwise, for available players.
ARENA DEVELOPMENT AND OPERATIONS
DEVELOPMENT OF THE BROWARD COUNTY CIVIC ARENA
In June 1996, the Company entered into the Development Agreement to develop
the Broward County Civic Arena, which will be owned by Broward County. Pursuant
to the Development Agreement, Broward County purchased the Development Site,
which will be used primarily for the development of the Facility and also for
possible future ancillary development. Broward County has agreed to provide
$184.7 million for the development of the Facility, including the purchase of
the Development Site. The Broward County Civic Arena will be located on the
Development Site and Broward County will reimburse the Company for all costs
relating to environmental remediation of the purchased land. The Company will
bear all costs relating to the development of the Broward County Civic Arena in
excess of $184.7 million; however, it may require Broward County to advance an
additional $18.5 million, which the Company will repay as supplemental rent.
In July 1996, Sawgrass Land Corporation, a Florida corporation ("Sawgrass")
which is owned by Mr. Huizenga, entered into a letter of intent (the "Lennar
Letter of Intent") with Lennar Homes, Inc. and Development Corporation of
America for the purchase of 153 contiguous acres of land adjacent to the Broward
County Civic Arena. In the future, Sawgrass may attempt to develop, or permit
other parties to develop, such land.
OPERATION OF THE BROWARD COUNTY CIVIC ARENA
In June 1996, the Company entered into the License Agreement and the
Operating Agreement pursuant to which the Company will utilize and operate the
Broward County Civic Arena. In connection therewith, Broward County will receive
the County Preferred Revenue from the operations of the Broward County Civic
Arena. The County Preferred Revenue is the annual amount equal to the difference
between (i) the actual amount of Broward County's debt service on the
Professional Sports Facilities Tax and Revenue Bonds, Series 1996 (Broward
County Civic Arena Project) (the "Series 1996 Bonds") and (ii) $10.0 million.
The amount of the County Preferred Revenue is approximately $1.4 million for the
twelve months ended September 30, 1999, and will average approximately $3.9
million in each subsequent twelve-month period for the remaining life of the
Series 1996 Bonds. The Company has provided Broward County a guaranty pursuant
35
<PAGE> 37
to which the Company will be obligated to pay Broward County the County
Preferred Revenue Obligation. The Company believes that the revenue generated
from the operations of the Facility will be sufficient to provide Broward County
with the County Preferred Revenue. In the event such revenue is not sufficient
to provide Broward County with the County Preferred Revenue, the Company will be
required to meet its County Preferred Revenue Obligation. There can be no
assurance that the revenue generated from Broward County Civic Arena will be
sufficient to meet the Company's obligations to Broward County.
Under the License Agreement, the Company is entitled to retain 95% of all
revenue derived from the sale of general seating tickets to the Panthers' home
games and all of certain other hockey-related advertising and merchandising
revenue. Five percent of the revenue derived from the sale of general seating
tickets together with luxury suites, premium seating and parking are considered
Facility operating revenue, which is the primary source of revenue in
determining net operating income. Net operating income is the difference between
the Facility operating revenue and Facility operating expense. The Company is
entitled to receive the first $14.0 million of the net operating income
generated from the Broward County Civic Arena and 80% (with Broward County
receiving 20%) of all net operating income in excess of $14.0 million. The
License Agreement provides that the Company loan to Broward County such an
amount as necessary to allow Broward County to meet certain financial
obligations relating to the Broward County Civic Arena at an interest rate of
prime plus 2%. Broward County is required to repay any loan made by the Company
on a priority from revenue generated from collection of tax. Such loans to be
repaid on a priority basis from further tax collection.
The License Agreement commencement date will occur upon thirty days notice
of the completion of construction of the Broward County Civic Arena, which is
currently scheduled for October 1, 1998; however, the commencement of the
License Agreement may be deferred by the Company until the following NHL hockey
season in the event the Broward County Civic Arena is completed between March 1
and July 1 of 1999. Once commenced, the License Agreement is for a term of 30
years, which term may be extended for five year periods, subject to certain
conditions, pursuant to options granted to the Company by Broward County.
The License Agreement entitles the Panthers to the exclusive use of the
Broward County Civic Arena during the playing of all of its home games, and
provides for nonexclusive use by the Panthers for practices and other team uses.
Additionally, the License Agreement provides the Company with exclusive use of
certain space within the Broward County Civic Arena to be used for a retail
store, offices, a box office, a locker room and a training and weight room. The
License Agreement contains a use covenant which requires the Panthers to play
all of their home games at the Broward County Civic Arena during the term of the
License Agreement.
DECOMA
The Company owns approximately 78% of the partnership interests in Decoma.
Decoma derives all of its revenue from its Miami Arena operations. Such revenue
is derived from (i) seat use charges imposed on tickets sold at the Miami Arena,
and (ii) net operating income and (iii) fixed and variable operating payments
generated from the Miami Arena operations. The City of Miami recently announced
that it intends to build the New Arena which will be utilized by the Miami Heat.
Upon its completion, the New Arena will compete with the Miami Arena for the
right to host various events, including sports events and concerts. There can be
no assurance that Miami Arena can successfully compete with the New Arena. In
the event the Miami Arena is unable to attract the various sports and non-sports
events, the results of operations of Decoma will be adversely affected.
EMPLOYEES
In addition to its players, the Company currently employs 25 hockey
personnel and 40 non-hockey personnel. During the hockey season, the Company
also uses part-time employees, most of whom are employed as statisticians and
press attendants. None of the Company's employees other than its players are
covered by collective bargaining agreements. The Company considers its relations
with its employees to be good.
36
<PAGE> 38
INSURANCE
The Company maintains various insurance coverages on behalf of its players
through the NHL, including through the league's affiliated Bermuda insurance
company, Intra-Continental Ensurers Ltd. ("ICE"). Such insurance, for which the
players are the beneficiaries, includes medical and dental, permanent total
disability, group life, accidental death and dismemberment ("AD&D"), and spousal
group life and AD&D.
The Company also maintains various types of insurance on behalf of the
Panthers through ICE. Workers' compensation insurance is maintained with a
$100,000 per injury deductible. The NHL Catastrophe Insurance Plan covers the
entire roster in the amount of $1.0 million per player. In addition, the ICE
program requires that each team cover their top five salaried players with at
least two years remaining on their contract with Total Temporary Disability
Insurance. This insurance pays a benefit of up to 80% of the covered player's
compensation after 30 consecutive regular season games are missed. From time to
time, the Panthers may obtain additional insurance coverage for its players as
may be necessary or required.
In addition to hockey related insurance, the Company maintains various
types of business insurance, including general liability insurance of $1.0
million, and umbrella insurance of $10.0 million.
Under the Operating Agreement, the License Agreement and the Development
Agreement, the Company will have insurance requirements which include (i)
workers' compensation insurance, (ii) casualty insurance against loss or damage
to the Facility in such amount not less than full replacement cost of the
Facility and the equipment and machinery therein, and (iii) occupancy insurance
in an amount not less than estimated annual revenue to be derived from the
Facility.
LITIGATION
On June 17, 1996, MSEA filed a lawsuit against, among others, Mr. Huizenga,
Mr. Rochon, the Panthers, Decoma, Arena Development and Arena Operator in the
United States District Court of the Southern District of Florida. The suit
alleges that the Defendants have conspired to restrain trade in the South
Florida sports and entertainment facility market by monopolizing or attempting
to monopolize such market in violation of federal antitrust laws. The Plaintiff
seeks, among other things, to (i) nullify certain provisions of the Miami Arena
Contract, specifically provisions restricting MSEA from developing the New
Arena, and (ii) force the Defendants to divest their control over the Miami
Arena and the Broward County Civic Arena. In addition, the Plaintiff seeks
treble damages as well as reimbursement for reasonable attorneys' fees and
costs. The Defendants believe that the suit is without merit and intend to
vigorously defend against this suit. An unfavorable outcome of the suit may have
a material adverse effect on the Company's financial condition or results of
operations.
In May 1996, the Company entered into the Lease Amendment, extending the
term of the lease (which was scheduled to expire at the end of the 1995-96
season) to July 31, 1998, with two one-year options for the 1998-99 season and
the 1999-2000 season. The Lease Amendment contained substantially the same
economic terms as the existing Miami Arena lease and was subject to the approval
of MSEA, which approval, according to the Miami Arena lease, could not be
unreasonably withheld. In June 1996, MSEA rejected the Lease Amendment and
demanded that the Panthers vacate the Miami Arena. Subsequently, the Company
sought and obtained a preliminary injunction enjoining MSEA from taking actions
to prevent the Panthers from utilizing the Miami Arena pursuant to the Lease
Amendment. MSEA has recently appealed the decision rendered by the court.
Although the Company believes that MSEA will not prevail, if MSEA is successful,
the Company may need to find and enter into a lease for an alternative playing
site, which may be outside South Florida, until such time as the Broward County
Civic Arena is completed. There can be no assurance that the Company will be
able to find and enter into a lease for an alternative playing site.
On September 4, 1996, Timothy Johanson, Walter Johanson and Veronica
Juliano (the "ADA Plaintiffs") filed a lawsuit against the Panthers, among
others, in the United States District Court of the Southern District of Florida.
The suit alleges that the Panthers violated the Americans with Disabilities Act
in connection with the development of the Broward County Civic Arena by (i)
failing to make reasonable modifications in policies, practices or procedures;
(ii) failing to take such steps as may be necessary to ensure
37
<PAGE> 39
that no individual with a disability is excluded, denied services, segregated or
otherwise treated differently; and (iii) failing to remove architectural
barriers and communications barriers. The ADA Plaintiffs seek, among other
things, to (A) obtain a judgment mandating the Panthers to revise, modify and
remove certain barriers at the Broward County Civic Arena that may prevent
persons with disabilities from having access to the Facility and take steps
necessary to ensure that no person with a disability is excluded, denied
services, segregated or otherwise treated differently, to the extent required by
law, and (B) be awarded reasonable attorneys' fees, costs and expenses incurred
in connection with the suit. The Panthers believe that they have complied with
the requirements of the Americans with Disabilities Act and that the suit is
without merit. An unfavorable outcome of the suit may require the Company to
incur additional costs.
The Company is not presently involved in any other material legal
proceedings. However, the Company may from time to time become a party to legal
proceedings arising in the ordinary course of business.
38
<PAGE> 40
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and the executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
H. Wayne Huizenga.................... 58 Chairman of the Board
Richard H. Evans..................... 51 President and Director
William A. Torrey.................... 61 President of Florida Panthers Hockey
Club, Inc. and Director
Alex Muxo............................ 41 President of Arena Development and Arena
Operator
Steven M. Dauria..................... 35 Vice President and Chief Financial
Officer
Steven R. Berrard.................... 41 Director
Harris W. Hudson..................... 53 Director
George D. Johnson, Jr................ 53 Director
Richard C. Rochon.................... 39 Director
</TABLE>
All directors are elected to serve until the next annual meeting of
shareholders and until their successors are elected and qualified. Officers
serve at the pleasure of the Board.
H. Wayne Huizenga has been the Company's Chairman of the Board since
September 1996. Mr. Huizenga has been Chairman of the Board and Chief Executive
Officer of Republic Industries, Inc. ("Republic"), a diversified company with
operations in the solid waste, electronic security services and out-of-home
advertising industries, since August 1995, and has been Chairman of the Board of
Extended Stay America, Inc. ("Extended Stay"), an extended stay lodging
facilities company, since January 1995. From September 1994 to October 1995, Mr.
Huizenga served as the Vice Chairman of Viacom, Inc., a diversified media and
entertainment company ("Viacom"), a position he assumed upon its merger with
Blockbuster Entertainment Corporation ("Blockbuster"). Prior thereto, Mr.
Huizenga became a director of Blockbuster in February 1987 and served as its
Chairman of the Board and Chief Executive Officer from April 1987 to September
1994. Since 1984, Mr. Huizenga has been an investor in several businesses and is
the sole shareholder and Chairman of the Board of Huizenga Holdings, Inc.
("Huizenga Holdings"), a holding and management company with various business
interests and an affiliate of the Company. He is the owner of the Miami Dolphins
and the Florida Marlins. In addition, Mr. Huizenga owns Pro Player Stadium and
has investments in numerous hotels and various other real estate ventures. Mr.
Huizenga is the brother-in-law of Mr. Hudson.
Richard H. Evans has been the Company's President and a director and has
also been the President and Chief Executive Officer of Huizenga Sports and
Entertainment Group since September 1996. Prior to joining the Company, Mr.
Evans served as a director of Genesco, Inc. and Bass Pro Shops. From April 1993
to October 1996, Mr. Evans served as the Chief Operating Officer of Gaylord
Entertainment Company ("Gaylord Entertainment"), a diversified entertainment and
communications company. Prior to joining Gaylord Entertainment, Mr. Evans served
as President and Chief Executive Officer of Dorna USA, a subsidiary of
Madrid-based Dorna Promocion del Deporte, a marketing company, from January 1992
to February 1993. Mr. Evans also served as the President and Chief Executive
Officer of Madison Square Garden Corporation from January 1987 to August 1991.
William A. Torrey has been the President of Florida Panthers Hockey Club,
Inc. and a director of the Company since September 1996. Since April 1993, Mr.
Torrey has served as the President and Governor of the Panthers. Prior to
joining the Company, Mr. Torrey was associated with the New York Islanders
Hockey Club (the "Islanders") for twenty-one years in various capacities. From
June 1989 to August 1992, Mr. Torrey served as the Chairman of the Board of the
Islanders. From September 1978 to August 1992 Mr. Torrey served as the President
of the Islanders, and from February 1972 to August 1992 he served as the General
Manager of the Islanders.
39
<PAGE> 41
Alex Muxo has been the President of Arena Development and Arena Operator
since September 1996. From January 1995 to July 1996, Mr. Muxo served as the
Vice President of Huizenga Holdings. Prior to joining Huizenga Holdings, Mr.
Muxo served as the Vice President for Planning for Blockbuster from May 1994 to
January 1995. Prior thereto, Mr. Muxo was the City Manager of City of Homestead,
Florida.
Steven M. Dauria has been the Company's Vice President and Chief Financial
Officer since September 1996. From July 1994 to July 1996, Mr. Dauria served as
Director of Finance and Administration and Chief Financial Officer of the
Panthers, and, from December 1993 to July 1994, Mr. Dauria served as the
Controller of the Panthers and the Florida Marlins. Prior to joining the
Panthers, Mr. Dauria served as Controller of the New York Yankees, a Major
League Baseball franchise, from November 1991 to December 1993, and was
previously associated with Time Warner, Inc. and Coopers & Lybrand, an
international public accounting firm.
Steven R. Berrard has been a director of the Company since September 1996.
Since October 1996, Mr. Berrard has been President and Co-Chief Executive
Officer of Republic. Mr. Berrard has been the Chief Executive Officer of
AutoNation Incorporated since March 1996. From September 1994 to March 1996, Mr.
Berrard served as the President and Chief Executive Officer of Blockbuster
Entertainment Group, a division of Viacom, as well as a director of Viacom.
Prior thereto, Mr. Berrard served as the President and Chief Operating Officer
of Blockbuster from January 1993 to September 1994 and was its Vice Chairman of
the Board from November 1989 to September 1994. Mr. Berrard was also the
President and Chief Executive Officer and a director of Spelling Entertainment
Group Inc., a television and film entertainment producer and distributor, from
March 1993 through March 1996.
Harris W. Hudson has been a director of the Company since September 1996.
Mr. Hudson has been a director of Republic since August 1995 and Vice-Chairman
of Republic since October 1996. From August 1995 to October 1996, Mr. Hudson
served as the President of Republic. Prior thereto, Mr. Hudson served as the
Chairman of the Board, Chief Executive Officer and President of Hudson
Management Corporation. Mr. Hudson is the brother-in-law of Mr. Huizenga.
George D. Johnson, Jr. has been a director of the Company since September
1996. Mr. Johnson has been the President, Chief Executive Officer and a director
of Extended Stay since January 1995, the managing general partner of American
Storage Limited Partnership, a chain of 23 self-storage facilities located in
the Southeast United States, and Chairman of the Board of Johnson Development
Associates, Inc., a real estate management, leasing and development company. Mr.
Johnson currently serves on the Board of Directors of Viacom, Republic and Duke
Power Company. Mr. Johnson previously served as President of the Consumer
Products Division of Blockbuster Entertainment. He was formerly the managing
general partner of WJB Video, the largest Blockbuster franchisee, which
developed over 200 video stores prior to its merger with Blockbuster in 1993.
Mr. Johnson served three terms in the South Carolina House of Representatives.
Richard C. Rochon has been a director of the Company since September 1996.
Mr. Rochon is also the President of Huizenga Holdings, a position he has held
since 1988. Prior to joining Huizenga Holdings, he was a certified public
accountant at Coopers & Lybrand, an international public accounting firm.
DIRECTORS' COMPENSATION
The Company's policy is not to pay compensation in the form of salaries or
fees to directors. However, the directors are entitled to receive options to
purchase shares of Class A Common Stock pursuant to the Stock Option Plan.
40
<PAGE> 42
EXECUTIVE COMPENSATION
The following table shows remuneration paid or accrued by the Company
during the year ended June 30, 1996 to the Chief Executive Officer and to each
of the four most highly compensated executive officers of the Company, other
than the Chief Executive Officer (together, the "Named Executive Officers"), for
services in all capacities while they were employees of the Company, and the
capacities in which the services were rendered.
<TABLE>
<CAPTION>
ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION
<S> <C> <C> <C>
H. Wayne Huizenga...................................... -- -- --
Chairman of the Board of Directors
Richard H. Evans....................................... -- -- --
President(1)
William A. Torrey...................................... $400,000(2) $ 3,000(3) $ 28,000(4)
President of Florida Panthers Hockey Club, Inc.
Alex Muxo.............................................. 156,000 -- 19,000(4)
President of Arena Development and Arena Operator
Steven M. Dauria....................................... 90,000 10,000(3) 14,000(4)
Vice President and Chief Financial Officer
</TABLE>
- ------------------------------
(1) Mr. Evans joined the Company as its President in September 1996. As such,
Mr. Evans did not receive any compensation from the Company during the
fiscal year 1996.
(2) Includes deferred compensation of $100,000 paid to Mr. Torrey during fiscal
1996.
(3) Represents bonus amounts earned in fiscal 1995 and paid in fiscal year 1996.
(4) Comprised of insurance premiums paid by the Company, and, in the case of Mr.
Torrey, $7,200 of automobile stipends paid by the Company on his behalf.
STOCK OPTION PLAN
Under the Company's Stock Option Plan, 2,600,000 shares of Class A Common
Stock are reserved for issuance upon the exercise of stock options. The Stock
Option Plan is designed as a means to attract, retain and motivate directors and
key employees. A committee (the "Committee") consisting of two or more non-
employee directors appointed by the Board of Directors will administer and
interpret the Stock Option Plan.
Options are granted under the Stock Option Plan on such terms and at such
prices as determined by the Committee, except that the per share exercise price
of the options cannot be less than the fair market value of the Class A Common
Stock on the date of grant. Each option shall be for a term of not less than
five years or more than ten years, as shall be determined by the Committee.
However, in the event of a change of control (as such term is defined in the
Stock Option Plan), all outstanding options shall be immediately exercisable.
Options granted under the Stock Option Plan are not transferable other than by
will or by the laws of descent and distribution.
EMPLOYMENT AGREEMENTS
Mr. Torrey's employment agreement (the "Torrey Employment Agreement")
provides that Mr. Torrey is entitled to an annual base salary for the 1996-97,
1997-98 and 1998-99 hockey seasons of $400,000, $450,000 and $500,000,
respectively. Additionally, Mr. Torrey is entitled to receive a bonus which is
equal to the average amount awarded and payable by the NHL to the players of the
Panthers for participation in post-season play. The Torrey Employment Agreement
contains certain confidentiality and non-competition provisions and terminates
in July 1999, unless terminated prior thereto, either for or without cause. If
Mr. Torrey's employment were to be terminated for cause, he would be entitled to
all accrued compensation up to the date of termination. If his employment were
to be terminated without cause, Mr. Torrey would be entitled to all benefits
provided for in the Torrey Employment Agreement, provided that he makes
substantial efforts to obtain other employment.
41
<PAGE> 43
DIRECTORS AND OFFICERS OF FLORIDA PANTHERS HOCKEY CLUB, INC.
Florida Panthers Hockey Club, Inc., a subsidiary of the Company, serves as
the sole general partner of the Partnership and, as such, is responsible for the
management of the Partnership. The officers and directors of Florida Panthers
Hockey Club, Inc. are as follows:
<TABLE>
<CAPTION>
NAME POSITION
<S> <C>
H. Wayne Huizenga..................... Chairman
William A. Torrey..................... President and Director
Dean J. Jordan........................ Executive Vice President
Steven M. Dauria...................... Vice President and Chief Financial Officer
Bryan Murray.......................... Vice President and General Manager
Declan Bolger......................... Vice President Marketing
Stephen B. Dangerfield................ Vice President Operations
Martha J. Huizenga.................... Director
Richard C. Rochon..................... Director
Cris V. Branden....................... Director
Robert J. Henninger, Jr............... Director
Pamela Huizenga-Van Hart.............. Director
Ray Goldsby-Huizenga.................. Director
H. Wayne Huizenga, Jr................. Director
William M. Pierce..................... Director
</TABLE>
42
<PAGE> 44
CERTAIN TRANSACTIONS
Prior to the closing of the Offerings, the following events will occur: (i)
Mr. Huizenga, as the sole shareholder of Decoma III, will cause Decoma III to
transfer all but 1% of its ownership interest in Decoma to Decoma II, following
which Decoma II will own a 51% interest in Decoma, resulting in Decoma I and
Decoma II collectively owning approximately a 78% interest in Decoma, Decoma III
owning a 1% interest in Decoma and various unrelated third parties owning the
remaining 21% interest in Decoma (Prior to the completion of the Reorganization,
Decoma I and II own 66 2/3% of the partnership interest of Decoma Venture. The
remaining 33 1/3% of the partnership interest of Decoma Venture is owned by
Decoma III. Upon completion of the Reorganization, Decoma I and Decoma II will
own 99% of the partnership interest in Decoma Venture which, through its
ownership of Decoma Limited, will own approximately 78% interest in Decoma);
(ii) Mr. Huizenga will contribute (A) a note (the "Partnership Note"),
representing the outstanding amount which the Company borrowed from Mr. Huizenga
plus interest, and (B) all the outstanding capital stock of each of Decoma I and
Decoma II to the capital of the Partnership; (iii) Mr. Huizenga, as the sole
limited partner and the sole general partner (through his ownership of Florida
Panthers Hockey Club, Inc.) of the Partnership, will contribute all of the
partnership interests in the Partnership to the Company; and (iv) Mr. Huizenga,
as the sole limited partner (through his ownership of the Partnership) and the
sole general partner (through his ownership of the Arena Development Company,
Inc. and Arena Operating Company, Inc., respectively) of each of Arena
Development and Arena Operator, will contribute all the limited partnership
interests in each of Arena Development and Arena Operator as well as all the
outstanding capital stock of each of Arena Development Company, Inc. and Arena
Operator Company, Inc. to the Company. In exchange for all of the foregoing
capital contributions, Mr. Huizenga will receive 5,275,678 shares of Common
Stock (the "Exchange Shares"), of which 5,020,678 shares will be Class A Common
Stock and 255,000 shares will be Class B Common Stock. The number of Exchange
Shares to be issued was derived by dividing by $9.30 (the assumed Initial Public
Offering price less underwriting discounts and commissions) the sum of (A) the
Partnership Note (approximately $41.0 million), which will result in the
issuance of 4,404,710 shares of Common Stock and (B) the approximately 78%
interest in Decoma (approximately $8.1 million, representing costs incurred by
Mr. Huizenga in acquiring the Decoma Interests), which will result in the
issuance of 870,968 shares of Common Stock.
The Panthers play all their home games at the Miami Arena, which is
operated by Decoma. The general partner of Decoma is Decoma Venture, a Texas
joint venture which is comprised of Decoma Investment, Inc. III ("Decoma III"),
Decoma I and Decoma II. Decoma I, Decoma II and Decoma III, whose sole
shareholder is Mr. Huizenga, own in the aggregate 79% of the partnership
interests in Decoma. For the twelve months ended December 31, 1994, and 1995 and
the six months ended June 30, 1996, Decoma Venture had revenue of approximately
$2.3 million, $1.6 million (as a result of a shortened hockey season) and
$762,000, respectively, from the operations of the Miami Arena.
In 1994, Mr. Huizenga purchased a 50% interest in Leisure Management
International ("LMI"), which manages the Miami Arena pursuant to a management
agreement (the "Management Agreement") with Decoma. Under the terms of the
Management Agreement, LMI received from Decoma a management fee of approximately
$136,000, $122,000 and $58,000 for the twelve months ended June 30, 1994, and
1995 and the six months ended June 30, 1996.
