<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 22, 1997
REGISTRATION STATEMENT NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
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>
<C> <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)
RICHARD L. HANDLEY
SENIOR VICE PRESIDENT
AND GENERAL COUNSEL
100 NORTHEAST THIRD AVENUE, SECOND FLOOR FLORIDA PANTHERS HOLDINGS, INC.
FORT LAUDERDALE, FLORIDA 33301 100 NORTHEAST THIRD AVENUE, SECOND FLOOR
(954) 768-1900 FORT LAUDERDALE, FLORIDA 33301
(Address, Including Zip Code, and Telephone Number, (954) 768-1900
Including (Name, Address, Including Zip Code, and Telephone
Area Code, of Registrant's Principal Executive Offices) Number, Including Area Code, of Agent For Service)
</TABLE>
------------------------
Copies to:
<TABLE>
<C> <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. [ ]
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================================================
PROPOSED PROPOSED
TITLE OF EACH CLASS AMOUNT MAXIMUM MAXIMUM AMOUNT OF
OF SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED(1) PER UNIT(2) PRICE(2) FEE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common Stock, par value $.01 per share... 7,239,836 $21.50 $155,656,474 $5,864.00(3)
=================================================================================================================================
</TABLE>
(1) The Company has granted the several Underwriters an option, exercisable
within 30 days hereof, to purchase up to an aggregate of 900,000 additional
shares of Class A Common Stock on the same terms as set forth above solely
to cover overallotments, if any.
(2) Calculated on the basis of the average of the high and low sales prices of
the Class A Common Stock on the New York Stock Exchange on July 15, 1997,
pursuant to Rule 457(c) solely for the purpose of determining the amount of
the registration fee.
(3) Includes 6,000,000 shares which were previously registered on a Registration
Statement on Form S-1 (333-30925) filed July 9, 1997, 300,000 shares which
were previously registered on a Registration Statement on Form S-1
(333-23133) filed March 11, 1997 and 39,836 shares which were previously
registered on a Registration Statement on Form S-4 (333-28951) filed June
12, 1997, which are collectively being carried forward and included in this
Registration Statement pursuant to Rule 429 under the Securities Act.
Therefore, the registration fee has been calculated based on the
registration of the remaining 900,000 shares, which consists of shares
issuable pursuant to the Underwriters' over-allotment option.
---------------------
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, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE 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 LAW OF
ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JULY 22, 1997
PROSPECTUS
, 1997
6,339,836 SHARES
FLORIDA PANTHERS HOLDINGS, INC.
'[LOGO] CLASS A COMMON STOCK
Of the 6,339,836 shares of Class A Common Stock offered hereby 6,000,000
are being sold by Florida Panthers Holdings, Inc. and 339,836 shares are being
offered for the account of certain sellers identified herein (the "Selling
Stockholders"). See "Selling Stockholders." The Company will not receive any
proceeds from the sale of shares by the Selling Stockholders. The Class A Common
Stock is listed on the New York Stock Exchange under the symbol "PAW." On July
18, 1997, the last reported sale price of the Class A Common Stock as reported
by the New York Stock Exchange was $21 3/4 per share. See "Price Range of Class
A Common Stock."
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 H.
Wayne Huizenga, the Company's principal shareholder and 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 this
Offering, 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 NHL
requirements and restrictions with respect to ownership. The NHL has mandated
that, unless otherwise permitted by the NHL, Mr. Huizenga is required to
maintain voting control of the Company at all times. THE SHARES OF CLASS B
COMMON STOCK WERE ISSUED TO MR. HUIZENGA TO SATISFY THE CONTROL REQUIREMENTS OF
THE NHL. See "The National Hockey League -- Restriction on Ownership,"
"-- Control Requirement" and "Description of Capital Stock."
SEE "RISK FACTORS" BEGINNING ON PAGE 6 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 NOR HAS THE 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.............................. $ $ $
Total(3)............................... $ $ $
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Company has agreed to indemnify the Underwriters 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 $ .
(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 900,000
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 the Public, Underwriting Discounts and
Commissions and Proceeds to the Company will be $ , $ and
$ , respectively. See "Underwriting."
The shares of Class A Common Stock are being offered hereby by the
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 , 1997.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
ALLEN & COMPANY
INCORPORATED
RAYMOND JAMES & ASSOCIATES, INC.
<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.
------------------------------------------------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES
OFFERED HEREBY, INCLUDING OVER-ALLOTMENT, STABILIZING TRANSACTIONS, SYNDICATE
SHORT COVERING TRANSACTIONS AND PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS (AND SELLING GROUP
MEMBERS) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE CLASS A COMMON
STOCK ON NASDAQ IN ACCORDANCE WITH RULE 103 OF REGULATION M. SEE "UNDERWRITING."
<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") currently conducts
substantially all of its business through its subsidiaries, which include
Panthers BRHC Limited ("Panthers BRHC"), 2301 SE 17th St. Ltd. ("2301 Ltd.") and
Rahn Bahia, Ltd. ("Rahn Ltd."), each a limited partnership formed for the
purpose of owning and operating the Boca Raton Resort and Club ("Boca Resort"),
the Hyatt Regency Pier 66 Hotel ("Pier 66") and the Radisson Bahia Mar Resort
and Yachting Center ("Bahia Mar"), respectively, as well as the Florida Panthers
Hockey Club, Ltd. ("Panthers Ltd."), a limited partnership formed for the
purpose of owning and operating the Florida Panthers (the "Panthers"), a
professional hockey team of the National Hockey League (the "NHL"), Arena
Development Company, Ltd. ("Arena Development"), a limited partnership formed
for the purpose of developing a new multi-purpose sports and entertainment
center (the "Broward County Civic Arena" or the "Facility") in Broward County,
Florida, Arena Operating Company ("Arena Operator"), a limited partnership
formed for the purposes of managing and operating the Broward County Civic
Arena, and Florida Panthers Ice Ventures, Inc. ("FPIVI"), a corporation formed
for the purpose of developing ice rink facilities (the "Ice Rink Business"). In
addition, the Company owns approximately 78% of the partnership interests in
Decoma Miami Associates, Ltd. ("Decoma"), a Florida limited partnership, which
operates the Miami Arena in which the Panthers currently play. Unless the
context otherwise requires, all references herein to the Company shall mean
Florida Panthers Holdings, Inc. and its subsidiaries collectively.
THE COMPANY
The Company currently operates in two business segments: (i) leisure and
recreation (the "Leisure and Recreation Business") and (ii) sports and
entertainment (the "Sports and Entertainment Business"). The Leisure and
Recreation Business currently consists of the Company's resort property
operations at Boca Resort, Pier 66 and Bahia Mar (the "Resort Facilities"). The
Sports and Entertainment Business currently consists of the Company's hockey
operations, arena development and management operations and ice skating rink
operations.
LEISURE AND RECREATION BUSINESS
The Company currently owns three resort properties in South Florida, all of
which have been acquired since February 1997. The Company believes that
attractive opportunities exist to acquire other luxury resorts.
BOCA RESORT
Boca Resort is a destination luxury resort and private club encompassing
298 acres of land fronting on both the Atlantic Ocean and Intracoastal Waterway
in Boca Raton, Florida and consisting of, among other things, 963 luxury guest
rooms, a 70,000 square foot convention center, a separate 130,000 square foot
convention center currently under construction, a 25 slip marina, two 18 hole
championship golf courses, 31 tennis courts, five swimming pools, an indoor
basketball court, two indoor racquetball courts and a half mile of private beach
with various water sports facilities. Other amenities of Boca Resort include 15
food and beverage sites, ranging from five star cuisine to beachside grills, and
a new fitness center. Boca Resort has been awarded the Readers' Award for "Top
25 Hotels in North America" by Travel & Leisure magazine.
1
<PAGE> 5
PIER 66
Pier 66 is a Fort Lauderdale Intracoastal Waterway luxury resort and marina
encompassing 23 acres and consisting of 380 luxury guest rooms, a 142 slip
marina, three swimming pools, 22,000 square feet of meeting space and six
restaurants and lounges. It has received the Mobil Travel Guide's Four Star
Award and AAA's Four Diamond Award.
BAHIA MAR
Bahia Mar is a resort and marina complex encompassing 40 acres and
consisting of 297 rooms, a 350 slip marina, four tennis courts, 20,000 square
feet of flexible meeting space and 23,000 square feet of retail space. Bahia Mar
is situated on oceanfront property in South Florida and has received the Mobile
Travel Guide's Three Star Award and AAA's Three Diamond Award, as well as the
1995 Radisson President's Award and a City of Fort Lauderdale Community
Appearance Award. The Bahia Mar marina is host to the International Boat Show,
an annual six day boating and marine event.
SPORTS AND ENTERTAINMENT BUSINESS
HOCKEY OPERATIONS
The Panthers commenced play in the NHL on October 4, 1993 and, in their
third season, reached the Stanley Cup Finals. The Company's hockey 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
substantial 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 contracts with broadcast organizations and sponsors. The Company
intends to capitalize on the increasing popularity of hockey by continuing to
advertise and market the Panthers, as well as continuing to enhance the service
and entertainment provided at games.
ARENA DEVELOPMENT AND MANAGEMENT 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 -- Sports and Entertainment
Business -- Development of the Broward County Civic Arena" and
"Business -- Sports and Entertainment 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 which is the
primary source of revenue, in determining net operating income. Net operating
income is the difference between Facility operating revenue and Facility
operating expense. Under the License Agreement, 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 all
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 -- Sports and Entertainment
Business -- Arena Development and Operations."
2
<PAGE> 6
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 -- Sports and
Entertainment Business -- Litigation Relating to Miami Arena."
ICE SKATING RINK OPERATIONS
The Company also owns and operates a twin-pad ice rink facility located in
Coral Springs, Florida ("Incredible Ice"). In addition, the Company operates an
ice skating rink facility in Pompano Beach, Florida ("Gold Coast") pursuant to a
lease. Incredible Ice and Gold Coast are open to the general public and derive
revenues from, among other things, (i) fees charged to the public for use of the
facilities for various hockey and skating programs and open skating sessions,
(ii) food and beverage sales and (iii) retail sales.
RECENT DEVELOPMENTS
On July 8, 1997, the Company entered into a merger agreement (the "Merger
Agreement") with Gary V. Chensoff and ResortHill, Inc., an Illinois corporation.
Pursuant to the Merger Agreement, the Company will acquire interests
constituting approximately 68% of The Registry Hotel at Pelican Bay (the
"Registry Hotel"), in exchange for approximately $75.0 million in cash, together
with approximately 930,000 shares of the Company's Class A common stock, par
value $.01 per share (the "Class A Common Stock") (the "Registry Acquisition").
The Registry Hotel is a well-known luxury resort hotel located on the Gulf of
Mexico in Naples, Florida within a 90-minute drive from the east coast of South
Florida. The Registry Hotel includes 474 guest rooms, a conference center,
recreational areas, restaurant and retail outlets, 15 tennis courts and a nature
reserve boardwalk, as well as watersports and beach amenities along the Gulf of
Mexico. The Naples market is a key vacation and conference group destination.
The consummation of the transaction contemplated by the Merger Agreement is
subject to customary conditions.
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.
3
<PAGE> 7
THE OFFERING
<TABLE>
<S> <C>
Class A Common Stock Offered by
The Company............................. 6,000,000 shares
The Selling Stockholders................ 339,836 shares
Total................................. 6,339,836 shares
Common Stock to be Outstanding after the Offering
Class A Common Stock(1)................. 33,943,093 shares
Class B Common Stock(2)................. 255,000 shares
Total................................. 34,198,093 shares
____________
Use of Proceeds.............................. The Company will use the net proceeds from
this Offering to repay certain outstanding
indebtedness, for possible future
acquisitions and for working capital and
general corporate purposes. See "Use of
Proceeds."
New York Stock Exchange Symbol............... PAW
</TABLE>
- ------------------------------
(1) Includes 4,242,586 shares of Class A Common Stock reserved for issuance upon
exercise of exchange rights which were issued in connection with the
acquisition of Boca Resort. Does not include 869,810 shares of Class A
Common Stock reserved for issuance upon the exercise of warrants to
purchase shares of Class A Common Stock at a purchase price of $29.01 per
share, which were issued in connection with the acquisition of Boca Resort,
or 2,600,000 shares of Class A Common Stock reserved for issuance under the
Company's stock option plan (the "Stock Option Plan"), of which 1,957,792
shares are subject to outstanding options with exercise prices ranging from
$10 per share to $26 5/8 per share. The exercise price of each of these
options is the fair market value of the Class A Common Stock on the date of
grant. See "Management -- Stock Option Plan."
(2) All the outstanding shares of Class B common stock, par value $.01 per share
(the "Class B Common Stock"), are currently owned by Mr. Huizenga.
4
<PAGE> 8
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,
the unaudited pro forma financial statements and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" contained elsewhere
in this Prospectus. The summary financial data as of March 31, 1997 and for the
nine months ended March 31, 1997 and 1996 are derived from unaudited interim
financial statements contained elsewhere herein. Operating results for the nine
months ended March 31, 1997 are not necessarily indicative of results that may
be expected for the year ending June 30, 1997.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31, FISCAL YEARS ENDED JUNE 30,
----------------------------------- ------------------------------------------------
1997 1996
----------------------- 1996 ------------------------ 1995 1994
ACTUAL PRO FORMA(F) ACTUAL PRO FORMA(F)
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Revenue:
Sports and Entertainment
Tickets......................... $18,944 $ 18,944 $ 15,379 $ 23,226 $ 23,226 $ 9,559 $ 14,784
Other........................... 13,241 13,597 8,645 10,861 10,861 8,187 6,898
Leisure and Recreation
Rooms........................... 2,535 51,991 -- -- 65,331 -- --
Food and beverage............... 1,209 34,929 -- -- 44,153 -- --
Other........................... 1,208 37,433 -- -- 42,971 -- --
------- -------- -------- -------- -------- -------- --------
Total revenue................... 37,137 156,894 24,024 34,087 186,542 17,746 21,682
Operating expenses:
Cost of services.................. 31,986 86,883 28,372 35,958 105,605 17,210 20,189
Selling, general and
administrative.................. 7,243 42,994 5,055 8,371 58,861 5,569 5,512
Amortization and depreciation..... 3,586 13,626 5,411 9,815 23,107 6,266 6,444
------- -------- -------- -------- -------- -------- --------
Total operating expenses........ 42,815 143,503 38,838 54,144 187,573 29,045 32,145
------- -------- -------- -------- -------- -------- --------
Net operating income (loss)........ (5,678) 13,391 (14,814) (20,057) (1,031) (11,299) (10,463)
Interest and other expense, net.... (1,844) (6,600) (3,538) (5,082) (8,800) (4,087) (2,463)
------- -------- -------- -------- -------- -------- --------
Net income (loss).................. $(7,522) $ 6,791 $(18,352) $(25,139) $ (9,831) $(15,386) $(12,926)
======= ======== ======== ======== ======== ======== ========
Pro Forma Data:
Net income (loss) per share........ $ (0.72)(b) $ 0.22(d) $ (3.48)(a) $ (4.76)(a) $ (0.34)(c) $ (2.96)(a) $ (2.93)(a)
Weighted average shares
outstanding....................... 10,498(b) 30,324(d) 5,276(a) 5,276(a) 28,938(c) 5,203(a) 4,405(a)
<CAPTION>
INCEPTION
(DECEMBER 2, 1992)
THROUGH
JUNE 30, 1993
<S> <C>
Revenue:
Sports and Entertainment
Tickets......................... --
Other........................... --
Leisure and Recreation
Rooms........................... --
Food and beverage............... --
Other........................... --
------
Total revenue................... --
Operating expenses:
Cost of services.................. --
Selling, general and
administrative.................. 768
Amortization and depreciation..... 2
------
Total operating expenses........ 770
------
Net operating income (loss)........ (770)
Interest and other expense, net.... (167)
------
Net income (loss).................. $ (937)
======
Pro Forma Data:
Net income (loss) per share........ $ (0.21)(a)
Weighted average shares
outstanding....................... 4,405(a)
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1997
------------------------
ACTUAL PRO FORMA(G)
<S> <C> <C>
Balance Sheet Data:
Total current assets........................................ $ 87,405 $127,413
Total current liabilities................................... 34,685 58,374
Total assets................................................ 262,071 655,200
Non-current obligations..................................... 27,511 170,071
Shareholders' equity........................................ 199,875 426,755
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31, FISCAL YEARS ENDED JUNE 30,
------------------------------------ -------------------------------------------------
1997 1996
----------------------- 1996 ----------------------- 1995 1994
PRO PRO
ACTUAL FORMA ACTUAL FORMA
<S> <C> <C> <C> <C> <C> <C> <C>
Supplemental Cash Flow Data(e)..... $ (2,092) $ 32,425 $ (9,403) $(10,242) $ 26,152 $ (5,033) $ (4,019)
<CAPTION>
INCEPTION
(DECEMBER 2, 1992)
THROUGH
JUNE 30, 1993
<S> <C>
Supplemental Cash Flow Data(e)..... $ (768)
</TABLE>
- ---------------
(a) Net loss per share and weighted average shares outstanding are determined
based on the 5,275,678 shares issued in connection with the reorganization
of the Company consummated on November 18, 1996 (the "Reorganization") as
follows:
(i) The 4,404,710 shares issued in exchange for the partnership interests of
the Panthers, as if they had been outstanding for the entire period
presented.
(ii) The 870,968 shares issued in exchange for the partnership interests of
Decoma, as if they had been outstanding since August 6, 1994, the date
of Decoma's acquisition by Mr. Huizenga.
(b) Net loss per share and weighted average shares outstanding are determined
based on the (i) 5,275,678 shares issued in connection with the
Reorganization as if they had been outstanding for the entire period
presented, (ii) 7,300,000 shares issued in connection with the Company's
initial public offering of 2,700,000 shares of Class A Common Stock and
concurrent offering of 4,600,000 shares of Class A Common Stock (the "Prior
Offerings") for the period for which they were actually outstanding, (iii)
2,460,000 shares issued in the Company's private placement which closed on
January 30, 1997 (the "Private Placement") for the period for which they
were actually outstanding, (iv) 212,766 shares issued in the acquisition of
Incredible Ice for the period for which they were actually outstanding and
(v) 8,400,000 shares issued in connection with the acquisition of Pier 66
and Bahia Mar (the "Fort Lauderdale Resort Facilities Acquisition")
(4,450,000 shares for 2301 Ltd. and 3,950,000 shares for Rahn Ltd.) for the
period for which they were actually outstanding.
(c) Net loss per share and weighted average shares outstanding are determined
based on the (i) 5,275,678 shares issued in connection with the
Reorganization, (ii) 4,838,710 shares (of the 7,300,000 shares issued in the
Prior Offerings) issued to repay the Company's outstanding indebtedness,
(iii) 8,400,000 shares issued in connection with the Fort Lauderdale Resort
Facilities Acquisition (4,450,000 shares for 2301 Ltd. and 3,950,000 shares
for Rahn Ltd.), (iv) 212,766 shares issued in the acquisition of Incredible
Ice, (v) 4,514,889 shares issued or issuable in connection with the
acquisition of Boca Resort, (vi) 1,994,124 shares (of the 2,460,000 issued
in the Private Placement) used to repay outstanding indebtedness and (vii)
3,700,753 shares (of the 6,000,000 issued in this Offering) used to repay a
portion of outstanding indebtedness assumed in the acquisition of the Resort
Facilities, all as if they had been outstanding for the entire period
presented.
(d) Net income (loss) per share and weighted average shares outstanding are
determined based on the (i) 5,275,678 shares issued in connection with the
Reorganization as if they had been outstanding for the entire period
presented, (ii) 4,838,710 shares (of the 7,300,000 shares issued in the
Prior Offerings) issued to repay the Company's outstanding indebtedness as
if they had been outstanding for the period prior to the Prior Offerings,
(iii) 7,300,000 shares issued in connection with the Prior Offerings for the
period for which they were actually outstanding, (iv) 8,400,000 shares
issued in connection with the Fort Lauderdale Resort Facilities Acquisition
(4,450,000 shares for 2301 Ltd. and 3,950,000 shares for Rahn Ltd.) as if
they had been outstanding for the entire period presented, (v) 212,766
shares issued in the acquisition of Incredible Ice as if they had been
outstanding for the entire period presented, (vi) 2,460,000 shares issued in
the Private Placement for the period for which they were actually
outstanding, (vii) 4,514,889 shares issued or issuable in connection with
the acquisition of Boca Resort as if they had been outstanding for the
entire period presented, (viii) 1,994,124 shares (of the 2,460,000 issued in
the Private Placement) used to repay outstanding indebtedness to be assumed
in connection with the acquisition of Boca Resort, as if they had been
outstanding for the period prior to the Private Placement and (ix) 3,700,753
shares (of the 6,000,000 issued in this Offering) used to repay a portion of
the outstanding indebtedness assumed in the acquisition of the Resort
Facilities, as if they had been outstanding for the entire period presented.
(e) Represents the difference between total revenue and total operating expenses
(exclusive of amortization and depreciation) plus Boca Resort's Premier Club
(the "Premier Club") membership deposits for the pro forma periods. When
adding the positive cash flows pertaining to the Premier Club membership
deposits to Boca Resort's earnings before interest, depreciation,
amortization and taxes, an informative supplemental measurement of operating
results has been provided. This supplemental cash flow data is not
determined in accordance with generally accepted accounting principles
("GAAP") nor is it intended as an alternative to GAAP operating income, net
income or cash flows from operations, or as a source of liquidity.
(f) Represents the pro forma results of operations of the Company after giving
effect to the (i) Reorganization, (ii) Prior Offerings, (iii) Fort
Lauderdale Resort Facilities Acquisition, (iv) Private Placement, (v)
acquisition of Incredible Ice, (vi) acquisition of Boca Resort as if each
event had occurred as of the beginning of the period presented and (vii)
issuance of 3,700,753 shares (of the 6,000,000 issued in this Offering) used
to repay a portion of the outstanding indebtedness assumed in the
acquisition of the Resort Facilities, as if they had been outstanding for
the entire period presented.
(g) Represents pro forma balance sheet data for the Company after giving effect
to the acquisition of Boca Resort and this Offering and the application of
the net proceeds therefrom as if such events had occurred on March 31, 1997.
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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 $7.5 million, $25.1 million, $15.4 million, $12.9
million and $937,000 for the nine months ended March 31, 1997, the years ended
June 30, 1996, 1995 and 1994 and the seven months ended June 30, 1993,
respectively. 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 Company's business may require substantial capital infusions on a
continuing basis to finance operations and expansion. The Company's additional
needs for capital could include cash needed for potential acquisitions,
including acquisitions of additional luxury resorts, as well as capital to be
used in connection with its current businesses and operations. The Company
intends to use its existing capital and cash flow from operations, as well as a
portion of the net proceeds from this Offering, to meet its capital needs.
Additional capital needs may require additional borrowings or the sale of debt
or equity securities, or some combination thereof. 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 materially adversely
affected. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources."
SUBSTANTIAL LEVERAGE
In connection with the Company's acquisition of the Resort Facilities, the
Company assumed substantial indebtedness. Although such indebtedness will be
partially repaid with a portion of the net proceeds from this Offering, the
ability of the Company to repay the remaining indebtedness will depend upon
future operating performance, including that of the Resort Facilities,
prevailing economic conditions, levels of interest rates and financial, business
and other factors, many of which are beyond the Company's control.
The Company believes that it will have sufficient resources to pay its
obligations and commitments. However, there can be no assurance that future cash
flows of the Company will be sufficient to meet all such obligations and
commitments. If the Company is unable to generate sufficient cash flows from
operations in the future to meet its obligations and commitments, the Company
could be required to pursue one or more alternatives, such as attempting to
arrange a refinancing or restructuring of its indebtedness, selling material
assets or operations or seeking to obtain additional debt or equity financing.
There can be no assurance that any of these actions could be effected on
satisfactory terms, that they would enable the Company to continue to satisfy
its capital requirements or that they would be permitted by the terms of
applicable debt agreements. In addition, if the Company were to encounter
difficulty in covering its fixed charges, it would have to consider reductions
in its operations and deferrals of planned capital expenditures and any
potential acquisitions.
CHALLENGES OF INTEGRATING THE OPERATIONS OF THE RESORT FACILITIES
The full benefits of the Company's acquisitions of the Resort Facilities
will require the integration of each entity's administrative, finance and
marketing organizations and the implementation of appropriate opera-
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tional, financial and management systems and controls. There can be no assurance
that the Company will be able to integrate the operations of the Resort
Facilities successfully.
RISKS RELATING TO EXPANSION OF BUSINESS; USES OF EXCESS PROCEEDS
The Company may, as part of its growth strategy, consider making additional
acquisitions of certain resort-related, sports-related or other types of
businesses, as well as certain commercial properties, including properties which
may be owned by Mr. Huizenga or his affiliates. The Company may make such
acquisitions with cash 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 Class A Common Stock or Class B Common
Stock (collectively, the "Common Stock") being issued in connection with the
acquisitions, incurrence or assumption of debt, possible goodwill amortization
or additional depreciation on acquired fixed assets, 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 may require consent
of the NHL. There is no assurance that the Company will be able to obtain such
consent from the NHL. See "-- Sports and Entertainment Business -- Restrictions
on the Company and Certain of its Shareholders as a Result of League
Membership."
CONTROL BY H. WAYNE HUIZENGA; VOTING RIGHTS
The Company has two classes of common stock, comprised of the Class A
Common Stock and the Class B Common Stock. The Company has 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 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." The Class A Common Stock and Class B Common Stock generally 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 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"
and "Principal Shareholders."
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 in
connection with this Offering 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.
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, Richard H. Evans,
President and Chief Operating Officer, and 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 -- Directors and Executive Officers." The Company does not carry key
man life insurance on any of its officers.
SHARES OF CLASS A COMMON STOCK ELIGIBLE FOR FUTURE SALE
All of the Company's currently issued and outstanding shares of Class A
Common Stock were either issued in the Prior Offerings or have been registered
for resale (except for 34,760 shares of Class A Common Stock which were issued
in connection with the acquisition of Gold Coast), and thus are freely tradeable
without restriction under the Securities Act, subject to the lockup agreements
described below. The recipients
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of the 8,400,000 shares of Class A Common Stock which were issued in connection
with the Fort Lauderdale Resort Facilities Acquisition, have agreed not to sell
such shares for a period of 180 days from March 4, 1997, the date the Fort
Lauderdale Resort Facilities Acquisition was consummated. In addition, the
Company has registered under the Securities Act (i) the 5,112,396 shares of the
Class A Common Stock which are issuable in connection with the acquisition of
Boca Resort, (ii) 2,600,000 shares of the Class A Common Stock reserved for
issuance under the Stock Option Plan and (iii) 6,000,000 shares of Class A
Common Stock which may be issued in connection with potential future
acquisitions and resales thereof by the recipients. Shares so registered could
be sold in the public market at any time. 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, including those shares which become issuable in connection with the
acquisition of Boca Resort, 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.
POSSIBLE VOLATILITY OF STOCK PRICE
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 has experienced
extreme price fluctuations which have often been unrelated to the operating
performance of affected companies.
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 the new credit facility
which the Company is presently negotiating (the "New Credit Facility"). See
"Dividend Policy" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."
CLASS ACTION LITIGATION
On January 28, 1997, February 3, 1997 and March 14, 1997, purported class
action lawsuits were filed against the Company and certain of its directors and
officers in the United States District Court for the Southern District of
Florida. The suits allege, among other things, that the defendants violated
Section 10(b) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and Rule 10b-5 thereunder, by making untrue statements or omitting to
state material facts, in connection with sales of the Company's Class A Common
Stock by the plaintiff and others in the purported class between November 13,
1996 and December 22, 1996. The suits generally seek, among other things,
certification as a class and an award of damages in an amount to be determined
at trial. The Company has not fully assessed the likely outcome of the class
action litigation, but intends to vigorously defend against these suits. An
unfavorable outcome may have a material adverse effect on the Company's
financial condition or results of operations.
LEISURE AND RECREATION BUSINESS
OPERATING RISKS
The Resort Facilities are subject to all operating risks common to the
resort and hotel industry. These risks include, among other things,
over-building in the resort and hotel industry which adversely affects rates
charged by the Resort Facilities; increases in operating costs due to inflation
and other factors; dependence on tourism and weather conditions; increases in
energy costs and other expenses of travel; and adverse effects of general and
local economic conditions. Any of these factors could have a material adverse
effect on the Company's financial condition or results of operations.
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COMPETITION
The resort and hotel industry is highly competitive. Competitive factors
within the resort and hotel industry include room rates, quality of
accommodations, service levels, convenience of location, reputation, reservation
systems, name recognition and supply and availability of alternative resort and
hotel operations in local markets. Each of the Resort Facilities has a number of
competitors. The number of competitive resort and hotel facilities in each of
the Resort Facilities' respective markets could have a material adverse effect
on the levels of occupancy and average room rates of each of the Resort
Facilities. Further, there can be no assurance that new or existing competitors
will not significantly reduce their rates or offer greater convenience, services
or amenities or significantly expand, improve or develop facilities in the
markets in which the Resort Facilities compete, thereby adversely affecting the
Company's resort and hotel operations.
CAPITAL EXPENDITURES
The Resort Facilities have an ongoing need for routine renovations and
other capital improvements, including periodic replacement of furniture,
fixtures and equipment. The cost of such capital improvements could have a
material adverse effect on the Company's financial condition or results of
operations. In addition, the Resort Facilities may require non-routine
renovations in the future. Such renovations involve certain risks, including the
possibility of environmental problems, the possibility that the Company will not
have available cash to fund renovations or that financing for renovations will
not be available on favorable terms, uncertainties as to market demand or
deterioration in market demand after commencement of renovation and the
emergence of unanticipated competition from resorts and hotels and alternative
lodging facilities.
ENVIRONMENTAL MATTERS
The Company's operating costs may be affected by the obligation to pay for
the cost of complying with existing environmental laws, ordinances and
regulations, as well as the cost of complying with future legislation. Under
various federal, state and local environmental laws, ordinances and regulations,
a current or previous owner or operator of real property may be liable for the
costs of removal or remediation of hazardous or toxic substances on, under or in
such property. Such laws often impose liability whether or not the owner or
operator knew of, or was responsible for, the presence of such hazardous or
toxic substances. In addition, the presence of contamination from hazardous or
toxic substances, or the failure to properly remediate such contaminated
property, may adversely affect the owner's ability to use or sell such real
property or borrow using such real property as collateral. Persons who arrange
for the disposal or treatment of hazardous or toxic substances also may be
liable for the costs of removal or remediation of such substances at the
disposal or treatment facility, whether or not such facility is or ever was
owned or operated by such person. Certain environmental laws and common law
principles could be used to impose liability for releases of hazardous
materials, including asbestos-containing materials ("ACMs"), into the
environment, and third parties may seek recovery from owners or operators of
real properties for personal injury associated with exposure to released ACMs or
other hazardous materials. Environmental laws also may impose restrictions on
the manner in which property may be used or transferred or in which businesses
may be operated, and these restrictions may require expenditures. In connection
with the ownership of its properties, the Company may be potentially liable for
any such costs. The costs of defending against claims of liability or
remediating contaminated property and the cost of complying with environmental
laws could have a material adverse effect on the Company's financial condition
and results of operations.
PROPERTY TAX AND INSURANCE FLUCTUATIONS
Each of the Resort Facilities is subject to real property taxes. Real
property taxes may increase or decrease as property tax rates change and as the
Resort Facilities are assessed or reassessed by taxing authorities. In addition,
each of the Resort Facilities is covered by property and casualty insurance.
Property and casualty insurance rates may increase depending upon claims
experience, insurance market conditions and the replacement value of the Resort
Facilities. A significant increase in the tax rate, the amount assessed by the
taxing authority or the casualty insurance rate could have a material adverse
effect on the Company's financial condition or results of operations.
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SEASONALITY OF THE RESORT BUSINESS; ADVERSE WEATHER
The business of the Resort Facilities is generally seasonal. The Resort
Facilities, each of which is located in South Florida, have historically
experienced higher revenues and operating profits in the first and fourth
quarters of each calendar year due to increased rates of occupancy and room
rental rates during the winter months. This seasonality also results in higher
operating costs during these quarters. In addition, South Florida is subject to
tropical weather and storms which, if severe (as in the case of a hurricane),
can interrupt the normal operations of the Resort Facilities and affect tourism.
LOSSES IN EXCESS OF INSURANCE COVERAGE
The Company maintains comprehensive insurance on the Resort Facilities,
including liability, fire and extended coverage, in the types and amounts
customarily obtained by an owner and operator in the resort and hotel industry.
Nevertheless, there are certain types of losses, generally of a catastrophic
nature, such as hurricanes, earthquakes and floods, that may be uninsurable or
not economically insurable. The Company will use its discretion in determining
amounts, coverage limits and deductibility provisions of insurance, with a view
to obtaining appropriate insurance on the Resort Facilities at a reasonable cost
and on suitable terms. This may result in insurance coverage that, in the event
of a loss, would not be sufficient to pay the full current market value or
current replacement value of the Company's lost investment and the insurance
proceeds received by the Company might not be adequate to restore its economic
position with respect to such Resort Facilities.
SPORTS AND ENTERTAINMENT BUSINESS
HISTORY OF LOSSES; UNCERTAINTY OF FUTURE RESULTS.
The Panthers currently play in the Miami Arena, which has a seating
capacity of 14,703, the smallest arena in the NHL. Under the terms of the
Panthers' current agreement, 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 -- Sports and Entertainment 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 Panthers could incur additional operating losses. There can
be no assurance that the Panthers 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."
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 currently 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
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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
three seasons. The aggregate Panthers players' salaries nearly doubled from
approximately $10.2 million during the 1993-94 season to approximately $21.1
million during the 1996-97 season. In comparison, average aggregate players'
salaries for NHL teams have increased 80% from approximately $14.3 million
during the 1993-94 season to approximately $25.7 million during the 1996-97
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 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.
LITIGATION RELATING TO MIAMI ARENA
On July 23, 1996, the Miami Sports and Exhibition Authority ("MSEA" or the
"Plaintiff") filed a lawsuit against, among others, Mr. Huizenga, Richard C.
Rochon, the Vice Chairman of the Board, the Panthers, Decoma, Arena Development
and Arena Operator (collectively, the "Defendants") in the United States
District Court for 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 "Dade 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.
OCCUPANCY OF MIAMI ARENA
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 Dade Arena which will be
utilized by the Miami Heat. In the event that the Dade 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
nine months ended March 31, 1997 and the year ended June 30, 1996 directly
attributable to the Panthers were approximately $310,000 and $240,000,
respectively, and Decoma revenues for the nine months ended March 31, 1997 and
the year ended June 30, 1996 directly attributable to the Miami Heat were
$500,000 and $380,000, 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 Dade Arena and the Broward County Civic Arena. In the event the
Miami Arena is unable to attract various sports and non-sports events, the
financial condition or 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.
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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 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.
SEASONALITY OF HOCKEY OPERATIONS
The NHL season begins during the fall and ends in late spring. As a result,
the Company realizes the vast majority of its hockey revenue and incurs the vast
majority of its hockey expenses during that period.
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. In June 1997, the NHL Collective Bargaining Agreement was extended through
September 2004. 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 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
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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.
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 this Offering, 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
The NHL Board of Governors has approved an expansion plan that is expected
to add four additional franchises into the league over the next four years as
follows:
<TABLE>
<CAPTION>
MARKET FIRST SEASON
- ------ ------------
<S> <C>
Nashville................................................... 1998-99
Atlanta..................................................... 1999-00
Columbus and Minneapolis-St. Paul........................... 2000-01
</TABLE>
13
<PAGE> 17
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. The expansion process will permit expansion teams to select, in an
expansion draft, certain unprotected players from the rosters of 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 the sale of NHL merchandise, the Company
may receive less revenue from the NHL as a result of the league expansion.
UNCERTAINTIES REGARDING RENEWAL OF MEDIA CONTRACTS
Prior to the commencement of the 1994-95 season, the NHL entered into a
new, seven-year $275.0 million television contract (the "Fox Contract") with Fox
Broadcasting Co. ("Fox") and 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
games in the U.S. Under the Fox Contract, Fox may choose to terminate the
contract after five years. In the event Fox chooses to terminate the contract
after five seasons, Fox is required to pay the NHL the difference between the
amount paid through the date of termination pursuant to the Fox Contract prior
to termination and $155.0 million. In addition, the NHL also renewed its
contract with Molson Breweries of Canada Limited ("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 70% owned by Mr. Huizenga ("SportsChannel
Florida"), for the proposed local broadcast (other than radio broadcast) of the
Panthers' pre-season, regular season and certain post-season games during the
1996-97 hockey season, with an option to extend the SportsChannel Letter of
Intent to cover the 1997-98 hockey season. The Company has exercised its option
under the SportsChannel Letter of Intent for the broadcast of the Panthers'
games during the 1997-98 hockey season. See "Certain Transactions." There can be
no assurance that the Company and SportsChannel Florida will enter into a
definitive agreement.
On October 24, 1996, the Company entered into a letter of intent (the
"Beasley-Reed Letter of Intent") with Beasley-Reed Broadcasting Acquisition
Partnership ("Beasley-Reed") for the proposed local English language radio
broadcast of all pre-season, regular season and post-season games of the
Panthers during the 1996-97, 1997-98, 1998-99, 1999-2000, 2000-01 and 2001-02
hockey seasons. There can be no assurance that the Company and Beasley-Reed will
enter into a definitive agreement.
DEVELOPMENT OF THE BROWARD COUNTY CIVIC ARENA
In June 1996, the Company 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 -- Sports and
Entertainment 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.
14
<PAGE> 18
In addition, on January 9, 1997, a lawsuit was filed by Arena Development,
seeking a determination as to the applicability of Broward County's Prevailing
Wage Ordinance to the construction of the Broward County Civic Arena. The suit
was filed in the Seventeenth Judicial Circuit in and for Broward County,
Florida. The complaint filed alleged that the Prevailing Wage Ordinance did not
apply to the construction of the Facility for two reasons: (i) the Prevailing
Wage Ordinance only applies to construction contracts in excess of $250,000 to
which Broward County is a party and Broward County is not a party to the
construction contract between Arena Development and the general contractor, and
(ii) the Development Agreement contains all the obligations and responsibilities
of both parties and does not include a provision mandating that Arena
Development comply with the Prevailing Wage Ordinance. The Prevailing Wage
Ordinance requires that all contracts to which the ordinance applies contain
such a provision. The lawsuit asked for a declaratory judgment finding that the
Prevailing Wage Ordinance did not apply to the construction of the Facility and
that Arena Development could continue without reference to the ordinance. On
February 21, 1997, the Seventeenth Judicial Circuit Court ruled against the
Company's complaint, finding that the Prevailing Wage Ordinance was applicable.
The Company has appealed the decision rendered by the court. An unfavorable
outcome of this suit may require the Company to incur additional costs of up to
$4.5 million.
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 -- Sports and Entertainment 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.
15
<PAGE> 19
USE OF PROCEEDS
Assuming an offering price of $21 3/4 (the last reported sale price on July
18, 1997 for the Class A Common Stock as reported on the New York Stock
Exchange), the net proceeds to the Company from the sale of the shares of Class
A Common Stock offered hereby are estimated to be approximately $123.5 million
(approximately $142.1 million if the Underwriters' over-allotment option is
exercised in full). The net proceeds of this Offering are expected to be used to
repay $76.1 million of debt assumed in connection with the acquisition of the
Resort Facilities, for possible future acquisitions and for working capital and
general corporate purposes. The $76.1 million of debt, which will be repaid with
a portion of the net proceeds of this Offering, has interest rates ranging from
7.2% to 8.4% and maturity dates ranging from June 1999 to June 2000.
PRICE RANGE OF CLASS A COMMON STOCK
The Class A Common Stock began trading on The Nasdaq National Market on
November 13, 1996 under the symbol "PUCK." On July 11, 1997, the Class A Common
Stock began trading on the New York Stock Exchange. The following table sets
forth, for the quarters indicated, the range of the high and low sale prices per
share for the Class A Common Stock on The Nasdaq National Market and the New
York Stock Exchange.
<TABLE>
<CAPTION>
PRICE RANGE
OF COMMON STOCK
---------------
HIGH LOW
<S> <C> <C>
FISCAL YEAR ENDED JUNE 30, 1997:
Second Quarter (from November 13, 1996)..................... $20 $10
Third Quarter............................................... 321/2 161/4
Fourth Quarter.............................................. 271/4 21
FISCAL YEAR ENDING JUNE 30, 1998:
First Quarter (through July 18, 1997)....................... 247/8 211/8
</TABLE>
On July 18, 1997, the last reported sale price of the Class A Common Stock
was $21 3/4. There were approximately 7,591 record holders of the Class A Common
Stock at July 18, 1997.
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 paying 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."
16
<PAGE> 20
CAPITALIZATION
The following table sets forth at March 31, 1997 (i) the actual
capitalization of the Company, (ii) the pro forma capitalization of the Company
which gives effect to the acquisition of Boca Resort and (iii) the pro forma as
adjusted capitalization of the Company which, in addition to the acquisition of
Boca Resort, gives effect to this Offering, at an assumed offering price of
$21 3/4 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>
MARCH 31, 1997
----------------------------------------
PRO FORMA AS
ACTUAL PRO FORMA ADJUSTED
(IN THOUSANDS)
<S> <C> <C> <C>
Current debt:
Current portion of long-term debt........................ $ 15,235 $ 15,635 $ --
======== ======== ========
Long-term debt............................................. $ 25,951 $170,508 $110,000
Shareholders' equity:
Class A Common Stock, $.01 par value, 100,000,000 shares
authorized; 23,393,444 shares outstanding, actual;
27,943,093 shares outstanding, pro forma; 33,943,093
shares outstanding pro forma, as adjusted............. 234 279 339
Class B Common Stock, $.01 par value, 10,000,000 shares
authorized; 255,000 shares outstanding................ 3 3 3
Contributed capital...................................... 200,124 303,509 426,899
Accumulated deficit...................................... (486) (486) (486)
-------- -------- --------
Total shareholders' equity....................... 199,875 303,305 426,755
-------- -------- --------
Total capitalization............................. $225,826 $473,813 $536,755
======== ======== ========
</TABLE>
17
<PAGE> 21
SELECTED FINANCIAL DATA
The following information has been derived from the financial statements of
the Company and the unaudited pro forma financial statements contained elsewhere
in this Prospectus. The financial statements as of and for the periods ended
June 30, 1996, 1995, 1994 and 1993 have been audited by Arthur Andersen LLP,
independent certified public accountants. The audited financial statements as of
June 30, 1996 and 1995 and for the three years ended June 30, 1996 are included
elsewhere herein. The selected financial data as of March 31, 1997 and for the
nine months ended March 31, 1997 and 1996 are derived from the unaudited interim
financial statements contained elsewhere herein. Operating results for the nine
months ended March 31, 1997 are not necessarily indicative of results that may
be expected for the year ending June 30, 1997. 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."
<TABLE>
<CAPTION>
NINE MONTHS ENDED INCEPTION
MARCH 31, FISCAL YEARS ENDED JUNE 30, (DECEMBER 2, 1992)
------------------- -------------------------------- THROUGH JUNE 30,
1997 1996 1996 1995 1994 1993
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue.......................... $37,137 $ 24,024 $ 34,087 $ 17,746 $ 21,682 $ --
Operating expenses:
Cost of services............... 31,986 28,372 35,958 17,210 20,189 --
Selling, general and
administrative............... 7,243 5,055 8,371 5,569 5,512 768
Amortization and
depreciation................. 3,586 5,411 9,815 6,266 6,444 2
------- -------- -------- -------- -------- ------
Total operating
expenses............... 42,815 38,838 54,144 29,045 32,145 770
------- -------- -------- -------- -------- ------
Net operating loss............... (5,678) (14,814) (20,057) (11,299) (10,463) (770)
Interest and other income........ 1,014 85 122 38 65 --
Interest and other expense....... (2,858) (3,623) (5,204) (4,125) (2,528) (167)
------- -------- -------- -------- -------- ------
Net loss......................... $(7,522) $(18,352) $(25,139) $(15,386) $(12,926) $ (937)
======= ======== ======== ======== ======== ======
PRO FORMA DATA:
Net loss per share............... $ (0.72)(b) $ (3.48)(a) $ (4.76)(a) $ (2.96)(a) $ (2.93)(a) $(0.21)(a)
Weighted average shares
outstanding.................... 10,498(b) 5,276(a) 5,276(a) 5,203(a) 4,405(a) 4,405(a)
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,
MARCH 31, -------------------------------------------
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total current assets................................ $ 87,405 $ 3,756 $ 3,408 $ 2,996 $ 9,117
Total current liabilities........................... 34,685 67,786 50,292 17,712 15,605
Total assets........................................ 262,071 47,760 53,587 49,019 59,669
Non-current obligations............................. 27,511 28,277 25,643 45,169 45,000
Shareholders' equity................................ 199,875 (48,303) (22,348) (13,862) (937)
</TABLE>
- ---------------
(a) Net loss per share and weighted average shares outstanding are determined
based on the 5,275,678 shares issued in connection with the Reorganization
as follows:
(i) The 4,404,710 shares issued in exchange for the partnership interests
of the Panthers, as if they had been outstanding for the entire period
presented.
(ii) The 870,968 shares issued in exchange for the partnership interests in
Decoma, as if they had been outstanding since August 6, 1994, the date
of Decoma's acquisition by Mr. Huizenga.
(b) Net loss per share and weighted average shares outstanding are determined
based on the 5,275,678 shares issued in connection with the Reorganization
as if they had been outstanding for the entire period presented and, (i)
7,300,000 shares issued in connection with the Prior Offerings, (ii)
2,460,000 shares issued in the Private Placement, (iii) 212,766 shares
issued in the acquisition of Incredible Ice and (iv) 8,400,000 shares issued
in the Fort Lauderdale Resort Facilities Acquisition (4,450,000 shares for
Pier 66 and 3,950,000 shares for Bahia Mar), all for the period for which
they were actually outstanding.
18
<PAGE> 22
SELECTED UNAUDITED PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial data for the nine months ended
March 31, 1997 and the year ended June 30, 1996 give effect to the Prior
Offerings, the acquisition of Boca Resort, the Fort Lauderdale Resort Facilities
Acquisition and the acquisition of Incredible Ice (collectively, the
"Acquisitions"), the Private Placement and this Offering, in the aggregate, as
if all such transactions had occurred at the beginning of the periods presented
for results of operations data and as if all such transactions had occurred as
of the balance sheet date for balance sheet data. The selected unaudited pro
forma financial data was derived from, and should be read in conjunction with,
the unaudited pro forma financial statements and the notes thereto appearing
elsewhere in this Prospectus. The unaudited pro forma data is not necessarily
indicative of the combined results of operations or financial position that
would have occurred if the Acquisitions or the Private Placement had occurred at
the beginning of the periods presented, nor are they necessarily indicative of
future operating results.
<TABLE>
<CAPTION>
NINE MONTHS ENDED FISCAL YEAR ENDED
MARCH 31, 1997 JUNE 30, 1996
--------------------- ----------------------
ACTUAL PRO FORMA ACTUAL PRO FORMA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue....................................... $37,137 $156,894 $ 34,087 $186,542
Operating expenses:
Cost of services............................ 31,986 86,883 35,958 105,605
Selling, general and administrative......... 7,243 42,994 8,371 58,861
Amortization and depreciation............... 3,586 13,626 9,815 23,107
------- -------- -------- --------
Total operating expenses............ 42,815 143,503 54,144 187,573
------- -------- -------- --------
Net operating income (loss)................... (5,678) 13,391 (20,057) (1,031)
Interest and other expense, net............... (1,844) (6,600) (5,082) (8,800)
------- -------- -------- --------
Net income (loss)............................. $(7,522) $ 6,791 $(25,139) $ (9,831)
======= ======== ======== ========
PRO FORMA DATA:
Net income (loss) per share................... $ (0.72)(b) $ 0.22(d) $ (4.76)(a) $ (0.34)(c)
Weighted average shares outstanding........... 10,498(b) 30,324(d) 5,276(a) 28,938(c)
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1997
--------------------
ACTUAL PRO FORMA
<S> <C> <C>
BALANCE SHEET DATA:
Total current assets........................................ $ 87,405 $127,413
Total current liabilities................................... 34,685 58,374
Total assets................................................ 262,071 655,200
Non-current obligations..................................... 27,511 170,071
Shareholders' equity........................................ 199,875 426,755
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS FISCAL YEAR
ENDED ENDED
MARCH 31, 1997 JUNE 30, 1996
--------------------- ----------------------
ACTUAL PRO FORMA ACTUAL PRO FORMA
<S> <C> <C> <C> <C>
Supplemental Cash Flow Data(e)................ $(2,092) $ 32,425 $(10,242) $ 26,152
</TABLE>
- ---------------
(a) Net loss per share and weighted average shares outstanding are determined
based on the 5,275,678 shares issued in connection with the Reorganization
as if they had been outstanding for the entire period presented.
(b) Net loss per share and weighted average shares outstanding are determined
based on the 5,275,678 shares issued in connection with the Reorganization
as if they had been outstanding for the entire period presented, and (i)
7,300,000 shares issued in connection with the Prior Offerings, (ii)
2,460,000 shares issued in the Private Placement, (iii) 212,766 shares
issued in the acquisition of Incredible Ice and
19
<PAGE> 23
(iv) 8,400,000 shares issued in the Fort Lauderdale Resort Facilities
Acquisition (4,450,000 shares for Pier 66 and 3,950,000 shares for Bahia
Mar), all for the period which they were outstanding.
(c) Net loss per share and weighted average shares outstanding are determined
based on the (i) 5,275,678 shares issued in connection with the
Reorganization, (ii) 4,838,710 shares (of the 7,300,000 shares issued in the
Prior Offerings) issued to repay the Company's outstanding indebtedness,
(iii) 8,400,000 shares issued in connection with the Fort Lauderdale Resort
Facilities Acquisition (4,450,000 shares for 2301 Ltd. and 3,950,000 shares
for Rahn Ltd.), (iv) 212,766 shares issued in the acquisition of Incredible
Ice, (v) 4,514,889 shares issued or issuable in connection with the
acquisition of Boca Resort, (vi) 1,994,124 shares (of the 2,460,000 issued
in the Private Placement) used to repay outstanding indebtedness, and (vii)
3,700,753 shares (of the 6,000,000 issued in this Offering) used to repay a
portion of the outstanding indebtedness assumed in the acquisition of the
Resort Facilities, all as if they had been outstanding for the entire period
presented.
(d) Net income (loss) per share and weighted average shares outstanding are
determined based on the (i) 5,275,678 shares issued in connection with the
Reorganization as if they had been outstanding for the entire period
presented, (ii) 4,838,710 shares (of the 7,300,000 shares issued in the
Prior Offerings) issued to repay the Company's outstanding indebtedness as
if they had been outstanding for the period prior to the Prior Offerings,
(iii) 7,300,000 shares issued in connection with the Prior Offerings for the
period for which they were actually outstanding, (iv) 8,400,000 shares
issued in connection with the Fort Lauderdale Resort Facilities Acquisition
(4,450,000 shares for 2301 Ltd. and 3,950,000 shares for Rahn Ltd.) as if
they had been outstanding for the entire period presented, (v) 212,766
shares issued in the acquisition of Incredible Ice as if they had been
outstanding for the entire period presented, (vi) 2,460,000 shares issued in
the Private Placement for the period for which they were actually
outstanding, (vii) 4,514,889 shares issued or issuable in connection with
the acquisition of Boca Resort as if they had been outstanding for the
entire period presented, (viii) the 1,994,124 (of the 2,460,000 issued in
the Private Placement) used to repay outstanding indebtedness to be assumed
in connection with the acquisition of Boca Resort, as if they had been
outstanding for the period prior to the Private Placement and (ix) 3,700,753
shares (of the 6,000,000 issued in this Offering) used to repay a portion of
the outstanding indebtedness assumed in the acquisition of the Resort
Facilities as if they had been outstanding for the entire period presented.
(e) Represents the difference between total revenue and total operating expenses
(exclusive of amortization and depreciation), plus Premier Club membership
deposits for the pro forma periods. When adding the positive cash flows
pertaining to Premier Club membership deposits to Boca Resort's earnings
before interest, depreciation, amortization and taxes, an informative
supplemental measurement of operating results has been provided. This
supplemental cash flow data is not determined in accordance with GAAP nor is
it intended as an alternative to GAAP operating income, net income or cash
flows from operations, or as a source of liquidity.
20
<PAGE> 24
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Certain statements and information included herein may constitute
"forward-looking statements" within the meaning of Federal Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. The following discussion should be read in
conjunction with the unaudited condensed consolidated financial statements and
notes thereto included elsewhere herein.
The historical selected financial data included herein include the
financial position and results of operations of Decoma Investment, Inc. I
("Decoma I") and Decoma Investment, Inc. II ("Decoma II"), which Mr. Huizenga
acquired in August of 1994, for all periods presented. As this transaction was
among entities under common control, it has been accounted for on an historical
cost basis in a manner similar to a pooling of interests, and, accordingly, the
Company's historical balance sheets, statements of operations, statements of
shareholders' equity and statements of cash flows have been presented as if the
Company were combined with Decoma I and Decoma II (collectively, the "Decoma
Entities") as of the date Mr. Huizenga acquired the Decoma Entities. Businesses
acquired during the three month period ended March 31, 1997 and accounted for
under the purchase method of accounting are included in the unaudited condensed
consolidated statement of operations for the nine months ended March 31, 1997
from their respective dates of acquisition and are not incorporated in any of
the historical selected financial data for any other prior periods presented.
Businesses acquired subsequent to March 31, 1997 and accounted for under the
purchase method of accounting are not so included.
BUSINESSES ACQUIRED DURING THREE MONTHS ENDED MARCH 31, 1997
On January 31, 1997, the Company acquired certain assets relating to the
business of owning and operating a twin-pad ice rink facility located in Coral
Springs, Florida in exchange for $1.0 million in cash, 212,766 shares of the
Class A Common Stock and the assumption by the Company of a maximum of
approximately $8.1 million in construction-related obligations, of which
approximately $6.7 million was repaid upon consummation of the acquisition. This
acquisition has been accounted for under the purchase method of accounting.
On March 4, 1997, the Company acquired all of the ownership interests,
comprised of capital stock and partnership interests, of each of the entities
which own, directly or indirectly, all of the general and limited partnership
interests in Pier 66 for 4,450,000 shares of Class A Common Stock. This
acquisition has been accounted for under the purchase method of accounting.
On March 4, 1997, the Company acquired all of the ownership interests,
comprised of capital stock and partnership interests, of each of the entities
which own, directly or indirectly, all of the general and limited partnership
interests in Bahia Mar in exchange for 3,950,000 shares of Class A Common Stock.
This acquisition has been accounted for under the purchase method of accounting.
PRIVATE PLACEMENT TRANSACTION
On January 30, 1997, the Company issued and sold 2,460,000 shares of Class
A Common Stock in the Private Placement at a price of $27.75 per share. The
Private Placement resulted in net proceeds to the Company of approximately $65.6
million after deducting placement agent fees.
BUSINESSES ACQUIRED SUBSEQUENT TO MARCH 31, 1997
On June 26, 1997, the Company, through the managing general partner,
limited partners and Panthers BRHC, acquired substantially all of the assets of
Boca Resort in exchange for 272,303 shares of Class A Common Stock, rights to
acquire approximately 4,242,586 shares of Class A Common Stock and warrants to
21
<PAGE> 25
purchase 869,810 shares of Class A Common Stock at a purchase price of $29.01
per share. This acquisition has been accounted for under the purchase method of
accounting.
PANTHERS OVERVIEW
The operations of the Panthers are seasonal. The Panthers receive a
substantial portion of their 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 Panthers did not realize revenue or incur expenses from
hockey operations. The Panthers incurred approximately $770,000 of various
general and administrative start-up costs during such 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 $7.5 million, $25.1
million, $15.4 million and $12.9 million during the nine month period ended
March 31, 1997 and the years ended June 30, 1996, 1995 and 1994, respectively.
Such net losses were primarily a result of the Panthers having entered into an
unfavorable agreement with the Miami Arena which does not provide the Panthers
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 currently the smallest arena in the NHL. These seating limitations have
precluded the Panthers from receiving additional revenue from the sale of
additional tickets. In addition, the Panthers' net losses were abnormally high
due to the amortization of the original franchise cost totaling approximately
$2.7 million, $9.1 million, $5.7 million and $6.2 million for the nine months
ended March 31, 1997 and the years ended June 30, 1996, 1995 and 1994,
respectively. Approximately $25.7 million of the Panthers' original franchise
cost was allocated to player contracts and is being amortized over approximately
six years, of which $21.3 million had been amortized as of March 31, 1997. 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, 1996,
1995, 1994 was approximately $5.2 million, $4.1 million and $2.5 million,
respectively. Such interest expense related to two term loans and advances from
Mr. Huizenga. These term loans were repaid after the consummation of the Prior
Offerings. The cumulative advances provided by Mr. Huizenga were contributed
pursuant to the Reorganization prior to the consummation of the Prior Offerings.
RESULTS OF OPERATIONS
The Company currently operates through two business segments: (i) the
Leisure and Recreation Business and (ii) the Sports and Entertainment Business.
The Leisure and Recreation Business is comprised of the Company's ownership of
Boca Resort, Pier 66 and Bahia Mar while the Sports and Entertainment Business
is comprised of the Company's ownership and operation of the Panthers, Arena
Development, Arena Operator and the Ice Rink Business. In addition, the Company
owns approximately 78% of the partnership interests in Decoma.
22
<PAGE> 26
NINE MONTHS ENDED MARCH 31, 1997 COMPARED TO THE NINE MONTHS ENDED MARCH 31,
1996
The following table sets forth revenue, operating expenses and net
operating income (loss) for each of the Company's business segments for the nine
months ended March 31, 1997 and 1996.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
------------------
1997 1996
------- --------
<S> <C> <C>
Revenue:
Leisure and Recreation.................................... $ 4,952 $ --
Sports and Entertainment.................................. 32,185 24,024
------- --------
37,137 24,024
Operating Expenses:
Leisure and Recreation.................................... 3,122 --
Sports and Entertainment.................................. 39,035 38,838
Corporate................................................. 658 --
------- --------
42,815 38,838
Net Operating Income (Loss):
Leisure and Recreation.................................... 1,830 --
Sports and Entertainment.................................. (6,850) (14,814)
Corporate................................................. (658) --
------- --------
$(5,678) $(14,814)
======= ========
</TABLE>
Revenue. Revenue from the Leisure and Recreation Business, directly
related to the March 4, 1997 acquisition of Pier 66 and Bahia Mar, was
approximately $5.0 million in the nine months ended March 31, 1997, of which
approximately 50% pertained to room revenue. The acquisition of Boca Resort was
consummated on June 26, 1997.
Revenue from the Sports and Entertainment Business increased approximately
34% or $8.2 million for the nine months ended March 31, 1997, primarily as a
result of increased Panthers ticket sales due to all home games being sold out
during the 1996-97 season and increases in revenue from broadcasting and
advertising/promotion contracts.
Cost of Services. Cost of services incurred in the Leisure and Recreation
Business were approximately $1.6 million in the nine months ended March 31, 1997
and were directly related to the acquisition of Pier 66 and Bahia Mar.
Cost of services incurred in the Sports and Entertainment Business
increased approximately 7% or $2.0 million during the nine month period ended
March 31, 1997, and were primarily attributable to higher player salaries and
higher ticketing and arena operation costs associated with increased attendance
at Panthers home games.
Selling, General, and Administrative (SG&A). Total SG&A expenses increased
approximately $2.2 million during the nine months ended March 31, 1997, as
compared to the nine months ended March 31, 1996, primarily as a result of the
additional $1.2 million of SG&A expenses incurred by the newly acquired resort
and marina properties during the period from March 4, 1997 (the date of
acquisition) through March 31, 1997. The Company also incurred approximately
$660,000 of various corporate SG&A expenses considered customary for a public
versus private entity during the nine month period ended March 31, 1997.
Amortization and Depreciation. Amortization and depreciation expenses were
approximately $3.6 million and $5.4 million for the nine month periods ended
March 31, 1997 and 1996, respectively. Most of the decrease related to the
amortization during fiscal 1996 of the contracts of players selected in the 1993
draft to better reflect current value of remaining players contracts. As of
March 31, 1997, the remaining unamortized portion of such players contracts was
approximately $4.4 million which will be completely amortized by May, 1999.
23
<PAGE> 27
Interest and Other Income. Investment interest income earned increased
approximately $900,000 during the nine months ended March 31, 1997 as compared
to the nine months ended March 31, 1996 due to the interest earned on the $65.6
million net proceeds received from the Private Placement on January 30, 1997
(See Footnote 2 within Notes to Unaudited Condensed Consolidated Financial
Statements).
Interest and Other Expense. The Company's interest and other expenses were
approximately $2.9 million and $3.6 million for the nine months ended March 31,
1997 and 1996, respectively. Interest expenses decreased primarily due to the
repayment of approximately $86.0 million of debt in connection with the
Reorganization and from the net proceeds from the Prior Offerings in November of
1996.
YEAR ENDED JUNE 30, 1996 COMPARED TO YEAR ENDED JUNE 30, 1995
Revenue. Revenue increased 92%, or approximately $16.3 million. Most of the
increase was derived from ticket sales which 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
Panthers 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.
Additionally, 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.
Other revenue increases, including advertising, promotions and concessions,
also resulted from the increase in the number of home games played.
Cost of Services. Cost of services increased 109%, or approximately $18.7
million. Approximately 70-75% of cost of services pertains to team operations,
which consists primarily of player salary costs, as well as hockey operating
costs, scouting, and player development costs. Approximately $17.0 million of
the increase was attributable to team operations of which players' salaries were
approximately $11.8 million higher primarily because there were increases in the
total compensation paid to the first and second round draft picks during the
1995-96 season and players were paid only 58% (pro-rated for the shortened
season) of their contracted salaries during the 1994-95 season. Additionally,
ticketing and arena operating costs increased $1.8 million as a result of the
increase in the number of home games played in the 1995-96 season (including the
Stanley Cup playoffs), with arena rent accounting for most of the increase.
Selling, General, and Administrative. SG&A increased approximately 50%, or
$2.8 million, mostly due to increased playoff costs.
Amortization and Depreciation. Amortization and depreciation costs
increased 57%, or approximately $3.5 million, and were solely comprised of an
increase in the amortization of player contracts. The Panthers were 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 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 player contracts was approximately $5.1 million, which included
approximately $960,000 related to the write-off of three players' contracts.
Interest and Other Income. Interest and other income was approximately
$120,000 and $40,000 in the years ended June 30, 1996 and 1995 and it is derived
from interest earned on cash balances in place during the respective years.
24
<PAGE> 28
Interest and Other Expense. Net interest and other expenses increased 26%,
or approximately $1.1 million primarily as a result of the increase in
accumulated borrowings from Mr. Huizenga which were used to fund operating
losses.
YEAR ENDED JUNE 30, 1995 COMPARED TO YEAR ENDED JUNE 30, 1994
Revenue. Revenue decreased 18%, or approximately $3.9 million, with $5.2
million of the decrease pertaining to revenue from ticket sales. 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, in the 1994-95 season, increased 10% to approximately $365,000 per
game, primarily as a result of increased ticket prices.
Offsetting this decrease in revenues was the introduction of arena
operations revenues earned by Decoma of $1.4 million. Mr. Huizenga acquired an
ownership interest in Decoma in August of 1994; thus, the historical results of
the Company presented here reflect various net operating income distributions to
Decoma from the Miami Arena in the year ended June 30, 1995 as if Decoma was
combined with the Company.
Cost of Services. Cost of services decreased 15%, or approximately $3.0
million, of which approximately $2.0 million related to team operating costs.
This decrease was primarily the result of the decrease in players' salaries of
15%, or approximately $1.5 million, which was due to a $5.8 million reduction in
actual salaries paid as a result of the shortened season, partially offset by
annual player contract increases of approximately $4.3 million. Ticketing and
arena operating costs also decreased as a result of playing fewer home games.
Selling, General and Administrative (SG&A). SG&A costs were approximately
$5.5 million in both the years ended June 30, 1995 and 1994.
Amortization and Depreciation. Amortization and depreciation costs showed
minimal change in the periods being compared. For the years ended June 30, 1995
and 1994, 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.
Offsetting this $500,000 decrease was the addition of approximately $400,000 for
Decoma's depreciation of the Miami Arena Contract which has been shown in the
historical combined consolidated statement of operations for the year ended June
30, 1995.
Interest and Other Income. Interest and other income was minimal in both
years ended June 30, 1995 and 1994.
Interest and Other Expense. Net interest and other costs increased 63%, or
approximately $1.6 million, primarily due to interest expense relating to the
accumulated borrowings from Mr. Huizenga which increased approximately $490,000
as the Panthers' operating losses accumulated. In addition, net interest expense
relating to the Panthers' long-term debt increased approximately $720,000 as a
result of rising interest rates. The remainder is attributable to minority
interest expense.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used for operating activities was $4.0 million, $17.4 million,
$8.8 million and $11.6 million for the nine months ended March 31, 1997 and the
years ended June 30, 1996, 1995, and 1994, respectively. Net cash flow from
financing activities totaled approximately $86.9 million during the nine month
period ended March 31, 1997 and primarily consisted of the $66.3 million net
proceeds from the Prior Offerings and the $65.6 million net proceeds from the
Private Placement. Additionally, $45.0 million of the net proceeds from the
Prior Offerings were used to repay the Company's outstanding indebtedness under
the two term loans. The remaining net proceeds were invested in short-term,
investment grade, interest bearing investments and subsequently used in
connection with the acquisition of Boca Resort. See "-- Financial Condition" for
further discussions regarding the Company's debt structure.
25
<PAGE> 29
Since the formation of the Panthers franchise in December 1992 and through
the date of the Prior Offerings, all net operating losses of the Panthers were
financed primarily with loans from Mr. Huizenga. As a result, net cash flow from
financing activities for the years ended June 30, 1996, 1995 and 1994, consisted
entirely of borrowings and repayments of the loans from Mr. Huizenga. Such
loans, including interest thereon accrued through September 30, 1996, totaled
approximately $41.0 million. This entire cumulative advance was exchanged for
shares of Class A Common Stock as part of the Reorganization. The Company does
not anticipate borrowing any additional funds from Mr. Huizenga in the
foreseeable future.
Capital expenditures were approximately $950,000 during the nine month
period ended March 31, 1997 and were approximately $140,000, $160,000 and $1.3
million during the years ended June 30, 1996, 1995 and 1994, respectively. The
recent increase in capital expenditures were primarily attributable to the
various activities of the businesses acquired during the nine month period ended
March 31, 1997.
Additionally, Decoma I and Decoma II made distributions to their minority
owners of approximately $571,000, $400,000 and $490,000, during the nine months
ended March 31, 1997, the year ended December 31, 1995, and the period from
August 6, 1994 to December 31, 1994, respectively. Future cash distributions to
minority owners of Decoma I and Decoma II will not have a material impact on the
Company.
The Company has entered into a three-year $35 million credit facility which
bears interest at LIBOR plus 1.5%. In addition, the Company is in the process of
negotiating the New Credit Facility. It is anticipated that the New Credit
Facility will provide for a line of credit up to $150.0 million and will be
secured by certain 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 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 Company, 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.
On November 15, 1996, construction began on the new Broward County Civic
Arena. All construction costs are currently being funded by Broward County.
Pursuant to the Development Agreement with Broward County, the Company will bear
all costs related to the development of the Broward County Civic Arena in excess
of $184.7 million. To date, all construction efforts are on schedule and within
budget, and it is not anticipated that the Company's cash flow will be affected
by the project.
FINANCIAL CONDITION
The reduction of indebtedness with the net proceeds of the Prior Offerings
has improved 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 intends to reduce its debt and the related future
interest cost with the proceeds of this Offering. See "Use of Proceeds."
The recent acquisition of the Resort Facilities is expected to have a
positive impact on the Company's cash flows. The Company expects cash flows and
net operating income to improve further once the Panthers begin playing at the
Broward County Civic Arena, which is expected to be completed in time for the
1998-99 hockey season. Prior to the acquisitions of the Resort Facilities and
Incredible Ice, net cash flow deficits for
26
<PAGE> 30
the Company were anticipated to be as much as $15.0 to $20.0 million each year
until completion of the Broward County Civic Arena. With the completed
acquisitions of the Resort Facilities and Incredible Ice, net cash flows are
expected to improve by as much as $35 million per year. The Company believes
such annual cash flows will be sufficient to service the Company's total
long-term debt which is shown to be $186.1 million (before the application of
proceeds of this Offering) on the unaudited pro forma consolidated balance sheet
as of March 31, 1997 and is intended to be reduced to $110.0 million upon
applying a portion of the proceeds from this Offering. However, there can be no
assurance that future cash flows of the Company will be sufficient to meet all
such obligations and commitments. If the Company is unable to generate
sufficient cash flows from operations in the future to meet its obligations and
commitments, the Company could be required to pursue one or more alternatives,
such as attempting to arrange a refinancing or restructuring of its
indebtedness, selling material assets or operations or seeking to obtain
additional debt or equity financing. There can be no assurance that any of these
actions could be effected on satisfactory terms, that they would enable the
Company to continue to satisfy its capital requirements or that they would be
permitted by the terms of applicable debt agreements. In addition, if the
Company were to encounter difficulty in covering its fixed charges, it would
have to consider reductions in its operations and deferrals of planned capital
expenditures and any potential acquisitions.
As of September 30, 1996, the last quarter previous to the Prior Offerings,
the Company had a net deficit in working capital of approximately $53.7 million.
After the Prior Offerings, recapitalization of Mr. Huizenga's cumulative
advances, and recording the effect of acquisitions and the Private Placement,
the Company's net shareholders' equity improved to approximately $200.0 million
as of March 31, 1997. After considering the effect of the acquisition of Boca
Resort, the unaudited pro forma consolidated balance sheet as of March 31, 1997
shows a net equity balance of approximately $303.3 million.
Cash and cash equivalents at March 31, 1997 were approximately $75.1
million as compared to approximately $470,000 at June 30, 1996. The increase was
attributable primarily to the net proceeds of the Prior Offerings on November
13, 1996 and the Private Placement on January 31, 1997.
Accounts receivable at March 31, 1997 were approximately $10.4 million as
compared to $3.1 million at June 30, 1996. This increase was mainly caused by
increased contractual advertising and broadcasting receivables for the 1996-97
season and the added receivables relating to the Fort Lauderdale Resort
Facilities Acquisition.
Prepaid expenses and other assets at March 31, 1997 were approximately $1.8
million as compared to approximately $170,000 at June 30, 1996. This increase
was mainly attributable to the Fort Lauderdale Resort Facilities Acquisition.
Property and equipment increased to approximately $129.1 million at March
31, 1997 from approximately $1.0 million at June 30, 1996, primarily due to the
various business acquisitions.
Other intangible assets were $6.1 million at March 31, 1997 and were
comprised of the goodwill recorded in connection with the acquisition of
Incredible Ice on January 31, 1997.
Deferred revenue at March 31, 1997 was approximately $6.5 million as
compared to approximately $1.0 million at June 30, 1996. This increase was
caused by playoff ticket collections which occurred in March 1997 which will be
recognized on a per game basis during the Stanley Cup Playoffs in the fourth
quarter. To the extent all playoff games are not played, customer deferred
revenue balances will either be refunded or carried over to the 1997-98 season.
The $1.0 million deferred revenue balance at June 30, 1996 represented playoff
ticket dollars collected but not earned in the prior year Stanley Cup Finals
because the series ended after four games.
Accounts payable and accrued expenses were $9.3 million at March 31, 1997
as compared to $2.3 million at June 30, 1996. The increase is primarily
attributable to the various business acquisitions.
27
<PAGE> 31
Current maturities of long-term debt were $15.2 million at March 31, 1997
and were related to the debt assumed in connection with the acquisition of Bahia
Mar.
Long-term debt of approximately $26.0 million at March 31, 1997 related to
the debt assumed in connection with the acquisition of Pier 66, while
approximately $25.0 million of long-term debt associated with the formation of
the hockey franchise was in place at June 30, 1996 and was paid off with the
proceeds from the Prior Offerings.
Shareholders' equity increased approximately $248.0 million during the nine
months ended March 31, 1997 primarily due to the sale of Class A Common Stock
and the Reorganization in November 1996 and the Private Placement in January
1997, and the various business acquisitions during the period.
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, 1996
and 1995 and the six month period ended December 31, 1996.
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share" ("SFAS
No. 128"). SFAS No. 128 supersedes Accounting Principles Board Opinion No. 15,
"Earnings Per Share", and specifies the computation, presentation and disclosure
requirements for earnings or loss per share ("EPS") for entities with publicly
held common stock or potential common stock, SFAS No. 128 replaces presentation
of primary EPS with a presentation of basic EPS and fully diluted EPS with
diluted EPS. The provisions of SFAS No. 128 require dual presentation of basic
and diluted EPS on the face of the statement of operations for all entities with
complex capital structures. Furthermore, the provisions of SFAS No. 128 require
basic EPS and diluted EPS be presented for both income (loss) from continuing
operations and net income (loss) on the face of the statement of operations.
SFAS No. 128 also requires a reconciliation of the numerator and denominator of
the basic EPS computation to the numerator and denominator of the diluted EPS
computation.
The provisions of SFAS No. 128 are effective for financial statements for
both interim and annual periods ending after December 15, 1997. After adoption,
all prior period EPS data presented shall be restated to conform with the
provisions of SFAS No. 128.
The Company will adopt the provisions of SFAS No. 128, as required. The
Company's management believes such adoption will not have a material impact on
the Company's EPS calculations.
28
<PAGE> 32
BUSINESS
GENERAL
The Company currently operates through two business segments: (i) the
Leisure and Recreation Business and (ii) the Sports and Entertainment Business.
The Leisure and Recreation Business is comprised of the Company's ownership and
operation of the Resort Facilities while the Sports and Entertainment Business
is comprised of the Company's ownership and operation of the Panthers, Arena
Development, Arena Operator and the Ice Rink Business. In addition, the Company
owns approximately 78% of the partnership interests in Decoma.
The Resort Facilities include Boca Resort, Pier 66 and Bahia Mar. Boca
Resort is a destination luxury resort and private club encompassing 298 acres of
land fronting on both the Atlantic Ocean and Intracoastal Waterway in Boca
Raton, Florida and consisting of 963 luxury guest rooms, a 70,000 square foot
convention center, a 130,000 square foot separate convention center currently
under construction, a 25 slip marina, two 18 hole championship golf courses, 31
tennis courts, five swimming pools, an indoor basketball court, two indoor
racquetball courts and a half mile of private beach with various water sports
facilities. Other amenities of Boca Resort include 15 food and beverage sites,
ranging from five star cuisine to beachside grills, and a new fitness center.
Boca Resort has been awarded the Readers' Award for "Top 25 Hotels in North
America" by Travel & Leisure magazine. Pier 66 is a Fort Lauderdale Intracoastal
Waterway resort and marina encompassing 23 acres and consisting of 380 luxury
guest rooms, a 142 slip marina, three swimming pools, 22,000 square feet of
meeting space and six restaurants and lounges. Bahia Mar is a Fort Lauderdale
resort hotel complex encompassing 40 acres and consisting of 297 rooms, a 350
slip marina, four tennis courts, 20,000 square feet of flexible meeting space
and 23,000 square feet of retail space. The operations of Pier 66 and Bahia Mar
are currently managed by Rahn Pier Mgt., Inc. ("Pier 66 Management") and Rahn
Bahia Mar Mgmt., Inc. ("Bahia Mar Management"), respectively, pursuant to
separate management agreements, each with a remaining term of approximately
three years. The Company believes that attractive opportunities exist to acquire
other luxury resorts.
The Panthers commenced play in the NHL on October 4, 1993 and, in their
third season, reached the Stanley Cup Finals. The Company's hockey revenue is
derived from (i) the sale of tickets to the Panthers' home games, (ii) contracts
with broadcasting organizations and (iii) advertising and promotions. A
substantial 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 and 1996-97 seasons,
in particular, by continuing to advertise and market the Panthers as well as
continuing to enhance the service and entertainment provided at home 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
29
<PAGE> 33
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 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,
which 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,
(ii) net operating income and (iii) fixed and variable operating payments
generated from the Miami Arena.
The Company also owns and operates Incredible Ice. In addition, the Company
operates Gold Coast. Incredible Ice and Gold Coast are open to the general
public and derive their revenues from, among other things, (i) fees charged to
the public for the use of the facilities for various hockey and skating programs
and open skating sessions, (ii) food and beverage sales and (iii) retail sales.
LEISURE AND RECREATION BUSINESS
BOCA RESORT
Boca Resort is a destination resort and private club located on over 298
acres of land fronting on both the Atlantic Ocean and Intracoastal Waterway in
Boca Raton, Florida. Boca Resort offers luxury accommodations and amenities to
group conference customers, the leisure traveler and the members of its
exclusive and private country and social club known as The Premier Club.
Boca Resort consists of the Cloister, the Tower, Boca Beach Club, the Golf
Villas, Boca Country Club, 963 luxury guestrooms, a 70,000 square foot
convention center, a 25 slip marina, two 18 hole championship golf courses, 31
tennis courts, five swimming pools, an indoor basketball court, two indoor
racquetball courts and a half mile of private beach with various water sports
facilities. Other amenities of Boca Resort include 15 food and beverage sites,
ranging from 5-star cuisine to beachside grills, and a new fitness center.
Additionally, Boca Resort has commenced a $46.5 million expansion and renovation
project which will include: (i) a new 130,000 square foot conference center
(25,000 square foot Grand Ballroom/15,000 square foot Junior Ballroom); (ii) a
new, state-of-the-art tennis and fitness center complex; (iii) a new and
expanded 650-space parking facility; and (iv) a new Couples/Bates designed
18-hole golf course to replace its present 18-hole golf course.
The following are key statistics for Boca Resort for its most recent fiscal
year:
Number of guest rooms............ 963
Year built....................... The Cloister was originally started in 1926
and additions were made in the 1930s and
1940s to arrive at its current status of
387 rooms. The Tower, convention center and
villas were added in 1969. The first major
addition to the Beach Club was completed in
1980 and the Boca Country Club was
purchased in 1988.
Renovations...................... Boca Resort has commenced a $46.5 million
expansion and renovation project.
Seasonality...................... Approximately 50% of Boca Resort room
revenues are earned from January through
April.
Average occupancy................ 70%
Average daily rate............... $181
Total room revenue per available
room............................. $127
30
<PAGE> 34
PIER 66
Pier 66 is a Fort Lauderdale Intracoastal Waterway luxury resort and marina
encompassing 23 acres and consisting of 380 luxury guest rooms, a 142 slip
marina, three swimming pools, 22,000 square feet of meeting space and six
restaurants and lounges. It has received the Mobil Travel Guide's Four Star
Award and AAA's Four Diamond Award.
The following are key statistics for Pier 66 for its most recent fiscal
year:
Pier 66 Resort
<TABLE>
<S> <C>
Number of guest rooms..................... 380
Year built................................ The first 100 Pier 66 guest rooms were constructed in
1957. Twice since then, in 1967 and 1986, additional
rooms were added bringing the current total to 380.
Renovations............................... In 1993, Pier 66 underwent renovations costing
approximately $3.75 million.
Seasonality............................... Approximately 46% of Pier 66 resort revenues are earned
from January through April.
Average occupancy......................... 67%
Average daily rate........................ $138
Total room revenue per available room..... $93
</TABLE>
Pier 66 Marina
<TABLE>
<S> <C>
Services provided......................... Full service marina includes water, electricity, cable
and telephone as well as fuel and other ship-related
supplies.
Seasonality............................... Approximately 42% of Pier 66 marina revenues are earned
from January through April.
Average size of slips rented.............. 65 feet
Average daily rate per slip............... $79
Average marina occupancy.................. 61%
</TABLE>
BAHIA MAR
Bahia Mar is a resort and marina complex encompassing 40 acres and
consisting of 297 rooms, a 350 slip marina, four tennis courts, 20,000 square
feet of flexible meeting space and 23,000 square feet of retail space. Bahia Mar
is situated on oceanfront property in South Florida and has received the Mobile
Travel Guide's Three Star Award and AAA's Three Diamond Award, as well as the
1995 Radisson President's Award and a City of Fort Lauderdale Community
Appearance Award. The Bahia Mar marina is host to the International Boat Show,
an annual six day boating and marine event.
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<PAGE> 35
The following are key statistics for Bahia Mar for its most recent fiscal
year:
Bahia Mar Resort
<TABLE>
<S> <C>
Number of guest rooms..................... 297
Year built................................ The first 115 Bahia Mar guest rooms were constructed in
1966. The Tower, with 182 rooms, was added in 1975.
Renovations............................... During 1994 and the early part of 1995, Bahia Mar spent
approximately $8.1 million in extensive renovations.
Seasonality............................... Approximately 46% of Bahia Mar resort revenues are
earned from January through April.
Average occupancy......................... 61%
Average daily rate........................ $104
Total room revenue per available room..... $63
</TABLE>
Bahia Mar Marina
<TABLE>
<S> <C>
Services provided......................... Full service marina includes water, electricity, cable
and telephone as well as close proximity to fuel and
other ship-related supplies.
Seasonality............................... Approximately 47% of Bahia Mar marina revenues are
earned from January through April.
Average size of slips rented.............. 60 feet
Average daily rate per slip............... $47
Average marina occupancy.................. 49%
</TABLE>
FRANCHISE, OWNER AND LICENSE AGREEMENTS
Franchise Agreement. On November 14, 1994, Pier 66 Management entered
into a franchise agreement (the "Hyatt Franchise Agreement") with Hyatt
Franchise Corporation ("Hyatt"). The agreement is for a 20 year term ending
November 14, 2014 and contains various early termination provisions and provides
for liquidated damages upon such early termination. The Hyatt Franchise
Agreement provides for monthly royalty fees based on a percentage of gross room
revenue, in the amount of 4.0% from December 1, 1996 through November 30, 1997
and 5.0% thereafter. Royalty fees totaled $398,175 in 1996.
The Hyatt Franchise Agreement also provides for the pro rata allocation of
certain Hyatt "allocable chain expenses" based on the relation of Pier 66's
total number of guest rooms to the average number of guest rooms in all Hyatt
hotels in the United States along with assessments for Gold Passport and
national/regional sales promotions. A fee for the use of the Hyatt reservation
system is also allocated to Pier 66. Total Hyatt expenses other than royalty
fees amounted to $502,658 as of December 31, 1996 and are included primarily in
rooms and marketing expense in the accompanying financial statements.
The Hyatt Franchise Agreement requires that a reserve, equal to four
percent of gross room revenues, be maintained in respect of Pier 66 for
replacement of furniture, fixtures and equipment and those repairs and
maintenance costs which are capitalizable under generally accepted accounting
principles. The franchise agreement requires significant renovations of guest
rooms, corridors and other public areas to be performed every five to six years.
The replacement of other furniture, fixtures and equipment, as defined in the
agreement, is to occur every 10 to 12 years.
Owner Agreement. The Company, Pier 66 Management and Hyatt are parties
to a Hyatt Hotel Franchise Owner Agreement dated November 14, 1994 (the "Owner
Agreement") pursuant to which the parties agree that Hyatt shall notify the
Company upon a voluntary surrender, a default or a breach by Pier 66 Management
under the Hyatt Franchise Agreement and the Company shall have an opportunity to
cure any such breach or default. In addition, upon any termination of Pier 66
Management under the Pier 66 Management Agreement, the Hyatt Franchise Agreement
shall terminate unless the Company employs a
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<PAGE> 36
substitute manager that Hyatt approves, provided such manager is qualified under
the terms of the Owner Agreement. The substitute manager will assume the duties
and responsibilities as franchisee under the Hyatt Franchise Agreement. The
Owner Agreement also contains requirements that Hyatt consent to any financing
transactions, sales or other transfers involving Pier 66, which consent shall
not be unreasonably withheld or delayed by Hyatt. The Owner Agreement also
obligates the Company to observe and be bound by certain terms, conditions and
restrictions contained in the Hyatt Franchise Agreement.
License Agreement. On June 28, 1994, Bahia Mar Management entered into a
10-year license agreement (the "Radisson License Agreement") with Radisson
Hotels International, Inc. ("Radisson"). The terms of the Radisson License
Agreement allow Bahia Mar Management to operate the hotel using Radisson's
proprietary hotel management system. Annual fees payable to Radisson pursuant to
the Radisson License Agreement range from 1.0% to 4.0% (increasing 1.0% each
year up to a maximum rate of 4.0%) of the first $7.0 million of gross room sales
and 5.0% of gross room sales (as defined by the license agreement) in excess of
$7.0 million through December 31, 1997. The remainder of the term requires fees
in the amount of 5.0% of gross room sales. Fees paid to Radisson pursuant to the
Radisson License Agreement totaled $206,438 in 1996.
MORTGAGES AND OTHER LOANS PAYABLE
The Company, through Panthers BRHC, assumed a $110.0 million note (the
"Senior Note") in connection with the acquisition of Boca Resort. The Senior
Note matures on August 22, 2001 and accrues interest at LIBOR plus 2.25%, based
on a 360 day year, payable monthly in arrears. The Senior Note is secured by a
first mortgage and lien on all assets held by Panthers BRHC, except in certain
circumstances where other first liens are permitted. The outstanding balance on
the Senior Note at March 31, 1997 totaled $110.0 million.
Panthers BRHC is required to make quarterly principal payments of $750,000
on the Senior Note commencing September 30, 1998 and increasing to $1.25 million
on September 30, 1999 and to $1.75 million on September 30, 2000. Panthers BRHC
is required to make additional principal payments on the Senior Note based upon
certain cash flow conditions.