In August 1996, the Company entered into the SportsChannel Letter of Intent
with SportsChannel Florida for the proposed local broadcast (other than radio
broadcast) of the Panthers' games. Under the terms of the SportsChannel Letter
of Intent, the Company shall grant to SportsChannel Florida broadcast rights
(other than radio broadcast rights) to all of the Panthers' pre-season, regular
season and certain post-season away games during the 1996-97 season. The
SportsChannel Letter of Intent provides that the Company shall have the option
to grant SportsChannel Florida exclusive or nonexclusive broadcast rights. In
return, the Company shall be entitled to 11% (for the grant of exclusive
broadcast rights) or 5.5% (for the grant of non-exclusive broadcast rights) of
SportsChannel Florida's gross receipts for the 1996-97 season, provided that the
Company shall in no event receive less than $2.5 million or $1.2 million,
respectively. The SportsChannel Letter of Intent may be extended for an
additional season upon notice by the Company. Mr. Huizenga
43
<PAGE> 45
currently owns 50% of SportsChannel Florida, and he holds an option to purchase
an additional 20% ownership interest in SportsChannel Florida.
The Company pays Huizenga Holdings a management fee equal to 1% of the
Company's gross revenue, excluding NHL generated revenues, in exchange for
services including, but not limited to, assisting the Company in obtaining
financing, developing tax planning strategies and formulating risk management,
as well as advising the Company with respect to securities matters and future
acquisitions. Such 1% management fees totaled approximately $194,000, $132,000
and $293,000 for the years ended June 30, 1994, 1995 and 1996, respectively.
In the Concurrent Offering, the Company will sell to certain individuals
4,600,000 shares of Class A Common Stock at a price equal to the Initial Public
Offering price per share less underwriting discounts and commissions but
including the Placement Agent fee. The Company expects that the Concurrent
Purchasers will include the Company's directors and certain of its officers.
The Company incurred charges of $94,613 during the year ended June 30, 1994
for the leases of certain private corporate aircraft owned by Huizenga Holdings.
In June 1993, the Company entered into a $25.0 million revolving credit
facility with NationsBank of Florida, N.A. ("NationsBank") for the purpose of
financing a portion of the $50.0 million NHL expansion franchise fee and
obtaining working capital for use by the Company. The credit facility was
subsequently converted to a $25.0 million term loan (the "Term Loan"). In
connection with the Term Loan, substantially all of the assets of the Panthers
have been pledged to NationsBank as collateral and Mr. Huizenga has provided a
guaranty of the Company's obligations relating to such Term Loan.
In addition, in June 1993, Panthers Investment Venture, an affiliate of the
Company controlled by Mr. Huizenga ("PIV"), entered into a loan agreement with
NationsBank pursuant to which it borrowed $20.0 million. PIV, in turn, loaned
the $20.0 million borrowed from NationsBank to the Company pursuant to a
separate loan agreement. In connection therewith, the Company issued to PIV a
promissory note on terms substantially similar to the promissory note (the
"NationsBank Promissory Note") issued by PIV to NationsBank. Mr. Huizenga has
provided certain debt service guarantees of the Company's obligations relating
to the NationsBank Promissory Note. Upon consummation of the Offerings, the
Company does not anticipate borrowing any additional funds from Mr. Huizenga.
With respect to the transactions discussed in this section, no independent
determination has been made as to the fairness and reasonableness of the terms
thereof. However, the Company, based on its prior experience, believes that the
terms of each transaction were as favorable to the Company as it could have
obtained from an unaffiliated party.
44
<PAGE> 46
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Class A Common Stock (including shares subject to
options exercisable within 60 days) as of the date of this Prospectus, and as
adjusted to reflect the assumed purchase of certain shares of Class A Common
Stock offered by this Prospectus, by (a) each of the Company's directors, (b)
all executive officers and directors of the Company as a group and (c) all
persons who own beneficially more than 5% of the Company's Class A Common Stock.
<TABLE>
<CAPTION>
CLASS A SHARES OF CLASS A CLASS A
COMMON STOCK COMMON STOCK COMMON STOCK
BENEFICIALLY OWNED EXPECTED TO BE BENEFICIALLY OWNED
PRIOR TO OFFERINGS PURCHASED IN THE AFTER OFFERINGS
------------------------ CONCURRENT ----------------------
NAME SHARES PERCENT(1) OFFERING SHARES PERCENT(1)
<S> <C> <C> <C> <C> <C>
H. Wayne Huizenga................ 5,020,678(2) 100.0% -- 5,020,678 40.8%
100 Northeast Third Avenue
Second Floor
Fort Lauderdale, FL 33301
Richard H. Evans................. -- -- 100,000 100,000 *
William A. Torrey................ -- -- 50,000 50,000 *
Alex Muxo........................ -- -- 25,000 25,000 *
Steven M. Dauria................. -- -- 5,000 5,000 *
Steven R. Berrard................ -- -- 250,000 250,000 2.0%
Harris W. Hudson................. -- -- 250,000 250,000 2.0%
George D. Johnson, Jr............ -- -- 250,000 250,000 2.0%
Richard C. Rochon................ -- -- 250,000 250,000 2.0%
All directors and executive
officers as a group (9
persons)....................... 5,020,678 100.0% 1,180,000 6,200,678 50.3%
</TABLE>
- ------------------------------
* Less than one percent (1%).
(1) Percentage of beneficial ownership is based on 5,020,678 shares of Class A
Common Stock outstanding after the Reorganization and prior to the
completion of the Offerings and 12,320,678 shares of Class A Common Stock
outstanding after the completion of the Offerings.
(2) Mr. Huizenga will receive 5,020,678 shares of Class A Common Stock and
255,000 shares of Class B Common Stock, constituting 100% of the
outstanding Class B Common Stock, in return for his capital contribution.
45
<PAGE> 47
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital consists of 100,000,000 shares of Class A
Common Stock, par value $.01 per share, and 10,000,000 shares of Class B Common
Stock, par value $.01 per share. No preferred stock is authorized.
COMMON STOCK
Upon completion of the Reorganization and the closing of the Offerings,
there will be 12,320,678 shares of Class A Common Stock (12,725,678 shares if
the Underwriters' over-allotment option is exercised in full) and 255,000 shares
of Class B Common Stock outstanding. The Class A Common Stock and Class B Common
Stock are identical in all respects, except that each share of Class A Common
Stock is entitled to one vote, and each share of Class B Common Stock is
entitled to 10,000 votes. In the event of a liquidation, dissolution or winding
up of the Company, the holders of Class A Common Stock and Class B Common Stock
are entitled to share equally and ratably in the assets of the Company, if any,
remaining after paying all debts and liabilities of the Company. The holders of
Class A and Class B Common Stock are entitled to receive dividends, on a
share-for-share basis if, as and when declared by the Board of Directors out of
funds legally available therefor, subject to any dividend restrictions in the
Company's credit facilities and the NHL Bylaws. See "Dividend Policy." Holders
of Class B Common Stock are entitled to convert each share of Class B Common
Stock into one share of Class A Common Stock at any time.
The NHL Constitution and Bylaws contain provisions which may in some
circumstances operate to prohibit a person from acquiring the Class A Common
Stock and affect the value of such Class A Common Stock. In general, any
acquisition of shares of Class A Common Stock which will result in a person or a
group of persons holding a 5% or more interest in the Company, and each
acquisition of shares of Class A Common Stock which will result in a person or a
group of persons holding any multiple of a 5% interest, will require the prior
approval of the NHL, which may be granted or withheld in the sole discretion of
the NHL. The prospective purchaser will be required to submit to the NHL an
application, in a form to be prescribed from time to time by the NHL, providing
certain information relating to that person's background. Upon receipt of such
application, the Commissioner shall have the right to conduct an investigation
with respect to the prospective purchaser, which may include an interview by the
Commissioner's office or one or more NHL owners and the submission of such
information about the prospective purchaser, whether or not confidential, as the
Commissioner shall deem relevant in his sole discretion. In addition, the NHL
may condition its approval upon the execution, delivery and performance by the
prospective purchaser of such documents as the Commissioner shall prescribe. The
expense of the NHL's investigation must be paid by the prospective purchaser,
whether or not its application is approved. If and when a prospective purchaser
receives the NHL's consent to acquire a 5% or more interest in the Company, such
prospective purchaser will be required to acknowledge that the purchaser shall
be bound by the applicable provisions of the NHL Constitution and Bylaws.
In addition, no person who directly or indirectly owns any interest in a
privately-held NHL team, or a 5% or more interest in any other publicly-held NHL
team, may own, directly or indirectly, a 5% or more interest in the Company,
without the prior approval of the NHL. The NHL Constitution and Bylaws also
contain provisions which would prohibit an owner of a 5% or more interest in the
Company from engaging in certain activities, such as wagering on any game in
which an NHL team participates. NHL players and referees and employees of the
NHL and its member clubs (other than the Company) are not eligible to purchase
or hold Common Stock. The NHL could in the future adopt different or additional
restrictions which could adversely affect the shareholders.
Furthermore, the grant of a security interest in any of the assets of the
Panthers, or any direct or indirect ownership interest in the Company, of 5% or
more, shall require the prior approval of the NHL, which may be withheld in the
NHL's sole discretion and, in that connection, the NHL will require a consent
agreement satisfactory to the NHL. NHL rules limit the amount of debt that may
be secured by the assets of, or ownership interests in, an NHL club and require
that the parties to any secured loan that is approved execute an agreement
limiting the rights of the lenders and the club (or shareholder) under certain
circumstances,
46
<PAGE> 48
including upon an event of default or foreclosure. These limitations may
adversely affect the rights of the club (or shareholder) under certain
circumstances.
Failure by a holder of a 5% or more interest to comply with these
restrictions may result in a forced sale of such holder's interest in the
Company or the repurchase of such interests by the Company. The Company's
Articles of Incorporation provide that the Company may redeem, at the lower of
fair market value or cost, shares held by any person or entity who becomes the
owner of 5% or more of the Company's shares without the approval of the NHL.
These restrictions will be contained in a legend on each certificate issued
evidencing shares of Class A Common Stock.
All of the shares of Class A Common Stock and Class B Common Stock to be
issued in connection with the Reorganization will be fully paid and
nonassessable and all of the shares of Class A Common Stock offered hereby, when
issued, will be fully paid and nonassessable.
The transfer agent and registrar for the Class A Common Stock is
ChaseMellon Shareholder Services Group, Inc.
CERTAIN PROVISIONS OF FLORIDA LAW
The directors of the Company are subject to the "general standards for
directors" provisions set forth in the Florida Business Corporation Act (the
"FBCA"). These provisions provide that in discharging his or her duties and
determining what is in the best interests of the Company, a director may
consider such factors as the director deems relevant, including the long-term
prospects and interests of the Company and its shareholders and the social,
economic, legal or other effects of any proposed action on the employees,
suppliers or customers of the Company, the community in which the Company
operates and the economy in general. Interests of other constituencies in
addition to the Company's shareholders may be considered, and directors who take
into account these other factors may make decisions which are less beneficial to
some, or a majority, of the shareholders than if the law did not permit
consideration of such other factors.
The Company has elected to opt out of the Florida Control Share Act and the
Florida Affiliated Transactions Act. The Florida Control Share Act generally
provides that shares acquired in a "control share acquisition" will not possess
any voting rights unless such voting rights are approved by a majority of the
corporation's disinterested shareholders. A "control share acquisition" is an
acquisition, directly or indirectly, by any person of ownership of, or the power
to direct the exercise of voting power with respect to, issued and outstanding
"control shares" of a publicly held Florida corporation. "Control shares" are
shares, which, except for the Florida Control Share Act, would have voting power
that, when added to all other shares owned by a person or in respect to which
such person may exercise or direct the exercise of voting power, would entitle
such person, immediately after acquisition of such shares, directly or
indirectly, alone or as a part of a group, to exercise or direct the exercise of
voting power in the election of directors within any of the following ranges:
(i) at least 20% but less than 33 1/3% of all voting power; (ii) at least 33 1/3
but less than a majority of all voting power; or (iii) a majority or more of all
voting power. The Florida Affiliated Transactions Act generally requires
supermajority approval by disinterested shareholders of certain specified
transactions between a public corporation and holders of more than 10% of the
outstanding voting shares of the corporation (or their affiliates).
LIMITED LIABILITY AND INDEMNIFICATION
Under the FBCA, a director is not personally liable for monetary damages to
the corporation or any other person for any statement, vote, decision, or
failure to act unless (i) the director breached or failed to perform his duties
as a director and (ii) the director's breach of, or failure to perform, those
duties constitutes: (A) a violation of the criminal law, unless the director had
reasonable cause to believe his conduct was lawful or had no reasonable cause to
believe his conduct was unlawful, (B) a transaction from which the director
derived an improper personal benefit either directly or indirectly, (C) a
circumstance under which an unlawful distribution is made, (D) in a proceeding
by or in the right of the corporation to procure a judgment in its favor or by
or in the right of a shareholder, conscious disregard for the best interest of
the corporation or willful misconduct, or (E) in a proceeding by or in the right
of someone other than the corporation or shareholder,
47
<PAGE> 49
recklessness or an act or omission which was committed in bad faith or with
malicious purpose or in a manner exhibiting wanton and willful disregard of
human rights, safety or property. A corporation may purchase and maintain
insurance on behalf of any director or officer against any liability asserted
against him and incurred by him in his capacity or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liability under the FBCA.
The Articles of Incorporation and Bylaws of the Company provide that the
Company shall, to the fullest extent permitted by applicable law, as amended
from time to time, indemnify all directors of the Company, as well as any
officers or employees of the Company to whom the Company has agreed to grant
indemnification.
48
<PAGE> 50
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offerings, the Company will have outstanding
12,320,678 shares of Class A Common Stock (12,725,678 shares if the
Underwriters' over-allotment option is exercised in full). The 7,300,000 shares
of Class A Common Stock offered hereby (7,705,000 shares if the Underwriters'
over-allotment option is exercised in full) will be freely tradeable without
restriction or further registration under the Securities Act, except to the
extent such shares are owned or purchased by "affiliates" of the Company, as
that term is defined in Rule 144 under the Securities Act. The remaining
5,020,678 shares of Class A Common Stock, which are comprised exclusively of the
Huizenga Class A Shares, are "restricted shares" within the meaning of Rule 144
under the Securities Act (i.e., such shares were issued pursuant to an exemption
from registration) and, therefore, may not be sold in the absence of
registration under the Securities Act, other than in accordance with Rule 144,
as described below, or pursuant to another exemption from registration.
In general, Rule 144 as currently in effect, provides that a person who is
an affiliate of the Company or who beneficially owns shares which are issued and
sold in reliance upon exemptions from registration under the Securities Act must
own such shares for at least two years before they may be sold. Further, Rule
144 limits the amount of shares which can be sold, so that the number of shares
sold by a person (or persons whose sales are aggregated), within any three-month
period does not exceed the greater of 1% of the then outstanding shares of Class
A Common Stock (beginning on the 91st day immediately after the Offerings) or
the average weekly trading volume in the Class A Common Stock during the four
calendar weeks preceding the filing of a notice of intent to sell. Sales under
Rule 144 are also subject to certain manner-of-sale provisions, notice
requirements and the availability of current public information about the
Company. However, a person who is not deemed to have been an "affiliate" of the
Company at any time during the three months preceding a sale, and who has
beneficially owned shares for at least three years, would be entitled to sell
such shares under Rule 144 without regard to volume limitations, manner-of-sale
provisions, notice requirements or the availability of current public
information about the Company.
The Company intends to (i) cause the Huizenga Registration Statement,
registering the Huizenga Class A Shares, to be filed prior to the consummation
of the Offerings, and (ii) cause the Huizenga Registration Statement to be
declared effective and maintain the continued effectiveness of the Huizenga
Registration Statement, including filings of post-effective amendments, in
connection with the sale of Huizenga Class A Shares from time to time on a
continuous basis. The directors and officers of the Company have agreed not to
sell any shares of Common Stock held by them for a period of 180 days from the
date of this Prospectus without the consent of Donaldson, Lufkin & Jenrette
Securities Corporation, subject to certain exceptions, including pursuant to a
foreclosure by a lender on a loan for which shares of Class A Common Stock have
been pledged as collateral.
The Company also intends to file a registration statement under the
Securities Act to register an aggregate of 2,600,000 shares reserved for
issuance under the Stock Option Plan, thus permitting the resale of such shares
in the public market without restriction under the Securities Act, subject to
vesting requirements and the lock-up agreements described above.
Prior to the Offerings, there has been no established trading market for
the Class A Common Stock, and no prediction can be made as to the effect that
sales of Class A Common Stock under Rule 144, pursuant to a registration
statement or otherwise, or the availability of shares of Class A Common Stock
for sale, will have on the market price prevailing from time to time. Sales of
substantial amounts of Class A Common Stock in the public market, or the
perception that such sales could occur, could depress the prevailing market
price. Such sales may also make it more difficult for the Company to sell equity
securities or equity-related securities in the future at a time and price that
it deems appropriate.
49
<PAGE> 51
UNDERWRITING
Subject to the terms and subject to the conditions of the Underwriting
Agreement dated the date hereof, the Underwriters named below (the
"Underwriters"), for whom Donaldson, Lufkin & Jenrette Securities Corporation
and Raymond James & Associates, Inc. are acting as representatives (the
"Representatives"), have severally agreed to purchase from the Company an
aggregate of 2,700,000 shares of Class A Common Stock. The number of shares of
Class A Common Stock that each Underwriter has agreed to purchase is set forth
opposite its name below.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation...............
Raymond James & Associates, Inc...................................
---------
Total................................................... 2,700,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Class A Common
Stock offered hereby in connection with the Initial Public Offering are subject
to approval of certain legal matters by their counsel and to certain other
conditions. The Underwriters are obligated to take and pay for all the shares of
Class A Common Stock offered in the Initial Public Offering if any such shares
are purchased.
The Underwriters propose to offer 2,700,000 shares of Class A Common Stock
directly to the public at the Initial Public Offering price set forth on the
cover page of this Prospectus and part of the shares to certain dealers at a
price that represents a concession not in excess of $ per share under the
Initial Public Offering price. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $
per share to certain other dealers. The Representatives of the Underwriters have
advised the Company that the Underwriters do not intend to confirm sales to any
accounts over which they exercise discretionary authority.
The Company has granted to the Underwriters an option, exercisable for 30
days from the date of this Prospectus, to purchase up to 405,000 shares of Class
A Common Stock at the price to public set forth on the cover page of this
Prospectus minus the underwriting discounts and commissions. The Underwriters
may exercise such option solely for the purpose of covering over-allotments, if
any, in connection with the Initial Public Offering. To the extent such option
is exercised, each Underwriter will be obligated, subject to certain conditions,
to purchase approximately the same percentage of such additional shares as the
number of shares set forth opposite each Underwriter's name in the preceding
table bears to the total number of shares listed in such table.
Subject to certain exceptions, the Company and its directors and officers
have agreed that, for a period of 180 days from the date of this Prospectus,
they will not, without the prior written consent of the underwriters offer,
sell, contract to sell, or otherwise dispose of, any shares of Common Stock or
any securities convertible into, or exercisable or exchangeable for, Common
Stock.
The Company and the Underwriters have agreed to indemnify each other
against certain liabilities, including liabilities under the Securities Act.
Prior to the Offerings, there has not been any public market for the Class
A Common Stock of the Company. Consequently, the Initial Public Offering price
for the shares of Class A Common Stock of the Company included in the Initial
Public Offering has been determined by negotiations between the Company and the
Representatives principally based on the cost of Mr. Huizenga's investment in
the Company. Other factors considered in determining such price were the history
of and prospects for the Company's business and the industry in which it
competes, an assessment of the Company's management and the present state of the
Company's development, the past and present revenue and earnings of the Company,
the prospects for the growth of the Company's revenue and earnings. Since the
Company will be one of the first public companies dedicated primarily to
professional sports, the Company and the Representatives were not able to use
the
50
<PAGE> 52
market prices of other companies in the same industry as a benchmark in setting
the Initial Public Offering price.
The closing of the Concurrent Offering is conditioned upon the closing of
the Initial Public Offering. The price of the shares to be sold to the
Concurrent Purchasers in the Concurrent Offering is equal to the Initial Public
Offering price less underwriting discounts and commissions plus the Placement
Agents fee. The Placement Agents in connection with the Concurrent Offering will
be paid a fee of $0.35 per share (assuming a Concurrent Offering price of $9.65
per share) for each share sold in the Concurrent Offering in consideration for
the provision of certain advisory services and for acting as the Company's
Placement Agents. The Placement Agents will be indemnified by the Company
against certain liabilities, including liabilities under the Securities Act.
The Company has reserved 270,000 shares of Class A Common Stock to be sold
in the Initial Public Offering for sale to certain persons, including employees
of the Company and its affiliates. Such shares will be reserved for two business
days after the commencement of the Initial Public Offering, at which time any
reserved shares which remain unsold will be offered to the general public. In
addition, the existing Panthers' season ticketholders will be given priority to
purchase Class A Common Stock in the Initial Public Offering. The number of
shares of Class A Common Stock to be sold to the season ticketholders has not
been determined and will be based on the demand by season ticketholders and by
general market demand for the Class A Common Stock. There are no shares of the
Class A Common Stock specifically reserved for the season ticketholders. The
price of such shares to such persons will be the Initial Public Offering price
set forth on the cover of this Prospectus. The number of shares available to the
general public will be reduced to the extent such persons purchase shares.
LEGAL MATTERS
The validity of shares of the Class A Common Stock offered hereby will be
passed upon for the Company by Akerman, Senterfitt & Eidson, P.A., Miami,
Florida. Certain legal matters will be passed upon for the Underwriters by
McDermott, Will & Emery, Chicago, Illinois.
EXPERTS
The financial statements included in this Prospectus have been audited by
Arthur Andersen LLP, independent certified public accountants, as indicated in
their reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
ADDITIONAL INFORMATION
This Prospectus constitutes a part of a Registration Statement filed by the
Company with the Securities and Exchange Commission (the "Commission") under the
Securities Act with respect to the Class A Common Stock offered hereby. This
Prospectus omits certain of the information contained in the Registration
Statement, and reference is hereby made to the Registration Statement and
related exhibits and schedules for further information with respect to the
Company and the Class A Common Stock offered hereby. Any statements contained
herein concerning the provisions of any document are not necessarily complete,
and in each such instance reference is made to the copy of such document filed
as an exhibit to the Registration Statement. Each such statement is qualified in
its entirety by such reference. The Registration Statement and the exhibits and
schedules forming a part thereof can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, DC 20549, and should also be available for
inspection and copying at the following regional offices of the Commission: 7
World Trade Center, 14th Floor, New York, New York 10048; and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of
such material can be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, DC 20549, at prescribed rates.
The Commission maintains a Web Site (http://www.sec.gov.) that contains reports,
proxy statements and other information filed by the Company.
51
<PAGE> 53
INDEX TO FINANCIAL STATEMENTS
THE REGISTRANT --
FLORIDA PANTHERS HOLDINGS, INC.
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
The balance sheet of Florida Panthers Holdings, Inc. as of July 3, 1996 consisting of
deferred offering costs and accrued expenses of $500,000 and common stock
subscriptions receivable of $500,000, has not been presented as it is not
considered meaningful.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
Introduction to Unaudited Pro Forma Financial Information............................ F-2
Unaudited Pro Forma Balance Sheet.................................................... F-3
Unaudited Pro Forma Statements of Operations......................................... F-4
Notes to Unaudited Pro Forma Financial Information................................... F-5
BUSINESSES TO BE ACQUIRED --
FLORIDA PANTHERS HOCKEY CLUB, LTD.
Report of Independent Certified Public Accountants................................... F-6
Balance Sheets as of June 30, 1995 and 1996.......................................... F-7
Statements of Operations
For the years ended June 30, 1994, 1995 and 1996................................... F-8
Statement of Partners' Deficit
For the years ended June 30, 1994, 1995 and 1996................................... F-9
Statements of Cash Flows
For the years ended June 30, 1994, 1995 and 1996................................... F-10
Notes to Financial Statements........................................................ F-11
THE DECOMA ENTITIES
Report of Independent Certified Public Accountants................................... F-19
Report of Independent Certified Public Accountants................................... F-20
Combined Balance Sheets as of December 31, 1994 and 1995 and June 30, 1996........... F-21
Combined Statements of Income
For the period from January 1, 1994 to August 5, 1994, the period from August 6,
1994 to December 31, 1994, the year ended December 31, 1995 and the six month
periods ended June 30, 1995 and 1996............................................... F-22
Combined Statement of Shareholder's Equity
For the period from January 1, 1994 to August 5, 1994, the period from August 6,
1994 to December 31, 1994, the year ended December 31, 1995 and the six month
period ended June 30, 1996......................................................... F-23
Combined Statements of Cash Flows
For the period from January 1, 1994 to August 5, 1994, the period from August 6,
1994 to December 31, 1994, the year ended December 31, 1995 and the six month
periods ended June 30, 1995 and 1996............................................... F-24
Notes to Combined Financial Statements............................................... F-25
</TABLE>
F-1
<PAGE> 54
FLORIDA PANTHERS HOLDINGS, INC.
INTRODUCTION TO
UNAUDITED PRO FORMA FINANCIAL INFORMATION
GENERAL
The following Unaudited Pro Forma Consolidated Balance Sheet as of June 30,
1996 and the Unaudited Pro Forma Statements of Operations for the year ended
June 30, 1996 reflect adjustments to Florida Panthers Hockey Club, Ltd. and the
Decoma Entities historical financial position and results of operations to give
effect to the transactions discussed below as if such transactions had been
consummated at June 30, 1996, or at the beginning of the period presented.