Panthers BRHC is required to deposit cash into reserve accounts which are
accumulated and restricted to support future debt service, facility expansion,
fixed asset replacement and real estate tax payments. The Senior Note contains
significant restrictions with respect to payments to the partners of Panthers
BRHC and other debt holders.
The Company acquired the property on which Pier 66 is situated, subject to
the assumption of a portion of a mortgage loan in the principal amount of $22.0
million ("Note 1") from Kemper Investors Life Insurance Company ("Kemper"). In
addition, the Company assumed an additional mortgage note from Kemper for $4.0
million ("Note 2") to be drawn upon to finance the cost of certain capital
improvements, to provide initial working capital, and to fund interest accrued
on the mortgage notes between January 1, 1994 and December 31, 1995 to the
extent cash flows from operations are insufficient for such payment. Both
mortgage notes mature on June 28, 2000 and bear interest at varying rates for
specified periods. The mortgage notes require monthly payments of interest only
throughout the term. A balloon payment of the entire outstanding principal
amount, together with the final monthly payment of interest, will be due at
maturity. At maturity, the Company will either refinance the property or pay off
the mortgage notes depending on the Company's working capital position and
business plan at that time. Both mortgage notes are collateralized by
substantially all property and equipment of Pier 66 including the alcoholic
beverage license, a security interest in the Hyatt Franchise Agreement, and an
assignment of leases, rents and profits, trademarks and the Pier 66 Management
Agreement.
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<PAGE> 37
The outstanding balances of the notes at March 31, 1997 were as follows:
<TABLE>
<S> <C>
Note 1...................................................... $21,951,325
Note 2...................................................... 4,000,000
-----------
$25,951,325
===========
</TABLE>
As required by the loan agreement relating to Note 1 and Note 2, (the "Pier
66 Loan Agreement") the Company maintains a Capital Expenditure Program ("CEP")
reserve fund for the replacement of capital assets. The CEP reserve equals 3.0%
of gross revenues net of amounts expended by Pier 66 for replacement of capital
assets and is funded quarterly for the preceding quarter. Beginning July 1,
1995, Pier 66 voluntarily increased the CEP reserve to 4.0% of gross revenues.
However, the Pier 66 Loan Agreement fund is only funded for the required 3.0%.
The CEP fund is also pledged as additional security pursuant to the Pier 66 Loan
Agreement. The Pier 66 Loan Agreement also requires the Company to maintain a
reserve fund for property taxes to provide for each year's anticipated payments.
Property taxes are to be paid no later than March 31 each calendar year for the
preceding calendar year.
The Company leases the Bahia Mar site from the City of Fort Lauderdale
under an operating lease (the "Rahn Lease Agreement") which was initially
extended through September 30, 2037. On January 4, 1995, the term of the Rahn
Lease Agreement was further extended for a period commencing October 1, 2037
through August 31, 2062 (the "Second Extended Term"). Under the Rahn Lease
Agreement, the Company is required to pay the lessor an annual rental (payable
in quarterly installments) equal to the greater of (i) a percentage (4.0%
through September 30, 2012 and 4.25% thereafter) of the annual gross operating
revenue, as defined in the Rahn Lease Agreement, or (ii) a minimum annual rent
payment of $300,000. During the Second Extended Term, the minimum annual rent
will be the greater of $300,000 or 80% of the average total annual rent paid
during the three lease years immediately preceding the lease year for which the
minimum annual rent is being calculated. Rent expense under the Rahn Lease
Agreement totaled $632,907 for the year ended December 31, 1996.
The Rahn Lease Agreement requires the Company to set aside cash for the
purchase, replacement and upgrade of furniture, fixtures and equipment. The
amount to be restricted is 3.0% of Bahia Mar's revenues, as defined in the Rahn
Lease Agreement. All cash was spent on its required purpose at December 31,
1996.
The Company currently is the obligor under a $15.5 million mortgage note
payable to a bank (the "Bahia Mar Note"). The Bahia Mar Note bears interest at
LIBOR plus 1.5% and is collateralized by substantially all property and
equipment of Bahia Mar. The maturity date for the Bahia Mar Note is June 30,
1999.
Effective February 1, 1995, and continuing on the first day of each month
thereafter during the term of the Bahia Mar Note, the Company is required to set
aside cash for the purchase, replacement and upgrade of furniture, fixtures,
equipment and property at Bahia Mar in the amount of $25,000 each month. All
cash was spent for its required purpose at December 31, 1996.
The Company also leases certain equipment used in its operations under
operating leases. Future minimum lease payments, including property leases and
operating leases, are as follows:
<TABLE>
<S> <C>
1997............................................ $ 407,080
1998............................................ 406,137
1999............................................ 391,241
2000............................................ 343,784
2001............................................ 304,126
Thereafter...................................... 18,200,000
-----------
$20,052,368
===========
</TABLE>
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<PAGE> 38
BUSINESS/CREDIT RISK
Any substantial change in economic conditions or any significant price
fluctuations related to the travel and tourism industry could affect
discretionary consumer spending and have a material impact on each of the Resort
Facilities' business. In addition, each of the Resort Facilities is subject to
competition from other entities engaged in the business of resort development
and operations, including interval ownership facilities, condominiums, hotels
and motels.
Pier 66's receivables contain significant amounts due from cruise lines
which are granted credit by Pier 66. Such credit is granted by Pier 66 to
attract the substantial business directed by cruise lines through package
vacations and otherwise. The amount of such credit is determined by Pier 66's
management on a case-by-case basis.
MANAGEMENT AGREEMENTS
The Company is a party to a hotel management agreement (the "Pier 66
Management Agreement") with Pier 66 Management pursuant to which Pier 66
Management operates Pier 66. Pier 66 Management has managed Pier 66 since June
29, 1993. The remaining term of the Pier 66 Management Agreement is
approximately three years, and it provides for an annual 2.0% management fee of
approximately $500,000, payable in monthly installments.
The Company is also a party to a separate hotel management agreement (the
"Bahia Mar Management Agreement") with Bahia Mar Management pursuant to which
Bahia Mar Management operates Bahia Mar. Bahia Mar Management has managed Bahia
Mar since June 30, 1994. The remaining term of the Bahia Mar Management
Agreement is approximately three years, and it requires Bahia Mar Management to
set aside cash from Bahia Mar operations for the purchase, replacement and
renewal of furniture, fixtures and equipment and non-routine repairs and
maintenance to the building. The amount to be reserved is 3.0% of Bahia Mar's
gross revenues each month during the term of the Bahia Mar Management Agreement.
COMPETITION
The resort and hotel industry is highly competitive. Competitive factors
within the resort and hotel industry include room rates, quality of
accommodations, service levels, convenience of location, reputation, reservation
systems, name recognition, and supply and availability of alternative resort and
hotel operations in local markets. Each of the Resort Facilities has a number of
competitors. An increase in the number of competitive resort and hotel
facilities in each of the Resort Facilities' respective markets could have a
material adverse effect on the levels of occupancy and average room rates of
each of the Resort Facilities. Further, there can be no assurance that new or
existing competitors will not significantly reduce their rates or offer greater
convenience, services or amenities or significantly expand, improve or develop
facilities in the markets in which the Resort Facilities compete, thereby
adversely affecting the Company's resort and hotel operations.
ENVIRONMENTAL MATTERS
Under various federal, state, and local laws and regulations, an owner or
operator of real estate may be liable for the costs of removal or remediation of
certain hazardous or toxic substances on such property. These laws often impose
liability without regard to whether the owner knew of, or was responsible for,
the presence of hazardous or toxic substances. Furthermore, a person that
arranges for the disposal or transports for disposal or treatment a hazardous
substance at a property owned by another may be liable for the costs of removal
or remediation of hazardous substances released into the environment at that
property. The costs of remediation or removal of such substances may be
substantial, and the presence of such substances, or the failure to properly
remediate the contaminated property, may adversely affect the owner's ability to
sell such real estate or to borrow using such real estate as collateral. In
connection with the ownership and operation of its properties, the Company may
be potentially liable for any such costs.
Phase I environmental site assessments (the "Phase I Surveys") have been
obtained for the real property on which each of the Resort Facilities is
located. A phase I survey is intended to identify potential
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<PAGE> 39
environmental contamination and regulatory compliance concerns, and generally
includes historical reviews of the property, reviews of certain public records,
preliminary investigations of the site and surrounding properties and the
preparation and issuance of written reports. A phase I survey generally does not
include invasive procedures, such as soil sampling or ground water analysis.
The Phase I Surveys have not revealed any environmental liability or
compliance concerns that the Company believes would have a material adverse
effect on the Company's business, assets, results of operations or liquidity of
its Leisure and Recreation Business, nor is the Company aware of any such
liability or concern. Nevertheless, it is possible that a phase I survey will
not reveal all environmental liabilities or compliance concerns or that there
will be material environmental liabilities or compliance concerns of which the
Company will not be aware. Moreover, no assurances can be given that (i) future
laws, ordinances, or regulations will not impose any material environmental
liability, or (ii) the current environmental condition of the Resort Facilities'
existing and future properties will not be affected by the condition of
neighboring properties or by third parties unrelated to any of the Resort
Facilities.
SPORTS AND ENTERTAINMENT BUSINESS
HOCKEY OPERATIONS
Sources of Revenue
The Company derives its hockey revenue principally from the sale of tickets
to the Panthers' 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
its first four seasons, the Panthers have sold an average of 9,100 season
tickets. Due primarily to the success achieved in the 1995-96 playoffs, the
Panthers' season ticket base rose to 11,500 in the 1996-97 season. Ticket prices
for regular season home games during the 1996-97 season at the Miami Arena
ranged from $12 to $95 per game with an average paid ticket price of $36. The
average individual ticket price is approximately 17% higher than the average
ticket price paid by season ticket holders.
National Television. In 1994, the NHL entered into a seven-year $275.0
million television 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 United States. 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, Fox is
required to pay the NHL the difference between the amounts paid through the date
of termination pursuant to the Fox Contract and $155.0 million. 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 United States.
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.
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<PAGE> 40
The revenue from the foregoing broadcasting contracts allocated to the
Company (constituting 1/26 of the NHL's revenue from the broadcasting contracts)
is as follows:
<TABLE>
<CAPTION>
THE COMPANY'S SHARE
SEASON (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. In August 1996, the Company entered
into the SportsChannel Letter of Intent with SportsChannel Florida for the local
broadcast (other than radio broadcast) of the Panthers' games. Under the terms
of the SportsChannel Letter of Intent, the Company granted 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 hockey season, with an option to extend the SportsChannel
Letter of Intent to cover the 1997-98 hockey season. The Company has exercised
its option under the SportsChannel Letter of Intent for the broadcast of the
Panthers' games during the 1997-98 hockey 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 applicable hockey season, provided that the Company shall in no
event receive less than $2.5 million or $1.2 million, respectively.
On October 24, 1996, the Company entered into the Beasley-Reed Letter of
Intent for the proposed local English language radio broadcast of all the
Panthers games during the 1997-98, 1998-99, 1999-2000, 2000-01 and 2001-02
hockey seasons. There can be no assurance that the Company and Beasley-Reed 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.
Miami Arena
The Panthers currently play in the Miami Arena, which has a seating
capacity of 14,703, the smallest arena in the NHL. Under the terms of the
Panthers' current agreement with the Miami Arena, 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.
The Company owns approximately 78% of the partnership interests in Decoma,
which derives all of its revenue from Miami Arena operations. The City of Miami
recently announced that it intends to build the Dade Arena which will be
utilized by the Miami Heat. Upon its completion, the Dade 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 Dade Arena. In the event the Miami Arena is unable
to attract various sports and non-sports events, the financial condition and
results of operations of Decoma will be adversely affected.
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<PAGE> 41
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 currently 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.
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. 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 requires that the Company loan to Broward County
all amounts that are necessary to allow Broward County to meet certain financial
obligations relating to the Broward County Civic Arena at an interest rate of
prime plus two percent. Broward County is required to repay any loan made by the
Company on a priority basis from revenue generated from the collection of taxes.
The License Agreement commencement date will occur upon 30 days notice of
the completion of construction of the Broward County Civic Arena, which is
currently scheduled for October 1, 1998; however, 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 Company to the exclusive use of the
Broward County Civic Arena during the playing of all of the Panthers' 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
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<PAGE> 42
the Panthers to play all of their home games at the Broward County Civic Arena
during the term of the License Agreement.
ICE RINKS
The Company currently owns and operates Incredible Ice. In addition, the
Company operates Gold Coast pursuant to a lease. Incredible Ice and Gold Coast
are open to the general public and derive their revenues from, among other
things, (i) fees charged to the public for use of the facilities for various
hockey and skating programs and open skating sessions, (ii) food and beverage
sales and (iii) retail sales. In addition, the Company owns the architectural
designs to Incredible Ice as well as predevelopment rights to develop other
similar ice rink facilities at various sites located throughout Florida. The
Company contemplates that, as part of its strategy to expand the Ice Rink
Business and as opportunities arise in the future, it may develop and operate
other similar ice rinks throughout Florida.
DECOMA
The Company owns approximately 78% of the partnership interests in Decoma,
which 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,
(ii) net operating income and (iii) fixed and variable operating payments.
EMPLOYEES
The Company employs 1,658 full-time and 444 part-time employees at Boca
Resort. The Company also employs 27 hockey players and 105 full-time employees
in connection with its Sports and Entertainment Business. During the hockey
season, the Company uses part-time employees, most of whom are employed as
statisticians and press attendants during the Panthers hockey games. In
addition, the Company employs an aggregate of 79 part-time employees at
Incredible Ice and Gold Coast for various guest services and food and beverage
positions. All 477 persons working at Pier 66 and all 237 persons working at
Bahia Mar are employees of Pier 66 Management and Bahia Mar Management,
respectively. None of these employees, other than the hockey players, are
subject to any collective bargaining agreement and each of the Company, Pier 66
Management and Bahia Mar Management believes that its relationship with its
employees is good.
INSURANCE
The Company maintains comprehensive insurance on the Resort Facilities,
including liability, fire and extended coverage, in the types and amounts
customarily obtained by an owner and operator in the resort and hotel industry.
Nevertheless, there are certain types of losses, generally of a catastrophic
nature, such as hurricanes, earthquakes and floods, that may be uninsurable or
not economically insurable. The Company will use its discretion in determining
amounts, coverage limits and deductibility provisions of insurance, with a view
to obtaining appropriate insurance on the Resort Facilities at a reasonable cost
and on suitable terms. This may result in insurance coverage that, in the event
of a loss, would not be sufficient to pay the full current market value or
current replacement value of the Company's lost investment and the insurance
proceeds received by the Company might not be adequate to restore its economic
position with respect to such Resort Facilities.
The Company maintains various insurance coverages on behalf of its hockey
players through the NHL, including through the league's affiliated Bermuda
insurance company, Intra-Continental Ensurers Ltd. ("ICE"). Such insurance, of
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 Panthers' 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
39
<PAGE> 43
players' 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.
The Company also maintains the types and amounts of insurance coverage that
it considers appropriate for its other businesses. Furthermore, 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. While the
Company believes that its insurance coverage is adequate, if the Company were
held liable for amounts exceeding the limits of its insurance coverage or for
claims outside the scope of its insurance coverage, such liability could have a
material adverse effect on the Company's financial condition or results of
operations.
LITIGATION
On July 23, 1996, MSEA filed a lawsuit against the Defendants in the United
States District Court for 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 operating
contract, specifically provisions restricting MSEA from developing the Dade
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.
On September 4, 1996, Timothy Johanson, Walter Johanson and Veronica
Juliano (the "ADA Plaintiffs") filed a lawsuit against the Company, among
others, in the United States District Court for the Southern District of
Florida. The suit alleges that the Company 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 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 Company 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 Company believes that it has 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.
A lawsuit was filed on January 9, 1997 by Arena Development seeking a
determination as to the applicability of Broward County's Prevailing Wage
Ordinance to the construction of the Broward County Civic Arena. The suit was
filed in the Seventeenth Judicial Circuit in and for Broward County, Florida.
The complaint filed alleged that the Prevailing Wage Ordinance did not apply to
the construction of the Facility for two reasons: (i) the Prevailing Wage
Ordinance only applies to construction contracts in excess of $250,000 to which
Broward County is a party and Broward County is not a party to the construction
contract between Arena Development and the general contractor, and (ii) the
Development Agreement contains all the obligations and responsibilities of both
parties and does not include a provision mandating that Arena Development comply
with the Prevailing Wage Ordinance. The Prevailing Wage Ordinance requires that
all contracts to which the ordinance applies must contain such a provision. The
lawsuit asked for a declaratory judgment finding that the Prevailing Wage
Ordinance did not apply to the construction of the Facility and that Arena
Development could continue without reference to the ordinance. On February 21,
1997, the Seventeenth Judicial Circuit Court ruled against the Company's
complaint, finding that the Prevailing Wage
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<PAGE> 44
Ordinance was applicable. The Company has appealed the decision rendered by the
court. An unfavorable outcome of this suit may require the Company to incur
additional costs of up to $4.5 million.
On January 28, 1997, February 3, 1997 and March 14, 1997, purported class
action lawsuits were filed against the Company and Messrs. Huizenga, Johnson,
Rochon, Berrard, Hudson, Dauria and Evans in the United States District Court
for the Southern District of Florida. The suits allege, among other things, that
the defendants violated Section 10(b) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and Rule 10b-5 thereunder, by making untrue
statements or omitting to state material facts, in connection with sales of the
Company's Class A Common Stock by the plaintiff and others in the purported
class between November 13, 1996 and December 22, 1996. The suits generally seek,
among other things, certification as a class and an award of damages in an
amount to be determined at trial. The Company has not fully assessed the likely
outcome of the class action litigation, but intends to vigorously defend against
these suits.
On April 9, 1997, Allied Minority Contractors Association, Inc., Overnight
Success Construction, Inc., Reed, Jr. Plumbing, Inc. and Christopher Mallard
(collectively, the "Broward County Plaintiffs") filed a suit against Broward
County and Arena Development in the Seventeenth Judicial Circuit in and for
Broward County, Florida. This suit alleges that Broward County entered into the
Development Agreement in violation of Florida law and Broward County ordinances.
The Broward County Plaintiffs seek, among other things, to nullify the
Development Agreement. The Company believes that this suit is without merit and
intends 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.
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.
RECENT DEVELOPMENTS
On July 8, 1997, the Company entered into the Merger Agreement pursuant to
which the Company will acquire interests constituting approximately 68% of the
Registry Hotel in exchange for $75.0 million in cash, together with the issuance
by the Company of approximately 930,000 shares of Class A Common Stock. The
Registry Hotel is a well-known luxury resort hotel located on the Gulf of Mexico
in Naples, Florida within a 90-minute drive from the east coast of South
Florida. The Registry Hotel includes 474 guest rooms, a conference center,
recreational areas, restaurant and retail outlets, 15 tennis courts and a nature
reserve boardwalk, as well as watersports and beach amenities along the Gulf of
Mexico. The Naples market is a key vacation and conference group destination.
The consummation of the transaction contemplated by the Merger Agreement is
subject to customary conditions.
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<PAGE> 45
THE NATIONAL HOCKEY LEAGUE
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 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 Panthers) 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.
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<PAGE> 46
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.
CONTROL REQUIREMENT
Unless otherwise permitted by the NHL, Mr. Huizenga is required to maintain
voting control of the Company at all times. The Company issued to Mr. Huizenga
shares of Class B Common Stock to satisfy the control requirements of the NHL.
See "Risk Factors -- General -- 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, as amended,
expires in September 2004.
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 (or
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 July 1, 1997, the Panthers had four players eligible for restricted
free agency. In addition, the Panthers had one Group V free agent and one Group
III free agent.
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<PAGE> 47
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............................ 59 Chairman of the Board
Richard C. Rochon............................ 40 Vice Chairman of the Board
Richard H. Evans............................. 52 President and Director
William A. Torrey............................ 62 President of Florida Panthers Hockey Club,
Inc. and Director
Alex Muxo.................................... 41 President of Arena Development and Arena
Operator
William M. Pierce............................ 46 Senior Vice President and Chief Financial
Officer
Richard L. Handley........................... 50 Senior Vice President and General Counsel
J. Ronald Castell............................ 59 Senior Vice President--Investor Relations and
Communications
Steven M. Dauria............................. 36 Vice President and Corporate Controller
Steven R. Berrard............................ 42 Director
Dennis J. Callaghan.......................... 48 Director
Michael S. Egan.............................. 57 Director
Chris Evert.................................. 42 Director
Harris W. Hudson............................. 54 Director
George D. Johnson, Jr........................ 54 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 also has been Chairman of the Board of Republic
Industries, Inc. ("Republic"), a diversified company with operations in
automotive, solid waste and electronic security services industries, since
August 1995. Mr. Huizenga served as Chief Executive Officer of Republic from
August 1995 until October 1996, and has served as Co-Chief Executive Officer of
Republic since October 1996. Mr. Huizenga has been Chairman of the Board of
Extended Stay America, Inc. ("Extended Stay"), an extended stay lodging
facilities company, since January 1995. Mr. Huizenga served as the Vice Chairman
of Viacom, Inc. ("Viacom"), a diversified media and entertainment company, from
September 1994 until October 1995. Mr. Huizenga also served as the Chairman of
the Board of Blockbuster Entertainment Group, a division of Viacom, from
September 1994 until October 1995. From April 1987 through September 1994, Mr.
Huizenga served as the Chairman of the Board and Chief Executive Officer of
Blockbuster Entertainment Corporation ("Blockbuster"), during which time he
helped build Blockbuster from a 19-store chain into the world's largest video
and music retailer. In September 1994, Blockbuster merged into Viacom. In 1971,
Mr. Huizenga co-founded Waste Management, Inc. ("Waste Management"), which he
helped build into the world's largest integrated environmental services company,
and he served in various capacities, including the President, the Chief
Operating Officer and a director from its inception until 1984. Mr. Huizenga
also currently owns or controls the Miami Dolphins and the Florida Marlins, both
professional sports franchises, as well as Pro Player Stadium, in South Florida.
Mr. Huizenga is the brother-in-law of Mr. Hudson.
Richard C. Rochon has been a director of the Company since September 1996
and has served as the Company's Vice Chairman since April 1997. Mr. Rochon is
also the President of Huizenga Holdings, Inc. ("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.
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
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<PAGE> 48
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.
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.
William M. Pierce has been the Company's Senior Vice President and Chief
Financial Officer since March 1997 and a Director of Florida Panthers Hockey
Club, Inc. since November 1996. Mr. Pierce has been an officer of Huizenga
Holdings since January 1990, and has served as Chief Financial Officer and
Director of numerous private companies owned by Mr. Huizenga.
Richard L. Handley joined the Company in May 1997 as a Senior Vice
President and the General Counsel. Prior to joining the Company, Mr. Handley
served as a Senior Vice President and the General Counsel of Republic from
October 1995 to May 1997. From June 1993 until joining Republic, he was a
principal of Randolph Management Group, Inc., a management consulting firm
specializing in the environmental industry. Prior to that, Mr. Handley was Vice
President, Secretary and General Counsel of The Brand Companies, Inc., an
environmental services company, from July 1990 until May 1993, Associate General
Counsel of Waste Management of North America, Inc., from January 1987 to June
1990, and legal counsel to Waste Management Energy Systems, Inc., a
waste-to-energy company, from September 1985 to January 1987, all of which
companies were affiliates or subsidiaries of Waste Management, Inc. Prior to
September 1985, Mr. Handley was a lawyer in private practice in Chicago,
Illinois.
J. Ronald Castell joined the Company as Senior Vice President--Investor
Relations and Communications in June 1997. Mr. Castell has served as Senior Vice
President--Communications Strategy and Service of Republic since August 1995.
Prior to joining Republic, Mr. Castell had been Executive Vice President and a
member of the Office of the President at Spelling Entertainment Group Inc., a
Los Angeles-based subsidiary of Blockbuster Entertainment Group, a division of
Viacom. In August 1991, he became Senior Vice President of Programming and
Communications for Blockbuster, and served in that capacity until Blockbuster's
merger with Viacom in September 1994. Mr. Castell joined Blockbuster in February
1989 as Senior Vice President of Programming and Merchandising. From October
1985 to February 1989 he was Vice President of Marketing and Merchandising at
Erol's, a chain of video and electronics stores headquartered in Washington,
D.C. Mr. Castell has also held senior executive marketing positions with the
Communications Satellite Corporation, Warner Communications, Group W Satellite
Communications, Banc One and Federated Department Stores.
Steven M. Dauria served as the Company's Vice President and Chief Financial
Officer from September 1996 through March 1997. As of March 31, 1997, Mr. Dauria
began serving as Vice President and Corporate Controller. Mr. Dauria also has
served as the Vice President and Chief Financial Officer of Florida Panthers
Hockey Club since July 1996. From July 1994 to July 1996, Mr. Dauria served as
Director of Finance and Administration and Chief Financial Officer of Florida
Panthers Hockey Club, and, from December 1993 to July 1994, Mr. Dauria served as
the Controller of both Florida Panthers Hockey Club and the Florida Marlins.
Prior to joining the Panthers, Mr. Dauria served as the 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.
Mr. Berrard has been Co-Chief Executive Officer, President and a director of
Republic since October 1996. Since March 1996, Mr. Berrard has served as Chief
Executive Officer of AutoNation Incorporated ("AutoNation"), which owns
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<PAGE> 49
and operates a developing national chain of used vehicle retailing megastores,
and which was acquired by Republic in January 1997. From September 1994 through
March 1996, Mr. Berrard served as President and Chief Executive Officer of
Blockbuster Entertainment Group. Mr. Berrard joined Blockbuster in June 1987 as
Senior Vice President, Treasurer and Chief Financial Officer and became a
director of Blockbuster in May 1989. He became Vice Chairman of the Board of
Blockbuster in November 1989 and served as Blockbuster's President and Chief
Operating Officer from January 1993 until September 1994. In addition, Mr.
Berrard served as 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, and served as a director of
Viacom from September 1994 until March 1996.
Dennis J. Callaghan has been a director of the Company since July 1997.
From 1990 to the present, Mr. Callaghan has been the President of Callaghan &
Partners, Ltd., an entity founded by Mr. Callaghan to acquire, develop, finance,
renovate and manage resorts, hotels and residential and commercial properties in
the United States and abroad. Mr. Callaghan was an affiliate of the general
partner of the Boca Raton Hotel and Club Limited Partnership and was appointed
to the Board in connection with the acquisition of Boca Resort.
Michael S. Egan has been a director of the Company since April 1997. Mr.
Egan has served as President and Chief Executive Officer of Alamo Rent-A-Car,
Inc. ("Alamo") since 1979 and as the Chairman of Alamo since 1973.
Chris Evert has been a director of the Company since July 1997. Since
retiring from professional tennis in 1989, Ms. Evert has served as a sports
commentator and continued to serve as a corporate spokesperson. In March 1989,
Ms. Evert founded Chris Evert Charities, Inc. and continues to be involved in
its charitable activities. Since March 1996, Ms. Evert has been a Partner and
Coach of the Evert Seguso Bassett Tennis Center in Boca Raton, Florida.
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 served as a director of Republic since November 1995.
Since January 1995, Mr. Johnson has served as President, Chief Executive Officer
and a director of Extended Stay. From August 1993 until January 1995, Mr.
Johnson served in various executive positions with Blockbuster Entertainment
Group and, prior to its merger with Viacom, with Blockbuster, including as
President of the Consumer Products Division, and also as a director of
Blockbuster. From July 1987 until August 1993, Mr. Johnson was the managing
general partner of WJB Video Limited Partnership, which became the largest
Blockbuster franchisee with over 200 video stores prior to its merger with
Blockbuster in August 1993. Mr. Johnson also serves as a director of Duke Power
Company.
DIRECTORS' COMPENSATION
The Company's policy is to not 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.
46
<PAGE> 50
EXECUTIVE COMPENSATION
The following table shows remuneration paid or accrued by the Company
during the fiscal years ended June 30, 1996 and June 30, 1997 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.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
---------------------
SECURITIES UNDERLYING
ANNUAL COMPENSATION OPTIONS TO PURCHASE
--------------------- CLASS A COMMON ALL OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS STOCK COMPENSATION
- ----------------------------------------- ----------- -------- ------- --------------------- ------------
<S> <C> <C> <C> <C> <C>
H. Wayne Huizenga........................ 1997 -- -- 100,000 shares --
Chairman of the Board of Directors 1996 -- -- -- --
Richard H. Evans......................... 1997 $100,000 -- 90,000 shares $ 5,000(4)
President(1) 1996 -- -- -- --
William A. Torrey........................ 1997 $400,000(2) $ 7,000(3) 75,000 shares $21,000(4)
President of Florida Panthers Hockey 1996 $400,000(2) $43,000(3) -- $21,000(4)
Club, Inc.
Alex Muxo................................ 1997 $225,000 -- 50,000 shares $15,000(4)
President of Arena Development and 1996 $150,000 -- -- $19,000(4)
Arena Operator
Steven M. Dauria......................... 1997 $110,000 -- 23,000 shares $15,000(4)
Vice President and Corporate
Controller 1996 $ 90,000 $10,000(3) -- $14,000(4)
</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 fiscal
1996.
(2) Includes deferred compensation of $100,000 earned by Mr. Torrey during each
of fiscal 1997 and 1996.
(3) Represents bonus amounts earned in fiscal 1996 and 1997 and paid in
subsequent corresponding fiscal years.
(4) Comprised of insurance premiums paid by the Company on behalf of these
employees.
47
<PAGE> 51
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ---------------------
NAME GRANTED FISCAL YEAR PRICE DATE 5% 10%
<S> <C> <C> <C> <C> <C> <C>
H. Wayne Huizenga..... 100,000 shares 5.1% $ 10.00 11/08/06 $628,895 $1,593,742
Chairman of the
Board of Directors
Richard H. Evans...... 75,000 shares 3.8% $ 10.00 11/08/06 $471,671 $1,195,307
President 15,000 shares * $26.625 01/02/07 $251,165 $ 636,501
William A. Torrey..... 75,000 shares 3.8% $ 10.00 11/08/06 $471,671 $1,195,307
President of Florida
Panthers Hockey
Club, Inc.
Alex Muxo............. 50,000 shares 2.6% $ 10.00 11/08/06 $314,447 $ 796,871
President of Arena
Development and
Arena Operator
Steven M. Dauria...... 23,000 shares 1.2% $ 10.00 11/08/06 $144,646 $ 366,561
Vice President and
Corporate Controller
</TABLE>
- ---------------
* Less than 1%
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 administers and
interprets 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 is for a term of not less than five
years or more than ten years, as 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 become immediately exercisable. Options granted under
the Stock Option Plan are not transferable other than by will or by the laws of
descent and distribution.
The Company has granted options to purchase an aggregate of 1,957,792
shares of the Class A Common Stock with exercise prices ranging from $10 per
share to $26 5/8 per share. The exercise price of each of these options is the
fair market value of the Class A Common Stock on the date of grant.
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 with 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.
48
<PAGE> 52
CERTAIN TRANSACTIONS
In connection with the Prior Offerings, the following events occurred: (i)
Mr. Huizenga, as the sole shareholder of Decoma Investment, Inc. III ("Decoma
III"), caused Decoma III to transfer all but 1% of its ownership interest in
Decoma to Decoma II, following which Decoma II owned 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 Prior Offerings, Decoma I and II owned 66 2/3% of the
partnership interests of Decoma Venture. The remaining 33 1/3% of the
partnership interests of Decoma Venture were owned by Decoma III. Upon
completion of the Prior Offerings, Decoma I and Decoma II owned 99% of the
partnership interests in Decoma Venture, which owned an approximately 78%
interest in Decoma); (ii) Mr. Huizenga contributed (A) a note (the "Panthers
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 Panthers; (iii) Mr. Huizenga, as
the sole limited partner and the sole general partner (through his ownership of
Florida Panthers Hockey Club, Inc.) of Panthers Ltd., contributed all of the
partnership interests in Panthers Ltd. to the Company; and (iv) Mr. Huizenga, as
the sole limited partner (through his ownership of Panthers Ltd.) and 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 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 received 5,275,678 shares of Common Stock, of which 5,020,678
shares were Class A Common Stock and 255,000 shares were Class B Common Stock.
The number of shares issued was derived by dividing by $9.30 (the assumed
initial public offering price of the Class A Common Stock less underwriting
discounts and commissions) the sum of (A) the Panthers Ltd. Note (approximately
$41.0 million), which resulted 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 resulted in the issuance of 870,968 shares of Common Stock.
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
$58,000 and $110,000 for the six months ended December 31, 1996 and the year
ended June 30, 1996, respectively.
In August 1996, the Company entered into the SportsChannel Letter of Intent
with SportsChannel Florida for the local broadcast (other than radio broadcast)
of the Panthers' games. Under the terms of the SportsChannel Letter of Intent,
the Company granted 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 away games during the 1996-97 season,
with an option to extend the SportsChannel Letter of Intent to cover the 1997-98
hockey season. The Company has exercised its option under the SportsChannel
Letter of Intent for the broadcast of the Panthers' games during the 1997-98
hockey season. The SportsChannel Letter of Intent provides the Company with the
option to grant SportsChannel Florida exclusive or nonexclusive broadcast
rights. In return, the Company is 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 applicable hockey season,
provided that the Company is in no event entitled to receive less than $2.5
million or $1.2 million, respectively.
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
strategies, as well as advising the Company with respect to securities matters
and future acquisitions. Such 1% management fee totaled approximately $293,000,
$132,000 and $194,000 for the years ended June 30, 1996, 1995 and 1994,
respectively.
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<PAGE> 53
The Company incurred charges of $94,613 during the year ended June 30, 1994
for the lease 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"). The
Company repaid all amounts outstanding under the Term Loan from the net proceeds
of the Prior Offerings.
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
provided certain debt service guarantees of the Company's obligations relating
to the NationsBank Promissory Note. The Company repaid the $20.0 million debt
owed to PIV from the net proceeds of the Prior Offerings.
No independent determination has been made as to the fairness and
reasonableness of the terms of the transactions described above. However, the
Company, based on its prior experience, believes that the terms of each such
transaction were as favorable to the Company as it could have obtained from an
unaffiliated party.
In connection with the Fort Lauderdale Resort Facilities Acquisition,
Messrs. Huizenga, Berrard, Johnson and Rochon received 972,018, 592,877, 451,248
and 379,062 shares of the Company's Class A Common Stock, respectively, in
exchange for their ownership interests in Pier 66 and Bahia Mar. Based, in part,
on a fairness opinion received from Donaldson, Lufkin & Jenrette Securities
Corporation, the Company believes that the Fort Lauderdale Resort Facilities
Acquisition was fair to the Company's shareholders and that the terms of the
Fort Lauderdale Resort Facilities Acquisition were as favorable to the Company
as could have been obtained from an unaffiliated party in a comparable
transaction.
50
<PAGE> 54
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Class A Common Stock (including shares which the
named individuals have the right to acquire within 60 days upon the exercise of
outstanding options or the conversion of outstanding convertible securities) as
of the date of this Prospectus, by (a) each of the Company's directors, (b) each
of the Company's executive officers, (c) all executive officers and directors of
the Company as a group and (d) all persons who own beneficially more than 5% of
the Company's Class A Common Stock.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK
BENEFICIALLY OWNED
------------------------
NAME SHARES PERCENT(1)
<S> <C> <C>
H. Wayne Huizenga(2)........................................ 6,147,696(3) 25.6%
Richard C. Rochon........................................... 770,062 3.2%
Richard H. Evans............................................ 100,000 *
William A. Torrey........................................... 50,000 *
Alex Muxo................................................... 40,000 *
William M. Pierce........................................... 67,545 *
Richard L. Handley.......................................... 15,000 *
J. Ronald Castell........................................... 50,000 *
Steven M. Dauria............................................ 5,000 *
Steven R. Berrard........................................... 974,877 4.1%
Dennis J. Callaghan......................................... -- *
Chris Evert................................................. -- *
Michael S. Egan............................................. 80,200 *
Harris W. Hudson............................................ 391,000 1.6%
George D. Johnson, Jr....................................... 863,248 3.6%
All directors and executive officers as a group (14
persons).................................................. 9,554,628 39.8%
</TABLE>
- ------------------------------
* Less than one percent (1%).
(1) Percentage of beneficial ownership is based on 23,995,343 shares of Common
Stock outstanding at July 18, 1997, which consists of 23,740,343 shares of
Class A Common Stock and 255,000 shares of Class B Common Stock, with
regard to Mr. Huizenga, and 23,740,343 shares of Class A Common Stock
outstanding at July 18, 1997 with regard to the other directors and
executive officers.
(2) Mr. Huizenga's address is 450 East Las Olas Boulevard, Suite 1500, Fort
Lauderdale, Florida 33301.
(3) Includes 255,000 shares of Class B Common Stock, each of which is
convertible into one share of Class A Common Stock.
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<PAGE> 55
SELLING STOCKHOLDERS
The following table sets forth the number of shares of outstanding Class A
Common Stock beneficially owned by the Selling Stockholders as of the date of
this Prospectus, the aggregate number of shares of Class A Common Stock that
each Selling Stockholder may offer and sell pursuant to this Prospectus and the
aggregate number of shares of Class A Common Stock to be beneficially owned by
each Selling Stockholder upon completion of the offering made hereby. To the
knowledge of the Company, none of the Selling Stockholders has had within the
past three years any material relationship with the Company or any of its
predecessors or affiliates, except as set forth in the footnotes to the
following table.
<TABLE>
<CAPTION>
NUMBER OF
SHARES
BENEFICIALLY
OWNED AFTER
NUMBER OF NUMBER OF SALE(1)
SHARES BENEFICIALLY SHARES OFFERED --------------
SELLING STOCKHOLDERS OWNED(1) HEREBY NUMBER %
<S> <C> <C> <C> <C>
Dean Buntrock(2).................................. 972,018 300,000 672,018 2.8%
Benjamin Lobel(3)................................. 7,726 7,726 -- --
Marcia Samuels(3)................................. 7,726 7,726 -- --
A. Hamilton Gardner(3)............................ 7,726 7,000 726 *
Raymond Wernig(3)................................. 1,932 1,932 -- --
Jerome A. Wensinger(3)............................ 7,726 7,726 -- --
Marvin Goldberg(3)................................ 7,726 7,726 -- --
</TABLE>
- ---------------
* Less than one percent
(1) As used herein, beneficial ownership means the sole power to vote, or direct
the voting of, a security, or the sole or shared power to dispose, or direct
the disposition of, a security. Except as otherwise indicated, the Selling
Stockholders have (i) sole voting power and investment power with respect to
his shares of Class A Common Stock, except to the extent that authority is
shared by his spouse under applicable law, and (ii) record and beneficial
ownership with respect to his/her shares of Class A Common Stock.
(2) Held an ownership interest in 2301 Ltd. and Rahn Ltd. prior to the Company's
acquisition of the ownership interests therein.
(3) Held an ownership interest in Boca Resort prior to the Company's acquisition
of the ownership interests therein.
52
<PAGE> 56
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
As of July 18, 1997, there were 23,740,343 shares of Class A Common Stock
and 255,000 shares of Class B Common Stock outstanding. In addition, 5,072,560
additional shares of Class A Common Stock are issuable upon the exercise of
warrants and exchange rights which were issued in connection with the
acquisition of Boca Resort. 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
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 Panthers) 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 of the Company.
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
53
<PAGE> 57
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.
The transfer agent and registrar for the Class A Common Stock is The First
National Bank of Boston.
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 with 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, 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
54
<PAGE> 58
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.
55
<PAGE> 59
UNDERWRITING
Subject to the terms and conditions of an Underwriting Agreement dated
, 1997 (the "Underwriting Agreement"), the Underwriters named below, who
are represented by Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"),
Allen & Company Incorporated ("Allen & Co.") and Raymond James & Associates,
Inc. ("Raymond James") (the "Representatives"), have severally agreed to
purchase from the Company and the Selling Stockholders the respective number of
shares of Class A Common Stock set forth opposite their names below.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation.........
Allen & Company Incorporated................................
Raymond James & Associates, Inc.............................
----------
Total.............................................
==========
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to purchase and accept delivery of the shares of Class A Common
Stock offered hereby are subject to approval by their counsel of certain legal
matters and to certain other conditions. The Underwriters are obligated to
purchase and accept delivery of all the shares of Class A Common Stock offered
hereby (other than those covered by the over-allotment option described below)
if any are purchased.
The Underwriters initially propose to offer the shares of Class A Common
Stock in part directly to the public at the initial public offering price set
forth on the cover page of this Prospectus and in part to certain dealers
(including the Underwriters) at such price less a concession not in excess of
$ per share. The Underwriters may allow, and such dealers may reallow, to
certain other dealers a concession not in excess of $ per share. After the
initial offering of the Class A Common Stock, the public offering price and
other selling terms may be changed by the Representatives.
The Company has granted to the Underwriters an option, exercisable within
30 days after the date of this Prospectus, to purchase, from time to time, in
whole or in part, up to an aggregate of 900,000 additional shares of Class A
Common Stock at the initial public offering price less underwriting discounts
and commissions. The Underwriters may exercise such option solely to cover
over-allotments, if any, made in connection with the offering. To the extent
that the Underwriters exercise such option, each Underwriter will become
obligated, subject to certain conditions, to purchase its pro rata portion of
such additional shares based on such Underwriter's percentage underwriting
commitment as indicated in the preceding table.
The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act or to contribute to payments that the Underwriters may be
required to make in respect thereof. Each of the Company, its executive officers
and directors have agreed, subject to certain exceptions, not to (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of, directly or indirectly, any shares
of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (ii) enter into any swap or other arrangement
that transfers all or a portion of the economic consequences associated with the
ownership of any Common Stock (regardless of whether any of the transactions
described in clause (i) or (ii) is to be settled by the delivery of Common
Stock, or such other securities, in cash or otherwise) for a period of 180 days
after the date of this Prospectus without the prior written consent of DLJ. DLJ,
Allen & Co. and Raymond James have in the past provided, and may in the future
provide, investment banking services for the Company.
Other than in the United States, no action has been taken by the Company,
the Selling Stockholders or the Underwriters that would permit a public offering
of the shares of Class A Common Stock offered hereby in any jurisdiction where
action for that purpose is required. The shares of Class A Common Stock offered
hereby may not be offered or sold, directly or indirectly, nor may this
Prospectus or any other offering material or advertisements in connection with
the offer and sale of any such shares of Class A Common Stock be distributed or
published in any jurisdiction, except under circumstances that will result in
compliance with the applicable rules and regulations of such jurisdiction.
Persons into whose possession this Prospectus comes are
56
<PAGE> 60
advised to inform themselves about and to observe any restrictions relating to
the offering of the Class A Common Stock and the distribution of this
Prospectus. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any shares of Class A Common Stock offered
hereby in any jurisdiction in which such an offer or a solicitation is unlawful.
The Underwriters and dealers may engage in passive market making
transactions in the Class A Common Stock in accordance with Rule 103 of
Regulation M promulgated by the Commission. In general, a passive market maker
may not bid for or purchase shares of Class A Common Stock at a price that
exceeds the highest independent bid. In addition, the net daily purchases made
by any passive market maker generally may not exceed 30% of its average daily
trading volume in the Class A Common Stock during a specified two month prior
period, or 200 shares, whichever is greater. A passive market maker must
identify passive market making bids as such on the Nasdaq electronic
inter-dealer reporting system. Passive market making may stabilize or maintain
the market price of the Class A Common Stock above independent market levels.