Florida Panthers Holdings, Inc. (the "Corporation") was formed on July 3,
1996 to enter into an exchange agreement which will be consummated only upon the
closing of a proposed initial public offering (the "Offering") of the
Corporation's Class A Common Stock. Pursuant to the exchange agreement, the
Corporation will acquire all of the partnership interest of the Florida Panthers
Hockey Club, Ltd. (the "Partnership") in exchange for 4,149,710 shares of its
Class A Common Stock and 255,000 shares of its Class B Common Stock.
Additionally, the Corporation will acquire all of the outstanding stock of
Decoma Investment, Inc. I (formerly BIL Development, Inc.), and Decoma
Investment, Inc. II (formerly, Linbeck Miami Corporation), (collectively, "the
Decoma Entities") in exchange for 870,968 shares of its Class A Common Stock.
The Partnership and the Decoma Entities are 100% owned by H. Wayne Huizenga
("HWH"). After the exchange agreements are consummated and the Corporation
closes its initial public offering, HWH will control the Corporation. The
transactions will be accounted for on a historical cost basis in a manner
similar to a pooling of interests.
The pro forma financial statements have been prepared by the Corporation
based on the audited financial statements of the Partnership and the Decoma
Entities as required under the Securities Act, which financial statements are
included elsewhere in this Prospectus. These pro forma financial statements are
not intended to be indicative of the results that would have occurred on the
dates indicated or which may be realized in the future.
THE OFFERING
The pro forma financial statements reflect the Offering and the application
of the net proceeds therefrom, as if the Offering had occurred on June 30, 1996,
or at the beginning of the period presented, as applicable. See "Use of
Proceeds."
F-2
<PAGE> 55
FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED PRO FORMA BALANCE SHEET
JUNE 30, 1996
<TABLE>
<CAPTION>
FLORIDA PRO FORMA
PANTHERS FOR THE
HOCKEY THE DECOMA CONTRIBUTION PRO FORMA
CLUB, LTD. ENTITIES OF THE AS ADJUSTED
ACTUAL ACTUAL ACQUISITION DECOMA OFFERING FOR THE
PRO FORMA(A) PRO FORMA(B) ADJUSTMENTS ENTITIES ADJUSTMENTS OFFERING
------------ ------------ ----------- ------------ ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and equivalents................. $ 373 $ 92 $ 465 $ 67,300(c) $22,577
(45,188)(d)
Accounts receivable.................. 2,857 331 $ (69)(e) 3,119 3,119
Prepaid expenses and other........... 172 172 172
------- ---- ---- ------- ------- -------
Total current
assets....................... 3,402 423 (69) 3,756 22,112 25,868
Property and equipment, net............ 972 972 972
Franchise cost, net.................... 22,489 22,489 22,489
Player contract acquisition costs,
net.................................. 6,507 6,507 6,507
Capitalized signing bonuses............ 4,674 4,674 4,674
Investment in Miami Arena operating
contract............................. 8,886 8,886 8,886
Other Assets........................... 352 124 476 476
------- ---- ---- ------- ------- -------
Total assets................... $ 38,396 $9,433 $ (69) $ 47,760 $ 22,112 $69,872
======= ==== ==== ======= ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Deferred revenue..................... $ 988 $ 988 $ 988
Accounts payable and accrued
expenses........................... 2,235 $ 147 $ (69)(e) 2,313 (188)(d) 2,125
Related party debt................... 20,000 20,000 (20,000)(d)
Current portion of signing bonuses
payable............................ 2,167 2,167 2,167
Other................................ 2,146 2,146 2,146
------- ---- ---- ------- ------- -------
Total current
liabilities.................. 25,390 2,293 (69) 27,614 (20,188) 7,426
Long-Term Debt......................... 25,000 25,000 (25,000)(d)
Deferred Compensation.................. 1,867 1,867 1,867
Signing Bonuses Payable................ 1,410 1,410 1,410
Shareholders' Equity:
Class A common stock, $.01 par value,
100,000,000 shares authorized and
4,149,710, 5,020,678 and 12,320,678
shares issued and outstanding, Pro
forma for the Contribution of the
Decoma Entities and Pro Forma as
Adjusted for the Offering,
respectively......................... 41 11 50 62 123
Class B common stock, $.01 par value,
10,000,000 shares authorized and
255,000 shares issued and
outstanding.......................... 3 3 3
Decoma common stock.................... 2 (2)
Contributed capital.................... (15,315) 7,138 (9) (8,184) 67,238 59,043
------- ---- ---- ------- ------- -------
Total shareholders' equity..... (15,271) 7,140 (8,131) 67,300(c) 59,169
------- ---- ---- ------- ------- -------
Total liabilities and
shareholders'
equity....................... $ 38,396 $9,433 $ (69) $ 47,760 $ 22,112 $69,872
======= ==== ==== ======= ======= =======
</TABLE>
F-3
<PAGE> 56
FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE TWELVE MONTH PERIOD ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
PRO FORMA
FLORIDA FOR THE
PANTHERS CONTRIBUTION PRO FORMA
HOCKEY THE DECOMA OF THE AS ADJUSTED
CLUB, LTD. ENTITIES ACQUISITION DECOMA OFFERING FOR THE
ACTUAL ACTUAL ADJUSTMENTS ENTITIES ADJUSTMENTS OFFERING
---------- ---------- ----------- ------------ ----------- -----------
(F)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Tickets..................... $ 23,226 $ $ 23,226 $ 23,226
Television and radio........ 5,141 5,141 5,141
Advertising and
promotions............... 2,192 2,192 2,192
NHL Enterprise Rights....... 885 885 885
Arena operations............ 1,463 $(381)(g) 1,082 1,082
Other....................... 1,561 1,561 1,561
-------- ------ ----- -------- --------
Total revenue....... 33,005 1,463 (381) 34,087 34,087
-------- ------ ----- -------- --------
Cost of Revenue:
Team operations............. 32,639 (381)(g) 32,258 32,258
Ticketing and arena
operations............... 3,700 3,700 3,700
Selling, general and
administrative........... 7,814 557 8,371 8,371
-------- ------ ----- -------- --------
Total cost of
revenue........... 44,153 557 (381) 44,329 44,329
Amortization of Player
Contracts................... (8,505) (8,505) (8,505)
Amortization of NHL Franchise
and Other................... (640) (640) (640)
Depreciation.................. (282) (314) (596) (596)
-------- ------ ----- -------- --------
Operating Income (loss)....... (20,575) 592 (19,983) (19,983)
Interest, net................. (4,908) (4,908) $ 5,030(h) 122
Minority Interests............ (358) 260(b) (98) (98)
-------- ------ ----- -------- ------ --------
Net Income (loss)............. $ (25,483) $ 234 $ 260 $(24,989) $ 5,030 $ (19,959)
======== ====== ===== ======== ====== ========
Pro Forma Net Loss Per
Share....................... $ (5.79) $ (4.74) $ (1.97)
======== ======== ========
Pro Forma Weighted Average
Shares Outstanding.......... 4,405(i) 5,276(j) 10,114(k)
======== ======== ========
</TABLE>
F-4
<PAGE> 57
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
- ---------------
(a) Reflects the pro forma capitalization of the Corporation giving effect to
the Reorganization (excluding the contribution of the Decoma Interests), as
if it occurred on June 30, 1996.
(b) Reflects the pro forma capitalization of the Decoma Entities giving effect
to their proposed increase in ownership of the Decoma Venture joint venture
to 99% and the related decrease in the minority interests' share of net
income.
(c) Reflects the receipt of the net proceeds to the Company from the sale of
7,300,000 shares of Class A Common Stock in the Offerings (at an assumed
Initial Public Offering price of $10.00 per share and assumed Concurrent
Offering price of $9.65 per share and after deducting underwriting
discounts and commissions, Placement Agent fee and other estimated offering
expenses).
(d) Reflects the use of the net proceeds of the Offerings to repay borrowings
and accrued interest under the long-term debt and the Related party debt.
(e) Represents the elimination of amounts receivable by the Decoma Entities
from the Panthers.
(f) The Decoma Entities have a fiscal year which ends on December 31. Reflected
hereon are the results of operations for the Decoma Entities for the twelve
month period ended June 30, 1996.
(g) Represents the elimination of seat use fees paid by the Panthers to the
Decoma Entities.
(h) Represents the elimination of interest expense related to the term loan and
the related party debt which will be repaid as discussed in note (d) above.
The term loan and the related party debt bear interest at LIBOR plus .75%
per annum (6.34% at June 30, 1996).
(i) Weighted average shares outstanding hereon are determined based on the
4,404,710 shares to be issued as a result of the Reorganization (excluding
the contribution of the Decoma Interests) as if they had been outstanding
for the entire period presented.
(j) Weighted average shares outstanding hereon are determined based on the
5,275,678 shares to be issued as a result of the Reorganization as if they
had been outstanding for the entire period presented.
(k) Weighted average shares outstanding hereon are determined based on the
5,275,678 shares to be issued as a result of the Reorganization and the
4,838,710 shares to be issued to repay the Company's outstanding
indebtedness as if they had been outstanding for the entire period
presented.
F-5
<PAGE> 58
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To Florida Panthers Hockey Club, Ltd.:
We have audited the accompanying balance sheets of Florida Panthers Hockey
Club, Ltd. as of June 30, 1995 and 1996 and the related statements of
operations, partners' deficit and cash flows for each of the three years in the
period ended June 30, 1996. These financial statements are the responsibility of
the Club's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Florida Panthers Hockey
Club, Ltd. as of June 30, 1995 and 1996, and the results of its operations and
its cash flows for each of the three years in the period ended June 30, 1996 in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
August 9, 1996 (except with
respect to the matter
discussed in the first
paragraph of Note 7, as to
which the date is September
13, 1996).
F-6
<PAGE> 59
FLORIDA PANTHERS HOCKEY CLUB, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, 1996
-------------------------
JUNE 30, PRO FORMA
1995 HISTORICAL -----------
----------- ----------- (UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and equivalents.................................. $ 1,216,071 $ 373,415 $ 373,415
Accounts receivable................................... 1,249,468 2,857,004 2,857,004
Prepaid expenses and other............................ 247,342 172,144 172,144
----------- ----------- -----------
Total current assets.......................... 2,712,881 3,402,563 3,402,563
Property and Equipment, at cost:
Leasehold improvements................................ 721,299 792,521 792,521
Equipment............................................. 682,934 745,059 745,059
Furniture and fixtures................................ 179,697 186,759 186,759
Less -- Accumulated depreciation and amortization..... (470,233) (752,336) (752,336)
----------- ----------- -----------
Property and equipment, net................... 1,113,697 972,003 972,003
----------- ----------- -----------
Franchise Cost, net of accumulated amortization of
$1,215,600 and $1,823,400 in 1995 and 1996,
respectively.......................................... 23,096,400 22,488,600 22,488,600
Player Contract Acquisition Costs, net of accumulated
amortization of $10,676,045 and $19,180,845 in 1995
and 1996, respectively................................ 15,011,955 6,507,155 6,507,155
Capitalized Signing Bonuses, net of accumulated
amortization of $837,083 and $3,088,750 in 1995 and
1996, respectively.................................... 1,137,917 4,673,750 4,673,750
Other Assets............................................ 429,746 352,191 352,191
----------- ----------- -----------
Total assets $43,502,596 $38,396,262 $38,396,262
=========== =========== ===========
LIABILITIES AND PARTNERS' DEFICIT
Current Liabilities:
Deferred revenue...................................... $ 3,916,795 $ 987,624 $ 987,624
Note payable-related party............................ 22,226,388 40,171,756 --
Accounts payable and accrued expenses................. 1,276,427 2,235,243 2,235,244
Related party debt (Note 5)........................... 20,000,000 20,000,000 20,000,000
Current portion of signing bonuses payable............ 400,000 2,167,500 2,167,500
----------- ----------- -----------
Total current liabilities..................... 47,819,610 65,562,123 25,390,368
----------- ----------- -----------
Long-Term Debt (Note 5)................................. 25,000,000 25,000,000 25,000,000
Deferred Compensation................................... 532,600 1,866,899 1,866,899
Signing Bonuses Payable................................. 110,000 1,410,000 1,410,000
Commitments and Contingencies (Notes 3 and 7)
Partners' Deficit, net.................................. (29,959,614) (55,442,760) --
Pro Forma Shareholder's Equity (Note 1):
Class A common stock, $.01 par value, 100,000,000
shares authorized and 4,149,710 shares issued and
outstanding........................................ -- -- 41,497
Class B common stock, $.01 par value, 10,000,000
shares authorized and 255,000 shares issued and
outstanding........................................ -- -- 2,550
Contributed capital................................... -- -- (15,315,052)
----------- ----------- -----------
Total pro forma shareholder's equity.......... -- -- (15,271,005)
----------- ----------- -----------
Total liabilities and partners' deficit $43,502,596 $38,396,262 $38,396,262
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
balance sheets.
F-7
<PAGE> 60
FLORIDA PANTHERS HOCKEY CLUB, LTD.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Revenue:
Tickets........................................ $ 14,784,070 $ 9,558,997 $ 23,226,043
Television and radio........................... 3,163,015 3,717,510 5,140,409
Advertising and promotions..................... 1,533,900 1,296,898 2,192,383
NHL Enterprise rights.......................... 761,000 846,000 885,000
Other, primarily arena concessions............. 1,439,700 911,833 1,560,988
------------ ------------ ------------
Total revenue.......................... 21,681,685 16,331,238 33,004,823
------------ ------------ ------------
Cost of Revenue:
Team operations................................ 17,691,042 15,652,321 32,638,550
Ticketing and arena operations................. 2,498,129 1,742,492 3,700,172
Selling, general and administrative............ 5,512,183 5,350,998 7,814,115
------------ ------------ ------------
Total cost of revenue.................. 25,701,354 22,745,811 44,152,837
------------ ------------ ------------
Amortization of Player Contracts................. (5,592,189) (5,083,856) (8,504,800)
Amortization of NHL Franchise and Other.......... (639,943) (639,943) (639,943)
Depreciation..................................... (211,768) (256,194) (282,103)
------------ ------------ ------------
Operating Loss................................... (10,463,569) (12,394,566) (20,574,860)
------------ ------------ ------------
Other Income (Expense):
Interest income................................ 64,743 37,571 121,863
Interest expense............................... (2,526,751) (3,740,534) (5,030,149)
------------ ------------ ------------
(2,462,008) (3,702,963) (4,908,286)
------------ ------------ ------------
Net Loss......................................... $(12,925,577) $(16,097,529) $(25,483,146)
============ ============ ============
Pro Forma Net Loss Per Share, unaudited (Note
3)............................................. $ (5.79)
============
Pro Forma Shares Outstanding, unaudited (Note
3)............................................. 4,404,710
============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-8
<PAGE> 61
FLORIDA PANTHERS HOCKEY CLUB, LTD.
STATEMENT OF PARTNERS' DEFICIT
<TABLE>
<CAPTION>
FLORIDA
PANTHERS
H. WAYNE HOCKEY CLUB,
HUIZENGA INC. TOTAL
------------ ------------ ------------
<S> <C> <C> <C>
Balance, July 1, 1993............................... $ (927,143) $ (9,365) $ (936,508)
Net loss.......................................... (12,796,321) (129,256) (12,925,577)
------------ --------- ------------
Balance, June 30, 1994.............................. (13,723,464) (138,621) (13,862,085)
Net loss.......................................... (15,936,554) (160,975) (16,097,529)
------------ --------- ------------
Balance, June 30, 1995.............................. (29,660,018) (299,596) (29,959,614)
Net loss.......................................... (25,228,315) (254,831) (25,483,146)
------------ --------- ------------
Balance, June 30, 1996.............................. $(54,888,333) $ (554,427) $(55,442,760)
============ ========= ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-9
<PAGE> 62
FLORIDA PANTHERS HOCKEY CLUB, LTD.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------------------
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net loss........................................... $(12,925,577) $(16,097,529) $(25,483,146)
Adjustments to reconcile net loss to net cash used
in operating activities --
Depreciation and amortization................... 6,443,900 5,979,993 9,394,703
Deferred compensation........................... 169,186 363,414 1,334,298
Changes in operating assets and liabilities --
Accounts receivable............................. (1,321,790) 72,322 (1,607,536)
Prepaid expenses and other...................... (220,453) (52,715) 152,753
Capitalized signing bonuses..................... (640,000) (497,917) (3,535,833)
Other assets.................................... (607,857) (55,227) --
Deferred revenue................................ (4,544,681) (574,570) (2,929,171)
Accounts payable and accrued expenses........... 1,402,557 388,667 958,817
Signing bonuses payable......................... 640,000 (130,000) 3,067,500
------------ ------------ ------------
Net cash used in operating activities...... (11,604,715) (10,603,562) (18,647,615)
------------ ------------ ------------
Cash Flows from Investing Activities:
Capital expenditures............................... (1,275,520) (160,799) (140,409)
------------ ------------ ------------
Net cash used in investing activities........... (1,275,520) (160,799) (140,409)
------------ ------------ ------------
Cash Flows from Financing Activities:
Payments on note payable -- related party.......... (5,500,000) (7,200,000) (3,500,000)
Proceeds from note payable -- related party........ 10,749,197 17,733,120 21,445,368
------------ ------------ ------------
Net cash provided by financing activities....... 5,249,197 10,533,120 17,945,368
Net decrease in cash and equivalents............ (7,631,038) (231,241) (842,656)
Cash and Equivalents:
Balance, beginning of period....................... 9,078,350 1,447,312 1,216,071
------------ ------------ ------------
Balance, end of period............................. $ 1,447,312 $ 1,216,071 $ 373,415
============ ============ ============
Supplemental Cash Flow Information:
Cash paid during the year for Interest............. $ 2,510,119 $ 3,460,522 $ 3,750,456
============ ============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-10
<PAGE> 63
FLORIDA PANTHERS HOCKEY CLUB, LTD.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1994, 1995 AND 1996
(1) ORGANIZATION AND BASIS OF PRESENTATION
(a) General
Florida Panthers Hockey Club, Ltd. ("Limited" or the "Club") is a Florida
limited partnership which owns and operates the Florida Panthers Hockey Club.
Florida Panthers Hockey Club, Inc. ("FPI"), a Florida corporation, is the
general partner of Limited. Both were formed by H. Wayne Huizenga ("HWH") on
December 2, 1992.
On December 22, 1992, the National Hockey League ("NHL") adopted the 1993
Modified NHL Plan of Sixth Expansion. On April 1, 1993, Limited entered into an
Expansion Membership Agreement with the NHL.
(b) Proposed Initial Public Offering and Proposed Reorganization
The Club has entered into a proposed plan of reorganization which will be
consummated only upon the closing of a proposed initial public offering of the
Class A common stock of Florida Panthers Holdings Inc., a newly formed Florida
Corporation (the "Corporation"). Prior to the proposed public offering, HWH will
contribute the Club's Note Payable-Related Party (including anticipated accrued
interest at the time of conversion) to the partnership, followed by an exchange
of all of the partnership interests for 4,149,710 shares of the Corporation's
Class A common stock and 255,000 shares of the Corporation's Class B common
stock (the "Recapitalization"). Accordingly, the operations of the Club will
henceforth be performed by the Corporation. This exchange will be accounted for
on a historical cost basis in a manner similar to a pooling of interests and has
been reflected in the accompanying pro forma balance sheet at June 30, 1996.
In addition, immediately prior to the proposed public offering, the
Corporation will acquire all of the outstanding stock of Decoma Investment, Inc.
I (formerly, BIL Development, Inc.) and Decoma Investment, Inc. II (formerly,
Linbeck Miami Corporation) (collectively, the "Decoma Entities") in exchange for
870,968 shares of its Class A common stock. As the Decoma entities are
wholly-owned by HWH, this transaction will be accounted for on a historical cost
basis in a manner similar to a pooling of interests.
(2) PARTNERSHIP ACTIVITIES
Partnership interests of Limited (collectively, the "Partners") from
inception through June 30, 1996 are summarized as follows:
<TABLE>
<S> <C>
General Partner -- FPI................................................. 1%
Limited Partner -- HWH................................................. 99
---
100%
===
</TABLE>
Cash requirements for operating and other activities of the Club are funded
by the Partners and net loss is allocated in accordance with the terms of the
Amended and Restated Partnership Agreement dated April 5, 1993.
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Revenue and Expense
Revenue from Tickets, Television and radio broadcasting and Advertising and
promotions revenues generally are recorded at the time the game to which such
proceeds relate is played. Team operations expenses, principally player
compensation and game and playoff expenses (principally arena rentals and
travel) are recorded as expense on the same basis. Accordingly, advance ticket
sales and payments on television and radio broadcasting contracts and payments
for team and game expenses not earned or incurred
F-11
<PAGE> 64
FLORIDA PANTHERS HOCKEY CLUB, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
are recorded as Deferred revenues, Capitalized signing bonuses and as a
component of Prepaid expenses and other. Such amounts are amortized ratably as
regular season games are played. General and administrative and selling and
promotional expenses are charged to operations as incurred.
(b) Pro Forma Net Loss Per Share
Pro forma net loss per share is calculated assuming that the 4,404,710
shares of the Corporation's common stock to be outstanding upon consummation of
the Recapitalization described in Note 1 were outstanding at the beginning of
the period presented.
(c) Cash and Equivalents
Cash and equivalents consist primarily of cash in banks and highly-liquid
investments with original maturities of 90 days or less.
(d) Note Payable -- Related Party
Note payable-related party represents a short-term borrowing of cash
required for working capital from HWH. Such note bears interest at prime (8.25%
at June 30, 1996) and is required to be repaid on demand.
(e) Property and Equipment
Property and equipment is recorded at cost. Depreciation and amortization
have been computed using the straight-line method over the following estimated
useful lives:
<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Leasehold improvements................................................ 5-20
Furniture, fixtures and equipment..................................... 5-7
</TABLE>
(f) Franchise Costs
The Club was required to pay a $50,000,000 franchise fee to the NHL, of
which $25,688,000 was allocated to the contracts of players selected in the 1993
expansion draft. The allocation was based upon the fair value of the player
contracts acquired as determined by an independent appraisal firm. The portion
allocable to player contracts is being amortized on a straight-line basis over
the estimated useful lives of the contracts which has been determined to be
approximately 6 years. The remaining portion of the franchise fee is classified
as Franchise costs in the accompanying balance sheets and is being amortized on
a straight-line basis over a 40 year life. For the fiscal years ended June 30,
1994, 1995 and 1996, the Club amortized $5,592,189, $5,083,856 and $8,504,800,
respectively, in player contract acquisition costs. The amortization for the
fiscal years ended June 30, 1994, 1995 and 1996 includes $1,469,971, $961,638
and $4,899,630 respectively, related to the write-off of unamortized player
contract costs due to the outright release of certain players and the
write-downs of contracts of active players to reflect reductions in remaining
value.
The Club accounts for trades of player contracts as like-kind exchanges,
whereby the recorded basis of the contract of the acquired player(s) is equal to
the net book value of the contract of the traded player(s) plus or minus any
cash consideration.
The Club continually evaluates whether events and circumstances have
occurred that indicate that the remaining estimated useful life of intangible
assets, such as franchise cost and player contract acquisition costs, may
warrant revision or that the remaining balance of the intangible asset may not
be recoverable. If factors indicate that the franchise cost or player contract
acquisition costs may be impaired, the Club uses an estimate of the remaining
value of the franchise rights or the individual player's contract in measuring
whether the intangible asset is recoverable. Unrecoverable amounts are charged
to operations in the applicable period.
F-12
<PAGE> 65
FLORIDA PANTHERS HOCKEY CLUB, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Effective July 1, 1995 the Club implemented the provisions of the Financial
Accounting Standards Board's ("FASB") Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of." As the Club had continually
evaluated the realizability of its long-lived assets, adoption of the statement
did not have a material effect on the Company's financial statements at the date
of adoption.
(g) Player Contract Costs
Signing bonuses are amortized over the life of the player contract. Such
signing bonuses expensed totaled approximately $220,000, $617,000 and $2,251,700
in the years ended June 30, 1994, 1995 and 1996 respectively, and have been
included in Team operations in the accompanying statements of operations.
Employment contracts with certain players require future compensation under
certain circumstances. Generally, these contracts are executory in nature;
accordingly, related payments are charged to operations over the contract
playing seasons.
The Club has obtained disability insurance policies for several of its
players under multi-year contracts. Benefits would become payable after thirty
consecutive games were missed by the insured player. The policies provide
payment of a portion of the player's salary for the remaining term of the
contract or until the player can resume playing.
(h) Deferred Revenue
Deferred revenue as of June 30, 1994, 1995 and 1996 consists primarily of
payments for ticket purchases for the respective upcoming seasons. Ticket
revenue is recognized as the underlying games are played.
(i) Income Taxes
Limited, as a partnership, is not subject to income taxes. Accordingly, no
income tax provision or benefit has been recognized in the accompanying
financial statements. On a pro forma basis (see Note 1), the Corporation would
have no income tax provision due to the Club's losses.
The Corporation, as of the date of the Recapitalization, will adopt the
provisions of SFAS No. 109, "Accounting for Income Taxes". SFAS No. 109
requires, among other things, recognition of future tax benefits measured at
enacted rates attributable to the deductible temporary differences between the
financial statement and income tax bases of assets and liabilities and net
operating loss carryforwards to the extent that the realization of said benefits
is "more likely than not". The adoption of SFAS No. 109 is not expected to have
a material impact on the financial position or results of operations of the
Corporation.