Underwriters and dealers are not required to engage in passive market making and
may end passive market making activities at any time.
In connection with the Offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the Class
A Common Stock. Specifically, the Underwriters may overallot the Offering,
creating a syndicate short position. The Underwriters may bid for and purchase
shares of Class A Common Stock in the open market to cover such syndicate short
position or to stabilize the price of the Class A Common Stock. These activities
may stabilize or maintain the market price of the Class A Common Stock above
independent market levels. The Underwriters are not required to engage in these
activities, and may end any of these activities at any time.
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<PAGE> 61
LEGAL MATTERS
The validity of shares of the Class A Common Stock offered hereby will be
passed upon for the Company and the Selling Stockholders by Akerman, Senterfitt
& Eidson, P.A., Miami, Florida. Certain attorneys at Akerman, Senterfitt &
Eidson, P.A. own shares of the Company's Class A Common Stock. Certain legal
matters will be passed upon for the Underwriters by McDermott, Will & Emery,
Chicago, Illinois.
EXPERTS
The audited financial statements of the Company as of June 30, 1996 and
1995 and for each of the three years in the period ended June 30, 1996; the
audited financial statements of 2301 Ltd. as of December 31, 1996 and the year
then ended; the audited financial statements of Rahn Bahia Mar, Ltd. as of
December 31, 1996 and 1995, and for the years ended December 31, 1996 and 1995
and the period from inception (June 28, 1994) to December 31, 1994; and the
audited financial statements of Coral Springs Ice, Ltd. as of December 31, 1996
and for the period from inception (February 26, 1996) to December 31, 1996
appearing elsewhere in this Prospectus and registration statement 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.
The audited financial statements of 2301 SE 17th St. Ltd. as of December
31, 1995, and for each of the years in the two year period ended December 31,
1995, have been included in this Prospectus and in the registration statement in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, appearing elsewhere herein, and upon the authority of said firm as
experts in accounting and auditing.
The financial statements of the Boca Raton Hotel and Club Limited
Partnership as of December 31, 1996 and for the year then ended included in this
Prospectus and registration statement have been so included in reliance on the
report of Price Waterhouse LLP, independent certified public accountants, given
on the authority of said firm as experts in auditing and accounting.
The financial statements of Boca Raton Hotel and Club Limited Partnership
at December 31, 1995, and for each of the two years in the period ended December
31, 1995 appearing in this Prospectus and the registration statement have been
audited by Ernst & Young LLP, independent certified public accountants, as set
forth in their report thereon appearing elsewhere herein, and are given upon the
authority of such firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
This Prospectus constitutes 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.
58
<PAGE> 62
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE REGISTRANT
FLORIDA PANTHERS HOLDINGS, INC.
Report of Independent Certified Public Accountants........ F-3
Consolidated Balance Sheets as of June 30, 1996 and
1995................................................... F-4
Consolidated Statements of Operations for the years ended
June 30, 1996, 1995 and 1994........................... F-5
Consolidated Statements of Shareholders' Equity (Deficit)
for the years ended June 30, 1996, 1995 and 1994....... F-6
Consolidated Statements of Cash Flows for the years ended
June 30, 1996, 1995 and 1994........................... F-7
Notes to Consolidated Financial Statements................ F-8
FLORIDA PANTHERS HOLDINGS, INC. -- UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
Unaudited Condensed Consolidated Balance Sheets as of
March 31, 1997 and June 30, 1996....................... F-17
Unaudited Condensed Consolidated Statements of Operations
for the three and nine month periods ended March 31,
1997 and 1996.......................................... F-18
Unaudited Condensed Consolidated Statements of Cash Flows
for the nine months ended March 31, 1997 and 1996...... F-19
Notes to Unaudited Condensed Consolidated Financial
Statements............................................. F-20
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Introduction to Unaudited Pro Forma Financial
Information............................................ F-25
Unaudited Pro Forma Consolidated Balance Sheet as of March
31, 1997............................................... F-27
Unaudited Pro Forma Consolidated Statement of Operations
for the nine months ended March 31, 1997............... F-28
Unaudited Pro Forma Consolidated Statement of Operations
for the year ended June 30, 1996....................... F-29
Notes to Unaudited Pro Forma Consolidated Financial
Statements............................................. F-30
BUSINESSES ACQUIRED
2301 SE 17TH ST., LTD. ("PIER 66")
Reports of Independent Certified Public Accountants....... F-34
Balance Sheets as of December 31, 1996 and 1995........... F-36
Statements of Operations for the years ended December 31,
1996, 1995 and 1994.................................... F-37
Statements of Partners' Equity for the years ended
December 31, 1996, 1995 and 1994....................... F-38
Statements of Cash Flows for the years ended December 31,
1996, 1995 and 1994.................................... F-39
Notes to Financial Statements............................. F-40
</TABLE>
F-1
<PAGE> 63
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
RAHN BAHIA MAR, LTD. ("BAHIA MAR")
Report of Independent Certified Public Accountants........ F-46
Balance Sheets as of December 31, 1996 and 1995........... F-47
Statements of Operations for the years ended December 31,
1996 and 1995 and for the Period from Inception (June
28, 1994) to December 31, 1994......................... F-48
Statements of Partners' Equity for the years ended
December 31, 1996 and 1995 and for the Period from
Inception (June 28, 1994) to December 31, 1994......... F-49
Statements of Cash Flows for the years ended December 31,
1996 and 1995 and for the Period from Inception (June
28, 1994) to December 31, 1994......................... F-50
Notes to Financial Statements............................. F-51
CORAL SPRINGS ICE, LTD.
Report of Independent Certified Public Accountants........ F-55
Balance Sheet as of December 31, 1996..................... F-56
Statement of Operations for the Period from Inception
(February 26, 1996) to December 31, 1996............... F-57
Statement of Partners' Equity (Deficit) for the Period
from Inception (February 26, 1996) to
December 31, 1996...................................... F-58
Statement of Cash Flows for the Period from Inception
(February 26, 1996) to
December 31, 1996...................................... F-59
Notes to Financial Statements............................. F-60
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
Reports of Independent Certified Public Accountants....... F-62
Balance Sheets as of December 31, 1996 and 1995........... F-64
Statements of Operations for the years ended December 31,
1996, 1995 and 1994.................................... F-65
Statements of Changes in Partners' Deficit for the years
ended December 31, 1996, 1995 and 1994................. F-66
Statements of Cash Flows for the years ended December 31,
1996, 1995 and 1994.................................... F-67
Notes to Financial Statements............................. F-68
UNAUDITED FINANCIAL STATEMENTS -- BOCA RATON HOTEL AND CLUB
LIMITED PARTNERSHIP
Unaudited Balance Sheets as of March 31, 1997 and December
31, 1996............................................... F-80
Unaudited Statements of Operations for the three months
ended March 31, 1997 and 1996.......................... F-81
Unaudited Statements of Cash Flows for the three months
ended March 31, 1997 and 1996.......................... F-82
Notes to Unaudited Financial Statements................... F-83
</TABLE>
F-2
<PAGE> 64
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
Florida Panthers Holdings, Inc.:
We have audited the accompanying consolidated balance sheets of Florida
Panthers Holdings, Inc. (a Florida corporation) and subsidiaries as of June 30,
1996 and 1995 and the related statements of operations, shareholders' equity and
cash flows for each of the three years in the period ended June 30, 1996. These
consolidated financial statements are the responsibility of the Company'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 Holdings,
Inc. and subsidiaries as of June 30, 1996 and 1995, and the results of their
operations and their 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,
November 13, 1996
(except with respect to the
matters discussed in Note 8,
as to which the date is June 26, 1997).
F-3
<PAGE> 65
FLORIDA PANTHERS HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30,
-------------------
1996 1995
-------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash and equivalents...................................... $ 465 $ 1,237
Accounts receivable....................................... 3,119 1,924
Prepaid expenses and other................................ 172 247
-------- --------
Total current assets................................... 3,756 3,408
Property and equipment, net................................. 972 1,114
Franchise cost, net of accumulated amortization of $1,823
and $1,216 in 1996 and 1995, respectively................. 22,489 23,096
Player contract acquisition costs, net of accumulated
amortization of $19,181 and $10,676 in 1996 and 1995,
respectively.............................................. 6,507 15,012
Investment in Miami Arena operating contract................ 8,886 9,271
Capitalized signing bonuses, net of accumulated amortization
of $3,089 and $837 in 1996 and 1995, respectively......... 4,674 1,138
Other assets................................................ 476 548
-------- --------
Total assets........................................... $ 47,760 $ 53,587
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Deferred revenue.......................................... $ 988 $ 3,917
Note payable-related party................................ 40,172 22,226
Related party debt........................................ 20,000 20,000
Accounts payable and accrued expenses..................... 2,313 1,375
Other current liabilities................................. 4,313 2,774
-------- --------
Total current liabilities.............................. 67,786 50,292
Long-term debt.............................................. 25,000 25,000
Other non-current liabilities............................... 3,277 643
Commitments and contingencies (Notes 5, 7 and 8)
Shareholders' Equity (Deficit):
Class A common stock, $.01 par value, 100,000,000 shares
authorized and 870,968 shares issued and outstanding in
1996 and 1995.......................................... 9 9
Class B common stock, $.01 par value, 10,000,000 shares
authorized and none issued and outstanding............. -- --
Contributed capital....................................... (48,312) (22,357)
-------- --------
Total shareholders' equity (deficit)................... (48,303) (22,348)
-------- --------
Total liabilities and shareholders' equity (deficit)... $ 47,760 $ 53,587
======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these balance sheets.
F-4
<PAGE> 66
FLORIDA PANTHERS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
--------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Revenue:
Tickets.................................................. $ 23,226 $ 9,559 $ 14,784
Television and radio..................................... 5,141 3,717 3,163
Advertising and promotions............................... 2,192 1,297 1,534
NHL Enterprise rights.................................... 885 846 761
Decoma arena operations.................................. 1,082 1,415 --
Other, primarily arena concessions....................... 1,561 912 1,440
-------- -------- --------
Total revenue.................................... 34,087 17,746 21,682
Cost of revenue:
Team operations.......................................... 32,639 15,652 17,691
Ticketing and arena operations........................... 3,319 1,558 2,498
Selling, general and administrative...................... 8,371 5,569 5,512
-------- -------- --------
Total cost of revenue............................ 44,329 22,779 25,701
Amortization and depreciation.............................. (9,815) (6,266) (6,444)
-------- -------- --------
Operating loss............................................. (20,057) (11,299) (10,463)
Interest and other, net.................................... (5,082) (4,087) (2,463)
-------- -------- --------
Net loss................................................... $(25,139) $(15,386) $(12,926)
======== ======== ========
Pro Forma net loss per share............................... $ (4.76) $ (2.96) $ (2.93)
======== ======== ========
Pro Forma weighted average shares outstanding.............. 5,276 5,203 4,405
======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-5
<PAGE> 67
FLORIDA PANTHERS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
CLASS A
COMMON STOCK
------------------ TOTAL
NUMBER OF CONTRIBUTED SHAREHOLDERS'
SHARES AMOUNT CAPITAL EQUITY (DEFICIT)
--------- ------ ----------- ----------------
<S> <C> <C> <C> <C>
Balance, July 1, 1993.............................. -- $-- $ (936) $ (936)
Net loss......................................... -- -- (12,926) (12,926)
------- --- -------- --------
Balance, June 30, 1994............................. -- -- (13,862) (13,862)
Acquisition of Decoma Entities................... 870,968 9 8,193 8,202
Net loss......................................... -- -- (15,386) (15,386)
Dividends-Decoma Entities........................ -- -- (1,302) (1,302)
------- --- -------- --------
Balance, June 30, 1995............................. 870,968 9 (22,357) (22,348)
Net loss......................................... -- -- (25,139) (25,139)
Dividends-Decoma Entities........................ -- -- (816) (816)
------- --- -------- --------
Balance June 30, 1996.............................. 870,968 $ 9 $(48,312) $(48,303)
======= === ======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-6
<PAGE> 68
FLORIDA PANTHERS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss.................................................. $(25,139) $(15,386) $(12,926)
Adjustments to reconcile net loss to net cash used in
operating activities --
Depreciation and amortization.......................... 9,815 6,266 6,444
Deferred compensation.................................. 1,334 363 169
Minority interest...................................... 174 384 --
Changes in operating assets and liabilities --
Accounts receivable.................................... (1,195) 440 (1,322)
Prepaid expenses and other assets...................... (3,425) (604) (1,468)
Accounts payable and accrued expenses.................. 938 448 1,403
Deferred revenue and other liabilities................. 138 (705) (3,905)
-------- -------- --------
Net cash used in operating activities............. (17,360) (8,794) (11,605)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures...................................... (140) (161) (1,275)
-------- -------- --------
Net cash used in investing activities............. (140) (161) (1,275)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on note payable -- related party................. (3,500) (7,200) (5,500)
Borrowings from note payable -- related party............. 21,446 17,733 10,749
Payment of dividends -- Decoma Entities................... (816) (1,302) --
Distribution to minority interests -- Decoma Entities..... (402) (486) --
-------- -------- --------
Net cash provided by financing activities......... 16,728 8,745 5,249
-------- -------- --------
Net decrease in cash and equivalents.............. (772) (210) (7,631)
CASH AND EQUIVALENTS:
Balance, beginning of year................................ 1,237 1,447 9,078
-------- -------- --------
Balance, end of year...................................... $ 465 $ 1,237 $ 1,447
======== ======== ========
Supplemental Cash Flow Information:
Cash paid during the year for interest.................... $ 3,750 $ 3,461 $ 2,510
======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-7
<PAGE> 69
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(1) ORGANIZATION AND BASIS OF PRESENTATION
(a) General
Florida Panthers Holdings, Inc. (the "Company"), through its wholly-owned
subsidiary, Florida Panthers Hockey Club, Ltd. ("Limited" or the "Club"), owns
and operates the Florida Panthers, a professional hockey team (the "Panthers")
of the National Hockey League (the "NHL"). Additionally, the Company owns Arena
Development Company Ltd., 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") in Broward County, Florida, and Arena
Operating Company Ltd., a Florida limited partnership formed for the purpose of
managing and operating the Broward County Civic Arena. Through its ownership of
Decoma Investment, Inc. I ("Decoma I") and Decoma Investment, Inc. II ("Decoma
II"), the Company also owns approximately 78% of the partnership interests in
Decoma Miami Associates Ltd., a Florida limited partnership ("DMAL") which
operates the Miami Arena in which the Panthers currently play.
(b) Initial Public Offering and Reorganization
On November 13, 1996, the Company completed an initial public offering of
its Class A common stock. Prior to the completion of the initial public offering
and the concurrent offering (the "Prior Offerings") Mr. H. Wayne Huizenga, the
Company's chairman, contributed the Club's Note Payable -- Related Party to the
partnership. Following this contribution, all of the Club's partnership
interests were exchanged for 4,149,710 shares of the Company's Class A common
stock and 255,000 shares of the Company's Class B common stock (the
"Recapitalization"). In addition, prior to the completion of the Prior
Offerings, all of the partnership interests of Decoma I and Decoma II
(collectively, "the Decoma Entities") were acquired by the Company in exchange
for a total of 870,968 shares of its Class A common stock. As this transaction
was among entities under common control, it has been accounted for on an
historical cost basis in a manner similar to a pooling of interests as of August
6, 1994, the date of their acquisition by Mr. Huizenga, and the Financial
Statements have been revised accordingly.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Hockey 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 expenses 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 are recorded as deferred
revenues. Capitalized signing bonuses are amortized ratably as regular season
games are played.
(b) Arena Management Revenue and Expense
Arena management revenue is recognized as earned and the related costs are
charged to operations as incurred, in accordance with the terms of the Miami
Arena Contract (the "MAC").
(c) Pro Forma Net Loss Per Share
Pro forma net loss per share is calculated assuming that the 4,404,710
shares of the Company's common stock issued in connection with the consummation
of the Recapitalization described in Note 1 were outstanding at the beginning of
all periods presented and that the 870,968 shares issued in connection with the
F-8
<PAGE> 70
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
acquisition of the Decoma Entities were outstanding since August 6, 1994, the
date such entities were acquired by Mr. Huizenga.
(d) Cash and Equivalents
Cash and equivalents consist primarily of cash in banks and highly-liquid
investments with original maturities of 90 days or less.
(e) Note Payable -- Related Party
Note payable-related party represents a short-term borrowing of cash
required for working capital from the Company's chairman. Such note bears
interest at prime (8.25% at June 30, 1996) and is required to be repaid on
demand.
(f) 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>
(g) Franchise Cost
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,
1996, 1995 and 1994, the Club amortized $8,504,800, $5,083,856 and $5,592,189,
respectively, in player contract acquisition costs. The amortization for the
fiscal years ended June 30, 1996, 1995 and 1994 includes $4,899,630, $961,638
and $1,469,971 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.
Effective July 1, 1995, the Company 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 Company
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.
F-9
<PAGE> 71
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(h) Player Contract Costs
Signing bonuses are amortized over the life of the player contract. Such
signing bonuses expensed totaled approximately $2,251,700, $617,000 and $220,000
in the years ended June 30, 1996, 1995 and 1994, respectively, and have been
included in Team operations in the accompanying consolidated 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 for
payment of a portion of the player's salary for the remaining term of the
contract or until the player can resume playing.
(i) Investment in Miami Arena Contract
Amounts invested in the MAC have been reflected as Investment in Miami
Arena contract in the accompanying consolidated balance sheets. Such amounts are
being amortized using the straight-line method over the remaining term of the
MAC.
(j) Deferred Revenue
Deferred revenue as of June 30, 1996, 1995 and 1994 consists primarily of
payments for ticket purchases for the respective upcoming seasons. Ticket
revenue is recognized as the underlying games are played.
(k) Income Taxes
The Company, as of the date of its incorporation, has adopted 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 did not have a material
impact on the financial position or results of operations of the Company.
Prior to the Recapitalization, the Company's subsidiaries were non-tax
paying entities. Accordingly, for all periods presented, no income tax provision
has been provided, nor have any deferred tax assets or liabilities been
established.
(l) Concession Agreement
Certain unrelated companies have the right, at home games, to sell
consumable and non-consumable concessions. 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 $832,303, $363,401 and
$763,651 for the years ended June 30, 1996, 1995 and 1994, respectively, in
hockey net consumable and non-consumable concessions income. Such amounts have
been included as a component of Other revenue in the accompanying consolidated
statements of operations.
(m) Television and Radio Agreements
In August 1996, the Company entered into a letter of intent with
SportsChannel Florida ("SportsChannel") for the local broadcast of the Panthers'
games. The Company's chairman currently owns 70% of SportsChannel. Under the
terms of this letter of intent, the Company granted to SportsChannel broadcast
rights (other than radio broadcast rights) to a pre-determined number of the
Panthers' pre-season, regular season and certain post-season away games during
the 1996-97 season. This letter of intent was subsequently
F-10
<PAGE> 72
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
extended to cover the 1997-98 season. There can be no assurance that the Company
and SportsChannel will enter into a definitive agreement. Currently, the Company
and SportsChannel are operating under the terms of this letter of intent.
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 has local
radio broadcast rights to all of the Panthers' pre-season, regular season and
post-season games during the 1996-97 season. Currently, the Company and Sunshine
are operating under the terms of this letter of intent.
(n) 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 respective terms of the underlying agreements.
(o) Fair Value of Financial Instruments
As of June 30, 1996 and 1995, 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.
(p) 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.
(q) Presentation
The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated. Certain amounts in the
accompanying financial statements have been reclassified to conform with the
current year presentation.
(r) 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 Company 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 for the year ending June 30, 1997.
F-11
<PAGE> 73
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(3) THE MIAMI ARENA
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 operates the Arena. The MAC is scheduled to expire
on July 8, 2020. Leisure Management Miami, Inc. ("LMMI"), manages 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 the Company's chairman.
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) 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
the Company's chairman) and its subsidiaries were leased by the Club. To the
extent that such aircraft were used by Club employees, the actual operating and
overhead costs related to such aircraft were 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, 1996 and
1995.
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 $293,239, $132,339 and $193,576 for the years ended June 30, 1996,
1995 and 1994, respectively, and are reflected as a component of Selling,
general and administrative expenses in the accompanying consolidated statements
of operations.
During 1996, 1995 and 1994, the Company incurred interest expense of
$3,448,136, $2,306,986 and $1,364,624, respectively, to related parties.
F-12
<PAGE> 74
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(5) RELATED PARTY AND LONG-TERM DEBT
In June 1993, the Company 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 Company 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). Following the completion of the Prior Offerings, this term loan was
repaid in full.
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 the Company's chairman
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
the Company's chairman. This note is subordinated to the $25,000,000 term loan
discussed above. Following the completion of the Prior Offerings discussed
above, this note was repaid in full.
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 consolidated balance sheets and is being
amortized over the period of the debt.
The Club had 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, 1996 and
1994, the Club recognized interest expense and income of approximately $353,000
and $134,000, 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 consolidated statements of operations. Following the
completion of the Prior Offerings, such swap agreements were terminated.
(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's contributions to the Plan
totaled $179,606, $89,379 and $183,564 for the years ended June 30, 1996, 1995
and 1994, respectively. Such contributions are included in Team operations in
the accompanying consolidated 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 1996, 1995 or 1994.
F-13
<PAGE> 75
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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 LMII for the use of the
Arena, for its home games. In May 1996, the Company entered into an amendment to
the license for the Miami Arena (the "License Agreement"), extending the term of
the license (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 License Agreement contained substantially the same
economic terms as the Miami Arena license and was subject to approval of MSEA.
In June 1996, MSEA rejected the License 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 License Agreement. On an
appeal, the decision was rendered in favor of the Company.
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,
1996, 1995 and 1994, rent expense for the license of the Arena was $1,787,795,
$729,382 and $1,173,181, 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 Company 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 Company has provided
Broward County a guaranty pursuant 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 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 Company 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 Company with exclusive use of
certain
F-14
<PAGE> 76
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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 Company 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 Company 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.
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.
(8) SUBSEQUENT EVENTS
(a) Exchange Agreements
On December 22, 1996, the Company entered into two definitive agreements
(the "Exchange Agreements"), relating to the acquisition by the Company of
direct and indirect ownership interests in each of the Hyatt Regency Pier 66
Resort & Marina and the Radisson Bahia Mar Beach Resort, in exchange for
4,450,000 shares and 3,950,000 shares of the Company's Class A Common Stock,
respectively (together, the "Exchanges"). The Exchanges were consummated on
March 4, 1997.
(b) Broward County Litigation
A lawsuit was filed on January 9, 1997 by Arena Development, seeking a
determination as to the applicability of Broward County's Prevailing Wage
Ordinance to the construction of the Broward County Civic Arena. The suit was
filed in the Seventeenth Judicial Circuit in and for Broward County, Florida.
The complaint filed alleged that the Prevailing Wage Ordinance did not apply to
the construction of the Broward County Civic Arena for two reasons: (i) the
Prevailing Wage Ordinance only applies to construction contracts in excess of
$250,000 to which Broward County is a party and Broward County is not a party to
the construction contract between Arena Development and the general contractor,
and (ii) the Development Agreement contained all the obligations and
responsibilities of both parties and does not include a provision mandating that
Arena Development comply with the Prevailing Wage Ordinance. The Prevailing Wage
Ordinance requires that all contracts to which the ordinance applies must
contain such a provision. The lawsuit asked for a declaratory judgment finding
the Prevailing Wage Ordinance did not apply to the construction of the Facility
and that Arena Development could continue without reference to the ordinance. On
February 21, 1997, the Seventeenth Judicial Circuit Court ruled against the
Company's complaint, finding that the Prevailing Wage Ordinance was applicable.
The Company appealed the decision rendered by the court. An unfavorable outcome
of this suit may require the Company to incur additional costs of up to
$4,500,000.
F-15
<PAGE> 77
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(c) Acquisition of Incredible Ice
On January 31, 1997, the Company acquired substantially all of the
business, assets and operations of Iceland (Coral Springs) Corp. and Iceland
Holdings, Inc., including the business, assets and operations of an operating
twin pad ice rink facility. In addition, the Company acquired from an
architectural firm and its principal certain architectural plans and designs
relating to the ice rink facility. The consideration paid by the Company in
connection with these acquisitions consisted of the assumption by the Company of
a maximum obligation of approximately $8,100,000 in construction-related
obligations, of which approximately $6,700,000 was repaid upon consummation of
the referenced acquisition, $1,000,000 in cash and 212,766 shares of Class A
Common Stock with a market value of $4,000,000. These acquisitions will be
accounted for as a purchase business combination.
(d) Private Placement Transaction
On January 30, 1997, the Company issued and sold 2,460,000 unregistered,
but otherwise unrestricted (i.e., such shares are not subject to any type of
"lockup" agreement), shares of Class A Common Stock in a Private Placement at a
price of $27.75 per share. The Private Placement resulted in net proceeds to the
Company of approximately $65,600,000 after deducting placement agency fees.
(e) Securities Litigation
On January 28, 1997, February 3, 1997 and March 14, 1997, purported class
action lawsuits were filed against the Company and certain of its officers and
directors which allege, among other things, that the defendants violated the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), in connection
with sales of the Company's Class A Common Stock by the plaintiff and others in
the purported class between November 13, 1996 and December 22, 1996. The suits
generally seek, among other things, certification as a class and an award of
damages in an amount to be determined at trial. The Company has not fully
assessed the likely outcome of the class action litigation, but intends to
vigorously defend against these suits.
(f) Boca Raton Hotel and Club
On March 20, 1997, the Company entered into a contribution and exchange
agreement related to the acquisition of substantially all of the assets of Boca
Raton Hotel and Club Limited Partnership ("Boca Partnership") in exchange for
certain consideration, including rights and warrants to acquire shares of the
Company's Class A common stock, together with the assumption of certain
indebtedness of Boca Partnership. The contribution and exchange was consummated
on June 26, 1997.
F-16
<PAGE> 78
FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
1997 1996
--------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash and equivalents...................................... $ 75,129 $ 465
Accounts receivable....................................... 10,445 3,119
Prepaid expenses and other................................ 1,831 172
-------- --------
Total current assets.............................. 87,405 3,756
Property and equipment, net................................. 129,152 972
Franchise cost, net of accumulated amortization of $2,279
and $1,823 at March 31, 1997 and June 30, 1996,
respectively.............................................. 22,033 22,489
Player contract acquisition costs, net of accumulated
amortization of $21,250 and $19,181 at March 31, 1997 and
June 30, 1996 respectively................................ 4,438 6,507
Other intangible assets, net of accumulated amortization of
$25 at March 31, 1997..................................... 6,118 --
Other assets................................................ 12,925 14,036
-------- --------
Total assets...................................... $262,071 $ 47,760
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Deferred revenue.......................................... $ 6,541 $ 988
Note payable -- related party............................. -- 40,172
Related party debt........................................ -- 20,000
Accounts payable and accrued expenses..................... 9,298 2,313
Current portion of long-term debt......................... 15,235 --
Other current liabilities................................. 3,611 4,313
-------- --------
Total current liabilities......................... 34,685 67,786
Long-term debt.............................................. 25,951 25,000
Other non-current liabilities............................... 1,560 3,277
Shareholders' equity:
Class A Common Stock, $.01 par value, 100,000,000 shares
authorized and 23,393,444 shares issued and
outstanding............................................ 234 9
Class B Common Stock, $.01 par value, 10,000,000 shares
authorized and 255,000 shares issued and outstanding... 3 --
Contributed capital....................................... 200,124 (48,312)
Accumulated deficit....................................... (486) --
-------- --------
Total shareholders' equity (deficit).............. 199,875 (48,303)
-------- --------
Total liabilities and shareholders' equity (deficit)...... $262,071 $ 47,760
======== ========
</TABLE>
The accompanying notes to unaudited condensed consolidated
financial statements are an integral part of these balance sheets.
F-17
<PAGE> 79
FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
--------------------- ----------------------
1997 1996 1997 1996
------- ----------- ------- -----------
<S> <C> <C> <C> <C>
Revenue............................................ $21,754 $10,912 $37,137 $ 24,024
------- ------- ------- --------
Operating expenses:
Cost of services................................. 16,035 13,072 31,986 28,372
Selling, general and administrative.............. 3,146 1,669 7,243 5,055
Amortization and depreciation.................... 1,791 2,681 3,586 5,411
------- ------- ------- --------
Total operating expenses................. 20,972 17,422 42,815 38,838
------- ------- ------- --------
Net operating income (loss)................... 782 (6,510) (5,678) (14,814)
Interest and other income.......................... 863 37 1,014 85
Interest and other expense......................... (368) (1,342) (2,858) (3,623)
------- ------- ------- --------
Net income (loss)............................. $ 1,277 $(7,815) $(7,522) $(18,352)
======= ======= ======= ========
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
--------------------- ----------------------
1997 1996 1997 1996
------- ----------- ------- -----------
(PRO FORMA) (PRO FORMA)
<S> <C> <C> <C> <C>
Per share data:
Primary and fully diluted earnings (loss) per
common and common equivalent share............ $ 0.07 $ (1.48) $ (0.72) $ (3.48)
======= ======= ======= ========
Weighted average shares outstanding.............. 17,510 5,276 10,498 5,276
======= ======= ======= ========
</TABLE>
The accompanying notes to unaudited condensed consolidated
financial statements are an integral part of these statements.
F-18
<PAGE> 80
FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
--------------------
1997 1996
-------- --------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Loss.................................................. $ (7,522) $(18,352)
Adjustments to reconcile net loss to net cash used for
operating activities --
Amortization and depreciation.......................... 3,586 5,411
Deferred compensation.................................. (321) 1,669
Minority interest...................................... 416 153
Changes in operating assets and liabilities --
Accounts receivable.................................... (3,811) (1,748)
Prepaid expenses and other assets...................... 112 (4,218)
Accounts payable and accrued expenses.................. 542 676
Deferred revenue and other liabilities................. 3,013 3,744
-------- --------
Net cash used in operating activities............. (3,985) (12,665)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash used in business acquisitions, net of cash
acquired............................................... (7,286) --
Capital expenditures...................................... (953) (63)
-------- --------
Net cash used in investing activities............. (8,239) (63)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock................ 131,938 --
Payments on related party debt............................ (20,000) --
Payments on note payable and interest-related party....... (340) (3,500)
Increase to interest payable-related party................ 1,131 1,615
Increase to note payable-related party.................... -- 18,265
Payment of long-term debt................................. (25,130) --
Payment of dividends -- Decoma Entities................... (140) (643)
Distribution to minority interests -- Decoma Entities..... (571) (283)
-------- --------
Net cash provided by financing activities......... 86,888 15,454
-------- --------
Net increase in cash and equivalents.............. 74,664 2,726
Cash at beginning of period................................. 465 1,237
-------- --------
Cash at end of period....................................... $ 75,129 $ 3,963
======== ========
</TABLE>
NON-CASH TRANSACTIONS:
In conjunction with the Prior Offerings and the reorganization of the
Company, note payable -- related party of $40,963,000 was exchanged for
4,149,710 shares of Class A common stock, par value $.01 per share, and 255,000
shares of Class B common stock, par value $.01 per share, of the Company.
In conjunction with the acquisitions of all of the ownership interests of
Pier 66 and Bahia Mar, the Company issued 8,400,000 shares of Class A Common
Stock. In conjunction with the acquisition of certain assets relating to the
business of owning and operating a twin-pad ice rink facility, the Company
issued 212,766 shares of Class A Common Stock.
The accompanying notes to unaudited condensed consolidated
financial statements are an integral part of these statements.
F-19
<PAGE> 81
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS EXCEPT SHARE DATA)
1. INTERIM FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements
include the accounts of Florida Panthers Holdings, Inc. (the "Company") and its
subsidiaries and have been prepared by the Company without audit pursuant to the
rules and regulations of the Securities and Exchange Commission (the
"Commission"). All significant intercompany accounts and transactions have been
eliminated. Certain information related to the Company's organization,
significant accounting policies and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These unaudited condensed
consolidated financial statements reflect, in the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
fairly state the financial position and the results of operations for the
periods presented and the disclosures herein are adequate to make the
information presented not misleading. Operating results for the interim periods
presented are not indicative of the results that can be expected for a full
year. These interim financial statements should be read in conjunction with the
audited consolidated financial statements and notes thereto.
In order to maintain consistency and comparability between periods
presented, certain amounts have been reclassified from the previously reported
financial statements in order to conform with the financial statement
presentation of the current period.
The accompanying statements of operations cover the three and nine month
periods ended March 31, 1997 and 1996. For financial reporting purposes, the
Company recognizes all hockey related revenues and expenses over the course of
the hockey season on a per game basis. With the National Hockey League ("NHL")
regular season beginning in early October, the three and nine month periods
ended March 31, 1997 encompassed 22 and 39 of the 41 Florida Panthers regular
season home games, respectively. Based on the present NHL regular season
schedule, which extends from early October through mid April, most of the
Company's hockey related revenues and expenses are reported during the second
and third quarters. Revenues and expenses relating to the Florida Panthers'
participation in the 1996-97 Stanley Cup Playoffs will be reflected during the
fourth quarter.
Pro forma weighted average shares outstanding for the three and nine month
periods ended March 31, 1996 and the nine month period ended March 31, 1997
include the 5,275,678 shares issued in connection with the Reorganization as if
such Reorganization had occurred at the beginning of the periods presented. Such
pro forma weighted average shares outstanding do not include the 7.3 million
shares sold in the Prior Offerings prior to the date of the Prior Offerings (see
Note 2).
2. STOCK OFFERINGS
THE PRIOR OFFERINGS
On November 8, 1996, the Company sold a total of 7.3 million shares of
Class A common stock, par value $.01 per share (the "Class A Common Stock"), of
which 2.7 million were sold to the public in an initial public offering ("IPO")
and 4.6 million shares were sold in a concurrent offering directly to certain
investors at a price equal to the IPO price per share less underwriting
discounts and commissions but including the placement agent fee (collectively,
the "Prior Offerings"). The shares of Class A Common Stock began trading on The
Nasdaq National Market on November 13, 1996.
Prior to the completion of the Prior Offerings, and pursuant to an exchange
agreement, the Company acquired all of the partnership interests in Florida
Panthers Hockey Club, Ltd. ("Panthers Ltd.") in exchange for 4,149,710 shares of
its Class A Common Stock and 255,000 shares of its Class B common stock, par
value $.01 per share (the "Class B Common Stock"). Additionally, the Company
acquired all of the outstanding stock of Decoma Investment, Inc. I (formerly BIL
Development, Inc.) and Decoma Investment, Inc. II (formerly Linbeck Miami
Corporation), and, in turn, approximately 78% of the partnership interests in
F-20
<PAGE> 82
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(IN THOUSANDS EXCEPT SHARE DATA)
Decoma Miami Associates Ltd., a Florida limited partnership ("Decoma"), in
exchange for 870,968 shares of its Class A Common Stock. Collectively, these
transactions are referred to as the Reorganization.
Common Stock Outstanding after the Prior Offerings:
<TABLE>
<S> <C>
Class A Common Stock........................................ 12,320,678 shares
Class B Common Stock........................................ 255,000 shares
-----------------
Total............................................. 12,575,678 shares
=================
</TABLE>
PRIVATE PLACEMENT TRANSACTION
On January 30, 1997, the Company issued and sold 2,460,000 shares of Class
A Common Stock in a private placement transaction (the "Private Placement") at a
price of $27.75 per share. The Private Placement resulted in net proceeds to the
Company of approximately $65.6 million after deducting placement agency fees.
3. BUSINESS COMBINATIONS
COMPLETED ACQUISITIONS
Businesses acquired through March 31, 1997 and accounted for under the
purchase method of accounting are included in the financial statements from the
date of acquisition.
On January 31, 1997, the Company acquired certain assets relating to the
business of owning and operating a twin-pad ice facility located in Coral
Springs, Florida in exchange for $1.0 million in cash, 212,766 shares of the
Company's Class A Common Stock and the assumption by the Company of a maximum of
approximately $8.1 million in construction-related obligations, of which
approximately $6.7 million was repaid upon consummation of the acquisition. This
acquisition has been accounted for under the purchase method of accounting.
On March 4, 1997, the Company acquired all of the ownership interests,
comprised of capital stock and partnership interests, of each of the entities
which own, directly or indirectly, all of the general and limited partnership
interests in the Hyatt Regency Pier 66 Resort and Marina ("Pier 66") for
4,450,000 shares of Class A Common Stock. This acquisition has been accounted
for under the purchase method of accounting.
On March 4, 1997 the Company acquired all of the ownership interests,
comprised of capital stock and partnership interests, of each of the entities
which own, directly or indirectly, all of the general and limited partnership
interests in the Radisson Bahia Mar Resort and Yachting Center ("Bahia Mar") in
exchange for 3,950,000 shares of Class A Common Stock. This acquisition has been
accounted for under the purchase method of accounting.
The Company's consolidated results of operations on an unaudited pro forma
basis assuming that the above acquisitions had occurred at the beginning of the
period presented are as follows:
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
1997 1996
----------- -----------
<S> <C> <C>
Revenue..................................................... $67,582 $ 55,075
Net operating income (loss)................................. $ 1,083 $ (9,106)
Net loss.................................................... $(5,230) $(15,531)
Pro forma fully diluted loss per common and common
equivalent share.......................................... $ (.29) $ (1.14)
</TABLE>
F-21
<PAGE> 83
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(IN THOUSANDS EXCEPT SHARE DATA)
The following summarizes the preliminary purchase price allocation for all
business combinations accounted for under the purchase method of accounting
consummated during the nine months ended March 31, 1997:
<TABLE>
<S> <C>
Property, plant and equipment............................... $127,579
Other intangible assets..................................... 6,143
Working capital deficiency, excluding cash.................. (2,181)
Debt assumed................................................ (41,316)
Common stock issued......................................... (82,939)
--------
Cash used in business acquisitions, net of cash acquired.... $ 7,286
========
</TABLE>
SUBSEQUENT ACQUISITIONS
On March 20, 1997, the Company entered into a contribution and exchange
agreement related to the acquisition of substantially all of the assets of Boca
Raton Hotel and Club Limited Partnership ("Boca Partnership") in exchange for
certain consideration, including 272,303 shares of Class A Common Stock, certain
rights and warrants to acquire 5,112,396 shares of Class A Common Stock, and the
assumption of $205.9 million of indebtedness and payment of deferred fees and
additional interest charges owed by Boca Partnership. Consummation of the
transaction, which will be accounted for under the purchase method of
accounting, occurred on June 26, 1997. Accordingly, the financial statements
included herein do not reflect any aspects of the exchanges.
4. PROPERTY AND EQUIPMENT
A summary of property and equipment is shown below:
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
1997 1996
--------- ---------
<S> <C> <C>
Land and improvements....................................... $ 28,588 $ --
Buildings and improvements.................................. 89,106 792
Furniture, fixtures and equipment........................... 12,838 932
-------- ------
130,532 1,724
Less: accumulated depreciation.............................. (1,380) (752)
-------- ------
$129,152 $ 972
======== ======
</TABLE>
5. USE OF PROCEEDS/REPAYMENT OF OUTSTANDING DEBT
The net proceeds from the sale of stock in the Prior Offerings totaled
approximately $66.3 million. Shortly after the completion of the Prior
Offerings, $45.0 million of the net proceeds of the Prior Offerings was used to
repay the Company's indebtedness outstanding under the two term loans (which
were used to pay the Company's cost of acquiring its NHL franchise).
Additionally, in conjunction with the Reorganization, Mr. Huizenga received
4,149,710 shares of Class A Common Stock and 255,000 shares of Class B Common
Stock in exchange for a note owed to him by the Company which represented
cumulative advances, plus interest, totaling approximately $41.0 million as of
September 30, 1996.
F-22
<PAGE> 84
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(IN THOUSANDS EXCEPT SHARE DATA)
6. LONG-TERM DEBT
In connection with the acquisition of the two resort and marina properties,
the Company assumed certain debt. The Company's outstanding debt at March 31,
1997 consisted of the following:
<TABLE>
<S> <C>
Mortgage note, collateralized by substantially all Pier 66
property and equipment, varying interest rate (8.39% at
March 31, 1997), balloon payment on outstanding principal
due June 29, 2000......................................... $ 25,951
Note payable to bank, collateralized by substantially all
Bahia Mar property and equipment, varying interest rate
(8.69% at March 31, 1997), due June 30, 1997 but may be
extended under a one year extension option................ 15,235
--------
Total debt outstanding...................................... 41,186
Less: current portion....................................... (15,235)
--------
Long-term debt at March 31, 1997............................ $ 25,951
========
</TABLE>
7. STOCK OPTIONS AND WARRANTS
The Company has a stock option plan under which the Company may grant to
key employees and directors of the Company, stock options to purchase shares of
Class A Common Stock. Stock options granted under the plans are non-qualified
and are granted at a price equal to the fair market value of the Class A Common
Stock at the date of grant.
A summary of stock option transactions for the nine months ended March 31,
1997 is as follows:
<TABLE>
<S> <C>
Options outstanding at July 1, 1996......................... --
Options Granted............................................. 1,033,265
Options Exercised........................................... --
Options Canceled............................................ (16,725)
---------
Options outstanding at March 31, 1997....................... 1,016,540
=========
Prices of options outstanding at March 31, 1997............. $10.00 to
$ 23.50
Average price of options outstanding at March 31, 1997...... $ 10.20
Vested options at March 31, 1997............................ --
Options available for future grants at March 31, 1997....... 1,583,460
</TABLE>
8. EARNINGS (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE
Earnings (loss) per common and common equivalent share are based on the
combined weighted average number of common shares and common share equivalents
outstanding which include, where appropriate, the assumed exercise or conversion
of options. In computing earnings (loss) per common and common equivalent share,
the Company utilizes the modified treasury stock method.
F-23
<PAGE> 85
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(IN THOUSANDS EXCEPT SHARE DATA)
The computation of weighted average common and common equivalent shares
used in the calculation of fully diluted earnings per share for the three months
ended March 31, 1997, which is substantially the same as the computation used to
calculate primary earnings per share, is as follows (in thousands):
<TABLE>
<S> <C>
Common shares outstanding................................... 23,648
Common equivalent shares.................................... 1,017
Weighted average treasury shares purchased.................. (382)
Effect of using weighted average common and common
equivalent shares outstanding............................. (6,773)
-------
17,510
=======
</TABLE>
In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128, "Earnings Per Share" ("SFAS No. 128"). SFAS No. 128 supersedes
Accounting Principles Board Opinion No. 15, "Earnings Per Share", and specifies
the computation, presentation and disclosure requirements for earnings or loss
per share ("EPS") for entities with publicly held common stock or potential
common stock. SFAS No. 128 replaces presentation of primary EPS with a
presentation of basic EPS and fully diluted EPS with diluted EPS. The provisions
of SFAS No. 128 require dual presentation of basic and diluted EPS on the face
of the statement of operations for all entities with complex capital structures.