(j) Concession Agreement
Certain unrelated third party companies have the rights, at home games, to
sell consumable and non-consumable concessions. These rights were granted by
Decoma Miami Associates, Ltd. ("DMAL"), the operator of the Miami Arena (the
"Arena"). The Club is entitled to effectively receive amounts ranging from 7% to
35% of the hockey net consumable and non-consumable concessions income. The Club
recorded $763,651, $363,401 and $832,303 for the years ended June 30, 1994, 1995
and 1996 respectively, in hockey net consumable and non-consumable concessions
income. Such amounts have been included as a component of Other revenue in the
accompanying statements of operations.
(k) Television and Radio Agreements
In August 1996, the Club entered into a letter of intent with SportsChannel
Florida ("SportsChannel") for the local broadcast of the Panthers' games. HWH
currently owns 50% of SportsChannel and he holds an
F-13
<PAGE> 66
FLORIDA PANTHERS HOCKEY CLUB, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
option to purchase an additional 20% ownership interest of SportsChannel. Under
the terms of this letter of intent, the Company shall grant to SportsChannel
broadcast rights (other than radio broadcast rights) to all of the Panthers'
pre-season, regular season and certain post-season away games during the 1996-97
season. The letter of intent may be extended for an additional season upon
notice by the Club. The obligations of the Club and SportsChannel are subject to
the negotiation of a definitive agreement. There can be no assurance that the
Club and SportsChannel will enter into a definitive agreement.
In addition, the Club entered into a letter of intent with Sunshine
Wireless Company Inc. ("Sunshine") for the local radio broadcast of all of the
Panthers' games. Under the terms of this letter of intent, Sunshine will have
local radio broadcast rights to all of the Panthers' pre-season, regular season
and post-season games during the 1996-97 season.
(l) Advertising Agreements
The Club has entered into multi-year agreements with several sponsors for
advertising and promotional activities. Such agreements expire at various dates
through June 30, 1998. The Club recognizes this revenue on a pro-rata basis over
the term of the underlying agreements.
(m) Fair Value of Financial Instruments
As of June 30, 1995 and 1996, the carrying amount of cash and equivalents,
accounts receivable, note payable-related party, accounts payable and accrued
expenses and long-term debt are reflected in the financial statements at cost
which approximates fair value.
(n) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(o) Presentation
Certain amounts in the accompanying financial statements have been
reclassified to conform with the current year presentation.
(p) Stock-Based Compensation
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation". Under the provisions of SFAS No. 123, companies can either
measure the compensation cost of equity instruments issued under employee
compensation plans using a fair value based method, or can continue to recognize
compensation cost using the intrinsic value method under the provisions of
Accounting Principles Board Opinion ("APB") No. 25. However, if the provisions
of APB No. 25 are continued, pro forma disclosures of net income or loss and
earnings or loss per share must be presented in the financial statements as if
the fair value method had been applied. The Corporation intends to recognize
compensation costs under the provisions of APB No. 25, and upon adoption of SFAS
No. 123 as of July 1, 1996, will provide the expanded disclosure required by
SFAS No. 123. As of August 9, 1996, a stock option plan had not yet been
formalized.
(4) RELATED PARTY TRANSACTIONS
During the year ended June 30, 1994, certain private corporate aircraft
owned by Huizenga Holdings, Inc. ("HHI", a corporation whose sole shareholder is
HWH) and its subsidiaries were leased by the Club. To
F-14
<PAGE> 67
FLORIDA PANTHERS HOCKEY CLUB, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
the extent that such aircraft was used by Club employees, the actual operating
and overhead costs related to such aircraft was charged back to the Club based
on its pro-rata share of flight hours used during any given month. The Club
incurred $94,613 of such charges in the year ended June 30, 1994. No such
related party charges were incurred during the years ended June 30, 1995 and
1996.
During fiscal 1995, HWH purchased an ownership interest in DMAL through
which HWH obtained operational control of the Arena, subject to prior
contractual restrictions.
The Club pays a management fee to HHI equal to 1% of total revenue,
excluding all NHL national television revenue and NHL Enterprise rights. Such
fees totaled $193,576, $132,339 and $293,239 for the years ended June 30, 1994,
1995 and 1996, respectively, and are reflected as a component of Selling,
general and administrative expenses in the accompanying statements of
operations.
During 1994, 1995 and 1996, the Club incurred interest expense of
$1,364,624, $2,306,986 and $3,448,136, respectively, to related parties.
(5) RELATED PARTY AND LONG-TERM DEBT
In June 1993, Limited entered into a $25,000,000 revolving credit facility
with a bank for the purpose of financing a portion of the $50,000,000 NHL
franchise fee and to obtain working capital for use by Limited. The credit
facility was subsequently converted to a $25,000,000 term loan. The Club is
required to make quarterly interest payments through June 30, 1997 and quarterly
principal and interest payments commencing July 1, 1997 and expiring May 31,
2001. The interest rate is LIBOR plus .75 percent per annum (6.34% at June 30,
1996).
In connection with this term loan, the Club is required to maintain
compliance with certain financial and other covenants. Substantially all of the
assets of the Club have been pledged as collateral and HWH has provided a
guaranty of the obligations related to this term loan.
In June 1993, Limited entered into an agreement with an affiliate, Panthers
Investment Venture ("PIV"), whereby Limited borrowed $20,000,000 bearing
interest at LIBOR plus .75 percent per annum (6.34% at June 30, 1996). This note
was issued contemporaneously with and with terms similar to a promissory note
issued by PIV to a bank. PIV was a joint venture between HWH and Blockbuster
Entertainment Corporation ("BEC"). However, during fiscal 1996, the terms of the
joint venture agreement were modified such that BEC was no longer a party to the
venture. PIV's note payable to the bank is guaranteed by HWH. This note is
subordinated to the $25,000,000 term loan discussed above and the Club is
required to make monthly interest payments until the note becomes payable on
September 1, 1996.
The Club paid a commitment fee of $225,000 in connection with disbursements
under these long-term debt arrangements. This amount has been capitalized as
Other assets in the accompanying balance sheets and is being amortized over the
period of the debt.
The Club has entered into a series of interest rate swap agreements which
synthetically fix the interest rates on the long-term debt agreements at 5.19%
and 4.85% for the $25,000,000 term loan and the $20,000,000 PIV note payable,
respectively. Such agreements expire concurrently with the underlying debt
agreements. The Club accounts for these agreements as a hedge against the risk
of future increases in interest rates. For the years ended June 30, 1994 and
1996 the Club recognized interest expense and income of approximately $134,000
and $353,000 respectively, as a result of entering into these interest rate swap
agreements. For the year ended June 30, 1995, the Club recognized interest
income and expense of $329,000 and $63,000, respectively, as a result of
entering into these interest rate swap agreements. Amounts related to these
interest rate swap agreements are reflected as a component of net interest
expense in the accompanying statements of operations.
F-15
<PAGE> 68
FLORIDA PANTHERS HOCKEY CLUB, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
As of June 30, 1996, the scheduled principal payments on the outstanding
debt are as follows:
<TABLE>
<S> <C>
1997............................................................................ $20,000,000
1998............................................................................ 2,500,000
1999............................................................................ 2,500,000
2000............................................................................ 2,500,000
Thereafter...................................................................... 17,500,000
-----------
Total................................................................. $45,000,000
===========
</TABLE>
(6) EMPLOYEE BENEFIT PLANS
The Club's NHL Hockey players are covered under the NHL Club Pension Plan
and Trust (the "Plan") which is administered by the NHL and represents a
multi-employer defined contribution plan. The Club contributions to the Plan
totaled $183,564, $89,379 and $179,606 for the years ended June 30, 1994, 1995
and 1996, respectively. Such contributions are included in Team operations in
the accompanying statements of operations.
Certain of the Club's employees are participants in a 401(k) Savings and
Retirement Plan (the "401(k)"), a defined contribution plan for non-players. The
401(k) is available to employees over the age of 21 with at least one year of
service who work a minimum of 1,000 hours per year. Game day arena employees are
ineligible to participate in the 401(k). The Club may match a discretionary
percentage of the amount contributed by the participant up to a limit of 6% of
annual compensation. Employees may contribute up to 10% of their annual
compensation. Participants are automatically vested in compensation deferrals.
Vesting in Club matching contributions is at the rate of 20% after one year of
plan participation, 40% after two years, 60% after three years, 80% after four
years and 100% after five years. The Club did not make a discretionary
contribution in 1994, 1995 or 1996.
Through March 31, 1995, the Club's employees other than players and coaches
were covered under a self-insured group health plan sponsored by HHI. The Club
fully reimbursed the third-party administrator for its actual billed cost,
including the cost of all paid claims for all Club employees other than coaches
and players. Beginning April 1, 1995 the Club obtained commercial insurance
coverage to cover such employees' health care costs for which employees make
partial contributions. Players and coaches are covered under the NHL Medical and
Dental Plan administered by the NHL, for which the Club pays 100% of the
premiums.
(7) COMMITMENTS AND CONTINGENCIES
The Club is a party to a license agreement with Leisure Management
International, Inc. for the use of the Arena, for its home games. In May 1996,
the Company entered into an amendment to the lease for the Miami Arena (the
"Lease Agreement"), extending the term of the lease (which was scheduled to
expire at the end of the 1995-96 season) to July 31, 1998, with two one-year
options for the 1998-99 season and the 1999-2000 season. The Lease Agreement
contained substantially the same economic terms as the Miami Arena lease and was
subject to approval of Miami Sports and Exhibition Authority ("MSEA"). In June
1996, MSEA rejected the Lease Agreement and demanded that the Panthers vacate
the Miami Arena. Subsequently, the Company sought and obtained a preliminary
injunction enjoining MSEA from taking actions to prevent the Panthers from
utilizing the Miami Arena pursuant to the Lease Agreement. MSEA has indicated
that it plans to appeal the decision rendered by the court. In the event MSEA is
ultimately successful in its appeal, the Company will need to find and enter
into a lease for an alternative playing site (within or outside of Florida)
until such time as the Broward County Civic Arena is completed. There can be no
assurance that the Company will be able to find and enter into a lease for an
alternative playing site.
F-16
<PAGE> 69
FLORIDA PANTHERS HOCKEY CLUB, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The terms of the license and the related agreements provide for the Club to
pay minimum rent of $9,000 per home game, a seat use charge of $.75 per ticket
sold and 7.5% of gross ticket sales proceeds over $200,000 per season plus
utilities, staffing and other operating expenses. For the years ended June 30,
1994, 1995 and 1996, rent expense for the lease of the Arena was $1,173,181,
$729,382 and $1,787,795, respectively.
The Club has entered into employment agreements with various player and
non-player employees which expire at various dates through June of 1999. As of
June 30, 1996, the terms of these employment agreements require future payments,
excluding bonuses, as follows:
<TABLE>
<CAPTION>
FISCAL
------------------------------------------------------------
<S> <C>
1997........................................................ $17,757,121
1998........................................................ 11,351,083
1999........................................................ 2,013,049
-----------
$31,121,253
===========
</TABLE>
In June 1996, the Club entered into a license agreement for the use of the
Broward County Civic Arena (the "Broward License Agreement"). In connection
therewith, Broward County will receive revenue (the "County Preferred Revenue")
from the operations of the Broward County Civic Arena for an amount to be
determined concurrent with the issuance of the bonds. The Corporation has
provided Broward County a guaranty pursuant to which the Corporation will be
obligated to pay Broward County the County Preferred Revenue Obligation. The
Corporation believes that the revenue generated from the operations of the
Broward County Civic Arena will be sufficient to provide Broward County with the
County Preferred Revenue. The Broward License Agreement commences upon the
completion of construction of the Broward County Civic Arena, which is currently
scheduled for October 1, 1998; however, the commencement of the Broward License
Agreement may be deferred by the Club until the following NHL hockey season in
the event the Broward County Civic Arena is completed between March 1 and July
1, 1999. Once commenced, the Broward License Agreement is for a term of 30
years, which may be extended for five year periods, subject to certain
conditions, pursuant to options granted to the Club by Broward County.
The Broward License Agreement entitles the Club to exclusive use of the
Broward County Civic Arena during the playing of all its home games, and
provides for nonexclusive use by the Club for practices and other team uses.
Additionally, the License Agreement provides the Club with exclusive use of
certain spaces within the Broward County Civic Arena to be used for a retail
store, offices, a box office, a locker room and a training and weight room. The
Broward License Agreement contains a use covenant which requires the Club to
play all of its home games at the Broward County Civic Arena during the term of
the Broward License Agreement.
Pursuant to the Broward License Agreement, the Club is entitled to receive
all revenues from the sale of (i) general seating ticket sales for its home
games to be played at the Broward County Civic Arena, (ii) non-consumable
concession items at the Broward County Civic Arena during its home games, (iii)
items in the Club's retail store to be located within the Broward County Civic
Arena, (iv) (in conjunction with and subject to the rights of the NHL) the
rights to all television and radio and other media broadcasting rights for
hockey related events at the Broward County Civic Arena, (v) advertising within
or on certain designated locations at the Broward County Civic Arena during
hockey related events and (vi) Panthers' related sponsorships or NHL league-wide
sponsorships. In addition, the Club is entitled to receive the first $14 million
of "net operating income" generated by the Broward County Civic Arena and 80%
with Broward County receiving 20% of all net operating income generated by the
Broward County Civic Arena in excess of $14 million. "Net operating income" is
defined to include revenues from building naming rights fees, food and beverage
concessions, parking, non-hockey related advertising and all other revenues
generated from non-hockey related events offset by certain arena operating and
financing costs.
F-17
<PAGE> 70
FLORIDA PANTHERS HOCKEY CLUB, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Club is obligated to pay rent in the amount of $7,500 per home game
played by the Panthers at the Broward County Civic Arena and to pay certain
utility and event staffing expenses, but the combined amounts payable by the
Club under the Broward License Agreement will not exceed 5% of the gross
receipts from the sale of general seating tickets to the Panthers' home games.
F-18
<PAGE> 71
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholder of Decoma Investment, Inc. I (formerly,
BIL Development, Inc.) and Decoma Investment, Inc. II
(formerly, Linbeck Miami Corporation):
We have audited the accompanying combined statements of income,
shareholder's equity, and cash flows of Decoma Investment, Inc. I (formerly, BIL
Development, Inc.), and Decoma Investment, Inc. II (formerly, Linbeck Miami
Corporation) (collectively, the "Decoma Entities") for the period from January
1, 1994 to August 5, 1994. These financial statements are the responsibility of
the Companies' management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of Decoma
Investment, Inc. I (formerly, BIL Development, Inc.) and Decoma Investment, Inc.
II (formerly, Linbeck Miami Corporation) for the period from January 1, 1994 to
August 5, 1994, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
July 3, 1996.
F-19
<PAGE> 72
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholder of Decoma Investment, Inc. I (formerly,
BIL Development, Inc.) and Decoma Investment, Inc. II
(formerly, Linbeck Miami Corporation):
We have audited the accompanying combined balance sheet of Decoma
Investment, Inc. I (formerly, BIL Development, Inc.) and Decoma Investment, Inc.
II (formerly, Linbeck Miami Corporation) (collectively, the "Decoma Entities")
as of December 31, 1994 and 1995, and the related combined statements of income,
shareholder's equity and cash flows for the period from August 6, 1994 to
December 31, 1994 and the year ended December 31, 1995. These financial
statements are the responsibility of the Companies' management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of Decoma Investment,
Inc. I (formerly, BIL Development, Inc.) and Decoma Investment, Inc. II
(formerly, Linbeck Miami Corporation) at December 31, 1994 and 1995, and the
results of their operations and their cash flows for the period from August 6,
1994 to December 31, 1994 and the year ended December 31, 1995, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
July 3, 1996.
F-20
<PAGE> 73
THE DECOMA ENTITIES
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, 1996
DECEMBER 31, ------------------------
----------------------- PRO FORMA
1994 1995 HISTORICAL (NOTE 1(B))
---------- ---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and equivalents.......................... $ 189,798 $ 201,011 $ 92,437 $ 92,437
Accounts receivable........................... 826,154 789,179 262,181 262,181
Receivable from related party................. -- 68,650 68,742 68,742
---------- ---------- ---------- ----------
Total current assets.................. 1,015,952 1,058,840 423,360 423,360
Investment in Miami Arena Operating Contract,
net of accumulated amortization of $1,126,131,
$1,436,315, $1,591,407 (unaudited) and
$1,731,623 (unaudited) in 1994, 1995, 1996,
and 1996 pro forma, respectively.............. 7,624,948 7,314,761 7,159,669 8,885,907
Other assets.................................... 125,436 130,961 123,683 123,681
---------- ---------- ---------- ----------
Total assets.......................... $8,766,336 $8,504,562 $7,706,712 $ 9,432,948
========== ========== ========== ==========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities
Accounts payable and accrued liabilities...... $ 115,912 $ 143,951 $ 146,787 $ 146,787
Minority interests.............................. 3,381,562 3,267,333 2,820,501 2,146,306
---------- ---------- ---------- ----------
Commitments and Contingencies (Notes 3 and 6)
Shareholder's equity............................ 5,268,862 5,093,278 4,739,424 7,139,855
---------- ---------- ---------- ----------
Total liabilities and shareholder's
equity.............................. $8,766,336 $8,504,562 $7,706,712 $ 9,432,948
========== ========== ========== ==========
</TABLE>
The accompanying notes to combined financial statements are an integral part of
these balance sheets.
F-21
<PAGE> 74
THE DECOMA ENTITIES
COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
PREDECESSOR
(NOTE 1) THE COMPANIES
--------------- -----------------------------------------------------------
PERIOD FROM PERIOD FROM SIX MONTHS ENDED
JANUARY 1, 1994 AUGUST 6, 1994 JUNE 30,
TO TO YEAR ENDED -------------------
AUGUST 5, 1994 DECEMBER 31, 1994 DECEMBER 31, 1995 1995 1996
--------------- ----------------- ----------------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Arena Management Revenue...... $ 1,581,984 $ 675,756 $ 1,626,078 $924,488 $761,826
Operating Expenses
Management fees............. 84,204 51,632 121,539 70,835 57,881
General and
administrative........... 73,565 41,986 114,584 54,471 388,264
Depreciation and
amortization............. 95,592 130,826 313,995 155,092 155,092
---------- -------- ---------- -------- --------
Total operating
expenses.......... 253,361 224,444 550,118 280,398 601,237
---------- -------- ---------- -------- --------
Net income before
income taxes and
minority
interest.......... 1,328,623 451,312 1,075,960 644,090 160,589
Minority interests............ 774,233 235,482 683,590 424,384 98,949
---------- -------- ---------- -------- --------
Net income.................... 554,390 215,830 392,370 219,706 61,640
Pro forma income tax provision
(Note 5).................... 216,212 84,173 153,024 85,685 24,040
---------- -------- ---------- -------- --------
Pro forma net income after
income taxes................ $ 338,178 $ 131,657 $ 239,346 $134,021 $ 37,600
========== ======== ========== ======== ========
</TABLE>
The accompanying notes to combined financial statements are an integral part of
these statements.
F-22
<PAGE> 75
THE DECOMA ENTITIES
COMBINED STATEMENT OF SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL PAID-IN
------------------------- CAPITAL RETAINED EARNINGS
(1) (2) ------------------------- -------------------------
DECOMA DECOMA DECOMA DECOMA DECOMA DECOMA
INVESTMENT, INVESTMENT, INVESTMENT, INVESTMENT, INVESTMENT, INVESTMENT,
INC. I INC. II INC. I INC. II INC. I INC. II TOTAL
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Predecessor (Note 1)
Balance as of January 1,
1994.................... $ 1,000 $ 1,000 $ 1,104,288 $ 1,104,288 $ (198,754) $ (198,754) $ 1,813,068
Net income.............. -- -- -- -- 277,195 277,195 554,390
Distributions........... -- -- -- -- (248,952) (248,952) (497,904)
------ ------ ---------- ---------- ---------- ---------- ----------
Balance as of
August 5,
1994........... $ 1,000 $ 1,000 $ 1,104,288 $ 1,104,288 $ (170,511) $ (170,511) $ 1,869,554
====== ====== ========== ========== ========== ========== ==========
The Companies
Capital contribution.... $ 1,000 $ 1,000 $ 2,749,000 $ 2,749,000 $ -- $ -- $ 5,500,000
Net income.............. -- -- -- -- 107,915 107,915 215,830
Distributions........... -- -- -- -- (223,484) (223,484) (446,968)
------ ------ ---------- ---------- ---------- ---------- ----------
Balance as of
December 31,
1994........... 1,000 1,000 2,749,000 2,749,000 (115,569) (115,569) 5,268,862
Net income.............. -- -- -- -- 196,185 196,185 392,370
Distributions........... -- -- -- -- (283,977) (283,977) (567,954)
------ ------ ---------- ---------- ---------- ---------- ----------
Balance as of
December 31,
1995........... 1,000 1,000 2,749,000 2,749,000 (203,361) (203,361) 5,093,278
Net income
(unaudited)........... -- -- -- -- 30,820 30,820 61,640
Distributions
(unaudited)........... -- -- -- -- (207,747) (207,747) (415,494)
------ ------ ---------- ---------- ---------- ---------- ----------
Balance as of
June 30, 1996
(unaudited).... $ 1,000 $ 1,000 $ 2,749,000 $ 2,749,000 $ (380,288) $ (380,288) $ 4,739,424
====== ====== ========== ========== ========== ========== ==========
</TABLE>
- ---------------
(1) Par value $1.00, 100,000 shares authorized, 1,000 shares issued and
outstanding for all periods.
(2) Par value $0.10, 100,000 shares authorized, 10,000 shares issued and
outstanding for all periods.
The accompanying notes to combined financial statements are an integral part of
these statements.
F-23
<PAGE> 76
THE DECOMA ENTITIES
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PREDECESSOR THE COMPANIES
----------- -----------------------------------------------------
PERIOD FROM PERIOD FROM
JANUARY 1, AUGUST 6, SIX MONTHS ENDED JUNE
1994 TO 1994 TO YEAR ENDED 30,
AUGUST 5, DECEMBER 31, DECEMBER 31, -----------------------
1994 1994 1995 1995 1996
----------- ------------ ------------ ----------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash Flows from Operating
Activities
Net income...................... $ 554,390 $ 215,830 $ 392,370 $ 219,706 $ 61,640
Adjustments to reconcile net
income to net cash provided
by operating activities --
Depreciation and
amortization............... 95,592 130,826 313,995 155,092 155,092
Minority interest............ 774,233 235,482 683,590 424,384 98,949
Changes in operating assets and
liabilities --
Receivables.................. (428,455) 216,490 (31,675) 150,819 526,906
Other assets................. (15,730) (5,422) (9,333) 7,064 7,278
Accounts payable and accrued
liabilities................ 9,674 75,604 28,039 (16,739) 2,836
----------- --------- ----------- ----------- ---------
Net cash provided by
operating
activities............ 989,704 868,810 1,376,986 940,326 852,701
Cash Flows from Financing
Activities
Payment of dividends............ (497,904) (446,968) (567,954) (430,016) (415,494)
Distributions to minority
interests.................... (546,175) (236,702) (797,819) (679,349) (545,781)
----------- --------- ----------- ----------- ---------
Net cash used in
financing
activities............ (1,044,079) (683,670) (1,365,773) (1,109,365) (961,275)
----------- --------- ----------- ----------- ---------
Net increase (decrease) in
cash and equivalents....... (54,375) 185,140 11,213 (169,039) (108,574)
----------- --------- ----------- ----------- ---------
Cash and Equivalents
Balance, beginning of period...... 59,033 4,658 189,798 189,798 201,011
----------- --------- ----------- ----------- ---------
Balance, end of period............ $ 4,658 $ 189,798 $ 201,011 $ 20,759 $ 92,437
=========== ========= =========== =========== =========
</TABLE>
The accompanying notes to combined financial statements
are an integral part of these statements.
F-24
<PAGE> 77
THE DECOMA ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1995 AND
JUNE 30, 1995 AND 1996 (UNAUDITED)
(1) ORGANIZATION
(a) General
Decoma Investment, Inc. I (formerly, BIL Development, Inc.) ("Decoma I")
and Decoma Investment, Inc. II (formerly, Linbeck Miami Corporation) ("Decoma
II") are Texas corporations which collectively represent 66 2/3% of the
partnership interests of Decoma Venture. Decoma Venture and its majority-owned
subsidiaries, Decoma Limited ("Limited") and Decoma Miami Associates, Limited
("DMAL") are hereinafter collectively referred to as "Venture". Decoma I and
Decoma II (collectively, the "Companies" or the "Decoma Entities") are engaged
in the business of operating the Miami Arena (the "Arena"). The Arena is the
home venue for the National Hockey League's Florida Panthers and the National
Basketball Association's Miami Heat.
On August 6, 1994, (the "Acquisition Date") all of the outstanding capital
stock of Decoma I and Decoma II was acquired by H. Wayne Huizenga ("HWH") for
approximately $5.5 million. Prior to this period, Decoma I and Decoma II were
owned by unrelated third parties (the "Predecessor"). The acquisition was
accounted for under the purchase method of accounting. Accordingly, the purchase
price was allocated to the net assets acquired based on their estimated fair
values at the date of acquisition as follows:
<TABLE>
<S> <C>
Purchase price.......................................................... $ 5,500,000
===========
Minority interest and working capital................................... $(2,360,558)
Investment in Miami Arena Operating Contract............................ 7,754,558
Other................................................................... 106,000
-----------
Total......................................................... $ 5,500,000
===========
</TABLE>
The accompanying combined financial statements represent the combined
accounts of the Companies. All significant intercompany amounts and transactions
have been eliminated.
(b) Proposed Reorganization
The Florida Panthers Hockey Club, Ltd. (the "Panthers"), an entity owned by
HWH, has entered into a proposed plan of reorganization which will be
consummated only upon the closing of a proposed initial public offering ("IPO")
of the Class A common stock of Florida Panthers Holdings, Inc., a newly formed
Florida Corporation (the "Corporation"). In accordance with the terms of the
proposed IPO, HWH will contribute all of the common stock of the Companies to
the Panthers and, in return, will receive 870,968 shares of Class A common stock
of the Corporation. As of July 3, 1996 the plan of reorganization and IPO had
not been consummated.
Since the Acquisition Date, Decoma I, Decoma II, and Decoma Investment,
Inc. III (formerly, HSA Management, Inc.) ("Decoma III" an entity wholly-owned
by HWH) have each owned 33 1/3% of the partnership interests of Venture. In
connection with the proposed reorganization discussed above, immediately prior
to the completion of the IPO, Decoma III will transfer all of its ownership of
Venture, except for a 1% interest, to Decoma II. As this transfer will be among
entities under common control, it will be accounted for on a historical cost
basis, in a manner similar to a pooling of interests and has been reflected in
the accompanying pro forma balance sheet at June 30, 1996. In addition, the
accompanying pro forma balance sheet at June 30, 1996 reflects the
reclassification of the deficit balance in retained earnings to additional paid-
in capital due to the termination of the S Corporation status elections.
F-25
<PAGE> 78
THE DECOMA ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Cash and equivalents
Cash and equivalents consist primarily of cash in banks and highly-liquid
investments with original maturities of 90 days or less.
(b) Investment in Miami Arena Operating Contract
Amounts invested in the Miami Arena operating contract (the "MAC") have
been reflected as Investment in Miami Arena operating contract in the
accompanying combined balance sheets. Such amounts are being amortized using the
straight-line method over the remaining term of the MAC (see Note 3).
(c) Revenue Recognition
Arena management revenue is recognized as earned, in accordance with the
terms of the MAC (see Note 3).
(d) Fair Value of Financial Instruments
As of December 31, 1994 and 1995, the carrying amount of cash and
equivalents, accounts receivable, accounts payable and accrued expenses and
minority interest approximates fair value due to the short-term nature of these
instruments.
(e) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(f) Long-Lived Assets
The Companies are required to implement the Financial Accounting Standards
Board's ("FASB") Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" in their fiscal year ending December 31, 1996. As the Companies
currently evaluate the realizability of their long-lived assets, adoption of the
statement is not anticipated to have a material effect on the Companies'
combined financial statements at the date of adoption.
(g) Interim Financial Data
In the opinion of the management of the Companies, the accompanying
unaudited combined financial statements contain all adjustments (consisting of
only normal recurring adjustments) necessary to present fairly the financial
position of the Companies as of June 30, 1996, and the results of operations for
the six month periods ended June 30, 1995 and 1996. The results of operations
and cash flows for the six month period ended June 30, 1996 are not necessarily
indicative of the results of operations or cash flows which may be reported for
the remainder of 1996.
(3) THE MIAMI ARENA
The Arena is owned by the Miami Sports and Exhibition Authority ("MSEA"),
an agency of the City of Miami. Under the terms of the MAC between MSEA and
DMAL, DMAL was engaged to operate the Arena. The MAC is scheduled to expire on
July 8, 2020. Under the terms of a separate agreement between
F-26
<PAGE> 79
THE DECOMA ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
the Companies and Leisure Management Miami, Inc. ("LMMI"), LMMI was engaged to
manage the operations of the Arena, including rental of space, advertising,
promotion, marketing, events management, box office, public relations and all
custodial and support services. During 1994, subsequent to the execution of the
MAC, approximately 50% of LMMI was acquired by HWH.
A summary of certain terms of the MAC is presented below:
(a) Operating Income (Loss)
Under the terms of the MAC, the Arena's operating income (as defined by the
MAC) is used to fund certain expenses, and required payments before any
distributions are made to DMAL and MSEA.
(b) Seat Use Fee
In accordance with the terms of the MAC, a $.75 to $1.00 seat use fee is
collected by the Arena as part of the purchase price of all tickets sold. This
charge is remitted quarterly to DMAL and MSEA based on percentages detailed in
the MAC and is recognized by the Decoma Entities in the period during which the
amount of such fees has been estimated and is determined to be collectible.
(c) Operating Payment
Under the terms of the MAC, DMAL is to receive a management fee from the
Arena consisting of a fixed and variable operating payment. The fixed operating
payment is based on an annual amount of $275,000, as adjusted for inflation. The
variable operating payment is calculated as defined in the MAC, based upon the
revenues of the Arena. In accordance with the terms of the MAC, the variable
operating payment is made only after the Arena's operating income (as defined in
the MAC) has been used to fund certain operating expenses and required payments.
Any unpaid management fees are deferred up to a maximum of $1,000,000. DMAL is
not entitled to recover any unpaid management fees in excess of $1,000,000. The
Decoma Entities recognize variable operating payments as revenue in the period
during which the amount of such payments has been determined and the
collectibility is considered to be probable.
(4) MINORITY INTERESTS
As discussed in Note 1 above, 33 1/3% of the partnership interests of
Venture are owned by Decoma III. Additionally, Limited and DMAL are organized as
limited partnerships of which 25% and 13%, respectively, are owned by unrelated
third parties (the "Limited Partners"). For financial reporting purposes, the
assets, liabilities, results of operations and cash flows of Venture, Limited
and DMAL are included in the accompanying combined financial statements and
Decoma III's interest in Venture and the Limited Partners' interests in Limited
and DMAL have been reflected as Minority interests.
(5) INCOME TAXES
Decoma I and Decoma II are organized as S corporations under provisions of
the Internal Revenue Code. Accordingly, taxable income of the Companies is
reported in the tax returns of the individual shareholder of the Companies. The
pro forma income tax provision in the accompanying combined statement of
operations is presented for informational purposes as if the operations of the
Decoma Entities were C corporations during the years presented. Pro forma taxes
have been computed based on an overall estimated effective rate of 39%.
F-27
<PAGE> 80
THE DECOMA ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(6) RELATED PARTY TRANSACTIONS
Leisure Management Miami, Inc.
The Companies through DMAL, are parties to a contract with LMMI, an entity
controlled by HWH, whereby LMMI provides certain management services to the
Companies related to the operation of the Arena.
Florida Panthers Hockey Club, Ltd.
In accordance with the terms of the MAC, the Companies received seat use
fees of $224,560, $7,481 and $426,145 during the period from January 1, 1994 to
August 5, 1994, the period from August 6, 1994 to December 31, 1994 and the year
ended December 31, 1995, respectively, and $238,846 and $308,267 for the 6
months ended June 30, 1995 and 1996, respectively, from its affiliate, the
Panthers.
During 1995, the Companies purchased certain fixed assets on behalf of the
Panthers in the amount of $68,650. Such amount has been reflected as receivable
from related party in the accompanying combined balance sheet.
(7) SUBSEQUENT EVENTS
(a) New Arena
During 1996, the City of Miami announced that it intends to build a new
arena (the "New Arena") which will be utilized primarily by the Miami Heat. Upon
its completion, the New Arena will compete with the Arena for the rights to host
various events, including sports events and concerts. There can be no assurance
that the Arena can successfully compete with the New Arena. In the event the
Arena is unable to attract the various sports and non-sports events, the results
of operations of the Decoma Entities will be adversely affected.
(b) Broward County Civic Arena
In addition, Broward County, Florida and an affiliate of HWH announced that
it also intends to build a new, state-of-the-art arena (the "Broward County
Civic Arena") which will be utilized primarily by the Panthers. Upon its
completion, the Broward County Civic Arena will be approximately 40 miles from
the Arena. Management of the Companies does not believe the Broward County Civic
Arena will have a material adverse impact on the Arena's operations, primarily
due to the distance between the facilities.
(c) Litigation
On June 17, 1996, MSEA filed a lawsuit against among others, HWH and Decoma
Venture (the "Defendants"), in the United States District Court of the Southern
District of Florida. The suit alleges that the Defendants have conspired to
restrain trade in the South Florida sports and entertainment facility market by
monopolizing or attempting to monopolize such market in violation of federal
antitrust laws. The plaintiff seeks, among other things, to (i) nullify certain
provisions of the MAC, specifically provisions restricting MSEA from developing
the New Arena, and (ii) force the Defendants to divest their control over the
Arena and the Broward County Civic Arena. In addition, the plaintiff seeks
treble damages as well as reimbursement for reasonable attorneys' fees and
costs. The Defendants believe that the suit is without merit and intend to
vigorously defend against this suit. An unfavorable outcome of the suit may have
a material adverse effect on the Companies financial condition or results of
operations.
F-28
<PAGE> 81
The inside back cover will consist of a foldout of three pages each of which has
a number of pictures of the Panthers players, the mascot, the fans and the words
"Go Panthers," a picture of the Eastern Conference Championship trophy, the
Panthers logo.
<PAGE> 82
------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESPERSON, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION, NOR DOES IT CONSTITUTE AN OFFER TO
SELL OR SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE CLASS A
COMMON STOCK OFFERED HEREBY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 7
Reorganization........................ 15
Concurrent Offering................... 17
Use of Proceeds....................... 17
Dividend Policy....................... 17
Dilution.............................. 18
Capitalization........................ 19
Selected Financial Data............... 20
Management's Discussion and Analysis
of Financial Condition And Results
of Operations....................... 21
The National Hockey League............ 26
Business.............................. 30
Management............................ 39
Certain Transactions.................. 43
Principal Shareholders................ 45
Description of Capital Stock.......... 46
Shares Eligible for Future Sale....... 49
Underwriting.......................... 50
Legal Matters......................... 51
Experts............................... 51
Additional Information................ 51
Index to Financial Statements......... F-1
</TABLE>
------------------
UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE CLASS A COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
7,300,000 SHARES
[LOGO] FLORIDA PANTHERS HOCKEY CLUB
FLORIDA PANTHERS HOLDINGS, INC.
CLASS A COMMON STOCK
------------------------
PROSPECTUS
------------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
RAYMOND JAMES & ASSOCIATES, INC.
, 1996
------------------------------------------------------
------------------------------------------------------
<PAGE> 83
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with the issuance of the securities
being registered are as follows:
<TABLE>
<S> <C>
SEC Registration Fee...................................................... $ 26,569
NASD Filing Fee........................................................... 8,205
Nasdaq National Market Listing Fee........................................ 50,000
Printing Expenses......................................................... 175,000
Accounting Fees and Expenses.............................................. 125,000
Legal Fees and Expenses................................................... 175,000
Blue Sky Fees and Expenses................................................ 15,000
Transfer Agent and Registrar Fees and Expenses............................ 10,000
Miscellaneous............................................................. 5,226
----------
-
Total........................................................... $590,000
===========
</TABLE>
- ---------------
* To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Florida Business Corporation Act. Section 607.0850(1) of the Florida
Business Corporation Act (the "FBCA") provides that a Florida corporation, such
as the Company, shall have the power to indemnify any person who was or is a
party to any proceeding (other than an action by, or in the right of, the
corporation), by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, or agent of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture, trust, or
other enterprise against liability incurred in connection with such proceeding,
including any appeal thereof, if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Section 607.0850(2) of the FBCA provides that a Florida corporation shall
have the power to indemnify any person, who was or is a party to any proceeding
by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee, or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses and amounts paid in
settlement not exceeding, in the judgment of the board of directors, the
estimated expense of litigating the proceeding to conclusion, actually and
reasonably incurred in connection with the defense or settlement of such
proceeding, including any appeal thereof. Such indemnification shall be
authorized if such person acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the corporation,
except that no indemnification shall be made under this subsection in respect of
any claim, issue, or matter as to which such person shall have been adjudged to
be liable unless, and only to the extent that, the court in which such
proceeding was brought, or any other court of competent jurisdiction, shall
determine upon application that, despite the adjudication of liability but in
view of all circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.
Section 607.850 of the FBCA further provides that: (i) to the extent that a
director, officer, employee or agent of a corporation has been successful on the
merits or otherwise in defense of any proceeding referred to in subsection (1)
or subsection (2), or in defense of any proceeding referred to in subsection (1)
or subsection (2), or in defense of any claim, issue, or matter therein, he
shall be indemnified against expense actually and reasonably incurred by him in
connection therewith; (ii) indemnification provided pursuant to Section 607.0850
is not exclusive; and (iii) the corporation may purchase and maintain insurance
on behalf of
II-1
<PAGE> 84
a director or officer of the corporation against any liability asserted against
him or incurred by him in any such capacity or arising out of his status as such
whether or not the corporation would have the power to indemnify him against
such liabilities under Section 607.0850.
Notwithstanding the foregoing, Section 607.0850 of the FBCA provides that
indemnification or advancement of expenses shall not be made to or on behalf of
any director, officer, employee or agent if a judgment or other final
adjudication establishes that his actions, or omissions to act, were material to
the cause of action so adjudicated and constitute: (i) a violation of the
criminal law, unless the director, officer, employee or agent had reasonable
cause to believe his conduct was lawful or had no reasonable cause to believe
his conduct was unlawful; (ii) a transaction from which the director, officer,
employee or agent derived an improper personal benefit; (iii) in the case of a
director, a circumstance under which the liability provisions regarding unlawful
distributions are applicable; or (iv) willful misconduct or a conscious
disregard for the best interests of the corporation in a proceeding by or in the
right of the corporation to procure a judgment in its favor or in a proceeding
by or in the right of a shareholder.
Section 607.0831 of the FBCA provides that a director of a Florida
corporation is not personally liable for monetary damages to the corporation or
any other person for any statement, vote, decision, or failure to act, regarding
corporate management or policy, by a director, unless: (i) the director breached
or failed to perform his duties as a director; and (ii) the director's breach
of, or failure to perform, those duties constitutes: (A) a violation of criminal
law, unless the director had reasonable cause to believe his conduct was lawful
or had no reasonable cause to believe his conduct was unlawful; (B) a
transaction from which the director derived an improper personal benefit, either
directly or indirectly; (C) a circumstance under which the liability provisions
regarding unlawful distributions are applicable; (D) in a proceeding by or in
the right of the corporation to procure a judgment in its favor or by or in the
right of a shareholder, conscious disregard for the best interest of the
corporation, or willful misconduct; or (E) in a proceeding by or in the right of
someone other than the corporation or a shareholder, recklessness or an act or
omission which was committed in bad faith or with malicious purpose or in a
manner exhibiting wanton and willful disregard of human rights, safety, or
property.
Articles and Bylaws. The Company's Articles of Incorporation and the
Company's Bylaws provide that the Company shall, to the fullest extent permitted
by law, indemnify all directors of the Company, as well as any officers or
employees of the Company to whom the Company has agreed to grant
indemnification.
Underwriting Agreement. Reference is made to the Underwriting Agreement,
the proposed form of which is to be filed as Exhibit 1.1 hereto, which provides
for indemnification by the Underwriters of directors, officers and controlling
persons of the Registrant against certain liabilities, including liabilities
under the Securities Act, under certain circumstances.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Aside from the securities issued in connection with the Reorganization of
the Company and as described more fully in the Prospectus, there has been no
issuance of unregistered securities by the Company within the past three years.
II-2
<PAGE> 85
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------------------------------------------------------------------------------
<C> <C> <S>
1.1 -- Form of Underwriting Agreement
1.2 -- Form of Placement Agency Agreement
2.1 -- Exchange Agreement dated October 25, 1996 by and among the Company, H. Wayne
Huizenga, Florida Panthers Hockey Club, Ltd., Florida Panthers Hockey Club, Inc.,
Arena Development Company, Inc. and Arena Operating Company, Inc.
2.2 -- Purchase Agreement dated October 25, 1996 by and between Decoma Investment, Inc. II
and Decoma Investment, Inc. III.
2.3 -- Partnership Exchange Agreement dated October 25, 1996 by and between Florida
Panthers Hockey Club, Ltd. and H. Wayne Huizenga.
3.1 -- Amended and Restated Articles of Incorporation of the Company*
3.2 -- Form of By-Laws of the Company*
5.1 -- Opinion of Akerman, Senterfitt & Eidson, P.A., Counsel to the Company*
10.1 -- Broward County Civic Arena License Agreement, dated as of June 4, 1996, by and
between Florida Panthers Hockey Club, Ltd., Arena Operating Company, Ltd., and
Broward County Florida*
10.2 -- Broward County Civic Arena Operating Agreement, dated as of June 4, 1996, by and
between Arena Operating Company, Ltd. and Broward County, Florida*
10.3 -- Amendment and Clarification to Operating Agreement and License Agreement, dated as
of June 4, 1996, by and between Florida Panthers Hockey Club, Ltd., Arena Operating
Company, Ltd. and Broward County, Florida*
10.4 -- Broward County Civic Arena Development Agreement, dated as of June 4, 1996, by and
between Arena Development Company, Ltd. and Broward County, Florida*
10.5 -- Employment Agreement by and between William A. Torrey and the Company*
10.6 -- Management Agreement by and between the Company and Huizenga Holdings, Inc.*
10.7 -- Miami Arena Contract, dated as of October 10, 1986, as amended, by and between
Miami Sports and Exhibition Authority and Decoma Miami Associates, Ltd.*
10.8 -- First Amendment to Miami Arena Contract and Agreement, dated as of December 13,
1990, by and between Miami Sports and Exhibition Authority and Decoma Miami
Associates, Ltd.*
10.9 -- Arena Management Agreement, dated as of October 10, 1986, by and between Decoma
Venture and Facility Management and Marketing (predecessor to Leisure Management
International)*
10.10 -- 1996 Stock Option Plan*
21.1 -- Subsidiaries of the Company*
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Form of Consent of Akerman, Senterfitt & Eidson, P.A. (included in their opinion
filed as Exhibit 5.1)*
24.1 -- Powers of Attorney (included on the signature page of this Registration Statement)*
27.1 -- Financial Data Schedule (for SEC use only)*
</TABLE>
- ---------------
* Previously filed.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes to provide to the
representatives of underwriters at the closing specified in the underwriting
agreement, certificates in such denominations and registered in such names as
required by such representatives of underwriters to permit prompt delivery to
each purchaser.
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
II-3
<PAGE> 86
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.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of Prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of Prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
Prospectus 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.
II-4
<PAGE> 87
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Fort
Lauderdale, State of Florida, on the 4th day of November, 1996.
Florida Panthers Holdings, Inc.
By: /s/ STEVEN M. DAURIA
------------------------------------
Steven M. Dauria
Vice President and Chief Financial
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
* Chairman of the Board November 4, 1996
- --------------------------------------------- (Principal Executive
H. Wayne Huizenga Officer)
* President and Director November 4, 1996
- ---------------------------------------------
Richard H. Evans
* President of Florida November 4, 1996
- --------------------------------------------- Panthers Hockey Club, Inc.
William A. Torrey and Director
* Vice President and Chief November 4, 1996
- --------------------------------------------- Financial Officer
Steven M. Dauria (Principal Financial and
Accounting Officer)
* Director November 4, 1996
- ---------------------------------------------
Steven R. Berrard
* Director November 4, 1996
- ---------------------------------------------
Harris W. Hudson
* Director November 4, 1996
- ---------------------------------------------
George D. Johnson, Jr.
* Director November 4, 1996
- ---------------------------------------------
Richard C. Rochon
*By: /s/ STEVEN M. DAURIA
- ---------------------------------------------
Steven M. Dauria
Attorney-in-fact
</TABLE>
II-5
<PAGE> 88
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ---------------------------------------------------------------------------------
<C> <C> <S>
1.1 -- Form of Underwriting Agreement
1.2 -- Form of Placement Agency Agreement
2.1 -- Exchange Agreement dated October 25, 1996 by and among the Company, H. Wayne
Huizenga, Florida Panthers Hockey Club, Ltd., Florida Panthers Hockey Club, Inc.,
Arena Development Company, Inc. and Arena Operating Company, Inc.
2.2 -- Purchase Agreement dated October 25, 1996 by and between Decoma Investment, Inc.
II and Decoma Investment, Inc. III.
2.3 -- Partnership Exchange Agreement dated October 25, 1996 by and between Florida
Panthers Hockey Club, Ltd. and H. Wayne Huizenga.
3.1 -- Amended and Restated Articles of Incorporation of the Company*
3.2 -- Form of By-Laws of the Company*
5.1 -- Opinion of Akerman, Senterfitt & Eidson, P.A., Counsel to the Company*
10.1 -- Broward County Civic Arena License Agreement, dated as of June 4, 1996, by and
between Florida Panthers Hockey Club, Ltd., Arena Operating Company, Ltd., and
Broward County Florida*
10.2 -- Broward County Civic Arena Operating Agreement, dated as of June 4, 1996, by and
between Arena Operating Company, Ltd. and Broward County, Florida*
10.3 -- Amendment and Clarification to Operating Agreement and License Agreement, dated
as of June 4, 1996, by and between Florida Panthers Hockey Club, Ltd., Arena
Operating Company, Ltd. and Broward County, Florida*
10.4 -- Broward County Civic Arena Development Agreement, dated as of June 4, 1996, by
and between Arena Development Company, Ltd. and Broward County, Florida*
10.5 -- Employment Agreement by and between William A. Torrey and the Company*
10.6 -- Management Agreement by and between the Company and Huizenga Holdings, Inc.*
10.7 -- Miami Arena Contract, dated as of October 10, 1986, as amended, by and between
Miami Sports and Exhibition Authority and Decoma Miami Associates, Ltd.*
10.8 -- First Amendment to Miami Arena Contract and Agreement, dated as of December 13,
1990, by and between Miami Sports and Exhibition Authority and Decoma Miami
Associates, Ltd.*
10.9 -- Arena Management Agreement, dated as of October 10, 1986, by and between Decoma
Venture and Facility Management and Marketing (predecessor to Leisure Management
International)*
10.10 -- 1996 Stock Option Plan*
21.1 -- Subsidiaries of the Company*
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Form of Consent of Akerman, Senterfitt & Eidson, P.A. (included in their opinion
filed as Exhibit 5.1)*
24.1 -- Powers of Attorney (included on the signature page of this Registration
Statement)*
27.1 -- Financial Data Schedule (for SEC use only)*
</TABLE>
- ---------------
* Previously filed.
II-6
<PAGE> 1
EXHIBIT 1.1
2,700,000 Shares
FLORIDA PANTHERS HOLDINGS, INC.
Common Stock
UNDERWRITING AGREEMENT
______________, 1996
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
RAYMOND JAMES & ASSOCIATES, INC.
As representatives of the
several underwriters
named in Schedule I hereto
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue, 16th Floor
New York, New York 10172
Dear Sirs:
Florida Panthers Holdings, Inc., a Florida corporation (the "COMPANY")
proposes to issue and sell 2,700,000 shares (the "FIRM SHARES") of its Class A
Common Stock, par value $.01 per share (the "CLASS A COMMON STOCK") to the
several underwriters named in Schedule I hereto (the "UNDERWRITERS"). The
Company also proposes to issue and sell to the several Underwriters not more
than 405,000 additional shares of the Class A Common Stock, par value $.01 per
share (the "ADDITIONAL SHARES") if requested by the Underwriters as provided in
Section 2 hereof. The issuance by the Company and the sale to the Underwriters
of the Firm Shares and the Additional Shares is hereinafter referred to as the
"UNDERWRITTEN OFFERING." The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the Underwritten Shares.
The Company is a newly-formed corporation, which was established for
the purpose of effecting the Reorganization (as defined below). The operations
of the business described in the Prospectus (as defined below) are currently
conducted by the Company, through its ownership of Florida Panthers Hockey
Club, Ltd. (the "PARTNERSHIP"), Arena Development Company, Ltd. ("ARENA
DEVELOPMENT"), Arena Operating Company, Ltd. ("ARENA OPERATOR"), Decoma
Investment, Inc. I ("DECOMA I") and Decoma Investment, Inc. II ("DECOMA II").
On __________, 1996, the following events (collectively, the "REORGANIZATION")
occurred: (i) Mr. Huizenga contributed (A) a note (the "PARTNERSHIP NOTE"),
representing the outstanding
<PAGE> 2
amount which the Partnership borrowed from Mr. Huizenga plus interest accrued
on the Partnership Note ($_______ as of _________, 1996), and (B) all the
outstanding capital stock of each of Decoma I and Decoma II, which entities
together own approximately a 78% limited partnership interest in Decoma Miami
Associates, Ltd., to the capital of the Partnership in exchange for a ___%
limited partnership interest in the Partnership; (ii) Mr. Huizenga, as the sole
limited partner and the sole general partner (through his ownership of Florida
Panthers Hockey Club, Inc.) of the Partnership, contributed his limited
partnership interest in the Partnership as well as the outstanding capital
stock of Florida Panthers Hockey Club, Inc. to the Company; and (iii) Mr.
Huizenga, as the sole general partner (through his ownership of Arena
Development Company, Inc. and Arena Operating Company, Inc., respectively) of
each of Arena Development and Arena Operator, contributed the outstanding
capital stock of each of Arena Development Company, Inc. and Arena Operating
Company, Inc. to the Company in exchange for 5,020,678 shares of the Company's
Class A Common Stock and 255,000 shares of the Company's Class B Common Stock.