Furthermore, the provisions of SFAS No. 128 require basic EPS and diluted EPS be
presented for both income (loss) from continuing operations and net income
(loss) on the face of the statement of operations. SFAS No. 128 also requires a
reconciliation of the numerator and denominator of the basic EPS computation to
the numerator and denominator of the diluted EPS computation.
The provisions of SFAS No. 128 are effective for financial statements for
both interim and annual periods ending after December 15, 1997. After adoption,
all prior period EPS data presented shall be restated to conform with the
provisions of SFAS No. 128.
The Company will adopt the provision of SFAS No. 128, as required. The
Company's management believes such adoption will not have a material impact on
the Company's EPS calculations.
F-24
<PAGE> 86
FLORIDA PANTHERS HOLDINGS, INC.
INTRODUCTION TO
UNAUDITED PRO FORMA FINANCIAL INFORMATION
GENERAL
The following Unaudited Pro Forma Consolidated Balance Sheet as of March
31, 1997 and the Unaudited Pro Forma Statements of Operations for the year ended
June 30, 1996 and nine months ended March 31, 1997 reflect adjustments to
Florida Panthers Holdings, Inc. Hyatt Regency Pier 66 Hotel, Radisson Bahia Mar
Resort and Yachting Center, Incredible Ice and Boca Raton Resort & Club
historical financial position and results of operations to give effect to the
transactions discussed below as if such transactions had been consummated at
March 31, 1997, or at the beginning of the period presented.
SEASONALITY
The Company operates in two separate business segments, both of which are
seasonal. Hockey related revenues and team operating expenses are recognized
during the regular season which extends from early October through mid-April. In
addition, approximately 45% to 50% of the resort net operating revenues are
earned during the period from January through April.
THE PRIOR OFFERINGS
The Unaudited Pro Forma Statements of Operations reflect the Company's
Prior Offerings, which were effective November 13, 1996 and the application of
the net proceeds therefrom, as if these offerings had occurred at the beginning
of the periods presented.
PRIVATE PLACEMENT TRANSACTION
On January 30, 1997, the Company issued and sold 2,460,000 shares of
unregistered, but otherwise unrestricted, Class A Common Stock in a Private
Placement at a price of $27.75 per share. The Private Placement resulted in net
proceeds to the Company of $65.6 million after deducting placement agency fees
and other expenses. The application of the net proceeds of the Private Placement
has been reflected in the Unaudited Pro Forma Consolidated Statements of
Operations as if it had occurred at the beginning of the periods presented.
THE OFFERING
The pro forma financial statements reflect this Offering (this "Offering")
and the application of the net proceeds therefrom, as if the Offering had
occurred on March 31, 1997, or at the beginning of the periods presented, as
applicable. See "Use of Proceeds."
2301 LTD. AND RAHN LTD.
Pursuant to the Pier 66 Exchange Agreement, on March 4, 1997 all of the
ownership interests, comprised of capital stock and partnership interests, of
each of the entities which own, directly or indirectly, all of the general and
limited partnership interests in 2301 Ltd. were exchanged for 4,450,000 shares
of the Company's Class A Common Stock. Pursuant to the Bahia Mar Exchange
Agreement, on March 4, 1997 all of the ownership interests, comprised of capital
stock and partnership interests, of each of the entities which own, directly or
indirectly, all of the general and limited partnership interests in Rahn Ltd.
were exchanged for 3,950,000 shares of the Company's Class A Common Stock. After
the consummation of the transactions contemplated by the Exchange Agreements,
the Company owns all of the ownership interests of each of the entities which
own, directly or indirectly, all of the general and limited partnership
interests in 2301 Ltd. and Rahn Ltd.
INCREDIBLE ICE
On January 31, 1997, the Company acquired substantially all of the
business, assets and operations of Iceland (Coral Springs) Corp. and Iceland
Holdings, Inc., including the business, assets and operations of a twin pad ice
rink facility. In addition, the Company acquired from an architectural firm and
such architectural firm's principal certain architectural plans and designs
relating to the ice rink facility. The consideration paid by the Company in
connection with these acquisitions consisted of the assumption by the Company of
a
F-25
<PAGE> 87
maximum of approximately $8,100,000 in construction-related obligations, of
which approximately $6,700,000 was repaid upon consummation of the referenced
acquisition, $1,000,000 in cash and 212,766 shares of unregistered, but
otherwise unrestricted, Class A Common Stock with a market value, if registered
and tradeable, of $4,000,000. These acquisitions will be accounted for as
purchase business combinations.
BOCA RATON HOTEL AND CLUB
Pursuant to a contribution and exchange agreement on June 26, 1997,
substantially all of the assets of Boca Raton Hotel and Club Limited Partnership
(the "Boca Partnership") were transferred to Panthers BRHC Limited, a newly
formed Florida limited partnership, in exchange for (i) a non-managing general
partnership interest in Panthers BRHC; (ii) warrants to purchase 869,810 shares
of the Class A Common Stock; (iii) 189,574 shares of Class A Common Stock, which
were used to compensate certain affiliates of Boca Partnership, who through
their affiliates control BRMC, L.P., a Delaware limited partnership, and the
general partner of the Boca Partnership (the "Boca General Partner"), for their
involvement in integrating Boca Raton Resort and Club ("Boca Resort") into the
Company; (iv) 82,729 shares of Class A Common Stock, which were used to pay
persons to whom Boca Partnership is obligated to pay fees; (v) exchange rights
which, when distributed to the Boca General Partner and the limited partners in
accordance with the partnership agreement of Boca Partnership, will entitle such
holders, without any additional consideration, to sell their partnership
interests to an affiliate of the Company in exchange for approximately 4,242,586
shares of Class A Common Stock exercisable at any time before January 1, 2001;
and (vi) the assumption of indebtedness and payment of deferred fees and
additional interest charges owed by the Boca Partnership in the amount of
approximately $205.9 million, of which approximately $95.9 million was repaid
upon consummation of the acquisition of Boca Resort. Of the $95.9 million which
was repaid, $60.9 million was paid from the Company's working capital and $35.0
million was paid from the incurrence of additional debt.
F-26
<PAGE> 88
FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
BUSINESS ACQUIRED
--------------------------------
BOCA RATON PRO FORMA AS
FLORIDA PANTHERS RESORT ACQUISITION ADJUSTED FOR THE OFFERING
HOLDINGS, INC. & CLUB ADJUSTMENTS BUSINESS ACQUIRED ADJUSTMENTS
------------------ ---------------- ------------- ----------------- -----------
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash and equivalents.............. $ 75,129 $ 1,736 $ 35,000(c) $ 16,012 $123,450(w)
(95,853)(c) (76,143)(x)
Accounts receivable............... 10,445 15,581 26,026
Prepaid expenses and other........ 1,831 36,237 38,068
------- ------- -------- ------- --------
Total current assets........ 87,405 53,554 (60,853) 80,106 47,307
Property and equipment, net........ 129,152 116,789 228,201(a) 474,142
Franchise cost, net................ 22,033 22,033
Player contract acquisition costs,
net............................... 4,438 4,438
Investment in Miami Arena
contract.......................... 8,609 8,609
Other intangible assets, net....... 6,118 6,118
Other assets....................... 4,316 17,751 (9,620)(b) 12,447
------- ------- -------- ------- --------
Total assets................ $262,071 $188,094 $157,728 $607,893 $ 47,307
======= ======= ======== ======= ========
Current Liabilities:
Deferred revenue.................. $ 6,541 $ 4,936 $ 11,477
Accounts payable and accrued
expenses........................ 9,298 19,677 $ 11,800(b) 40,775
Current portion of long-term
debt............................ 15,235 400 15,635 $(15,635)
Other current liabilities......... 3,611 6,236 (3,725)(c) 6,122
------- ------- -------- ------- --------
Total current liabilities... 34,685 31,249 8,075 74,009 (15,635)
Long-term debt..................... 25,951 174,800 20,332(b) 170,508 (60,508)(x)
35,000(c)
(85,575)(c)
Other non-current liabilities...... 1,560 58,511 60,071
Shareholders' Equity
Class A Common Stock............ 234 45(d) 279 60(w)
Class B Common Stock............ 3 3
Contributed capital............. 200,124 (76,466) 179,851(d) 303,509 123,390(w)
Accumulated deficit............. (486) (486)
------- ------- -------- ------- --------
Total shareholders'
equity..................... 199,875 (76,466) 179,896 303,305 123,450
------- ------- -------- ------- --------
Total liabilities and
shareholders' equity....... $262,071 $188,094 $157,728 $607,893 $ 47,307
======= ======= ======== ======= ========
<CAPTION>
PRO FORMA AS
ADJUSTED
------------
<S> <C>
Current Assets:
Cash and equivalents.............. $ 63,319
Accounts receivable............... 26,026
Prepaid expenses and other........ 38,068
--------
Total current assets........ 127,413
Property and equipment, net........ 474,142
Franchise cost, net................ 22,033
Player contract acquisition costs,
net............................... 4,438
Investment in Miami Arena
contract.......................... 8,609
Other intangible assets, net....... 6,118
Other assets....................... 12,447
--------
Total assets................ $655,200
========
Current Liabilities:
Deferred revenue.................. $ 11,477
Accounts payable and accrued
expenses........................ 40,775
Current portion of long-term
debt............................ --
Other current liabilities......... 6,122
--------
Total current liabilities... 58,374
Long-term debt..................... 110,000
Other non-current liabilities...... 60,071
Shareholders' Equity
Class A Common Stock............ 339
Class B Common Stock............ 3
Contributed capital............. 426,899
Accumulated deficit............. (486)
--------
Total shareholders'
equity..................... 426,755
--------
Total liabilities and
shareholders' equity....... $655,200
========
</TABLE>
The accompanying notes to unaudited pro forma consolidated
financial statements are an integral part of these statements.
F-27
<PAGE> 89
FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED MARCH 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
BUSINESSES ACQUIRED(V)(E)
PRO FORMA -------------------------------------------------
AS
FLORIDA ADJUSTED
PANTHERS PRIOR FOR THE
HOLDINGS, INC. OFFERINGS PRIOR ACQUISITION INCREDIBLE
ACTUAL ADJUSTMENT OFFERINGS 2301 LTD. RAHN LTD. ADJUSTMENTS ICE
-------------- ----------- ------------ --------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Ticket sales................ $18,944 $18,944
Television and radio........ 5,745 5,745
Advertising and promotion... 3,580 3,580
Arena operations............ 2,138 2,138
Rooms....................... 2,535 2,535 $ 8,846 $ 5,031
Yachting and marina
services.................. 701 701 2,242 2,865
Food, beverage and
banquets.................. 1,209 1,209 5,800 1,867
Retail and other............ 507 507 1,623 1,815
Other, primarily
concessions............... 1,778 1,778 $ 356
------- ------ ------- ------- ------- ------- -------
Total revenue.......... 37,137 37,137 18,511 11,578 356
Cost of revenue:
Team operations............. 27,482 27,482
Ticketing and arena
operations................ 2,865 2,865
Rooms....................... 408 408 1,925 1,071
Yachting and marina
services.................. 169 169 656 612
Food, beverage and
banquets.................. 843 843 4,371 1,436
Retail and other............ 219 219 727 796
Selling, general and
administrative............ 7,243 7,243 5,513 3,658 $ 301(j) 1,175(k)
------- ------ ------- ------- ------- ------- -------
Total cost of
revenue............... 39,229 39,229 13,192 7,573 301 1,175
Amortization and
depreciation................ (3,586) (3,586) (1,155) (1,348) (977)(i) (36)
------- ------ ------- ------- ------- ------- -------
Operating income (loss)...... (5,678) (5,678) 4,164 2,657 (1,278) (855)
Interest and other, net...... (1,844) $2,069(g) 225 (1,487) (816)
------- ------ ------- ------- ------- ------- -------
Net income (loss)............ $(7,522) $2,069 $(5,453) $ 2,677 $ 1,841 $(1,278) $ (855)
======= ====== ======= ======= ======= ======= =======
Net income (loss) per
share....................... $ (0.72)(f) $ (0.43)(h)
Pro Forma weighted average
shares outstanding.......... 10,498(f) 12,811(h)
<CAPTION>
BUSINESSES ACQUIRED(V)(E)
-------------------------------------------- PRO FORMA AS
ADJUSTED FOR
THE PRIOR
OFFERINGS AND PRO FORMA
ACQUISITION BOCA RATON ACQUISITION THE BUSINESSES OFFERING AS
ADJUSTMENTS RESORT & CLUB ADJUSTMENTS ACQUIRED ADJUSTMENT ADJUSTED
----------- ---------------- ----------- ---------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Ticket sales................ $ 18,944 $18,944
Television and radio........ 5,745 5,745
Advertising and promotion... 3,580 3,580
Arena operations............ 2,138 2,138
Rooms....................... $35,579 51,991 51,991
Yachting and marina
services.................. 5,808 5,808
Food, beverage and
banquets.................. 26,053 34,929 34,929
Retail and other............ 27,680 31,625 31,625
Other, primarily
concessions............... 2,134 2,134
--- ----- ------- ------ ------ -------
Total revenue.......... 89,312 156,894 156,894
Cost of revenue:
Team operations............. 27,482 27,482
Ticketing and arena
operations................ 2,865 2,865
Rooms....................... 8,199 11,603 11,603
Yachting and marina
services.................. 1,437 1,437
Food, beverage and
banquets.................. 20,410 27,060 27,060
Retail and other............ 14,694 16,436 16,436
Selling, general and
administrative............ $ 4(j) 25,917 $ (817)(j)(n) 42,994 42,994
--- ----- ------- ------ ------ -------
Total cost of
revenue............... 4 69,220 (817) 129,877 129,877
Amortization and
depreciation................ (89)(l) (4,667) (1,768)(i) (13,626) (13,626)
--- ----- ------- ------ ------ -------
Operating income (loss)...... (93) 15,425 (951) 13,391 13,391
Interest and other, net...... (13,250) 4,550(o) (10,778) $4,178(y) (6,600)
--- ----- ------- ------ ------ -------
Net income (loss)............ $ (93) $ 2,175 $ 3,599 $ 2,613 $4,178 $ 6,791
=== ===== ======= ====== ====== =======
Net income (loss) per
share....................... $ 0.10(m) $ 0.22(p)
Pro Forma weighted average
shares outstanding.......... 26,623(m) 30,324(p)
</TABLE>
The accompanying notes to unaudited pro forma consolidated financial statements
are an integral part of these statements.
F-28
<PAGE> 90
FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
BUSINESSES ACQUIRED(V)(E)
--------------------------------------------------
PRO FORMA
FLORIDA AS
PANTHERS ADJUSTED
HOLDINGS, PRIOR FOR THE
INC. OFFERINGS PRIOR ACQUISITION INCREDIBLE
ACTUAL ADJUSTMENT OFFERINGS 2301 LTD. RAHN LTD. ADJUSTMENTS ICE(U)
-------------- ----------- ----------- --------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Ticket Sales.................. $ 23,226 $ 23,226
Television and radio.......... 5,141 5,141
Advertising and promotion..... 2,192 2,192
Arena operations.............. 1,082 1,082
Rooms......................... $12,036 $ 6,251
Yachting and marina
services.................... 3,481 3,813
Food, beverage and banquets... 8,309 2,379
Retail and other.............. 2,513 2,365
Other, primarily
concessions................. 2,446 2,446
-------- ------ -------- ------- ------- ------- --
Total revenue............ 34,087 34,087 26,339 14,808
Cost of revenue:
Team operations............... 32,639 32,639
Ticketing and arena
operations.................. 3,319 3,319
Rooms......................... 2,698 1,402
Yachting and marina
services.................... 1,175 733
Food, beverage and banquets... 6,340 1,870
Retail and other.............. 1,078 1,088
Selling, general and
administrative.............. 8,371 8,371 7,957 5,068 $ 411(j)
-------- ------ -------- ------- ------- ------- --
Total cost of revenue.... 44,329 44,329 19,248 10,161 411
Amortization and
depreciation................ (9,815) (9,815) (1,608) (1,935) (1,458)(i)
-------- ------ -------- ------- ------- ------- --
Operating income (loss)........ (20,057) (20,057) 5,483 2,712 (1,869)
Interest and other, net........ (5,082) $5,030(g) (52) (2,299) (1,340)
-------- ------ -------- ------- ------- ------- --
Net income (loss).............. $(25,139) $5,030 $(20,109) $ 3,184 $ 1,372 $(1,869) $
======== ====== ======== ======= ======= ======= ==
Net loss per share............. $ (4.76)(q) $ (1.99)(r)
Pro Forma weighted average
shares outstanding............ 5,276(q) 10,114(r)
<CAPTION>
BUSINESSES ACQUIRED(V)(E)
---------------------------------------- PRO FORMA AS
ADJUSTED FOR
THE
PRIOR
BOCA RATON OFFERINGS AND PRO FORMA
ACQUISITION RESORT & ACQUISITION THE BUSINESSES OFFERING AS
ADJUSTMENTS CLUB ADJUSTMENTS ACQUIRED ADJUSTMENT ADJUSTED
----------- ------------ ----------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Ticket Sales.................. $ 23,226 $ 23,226
Television and radio.......... 5,141 5,141
Advertising and promotion..... 2,192 2,192
Arena operations.............. 1,082 1,082
Rooms......................... $ 47,044 65,331 65,331
Yachting and marina
services.................... 7,294 7,294
Food, beverage and banquets... 33,465 44,153 44,153
Retail and other.............. 30,799 35,677 35,677
Other, primarily
concessions................. 2,446 2,446
--- -------- ------- -------- ------- --------
Total revenue............ 111,308 186,542 186,542
Cost of revenue:
Team operations............... 32,639 32,639
Ticketing and arena
operations.................. 3,319 3,319
Rooms......................... 10,895 14,995 14,995
Yachting and marina
services.................... 1,908 1,908
Food, beverage and banquets... 25,597 33,807 33,807
Retail and other.............. 16,771 18,937 18,937
Selling, general and
administrative.............. 38,223 $(1,169)(n)(j) 58,861 58,861
--- -------- ------- -------- ------- --------
Total cost of revenue.... 91,486 (1,169) 164,466 164,466
Amortization and
depreciation................ $(152)(l) (6,420) (1,719)(i) (23,107) (23,107)
--- -------- ------- -------- ------- --------
Operating income (loss)........ (152) 13,402 (550) (1,031) (1,031)
Interest and other, net........ (15,697) 4,097(o) (15,291) $ 6,491(y) (8,800)
--- -------- ------- -------- ------- --------
Net income (loss).............. $(152) $ (2,295) $ 3,547 $(16,322) $ 6,491 $ (9,831)
=== ======== ======= ======== ======= ========
Net loss per share............. $ (0.65)(s) $ (0.34)(t)
Pro Forma weighted average
shares outstanding............ 25,237(s) 28,938(t)
</TABLE>
The accompanying notes to unaudited pro forma consolidated financial statements
are an integral part of these statements.
F-29
<PAGE> 91
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS
(a) Represents the step-up in cost basis of property and equipment acquired.
The excess of purchase price over historical cost is allocated based upon
the relative market values as follows (in 000's):
<TABLE>
<CAPTION>
HISTORICAL STEP-UP AS ADJUSTED
---------- -------- -----------
<S> <C> <C> <C>
Land....................................... $ 26,851 $ 78,795 $105,646
Building, net.............................. 63,157 149,406 212,563
Furniture and equipment, net............... 17,446 -- 17,446
Construction-in-progress................... 9,335 -- 9,335
-------- -------- --------
Total fixed assets....................... $116,789 $228,201 $344,990
======== ======== ========
</TABLE>
The relative market values of property and equipment were determined by the
Company's management in consultation with representatives of the current
property owners. Factors considered in the allocation include trends in the
hospitality industry and local real estate market. Although such allocation
is preliminary, management believes that no material adjustments will be
required once the Company's due diligence process has been completed.
(b) Represents adjustments to outstanding debt and related costs, including
yield maintenance adjustment of $20,332,000 resulting from the early
retirement of debt in connection with the change of control, reduction of
deferred loan costs of $9,620,000 and accrual of acquisition closing costs
of $11,800,000. The yield maintenance adjustment has been determined in
accordance with Boca Partnership's debt agreements.
(c) Represents the use of Private Placement proceeds to repay approximately
$30,243,000 of outstanding debt, approximately $20,332,000 of yield
maintenance fees (see note (b) above) and $10,278,000 of deferred fees
(including $3,725,000 of deferred fees due to the General Partner accrued
at March 31, 1997) and additional interest charges owed by the Boca
Partnership. Approximately $35,000,000 of additional debt will be repaid
with funds provided by additional borrowings in accordance with the terms
of the Contribution and Exchange.
(d) Represents the issuance of 4,514,889 shares of Class A Common Stock in
exchange for the property and equipment detailed in note (a) less the fair
value of long-term debt, per the Contribution and Exchange Agreement. The
fair market value of the net assets received ($103,430,000 or $22.91 per
share) is based on the average share price for 5 days before and 5 days
after execution of the Contribution and Exchange Agreement reduced by a
discount which was based upon the nature of the securities received
(convertible limited partnership units) and the size of the block of shares
to be ultimately issued. The adjustment amount is a combination of the
partners' deficit and the fair value noted.
(e) Boca Raton Resort and Club has a fiscal year which ends on December 31.
Reflected hereon are the results of operations for Boca Raton Resort and
Club for the nine month period ended March 31, 1997 and the twelve month
period ended June 30, 1996.
(f) Net loss per share and weighted average shares outstanding are determined
based on the 5,275,678 shares issued in connection with the Reorganization
as if they had been outstanding for the entire period presented and (i)
7,300,000 shares issued in connection with the Prior Offerings (ii)
8,400,000 shares issued in the acquisitions of Pier 66 and Bahia Mar
(4,450,000 shares for Pier 66 and 3,950,000 shares for Bahia Mar) (iii)
212,766 shares issued in the acquisition of Incredible Ice and (iv)
2,460,000 shares issued in the Private Placement, all for the period for
which they were actually outstanding.
(g) Represents the elimination of interest expense related to the term loan and
the related party debt for the period prior to the Prior Offerings. The
loans had an interest rate of LIBOR plus .75% per annum. In November 1996
these loans were repaid with the proceeds of the Prior Offerings.
F-30
<PAGE> 92
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
(h) Net loss per share and weighted average shares outstanding are determined
based on the 5,275,678 shares issued in connection with the Reorganization
as if they had been outstanding for the entire period presented, 4,838,710
shares (of the 7,300,000 shares issued in the Prior Offerings) issued to
repay the Company's outstanding indebtedness as if they had been
outstanding for the period prior to the Prior Offerings and for the periods
for which they were actually outstanding and (i) 7,300,000 shares issued in
connection with the Prior Offerings (ii) 8,400,000 shares issued in the
acquisitions of Pier 66 and Bahia Mar (4,450,000 shares for Pier 66 and
3,950,000 shares for Bahia Mar) (iii) 212,766 shares issued in the
acquisition of Incredible Ice and (iv) 2,460,000 shares issued in the
Private Placement, all for the period for which they were actually
outstanding.
(i) Represents the additional depreciation expense associated with the
stepped-up basis of the property and equipment of the acquired companies.
(j) Represents a management fee equal to 1% of revenue payable to Huizenga
Holdings.
(k) These Selling, general and administrative costs include approximately
$691,000 of legal and advisory costs incurred by the previous owners
related to unconsummated private placement and business sale transactions.
(l) Represents the amortization of the excess of purchase price over the
historical cost basis of assets of Incredible Ice ($6,092,000) over an
estimated useful life of 40 years.
(m) Net loss per share and weighted average shares outstanding are determined
based on the (i) 5,275,678 shares issued in connection with the
Reorganization as if they had been outstanding for the entire period
presented, (ii) 4,838,710 shares (of the 7,300,000 shares issued in the
Prior Offerings) issued to repay the Company's outstanding indebtedness as
if they had been outstanding for the period prior to the Prior Offerings,
(iii) 7,300,000 shares issued in connection with the Prior Offerings for
the period for which they were actually outstanding, (iv) 8,400,000 shares
in connection with the Exchange Agreements (4,450,000 shares for 2301 Ltd.
and 3,950,000 shares for Rahn Ltd.) as if they had been outstanding for the
entire period presented, (v) 212,766 shares issued in the acquisition of
Incredible Ice as if they had been outstanding for the entire period
presented, (vi) 2,460,000 shares issued in the Private Placement for the
period for which they were actually outstanding and (vii) 4,514,889 shares
issued in connection with the acquisition of Boca Raton Resort and Club as
if they had been outstanding for the entire period presented and (viii)
1,994,124 shares (of the 2,460,000 issued in the Private Placement) used to
repay $54.3 million of outstanding indebtedness as if they had been
outstanding for the entire period presented.
(n) Represents the net difference in contracted expenses incurred prior to the
acquisition versus those to be incurred subsequent to the acquisition. Such
costs include payments under employment contracts and management
agreements.
(o) Represents the reduction of interest expense associated with approximately
$145,000,000 of adjusted debt balances related to the acquisition of the
Boca Raton Resort and Club as discussed in note (c).
(p) Net income per share and weighted average shares outstanding are determined
based on the (i) 5,275,678 shares issued in connection with the
Reorganization as if they had been outstanding for the entire period
presented, (ii) 4,838,710 shares (of the 7,300,000 shares issued in the
Prior Offerings) issued to repay the Company's outstanding indebtedness as
if they had been outstanding for the period prior to the Prior Offerings,
(iii) 7,300,000 shares issued in connection with the Prior Offerings for
the period for which they were actually outstanding, (iv) 8,400,000 shares
issued in connection with the Exchange Agreements (4,450,000 shares for
2301 Ltd. and 3,950,000 shares for Rahn Ltd.) as if they had been
outstanding for the entire period presented, (v) 212,766 shares issued in
the acquisition of Incredible Ice, as if they had been outstanding for the
entire period presented, (vi) 2,460,000 shares
F-31
<PAGE> 93
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
issued in the Private Placement for the period for which they were actually
outstanding (vii) 4,514,889 shares issued in connection with the
acquisition of Boca Raton Resort and Club as if they had been outstanding
for the entire period presented, (viii) 1,994,124 shares (of the 2,460,000
issued in the Private Placement) used to repay $54.3 million of outstanding
indebtedness as if they had been outstanding for the entire period
presented and (ix) 3,700,753 shares (of the 6,000,000 issued in the
Offering) used to repay a portion of outstanding indebtedness assumed in
the acquisition of the Resort Facilities, as if they had been outstanding
for the entire period presented.
(q) Net loss per share and weighted average shares outstanding are determined
based on the 5,275,678 shares issued in connection with the Reorganization
as if they had been outstanding for the entire period presented.
(r) Net loss per share and weighted average shares outstanding are determined
based on the (i) 5,275,678 shares issued in connection with the
Reorganization and (ii) 4,838,710 shares (of the 7,300,000 shares issued in
the Prior Offerings) issued to repay the Company's outstanding indebtedness
as if they had been outstanding for the entire period presented.
(s) Net loss per share and weighted average shares outstanding are determined
based on the (i) 5,275,678 shares issued in connection with the
Reorganization, (ii) 4,838,710 shares (of the 7,300,000 shares offered in
the Prior Offerings) issued to repay the Company's outstanding
indebtedness, (iii) 8,400,000 shares issued in connection with the Exchange
Agreements (4,450,000 shares for 2301 Ltd. and 3,950,000 shares for Rahn
Ltd.) as if they had been outstanding for the entire period presented and
(iv) 212,766 shares issued in the acquisition of Incredible Ice as if they
had been outstanding for the entire period presented (v) 4,514,889 shares
issued in connection with the acquisition of Boca Raton Resort and Club and
(vi) 1,994,124 shares (of the 2,460,000 issued in the Private Placement)
used to repay $54.3 million of outstanding indebtedness as if they had been
outstanding for the entire period presented.
(t) Net loss per share and weighted average shares outstanding are determined
based on the (i) 5,275,678 shares issued in connection with the
Reorganization, (ii) 4,838,710 shares (of the 7,300,000 shares offered in
the Prior Offerings) issued to repay the Company's outstanding
indebtedness, (iii) 8,400,000 shares issued in connection with the Exchange
Agreements (4,450,000 shares for 2301 Ltd. and 3,950,000 shares for Rahn
Ltd.) as if they had been outstanding for the entire period presented, (iv)
212,766 shares issued in the acquisition of Incredible Ice, as if they had
been outstanding for the entire period presented, (v) 4,514,889 shares
issued in connection with the acquisition of Boca Raton Resort and Club as
if they had been outstanding for the entire period presented, (vi)
1,994,124 shares (of the 2,460,000 issued in the Private Placement) used to
repay $54.3 million of outstanding indebtedness as if they had been
outstanding for the entire period presented and (vii) 3,700,753 shares (of
the 6,000,000 issued in the Offering) used to repay a portion of
outstanding indebtedness assumed in the acquisition of the Resort
Facilities, as if they had been outstanding for the entire period
presented.
(u) Incredible Ice commenced its operations during November, 1996. Accordingly,
there are no results of operations included hereon for the period ended
June 30, 1996.
(v) 2301 Ltd., Rahn Ltd. and Incredible Ice have fiscal years which end on
December 31. Reflected hereon are the results of operations of 2301 Ltd.,
Rahn Ltd. and Incredible Ice for the twelve month period ended June 30,
1996 and the period from July 1, 1996 to the date of acquisition by the
Company.
(w) Reflects the receipt of the net proceeds to the Company from the sale of
6,000,000 shares of Class A Common Stock in this Offering at a price of
$20.58 per share after deducting underwriting discounts and commissions and
other estimated offering expenses.
F-32
<PAGE> 94
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
(x) Represents the use of the proceeds of the Offering to repay a portion of
outstanding indebtedness assumed in the acquisition of the Resort
Facilities.
(y) Represents the elimination of interest expense related to the repayment of
indebtedness as discussed in note (x) above.
F-33
<PAGE> 95
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners of
2301 SE 17th St., Ltd.:
We have audited the accompanying balance sheet of 2301 SE 17th St., Ltd.
(the "Partnership", a Florida limited partnership) as of December 31, 1996, and
the related statements of operations, partners' equity and cash flows for the
year then ended. These financial statements are the responsibility of the
Partnership's 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 financial position of 2301 SE 17th St., Ltd. as of
December 31, 1996, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
January 10, 1997.
F-34
<PAGE> 96
INDEPENDENT AUDITORS' REPORT
The Partners
2301 SE 17th St., Ltd.:
We have audited the accompanying balance sheet of 2301 SE 17th St., Ltd. (a
Florida limited partnership) as of December 31, 1995, and the related statements
of operations, partners' equity and cash flows for each of the years in the two
year period ended December 31, 1995. These financial statements are the
responsibility of the Partnership'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 2301 SE 17th St., Ltd. at
December 31, 1995, and the results of its operations and its cash flows for each
of the years in the two year period ended December 31, 1995 in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Fort Lauderdale, Florida,
April 19, 1996
F-35
<PAGE> 97
2301 SE 17TH ST., LTD.
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
ASSETS
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................. $ 5,665,918 $ 5,296,563
Accounts receivable, net of allowance for doubtful
accounts of $25,000 as of December 31, 1996 and 1995... 1,270,539 1,510,354
Inventories............................................... 417,775 360,691
Prepaid expenses and other current assets................. 52,650 112,827
----------- -----------
Total current assets.............................. 7,406,882 7,280,435
PROPERTY AND EQUIPMENT, net of accumulated depreciation of
$4,989,415 and $3,402,512 as of December 31, 1996 and
1995, respectively........................................ 28,435,871 29,045,675
OTHER ASSETS, net of accumulated amortization of $1,659,860
and $1,575,526 as of December 31, 1996 and 1995,
respectively.............................................. 350,338 387,638
----------- -----------
Total assets...................................... $36,193,091 $36,713,748
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.......................................... $ 734,140 $ 1,210,721
Accrued liabilities....................................... 974,562 1,070,441
Advance deposits.......................................... 400,049 522,622
----------- -----------
Total current liabilities......................... 2,108,751 2,803,784
LONG-TERM DEBT.............................................. 25,741,929 25,522,398
----------- -----------
Total liabilities................................. 27,850,680 28,326,182
COMMITMENTS AND CONTINGENCIES (Notes 1 and 9)
PARTNERS' EQUITY:
General Partner........................................... 83,424 83,875
Class A Limited Partners.................................. 8,258,887 8,303,591
Class B Limited Partners.................................. 100 100
----------- -----------
Total partners' equity............................ 8,342,411 8,387,566
----------- -----------
Total liabilities and partners' equity............ $36,193,091 $36,713,748
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
balance sheets.
F-36
<PAGE> 98
2301 SE 17TH ST., LTD.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
OPERATING REVENUES:
Rooms.......................................... $ 12,885,858 $ 11,778,303 $ 9,784,119
Yachting and marina service.................... 3,613,361 3,186,513 3,157,742
Food, beverage and banquets.................... 8,756,909 8,151,581 6,889,860
Telephone, retail and other.................... 2,466,427 2,516,960 2,100,903
------------ ------------ ------------
Total operating revenues............... 27,722,555 25,633,357 21,932,624
COSTS AND EXPENSES:
Rooms.......................................... 2,801,808 2,659,149 2,443,787
Yachting and marina service.................... 1,199,177 984,456 869,688
Food, beverage and banquets.................... 6,543,959 6,273,101 5,670,050
Telephone, retail and other.................... 1,098,451 1,121,172 1,082,039
Selling, general and administrative............ 3,389,522 3,488,941 3,020,107
Property operations, maintenance and energy
costs....................................... 2,723,454 2,535,241 2,423,787
Royalty fees, property taxes, insurance,
etc......................................... 1,404,356 1,189,549 1,103,749
Depreciation and amortization.................. 1,675,608 1,566,582 1,428,172
Related party management fee................... 530,000 514,000 560,000
------------ ------------ ------------
Total costs and expenses............... 21,366,335 20,332,191 18,601,379
Income from operations................. 6,356,220 5,301,166 3,331,245
OTHER INCOME (EXPENSE):
Interest income................................ 233,859 225,111 120,989
Interest expense............................... (2,375,634) (2,424,040) (2,168,908)
Loss on disposal of fixed assets............... (59,600) (114,230) (12,523)
------------ ------------ ------------
NET INCOME....................................... 4,154,845 2,988,007 1,270,803
PRO FORMA INCOME TAX PROVISION (Note 3).......... 1,620,389 1,165,323 495,613
------------ ------------ ------------
PRO FORMA NET INCOME AFTER INCOME TAXES.......... $ 2,534,456 $ 1,822,684 $ 775,190
============ ============ ============
NET INCOME ALLOCATED TO:
General Partner................................ $ 41,549 $ 29,880 $ 12,708
Class A Limited Partners....................... 4,113,296 2,958,127 1,258,095
Class B Limited Partners....................... -- -- --
------------ ------------ ------------
Total Net income....................... $ 4,154,845 $ 2,988,007 $ 1,270,803
============ ============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-37
<PAGE> 99
2301 SE 17TH ST., LTD.
STATEMENTS OF PARTNERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
CLASS A CLASS B
GENERAL PARTNER LIMITED PARTNERS LIMITED PARTNERS TOTAL
--------------- ---------------- ---------------- -----------
<S> <C> <C> <C> <C>
PARTNERS' EQUITY,
December 31, 1993........................... $ 76,287 $ 7,552,369 $ 100 $ 7,628,756
Partner distributions....................... (10,000) (990,000) -- (1,000,000)
Net income.................................. 12,708 1,258,095 -- 1,270,803
-------- ----------- ------ -----------
PARTNERS' EQUITY,
December 31, 1994........................... 78,995 7,820,464 100 7,899,559
Partner distributions....................... (25,000) (2,475,000) -- (2,500,000)
Net income.................................. 29,880 2,958,127 -- 2,988,007
-------- ----------- ------ -----------
PARTNERS' EQUITY,
December 31, 1995........................... 83,875 8,303,591 100 8,387,566
Partner distributions....................... (42,000) (4,158,000) -- (4,200,000)
Net income.................................. 41,549 4,113,296 -- 4,154,845
-------- ----------- ------ -----------
PARTNERS' EQUITY,
December 31, 1996........................... $ 83,424 $ 8,258,887 $ 100 $ 8,342,411
======== =========== ====== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-38
<PAGE> 100
2301 SE 17TH ST., LTD.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income........................................ $ 4,154,845 $ 2,988,007 $ 1,270,803
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization.................. 1,675,608 1,566,582 1,428,172
Amortization of debt discount.................. 219,532 484,462 540,505
Loss on disposal of fixed assets............... 59,600 114,230 12,523
Changes in assets and liabilities:
Accounts receivable.......................... 239,815 (553,103) 262,716
Inventories.................................. (57,084) 4,009 67,323
Prepaid expenses and other current assets.... 60,177 13,538 91,229
Other assets................................. 6,706 37,494 31,515
Restricted cash fund......................... -- 21,357 482,585
Accounts payable and accrued liabilities..... (572,461) 794,087 (1,386,047)
Advance deposits............................. (122,573) (124,738) 304,176
----------- ----------- -----------
Total adjustments......................... 1,509,320 2,357,918 1,834,697
----------- ----------- -----------
Net cash provided by operating
activities.............................. 5,664,165 5,345,925 3,105,500
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment............... (1,094,810) (1,049,310) (1,103,095)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt...................... -- -- 994,105
Repayment of long-term debt....................... -- -- (48,000)
Distributions to partners......................... (4,200,000) (2,500,000) (1,000,000)
----------- ----------- -----------
Net cash used in financing activities..... (4,200,000) (2,500,000) (53,895)
----------- ----------- -----------
Net increase in cash and cash
equivalents............................. 369,355 1,796,615 1,948,510
CASH AND CASH EQUIVALENTS, beginning of period...... 5,296,563 3,499,948 1,551,438
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, end of period............ $ 5,665,918 $ 5,296,563 $ 3,499,948
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest.......... $ 2,156,102 $ 1,936,838 $ 1,628,403
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-39
<PAGE> 101
2301 SE 17TH ST., LTD.
NOTES TO FINANCIAL STATEMENTS
(1) BACKGROUND OF THE PARTNERSHIP AND OPERATIONS:
2301 SE 17th St., Ltd. (the "Partnership"), a Florida limited partnership,
was formed on March 5, 1993 for the purpose of acquiring, owning and operating
Pier 66 Resort Hotel and Marina, a 380-room resort hotel and conference facility
and a marina which accommodates 142 yachts, located on approximately 23 acres in
Fort Lauderdale, Florida, (the "Resort"). The partnership agreement, amended and
modified on June 29, 1993, is hereinafter referred to as the "Partnership
Agreement".
The Partnership acquired its interest in the Resort from SSA Associates and
Pier Operating Associates, Ltd. on June 29, 1993. The aggregate purchase price
paid by the Partnership for its interest in the Resort was approximately
$30,310,000. Of this amount, $22,000,000 was funded by refinancing the existing
mortgage loan on the Resort.
The Partnership will terminate on December 31, 2035, or sooner, in
accordance with the terms of the Partnership Agreement (see Note 11). The
General Partner of the Partnership is 2301 Mgt., Ltd. (the "General Partner").
2301 Joint Venture and Rahn Pier, Inc. are Class A Limited Partners and First
Winthrop Corporation and Sixty-Six Inc. are Class B Limited Partners.
Class B Limited Partners are not required to make additional capital
contributions, have no rights to vote on partnership matters and do not
participate in the allocation of partnership profits and losses. If the General
Partner and the Class A Limited Partners have both received the Minimum
Qualified Distributions (as defined in the Partnership Agreement), then 15
percent of the distributions with respect to a Capital Transaction (as defined
in the Partnership Agreement) that would otherwise have been made to the General
Partner and the Class A Limited Partners will instead be made to the Class B
Limited Partners.
After any special allocations required by the Partnership Agreement,
profits and losses of the Partnership shall be allocated 1 percent to the
General Partner and 99 percent to the Class A Limited Partners.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(a) Basis of Accounting --
The accompanying financial statements include the accounts of the
Partnership prepared on the accrual basis of accounting in accordance with
generally accepted accounting principles.
(b) Cash and Cash Equivalents --
The Partnership considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents. Cash equivalents are
stated at cost, which approximates market, and consist of repurchase agreements
and money market funds at December 31, 1996 and 1995.
(c) Inventories --
Inventories are stated at the lower of first-in, first-out cost or market.
Inventories consist of food and beverage, marina fuel, retail merchandise and
general store items.
(d) Depreciation --
The following estimated useful lives are used for depreciating property and
equipment on a straight-line basis.
<TABLE>
<S> <C>
Land improvements.............................. 20 years
Building and improvements...................... 40 years
Furnishings and equipment...................... 5-7 years
</TABLE>
F-40
<PAGE> 102
2301 SE 17TH ST., LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(e) Property and Equipment --
The Partnership's assets are carried at the lower of cost or estimated fair
value. All subsequent expenditures for improvements are capitalized. The costs
of repairs and maintenance are charged to expense as incurred.
The Partnership adopted Statement of Financial Accounting Standards No.
121 -- Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed of, as of January 1, 1995, and accordingly evaluates its
real estate investments periodically to assess whether any impairment
indications are present, including recurring operating losses and significant
adverse changes in legal factors or business climate that affect the recovery of
the recorded value. If any real estate investment is considered impaired, a loss
is provided to reduce the carrying value of the property to its estimated fair
value. The implementation of this standard had no impact on the financial
statements.
(f) Use of Estimates --
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts in the financial statements and
accompanying notes. Actual results could differ from those estimates.
(g) Fair Value of Financial Instruments --
The fair values of the Partnership's financial instruments, including
accounts receivable, long-term debt, accounts payable and accrued liabilities,
advance deposits, and other financial instruments, generally determined using
the present value of estimated future cash flows using a discount rate
commensurate with the risks involved, approximate their carrying or contract
values.
(h) Business Risk --
Any substantial change in economic conditions or any significant price
fluctuations related to the travel and tourism industry could affect
discretionary consumer spending and have a material impact on the Company's
business. In addition, the Company is subject to competition from other entities
engaged in the business of resort development and operation, including interval
ownership, condominiums, hotels and motels.
(i) Concentration of Credit Risk --
The Partnership's receivables contain significant amounts due from cruise
lines which are granted credit by the Partnership. The amount of such credit is
determined by the Partnership's management on an individual basis. Amounts
outstanding at December 31, 1996 are $181,228 and are included in Accounts
receivable in the accompanying balance sheet.
(3) INCOME TAXES:
No provision for income taxes is reflected in the accompanying financial
statements. The partners are required to report on their individual income tax
returns, their allocable share of income, gains, losses, deductions and credits
of the Partnership. The pro forma income tax provision in the accompanying
statements of operations is presented for informational purposes as if the
Partnership was a C corporation during the years presented. Pro forma taxes have
been computed based on an overall estimated effective rate of 39%.