The Company has also entered into an agreement (the "PLACEMENT AGENCY
AGREEMENT"), providing for the sale by the Company (the "CONCURRENT OFFERING")
of up to a total of 4,600,000 shares of the Class A Common Stock (the
"CONCURRENT SHARES" and, collectively with the Underwritten Shares, the
"SHARES") through arrangements with Donaldson, Lufkin & Jenrette Securities
Corporation and Raymond James & Associates, Inc. as placement agents (the
"PLACEMENT AGENTS"). In connection with the Concurrent Offering, the Company
will also enter into a subscription agreement (the "SUBSCRIPTION AGREEMENT")
with each purchaser of Concurrent Shares (collectively, the "PURCHASERS"). The
Company acknowledges and agrees with the Underwriters that as between the
Company on the one hand and the Underwriters (other than the Placement Agents,
in their capacity as Placement Agents) on the other, the Company is the sole
beneficiary of the Concurrent Offering and that none of the Underwriters (other
than the Placement Agents, in their capacity as Placement Agents) has provided
any services to the Company as to the structure or implementation of the
Concurrent Offering. The shares of Class A Common Stock of the Company to be
outstanding after giving effect to the sales contemplated hereby and pursuant
to the Concurrent Offering are hereinafter referred to as the "CLASS A COMMON
STOCK." The Underwritten Offering and the Concurrent Offering are hereinafter
collectively referred to as the "OFFERINGS." The consummation of the Initial
Public Offering is contingent upon the consummation of the Concurrent Offering.
1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has prepared
and filed with the Securities and Exchange Commission (the "COMMISSION") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively called the
"ACT"), a registration statement on Form S-1 including a prospectus relating to
the Shares, which may be amended. The registration statement as amended at the
time when it becomes effective, including a registration statement (if any)
filed pursuant to Rule 462(b) under the Act increasing the size of the Offerings
registered under the Act and information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A or
Rule 434 under the Act, is hereinafter referred to as the Registration
Statement; and the prospectus including any prospectus subject to completion
taken
-2-
<PAGE> 3
together with any term sheet meeting the requirements of Rule 434(b) or Rule
434(c) under the Act in the form first used to confirm sales of the Shares is
hereinafter referred as the Prospectus.
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the
representations and warranties contained in this Agreement, and subject to its
terms and conditions, the Company agrees to issue and sell, and each Underwriter
agrees, severally and not jointly, to purchase from the Company at a price per
share of $______ (the "PURCHASE PRICE") the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to issue
and sell the Additional Shares and the Underwriters shall have the right to
purchase, severally and not jointly, up to 405,000 Additional Shares from the
Company at the Purchase Price. Additional Shares may be purchased solely for
the purpose of covering over-allotments made in connection with the offering of
the Firm Shares. The Underwriters may exercise their right to purchase
Additional Shares in whole or in part on one occasion only, by giving written
notice thereof to the Company within 30 days after the date of this Agreement.
You shall give any such notice on behalf of the Underwriters and such notice
shall specify the aggregate number of Additional Shares to be purchased
pursuant to such exercise and the date for payment and delivery thereof. The
date specified in any such notice shall be a business day (i) no earlier than
the Closing Date (as hereinafter defined), (ii) no later than ten business days
after such notice has been given and (iii) no earlier than two business days
after such notice has been given. If any Additional Shares are to be
purchased, each Underwriter, severally and not jointly, agrees to purchase from
the Company the number of Additional Shares (subject to such adjustments to
eliminate fractional shares as you may determine) which bears the same
proportion to the total number of Additional Shares to be purchased from the
Company as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I bears to the total number of Firm Shares.
The Company hereby agrees and the Company shall, concurrently with the
execution of this Agreement, deliver an agreement executed by (i) each of the
directors and officers of the Company; (ii) each stockholder listed on Annex I
hereto, pursuant to which each such person agrees, not to offer, sell, contract
to sell, grant any option to purchase, or otherwise dispose of any shares of
Class A Common Stock or any shares of the Company's Class B Common Stock (the
Class A Common Stock and the Class B Common Stock shall hereinafter be
collectively referred to as the "COMMON STOCK") or any securities convertible
into or exercisable or exchangeable for shares of the Common Stock or in any
other manner transfer all or a portion of the economic consequences associated
with the ownership of any shares of the Common Stock, except to the
Underwriters pursuant to this Agreement, for a period of 180 days after the
date of the Prospectus without the prior written consent of Donaldson, Lufkin &
Jenrette Securities Corporation. Notwithstanding the foregoing, during such
period (i) the Company may grant stock options pursuant to the Company's
existing stock option plan; (ii) the Company may issue shares of its Common
Stock upon the exercise of an option or warrant or the conversion of a security
outstanding on the date hereof; and (iii) shares of the Common Stock may be
pledged as
-3-
<PAGE> 4
security for obligations of the holders thereof; provided, that the pledgees
also agree to be bound by the terms and conditions of the preceding sentence.
3. TERMS OF PUBLIC OFFERING. The Company is advised by you that the
Underwriters propose (i) to make a public offering of their respective portions
of the Underwritten Shares as soon after the effective date of the Registration
Statement as in your judgment is advisable and (ii) initially to offer the
Underwritten Shares upon the terms set forth in the Prospectus.
4. DELIVERY AND PAYMENT. Delivery to the Underwriters of and payment
for the Firm Shares shall be made at 10:00 A.M., New York City time, on the
third or fourth business day unless otherwise permitted by the Commission
pursuant to Rule 15c6-1 of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT") following the date of the initial public offering (the "CLOSING
DATE"), at such place as you shall designate. The Closing Date and the location
of delivery of and the form of payment for the Firm Shares may be varied by
agreement between you and the Company.
Delivery to the Underwriters of and payment for any Additional Shares
to be purchased by the Underwriters shall be made at such place as you shall
designate at 10:00 A.M., New York City time, on the date specified in the
applicable exercise notice given by you pursuant to Section 2 (the "OPTION
CLOSING DATE"). Such Option Closing Date and the location of delivery of and
the form of payment for such Additional Shares may be varied by agreement
between you and the Company.
Certificates for the Shares shall be registered in such names and
issued in such denominations as you shall request in writing not later than two
full business days prior to the Closing Date or the Option Closing Date, as the
case may be. Such certificates shall be made available to you for inspection
not later than 9:30 A.M., New York City time, on the business day next
preceding the Closing Date or the Option Closing Date, as the case may be.
Certificates in definitive form evidencing the Shares shall be delivered to you
on the Closing Date or the Option Closing Date, as the case may be, with any
transfer taxes thereon duly paid by the Company, for the respective accounts of
the several Underwriters, against payment of the Purchase Price therefor, at
the election of the Company, by wire transfer or certified or official bank
checks payable in New York Clearing House/Federal funds to the order of the
Company.
5. AGREEMENTS OF THE COMPANY. The Company agrees with you:
(a) To use its best efforts to cause the Registration
Statement to become effective at the earliest possible time.
(b) To advise you promptly and, if requested by you, to
confirm such advice in writing, (i) when the Registration Statement
has become effective and when any post-effective amendment to it
becomes effective, (ii) of any request by the Commission for
amendments to the Registration Statement or amendments or
-4-
<PAGE> 5
supplements to the Prospectus or for additional information, (iii) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the suspension of
qualification of the Shares for offering or sale in any jurisdiction,
or the initiation of any proceeding for such purposes, and (iv) of the
happening of any event during the period referred to in paragraph (e)
below which makes any statement of a material fact made in the
Registration Statement or the Prospectus untrue or which requires the
making of any additions to or changes in the Registration Statement or
the Prospectus in order to make the statements therein not misleading.
If at any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, the Company will make
every reasonable effort to obtain the withdrawal or lifting of such
order at the earliest possible time.
(c) To furnish to you, without charge, three signed copies of
the Registration Statement as first filed with the Commission and of
each amendment to it, including all exhibits, and to furnish to you
and each Underwriter designated by you such number of conformed copies
of the Registration Statement as so filed and of each amendment to it,
without exhibits, as you may reasonably request.
(d) Not to file any amendment or supplement to the
Registration Statement, whether before or after the time when it
becomes effective, or to make any amendment or supplement to the
Prospectus (including the issuance or filings of any term sheet within
the meaning of Rule 434) of which you shall not previously have been
advised or to which you shall reasonably object; and to prepare and
file with the Commission, promptly upon your reasonable request, any
amendment to the Registration Statement or supplement to the
Prospectus (including the issuance or filings of any term sheet within
the meaning of Rule 434) which may be necessary or advisable in
connection with the distribution of the Shares by you, and to use its
best efforts to cause the same to become promptly effective.
(e) Promptly after the Registration Statement becomes
effective, and from time to time thereafter for such period as in the
reasonable opinion of counsel for the Underwriters a prospectus is
required by law to be delivered in connection with sales by an
Underwriter or a dealer, to furnish to each Underwriter and dealer as
many copies of the Prospectus (and of any amendment or supplement to
the Prospectus) as such Underwriter or dealer may reasonably request.
(f) If during the period specified in paragraph (e) any event
shall occur as a result of which, in the reasonable opinion of counsel
for the Underwriters it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of
the circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if it is necessary to amend or
-5-
<PAGE> 6
supplement the Prospectus to comply with any law, forthwith to
prepare and file with the Commission an appropriate amendment or
supplement to the Prospectus so that the statements in the
Prospectus, as so amended or supplemented, will not in the light of
the circumstances when it is so delivered, be misleading, or so that
the Prospectus will comply with law, and to furnish to each
Underwriter and to such dealers as you shall specify, such number of
copies thereof as such Underwriter or dealers may reasonably request.
(g) Prior to any public offering of the Shares, to cooperate
with you and counsel for the Underwriters and the Placement Agents in
connection with the registration or qualification of the Shares for
offer and sale by the several Underwriters and by dealers under the
state securities or Blue Sky laws of such jurisdictions as you may
request, to continue such qualification in effect so long as required
for the original distribution of the Shares and to file such consents
to service of process or other documents as may be necessary in order
to effect such registration or qualification.
(h) To mail and make generally available to its shareholders
as soon as reasonably practicable an earnings statement covering a
period of at least twelve months after the effective date of the
Registration Statement (but in no event commencing later than 90 days
after such date) which shall satisfy the provisions of Section 11(a)
of the Act, and to advise you in writing when such statement has been
so made available.
(i) During the period of five years after the date of this
Agreement, to mail as soon as reasonably practicable after the end of
each fiscal year to the record holders of its Common Stock a financial
report of the Company and its subsidiaries on a consolidated basis
(and a similar financial report of all unconsolidated subsidiaries, if
any), all such financial reports to include a consolidated balance
sheet, a consolidated statement of operations, a consolidated
statement of cash flows and a consolidated statement of shareholders'
equity as of the end of and for such fiscal year, together with
comparable information as of the end of and for the preceding year,
certified by independent certified public accountants.
(j) During the period referred to in paragraph (i), to
furnish to you as soon as available a copy of each report or other
publicly available information of the Company mailed to the holders of
Common Stock or filed with the Commission and such other publicly
available information concerning the Company and its Subsidiaries (as
hereinafter defined) as you may reasonably request.
(k) To pay all costs, expenses, fees and taxes incident to
(i) the preparation, printing, filing and distribution under the Act
of the Registration
-6-
<PAGE> 7
Statement (including financial statements and exhibits), of each
preliminary prospectus and all amendments and supplements to any of
them prior to or during the period specified in paragraph (e) to the
Underwriters, Placement Agents, dealers and the Purchasers (including
potential purchasers), (ii) the printing and delivery of the
Prospectus and all amendments or supplements to it during the period
specified in paragraph (e) to the Underwriters, Placement Agents,
dealers and the Purchasers (including potential purchasers), (iii) the
printing and delivery of this Agreement, the Placement Agency
Agreement, the Preliminary and Supplemental Blue Sky Memoranda and all
other agreements, memoranda, correspondence and other documents
printed and delivered in connection with the offering of the Shares
(including in each case any disbursements of counsel for the
Underwriters and Placement Agents relating to such printing and
delivery), (iv) the registration or qualification of the Shares for
offer and sale under the securities or Blue Sky laws of the several
states (including in each case the fees and disbursements of counsel
for the Underwriters and Placement Agents relating to such
registration or qualification and memoranda relating thereto), (v)
filings and clearance with the National Association of Securities
Dealers, Inc. in connection with the Offerings, (vi) the listing of
the Shares on the National Association of Securities Dealers Automated
Quotation ("NASDAQ") National Market System, (vii) furnishing such
copies of the Registration Statement, the Prospectus and all
amendments and supplements thereto as may be requested for use in
connection with the offering or sale of the Shares by the Underwriters
or by dealers to whom Shares may be sold, and (viii) all other costs
and expenses incident to the performance of its obligations hereunder
and under the Placement Agency Agreement and the Subscription
Agreements which are not otherwise specifically provided for in this
Section.
(l) To use its best efforts to maintain the inclusion of the
Common Stock in the Nasdaq National Market System (or on a national
securities exchange) for a period of five years after the effective
date of the Registration Statement.
(m) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by
the Company prior to the Closing Date or any Option Closing Date, as
the case may be, and to satisfy all conditions precedent to the
delivery of the Shares.
(n) To not terminate the Concurrent Offering without the
prior written consent of Donaldson, Lufkin & Jenrette Securities
Corporation.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Underwriter that:
-7-
<PAGE> 8
(a) The Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or, to
the best of Company's knowledge, threatened by the Commission.
(b) (i) Each part of the Registration Statement, when such
part became effective, did not contain and each such part, as amended
or supplemented, if applicable, will not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, (ii) the Registration Statement and the Prospectus comply
and, as amended or supplemented, if applicable, will comply in all
material respects with the Act and (iii) the Prospectus does not
contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this
paragraph (b) do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information
relating to any Underwriter furnished to the Company in writing by
such Underwriter through you expressly for use therein.
(c) Each preliminary prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Act, and each
Registration Statement filed pursuant to Rule 462(b) under the Act, if
any, complied when so filed in all material respects with the Act; and
did not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(d) The Company and each of its subsidiaries, including those
subsidiaries organized as limited partnerships, (collectively, the
"SUBSIDIARIES") has been duly incorporated or organized, is validly
existing as a corporation or limited partnership, as the case may be,
in good standing under the laws of its jurisdiction of incorporation
or organization and has the corporate or partnership power and
authority to carry on its business as it is currently being conducted
and to own, lease and operate its properties, and each is duly
qualified and is in good standing as a foreign corporation or
partnership authorized to do business in each jurisdiction in which
the nature of its business or its ownership or leasing of property
requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the Company and
the Subsidiaries, taken as a whole.
-8-
<PAGE> 9
(e) All of the outstanding shares of capital stock of, or
other ownership interests in, each of the Company's subsidiaries have
been duly authorized and validly issued and are fully paid and
non-assessable, and are owned by the Company, free and clear of any
security interest, claim, lien, encumbrance or adverse interest of any
nature.
(f) All the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully
paid, non-assessable and not subject to any preemptive or similar
rights; and the Shares have been duly authorized and, when issued and
delivered to the Underwriters or the Purchasers, as the case may be,
against payment therefor as provided by this Agreement or the
Subscription Agreements, will be validly issued, fully paid and
non-assessable, and the issuance of such Shares will not be subject to
any preemptive or similar rights.
(g) The authorized capital stock of the Company, including
the Common Stock, conforms as to legal matters to the description
thereof contained in the Prospectus.
(h) Neither the Company nor the Subsidiaries is in violation
of its respective charter, by-laws or partnership agreement or in
default in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of
indebtedness or in any other agreement, indenture or instrument
material to the conduct of the business of the Company and the
Subsidiaries, taken as a whole, to which the Company or any of the
Subsidiaries is a party or by which it or any of the Subsidiaries or
their respective property is bound, including, but not limited to, the
NHL Lex Scripta.
(i) Except with respect to the consent which has been
obtained by the Company from the National Hockey League (the "NHL")
with respect to the Offerings, the execution, delivery and performance
of this Agreement and the Placement Agency Agreement and the
Subscription Agreements, compliance by the Company with all the
provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not require any consent,
approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body (except as such may
be required under the securities or Blue Sky laws of the various
states) and will not conflict with or constitute a breach of any of
the terms or provisions of, or a default under, the charter, by-laws
or partnership agreement of the Company or any of the Subsidiaries,
the NHL Lex Scripta or any agreement, indenture or other instrument to
which the Company or any of the Subsidiaries is a party or by which it
or any of the Subsidiaries or their respective property is bound, or
violate or
-9-
<PAGE> 10
conflict with any laws, administrative regulations or rulings or court
decrees applicable to the Company, any of the Subsidiaries or their
respective property.
(j) Except as otherwise set forth in the Prospectus, there
are no material legal or governmental proceedings pending to which the
Company or any of the Subsidiaries is a party or of which any of their
respective property is the subject, and, to the best of the Company's
knowledge, no such proceedings are threatened or contemplated. No
contract or document of a character required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit
to the Registration Statement is not so described or filed as
required.
(k) Neither the Company nor any of the Subsidiaries has
violated any foreign, federal, state or local law or regulation
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
("ENVIRONMENTAL LAWS"), nor any federal or state law relating to
discrimination in the hiring, promotion or pay of employees nor any
applicable federal or state wages and hours laws, nor any provisions
of the Employee Retirement Income Security Act or the rules and
regulations promulgated thereunder, which in each case might result in
any material adverse change in the business, prospects, financial
condition or results of operations of the Company and the
Subsidiaries, taken as a whole.
(l) The Company and each of the Subsidiaries has such
permits, licenses, franchises and authorizations of governmental or
regulatory authorities ("PERMITS"), including, without limitation,
under any applicable Environmental Laws, as are necessary to own,
lease and operate its respective properties and to conduct its
business; the Company and each of the Subsidiaries has fulfilled and
performed all of its material obligations with respect to such permits
and no event has occurred which allows, or after notice or lapse of
time would allow, revocation or termination thereof or results in any
other material impairment of the rights of the holder of any such
permit; and, except as described in the Prospectus, such permits
contain no restrictions that are materially burdensome to the Company
or any of the Subsidiaries.
(m) In the ordinary course of its business, the Company
conducts a periodic review of the effect of Environmental Laws on the
business, operations and properties of the Company and the
Subsidiaries, in the course of which it identifies and evaluates
associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or any permit,
license or approval, any related constraints on operating activities
and any potential liabilities to third parties). On the basis of such
review, the Company has reasonably concluded that such associated
costs and liabilities would not, singly
-10-
<PAGE> 11
or in the aggregate, have a material adverse effect on the Company and
the Subsidiaries, taken as a whole.
(n) Except as otherwise set forth in the Prospectus or such
as are not material to the business, prospects, financial condition or
results of operations of the Company and the Subsidiaries, taken as a
whole, the Company and each of the Subsidiaries has good and
marketable title, free and clear of all liens, claims, encumbrances
and restrictions except liens for taxes not yet due and payable, to
all property and assets described in the Registration Statement as
being owned by it. Except as otherwise set forth in the Prospectus,
all leases to which the Company or any of the Subsidiaries is a party
are valid and binding and no default has occurred or is continuing
thereunder, which might result in any material adverse change in the
business, prospects, financial condition or results of operations of
the Company and the Subsidiaries taken as a whole, and the Company and
the Subsidiaries enjoy peaceful and undisturbed possession under all
such leases to which any of them is a party as lessee with such
exceptions as do not materially interfere with the use made by the
Company or such Subsidiary.
(o) The Company and each of the Subsidiaries maintains
reasonably adequate insurance.
(p) Arthur Andersen LLP are independent public accountants
with respect to the Company as required by the Act.
(q) The financial statements, together with related schedules
and notes forming part of the Registration Statement and the
Prospectus (and any amendment or supplement thereto), present fairly
the consolidated financial position, results of operations and changes
in financial position of the Company and the Subsidiaries on the basis
stated in the Registration Statement at the respective dates or for
the respective periods to which they apply; such statements and
related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; and the
other financial and statistical information and data set forth in the
Registration Statement and the Prospectus (and any amendment or
supplement thereto) is, in all material respects, accurately presented
and prepared on a basis consistent with such financial statements and
the books and records of the Company.
(r) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
-11-
<PAGE> 12
(s) Except as otherwise set forth in the Prospectus, no holder
of any security of the Company has any right to require registration
of shares of Common Stock or any other security of the Company.
(t) The Company has complied with all provisions of Section
517.075, Florida Statutes (Chapter 92-198, Laws of Florida).
(u) The Company has filed a registration statement pursuant
to Section 12(g) of the Exchange Act, to register the Class A Common
Stock, has filed an application to list the Shares on the Nasdaq
National Market, and has received notification that the listing has
been approved, subject to notice of issuance of the Shares.
(v) There are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities, commitments of sale or liens
related to or entitling any person to purchase or otherwise to acquire
any shares of the capital stock of, or other ownership interest in,
the Company or any of the Subsidiaries except as otherwise disclosed
in the Registration Statement.
(w) Except as disclosed in the Prospectus, there are no
business relationships or related party transactions required to be
disclosed therein by Item 404 of Regulation S-K of the Commission.
(x) There is (i) no significant unfair labor practice
complaint pending against the Company or any of the Subsidiaries or,
to the best knowledge of the Company, threatened against any of them,
before the National Labor Relations Board or any state or local labor
relations board, and no significant grievance or more significant
arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against the Company or any of the
Subsidiaries or, to the best knowledge of the Company, threatened
against any of them, and (ii) no significant strike, labor dispute,
slowdown or stoppage pending against the Company or any of the
Subsidiaries or, to the best knowledge of the Company, threatened
against it or any of the Subsidiaries except for such actions
specified in clause (i) or (ii) above, which, singly or in the
aggregate could not reasonably be expected to have a material adverse
effect on the Company and the Subsidiaries, taken as a whole.
(y) The Company and each of the Subsidiaries maintains a
system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (iii) access to
assets is permitted only in
-12-
<PAGE> 13
accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(z) All material tax returns required to be filed by the
Company and each of the Subsidiaries in any jurisdiction have been
filed, other than those filings being contested in good faith, and all
material taxes, including withholding taxes, penalties and interest,
assessments, fees and other charges due pursuant to such returns or
pursuant to any assessment received by the Company or any of the
Subsidiaries have been paid, other than those being contested in good
faith and for which adequate reserves have been provided.
(aa) The Concurrent Offering conforms, and will conform in
all material respects to the requirements of the Act and the Exchange
Act, and the rules and regulations of the Commission thereunder.
(ab) Each of the Subscription Agreements has been duly
authorized, executed and delivered by the Company and, when accepted
by the Company is a valid and binding agreement of the Company,
enforceable in accordance with its terms.
7. INDEMNIFICATION. (a) The Company agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages, liabilities and judgments
caused by (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any claim, action,
suit or proceeding relating to or arising out of the Concurrent Offering, and
(iii) any claim, action, suit or proceeding relating to or arising out of any
allegation that any sale of Shares to any persons designated by the Company
violates any applicable law, rule, regulation or order; provided, however, that
the Company shall not be liable in the case of clause (i) insofar as such
losses, claims, damages, liabilities or judgments are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriters furnished in writing to the Company by
or on behalf of any Underwriter through you specifically for use therein; and
provided further, that the foregoing indemnity agreement in clause (i) with
respect to any preliminary prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages,
liabilities and judgments purchased Shares, or any person controlling such
Underwriter, if a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not sent
or given by or on behalf of
-13-
<PAGE> 14
such Underwriter to such person, if required by law so to have been delivered,
at or prior to the written confirmation of the sale of the Shares to such
person, and if the Prospectus (as so amended and supplemented) would have cured
the defect giving rise to such loss, claim, damage, liability or judgment.