F-41
<PAGE> 103
2301 SE 17TH ST., LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(4) ACCRUED LIABILITIES:
Accrued liabilities consist of the following as of December 31, 1996 and
1995:
<TABLE>
<CAPTION>
1996 1995
-------- ----------
<S> <C> <C>
Accrued salaries and wages........................... $195,613 $ 168,736
Accrued vacation..................................... 227,883 191,046
Sales tax payable.................................... 129,306 108,621
Other accrued liabilities............................ 421,760 602,038
-------- ----------
$974,562 $1,070,441
======== ==========
</TABLE>
(5) LONG-TERM DEBT:
The property was acquired subject to assumption of a portion of the
existing mortgage loan in the principal amount of $22,000,000 ("Note 1") from
Kemper Investors Life Insurance Company. In addition, the Partnership obtained
an additional mortgage note from Kemper for $4,000,000 ("Note 2") to be drawn
upon to finance the cost of certain capital improvements, to provide initial
working capital, and to fund interest accrued on the mortgage notes between
January 1, 1994 and December 31, 1995 to the extent cash flows from operations
are insufficient for such payment. Both mortgage notes mature on June 28, 2000
and bear interest at varying rates for specified periods. This rate was 8.39
percent and 8.0 percent at December 31, 1996 and 1995, respectively. The
mortgage notes require monthly payments of interest only throughout the term. A
balloon payment on the entire outstanding principal amount, together with the
final monthly payment of interest, will be due at maturity. Both mortgage notes
are collateralized by substantially all property and equipment including the
alcoholic beverage license, a security interest in the Hyatt franchise
agreement, an assignment of leases, rents and profits, trademarks and the
management agreement.
The outstanding balances of the notes at December 31, 1996 and 1995 were as
follows:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Note 1............................................ $21,951,325 $21,951,325
Note 2............................................ 4,000,000 4,000,000
----------- -----------
25,951,325 25,951,325
Less: Unamortized discount based on imputed
interest rate of 9%............................. (209,396) (428,927)
----------- -----------
$25,741,929 $25,522,398
=========== ===========
</TABLE>
As required by the loan agreement, the Partnership maintains a Capital
Expenditure Program ("CEP") reserve fund for the replacement of capital assets.
The CEP reserve equals 3 percent of gross revenues net of amounts expended by
the Resort for replacement of capital assets and is funded quarterly for the
preceding quarter. The CEP establishes a minimum level of fixed asset
expenditures to be made by the Partnership. To the extent these minimum
expenditure levels are not achieved, such shortfall is to be included in the CEP
fund. Beginning July 1, 1995, the Resort voluntarily increased the CEP reserve
to 4 percent of gross revenues; however, the loan agreement fund is only funded
for the required 3 percent. The CEP fund is also pledged as additional security
for the loan obligation. At December 31, 1996 and 1995, the balance of the CEP
reserve is $1,284 and $9,218, respectively, and is included in Other assets in
the accompanying balance sheets.
(6) MANAGEMENT AGREEMENT:
The Partnership entered into a hotel management agreement with Rahn Pier
Mgt., Inc., a company affiliated by common ownership and management with the
general partner and Class A limited partners, effective June 29, 1993. The
agreement provides for a management fee equal to three percent of gross
F-42
<PAGE> 104
2301 SE 17TH ST., LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
revenues during the first year, payable monthly. Management fees for the second
year equal two percent of gross revenues and for each year thereafter through
December 31, 2003, an amount equal to the total management fee during the second
year.
Management fees for the Resort amounted to approximately $530,000, $514,000
and $560,000, in 1996, 1995 and 1994, respectively, and are included in Related
party management fee in the accompanying statements of operations. Fees payable
to Rahn Pier Mgt., Inc. were approximately $50,000 as of December 31, 1996 and
1995. In addition, during 1994 construction management fees of $48,000 were paid
to Rahn Properties, Inc., an affiliate of the general partner and Class A
limited partners and are included in Royalty fees, property taxes, insurance,
etc., in the accompanying statements of operations.
(7) LICENSE AND FRANCHISE AGREEMENTS:
Hyatt Franchise--
As of November 14, 1994, Rahn Pier Mgt., Inc. entered into a franchise
agreement with Hyatt Franchise Corporation. The agreement is for a 20 year term
ending November 14, 2014 with various early termination provisions and
liquidated damages for early termination. The franchise agreement provides a
reimbursement of not more than $15,000 for out-of-pocket expenses incurred
relating to the granting of the franchise and monthly royalty fees based on a
percentage of gross room revenue: one percent from December 1, 1994 through
November 30, 1995, three percent from December 1, 1995 through November 30,
1996, four percent from December 1, 1996 through November 30, 1997 and five
percent thereafter. Royalty fees amounted to $398,175 and $132,449 in 1996 and
1995, respectively.
The agreement also provides for the pro-rata allocation of certain Hyatt
"allocable chain expenses" based on the relation of the Resort's total number of
guest rooms to the average number of guest rooms in all Hyatt Resorts in the
United States along with assessments for Gold Passport and national/regional
sales promotions. A fee for the use of the Hyatt reservation system is also
allocated to the Hotel. Total Hyatt expenses other than the royalty fees
amounted to $501,752 and $502,658 for the years ended December 31, 1996 and
1995, respectively, and are included in Rooms and Selling, general, and
administrative expenses in the accompanying statements of operations.
The franchise agreement requires the Partnership to maintain a reserve for
replacement of furniture, fixtures and equipment and those repairs and
maintenance costs which are capitalizable under generally accepted accounting
principles. This reserve is determined as a percentage of gross room revenues:
three percent through November 1995 and four percent thereafter.
The franchise agreement requires the significant renovation of guest rooms,
corridors and other public areas to be performed every five to six years. In
addition, the replacement of other furniture, fixtures and equipment, as defined
in the agreement, is to occur every 10 to 12 years.
F-43
<PAGE> 105
2301 SE 17TH ST., LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(8) PROPERTY AND EQUIPMENT:
Property and equipment consists of the following:
<TABLE>
<CAPTION>
1996 1995
-------------------- --------------------
<S> <C> <C>
Land and land improvements........................ $ 6,547,452 $ 6,547,452
Building and improvements......................... 18,937,564 18,396,035
Furnishings and equipment......................... 7,742,848 7,315,209
Operating equipment............................... 197,422 189,491
----------- -----------
33,425,286 32,448,187
Less: Accumulated depreciation.................... (4,989,415) (3,402,512)
----------- -----------
$28,435,871 $29,045,675
=========== ===========
</TABLE>
(9) LEASES:
Leases for operating equipment are contracted under the Partnership's name.
The following is a schedule of future minimum lease payments for the operating
leases, with initial or remaining terms in excess of one year, as of December
31, 1996:
<TABLE>
<S> <C>
1997............................................ $ 75,825
1998............................................ 48,196
1999............................................ 2,136
2000............................................ 356
Thereafter...................................... --
--------
$126,513
========
</TABLE>
Operating lease costs totaled $89,073, $92,717 and $91,820, for 1996, 1995
and 1994, respectively.
The Resort also has various marina and long-term tenant leases. The
receipts on these tenant leases are included in Telephone, retail and other.
Lease income totaled $381,296, $351,006 and $347,949, for 1996, 1995 and 1994,
respectively.
The Partnership leased a restaurant located at the Resort to an unrelated
party in August 1993 for a period of 5 years beginning November 1, 1993 with
four, five-year renewal options. Annual rent is $204,000 plus 7 percent of
annual gross sales in excess of $3,500,000.
Other leases for building space have been contracted with unrelated parties
for operation of a spa and a yacht broker. The spa lease is for a period of
three years beginning February 1, 1992 with two three-year renewal options. The
lease was renewed on February 1, 1995 with annual rent of $27,336 plus five
percent of gross sales. The yacht broker lease is for three years beginning
January 1, 1995 with one three-year renewal option. Annual rent is $92,812.
The following is a schedule of future minimum cash receipts for tenant
operating leases with initial term in excess of one year, as of December 31,
1996:
<TABLE>
<S> <C>
1997............................................ $239,373
1998............................................ 191,554
Thereafter...................................... --
</TABLE>
F-44
<PAGE> 106
2301 SE 17TH ST., LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(10) DEFERRED COMPENSATION PLAN:
The Rahn Pier Mgt., Inc. offers its employees a deferred compensation plan
(the "Plan") created in accordance with Internal Revenue Code Section 401(k).
The Plan is available to all employees with a minimum of 21 years of age and one
year of service. All of the costs are reimbursed by the Partnership.
The Plan's participants may contribute from one percent to 14 percent of
their compensation during the Plan year. Rahn Pier Mgt., Inc. matches 25 percent
of the first four percent contributed by each Plan participant and effective
January 1, 1996, the matched contributed percentage was increased to six
percent. Rahn Pier Mgt., Inc. incurred expenses related to the Plan of $48,359,
$40,791 and $45,973, in 1996, 1995 and 1994, respectively.
(11) EXCHANGE AGREEMENT:
On December 22, 1996, the Partnership entered into a definitive exchange
agreement with Florida Panthers Holdings, Inc. ("Holdings"), whereby Holdings
will acquire the Partnership in exchange for 4.45 million shares of Holdings'
Class A common stock. The transaction is subject to the approval of Holdings'
shareholders and as of January 10, 1997, had not been finalized.
F-45
<PAGE> 107
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners of
Rahn Bahia Mar, Ltd.:
We have audited the accompanying balance sheets of Rahn Bahia Mar, Ltd.
(the "Partnership", a Florida limited partnership) as of December 31, 1996 and
1995, and the related statements of operations, partners' equity and cash flows
for the years ended December 31, 1996 and 1995 and for the period from inception
(June 28, 1994) to December 31, 1994. These financial statements are the
responsibility of the Partnership'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 Rahn Bahia Mar, Ltd. as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
for the years ended December 31, 1996 and 1995 and for the period from inception
(June 28, 1994) to December 31, 1994 in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
January 10, 1997.
F-46
<PAGE> 108
RAHN BAHIA MAR, LTD.
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
ASSETS
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................. $ 2,653,789 $ 1,010,993
Accounts receivable, net of allowance for doubtful
accounts of $9,506 and $9,600 as of December 31, 1996
and 1995............................................... 604,720 519,779
Inventories............................................... 204,860 180,713
Prepaid expenses and other current assets................. 63,522 124,681
----------- -----------
Total current assets................................... 3,526,891 1,836,166
PROPERTY AND EQUIPMENT, net of accumulated depreciation of
$4,311,773 and $2,381,116 as of December 31, 1996 and
1995...................................................... 28,907,213 30,005,394
OTHER ASSETS................................................ 191,591 287,375
----------- -----------
Total assets...................................... $32,625,695 $32,128,935
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.......................................... $ 292,067 $ 434,870
Accrued liabilities....................................... 567,160 476,064
Advance deposits.......................................... 486,313 385,864
Current portion of long-term debt......................... 15,495,000 710,000
----------- -----------
Total current liabilities......................... 16,840,540 2,006,798
LONG-TERM DEBT, net of current portion...................... -- 15,495,000
----------- -----------
Total liabilities................................. 16,840,540 17,501,798
COMMITMENTS AND CONTINGENCIES (Notes 1 and 7)
PARTNERS' EQUITY:
General Partner........................................... 157,852 146,272
Limited Partners.......................................... 15,627,303 14,480,865
----------- -----------
Total partners' equity............................ 15,785,155 14,627,137
----------- -----------
Total liabilities and partners' equity............ $32,625,695 $32,128,935
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
balance sheets.
F-47
<PAGE> 109
RAHN BAHIA MAR, LTD.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 AND
FOR THE PERIOD FROM INCEPTION (JUNE 28, 1994) TO DECEMBER 31, 1994
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(JUNE 28, 1994) TO
1996 1995 DECEMBER 31, 1994
----------- ----------- ------------------
<S> <C> <C> <C>
OPERATING REVENUES:
Rooms.......................................... $ 6,881,263 $ 5,338,328 $1,421,161
Yachting and marina service.................... 3,870,609 4,213,381 1,995,704
Food, beverage and banquets.................... 2,686,536 1,782,380 621,207
Telephone, retail and other.................... 2,571,326 2,135,405 671,859
----------- ----------- ----------
Total operating revenues............... 16,009,734 13,469,494 4,709,931
COSTS AND EXPENSES:
Rooms.......................................... 1,499,432 1,294,583 572,516
Yachting and marina service.................... 765,719 996,900 536,137
Food, beverage and banquets.................... 2,104,675 1,593,065 758,372
Telephone, retail and other.................... 1,126,165 1,060,365 399,090
Selling, general and administrative............ 1,789,949 1,759,968 671,422
Property operations, maintenance and energy
costs....................................... 1,406,022 1,286,357 760,174
Royalty fees, property taxes, insurance,
etc......................................... 1,881,905 1,851,898 745,386
Depreciation and amortization.................. 1,970,770 1,848,544 593,033
----------- ----------- ----------
Total costs and expenses............... 12,544,637 11,691,680 5,036,130
----------- ----------- ----------
Income (loss) from operations............... 3,465,097 1,777,814 (326,199)
OTHER INCOME (EXPENSE):
Interest income................................ 98,126 57,983 18,288
Interest expense............................... (1,405,205) (1,455,129) (443,629)
Loss on disposal of fixed assets............... -- (1,991) --
----------- ----------- ----------
(1,307,079) (1,399,137) (425,341)
----------- ----------- ----------
NET INCOME (LOSS)................................ 2,158,018 378,677 (751,540)
PRO FORMA INCOME TAX BENEFIT (PROVISION) (Note
3)............................................. (841,626) (147,684) 293,101
----------- ----------- ----------
PRO FORMA NET INCOME (LOSS) AFTER INCOME TAXES... $ 1,316,392 $ 230,993 $ (458,439)
=========== =========== ==========
NET INCOME (LOSS) ALLOCATED TO:
General Partner................................ $ 21,580 $ 3,787 $ (7,515)
Limited Partners............................... 2,136,438 374,890 (744,025)
----------- ----------- ----------
Total Net income (loss)................ $ 2,158,018 $ 378,677 $ (751,540)
=========== =========== ==========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-48
<PAGE> 110
RAHN BAHIA MAR, LTD.
STATEMENTS OF PARTNERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 AND
FOR THE PERIOD FROM INCEPTION (JUNE 28, 1994) TO DECEMBER 31, 1994
<TABLE>
<CAPTION>
GENERAL PARTNER LIMITED PARTNERS
(1%) (99%) TOTAL
--------------- ---------------- -----------
<S> <C> <C> <C>
PARTNERS' CONTRIBUTION, June 28, 1994............ $150,000 $14,850,000 $15,000,000
Net loss....................................... (7,515) (744,025) (751,540)
-------- ----------- -----------
PARTNERS' EQUITY, December 31, 1994.............. 142,485 14,105,975 14,248,460
Net income..................................... 3,787 374,890 378,677
-------- ----------- -----------
PARTNERS' EQUITY, December 31, 1995.............. 146,272 14,480,865 14,627,137
Partner Distributions.......................... (10,000) (990,000) (1,000,000)
Net income..................................... 21,580 2,136,438 2,158,018
-------- ----------- -----------
PARTNERS' EQUITY, December 31, 1996.............. $157,852 $15,627,303 $15,785,155
======== =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-49
<PAGE> 111
RAHN BAHIA MAR, LTD.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 AND
FOR THE PERIOD FROM INCEPTION (JUNE 28, 1994) TO DECEMBER 31, 1994
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(JUNE 28, 1994) TO
1996 1995 DECEMBER 31, 1994
----------- ----------- ------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).............................. $ 2,158,018 $ 378,677 $ (751,540)
Adjustments to reconcile net income (loss) to
cash provided by operating activities --
Depreciation and amortization............... 1,970,770 1,848,544 593,033
Loss on disposal of fixed assets............ -- 1,991 --
Changes in assets and liabilities:
Accounts receivable....................... (84,941) (143,063) (376,716)
Inventories............................... (24,147) (5,469) (175,244)
Prepaid expenses and other current
assets................................. 61,159 (2,270) (122,411)
Other assets.............................. 95,784 (44,983) (302,522)
Accounts payable, accrued liabilities and
advance deposits....................... 48,742 (1,298,268) 2,595,066
----------- ----------- ------------
Total adjustments...................... 2,067,367 356,482 2,211,206
----------- ----------- ------------
Net cash provided by operating
activities........................... 4,225,385 735,159 1,459,666
----------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment............ (872,589) (3,776,347) (28,612,485)
----------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term debt proceeds........................ -- 3,553,715 13,196,285
Long-term debt repayments...................... (710,000) (545,000) --
Partners' capital contribution................. -- -- 15,000,000
Partners' capital distribution................. (1,000,000) -- --
----------- ----------- ------------
Net cash provided by (used in)
financing activities................. (1,710,000) 3,008,715 28,196,285
----------- ----------- ------------
Net increase (decrease) in cash and
cash equivalents..................... 1,642,796 (32,473) 1,043,466
CASH AND CASH EQUIVALENTS, beginning of period... 1,010,993 1,043,466 --
----------- ----------- ------------
CASH AND CASH EQUIVALENTS, end of period......... $ 2,653,789 $ 1,010,993 $ 1,043,466
=========== =========== ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest....... $ 1,405,205 $ 1,328,496 $ 497,043
=========== =========== ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-50
<PAGE> 112
RAHN BAHIA MAR, LTD.
NOTES TO FINANCIAL STATEMENTS
(1) BACKGROUND OF THE PARTNERSHIP AND OPERATIONS:
Rahn Bahia Mar, Ltd. (the "Partnership"), a Florida limited partnership,
was formed and began operations on June 28, 1994 for the purpose of owning the
Bahia Mar Resort and Yachting Center (the "Resort"), in Fort Lauderdale,
Florida. Rahn Bahia Mar, G.P., Ltd. (the "General Partner"), a Florida limited
partnership, is the general partner of the Partnership (1% owner) and engages in
transactions on the Partnership's behalf. Limited partners include Rahn Bahia
Mar, Inc., a Florida corporation (19.5% owner), and Bahia Mar Joint Venture, a
Florida general partnership (79.5% owner). The term of the partnership agreement
is 50 years and expires December 31, 2044.
The Partnership's tax basis profits, losses and excess net cash flows, as
defined by the Partnership agreement (the "Agreement"), are allocated to the
partners on the basis of their respective percentage interests in the
Partnership, as defined by the Agreement.
On June 28, 1994, the Partnership entered into a license agreement with
Radisson Hotels International, Inc. ("Radisson"), covering a period of 10 years.
The terms of the agreement allow the Partnership to operate the Resort using the
Radisson system. Annual fees payable to Radisson pursuant to the agreement range
from one percent to four percent (increasing one percent each year) of the first
$7,000,000 of gross room sales and five percent of gross room sales (as defined
by the agreement) in excess of $7,000,000 through December 31, 1997. The
remainder of the term requires fees in the amount of five percent of gross room
sales.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(a) Basis of Accounting --
The accompanying financial statements include the accounts of the
Partnership prepared on the accrual basis of accounting in accordance with
generally accepted accounting principles.
(b) Cash and Cash Equivalents --
The Partnership considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents. Cash equivalents are
stated at cost, which approximates market, and consist of repurchase agreements
and money market funds at December 31, 1996 and 1995.
(c) Inventories --
Inventories are stated at the lower of first-in, first-out cost or market.
Inventories consist of food and beverage, marina fuel, retail merchandise and
general store items.
(d) Depreciation --
The following estimated useful lives are used for depreciating property and
equipment on a straight-line basis:
<TABLE>
<S> <C>
Land improvements.................................. 15 years
Building and improvements.......................... 40 years
Furnishings........................................ 7 years
</TABLE>
(e) Property and Equipment --
The Partnership's assets are carried at the lower of cost or estimated fair
value. All subsequent expenditures for improvements are capitalized. The costs
of repairs and maintenance are charged to expense as incurred.
F-51
<PAGE> 113
RAHN BAHIA MAR, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Partnership adopted Statement of Financial Accounting Standards No.
121 -- Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed of, as of January 1, 1995, and accordingly evaluates its
real estate investments periodically to assess whether any impairment
indications are present, including recurring operating losses and significant
adverse changes in legal factors or business climate that affect the recovery of
the recorded value. If any real estate investment is considered impaired, a loss
is provided to reduce the carrying value of the property to its estimated fair
value. At the date of implementation, this standard had no impact on the
Partnership's financial statements.
(f) Use of Estimates --
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts in the financial statements and
accompanying notes. Actual results could differ from those estimates.
(g) Fair Value of Financial Instruments --
The fair values of the Partnership's financial instruments, including
accounts receivable, long-term debt, accounts payable and accrued liabilities,
advance deposits, and other financial instruments, generally determined using
the present value of estimated future cash flows using a discount rate
commensurate with the risks involved, approximate their carrying or contract
values.
(h) Business Risk --
Any substantial change in economic conditions or any significant price
fluctuations related to the travel and tourism industry could affect
discretionary consumer spending and have a material impact on the Partnership's
business. In addition, the Partnership is subject to competition from other
entities engaged in the business of resort development and operation, including
interval ownership, condominiums, hotels and motels.
(i) Concentration of Credit Risk --
The Partnership's receivables contain significant amounts due from cruise
lines which are granted credit by the Partnership. The amount of such credit is
determined by the Partnership's management on an individual basis.
(3) INCOME TAXES:
Provisions for federal and state income taxes have not been made in the
accompanying financial statements, as the Partnership's tax basis profits and
losses are allocated to the partners (see Note 1). The pro forma income tax
provision in the accompanying statement of operations is presented for
informational purposes as if the Partnership was a C corporation during the
years for which pro forma information is presented. Such pro forma taxes have
been computed on an overall estimated effective rate of 39%.
(4) RELATED PARTY TRANSACTIONS:
Rahn Properties, Inc. ("Rahn"), provided renovation management services to
the Partnership. Fees totaling $88,000 and $114,000 in 1995 and 1994,
respectively, were paid to Rahn in connection with the renovation of the Hotel
and are reflected in the cost of the property. The Partnership also reimbursed
Rahn for various expenses incurred in performing these services including the
renovation management and administrative staff salaries, telephone, utilities
and postage. Reimbursements totaling $9,955 and $9,862 in 1995 and 1994,
respectively, are also reflected in the cost of the property. No such fees or
reimbursements were made in 1996. Included in accounts payable at December 31,
1995 are amounts due to Rahn of $8,576. No such amounts were payable at December
31, 1996.
F-52
<PAGE> 114
RAHN BAHIA MAR, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Partnership has a management agreement with Rahn Bahia Mar Mgmt., Inc.
("Rahn Management") for a period of ten years ending June 30, 2004. The
agreement requires a management fee of three percent of gross revenues, as
defined in the management agreement, during the first eighteen months of the
agreement and a two percent fee for 1996 and thereafter. Management fees paid to
Rahn Management totaled $321,193, $405,261 and $141,298 in 1996, 1995 and 1994,
respectively.
The management agreement requires Rahn Management to set aside cash from
Hotel operations for the purchase, replacement and renewal of furniture,
fixtures and equipment and non-routine repairs and maintenance to the building.
The amount to be restricted is three percent of the Hotel's gross revenues each
month during the term of the agreement. All cash was spent on its required
purpose at December 31, 1996.
Fees paid to Radisson pursuant to the license agreement with Radisson (see
Note 1) totaled $206,438 $107,127, and $13,395, in 1996, 1995 and 1994,
respectively.
(5) LONG-TERM DEBT:
Long-term debt consists of a $15,495,000 mortgage note payable to a bank.
The note bears interest at a variable rate as defined by the agreement (8.8125
percent at December 31, 1996) and is collateralized by substantially all
property and equipment. In addition to the monthly interest payments, the note
has monthly principal installments of $45,000 commencing in February 1995. The
principal payments increased to $55,000 in August 1995 and $65,000 in August
1996. The maturity date for the note is June 30, 1997, but may be extended under
a one year extension option. During the extension period, the monthly principal
installments will increase to $75,000, the interest rate will increase by 1
percent and an extension fee equal to .0025 percent of the then outstanding
balance will be due prior to the extension. The final balloon payment would then
be due June 30, 1998.
Capitalized interest paid in 1994 and included in the cost of the property
is $53,414. Effective February 1, 1995, and continuing on the first day of each
month thereafter during the term of the note, the note agreement requires the
Partnership to set aside cash for the purchase, replacement and upgrade of
furniture, fixtures, equipment and property in the amount of $25,000 each month.
All cash was spent on its required purpose at December 31, 1996.
(6) PROPERTY AND EQUIPMENT:
Property and equipment consists of the following:
<TABLE>
<CAPTION>
1996 1995
-------------------- --------------------
<S> <C> <C>
Land and improvements............................. $ 8,202,702 $ 8,127,597
Buildings and improvements........................ 18,149,511 17,798,505
Furnishings and equipment......................... 6,779,921 6,338,365
Operating equipment............................... 86,852 122,043
----------- -----------
33,218,986 32,386,510
Less: Accumulated depreciation.................... (4,311,773) (2,381,116)
----------- -----------
$28,907,213 $30,005,394
=========== ===========
</TABLE>
(7) COMMITMENTS AND CONTINGENCIES:
The Partnership leases the Resort site under an operating lease which had a
term through September 30, 2037. On January 4, 1995, the term of this lease was
extended for an additional period commencing October 1, 2037 through August 31,
2062 (the "Second Extended Term"). Under the lease agreement, the Partnership is
required to pay the lessor an annual rental (payable in quarterly installments)
equal to the greater of a
F-53
<PAGE> 115
RAHN BAHIA MAR, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
percentage (4 percent through September 30, 2012 and 4.25 percent thereafter) of
the annual gross operating revenue, as defined in the lease agreement, or a
minimum annual rent payment. Minimum lease payments were $150,000 a year through
September 30, 1995; effective October 1, 1995 the minimum annual rent is
$300,000 payable in quarterly installments. During the Second Extended Term, the
minimum annual rent shall be the greater of $300,000 or eighty percent of the
average total annual rent paid during the three lease years immediately
preceding the lease year for which the minimum annual rent is being calculated.
Rent expense under the lease totaled $632,907 and $510,956 for the years ended
December 31, 1996 and 1995, respectively, and $174,174 for the period from
inception (June 28, 1994) to December 31, 1994.
Effective October 1, 1995 and continuing annually for the remaining term of
the lease, the lease agreement requires the Partnership to set aside cash for
the purchase, replacement and upgrade of furniture, fixtures and equipment. The
amount to be restricted is three percent of the Resort's revenues, as defined in
the lease agreement. All cash was spent on its required purpose at December 31,
1996.
The Hotel also leases certain equipment used in its operations under
operating leases. Future minimum lease payments, including the property lease
and operating leases, are as follows:
<TABLE>
<S> <C>
1997............................................ $ 407,080
1998............................................ 406,137
1999............................................ 391,241
2000............................................ 343,784
2001............................................ 304,126
Thereafter...................................... 18,200,000
-----------
$20,052,368
===========
</TABLE>
(8) DEFERRED COMPENSATION PLAN:
Effective July 1, 1995, Rahn Management offered its employees a
multi-employer deferred compensation plan (the "Plan") created in accordance
with Internal Revenue Code Section 401(k). The Plan is available to all
employees with a minimum of 21 years of age and one year of service. All of the
costs are reimbursed by the Partnership.
The Plan's participants may contribute from 1 percent to 14 percent of
their compensation during the Plan year. Rahn Management matched 25 percent of
the first 4 percent contributed by each Plan participant, prior to January 1,
1996. Effective January 1, 1996, Rahn Management matches 25 percent of the first
six percent contributed by each Plan participant. Rahn Management contributed
$16,002 and $9,721 to the Plan in 1996 and 1995, respectively.
(9) EXCHANGE AGREEMENT:
On December 22, 1996, the Partnership entered into a definitive exchange
agreement with Florida the Company, Inc. ("Holdings"), whereby Holdings will
acquire the Partnership in exchange for 3,950,000 shares of Holdings' Class A
common stock. The transaction is subject to the approval of Holdings'
shareholders and, as of January 10, 1997, had not been finalized.
F-54
<PAGE> 116
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners of
Coral Springs Ice, Ltd.:
We have audited the accompanying balance sheet of Coral Springs Ice, Ltd.
(a Florida limited partnership) as of December 31, 1996, and the related
statements of operations, partners' equity (deficit) and cash flows for the
period from inception (February 26, 1996) to December 31, 1996. These financial
statements are the responsibility of the Partnership's 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 financial position of Coral Springs Ice, Ltd. as
of December 31, 1996, and the results of its operations and its cash flows for
the period from inception (February 26, 1996) to December 31, 1996 in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
February 7, 1997.
F-55
<PAGE> 117
CORAL SPRINGS ICE, LTD.
BALANCE SHEET
DECEMBER 31, 1996
<TABLE>
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 35,614
Accounts receivable....................................... 62,513
Inventories............................................... 71,847
Prepaid expenses and other current assets................. 56,883
----------
Total current assets.............................. 226,857
Buildings and Equipment, at cost, net of accumulated
depreciation of $17,285................................... 6,298,340
Other Assets................................................ 138,000
----------
Total assets...................................... $6,663,197
==========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable.......................................... $ 181,659
Accrued expenses.......................................... 376,684
Deferred revenue.......................................... 159,869
Retainage payable......................................... 269,333
Note payable.............................................. 6,541,849
----------
Total current liabilities......................... 7,529,394
----------
Partners' equity (deficit):
General partner........................................... (779,577)
Limited partner........................................... (86,620)
----------
Total partners' equity (deficit).................. (866,197)
----------
Total liabilities and partners' equity
(deficit)......................................... $6,663,197
==========
</TABLE>
The accompanying notes to financial statements are an integral part of this
balance sheet.
F-56
<PAGE> 118
CORAL SPRINGS ICE, LTD.
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCEPTION (FEBRUARY 26, 1996) TO DECEMBER 31, 1996
<TABLE>
<S> <C>
Revenues.................................................... $ 149,653
Cost of revenues............................................ (49,155)
---------
Gross profit...................................... 100,498
Selling, General and Administrative Expenses................ (966,795)
---------
Net loss.......................................... $(866,297)
=========
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
F-57
<PAGE> 119
CORAL SPRINGS ICE, LTD.
STATEMENT OF PARTNERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM INCEPTION (FEBRUARY 26, 1996) TO DECEMBER 31, 1996
<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNER PARTNER TOTAL
--------- -------- ---------
<S> <C> <C> <C>
Capital contribution at inception.................... $ 90 $ 10 $ 100
Net loss............................................. (779,667) (86,630) (866,297)
--------- -------- ---------
Partners' deficit at December 31, 1996..... $(779,577) $(86,620) $(866,197)
========= ======== =========
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
F-58
<PAGE> 120
CORAL SPRINGS ICE, LTD.
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION (FEBRUARY 26, 1996) TO DECEMBER 31, 1996
<TABLE>
<S> <C>
Cash Flows From Operating Activities:
Net loss.................................................. $ (866,297)
Adjustments to reconcile net loss to net cash used by
operating activities --
Depreciation and amortization.......................... 17,285
Changes in assets and liabilities:
Accounts receivable.................................. (62,513)
Inventories.......................................... (71,847)
Prepaid expenses..................................... (56,883)
Other assets......................................... (138,000)
Accounts payable..................................... 181,659
Accrued expenses..................................... 326,684
Deferred revenue..................................... 159,869
Retainage payable.................................... 269,333
-----------
Net cash used in operating activities............. (240,710)
-----------
Cash Flows From Investing Activities:
Capital expenditures...................................... (6,315,625)
-----------
Net cash used in investing activities............. (6,315,625)
-----------
Cash Flows From Financing Activities:
Proceeds from note payable................................ 6,541,849
Advances from related parties............................. 50,000
Capital contributions..................................... 100
-----------
Net cash provided by financing activities......... 6,591,949
-----------
Net increase in cash and cash equivalents......... 35,614
Cash and Cash Equivalents, beginning of period.............. --
-----------
Cash and Cash Equivalents, end of period.................... $ 35,614
===========
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
F-59
<PAGE> 121
CORAL SPRINGS ICE, LTD.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
(1) BACKGROUND OF THE PARTNERSHIP AND OPERATIONS:
Coral Springs Ice, Ltd., a Florida limited partnership (the "Partnership"),
was organized on February 26, 1996 with Coral Springs Ice, Inc. as the general
partner as well as a limited partner and Iceland (Coral Springs) Corp. as the
other limited partner. The Partnership was formed to construct, operate and
manage an enclosed twin ice rink facility (the "Facility") in Coral Springs,
Florida. The Facility will operate as the concessionaire under a Concession
Agreement with the City of Coral Springs. The Partnership completed construction
and commenced operation of the Facility in November, 1996.
(2) SIGNIFICANT ACCOUNTING POLICIES:
(a) Basis of Accounting
The accompanying financial statements include the accounts of the
Partnership prepared on the accrual basis of accounting in accordance with
generally accepted accounting principles.
(b) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts in the financial statements and
accompanying notes. Actual results could differ from those estimates.
(c) Inventories
Inventories are stated at the lower of first-in, first-out cost or market.
Inventories consist of hockey and figure skating retail goods and food and
beverage items.
(d) Buildings and Equipment
The Partnership's assets are carried at the lower of cost or estimated fair
value. All expenditures for improvements are capitalized. The costs of repairs
and maintenance are charged to expense as incurred.
(e) Depreciation
The following estimated useful lives are used for depreciating property and
equipment on a straight-line basis.
<TABLE>
<S> <C>
Building and improvements................................... 40 years
Furniture, fixtures and equipment........................... 5-7 years
</TABLE>
(f) Cash and Cash Equivalents
The Partnership considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents. Cash equivalents are
stated at cost, which approximates market.
(g) Deferred Revenue
The Partnership collects fees in advance from customers for hockey and
figure skating programs and records such fees as deferred revenue. Revenue is
recognized as the related services are provided.
(h) Fair Value of Financial Instruments
The fair values of the Partnership's financial instruments, including
accounts receivable, long-term debt, accounts payable, accrued expenses and
other financial instruments, generally determined using the present
F-60
<PAGE> 122
CORAL SPRINGS ICE, LTD.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
value of estimated future cash flows using a discount rate commensurate with the
risks involved, approximate their carrying or contract values.
(3) INCOME TAXES:
No provision for income taxes is reflected in the accompanying financial
statements. The partners are required to report on their individual income tax
returns, their allocable share of income, gains, losses, deductions and credits
of the Partnership.
(4) MANAGEMENT AGREEMENT:
In November 1996, Real Ice Sports Facility Management, Inc. began providing
management services to the Partnership for a monthly fee of $6,250 included in
selling, general and administrative expenses. Coral Springs Ice, Ltd. operated
under the terms of a management agreement with this company through January
1997, although the agreement was never signed.
(5) BUILDINGS AND EQUIPMENT:
The balance of buildings and equipment at December 31, 1996, consists of
the following:
<TABLE>
<S> <C>
Building and improvements................................... $5,892,195
Furniture, fixtures and equipment........................... 423,430
----------
6,315,625
Less -- Accumulated depreciation............................ (17,285)
----------
Building and equipment, net................................. $6,298,340
==========
</TABLE>
Included in the building costs is $269,333 of retainage. This represents
the construction holdback of 5% of costs to date as per the construction
contract. It will be paid to the contractor when all work is satisfactorily
completed.
(6) NOTE PAYABLE:
The Partnership obtained a loan from Trizec Ice, Inc. (the sole owner of
Coral Springs Ice, Inc.) to fund construction costs of the Facility and related
costs. The outstanding loan balance ($6,678,874 as of January 31, 1997) was
repaid in connection with the sale of assets (see Note 8).
(7) CONCESSION AGREEMENT:
The Partnership is party to a concession agreement with the City of Coral
Springs which allows the Partnership to utilize city-owned land upon which the
Facility is located. The term of this agreement is 49 years with an option to
extend for two 25 year periods. The concession agreement requires the
Partnership to pay a minimum monthly rental of $2,500 (plus six percent sales
tax) to the City of Coral Springs. The agreement requires additional contingent
payments that are dependent on the level of revenues. In the first five years of
operations, four percent of total revenues, to the extent that this exceeds the
minimum monthly charge, is payable to the City of Coral Springs each month.
(8) SALE OF ASSETS:
On January 31, 1997, the Partnership completed the sale of substantially
all of its operating assets to Florida Panthers Ice Ventures, Inc., a
wholly-owned subsidiary of Florida Panthers Holdings, Inc.
F-61
<PAGE> 123
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners of
Boca Raton Hotel and Club Limited Partnership
In our opinion, the accompanying balance sheet and the related statements
of operations, of changes in partners' deficit and of cash flows present fairly,
in all material respects, the financial position of Boca Raton Hotel and Club
Limited Partnership at December 31, 1996, and the results of its operations and
its cash flows for the year in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the
Partnership's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Fort Lauderdale, Florida
January 29, 1997, except as to Note 12, which is
as of March 20, 1997
F-62
<PAGE> 124
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Partners
Boca Raton Hotel and Club Limited Partnership
We have audited the accompanying balance sheet of the Boca Raton Hotel and
Club Limited Partnership (A Limited Partnership) (the Partnership) as of
December 31, 1995, and the related statements of operations, changes in
partners' deficit and cash flows for each of the two years in the period ended
December 31, 1995. These financial statements are the responsibility of the
Partnership'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 the Boca Raton Hotel and
Club Limited Partnership (A Limited Partnership) at December 31, 1995, and the
results of its operations and its cash flows for each of the two years in the
period ended December 31, 1995, in conformity with generally accepted accounting
principles.
Ernst & Young LLP
West Palm Beach, Florida
January 26, 1996
F-63
<PAGE> 125
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1995
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 1,126 $ 2,887
Restricted cash and short-term investments................ 18,887 13,671
Accounts receivable, net of allowance for doubtful
accounts of $412 and $50, respectively, in 1996 and
1995................................................... 12,203 12,249
Current portion of Premier Club promissory notes for
membership deposits.................................... 3,840 3,161
Other current assets...................................... 727 705
Prepaid insurance......................................... 1,697 2,074
Inventories............................................... 5,725 5,752
-------- --------
Total current assets.............................. 44,205 40,499
Premier Club promissory notes for membership deposits, less
current portion........................................... 8,246 6,964
Property and improvements:
Land...................................................... 26,851 26,851
Buildings and improvements................................ 114,199 103,354
Furnishings and equipment................................. 20,407 19,934
Construction in progress.................................. 6,750 4,199
-------- --------
168,207 154,338
Less accumulated depreciation............................. (52,479) (49,914)
-------- --------
115,728 104,424
Deferred loan costs and other, net.......................... 10,080 6,546
-------- --------
$178,259 $158,433
======== ========
LIABILITIES AND PARTNERS' DEFICIT
Current liabilities:
Accounts payable, trade................................... $ 4,490 $ 7,289
Advance deposits.......................................... 3,027 3,118
Accrued interest payable.................................. 3,296 2,559
Accrued payroll costs and employee benefits............... 3,015 3,108
Due to general partner.................................... 3,725 5,900
Other accounts payable and accrued expenses............... 6,102 5,654
Deferred membership revenue............................... 7,232 6,371
Current portion of mortgage and other loans payable....... 400 2,347
-------- --------
Total current liabilities......................... 31,287 36,346
Mortgage and other loans payable, less current portion...... 174,800 140,889
Accrued settlement costs.................................... 500 950
Premier Club membership deposits and credits, net........... 55,905 49,717
Partners' deficit:
General Partner........................................... (2,492) (2,249)
Class A Limited Partners.................................. (80,067) (65,892)
Class B Limited Partner................................... (1,674) (1,328)
-------- --------
Total Partners' deficit........................... (84,233) (69,469)
-------- --------
$178,259 $158,433
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-64
<PAGE> 126
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Revenue:
Rooms..................................................... $ 44,856 $ 44,050 $ 41,191
Food and beverage......................................... 34,762 32,764 32,841
Club Membership, Retail and Other......................... 34,109 31,376 29,339
-------- -------- --------
Total revenue..................................... 113,727 108,190.. 103,371
Costs and expenses:
Rooms..................................................... 10,913 10,228 10,038
Food and beverage......................................... 26,363 24,814 25,136
Club Membership, Retail and Other......................... 19,005 17,569 17,103
Selling, general and administrative....................... 17,999 16,679 19,498
Property operations, maintenance and energy costs......... 10,959 11,125 9,604
Other indirect costs........................................ 8,911 8,041 6,799
-------- -------- --------
Total cost of revenues...................................... 94,150 88,456 88,178
Depreciation and amortization............................... 6,215 6,623 7,108
-------- -------- --------
Income from operations...................................... 13,362 13,111 8,085
Interest expense, net....................................... 16,562 14,909 17,382
-------- -------- --------
Loss before extraordinary item.............................. (3,200) (1,798) (9,297)
Extraordinary items:
Net gain on debt restructuring............................ -- 10,328 6,704
Net (loss) on debt restructuring, including debt
prepayment penalty of ($3,515)......................... (8,932) -- --
-------- -------- --------
Net (loss) income........................................... $(12,132) $ 8,530 $ (2,593)
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-65
<PAGE> 127
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
(IN THOUSANDS)
<TABLE>
<CAPTION>
CLASS A CLASS B
GENERAL LIMITED LIMITED
PARTNER PARTNERS PARTNER TOTAL
------- -------- ------- --------
<S> <C> <C> <C> <C>
Partners' deficit at January 1, 1994.................... $(2,368) $(71,606) $(1,432) $(75,406)
Net loss.............................................. (52) (2,495) (46) (2,593)
------- -------- ------- --------
Partners' deficit at December 31, 1994.................. (2,420) (74,101) (1,478) (77,999)
Net income............................................ 171 8,209 150 8,530
------- -------- ------- --------
Partners' deficit at December 31, 1995.................. (2,249) (65,892) (1,328) (69,469)
Distribution.......................................... -- (2,500) (132) (2,632)
Net loss.............................................. (243) (11,675) (214) (12,132)
------- -------- ------- --------
Partners' deficit at December 31, 1996.................. $(2,492) $(80,067) $(1,674) $(84,233)
======= ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-66
<PAGE> 128
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
---------- --------- ---------
<S> <C> <C> <C>
Operating activities:
Net income (loss)......................................... $ (12,132) $ 8,530 $ (2,593)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization.......................... 6,935 6,623 7,108
Loss (gain) on debt restructuring...................... 5,417 (10,328) (6,704)
Provision for settlement agreements.................... 300 -- 1,250
Changes in operating assets and liabilities:
Accounts receivable.................................. (1,915) (2,193) (1,955)
Prepaid expenses and other assets.................... 354 1,146 (4,105)
Inventories.......................................... 27 (227) 703
Accounts payable, trade.............................. (2,799) 1,998 1,265
Advance deposits..................................... (91) 32 (210)
Accrued interest payable............................. 737 197 4,682
Accrued payroll costs and employee benefits.......... (93) (385) 898
Other accounts payable and accrued expenses.......... (4,184) 1,669 1,569
Deferred membership revenue.......................... 861 325 535
Premier Club Membership cash and note payments....... 6,049 3,987 5,770
Accrued settlement costs............................. (750) -- --
--------- -------- --------
Net cash provided by (used in) operating
activities........................................ (1,284) 11,374 8,213
--------- -------- --------
Investing activities:
Restricted cash and short-term investments................ (5,216) (10,964) 1,124
Additions to property and improvements.................... (14,829) (4,601) (3,454)
Additions to construction in progress..................... (2,551) -- --
--------- -------- --------
Net cash used in investing activities................ (22,596) (15,565) (2,330)
--------- -------- --------
Financing activities:
Proceeds from increase in mortgage and other loans
payable................................................ 155,000 60,000 48,583
Principal payments of mortgage and other loans payable.... (123,036) (54,313) (48,071)
Principal payment on Banyan mortgage loans................ -- (3,500) (1,000)
Payment of financing costs................................ (7,345) (725) --
Distributions to Limited Partners......................... (2,500) -- --
--------- -------- --------
Net cash (used in) provided by financing
activities........................................ 22,119 1,462 (488)
--------- -------- --------
Net increase (decrease) in cash and cash equivalents........ (1,761) (2,729) 5,395
Cash and cash equivalents at beginning of year.............. 2,887 5,616 221
--------- -------- --------
Cash and cash equivalents at end of year.................... $ 1,126 $ 2,887 $ 5,616
========= ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest...................... $ 14,148 $ 14,710 $ 12,633
========= ======== ========
Accrual of distribution payable to Class B Limited
Partners.................................................. $ 132 $ -- $ --
========= ======== ========
Accrual of General Partner Fees............................. $ 2,325 $ -- $ --
========= ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-67
<PAGE> 129
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 (IN THOUSANDS OF DOLLARS)
1. ORGANIZATION
The Boca Raton Hotel and Club Limited Partnership (the Partnership) was
formed in June 1983 under the laws of the State of Florida. The purpose of the
Partnership is to purchase, own, manage and operate the Boca Raton Resort and
Club, a 298-acre resort complex containing several hotel facilities with a total
of 963 guest rooms. In addition, the complex includes 31 tennis courts, 2 golf
courses, marina, beach club and other recreational facilities. Included within
the resort is the Boca Golf and Tennis Country Club (a separate facility) (see
Note 6). The Partnership also leases the food and beverage concessions, and has
contracted for golf access at the Deer Creek and Carolina country clubs.