(b) In case any action shall be brought against any Underwriter or
any person controlling such Underwriter, and with respect to which indemnity
may be sought against the Company, such Underwriter shall promptly notify the
Company in writing and the Company shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to such indemnified party and
payment of all reasonable fees and expenses. Any Underwriter or any such
controlling person shall have the right to employ separate counsel reasonably
satisfactory to the Company in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Underwriter or such controlling person unless (i) the employment of such
counsel shall have been specifically authorized in writing by the Company, (ii)
the Company shall have failed to assume the defense and employ counsel or (iii)
the named parties to any such action (including any impleaded parties) include
both such Underwriter or such controlling person and the Company and such
Underwriter or such controlling person shall have been advised by such counsel
that there may be one or more legal defenses available to it which are
different from or additional to those available to the Company (in which case
the Company shall not have the right to assume the defense of such action on
behalf of such Underwriter or such controlling person, it being understood,
however, that the Company shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel) for all such Underwriters and controlling persons, which
firm shall be designated in writing by Donaldson, Lufkin & Jenrette Securities
Corporation and that all such fees and expenses shall be reimbursed as they are
incurred). The Company shall not be liable for any settlement of any such
action effected without its written consent but if settled with the written
consent of the Company, the Company agrees to indemnify and hold harmless any
Underwriter and any such controlling person from and against any loss or
liability by reason of such settlement. Notwithstanding the immediately
preceding sentence, if in any case where the fees and expenses of counsel are
at the expense of the indemnifying party and an indemnified party shall have
requested the indemnifying party to reimburse the indemnified party for such
fees and expenses of counsel as incurred, such indemnifying party agrees that
it shall be liable for any settlement of any action effected without its
written consent if (i) such settlement is entered into more than ten business
days after the receipt by such indemnifying party of the aforesaid request and
(ii) such indemnifying party shall have failed to reimburse the indemnified
party in accordance with such request for reimbursement prior to the date of
such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
-14-
<PAGE> 15
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and any person controlling the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, to the same
extent as the foregoing indemnity from the Company to each Underwriter but only
with reference to information relating to such Underwriter furnished in writing
by or on behalf of such Underwriter through you specifically for use in the
Registration Statement, the Prospectus or any preliminary prospectus. In case
any action shall be brought against the Company, any of its directors, any such
officer or any person controlling the Company based on the Registration
Statement, the Prospectus or any preliminary prospectus and in respect of which
indemnity may be sought against any Underwriter, the Underwriter shall have the
rights and duties given to the Company (except that if the Company shall have
assumed the defense thereof, such Underwriter shall not be required to do so,
but may employ separate counsel therein and participate in the defense thereof
but the fees and expenses of such counsel shall be at the expense of such
Underwriter), and the Company, its directors, any such officers and any person
controlling the Company shall have the rights and duties given to the
Underwriter, by Section 7(b) hereof.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in the case of subsections (a)(i) or (c)
of this Section 7, (A) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other hand from the offering of the Underwritten Shares or (B) if the
allocation provided by clause (A) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (A) above but also the relative fault of the Company and
the Underwriters in connection with the statements or omissions which resulted
in such losses, claims, damages, liabilities or judgments, as well as any other
relevant equitable considerations and (ii) in the case of subsections (a)(ii)
and (a)(iii) of this Section 7 the Company shall contribute the entire amount
by which such indemnification is unavailable, or insufficient, it being
understood that as between the Company and the Underwriters, the Company is the
sole beneficiary of the Concurrent Offering. The relative benefits received by
the Company and the Underwriters shall be deemed to be in the same proportion
as the total net proceeds from the Underwritten Offering (before deducting
expenses) received by the Company, and the total underwriting discounts and
commissions received by the Underwriters, bear to the total price to the public
of the Underwritten Shares, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault of the Company and the Underwriters
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the Company or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
-15-
<PAGE> 16
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Underwritten Shares underwritten by it
and distributed to the public were offered to the public exceeds the amount of
any damages which such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 7(d) are several in proportion to the
respective number of Underwritten Shares purchased by each of the Underwriters
hereunder and not joint.
(e) The obligations of the Company under this Section 7 shall be in
addition to any liability which the Company may otherwise have, including under
the Placement Agency Agreement.
8. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations
of the Underwriters to purchase the Firm Shares under this Agreement are subject
to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company
contained in this Agreement shall be true and correct on the Closing
Date with the same force and effect as if made on and as of the
Closing Date.
(b) The Registration Statement shall have become effective
not later than 5:00 P.M. (and in the case of a Registration Statement
filed under Rule 462 (b) of the Act, not later than 10:00 p.m.), New
York City time, on the date of this Agreement or at such later date
and time as you may approve in writing, and at the Closing Date no
stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have
been commenced or shall be pending before or, to the knowledge of the
Company or the Underwriters, be contemplated by the Commission.
(c)(i) Since the date of the latest balance sheet included in
the Registration Statement and the Prospectus, there shall not have
been any material adverse change, or any development involving a
prospective material adverse change, in
-16-
<PAGE> 17
the condition, financial or otherwise, or in the earnings, affairs or
business prospects, whether or not arising in the ordinary course of
business, of the Company, (ii) since the date of the latest balance
sheet included in the Registration Statement and the Prospectus there
shall not have been any change, or any development involving a
prospective material adverse change, in the capital stock or in the
long-term debt of the Company from that set forth in the Registration
Statement and Prospectus, (iii) the Company and the Subsidiaries
shall have no liability or obligation, direct or contingent, which is
material to the Company and the Subsidiaries, taken as a whole, other
than those reflected in the Registration Statement and the Prospectus
and (iv) on the Closing Date you shall have received a certificate
dated the Closing Date, signed by the principal executive officer and
the principal financial officer of the Company, confirming the
matters set forth in paragraphs (a), (b), and (c) of this Section 8.
(d) You shall have received on the Closing Date an opinion
(reasonably satisfactory to you and counsel for the Underwriters),
dated the Closing Date, of Akerman, Senterfitt & Eidson, P.A., counsel
for the Company, to the effect that:
(i) the Company and each of the Subsidiaries has
been duly incorporated or organized, is validly existing as a
corporation or limited partnership, as the case may be, in
good standing under the laws of its jurisdiction of
incorporation or organization and has the corporate or
partnership power and authority required to carry on its
business as it is currently being conducted and to own, lease
and operate its properties;
(ii) the Company and each of the Subsidiaries is
duly qualified and is in good standing as a foreign
corporation or partnership authorized to do business in each
jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification,
except where the failure to be so qualified would not have a
material adverse effect on the Company and the Subsidiaries,
taken as a whole;
(iii) all of the outstanding shares of capital stock
of, or other ownership interests in, each of the Subsidiaries
have been duly and validly authorized and issued and are fully
paid and non-assessable, and are owned by the Company, free
and clear of any security interest or, to the best of such
counsel's knowledge, after due inquiry, any other, claim,
lien, encumbrance or adverse interest of any nature;
-17-
<PAGE> 18
(iv) all the outstanding shares of the Common Stock
have been duly authorized and validly issued and are fully
paid, non-assessable and not subject to any preemptive or
similar rights;
(v) the Shares have been duly authorized, and when
issued and delivered to the Underwriters or the Purchasers, as
the case may be, against payment therefor as provided by this
Agreement or the Subscription Agreements, will have been
validly issued and will be fully paid and non-assessable, and
the issuance of such Shares is not subject to any preemptive
or similar rights;
(vi) Each of this Agreement, the Placement Agency
Agreement and the Subscription Agreements has been duly
authorized, executed and delivered by the Company and is a
valid and binding agreement of the Company enforceable in
accordance with its terms subject to applicable bankruptcy,
insolvency, and similar laws affecting creditors rights
generally and subject to general principals of equity;
(vii) the authorized capital stock of the Company,
including the Common Stock, conforms as to legal matters to
the description thereof contained in the Prospectus;
(viii) the Registration Statement has become
effective under the Act, no stop order suspending its
effectiveness has been issued and no proceedings for that
purpose are, to the knowledge of such counsel, pending before
or contemplated by the Commission;
(ix) the statements under the captions "The
Prospectus Summary", "Risk Factors-Hockey Operations" and
"-Real Estate Development and Arena Operations", "The National
Hockey League", "Hockey Operations", "Real Estate Development
and Arena Operations", "Management-Stock Option Plans,"
"-Employment Agreements" and "-other Employment Agreements",
"Certain Transactions", "Description of Capital Stock" and
"Underwriting" in the Prospectus and Items 14 and 15 of Part
II of the Registration Statement insofar as such statements
constitute a summary of legal matters, documents or
proceedings referred to therein, fairly present the
information called for with respect to such legal matters,
documents and proceedings;
(x) neither the Company nor any of the Subsidiaries
is in violation of its respective charter, by-laws or
partnership
-18-
<PAGE> 19
agreements and, to the best of such counsel's knowledge after
due inquiry, neither the Company nor any of the Subsidiaries
is in default in the performance of any obligation, agreement
or condition contained in any bond, debenture, note or any
other evidence of indebtedness or in any other agreement,
indenture or instrument material to the conduct of the
business of the Company and the Subsidiaries, taken as a
whole, to which the Company or any of the Subsidiaries is a
party or by which it or any of the Subsidiaries or their
respective property is bound, including, but not limited to,
the NHL Lex Scripta;
(xi) except with respect to the consent which has
been obtained by the Company from the NHL with respect to the
Offerings, the execution, delivery and performance of this
Agreement, the Placement Agency Agreement and the Subscription
Agreements by the Company, compliance by the Company with all
the provisions hereof and thereof and the consummation of the
transactions contemplated hereby and thereby will not require
any consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other
governmental body (except as such may be required under the
Act or other securities or Blue Sky laws) and will not
conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the charter, by-laws or
partnership agreement of the Company or any of the
Subsidiaries, the NHL Lex Scripta or any agreement, indenture
or other instrument to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the
Subsidiaries or their respective properties are bound, or
violate or conflict with any laws, administrative regulations
or rulings or court decrees applicable to the Company or any
of the Subsidiaries or their respective properties;
(xii) after due inquiry, such counsel does not know
of any legal or governmental proceeding pending or threatened
to which the Company or any of the Subsidiaries is a party or
to which any of their respective property is subject which is
required to be described in the Registration Statement or the
Prospectus and is not so described, or of any contract or
other document which is required to be described in the
Registration Statement or the Prospectus or is required to be
filed as an exhibit to the Registration Statement which is not
described or filed as required;
-19-
<PAGE> 20
(xiii) to the best of such counsel's knowledge,
after due inquiry, neither the Company nor any of the
Subsidiaries has violated any Environmental Laws, nor any
federal or state law relating to discrimination in the hiring,
promotion or pay of employees nor any applicable federal or
state wages and hours laws, nor any provisions of the Employee
Retirement Income Security Act or the rules and regulations
promulgated thereunder, which in each case might result in any
material adverse change in the business, prospects, financial
condition or results of operations of the Company and the
Subsidiaries, taken as a whole;
(xiv) to the best of such counsel's knowledge after
due inquiry, the Company and each of the Subsidiaries has such
permits, licenses, franchises and authorizations of
governmental or regulatory authorities ("PERMITS"), including,
without limitation, under any applicable Environmental Laws,
as are necessary to own, lease and operate its respective
properties and to conduct its business in the manner described
in the Prospectus; to the best of such counsel's knowledge,
after due inquiry, the Company and each of the Subsidiaries
has fulfilled and performed all of its material obligations
with respect to such permits and no event has occurred which
allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such
permit, subject in each case to such qualification as may be
set forth in the Prospectus; and, except as described in the
Prospectus, such permits contain no restrictions that are
materially burdensome to the Company and the Subsidiaries,
taken as a whole;
(xv) the Company is not an "investment company" or a
company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended;
(xvi) to the best of such counsel's knowledge, after
due inquiry, except as otherwise set forth in the Prospectus
no holder of any security of the Company has any right to
require registration of shares of Common Stock or any other
security of the Company;
(xvii) to the best of such counsel's knowledge,
after due inquiry, except as otherwise set forth in the
Prospectus all leases to which the Company or any of its
subsidiaries is a party are valid and binding and no default
has occurred or is continuing thereunder, which might result
in any material adverse change in
-20-
<PAGE> 21
the business, prospects, financial condition or results of
operations of the Company and its subsidiaries taken as a
whole, and the Company and its subsidiaries enjoy peaceful and
undisturbed possession under all such leases to which any of
them is a party as lessee with such exceptions as do not
materially interfere with the use made by the Company or such
subsidiary; and
(xviii) The Concurrent Offering conforms, in all
material respects, to the requirements of the Act and the
Exchange Act;
(xix) The reorganization of the Company as described
in the Prospectuses under "Reorganization" and "Certain
Transactions" will qualify under Section 351 of the Internal
Revenue Code of 1986, as amended, and no gain or loss will be
recognized by the Company on the transfer of (i) the
outstanding capital stock of Decoma I and Decoma II to the
Partnership (ii) the partnership interests of Florida Panthers
Hockey Club, Ltd. to the Company or (iii) the limited
partnership interests in Arena Development and Arena Operator
and the outstanding capital stock of Arena Development
Company, Inc. and Arena Operator Company Inc. to the Company
in exchange for partnership interests and shares of Common
Stock; and
(xx) (1) the Registration Statement (including any
Registration Statement filed under 462 (b) of the Act, if any)
and the Prospectus and any supplement or amendment thereto
(except for financial statements as to which no opinion need
be expressed) comply as to form in all material respects with
the Act, and (2) such counsel has no reason to believe that
(except for financial statements, as aforesaid) the
Registration Statement and the prospectus included therein at
the time the Registration Statement became effective contained
any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the
Prospectus, as amended or supplemented, if applicable (except
for financial statements, as aforesaid) contained any untrue
statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
In giving such opinion, such counsel may rely, as to the matters of
fact, on certificates of officers of the Company and public officials.
-21-
<PAGE> 22
In giving such opinions with respect to the matters covered by clause
(xx) such counsel may state that their opinion and belief are based upon their
participation in the preparation of the Registration Statement and Prospectus
and any amendments or supplements thereto and review and discussion of the
contents thereof, but are without independent check or verification except as
specified.
The opinion of Akerman, Senterfitt & Eidson, P.A. described in
paragraph (d) above shall be rendered to you at the request of the Company and
shall so state therein.
(e) You shall have received on the Closing Date an opinion,
dated the Closing Date, of McDermott, Will & Emery, counsel for the
Underwriters, as to the matters referred to in clauses (v), (vi),
(viii), (ix) (but only with respect to the statements under the
caption "Description of Capital Stock" and "Underwriting") and (xx) of
the foregoing paragraph (d). In giving such opinion with respect to
the matters covered by clause (xx) such counsel may state that their
opinion and belief are based upon their participation in the
preparation of the Registration Statement and Prospectus and any
amendments or supplements thereto and review and discussion of the
contents thereof, but are without independent check or verification
except as specified.
(f) You shall have received a letter on and as of the Closing
Date, in form and substance satisfactory to you, from Arthur Andersen
LLP, independent public accountants, with respect to the financial
statements and certain financial information contained in the
Registration Statement and the Prospectus and substantially in the
form and substance of the letter delivered to you by Arthur Andersen
LLP on the date of this Agreement.
(g) The Company shall have delivered to you the agreements
specified in Section 2 hereof.
(h) The Company shall not have failed at or prior to the
Closing Date to perform or comply with any of the agreements herein
contained and required to be performed or complied with by the Company
at or prior to the Closing Date.
(i) The Company shall have satisfied all of the conditions
with respect to the sale of the Concurrent Shares pursuant to the
Placement Agency Agreement and the Subscription Agreements and the
Company shall have complied with all obligations under the Placement
Agency Agreement and the Subscription Agreements.
(j) Prior to the Closing Date, the Recapitalization, as set
forth in the Prospectus, shall have been consummated to your
reasonable satisfaction.
-22-
<PAGE> 23
The several obligations of the Underwriters to purchase any Additional Shares
hereunder are subject to the delivery to you on the Option Closing Date of such
documents as you may reasonably request with respect to the good standing of
the Company, the due authorization and issuance of such Additional Shares and
other matters related to the issuance of such Additional Shares.
9. EFFECTIVE DATE OF AGREEMENT AND TERMINATION. This Agreement shall
become effective upon the later of (i) execution of this Agreement and (ii) when
notification of the effectiveness of the Registration Statement has been
telephonically released by the Commission.
This Agreement may be terminated at any time prior to the Closing Date
by you by written notice to the Company if any of the following has occurred:
(i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or
development involving a prospective material adverse change in the condition,
financial or otherwise, of the Company and the Subsidiaries, taken as a whole,
or the earnings, affairs, or business prospects of the Company or any of the
Subsidiaries, taken as a whole, whether or not arising in the ordinary course
of business, which would, in your judgment, make it impracticable to market the
Underwritten Shares on the terms and in the manner contemplated in the
Prospectus, (ii) any outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic conditions or in the
financial markets of the United States or elsewhere that, in your judgment, is
material and adverse and would, in your judgment, make it impracticable to
market the Underwritten Shares on the terms and in the manner contemplated in
the Prospectus, (iii) the suspension or material limitation of trading in
securities on the New York Stock Exchange, the American Stock Exchange or the
Nasdaq National Market System or limitation on prices for securities on any
such exchange or National Market System, (iv) the enactment, publication,
decree or other promulgation of any federal or state statute, regulation, rule
or order of any court or other governmental authority which in your opinion
materially and adversely affects, or will materially and adversely affect, the
business or operations of the Company or any subsidiary, (v) the declaration of
a banking moratorium by either federal or New York State authorities or (vi)
the taking of any action by any federal, state or local government or agency in
respect of its monetary or fiscal affairs which in your opinion has a material
adverse effect on the financial markets in the United States.
If on the Closing Date or on the Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase the
Firm Shares or Additional Shares, as the case may be, which it or they have
agreed to purchase hereunder on such date and the aggregate number of Firm
Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused
to purchase is not more than one-tenth of the total number of Underwritten
Shares to be purchased on such date by all Underwriters, each non-defaulting
Underwriter shall be obligated severally, in the proportion which the number of
Firm Shares set forth opposite its name in Schedule I bears to the total number
of Firm Shares which all the non-defaulting Underwriters, as the case may be,
have agreed to purchase, or in such other proportion as you may specify, to
purchase the Firm
-23-
<PAGE> 24
Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused
to purchase on such date; provided that in no event shall the number of Firm
Shares or Additional Shares, as the case may be, which any Underwriter has
agreed to purchase pursuant to Section 2 hereof be increased pursuant to this
Section 9 by an amount in excess of one-ninth of such number of Firm Shares or
Additional Shares, as the case may be, without the written consent of such
Underwriter. If on the Closing Date or on the Option Closing Date, as the case
may be, any Underwriter or Underwriters shall fail or refuse to purchase
Firm Shares, or Additional Shares, as the case may be, and the aggregate number
of Firm Shares or Additional Shares, as the case may be, with respect to which
such default occurs is more than one-tenth of the aggregate number of
Underwritten Shares to be purchased on such date by all Underwriters and
arrangements satisfactory to you and the Company for purchase of such
Underwritten Shares are not made within 48 hours after such default, this
Agreement will terminate without liability on the part of any non-defaulting
Underwriter and the Company. In any such case which does not result in
termination of this Agreement, either you or the Company shall have the right
to postpone the Closing Date or the Option Closing Date, as the case may be,
but in no event for longer than seven days, in order that the required changes,
if any, in the Registration Statement and the Prospectus or any other documents
or arrangements may be effected. Any action taken under this paragraph shall
not relieve any defaulting Underwriter from liability in respect of any default
of any such Underwriter under this Agreement.
10. MISCELLANEOUS. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (a) if to the Company, to Florida
Panthers Holdings, Inc., 100 Northeast Third Avenue, Second Floor, Fort
Lauderdale, Florida 33301; and (b) if to any Underwriter or to you, to you c/o
Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park Avenue, 16th
Floor, New York, New York 10172, Attention: Syndicate Department, or in any
case to such other address as the person to be notified may have requested in
writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, its officers and directors and
of the several Underwriters set forth in or made pursuant to this Agreement
shall remain operative and in full force and effect, and will survive delivery
of and payment for the Shares, regardless of (i) any investigation, or
statement as to the results thereof, made by or on behalf of any Underwriter or
by or on behalf of the Company, the officers or directors of the Company or any
controlling person of the Company, (ii) acceptance of the Underwritten Shares
and payment for them hereunder and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Underwriters because of
any failure or refusal on the part of the Company to comply with the terms or
to fulfill any of the conditions of this Agreement, the Company agrees to
reimburse the several Underwriters for all out-of-pocket expenses (including
the fees and disbursements of counsel) reasonably incurred by them.
-24-
<PAGE> 25
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the
Underwriters, any controlling persons referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement,
and no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Shares from any of the several Underwriters merely because of such
purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
* * *
-25-
<PAGE> 26
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
FLORIDA PANTHERS HOLDINGS, INC.
By:
----------------------------------
Title:
-------------------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
RAYMOND JAMES & ASSOCIATES, INC.
Acting severally on behalf of
themselves and the several
Underwriters named in
Schedule I hereto
By DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
----------------------------
Title:
-------------------------
-26-
<PAGE> 27
SCHEDULE I
<TABLE>
<CAPTION>
Number of Firm Shares
Underwriters to be Purchased
------------ -----------------------
<S> <C>
Donaldson, Lufkin & Jenrette
Securities Corporation
Raymond James & Associates, Inc.
---------
Total 2,700,000
=========
</TABLE>
<PAGE> 1
EXHIBIT 1.2
PLACEMENT AGENCY AGREEMENT
____________ __, 1996
Florida Panthers Holdings, Inc.
100 Northeast Third Avenue
Second Floor
Fort Lauderdale, Florida 33301
Ladies and Gentlemen:
This placement agency agreement (the "AGREEMENT") outlines the terms upon
which Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") and Raymond
James & Associates, Inc. (collectively, the "PLACEMENT AGENTS") are engaged by
Florida Panthers Holdings, Inc., a Florida corporation (the "COMPANY"), to act
as its financial advisors and exclusive placement agents in connection with the
offering by the Company (the "CONCURRENT OFFERING") of up to an aggregate of
4,600,000 Shares (the "CONCURRENT SHARES") of Class A Common Stock, par value
$.01 per share (the "CLASS A COMMON STOCK"), of the Company. The Concurrent
Offering of Concurrent Shares is registered on Registration Statement No.
333-12191 (as such Registration Statement may be amended from time to time, the
"REGISTRATION STATEMENT") under the Securities Act of 1933, as amended (the
"ACT"), filed by the Company with the Securities and Exchange Commission (the
"COMMISSION"). The Company will also enter into an underwriting agreement with
the Placement Agents, as representatives of the several underwriters to be
named in Schedule I thereto (collectively, the "UNDERWRITERS"), relating to the
offering of Class A Common Stock by the Underwriters (the "INITIAL PUBLIC
OFFERING" and, together with the Concurrent Offering, the "OFFERINGS"). The
Initial Public Offering is also registered on the Registration Statement. To
the extent designated herein, portions of the underwriting agreement relating
to the Initial Public Offering, in the form filed as Exhibit 1.1 to the
Registration Statement and attached hereto as Annex A (as such Underwriting
Agreement may be amended from time to time with the Placement Agents' consent,
the "UNDERWRITING AGREEMENT"), shall be deemed to be incorporated by reference
herein and form a part hereof. Notwithstanding anything else herein to the
contrary, it is expressly understood and agreed that the closing of the
Concurrent Offering is conditioned on the occurrence of the Closing Date. All
capitalized terms not defined herein shall have the meanings ascribed to them
in the Underwriting Agreement.
<PAGE> 2
The Company is a newly-formed corporation, which was established for the
purpose of effecting the Reorganization (as defined below). The operations of
the business described in the Prospectus (as defined below) are currently
conducted by the Company, through its ownership of Florida Panthers Hockey
Club, Ltd. (the "PARTNERSHIP"), Arena Development Company, Ltd. ("ARENA
DEVELOPMENT"), Arena Operating Company, Ltd. ("ARENA OPERATOR"), Decoma
Investment, Inc. I ("DECOMA I") and Decoma Investment, Inc. II ("DECOMA II").
On __________, 1996, the following events (collectively, the "REORGANIZATION")
occurred: (i) Mr. Huizenga contributed (A) a note (the "PARTNERSHIP NOTE"),
representing the outstanding amount which the Partnership borrowed from Mr.
Huizenga plus interest accrued on the Partnership Note ($_______ as of
_________, 1996), and (B) all the outstanding capital stock of each of Decoma I
and Decoma II, which entities together own approximately a 78% limited
partnership interest in Decoma Miami Associates, Ltd., to the capital of the
Partnership in exchange for a ___% limited partnership interest in the
Partnership; (ii) Mr. Huizenga, as the sole limited partner and the sole
general partner (through his ownership of Florida Panthers Hockey Club, Inc.)
of the Partnership, contributed his limited partnership interest in the
Partnership as well as the outstanding capital stock of Florida Panthers Hockey
Club, Inc. to the Company; and (iii) Mr. Huizenga, as the sole general partner
(through his ownership of Arena Development Company, Inc. and Arena Operating
Company, Inc., respectively) of each of Arena Development and Arena Operator,
contributed the outstanding capital stock of each of Arena Development Company,
Inc. and Arena Operating Company, Inc. to the Company in exchange for 5,020,678
shares of the Company's Class A Common Stock and 255,000 shares of the
Company's Class B Common Stock.
SERVICES
1. The Company hereby appoints the Placement Agents as the Company's
exclusive placement agents in connection with the Concurrent Offering and,
subject to the terms and conditions contained or incorporated by reference
herein, the Placement Agents hereby accept such appointment.
2. The Placement Agents agree to provide advisory services to the Company
as to the structure of the Concurrent Offering. Except as specifically set
forth herein, the Placement Agents do not assume any additional duties or
responsibilities with respect to the Concurrent Offering and no other duties
shall be implied from this Agreement. The Company acknowledges that purchasers
of the Concurrent Offering are not, and will not be treated as, "customers" of
the Placement Agents for purposes of the rules of the National Association of
Securities Dealers, Inc. (the "NASD") and that the Placement Agents shall have
no responsibility for the performance or non-performance of any purchaser in
the Concurrent Offering or for the performance or non-performance of the
Company.
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
-2-
<PAGE> 3
3. The Company hereby makes to the Placement Agents the agreements,
representations and warranties set forth in Sections 5 and 6 of the
Underwriting Agreement.
4. The Company agrees with the Placement Agents:
(a) to provide the Placement Agents with such copies of the
Registration Statement, Prospectus, any preliminary prospectus and such
other documents and instruments as the Placement Agents may reasonably
request; and
(b) to comply with the agreement in the third paragraph of
Section 2 of the Underwriting Agreement.