As of January 15, 1993, the original general partner, VMS Realty Investment
Ltd. (VMSRIL), withdrew from the Partnership as general partner and was replaced
by the Boca Raton Management Company, a New York general partnership (BRMC/NY).
BRMC/NY was succeeded as general partner on October 1, 1993 by BRMC, L.P., a
Delaware limited partnership (BRMC) (see Note 3).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting principles and practices used in
the preparation of the financial statements follows:
BASIS OF FINANCIAL STATEMENT PRESENTATION
The Partnership prepares its financial statements in conformity with
generally accepted accounting principles. These principles require management to
(1) make estimates and assumptions that affect the reported amounts of assets
and liabilities, (2) disclose contingent assets and liabilities at the date of
the financial statements and (3) report amounts of revenue and expenses during
the reporting period. Actual results could differ from these estimates.
CASH EQUIVALENTS AND RESTRICTED CASH
The Partnership considers all highly liquid investments with a maturity of
three months or less from the date purchased to be cash equivalents. Restricted
cash consists principally of escrow accounts restricted as to use and maintained
in accordance with the terms of the Partnership's First Mortgage Notes. Short
term investments consist primarily of repurchase agreements.
FAIR VALUES OF FINANCIAL INSTRUMENTS
At December 31, 1996 and 1995, the carrying amounts of cash, cash
equivalents and short-term investments approximate their fair value due to their
short duration to maturity. The carrying amount of the mortgages and other loans
approximate their fair value.
CONCENTRATIONS OF CREDIT RISK AND MARKET RISK
Concentration of credit risk and market risk associated with cash, cash
equivalents, restricted cash and short-term investments are considered low due
to the credit quality of the issuers of the financial instruments held by the
Partnership and due to their short duration to maturity. Accounts receivable are
primarily from major credit card companies and other large corporations. The
Partnership performs ongoing credit evaluations of its significant customers and
generally does not require collateral.
PREMIER CLUB MEMBERSHIP DEPOSITS
The Partnership classifies premier club membership deposits as an operating
activity in the Statement of Cash Flows (see Note 10).
F-68
<PAGE> 130
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
PROPERTY, IMPROVEMENTS AND DEPRECIATION
Property and improvements are stated at cost and are depreciated on the
straight-line method over the estimated useful lives of the assets as follows:
<TABLE>
<S> <C>
Buildings and improvements.............................. 15 - 30 years
Furnishings and equipment............................... 3 - 10 years
</TABLE>
Provision for value impairments are recorded with respect to such assets
whenever the estimated future cash flows from operations and projected sales
proceeds are less than the net carrying value. The Partnership implemented
Statements on Financial Accounting Standards (FAS) No. 121, Accounting for
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,
effective January 1, 1996. The implementation of FAS No. 121 did not have a
material impact on the financial statements. Costs of major renewals and
improvements which extend useful lives are capitalized. Expenditures for
maintenance and repairs are charged to expense as incurred.
INVENTORIES
Inventories consisting of food, beverage and operating supplies are
determined using the first-in, first-out method and are stated at the lower of
cost or market.
DEFERRED LOAN COSTS
Deferred loan costs, primarily loan origination and related fees, are
capitalized and amortized on the straight-line basis over the terms of the
respective debt, which approximates the effective interest method. Deferred loan
costs are presented net of accumulated amortization. At December 31, 1996 and
1995, accumulated amortization totaled $643 and $1,320, respectively.
DEFERRED MEMBERSHIP REVENUE
Deferred membership revenue is recognized as income ratably over the
membership year commencing October 1.
RECLASSIFICATIONS
Certain items for 1994 and 1995 have been reclassified to conform to the
1996 presentation.
PARTNERSHIP RECORDS
The Partnership's records are maintained on the accrual basis of accounting
as adjusted for federal income tax reporting purposes. The accompanying
financial statements have been prepared from such records after making
adjustments, where applicable, to reflect the Partnership's accounts in
accordance with generally accepted accounting principles (GAAP). The net effect
of these items is summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------
1996 1995
-------------------- -------------------
GAAP TAX GAAP TAX
BASIS BASIS BASIS BASIS
--------- -------- -------- --------
<S> <C> <C> <C> <C>
Total assets................................. $ 178,259 $153,248 $158,433 $133,290
Partners' deficits:
General Partner............................ (2,492) (3,127) (2,249) (2,834)
Class A Limited Partners................... (80,067) (102,207) (65,892) (85,631)
Class B Limited Partner.................... (1,674) (1,964) (1,328) (1,706)
</TABLE>
F-69
<PAGE> 131
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1996 1995 1994
------------------- --------------- -----------------
GAAP TAX GAAP TAX GAAP TAX
BASIS BASIS BASIS BASIS BASIS BASIS
-------- -------- ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net income (loss):
General Partner................ $ (243) $ (293) $ 171 $ 182 $ (52) $ (163)
Class A Limited Partners....... (11,675) (14,076) 8,209 8,767 (2,495) (7,835)
Class B Limited Partner........ (214) (258) 150 161 (46) (144)
</TABLE>
INCOME TAXES
No provision has been recorded for income taxes or related credits in the
Partnership's financial statements as the results of operations are includable
in the income tax returns of the partners. The differences between financial
statement income or loss and tax income or loss relate primarily to the methods
and lives used to depreciate fixed assets, the treatment of costs of the Premier
Membership Program, the treatment of syndication costs and the treatment of the
1994, 1995 and 1996 debt restructurings.
3. PARTNERSHIP AGREEMENT
Operating profits and losses of the Partnership are allocated pursuant to
the terms of the partnership agreement or in accordance with Internal Revenue
Code Section 704(b). Profits and losses attributable to capital items such as a
sale or refinancing are allocated among the partners in accordance with the
Partnership agreement.
Distributions of cash flows are made, subject to the participation therein
of BRMC, as follows: (a) first, to the Limited Partners in an amount equal to
12% per annum (on a non-cumulative basis) of their aggregate capital
contributions (95% to Class A and 5% to Class B); (b) then, to BRMC, the payment
of a subordinated incentive fee, as defined in the Partnership Agreement; and
(c) then, of the balance, 98% to the Limited Partners (93.1% to Class A and 4.9%
to Class B) and 2% to BRMC.
Distributions of capital items are made as follows: (a) first, 100% to the
Limited Partners until such time as each Limited Partner has received
distributions sufficient to reduce their aggregate capital contribution to zero;
(b) then, 100% to BRMC until such time as BRMC has received distributions
sufficient to reduce its aggregate capital contributions to zero; (c) then, to
the Class A Limited Partners to the extent not previously paid from Cash Flow an
amount equal to: 10% per annum of their aggregate capital contributions (on a
cumulative basis from January 1, 1984); (d) then, first to the Limited Partners,
90% (85.5% to Class A and 4.5% to Class B) of the next $16,000 and then 10% of
such $16,000 to BRMC; and (3) then, 70% to the Limited Partners (66.5% to Class
A and 3.5% to Class B) and 30% to BRMC.
In 1996, the Partnership made capital distributions totaling $2,500 to the
Class A Limited Partners and accrued $132 for distributions to the Class B
Limited Partners.
The Partnership relies on mortgages and other loans to fund capital
improvements and construction projects. The Partnership expects to meet its cash
requirements through operations and the use of existing cash balances.
As general partner, BRMC is entitled to receive the following forms of
compensation and additional distributions (General Partner Compensation):
1. A supervisory management fee, the lesser of (a) $50 per month and
(b) 90% of the hypothetical supervisory fee formerly payable to an
affiliate of VMSRIL (see Note 8).
2. A debt restructuring fee with existing creditors, .5% of the
principal amount of the Partnership's indebtedness restructured (see Note
8).
F-70
<PAGE> 132
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
3. A debt or equity capital raising fee, 1.5% of the amount raised. To
the extent any capital raised is applied to repay indebtedness, no debt
restructuring fee referred to in 2 above shall be payable with respect to
the portion of the indebtedness for which a capital raising fee is charged
(see Note 8).
4. A debt reduction fee, 10% of the principal amount of the debt
extinguished. BRMC would receive 20% of its debt reduction fee at the
closing of the debt reduction transaction, with the balance paid from (a)
any excess proceeds from the refinancing of such debt, and (b) any
distributions resulting from any sale or refinancing as a preference to the
Limited Partners' distributions thereunder (see Note 8).
5. A participation in cash distributions, BRMC will receive the
following distributions:
<TABLE>
<CAPTION>
BRMC
CUMULATIVE AMOUNT DISTRIBUTED PERCENTAGE
- ----------------------------- ----------
<S> <C> <C>
First $10,000.................................................. 1%
Next $10,000.................................................. 2
Next $10,000.................................................. 3
Next $10,000.................................................. 4
Next $10,000.................................................. 5
Over $50,000.................................................. 10
</TABLE>
In the event the Limited Partners are diluted in connection with any
offering of new Partnership equity, the distribution breakpoints (DBP)
in the above table will be adjusted in accordance with the following
formula: DBP divided by that percentage of the Partnership's equity
owned by the existing Limited Partners upon completion of the financing.
Notwithstanding any of the foregoing, BRMC shall receive a total share
of such distributions of not less than $500. Such minimum shall not
apply in the event that the Limited Partners' cumulative distributions
have not exceeded Limited Partners' taxes due thereon.
6. The foregoing elements set forth in preceding subparagraphs 2, 3, 4
and 5 are limited by the provisions of the first mortgage notes (see Note
5).
4. LETTERS OF CREDIT
As of December 31, 1996 and 1995, the Partnership has two letters of credit
which secure two operating leases. The letters of credit are collateralized by
certificates of deposit totaling $500 which mature in August 1997 and are
included in restricted cash and short-term investments.
F-71
<PAGE> 133
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
5. MORTGAGES AND OTHER LOANS PAYABLE
Various refinancing activities occurred in 1996 and can be summarized as
follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
TOTAL
OUTSTANDING 1996 OUTSTANDING
BALANCE AT PRINCIPAL 1996 DEBT AT
LOAN DESCRIPTION, INTEREST RATE DECEMBER 31, 1995 PAYMENTS NEW DEBT DECEMBER 31, 1996
- ------------------------------- ----------------- --------- -------- -----------------
<S> <C> <C> <C> <C>
Nomura-$75,000..................... $ 71,524 $71,524 $ -0-
Starwood-$50,000................... 51,000 51,000 -0-
Starwood-$500 -- 14 1/2%........... 500 500
RMA -- 7%.......................... 10,000 300 9,700
Senior Facility, LIBOR + 2 1/4%.... 110,000 110,000
Subordinate Facility, 13%.......... 20,000 20,000
Starwood-$35,000, 18.5%............ 10,000 25,000 35,000
Other.............................. 212 212 -0-
-------- -------- -------- --------
$143,236 $123,036 $155,000 $175,200
======== ======== ======== ========
</TABLE>
FIRST MORTGAGE NOTES
On August 22, 1996, the Partnership entered into an agreement with a
consortium of financial institutions to borrow $130,000 primarily for the
purpose of refinancing existing first mortgage notes. The agreement consists of
a $110,000 Senior Facility (Senior Notes) and a $20,000 Subordinate Facility
(Subordinate Notes). Both Facilities mature on August 22, 2001 and accrue
interest, based on a 360 day year, payable monthly in arrears. The Senior Notes
accrue interest at the lenders' base rate plus one-quarter percent (Base Rate)
or LIBOR plus two and one-quarter percent (LIBOR Rate). In 1996, the Partnership
selected the LIBOR Rate, averaging approximately 7.814%. The Subordinate Notes
accrue interest at a fixed rate of thirteen percent. Both Facilities are secured
by a first mortgage and lien on all assets held by the Partnership, except in
certain circumstances where other first liens are permitted. The outstanding
balance on the First Mortgage Notes at December 31, 1996 totaled $130,000.
The Partnership is required to make quarterly principal payments of $750 on
the Senior Notes commencing September 30, 1998 and increasing to $1,250 on
September 30, 1999 and to $1,750 on September 30, 2000. The Partnership is
required to make additional principal payments on the Senior Notes and initial
principal payments on the Subordinate Notes based upon certain cash flow
conditions.
In accordance with the agreement, the Partnership deposits cash into
reserve accounts which are accumulated and restricted to support future debt
service, facility expansion, fixed asset replacement and real estate tax
payments. Both Facilities contain significant restrictions with respect to
payments to Partners and other debt holders.
In conjunction with the refinancing, the Partnership recorded a loss on
debt restructuring of $5,417 which represents the write off of debt issue costs.
The Partnership paid a loan prepayment penalty of $3,515 to Nomura.
SECOND MORTGAGE NOTE
On August 22, 1996, the Partnership entered into an agreement with an
institutional lender to borrow $35,000, as evidenced by a promissory note,
primarily for the purpose of the planned expansion of the Resort. The note is
secured by a second mortgage and lien on all assets held by the Partnership,
except in certain circumstances where other liens are permitted. At maturity,
August 21, 2003, or prepayment of the note, the Partnership is required to pay
an amount which will result in an annual internal rate of return to the lender
of
F-72
<PAGE> 134
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
eighteen and one-half percent (18.5%). Interest is payable quarterly in arrears
commencing October 1, 1996 at a rate of eight percent through December 31, 1998
and fourteen and one-half percent thereafter based on a 360 day year. The
Partnership accrues interest at 18.5% per annum. Additional interest and
principal payments are required based on certain cash flow conditions. The
outstanding balance on the Second Mortgage Note totaled $35,000 at December 31,
1996.
The Partnership may not prepay the note prior to its third anniversary
except in connection with a sale of Partnership assets to a third party. If
prepayment occurs before August 23, 2001, the Partnership is required to pay an
amount (Prepayment Amount) which would result in an 18.5% internal rate of
return to the lender through that date. The Prepayment Amount will be reduced by
the return which would result from the lenders' reinvestment of the repaid
principal at the United States Treasury Notes rate plus 250 basis points, if
prepayment results from sale of Partnership assets or from cash flow; or plus
150 basis points, if prepayment results from refinancing the note or sale or
issuance of any ownership interest in the Partnership.
THIRD MORTGAGE NOTE
On August 22, 1996, a note payable, which was previously secured by a first
mortgage, was replaced with a third mortgage and lien on all assets of the
Partnership. The note matures on September 30, 2003 and accrues interest at a
fixed rate of approximately 14.52% through September 30, 1998 and at a variable
rate thereafter payable quarterly in arrears. The outstanding balance on the
Third Mortgage Note at December 31, 1996 totaled $500.
The Partnership is required to make an additional payment (Final
Participation Interest) upon maturity of the loan or sale of the Partnership's
assets equaling the sum of $750, plus 5% of the Partnership's net asset value as
calculated based on certain criteria. In the event of refinancing of the
property, the Partnership is required to make a payment of 5% of the net
proceeds (Interim Participation Interest). Interim Participation Interest paid
will be deducted from the Final Participation Interest amount. In 1996, the
Partnership paid $125 of Interim Participation Interest.
OTHER NOTES PAYABLE
The Partnership's other notes payable represent two unsecured promissory
notes with original amounts of $8,000 and $2,000 dated October 7, 1994 related
to a settlement agreement whereby the Partnership terminated a 20-year
management agreement. Both promissory notes mature on October 7, 2004 and accrue
interest at a rate of 7% payable semi-annually in arrears.
The $8,000 promissory note requires future principal reductions of $320 on
October 7, 1997 and $400 on each October 7 from 1998 to 2003, with a balloon
payment of $5,040 due at maturity. The $2,000 promissory note payable requires
future principal reductions of $80 on October 7, 1997 and $100 on each October
7, from 1998 to 2003, with a balloon payment of $1,260 due at maturity. The
notes include limitations on additional senior debt.
At December 31, 1996, aggregate future maturities of mortgage and other
loans payable are as follows:
<TABLE>
<S> <C>
1997........................................................ $ 400
1998........................................................ 2,000
1999........................................................ 4,500
2000........................................................ 6,500
2001........................................................ 119,000
Thereafter.................................................. 42,800
--------
$175,200
========
</TABLE>
F-73
<PAGE> 135
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
The following schedule reflects the mortgage and loan payable balances as
of December 31, 1995. Senior and subordinated notes were refinanced during 1996,
as disclosed above:
<TABLE>
<CAPTION>
1995
--------
<S> <C>
A senior note secured by the $130,000 first mortgage on
the principal resort property, improvements and all
assets and rights of the Partnership accruing interest
at 8.26%. The Partnership may pay the loan in whole or
in part at any time by paying a prepayment fee based on
a formula. $ 71,524
A subordinated note secured by the $130,000 first mortgage
on the principal resort property, improvements, and all
assets and rights of the Partnership accruing interest
at 14.52%. The balance at December 31, 1995 includes a
fee of $1,000 due upon payoff of the note. The loan has
a term of eight years and no amortization period [see
(b) and (d) below]. 51,000
A subordinated note secured by the $130,000 first mortgage
on the principal resort property, improvements and all
assets and rights of the Partnership accruing interest
at 14.52%. The note contains a provision whereby the
lender upon the sale or refinancing of the Partnership,
or substantially all of its assets, is entitled to an
amount based on a certain formula [see (a) below]. 500
Other loans payable:
A promissory note bearing interest at 14.5% per annum,
payable quarterly commencing April 1, 1996. The note is
collateralized by the notes receivable due from club
members for the Premier Membership Program at December
15, 1995 and additions thereafter (see Note 10). The
loan matures on December 15, 2002, at which time all
principal and any accrued unpaid interest is due. The
principal amount due at maturity of the note includes
an amount, in addition to principal and accrued
interest, sufficient to provide the lender an internal
rate of return of 18.5% per annum. [see (c) below]. 10,000
An unsecured promissory note dated October 7, 1994 with
interest at 7% per annum. The first interest payment is
due October 7, 1995, with subsequent payments of
interest due semiannually commencing April 1, 1996.
Principal payments commence October 7, 1996 in the
amount of $240 increasing to $400 in the year 2003 with
a balloon payment of $5,040 due October 7, 2004. 8,000
An unsecured promissory note dated October 7, 1994 with
interest at 7% per annum. The first interest payment is
due October 7, 1995, with subsequent payments of
interest due semiannually commencing April 1, 1996.
Principal payments commence October 7, 1996 in the
amount of $60 increasing to $100 in the year 2003 with
a balloon payment of $1,260 due October 7, 2004. 2,000
An unsecured promissory note dated October 7, 1994 with
interest at 7% per annum. Annual principal payments of
$100 plus interest commence October 7, 1995. $ 100
A note payable dated March 31, 1991 for $600 to fund the
redevelopment and renovation of a resort restaurant.
Principal and interest payments are made monthly over a
five-year term at an interest rate of prime plus 2.5%
(11.0% at December 31, 1995). 112
--------
143,236
Current portion of mortgage and other loans payable (2,347)
--------
$140,889
========
</TABLE>
- ---------------
(a) On October 11, 1994, the Partnership exercised its call option (the "1994
Refinancing") and paid $45,086 to reduce the then outstanding principal
balance of $55,000 on this subordinated note to $500,
F-74
<PAGE> 136
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
resulting in a gain on debt restructuring of $6,704, net of $2,710 in
capitalized costs on the repaid subordinated note which were written off as
a result of the restructuring.
Also on October 11, 1994, the Partnership entered into a $48,500
subordinated note agreement with a new lender. The proceeds of the note
were reduced by a $1,000 commitment fee and used to make the $45,086
payment described above and to pay accrued interest of $216 on the repaid
subordinated note, resulting in net cash proceeds of $2,198.
(b) The Partnership's subordinated note in the original principal amount of
$48,500 was retired on September 29, 1995 (the "1995 Refinancing"). The
total principal and interest owed to the Lender under the note was $50,241.
An additional Payoff Premium of $1,500 was also owed to the Lender under the
note. The Partnership made a cash payment of $1,741 to the Lender for
accrued interest at September 29, 1995 and refinanced $50,000 with the
issuance of a $50,000 subordinated note. As a result of the 1995
Refinancing, approximately $1,696 in deferred loan costs were written off
resulting in a loss on extinguishment of debt of said amount.
In connection with the 1995 Refinancing, the Partnership paid $389 in
closing costs and legal fees. These loan costs were capitalized and are
being amortized on a straight line basis over the term of the loan.
(c) On December 15, 1995, the Partnership entered into a $10,000 promissory
note, the proceeds of which were deposited into an escrow account. The
balance in the escrow account at December 31, 1995 is $9,864 and is included
in restricted cash and short-term investments in the accompanying balance
sheet. The proceeds of the note are to be used for the construction of
certain hotel property.
The Note is prepayable at any time, provided that any prepayments made
prior to December 15, 2000 require a prepayment fee sufficient to provide
the holder an internal rate of return of 16% per annum through December 15,
2000 based upon a yield maintenance formula.
(d) The note calls for $1,000 fee due upon payoff. This fee is being accreted
over the life of the loan. At December 31, 1995, included in deferred loan
costs is approximately $968, which represents the $1,000 fee less
accumulated accretion of $32.
Under the terms of the senior and subordinated mortgage notes described
above, certain amounts are required to be deposited in an escrow account for the
purposes of paying personal and real property taxes. The balance in the personal
and real property taxes account was $853 at December 31, 1995. The terms of
these mortgages also require funds to be escrowed for capital repairs and
replacements to the resort. The balance in the capital repair and replacement
escrow account was $2,148 at December 31, 1995.
The mortgage loan agreements include certain restrictive covenants
including, among other things, the maintenance of a senior debt service ratio,
as defined, of 1.75 to 1 and a subordinate debt service coverage ratio, as
defined, of 1.2 to 1, restrictions on general and limited partner distributions
and limitations on the incurrence of new debt.
6. BANYAN MORTGAGE LOANS
The Banyan mortgage loans consisted of three matured first mortgage loans
collateralized by certain land (the Marina Parcel) and the Boca Golf and Tennis
Country Club. At December 31, 1994, the mortgage loans had principal balances of
$8,100, $10,354 and $2,031 and accrued interest totaled $4,388. During 1994 and
1995, no principal payments were made, other than as described below, and, in
accordance with the terms of the agreements, interest totaling $2,419 was
incurred in 1994.
On December 29, 1994 (the Settlement Date), the Partnership entered into a
settlement agreement which called for the following: (1) a payment of $1,000,
which was made on November 29, 1994, and applied against outstanding principal;
(2) a payment to be made of $3,500, plus interest accrued from the Settlement
Date to the date of payment, to release the Boca Golf and Tennis Country Club
from the mortgage loans; and (3) a foreclosure sale on the Marina Parcel, to be
held subsequent to December 31, 1994.
F-75
<PAGE> 137
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
On January 17, 1995, the Partnership made the $3,500 payment, plus accrued
interest of $18, and on January 26, 1995, a foreclosure sale was held and the
lender obtained ownership of the Marina Parcel.
The settlement is deemed to have occurred at the time the $3,500 payment
was made and the foreclosure sale was held. Accordingly, in 1995, the
Partnership recognized a net gain of $12,024 consisting of $21,373 in
forgiveness of principal and interest offset by a write-off of $9,349
representing the carrying value of the Marina Parcel.
The Partnership agreed to lease the Marina Parcel from the owner for $8 per
month which terminated December 1, 1996 and was subsequently extended to January
1, 1997. On January 2, 1997, the Partnership entered into an agreement with the
owner for the right of partial use of the marina property. The agreement's
initial term expires on September 1, 1997 and is automatically renewable upon
notice, unless terminated by either property owner or the Partnership.
7. SERVICES AGREEMENT
The Partnership has entered into a services agreement with an individual to
provide executive services. Pursuant to the agreement, the individual has agreed
to serve as a director of the corporate general partner of BRMC. The term of the
agreement is ten years commencing on January 1, 1993. As compensation for these
services, the individual receives the following:
1. Basic advisory fee of not less than $150 per year payable in equal
monthly installments.
2. For the first three calendar years, a guaranteed bonus equal to the
greater of $35 or 2.5% of the Partnership's adjusted contract year earnings
in excess of the contract year base level earnings.
3. Complimentary Premier Club membership.
The basic advisory fee of $150 was paid to the individual in 1994, 1995 and
1996. Cumulative bonuses totaling $107 have been accrued and are included in
other accounts payable and accrued expenses at December 31, 1996.
8. OTHER RELATED PARTY TRANSACTIONS
As described in Note 3, BRMC is entitled to receive several forms of
compensation. In respect to Note 3 subparagraph 1, the Partnership paid $600 in
supervisory management fees during 1994, 1995 and 1996. In connection with Note
3 subparagraph 2, 3, 4 and 5, the following sets forth the extent of amounts
owed by the Partnership to BRMC.
<TABLE>
<S> <C> <C>
Fees incurred in 1993
Capital raising fee(1)...................................... $ 1,650
Debt reduction fee(2)....................................... 1,416
---------
Balance due as of December 31, 1993......................... 3,066
Less: Payment made in 1994 in connection with balance due as
of December 31, 1993.................................. (500)
Plus: Fees incurred in 1994
Capital raising fee(3)...................................... 728
Debt reduction fee(4)....................................... 1,140
Settlement fee(5)........................................... 400
---------
Balance due as of December 31, 1994......................... 4,834
</TABLE>
F-76
<PAGE> 138
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
Plus: Fees incurred in 1995
Debt restructuring fee(6).............................. 243
Capital raising fee(7)................................. 173
Debt reduction fee(8).................................. 650
---------
Balance due as of December 31, 1995......................... 5,900
Less: Payment made in 1996 in connection with balance due as
of December 31, 1995.................................. (4,500)
Plus: Capital raising fee incurred in 1996(9)............... 2,325
---------
Balance due as of December 31, 1996......................... $ 3,725
=========
(1) Aggregate new money raised in 1993.......................... 110,000
Capital raising fee (@ 1.5%)................................ 1,650
(2) Original principal replaced................................. 154,908
Less: Replacement financing................................. (140,750)
---------
Debt reduction amount....................................... 14,158
=========
Debt reduction fee (@ 10%).................................. 1,416
(3) Aggregate new money raised in 1994.......................... 48,500
Capital raising fee (@ 1.5%)................................ 728
(4) Original principal replaced................................. 25,200
Less: Loan payments......................................... (4,500)
Value of Marina Parcel per settlement....................... (9,300)
---------
Debt reduction amount....................................... 11,400
=========
Debt reduction fee (@ 10%).................................. 1,140
(5) RMA settlement fee.......................................... 400
(6) Debt restructured in 1995................................... 48,500
Debt restructuring fee (@ 0.5%)............................. 243
(7) Aggregate new money raised in 1995.......................... 11,500
Capital raising fee (@ 1.5%)................................ 173
(8) Original principal replaced................................. 54,500
Less: Replacement financing payoff amount................... (51,000)
Plus: New money included in replacement financing........... 3,000
---------
Debt reduction amount....................................... 6,500
=========
Debt reduction fee (@ 10%).................................. 650
(9) Aggregate new money raised in 1996.......................... 155,000
Capital raising fee (@ 1.5%)................................ $ 2,325
Payment of the balance due BRMC at December 31, 1996 is restricted in
accordance with provisions of the First Mortgage Notes. There is $25 due to the
BRMC from future distribution to Limited Partners for the participation fee on
the $2,500 distribution made during 1996.
In 1994, the Partnership received $500 from an affiliate of VMSRIL for
reimbursement of a percentage of shared executives' salaries and benefits and
$60 for office space rental.
9. PROFIT SHARING PLAN
On January 1, 1987, the Partnership established the Boca Raton Hotel and
Beach Club Employees Savings and Thrift Plan and Trust (the "BEST Plan").
Substantially all employees are eligible to participate
F-77
<PAGE> 139
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
in the BEST Plan. The BEST Plan allows participants to contribute up to 16% of
their total compensation. The Partnership is required to contribute 50% of the
first 6% of the employee's earnings. The Partnership's contributions to the BEST
Plan were $360, $362, and $387 for the years ended December 31, 1994, 1995, and
1996, respectively.
10. PREMIER CLUB MEMBERSHIP DEPOSITS AND CREDITS
During 1991, the Partnership introduced the Premier Club at the resort
complex. The program requires an initial membership deposit and annual dues
based on the number and type of facilities the member uses.
Under the terms of the Premier Club, commencing in January 1991,
applications for membership required a deposit of $15 ($12 for members under a
prior program). The required deposit was increased to $18 as of May 1, 1992, $22
as of May 1, 1993, $25 as of May 1, 1994 and $28 as of May 1, 1995 and $30 as of
May 1, 1996. As of December 31, 1996, the Partnership has recorded membership
deposits of $59,287, of which $47,201 has been either received or credited. As
of December 31, 1996, $1,912 of membership notes bear interest at 7% per annum
and the remaining balance of $10,174 is non-interest bearing. The membership
notes will be collected by 2003 as follows:
<TABLE>
<S> <C>
1997........................................................ $ 3,840
1998........................................................ 3,327
1999........................................................ 2,723
2000........................................................ 1,565
2001........................................................ 565
Thereafter.................................................. 66
-------
$12,086
=======
</TABLE>
Premier Club deposits are net of a deposit credit of $3,584 and $3,462 at
December 31, 1995 and 1996, respectively, granted to members of a prior
membership program. The deposit credit is amortized on the interest method over
30 years. If any member paying over time suspends payments, amounts paid to date
will be forfeited and recognized as income. Fully paid deposits are refundable
upon the death of a member or a member's spouse and upon the expiration of the
30-year membership term (subject to renewal). The deposit is refundable upon a
member's resignation from the Premier Club, but only out of the proceeds of the
membership deposit of the fifth new member to join the Premier Club following
refund of all previously resigned members' deposits.
11. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS
On August 5, 1993, the Partnership entered into agreements to lease food
and beverage operations at the Deer Creek and Carolina country club facilities.
The Partnership is entitled to food and beverage revenues from the operation of
the facilities and is obligated to pay all employee costs, certain maintenance
costs and 50% of the following: real and personal property taxes, insurance
premiums and common area maintenance costs, and certain other items, in
accordance with the terms of the agreements. For the years ended December 31,
1994, 1995 and 1996, rental and other expenses include net losses from these
leases operations of $365, $261 and $431, respectively, which are net of food
and beverage revenues totaling $5,164, $5,241 and $5,018, respectively. Included
in the net losses from these operations are rent expense under the related
leases of $305, $397 and $321, respectively.
F-78
<PAGE> 140
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
Minimum future obligations under operating leases, in effect at December
31, 1996, for certain equipment and the Deer Creek and Carolina food and
beverage operations are as follows:
<TABLE>
<S> <C>
1997........................................................ $1,620
1998........................................................ 1,522
1999........................................................ 1,386
2000........................................................ 343
2001........................................................ 327
Thereafter.................................................. 321
------
$5,519
======
</TABLE>
Rent expense under operating leases, excluding rent expense under the Deer
Creek and Carolina country club leases, totaled $566, $1,290 and $1,493 for the
years ended December 31, 1994, 1995 and 1996, respectively.
In conjunction with the closing of the First and Second Mortgage Notes,
bonuses totaling $1,000 were paid to certain employees of the Partnership.
State of Florida Department of Revenue performed audits of the
Partnership's Sales and Use and Intangible taxes for the periods March 31, 1991
to December 31, 1995 and January 1, 1991 to January 1, 1995, respectively. The
Partnership was assessed an additional $248 of taxes and $106 of interest. The
Partnership disputes the assessments and believes it will be successful in
defending its position. Accordingly, no additional liability has been accrued.
The Partnership and KSL Recreation Corporation (KSL) entered into a
settlement agreement and general release on April 24, 1996. In accordance with
the settlement agreement, the Partnership agreed to pay KSL an amount totaling
$1,250, in exchange for mutual releases and discharges from all actions and
obligations from their respective suits. In accordance with the agreement, the
Partnership paid $750 and agreed to pay $500 on or before June 30, 1998. At
December 31, 1995, $950 was included in accrued settlement cost in the
accompanying balance sheet.
The Partnership is subject to various actions arising out of the operations
of its business. Management is vigorously defending these actions and believes
that all actions are adequately covered by insurance.
In November 1995, the Partnership began Phase I of a planned $40,000
expansion of the Resort. At December 31, 1996, the Partnership incurred $15,148
of costs related to the expansion; $8,396 was completed in 1996 and includes
building of a parking garage and tennis courts. The balance of the expansion
plan encompasses construction of a new conference center, completion of a
fitness center and certain other minor improvements to the Resort facilities.
Construction of the new conference center commenced in September 1996. As of
December 31, 1996 and in connection with the Project, the Partnership had
contractual commitments for capital expenditures of $28,406 of which $1,507 is
included in other accounts payable and accrued expenses in the accompanying
balance sheet.
12. SUBSEQUENT EVENTS
On March 20, 1997, BRMC, BRMC's corporate general partner, and the
Partnership entered into a Contribution and Exchange Agreement with Florida
Panthers Holdings, Inc. (Panthers) and Panthers BRHC Limited to convey
substantially all of the assets and liabilities of the Partnership in exchange
for cash and ownership interests (as defined in the agreement) in Florida
Panthers Holdings, Inc. This exchange of interests, which is subject to approval
of the limited partners of the Partnership and the shareholders of Panthers, has
an agreed-upon value of approximately $325,000 and is to close within five days
of registering Panthers BRHC Limited shares and Panthers shares and warrants
under the Securities Act of 1933 and under applicable state securities law.
F-79
<PAGE> 141
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
--------- ------------
1997 1996
--------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 1,736 $ 1,126
Restricted cash and short-term investments................ 28,005 18,887
Accounts receivable, net of allowance for doubtful
accounts of $397 and $412, respectively, at March 31,
1997 and December 31, 1996............................. 11,689 12,203
Current portion of Premier Club promissory notes for
membership deposits.................................... 3,892 3,840
Other current assets...................................... 970 727
Prepaid insurance......................................... 1,489 1,697
Inventories............................................... 5,773 5,725
-------- --------
Total current assets.............................. 53,554 44,205
Premier Club promissory notes for membership deposits, less
current portion........................................... 8,131 8,246
Property and improvements:
Land...................................................... 26,851 26,851
Buildings and improvements................................ 114,199 114,199
Furnishings and equipment................................. 20,407 20,407
Construction in progress.................................. 9,335 6,750
-------- --------
170,792 168,207
Less accumulated depreciation............................. (54,003) (52,479)
-------- --------
116,789 115,728
Deferred loan costs and other, net.......................... 9,620 10,080
-------- --------
$188,094 $178,259
======== ========
LIABILITIES AND PARTNERS' DEFICIT
Current liabilities:
Accounts payable, trade................................... $ 5,791 $ 4,490
Advance deposits.......................................... 2,511 3,027
Accrued interest payable.................................. 4,466 3,296
Accrued payroll costs and employee benefits............... 2,674 3,015
Due to general partner.................................... 3,725 3,725
Other accounts payable and accrued expenses............... 6,746 6,102
Deferred membership revenue............................... 4,936 7,232
Current portion of mortgage and other loans payable....... 400 400
-------- --------
Total current liabilities......................... 31,249 31,287
Mortgage and other loans payable, less current portion...... 174,800 174,800
Accrued settlement costs.................................... 500 500
Premier Club membership deposits and credits, net........... 58,011 55,905
Partners' deficit:
General Partner........................................... (2,337) (2,492)
Class A Limited Partners.................................. (72,593) (80,067)
Class B Limited Partner................................... (1,536) (1,674)
-------- --------
Total Partners' deficit........................... (76,466) (84,233)
-------- --------
$188,094 $178,259
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-80
<PAGE> 142
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
1997 1996
-------- --------
(UNAUDITED)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Rooms..................................................... $18,523 $17,593
Food and beverage......................................... 10,443 10,582
Club Membership, Retail and Other......................... 10,664 9,454
------- -------
Total revenues.................................... 39,630 37,629
Cost of Revenue:
Rooms..................................................... 3,194 3,126
Food and beverage......................................... 7,545 7,356
Club Membership, Retail and Other......................... 5,772 5,142
Selling, general and administrative....................... 4,334 4,270
Property maintenance and energy costs..................... 2,444 2,555
Other indirect costs...................................... 2,007 2,369
------- -------
Total cost of revenue............................. 25,296 24,818
Depreciation and amortization............................... 1,559 1,391
Operating income............................................ 12,775 11,420
Interest expense, net....................................... 5,008 3,903
Profit before extraordinary items........................... 7,767 7,517
------- -------
Net income.................................................. $ 7,767 $ 7,517
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-81
<PAGE> 143
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED
MARCH 31,
-----------------
1997 1996
------- -------
(UNAUDITED)
<S> <C> <C>
Operating activities:
Net income................................................ $ 7,767 $ 7,517
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 1,938 1,444
Changes in operating assets and liabilities:
Accounts receivable.................................. 514 (2,064)
Prepaid expenses and other assets.................... (35) (622)
Inventories.......................................... (48) (82)
Accounts payable, trade.............................. 1,301 (1,265)
Advance deposits..................................... (517) (275)
Accrued interest payable............................. 1,170 540
Accrued payroll costs and employee benefits.......... (341) 87
Other accounts payable and accrued expenses.......... 644 1,106
Deferred membership revenue.......................... (2,296) (1,705)
Premier Club Membership cash and note payments....... 2,216 1,206
------- -------
Net cash provided by operating activities............ 12,313 5,887
------- -------
Investing activities:
Restricted cash and short-term investments................ (9,118) 2,002
Additions to construction in progress..................... (2,585) (2,183)
------- -------
Net cash used in investing activities................ (11,703) (181)
------- -------
Financing activities:
Principal payments of mortgage and other loans payable.... -- (482)
------- -------
Net cash used in financing activities................ -- (482)
------- -------
Net increase in cash and cash equivalents................... 610 5,224
Cash and cash equivalents at beginning of period............ 1,126 2,886
------- -------
Cash and cash equivalents at end of period.................. $ 1,736 $ 8,110
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest...................... $ 3,447 $ 3,307
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-82
<PAGE> 144
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO UNAUDITED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL STATEMENTS
The accompanying unaudited financial statements of Boca Raton Hotel and
Club Limited Partnership (the "Partnership") as of March 31, 1997 and for the
three months ended March 31, 1997 and 1996 have been prepared by the Company
without audit pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information related to the Company's organization,
significant accounting policies and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These unaudited financial statements
reflect, in the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to fairly state the financial position
and the results of operations for the periods presented and the disclosures
herein are adequate to make the information presented not misleading. Operating
results for the interim periods presented are not indicative of the results that
can be expected for a full year.
2. COMMITMENTS AND CONTINGENCIES
On March 20, 1997, BRMC, corporate general partner of BRMC, L.P., and the
Partnership entered into a Contribution and Exchange Agreement with Florida
Panthers Holdings, Inc. (Panthers) and Panthers BRHC Limited to convey
substantially all of the assets and liabilities of the Partnership in exchange
for cash and ownership interests (as defined in the agreement) in Florida
Panthers Holdings, Inc. This exchange of interests, which is subject to approval
of the limited partners of the Partnership and the shareholders of Panthers, had
an agreed-upon value of approximately $325,000 and is to close within five days
of registering Panthers BRHC Limited shares and Panthers shares and warrants
under the Securities Act of 1933 and under applicable state securities law.
3. SUBSEQUENT EVENT
On April 3, 1997, the Partnership sold approximately 7 acres of land that
formed part of the Resort Golf Course for $6,675,000. The proceeds from this
sale will be used to completely reconstruct the Golf Course and provide
additional working capital. The estimated cost of the project is approximately
$6,000,000. Construction began on April 21, 1997 and is anticipated to be ready
for play December 15, 1997.
F-83
<PAGE> 145
======================================================
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. 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....................... 1
Summary Financial Data................... 5
Risk Factors............................. 6
Use of Proceeds.......................... 16
Price Range of Class A Common Stock...... 16
Dividend Policy.......................... 16
Capitalization........................... 17
Selected Financial Data.................. 18
Selected Unaudited Pro Forma Financial
Data................................... 19
Management's Discussion and Analysis of
Financial Condition And Results of
Operations............................. 21
Business................................. 29
The National Hockey League............... 42
Management............................... 44
Certain Transactions..................... 49
Principal Shareholders................... 51
Selling Stockholders..................... 52
Description of Capital Stock............. 53
Underwriting............................. 56
Legal Matters............................ 58
Experts.................................. 58
Additional Information................... 58
Index to Financial Statements............ F-1
</TABLE>
======================================================
======================================================
6,339,836 SHARES
'[LOGO]
FLORIDA PANTHERS HOLDINGS, INC.
CLASS A COMMON STOCK
------------------------
PROSPECTUS
------------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
ALLEN & COMPANY
INCORPORATED
RAYMOND JAMES & ASSOCIATES, INC.
, 1997
======================================================
<PAGE> 146
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, all of which will be paid by the Registrant pursuant to a
contractual obligation, are as follows:
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 43,069
NYSE Additional Listing Fee................................. 51,300
NASD Filing Fee............................................. 14,213
Printing Expenses........................................... 175,000
Accounting Fees and Expenses................................ 75,000
Legal Fees and Expenses..................................... 150,000
Miscellaneous............................................... 16,418
--------
Total............................................. $525,000
========
</TABLE>
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 607.0850 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 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.