5. The Company further agrees with the Placement Agents that the Company
will pay all costs, expenses, fees and taxes incident to (i) the preparation,
printing, filing and distribution under the Act of the Registration Statement
(including financial statements and exhibits), of each preliminary prospectus
and all amendments and supplements to any of them prior to or during the period
specified in Section 5(e) of the Underwriting Agreement to the Placement Agents
and the Purchasers (including potential purchasers), (ii) the printing and
delivery of the Prospectus and all amendments or supplements to it during the
period specified in Section 5(e) of the Underwriting Agreement to the Placement
Agents and the Purchasers (including potential purchasers), (iii) the printing
and delivery of this Agreement, the Preliminary and Supplemental Blue Sky
Memoranda and all other agreements, memoranda, correspondence and other
documents printed and delivered in connection with the offering of the
Concurrent Shares (including in each case any disbursements of counsel for the
Placement Agents relating to such printing and delivery), (iv) the registration
or qualification of the Concurrent Shares for offer and sale under the
securities or Blue Sky laws of the several states (including in each case the
fees and disbursements of counsel for the Placement Agents relating to such
registration or qualification and memoranda relating thereto), (v) filings and
clearance with the National Association of Securities Dealers, Inc. in
connection with the Concurrent Offering, (vi) the listing of the Concurrent
Shares on the National Association of Securities Dealers Automated Quotation
system ("NASDAQ") National Market System, (vii) furnishing such copies of the
Registration Statement, the Prospectus and all amendments and supplements
thereto as may be requested for use in connection with the offering or sale of
the Concurrent Shares by the Company to the Purchasers, and (viii) all other
costs and expenses incident to the performance of its obligations hereunder and
the Subscription Agreements which are not otherwise specifically provided for
in this Section.
-3-
<PAGE> 4
6. The obligations of the Placement Agents hereunder and the closing of
the sale of the Concurrent Shares in the Concurrent Offering (the "CONCURRENT
TIME OF DELIVERY") shall be subject to the satisfaction of the conditions set
forth in Section 8 of the Underwriting Agreement. Furthermore, (i) the
Concurrent Time of Delivery shall be conditioned upon the occurrence of the
Closing Date and (ii) the obligations of the Placement Agents hereunder shall
be conditioned upon resolution to the reasonable satisfaction of the Placement
Agents of all legal and regulatory issues related to the Concurrent Offering.
For purposes of this Section 6, all references to "Underwriters" and "Firm
Shares" in the introductory paragraph of Section 8 of the Underwriting
Agreement shall be deemed to refer to the Placement Agents and Concurrent
Shares, respectively. Also for purposes of this Section 6, (a) the opinions of
(i) Akerman, Senterfitt & Eidson, P.A. and (ii) McDermott, Will & Emery, (b)
the letter or letters of Arthur Andersen LLP and (c) the certificates of
officers of the Company (provided for in Section 8(c) of the Underwriting
Agreement), shall each also be addressed and furnished to the Placement Agents
at the Concurrent Time of Delivery and all references in Section 8 of the
Underwriting Agreement to "your reasonable satisfaction," "satisfactory to
you," "judgment of the Representatives" or similar language shall be deemed to
refer to a determination by the Placement Agents.
FEES
7. As compensation for their services under this Agreement, the Placement
Agents will receive at the Concurrent Time of Delivery a fee (the "PLACEMENT
FEE") from the Company of 3.5% of the amount equal to Initial Public Offering
Price less the underwriting discount and commissions to be paid to the
Underwriters in the Underwritten Offering, multiplied by the number of Shares
sold in the Concurrent Offering, by wire transfer in immediately available
funds to a bank account or accounts designated by the Placement Agents.
Payment of such Placement Fee shall be a condition of the Concurrent Time of
Delivery. In the event the Concurrent Offering is terminated by the Placement
Agents because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, the
Company agrees to reimburse the Placement Agents for all out-of-pocket expenses
(including the fees and disbursements of counsel) reasonably incurred by them.
INDEMNIFICATION AND EXCULPATION
8. The Company (the "INDEMNIFYING PARTY") agrees to indemnify and hold
harmless the Placement Agents, their affiliates and their parents and their
affiliates, and the respective directors, officers, agents and employees of the
Placement Agents, their affiliates and their parents and their affiliates, and
each person, if any, who controls either of the Placement Agents within the
meaning of the Act or the Exchange Act from and against any losses, claims,
damages, judgments, assessments, costs and other liabilities (or actions or
proceedings in respect thereof) to which the Placement Agents or such entity or
person may become subject related to or arising out of (i) the Placement
Agents' engagement hereunder including, without limitation, the use or content
of the Registration Statement, any preliminary prospectus or the Prospectus, or
any amendment or supplement thereto, or (ii) the activities of the Company in
connection with
-4-
<PAGE> 5
the Offerings, and will reimburse the Placement Agents and each such entity or
person for all reasonable legal and other expenses as incurred in connection
with investigating, preparing, pursuing or defending any such loss, claim,
damage, judgment, assessment, cost, liability, action, investigation or
proceeding whether or not in connection with pending or threatened litigation
in which either the Placement Agents or any such entity or person is a party;
provided, however, that the Company shall not be liable in the case of clause
(i) for losses, claims, damages, judgments, assessments, costs, liabilities or
expenses that (x) a court of competent jurisdiction shall have found in a final
judgment which is no longer subject to appeal or further review to have arisen
solely from the gross negligence or willful misconduct of either of the
Placement Agents or (y) are caused by any untrue statement or omission or
alleged untrue statement or omission based upon information relating to the
Placement Agents furnished in writing to the Company by the Placement Agents
specifically for use in the Registration Statement, any preliminary prospectus
or any Prospectus or any amendment or supplement thereto.
In case any proceeding shall be instituted involving any person in respect
to whom indemnity may be sought, such person (the "INDEMNIFIED PARTY") shall
promptly notify the indemnifying party in writing; provided, however, that
failure to so notify the indemnifying party shall not relieve the indemnifying
party from any liability the indemnifying party may have on account of this
indemnity or otherwise, except to the extent the indemnifying party shall have
been materially prejudiced by such failure. The indemnifying party, upon the
request of the indemnified party, shall retain counsel reasonably satisfactory
to the indemnified party to represent the indemnified party and any others the
indemnifying party may reasonably designate in such proceedings and shall pay
as incurred the fees and expenses of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain
its own counsel at its own expense, except that the indemnifying party shall
pay as incurred the reasonable fees and expenses of counsel retained by the
indemnified party in the event that (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel,
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and
representation of all such parties by the same counsel would constitute a real
or perceived conflict of interest in the reasonable opinion of the indemnified
party, due to actual or potential differing interests between them or (iii) the
indemnifying party has failed to assume the defense and employ counsel. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
to the extent set forth in this Agreement. The indemnifying party will not,
without the prior written consent of the indemnified party, settle, compromise
or consent to the entry of any judgment in or otherwise seek to terminate any
pending or threatened action or proceeding in respect of which indemnification
or contribution may be sought hereunder unless such settlement, compromise,
consent or termination includes an unconditional release of the indemnified
party from any and all liability with respect to such action or proceeding.
-5-
<PAGE> 6
In the event a claim for indemnification as described herein is
unavailable or insufficient, then the Company shall contribute to the aggregate
losses, claims, damages or liabilities to which the Placement Agents, their
affiliates and their parents and their affiliates, and the respective
directors, officers, agents, employees or controlling persons may be subject in
such amount as is appropriate to reflect the relative benefits received by the
Company on the one hand and the party seeking contribution on the other and the
relative fault of the Company on the one hand and the party seeking
contribution on the other, as well as any relevant equitable contributions;
provided, however, that in no event shall the Company contribute less than the
amount necessary to ensure that the Placement Agents and such entities and
persons, in the aggregate, are not liable for any losses, claims, damages,
judgments, assessments, costs and other liabilities in excess of the amount of
the Placement Fee actually received by the Placement Agents hereunder. The
relative benefits received by the Company and on the one hand and the Placement
Agents on the other shall be deemed to be in the same proportion as the total
net proceeds from the Concurrent Offering (before deducting expenses) received
by the Company bear to the Placement Fee paid to the Placement Agents by the
Company.
The provisions of this Agreement relating to reimbursement,
indemnification and contribution shall survive termination, modification or
completion of the engagement of the Placement Agents and shall be binding upon
any successors or assigns of the Company.
9. The Company also agrees that the Placement Agents, their affiliates
and their parents and their affiliates and the respective directors, officers,
agents, employees of the Placement Agents, their affiliates and their parents
and their affiliates, shall have no liability to the Company or its
shareholders for or in connection with any matter referred to in this
Agreement, except in the case of clause (i) of Section 8, to the extent that
any losses, claims, damages, judgments, assessments, costs, liabilities or
expenses incurred by the Company are determined by a court of competent
jurisdiction in a final judgment which is no longer subject to appeal or
further review to have arisen solely from the gross negligence or willful
misconduct of the Placement Agents.
OTHER
10. The Company represents and warrants that no person or organization
other than the Placement Agents are, as a result of any action by the Company,
entitled to compensation for services as a finder, broker, placement agent or
investment banker in connection with the Concurrent Offering.
11. This Agreement shall be deemed to be effective as of the date hereof
and the term of this engagement shall be from the date hereof until the earlier
of (i) termination of the
-6-
<PAGE> 7
Concurrent Offering, and (ii) the completion of the Offerings. Notwithstanding
the foregoing, if at any time the Company violates any of its covenants and
agreements contained herein or if any of the conditions set forth in Section 6
are not satisfied, the Placement Agents shall have the right to terminate their
obligations hereunder upon prior notice to the Company. In the event of any
termination of this Agreement or if for any reason the Concurrent Offering is
terminated, the Company shall be responsible for (i) the reimbursement of all
fees, disbursements, costs and expenses, as provided in Section 5, and (ii) its
obligations arising under Section 8.
12. The Company agrees that the Placement Agents shall have the right
to advertise their participation in the Concurrent Offering in "tombstone" or
other appropriate financial advertisements in newspapers, magazines, trade
periodicals or other publications. The Placement Agents agree that such
tombstone or other advertisements shall not be published without the prior
approval of the Company, provided that such approval is not unreasonably
withheld or delayed.
13. The invalidity or unenforceability of any provision of this Agreement
shall in no way offset the validity or enforceability of any other provision.
This Agreement shall be governed by and construed and enforced in accordance
with the laws of the state of New York. The terms and provisions of this
Agreement are solely for the benefit of the Company and the Placement Agents
and the other indemnified parties and their respective successors, assigns,
heirs and personal representatives, and no other person shall acquire or have
any right by virtue of this letter.
14. All statements, requests, notices and agreements hereunder shall be
in writing, and if to the Placement Agents shall be delivered or sent by mail,
telex or facsimile transmission to: in the case of the Placement Agents to
Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park Avenue, 16th
Floor, New York, New York 10172; and in the case of the Company to the address
of the Company set forth in the Registration Statement, Attention: Secretary.
Any such statements, requests, notices or agreement shall take effect upon
receipt thereof.
15. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
* * *
-7-
<PAGE> 8
Please confirm that the terms described here are in accordance with your
understanding by signing and returning to use the enclosed duplicate of this
letter.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
----------------------------------------
Title:
-------------------------------------
RAYMOND JAMES & ASSOCIATES, INC.
By:
----------------------------------------
Title:
-------------------------------------
AGREED AND CONFIRMED:
FLORIDA PANTHERS HOLDINGS, INC.
By:
-----------------------------------------
Title:
--------------------------------------
-8-
<PAGE> 9
ANNEX A
[Attach form of Underwriting Agreement]
<PAGE> 1
Exhibit 2.1
EXCHANGE AGREEMENT
This Exchange Agreement (this "Agreement") is entered into this 25th
day of October, 1996 by and among Florida Panthers Holdings, Inc., a Florida
corporation (the "Company"), and Mr. H. Wayne Huizenga ("Huizenga").
W I T N E S S E T H:
WHEREAS, Huizenga is the sole limited partner of Florida Panthers
Hockey Club, Ltd., a Florida limited partnership (the "Partnership"), and the
sole shareholder of Florida Panthers Hockey Club, Inc., a Florida corporation
and a general partner of the Partnership (the "General Partner");
Whereas, the Partnership is the 99% limited partner of each of Arena
Development, Ltd., a Florida limited partnership ("Development, Ltd."), and
Arena Operating Company, Ltd., a Florida limited partnership ("Operating
Company, Ltd.");
WHEREAS, the Partnership is the sole shareholder of each of Decoma
Investment, Inc. I, a Texas corporation f/k/a BIL Development, Inc. ("Decoma
I"), and Decoma Investment, Inc. II, a Texas corporation f/k/a Linbeck Miami
Corporation ("Decoma II"), which together own approximately 78% of the
partnership interest in Decoma Miami Associates, Ltd., the operator of the
Miami Arena;
WHEREAS, Huizenga is the sole shareholder of each of Arena
Development Company, Inc., the general partner of Development, Ltd., and Arena
Operating Company, Inc., the general partner of Operating Company, Ltd.;
WHEREAS, the Company has been formed in contemplation of the public
offering (the "Public Offering") of shares of the Company's Class A common
stock, par value $.01 per share (the "Class A Common Stock"), pursuant to an
effective Registration Statement on Form S-1 (SEC File No. 333-12191);
WHEREAS, as part of the organization of the Company and in connection
with the Public Offering, Huizenga desires to exchange all of his limited
partner interest in the Partnership as well as all the outstanding capital
stock of each of the General Partner, Arena Development and Arena Operator in
exchange for 5,020,678 shares of the Company Class A Common Stock and 255,000
shares of the Company's Class B common stock, par value $.01 per share (the
"Class B Common Stock"); and
WHEREAS, upon consummation of the transactions contemplated by this
Agreement, the Company will own (i) all the limited partner interest in the
Partnership, and (ii) all the outstanding capital stock of the General Partner,
Arena Development and Arena Operator.
NOW, THEREFORE, in consideration of the mutual covenants, conditions
and agreements set forth herein, the parties hereto, intending to be legally
bound, hereby agree as follows:
SECTION 1 AGREEMENT TO EXCHANGE. Huizenga hereby agrees to
exchange all of his limited partner interest in the Partnership as well as all
the outstanding capital stock of each of the General Partner, Arena Development
and Arena Operator in exchange for 5,020,678 shares of Class A Common Stock
and 255,000 shares of Class B Common Stock. This Agreement shall be effective
the date hereof.
SECTION 2 CLOSING.
(a) The Closing ("the Closing") of the transactions
contemplated hereby shall take place immediately prior to the closing of the
Public Offering.
(b) Each of the parties to this Agreement hereby agrees
that there are no conditions to the Closing of the transactions contemplated
hereby.
SECTION 3 REGISTRATION. The Company hereby agrees to file on
behalf of Huizenga a Registration Statement on Form S-1 registering 5,020,678
shares of Class A Common Stock upon request by Huizenga. The Company hereby
agrees to bear all costs relating to the registration of the 5,020,678 shares
of Class A Common Stock owned by Huizenga, including attorney's fees.
<PAGE> 2
SECTION 4 NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed to have
been given if sent by registered or certified mail, first class postage
prepaid, return receipt requested, to the address of such parties set forth
below or such other future address as may be specified by any party by notice
to all of the other parties. Such communications may also be given by personal
delivery, by facsimile or by regular mail, but shall be effective only if and
when actually received.
If to Holdings, at:
Florida Panthers Holdings, Inc.
100 N.E. Third Avenue, Second Floor
Fort Lauderdale, Florida 33301
Fax: (954) 768-1920
Attn: Steven M. Dauria
If to Huizenga, the General Partner, Arena Development or Arena
Operator, at:
200 South Andrews Avenue, Sixth Floor
Fort Lauderdale, Florida 33301
Fax: (954) 627-5080
Attn: William M. Pierce
SECTION 5 AMENDMENT. This Agreement may not be modified,
amended, altered or supplemented except upon execution and delivery of a
written agreement executed by the parties hereto.
SECTION 6 MISCELLANEOUS.
(a) The provisions hereof shall be binding upon and inure
to the benefit of the parties and their respective heirs, personal
representatives, successors and permitted assigns.
(b) This Agreement may not be assigned without the prior
written consent of the parties hereto.
(c) This Agreement and the additional documents
referenced herein merge all prior negotiations and agreements among the parties
relating to the subject matter hereof and constitute the entire agreement among
the parties relating to such subject matter. No prior or contemporaneous
agreements, except as specified herein, written or oral, relating to such
subject matter shall be binding.
2
<PAGE> 3
(d) Each party hereto specifically covenants and agrees
that it will execute such other and further instruments and documents as are or
may become necessary or convenient to effectuate and carry out the provisions
of this Agreement.
(e) This Agreement may be executed simultaneously in
multiple counterparts, all of which together shall constitute one and the same
instrument.
(f) This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
instrument as of the date first above written.
FLORIDA PANTHERS HOLDINGS, INC.
By: /s/ Steven M. Dauria
-------------------------
Name:
Title:
H. WAYNE HUIZENGA
/s/ H. Wayne Huizenga
----------------------------
3
<PAGE> 1
Exhibit 2.2
PURCHASE AGREEMENT
This Purchase Agreement (this "Agreement") is entered into this 25th
day of October, 1996 by and between Decoma Investment, Inc. II, a Texas
corporation f/k/a Linbeck Miami Corporation ("Decoma II"), and Decoma
Investment, Inc. III, a Texas corporation f/k/a HSA Management, Inc. ("Decoma
III").
W I T N E S S E T H:
WHEREAS, Decoma III holds 33.33% interest in Decoma Ventures, a Texas
general partnership ("Decoma Venture"); and
WHEREAS, Decoma III desires to sell to Decoma II, and Decoma II
desires to purchase from Decoma III, 32.33% interest in Decoma Venture.
NOW, THEREFORE, in consideration of the mutual covenants, conditions
and agreements set forth herein, the parties hereto, intending to be legally
bound, hereby agree as follows:
SECTION 1 PURCHASE OF DECOMA VENTURE INTEREST. Decoma III hereby
agrees to sell to Decoma II, and Decoma II hereby agrees to purchase from
Decoma III, 32.33% interest in Decoma Ventures for the total purchase price of
$2,628,444 (the "Purchase Price"). This Agreement shall be effective the date
hereof.
SECTION 2 CLOSING.
(a) The Closing (the "Closing") of the transactions contemplated
hereby shall take place prior to the closing of the public offering of shares
contemplated by the Registration Statement on Form S-1 (SEC File No. 333-12191)
filed by Florida Panthers Holdings, Inc. with the Securities and Exchange
Commission.
(b) At the Closing Decoma II shall deliver to Decoma III the Purchase
Price, and Decoma III shall deliver to Decoma II an assignment assigning the
32.33% interest in Decoma Venture.
(c) Each of the parties to this Agreement hereby agrees that there are
no conditions to the Closing of the transactions contemplated hereby.
SECTION 3 NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed to have
been given if sent by registered or certified mail, first class postage
prepaid, return receipt requested, to the address of such parties set forth
below or such other future address as may be specified by any party by notice
to all of the other parties. Such communications may also be given by personal
delivery, by facsimile or by regular mail, but shall be effective only if and
when actually received.
If to Decoma II, at:
Decoma Investment, Inc. II
c/o Huizenga Holdings, Inc.
200 South Andrews Avenue, Sixth Floor
Fort Lauderdale, Florida 33301
Fax: (954) 637-5080
<PAGE> 2
If to Decoma III, at:
Decoma Investment, Inc. III
c/o Huizenga Holdings, Inc.
200 South Andrews Avenue, Sixth Floor
Fort Lauderdale, Florida 33301
Fax: (954) 627-5080
SECTION 5 AMENDMENT. This Agreement may not be modified, amended,
altered or supplemented except upon execution and delivery of a written
agreement executed by the parties hereto.
SECTION 6 MISCELLANEOUS.
(a) The provisions hereof shall be binding upon and inure to the
benefit of the parties and their respective heirs, personal representatives,
successors and permitted assigns.
(b) This Agreement may not be assigned without the prior written
consent of the parties hereto.
(c) This Agreement and the additional documents referenced herein
merge all prior negotiations and agreements between the parties relating to the
subject matter hereof and constitute the entire agreement between the parties
relating to such subject matter. No prior or contemporaneous agreements,
except as specified herein, written or oral, relating to such subject matter
shall be binding.
(d) Each party hereto specifically covenants and agrees that it
will execute such other and further instruments and documents as are or may
become necessary or convenient to effectuate and carry out the provisions of
this Agreement.
(e) This Agreement may be executed simultaneously in multiple
counterparts, all of which together shall constitute one and the same
instrument.
(f) This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
*******
2
<PAGE> 3
IN WITNESS WHEREOF, the undersigned have executed and delivered this
instrument as of the date first above written.
DECOMA INVESTMENT, INC. II
By: /s/ Richard C. Rochon
-----------------------------------
Name: Richard C. Rochon
Title: President
DECOMA INVESTMENT, INC. III
By: /s/ Richard C. Rochon
-----------------------------------
Name: Richard C. Rochon
Title: President
3
<PAGE> 1
Exhibit 2.3
PARTNERSHIP EXCHANGE AGREEMENT
This Partnership Exchange Agreement (this "Agreement") is entered into
this 25th day of October, 1996 by and between Florida Panthers Hockey Club,
Ltd., a Florida limited partnership (the "Partnership"), and Mr. H. Wayne
Huizenga ("Huizenga").
W I T N E S S E T H:
WHEREAS, Huizenga is the sole shareholder of all of the outstanding
capital stock of each of Decoma Investment, Inc. I, a Texas corporation f/k/a
BIL Development, Inc. ("Decoma I"), and Decoma Investment, Inc. II, a Texas
corporation f/k/a Linbeck Miami Corporation ("Decoma II");
WHEREAS, Huizenga, through his ownership of all the outstanding
capital stock of each of Decoma I and Decoma II, owns approximately 78% of the
partnership interests in Decoma Miami Associates, Ltd., the operator of the
Miami Arena;
WHEREAS, Huizenga is the holder of a note (the "Partnership Note") in
the amount of $41,000,000, representing the amount the Partnership borrowed
from Huizenga plus interest;
WHEREAS, Florida Panthers Holdings, Inc., a Florida corporation
("Holdings"), has been formed in contemplation of the public offering (the
"Public Offering") of shares of Holdings' Class A common stock, par value $.01
per share (the "Class A Common Stock"), pursuant to an effective Registration
Statement on Form S-1;
WHEREAS, as part of the organization of Holdings and in connection
with the Public Offering, Huizenga desires to exchange the Partnership Note and
all the outstanding capital stock (the "Decoma Capital Stock") of each of
Decoma I and Decoma II (collectively valued at $8,100,000) for interest in the
Partnership; and
WHEREAS, upon consummation of the transactions contemplated by this
Agreement, the Partnership will own all the outstanding Decoma Capital Stock.
NOW, THEREFORE, in consideration of the mutual covenants, conditions
and agreements set forth herein, the parties hereto, intending to be legally
bound, hereby agree as follows:
SECTION 1 AGREEMENT TO EXCHANGE. Huizenga hereby agrees to
exchange the Partnership Note and the Decoma Capital Stock for interests in
the Partnership equal to $49,100,000. This Agreement shall be effective the
date hereof.
SECTION 2 CLOSING.
(a) The Closing (the "Closing") of the transactions
contemplated hereby shall take place prior to the closing of the Public
Offering.
(b) Each of the parties to this Agreement hereby agrees
that there are no conditions to the Closing of the transactions contemplated
hereby.
<PAGE> 2
SECTION 3 NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed to have
been given if sent by registered or certified mail, first class postage
prepaid, return receipt requested, to the address of such parties set forth
below or such other future address as may be specified by any party by notice
to all of the other parties. Such communications may also be given by personal
delivery, by facsimile or by regular mail, but shall be effective only if and
when actually received.
If to the Partnership, at:
Florida Panthers Hockey Club, Ltd.
100 N.E. Third Avenue, Second Floor
Fort Lauderdale, Florida 33301
Fax: (954) 768-1920
If to Huizenga, at:
200 South Andrews Avenue, Sixth Floor
Fort Lauderdale, Florida 33301
Fax: (954) 627-5080
SECTION 4 AMENDMENT. This Agreement may not be modified,
amended, altered or supplemented except upon execution and delivery of a
written agreement executed by the parties hereto.
SECTION 5 MISCELLANEOUS.
(a) The provisions hereof shall be binding upon and inure
to the benefit of the parties and their respective heirs, personal
representatives, successors and permitted assigns.
(b) This Agreement may not be assigned without the prior
written consent of the parties hereto.
(c) This Agreement and the additional documents
referenced herein merge all prior negotiations and agreements between the
parties relating to the subject matter hereof and constitute the entire
agreement between the parties relating to such subject matter. No prior or
contemporaneous agreements, except as specified herein, written or oral,
relating to such subject matter shall be binding.
(d) Each party hereto specifically covenants and agrees
that it will execute such other and further instruments and documents as are or
may become necessary or convenient to effectuate and carry out the provisions
of this Agreement.
(e) This Agreement may be executed simultaneously in
multiple counterparts, all of which together shall constitute one and the same
instrument.
(f) This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
2
<PAGE> 3
IN WITNESS WHEREOF, the undersigned have executed and delivered this
instrument as of the date first above written.
FLORIDA PANTHERS HOCKEY CLUB, LTD., a Florida
limited partnership
By: FLORIDA PANTHERS HOCKEY CLUB, INC., the
General Partner
By: /s/ Steven M. Dauria
-------------------------------
Name: Steven M. Dauria
Title: Vice President
H. WAYNE HUIZENGA
/s/ H. Wayne Huizenga
---------------------------------------------
3
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the use of
our reports (and to all references to our firm) included in or made a part of
this registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
November 4, 1996.