II-1
<PAGE> 147
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.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
On January 30, 1997, the Company issued and sold 2,460,000 shares of Class
A Common Stock in connection with the private placement (the "Private
Placement") at a price of $27.75 per share to certain accredited investors. The
Private Placement was exempt from registration pursuant to Section 4(2) of the
Securities Act and resulted in net proceeds to the Company of approximately
$67.0 million after deducting placement agency fees.
On January 31, 1997, the Company acquired substantially all of the
business, assets and operations of Iceland (Coral Springs) Corp. ("Iceland") and
Iceland Holdings, Inc. ("IHI"), including the business, assets and operations of
an operating twin-pad ice rink facility. The consideration paid by the Company
in connection with these acquisitions included 212,766 shares of Class A Common
Stock. The issuance of these 212,766 shares of Class A Common Stock to the sole
shareholder of Iceland and IHI, who is an accredited investor, was exempt from
registration pursuant to Section 4(2) of the Securities Act.
On March 4, 1997, the Company acquired all of the direct and indirect
ownership interests of Pier 66 and Bahia Mar in exchange for 4,450,000 and
3,950,000 shares of Class A Common Stock, respectively. The issuance of these
shares was to accredited investors and was exempt from registration pursuant to
Section 4(2) of the Securities Act.
II-2
<PAGE> 148
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
1.1 -- Form of Underwriting Agreement by and between the Company
and Donaldson, Lufkin & Jenrette Securities Corporation,
Allen & Company Incorporated and Raymond James & Associates,
Inc. (Class A Common Stock)*****
2.1 -- Exchange Agreement dated October 25, 1996 by and between the
Company and H. Wayne Huizenga.*
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.*
2.4 -- Asset Purchase Agreement, dated as of January 18, 1997, by
and among Florida Panthers Ice Ventures, Inc., Iceland
(Coral Springs) Corp., Iceland Holdings, Inc. and Brian
Brisbin.**
2.5 -- Asset Purchase Agreement, dated as of January 18, 1997, by
and among Florida Panthers Ice Ventures, Inc., Brisbin Brook
Beynon, Architects and Brian Brisbin.**
2.6 -- Asset Purchase Agreement, dated as of January 18, 1997, by
and among Florida Panthers Ice Ventures, Inc. and Brian
Brisbin.**
2.7 -- Exchange Agreement (Hyatt Regency Pier 66), dated as of
December 22, 1996.***
2.8 -- Exchange Agreement (Radisson Bahia Mar), dated as of
December 22, 1996.***
2.9 -- Amended and Restated Contribution and Exchange Agreement,
dated as of March 20, 1997, by and among Florida Panthers
Holdings, Inc., Panthers BRHC Limited, Boca Raton Hotel and
Club Limited Partnership, BRMC, L.P. and BRMC
Corporation****
2.10 -- Merger Agreement, dated July 8, 1997, by and among the
Company, FPH/RHI Merger Corp., Inc., ResortHill, Inc. and
Gary V. Chensoff*****
3.1 -- Amended and Restated Articles of Incorporation of the
Company*
3.2 -- Form of By-Laws of the Company*
4.1 -- Amended and Restated Loan Agreement, dated June 25, 1997,
among Panthers BRHC Limited, the banks listed on the
signature page thereto and the Bank of Nova Scotia
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*
10.11 -- Concession Agreement, dated as of April 4, 1995, as amended,
by and between City of Coral Springs, Florida and Can Am
Investment Group, Inc.**
10.12 -- Assignment of Concession Agreement, dated as of January 31,
1997, by and between Coral Springs Ice, Ltd. and Florida
Panthers Holdings, Inc.**
10.13 -- Hotel Management Agreement (Pier 66), by and between 2301 SE
17th St., Ltd. and Rahn Pier Mgt., Inc.***
10.14 -- Hotel Management Agreement (Bahia Mar), by and between 2301
Rahn Bahia Mar, Ltd. and Rahn Bahia Mar Mgmt., Inc.***
21.1 -- Subsidiaries of the Company*
23.1 -- Consent of Arthur Andersen LLP******
</TABLE>
23.2 -- Consent of KPMG Peat Marwick LLP******
23.3 -- Consent of Price Waterhouse LLP******
II-3
<PAGE> 149
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
23.4 -- Consent of Ernst & Young LLP******
23.5 -- Consent of Akerman, Senterfitt & Eidson, P.A. (included in
its opinions filed as Exhibit 5.1)******
24.1 -- Powers of Attorney (included on the signature page of this
Registration Statement)******
</TABLE>
- ---------------
* Incorporated by reference to the Company's Registration Statement on
Form S-1 -- SEC File No. 333-12191
** Incorporated by reference to the Company's Current Report on Form 8-K
filed on February 18, 1997 -- SEC File No. 0-21435
*** Incorporated by reference to the Company's Definitive Consent
Solicitation Statement filed on March 4, 1997 -- SEC File No. 0-21435
**** Incorporated by reference to the Company's Registration Statement on Form
S-4 -- SEC File 333-28951
***** To be Filed by Amendment
****** Previously Filed
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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> 150
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 21st day of July, 1997.
Florida Panthers Holdings, Inc.
By: /s/ William M. Pierce
------------------------------------
William M. Pierce
Senior 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 July 21, 1997
- ----------------------------------------------------- (Principal Executive Officer)
H. Wayne Huizenga
* Vice Chairman July 21, 1997
- -----------------------------------------------------
Richard C. Rochon
* President and Director July 21, 1997
- -----------------------------------------------------
Richard H. Evans
* President of Florida Panthers July 21, 1997
- ----------------------------------------------------- Hockey Club, Inc. and
William A. Torrey Director
/s/ WILLIAM M. PIERCE Senior Vice President and Chief July 21, 1997
- ----------------------------------------------------- Financial Officer (Principal
William M. Pierce Financial Officer)
* Vice President and Corporate July 21, 1997
- ----------------------------------------------------- Controller (Principal
Steven M. Dauria Accounting Officer)
</TABLE>
II-5
<PAGE> 151
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Director July 21, 1997
- -----------------------------------------------------
Steven R. Berrard
Director
- -----------------------------------------------------
Dennis J. Callaghan
Director
- -----------------------------------------------------
Michael S. Egan
Director
- -----------------------------------------------------
Chris Evert
* Director July 21, 1997
- -----------------------------------------------------
Harris W. Hudson
Director
- -----------------------------------------------------
George D. Johnson, Jr.
*By: /s/ William M. Pierce
- -----------------------------------------------------
William M. Pierce
Attorney-in-Fact
</TABLE>
II-6
<PAGE> 152
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
1.1 -- Form of Underwriting Agreement by and between the Company
and Donaldson, Lufkin & Jenrette Securities Corporation,
Allen & Company Incorporated and Raymond James & Associates,
Inc. (Class A Common Stock)*****
2.1 -- Exchange Agreement dated October 25, 1996 by and between the
Company and H. Wayne Huizenga.*
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.*
2.4 -- Asset Purchase Agreement, dated as of January 18, 1997, by
and among Florida Panthers Ice Ventures, Inc., Iceland
(Coral Springs) Corp., Iceland Holdings, Inc. and Brian
Brisbin.**
2.5 -- Asset Purchase Agreement, dated as of January 18, 1997, by
and among Florida Panthers Ice Ventures, Inc., Brisbin Brook
Beynon, Architects and Brian Brisbin.**
2.6 -- Asset Purchase Agreement, dated as of January 18, 1997, by
and among Florida Panthers Ice Ventures, Inc. and Brian
Brisbin.**
2.7 -- Exchange Agreement (Hyatt Regency Pier 66), dated as of
December 22, 1996.***
2.8 -- Exchange Agreement (Radisson Bahia Mar), dated as of
December 22, 1996.***
2.9 -- Amended and Restated Contribution and Exchange Agreement,
dated as of March 20, 1997, by and among Florida Panthers
Holdings, Inc., Panthers BRHC Limited, Boca Raton Hotel and
Club Limited Partnership, BRMC, L.P. and BRMC
Corporation****
2.10 -- Merger Agreement, dated July 8, 1997, by and among the
Company, FPH/RHI Merger Corp., Inc., ResortHill, Inc. and
Gary V. Chensoff*****
3.1 -- Amended and Restated Articles of Incorporation of the
Company*
3.2 -- Form of By-Laws of the Company*
4.1 -- Amended and Restated Loan Agreement, dated June 25, 1997,
among Panthers BRHC Limited, the banks listed on the
signature page thereto and the Bank of Nova Scotia
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*
10.11 -- Concession Agreement, dated as of April 4, 1995, as amended,
by and between City of Coral Springs, Florida and Can Am
Investment Group, Inc.**
10.12 -- Assignment of Concession Agreement, dated as of January 31,
1997, by and between Coral Springs Ice, Ltd. and Florida
Panthers Holdings, Inc.**
10.13 -- Hotel Management Agreement (Pier 66), by and between 2301 SE
17th St., Ltd. and Rahn Pier Mgt., Inc.***
10.14 -- Hotel Management Agreement (Bahia Mar), by and between 2301
Rahn Bahia Mar, Ltd. and Rahn Bahia Mar Mgmt., Inc.***
21.1 -- Subsidiaries of the Company*
23.1 -- Consent of Arthur Andersen LLP******
23.2 -- Consent of KPMG Peat Marwick LLP******
23.3 -- Consent of Price Waterhouse LLP******
23.4 -- Consent of Ernst & Young LLP******
23.5 -- Consent of Akerman, Senterfitt & Eidson, P.A. (included in
its opinions filed as Exhibit 5.1)******
24.1 -- Powers of Attorney (included on the signature page of this
Registration Statement)******
</TABLE>
- ---------------
* Incorporated by reference to the Company's Registration Statement on Form
S-1 -- SEC File No. 333-12191
** Incorporated by reference to the Company's Current Report on Form 8-K
filed on February 18, 1997 -- SEC File No. 0-21435
*** Incorporated by reference to the Company's Definitive Consent
Solicitation Statement filed on March 4, 1997 -- SEC File No. 0-21435
**** Incorporated by reference to the Company's Registration Statement on Form
S-4 -- SEC File 333-28951
***** To be Filed by Amendment
****** Previously Filed
<PAGE> 1
Exhibit 4.1
$110,000,000
AMENDED AND RESTATED LOAN AGREEMENT
AMONG
PANTHERS BRHC LIMITED
("BORROWER"),
THE BANKS SIGNATORY HERETO
(the "LENDERS")
and
THE BANK OF NOVA SCOTIA,
NEW YORK AGENCY
("AGENT"),
individually and as Agent for itself and
the Lenders
====================================
DATED AS OF: JUNE 25, 1997
====================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE 1
RULES OF USAGE; DEFINITIONS
<S> <C> <C>
SECTION 1.1.
Rules of Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
--------------
SECTION 1.2.
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-----------
ARTICLE 2
THE FACILITY
SECTION 2.1.
The Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
------------
SECTION 2.2. Facility Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
---------------------
(a) Mandatory Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
----------------------
(b) Additional Cash Flow Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
---------------------------------
(c) Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
--------------------
(d) Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
--------
(e) Breakage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
--------
SECTION 2.3. [Intentionally omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.4. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
--------
(a) Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
-----
(b) Requests for Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
------------------------
(c) Portions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
--------
(d) Maximum Number of Portions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
--------------------------
(e) After Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
-------------
(f) Automatic Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
--------------------
(g) Notice of Change in Base Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-----------------------------
SECTION 2.5. Interest Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
----------------
(a) Facility Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-----------------
(b) Default Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
----------------
SECTION 2.6. Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
---------------
SECTION 2.7. INCREASED CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-----------------
SECTION 2.8. LIBOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
-----
(a) Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
----------
(b) Unavailable/Insufficient . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
------------------------
SECTION 2.9. Payments and Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
-------------------------
(a) Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
--------
(b) Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
------------
(c) Business Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-------------
(d) Distributions by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
----------------------
SECTION 2.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-----
(a) No Deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
------------
</TABLE>
<PAGE> 3
ii
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
(b) Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
---------
(c) Representation by Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
-------------------------
SECTION 2.11. Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
-------------------
SECTION 2.12. Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
------------------
SECTION 2.13. Replacement of Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
---------------------
ARTICLE 3
CONDITIONS PRECEDENT
SECTION 3.1. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
--------------------
(a) Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
-------------
(b) Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
--------------
(c) Other Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
---------------
(e) Other Conditions Satisfied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
--------------------------
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
------------------------------
(a) Borrower's Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
-----------------------
(b) Managing General Partner's Organization . . . . . . . . . . . . . . . . . . . . . . . . . . 34
---------------------------------------
(c) Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
-------------------
(d) Due Execution/Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
----------------------------
(e) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
----------
(f) Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
--------
(g) Governmental Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
--------------------
(h) Compliance; Zoning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
------------------
(i) Regulation U . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
------------
(j) Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
--------------------
(k) Taxes and Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
---------------------
(l) Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
-----
(m) Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
------------
(n) Management Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
--------------------
(o) Certain Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
-------------------
(p) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
-----
(q) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
---------
(r) Written Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
-------------------
</TABLE>
<PAGE> 4
iii
<TABLE>
<CAPTION>
PAGE
ARTICLE 5
COVENANTS
<S> <C> <C>
SECTION 5.1. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
---------------------
(a) Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
---------
(b) Required Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
----------------
(c) Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
----------
(d) Authorized Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
------------------
(e) Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
--------------------
(f) Annual Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
-------------
(g) Change in Circumstance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
----------------------
(h) Additional Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
----------------------
(i) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
---------
(j) Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
----------
(k) Single Purpose Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
---------------------
(l) Appraisal Updates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
-----------------
(m) Construction Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
--------------------
(n) Construction Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
---------------------
(o) Subcontracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
------------
(p) Prosecution and Completion of Construction . . . . . . . . . . . . . . . . . . . . . . . . 44
------------------------------------------
(q) Inspection; Repair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
------------------
(r) Final Lien Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
------------------
(s) Post-Completion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
---------------
(t) Deficiencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
------------
(u) Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
---------
(v) Beach Club Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
-----------------------
(w) Interest Rate Protection Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
----------------------------------
(x) TAA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
---
(y) Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
--------------------
SECTION 5.2. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
------------------
(a) Amendment or Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
-------------------------
(b) Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
-------
(c) Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
----------
(d) Governing Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
-------------------
(e) Other Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
------------------
(f) Payments; Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
-----------------------
(g) [Intentionally Omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(h) Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
---------------
(i) Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
-----------
(j) Use of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
---------------
</TABLE>
<PAGE> 5
iv
<TABLE>
<CAPTION>
ARTICLE 6
PAGE
EVENTS OF DEFAULT AND REMEDIES
<S> <C> <C>
SECTION 6.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
-----------------
(a) Failure to Repay Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
----------------------
(b) Failure to Pay Other Monetary Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 49
-----------------------------------------
(c) Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
-----------------------
(d) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
----------
(e) [Intentionally omitted]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
---------------------
(f) Completion of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
--------------------------
(g) Failure to Perform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
------------------
(h) Misrepresentations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
------------------
(i) Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
-----------------
(j) Insolvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
----------
SECTION 6.2. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
--------
(a) Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
------------
(b) Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
----------
(c) No Further Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
----------------------
(d) Injunctive Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
-----------------
(e) Cash Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
---------------
SECTION 6.3. Remedies Cumulative; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
----------------------------
ARTICLE 7
MISCELLANEOUS
SECTION 7.1. Agent's Discretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
------------------
SECTION 7.2. No Third Party Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
--------------------------
SECTION 7.3. No Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
----------------
SECTION 7.4. Reliance on Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 53
------------------------------------------
SECTION 7.5. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
-------
SECTION 7.6. Time of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
-------------------
SECTION 7.7. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
------------
SECTION 7.8. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
-------------
SECTION 7.9. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
------------
SECTION 7.10. Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
------------
SECTION 7.11. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
--------
SECTION 7.12. Controlling Document; Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
-------------------------------
SECTION 7.13. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
--------------------
SECTION 7.14. Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
------
SECTION 7.15. Assignment by Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
---------------------
SECTION 7.16. Right of Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
----------------
SECTION 7.17. LIMITATION ON LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
-----------------------
</TABLE>
<PAGE> 6
v
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 7.18. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
---------
SECTION 7.19. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
---------------
SECTION 7.20. Lender Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
------------------
ARTICLE 8
AGENT
SECTION 8.1. Authorization and Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
------------------------
ARTICLE 9
COLLATERAL RELEASE PROVISIONS
SECTION 9.1. Partial Release of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
-----------------------------
</TABLE>
<PAGE> 7
TABLE OF SCHEDULES AND EXHIBITS
<TABLE>
<S> <C>
Schedule 1 Quarterly Facility Amortization
Schedule 2 Intentionally Omitted
Schedule 3 Litigation
Exhibit A Form of Note
Exhibit B Intentionally Omitted
Exhibit C Description of Conference Plans and Specifications
Exhibit D Construction Budget
Exhibit E Form of Request for Construction Disbursement
Exhibit F Form of Inspection Certificate
Exhibit G Form of Contractor's Certificate
Exhibit H Form of Consent to Assignment of Agreement
</TABLE>
<PAGE> 8
AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT (this "AGREEMENT"),
dated as of June 25, 1997, among PANTHERS BRHC LIMITED, a Florida limited
partnership having its principal place of business at 501 East Camino Real,
Boca Raton, Florida 33432 ("BORROWER"), the banks listed on the signature pages
hereof (collectively with their respective successors and permitted assigns,
the "LENDERS") and THE BANK OF NOVA SCOTIA ("SCOTIABANK"), a Canadian chartered
bank acting by and through its New York Agency and having an office at One
Liberty Plaza, New York, New York 10006, individually and as agent ("AGENT")
for the Lenders.
W I T N E S S E T H:
WHEREAS, Boca Raton Hotel and Club Limited Partnership, a
Florida limited partnership ("BRHC"), the Lenders and Agent entered into that
certain Loan Agreement, dated as of August 22, 1996 (the "ORIGINAL LOAN
AGREEMENT"), pursuant to which the Lenders advanced the Facility to BRHC;
WHEREAS, on the date hereof, Borrower has acquired all of
BRHC's right, title and interest in the Property, subject to the Mortgage which
secures the Facility;
WHEREAS, Borrower has assumed all of BRHC's rights and
obligations under the Original Loan Agreement, the notes issued thereunder (the
"ORIGINAL NOTES") and the other agreements and documents related thereto (the
"ORIGINAL LOAN DOCUMENTS") pursuant to that certain Assumption Agreement, dated
as of the date hereof, from Borrower in favor of the Lenders and Agent; and
WHEREAS, Borrower, the Lenders and Agent desire to amend and
restate the Original Loan Agreement, the Original Notes and the Original Loan
Documents in their entireties.
NOW, THEREFORE, in consideration of the mutual covenants and
premises contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Borrower, the Lenders
and Agent agree that the Original Loan Agreement is hereby amended and restated
in its entirely as follows:
ARTICLE 1
RULES OF USAGE; DEFINITIONS
SECTION 1.1. RULES OF USAGE. The following rules of usage
shall apply to this Agreement:
<PAGE> 9
2
(a) Singular words shall connote the plural as well as
the singular, and vice versa (except as indicated), as may be
appropriate;
(b) Unless otherwise indicated, references in this
Agreement to Sections or Exhibits are references to Sections or
Exhibits of this Agreement;
(c) The headings, subheadings and table of contents used
in this Agreement are solely for convenience of reference and shall
not constitute a part of this Agreement nor shall they affect any
meanings, construction or effect;
(d) "or" is not exclusive and "include" and "including"
are not limiting; and
(e) "hereby," "herein," "hereof," and "hereunder" refer
to this Agreement, as it may be amended, modified or supplemented from
time to time in accordance with its terms.
SECTION 1.2. DEFINITIONS. The following terms when used in
this Agreement shall have the respective meanings set forth below:
ACCOUNTING RULES: GAAP, and where applicable, USAH, in each
case, consistently applied.
ACCOUNTS: As defined in the Security Agreement.
ADDITIONAL CASH FLOW AMORTIZATION: As defined in the
Security Agreement.
ADJUSTED DEBT SERVICE: An annual principal and interest
payment with respect to the Total Debt calculated so as to amortize fully the
amount of the Total Debt on a twenty-five (25) year amortization schedule
(using the constant payment method) assuming a per annum interest rate equal to
the Adjusted Debt Service Interest Rate.
ADJUSTED DEBT SERVICE COVERAGE RATIO: The ratio of (i) the
Available Cash Flow for the immediately preceding twelve (12) months divided by
(ii) the Adjusted Debt Service.
ADJUSTED DEBT SERVICE INTEREST RATE: At any time, the greater
of (i) the sum of (A) the current Five-Year Treasury Yield and (B) 2.75% or
(ii) nine percent (9%).
AFFILIATE: With respect to any Person, any other current or
future Person directly or indirectly Controlling or Controlled by or under
direct or indirect common Control with such person or entity.
AGENT: Scotiabank, in its capacity as agent for the Lenders.
<PAGE> 10
3
ANNUAL BUDGET: As defined in Section 5.1(f).
APPRAISAL UPDATE: An update to the appraisal of the Real
Property, dated May 10, 1995, performed by Hospitality Valuation Services, A
Division of Hotel Appraisals, Inc., or such other appraiser as Agent may
reasonably approve, (i) in form and substance satisfactory to Agent, (ii) paid
for by Borrower and (iii) made in accordance with the requirements of FIRREA.
ARCHITECT: Ahearn-Schopfer and Associates P.C., or such other
architect as Agent may approve.
ARCHITECT'S AGREEMENT: The agreement between BRHC, as
assigned to Borrower, and Architect, dated April 1, 1995, regarding the
Conference Construction.
AS-BUILT CONFERENCE PLANS AND SPECIFICATIONS: A full set of
plans and specifications for the Conference Improvements as of Conference
Substantial Completion and as approved by the Lender Construction
Representative, including all revisions made thereto in accordance with Section
5.2(k).
AS-BUILT SURVEY: The survey entitled "Boca Raton Hotel and
Club" referenced in the definition of Survey, updated after Conference
Substantial Completion to show the location of the Conference Improvements,
certified to the Agent and the Title Insurer and in form and substance
reasonably satisfactory to Agent.
ASSIGNED AGREEMENTS: As defined in the Mortgage.
ASSUMPTION AGREEMENT: An Assumption Agreement, dated as of
the date hereof, pursuant to which Borrower shall assume all of the obligations
of BRHC under the Mortgage and the other obligations described therein, in form
and substance satisfactory to Agent.
AVAILABLE CASH FLOW: With respect to any period, the
difference between (a) the sum of (i) all Revenues received during such period
and (ii) all payments received from Premier Club members during such period (A)
as Premier Club Cash Deposits and (B) as payments of interest or principal on
Premier Club Notes minus (b) the sum of (i) all Operating Expenses paid during
such period, (ii) all amounts paid into the Replacement Reserve Account
pursuant to the Security Agreement during such period and (iii) all amounts
paid into the Tax Reserve Account pursuant to the Security Agreement during
such period.
BANKRUPTCY CODE: The Bankruptcy Reform Act of 1978, as
amended and as the same may be further amended, and any other applicable law
with respect to bankruptcy, insolvency or reorganization that is a successor
thereto.
<PAGE> 11
4
BASE RATE: A fluctuating interest rate per annum in effect
from time to time equal at all times to the rate of interest announced publicly
by Scotiabank in Atlanta, Georgia, from time to time, as its base lending rate.
BASE RATE PORTION: Any portion of the Facility with respect
to which interest shall be calculated in accordance with Section 2.4(a)(ii).
BEACH CLUB COMPLETION DATE: December 31, 1998.
BEACH CLUB CONSTRUCTION: The renovation of the improvements
located on the beachfront portion of the Real Estate in accordance with a
Capital Expenditure Plan approved by Agent.
BEACH CLUB RESERVE: (i) Prior to Beach Club Substantial
Completion, $1,300,000 or (ii) from and after Beach Club Substantial Completion
or a partial prepayment of the Facility in the amount of $1,300,000 in
accordance with Section 5.1(v), zero.
BEACH CLUB SUBSTANTIAL COMPLETION: The date on which the
Beach Club Construction has been substantially completed in accordance with the
plans and specifications therefor and all approvals and permits required for
the intended use and occupancy thereof (including a temporary certificate of
occupancy if required for occupancy under applicable laws or its equivalent for
each building comprising any part of the Beach Club Construction and each other
improvement requiring any such permit under applicable laws) have been
obtained, in each case, as certified by Borrower and the architect engaged by
Borrower in connection with the Beach Club Construction.
BORROWER: As defined in the Preamble.
BORROWER CONFIDENTIAL INFORMATION: Any (a) information that
Borrower furnishes to Agent or any Lender in a writing designated as
confidential and (b) financial information regarding Borrower or the Property,
including projections of the operating results of the Real Property, that
Borrower furnishes to Agent or any Lender, but in each case does not include
any such information that is or becomes generally available to Agent or such
Lender from a source other than Borrower or any Affiliate thereof and which
Agent or such Lender does not know is subject to a confidentiality agreement or
order.
BORROWER ENTITY: Any of Borrower, any General Partner or
Holdings.
BRHC: As defined in the recitals to this Agreement.
BUSINESS DAY: A day on which banks are not required or
authorized to close in New York City or Boca Raton, Florida.
<PAGE> 12
5
CAPITAL EXPENDITURE PLAN: As defined in Section 9.1.
CAROLINA AGREEMENTS: As defined in the Mortgage.
CHANGE OF CONTROL: Any Equity Transfer the result of which is
that Holdings does not, either directly or indirectly, own one hundred percent
(100%) of (i) Managing General Partner and (ii) Limited Partner.
CONFERENCE COMPLETION DATE: March 1, 1998.
CONFERENCE CONSTRUCTION: The capital improvement program at
the Real Property consisting of a new conference center space, as more
specifically described in the Conference Plans and Specifications.
CONFERENCE CONSTRUCTION BUDGET: The budget attached hereto as
Exhibit D, setting forth the costs and expenses related to the Conference
Construction.
CONFERENCE CONSTRUCTION CONTRACT: The Contract, dated as of
August 21, 1996, between BRHC, as assigned to Borrower, and Contractor covering
the Conference Construction.
CONFERENCE CONSTRUCTION COSTS: All hard and soft costs
incurred in the construction of the Conference Improvements, including the cost
of any Furnishings and Equipment with respect to the Conference Improvements.
CONFERENCE CONSTRUCTION DISBURSEMENT: A disbursement from the
Facility Escrow Account for the construction of the Conference Improvements
made in accordance with the terms and conditions set forth on Exhibit A to the
Security Agreement.
CONFERENCE CONSTRUCTION LEGAL COMPLIANCE: Borrower's
satisfaction of all of the following:
(a) the Conference Improvements through the date of
determination have been constructed in accordance with the Conference
Plans and Specifications (other than deviations therefrom that are
immaterial individually and in the aggregate) and in compliance with
all Legal Requirements;
(b) all entitlements, approvals, allocations,
certificates, authorizations, permits and licenses required (i)
through the then-current stage of construction and (ii) in order to
achieve Conference Substantial Completion by the Conference Completion
Date have been obtained from all appropriate Governmental Authorities
and have been validly obtained without qualification other than as set
forth in the Conference Construction Resolutions or as otherwise
approved by Agent;
<PAGE> 13
6
(c) all conditions to the issuance of, and the
requirements under, all permits, conditional use permits and licenses
required through the current stage of construction have been
satisfied; and
(d) there is no pending or threatened investigations,
appeals, suits or other actions leading to or threatening the
revocation, suspension or qualification of any of such permits or
approvals.
CONFERENCE CONSTRUCTION RESOLUTIONS: (i) Planning and Zoning
Board Approval (Resolution No. 95-26) (which modifies Resolution No. 90-37)
adopted by the Zoning and Planning Board of the City of Boca Raton and (ii)
City Council Approval (Resolution No. 145-95) (which modifies previous City
Council Resolutions No. 192-90 and 38-83) adopted by the City Council of the
City of Boca Raton, each in connection with the Conference Construction.
CONFERENCE IMPROVEMENTS: The Improvements to be constructed
as part of the Conference Construction.
CONFERENCE PLANS AND SPECIFICATIONS: The drawings and
specifications for the development and construction of the Conference
Improvements described on Exhibit C, as the same may be modified and amended in
accordance with the terms hereof.
CONFERENCE SUBSTANTIAL COMPLETION: The satisfaction of all of
the following conditions:
(a) The Conference Construction shall have been completed
substantially in accordance with the Conference Plans and
Specifications, as certified by the Architect on a standard AIA-G704
form and approved by the Lender Construction Representative, such
approval not to be unreasonably withheld or delayed;
(b) All permits and approvals required for the normal use
and occupancy of the Conference Improvements (including a temporary
certificate of occupancy if required for occupancy under applicable
laws or its equivalent for each building comprising any part of the
Conference Improvements and each other improvement requiring any such
permit under applicable laws) for the intended operation of the
Conference Improvements shall have been issued by the appropriate
Governmental Authority and shall be in full force and effect; and
(c) The Conference Improvements shall have been equipped
with all Furnishings and Equipment required for the intended use and
operation of such Improvements.
<PAGE> 14
7
CONTRACTOR: Fluor Daniel, Inc. or such other general
contractor or construction manager as Agent and the Lender Construction
Representative may approve.
CONTROL: As to any Person, the possession, direct or
indirect, of the power to vote fifty percent (50%) or more of the voting stock
or other ownership interests of such Person and to direct or cause direction of
the management and policies of such Person, whether through ownership of voting
interests, by contract or otherwise.
CONTROLLED GROUP: All members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with any Person, are treated as a single
employer under Section 414(b) or 414(c) of the Internal Revenue Code.
DEBT SERVICE: The aggregate sum of interest and principal
payments that were due and payable (whether or not actually paid) in the
immediately preceding twelve (12) months on the Total Debt.
DEER CREEK AGREEMENTS: As defined in the Mortgage.
DEBT SERVICE COVERAGE RATIO: The ratio of (i) the Available
Cash Flow for the immediately preceding twelve (12) months divided by (ii) the
Debt Service.
DEFAULT: Any event or failure of any event or condition to
occur which constitutes or would, after the giving of notice or lapse of time
or both, constitute an Event of Default.
DEFAULT RATE: A per annum rate of interest equal to (i) with
respect to any LIBOR Portion, the sum of (A) the applicable LIBOR and (B)
4.25%, (ii) with respect to any Base Rate Portion, the sum of (A) the Base Rate
and (B) 2.25%, and (iii) with respect to any other amount owed by Borrower
hereunder or under any other Loan Document and specified in such Loan
Document to accrue interest at the Default Rate, the sum of (A) the Base Rate
and B 2.25%.
DEFICIENCY: The positive amount, if any, by which the sum of
(i) the then-current balances of the Facility Escrow Account and Operating
Account available or anticipated to be available for Conference Construction
Disbursements and (ii) the Available Cash Flow from operations anticipated to
be available from time to time in the Facility Escrow Account for Conference
Construction Disbursements through the anticipated date of Conference
Substantial Completion (as estimated by Borrower and approved by Agent or by
Agent in the event Borrower fails to provide such estimate within five (5) days
after a request by Agent) is less than the amount (the "COMPLETION AMOUNT")
that will be required to be paid by Borrower to bring about Conference
Substantial Completion, the Completion Amount to be determined (A) by Borrower
and approved by the Lender Construction Representative or (B) in
<PAGE> 15
8
the event Borrower fails to determine such amount within five (5) days after a
request by Agent, by the Lender Construction Representative.
DEPOSITORY AGREEMENTS: (i) The Depository Agreement, dated as
of the date hereof, among Borrower, the Operating Account Depositary and Agent
and (ii) the Depository Agreement, dated as of the date hereof, among Borrower,
the Facility Depositary and Agent.
DISTRIBUTION: As defined in Section 5.2(f).
EFFECTIVE DATE: The date upon which all of the conditions set
forth in Section 3.1 shall have been satisfied.
ELIGIBLE ASSIGNEE: Any Person who is (a) a commercial bank
organized under the laws of the United States of America or any state thereof;
(b) a savings and loan association or savings bank organized under the laws of
the United States of America or any state thereof; (c) a commercial bank
organized under the laws of any other country or a political subdivision
thereof; provided, that (x) such bank is acting through a branch or agency
located in the United States of America or (y) such bank is organized under the
laws of a country that is a member of the Organization for Economic Cooperation
and Development or a political subdivision of such country; (d) an
institutional lender including, but not limited to, insurance companies, mutual
funds, Mortgage REITS, pension funds, educational or charitable organizations
and lease financing companies or (e) any Lender and any Affiliate of any
Lender; provided, however, that prior to the occurrence of an Event of Default,
an Eligible Assignee shall not include any Person described in clause (d) above
who, either directly or through one or more Affiliates, owns or makes direct or
indirect equity investments in, or operates one or more luxury hotels of a
similar quality and class to that of the Real Property other than through
foreclosure, deed in lieu of foreclosure or otherwise in connection with the
exercise of remedies relating to a loan made by such Person.
ENFORCEMENT ACTION: Any (i) foreclosure proceeding, the
exercise of any power of sale, the taking of a deed or assignment in lieu of
foreclosure, the obtaining of a receiver or the taking of any other enforcement
action against the Property or Borrower, including the taking of possession, or
control, of the Property or (ii) acceleration of, or demand or action taken in
order to collect, all or any indebtedness secured by the Property.
ENVIRONMENTAL INDEMNITY: The Amended and Restated
Environmental Indemnity, dated as of the date hereof, from the Borrower
Entities in favor of the Lenders.
EQUITY TRANSFER: Any voluntary or involuntary, direct or
indirect, sale, grant, conveyance, encumbrance, pledge or other transfer, by
operation of law or otherwise, of any beneficial interest in the referenced
entity, including the issuance, transfer or redemption of any equity interest
(whether stock, partnership interest or otherwise).
<PAGE> 16
9
ERISA: The Employee Retirement Income Security Act of 1974,
as amended, as now or hereafter in effect, or any successor legislation
thereto.
EUROCURRENCY LIABILITIES: As defined in Section 204.2(h) of
Regulation D.
EURODOLLAR OBLIGATIONS: Eurocurrency Liabilities and
non-personal time deposits (as defined in Section 204.2(f)(v) of Regulation D).
EVENT OF DEFAULT: As defined in Section 6.1.
EXCULPATED PARTY: Each General Partner and each shareholder,
officer, director or agent thereof.
EXPANSION PLAN: The capital improvement program at the Real
Property generally consisting of the Beach Club Construction and the Conference
Construction.
EXPANSION PLAN IMPROVEMENTS: The Improvements to be
constructed as part of the Expansion Plan.
FACILITY: The One Hundred Ten Million Dollar
($110,000,000.00) loan advanced by the Lenders to Borrower in accordance with
the terms and provisions of the Original Loan Agreement.
FACILITY DEPOSITARY: As defined in the Security Agreement.
FACILITY ESCROW ACCOUNT: As defined in the Security Agreement.
FEDERAL FUNDS RATE: For any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average of the quotations for such day for
such transactions received by Agent from three (3) federal funds brokers of
recognized standing selected by it.
FINAL CONFERENCE CONSTRUCTION DISBURSEMENT: The Conference
Construction Disbursement in respect of the retainage under the Conference
Construction Contract and any other unpaid Conference Construction Costs as of
the date of such disbursement.
FINANCIAL STATEMENTS: As defined in Section 5.1(e).
FINANCING STATEMENTS: As defined in the Security Agreement.
<PAGE> 17
10
FIRREA: The Financial Institutions Reform, Recovery and
Enforcement Act of 1989, Pub. L. No. 101-73, 103 Stat. 183 (1989) and the
regulations adopted pursuant thereto, as the same may be amended from time to
time.
FIVE YEAR TREASURY YIELD: The Treasury Rate for the period
commencing on the date of determination and ending on the five (5) year
anniversary of such date.
FORCE MAJEURE: Any of the following: (a) acts of declared or
undeclared war by a foreign enemy; (b) riots; (c) casualty or condemnation; (d)
floods; (e) earthquakes or acts of God; (f) labor strikes not caused or
aggravated by any Borrower Entity or Contractor; or (g) any other event not
within the reasonable control of any Borrower Entity or Contractor, but shall
not include: (i) inefficiencies on the part of Borrower, Contractor, Architect
or any subcontractor or other design professional; (ii) late performance caused
by failure to hire an adequate number of subcontractors, supervisors and/or
laborers; (iii) any cause or occurrence which any Borrower Entity could
reasonably control or circumvent; or (iv) delays, stoppage or any other
interference with construction caused by insolvency, bankruptcy or any lack of
funds of Contractor or any Borrower Entity.
FORM 1001: As defined in Section 2.10(b).
FORM 4224: As defined in Section 2.10(b).
FURNISHINGS AND EQUIPMENT: As defined in the Mortgage.
GAAP: Generally accepted accounting principles in the United
States of America in effect from time to time.
GENERAL PARTNER: Each of Managing General Partner and BRHC.
GOVERNMENTAL AUTHORITY: The United States of America, any
State and any political subdivision or regional division thereof, and any
agency, department, court, regulatory body, commission, board, bureau or
instrumentality of any of them which exercises jurisdiction over the Real
Property or any Borrower Entity.
HEDGE PROVIDER: Any counter-party to an Interest Rate
Protection Agreement.
HOLDINGS: Florida Panthers Holdings, Inc., a Florida
corporation.
IMPOSITIONS: As defined in the Mortgage.
IMPROVEMENTS: As defined in the Mortgage.
<PAGE> 18
11
INDEBTEDNESS: With respect to any Person means, without
duplication, (a) any indebtedness of such Person for borrowed money (whether by
loan, the issuance and sale of debt securities or the sale of any property or
asset of such Person to another Person subject to an understanding or
agreement, contingent or otherwise, to repurchase such Property from such
Person), (b) any obligations of such Person for the deferred purchase price of
property or services (other than trade payables not overdue by more than ninety
(90) days incurred in the ordinary course of such Person's business), (c) any
obligations of such Person evidenced by notes, bonds, debentures, interest rate
exchange agreements or other similar instruments, (d) any obligations of such
Person created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the event
of default are limited to repossession or sale of such property), (e) any
obligations of such Person as lessee under leases that have been or should be,
in accordance with the Accounting Rules, recorded as capital leases, (f) any
obligations of such Person as a result of any final judgment rendered against
such Person or any settlement agreement entered into by such Person with
respect to any litigation unless such obligations are stayed upon appeal (for
so long as such appeal shall be maintained) or are fully discharged or bonded
within thirty (30) days after the entry of such judgment or execution of such
settlement agreement, (g) any obligations, contingent or otherwise, of such
Person in respect of acceptances, letters of credit or similar extensions of
credit, (h) any Indebtedness of others referred to in clauses (a) through (g)
above or clause (i) below guaranteed directly or indirectly in any manner by
such Person, or in effect guaranteed directly or indirectly by such Person
through an agreement (1) to pay or purchase such Indebtedness or to advance or
supply funds for the payment or purchase of such Indebtedness, (2) to purchase,
sell or lease (as lessee or lessor) property, or to purchase or sell services,
primarily for the purpose of enabling the debtor to make payment of such
Indebtedness or to assure the holder of such Indebtedness against loss, (3) to
supply funds to or in any other manner invest in the debtor (including any
agreement to pay for property or services irrespective of whether such property
is received or such services are rendered) or (4) otherwise to assure a
creditor against loss, and (i) any Indebtedness referred to in clauses (a)
through (h) above secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any lien on
property (including, without limitation, accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness; provided, however, that Indebtedness shall in no
event include the inchoate right of any mechanic, materialman or supplier to
file a lien.
INDEMNIFIED PARTY: As defined in Section 7.18.
INSPECTION CERTIFICATE: A certificate from the Lender
Construction Representative in the form of Exhibit F.
<PAGE> 19
12
INTEREST PERIOD: With respect to any LIBOR Portion, the
applicable LIBOR Period and with respect to any Base Rate Portion, the period
during which such Base Rate Portion was designated as such by Borrower in
accordance with Section 2.4.
INTEREST RATE PROTECTION AGREEMENTS: Collectively, any (i)
interest rate cap agreements, (ii) interest rate floor agreements or (iii) any
ISDA Interest Rate and Currency Exchange Agreements and any and all interest
rate swap transactions under separate confirmations entered into thereunder,
between Borrower and any Hedge Provider, as the same may, from time to time, be
amended, supplemented or otherwise modified.
INTERNAL REVENUE CODE: The Internal Revenue Code of 1986, as
amended and as hereafter amended and in effect, or any successor legislation.
LAND: As defined in the Mortgage.
LEGAL REQUIREMENTS: All applicable laws, statutes,
ordinances, rulings, regulations, codes, decrees, orders, judgments, covenants,
conditions, restrictions, approvals, permits and requirements under any
Permitted Exception or of, from or by any Governmental Authority, including
zoning, subdivision, use, environmental, building, safety, health, housing and
fire.
LENDER CONSTRUCTION REPRESENTATIVE: Greystone Realty
Corporation or such other representative or representatives as Agent may
designate from time to time.
LENDER INTERCREDITOR AGREEMENT: The Intercreditor Agreement,
dated as of August 22, 1996, among the Lenders and Agent.
LENDERS: Scotiabank, in its individual capacity, and the
other Lenders designated on the signature pages of this Agreement as "Lenders".
LIBOR: The rate per annum equal to (a) the LIBOR Base divided
by (b) 1 minus the LIBOR Reserve Percentage.
LIBOR BANKING DAY: Any banking day on which dealings in U.S.
dollar deposits are conducted by and between banks in the London Interbank
Market.
LIBOR BASE: The rate per annum equal to the London interbank
offered rate for deposits in U.S. Dollars for a period equal to the applicable
LIBOR Period as of 11:00 A.M. (London time) two (2) LIBOR Banking Days (or, if
not a Business Day, the next previous LIBOR Banking Day that is also a Business
Day) before the first day of the applicable LIBOR Period. The applicable LIBOR
Base shall be determined by Agent by selecting the rate for the applicable
LIBOR Period for U.S. dollars shown on the display designated as page "British
Bankers Association LIBOR Rates" on the Reuters Monitor Money Rates Service (or
<PAGE> 20
13
such other page as may replace such page on that service for the purpose of
displaying London interbank offered rates of major banks) (rounded upward, if
necessary, to the nearest one-hundred-thousandth of a percentage point);
provided, however that if the Reuters Monitor Money Rates Service shall not
publish or shall cease publication of such information with respect to any
LIBOR Period applicable to a particular LIBOR Portion, the applicable LIBOR
Base shall be determined by Agent by reference to the Telerate, Inc. display
designated as page 3750 -- "British Bankers Association Interest Settlement
Rates" (or such other page as may replace such page on the Telerate, Inc.
service for the purpose of displaying London interbank offered rates) (rounded
upward, if necessary, to the nearest one-hundred-thousandth of a percentage
point); provided, further, however, that if Telerate, Inc. shall not publish or
shall cease publication of such information with respect to any LIBOR Period
applicable to a particular LIBOR Portion, the applicable LIBOR Base shall be
determined by Agent by reference to the rate at which deposits in U.S. Dollars
are offered by the principal office of Scotiabank in the London interbank
market for the applicable LIBOR Period. The determination of the LIBOR Base by
Agent shall be conclusive absent manifest error.
LIBOR BREAKAGE: The amount of losses, costs, charges and
damages which are actually incurred or which would be incurred by any Lender
(as reasonably determined by Agent in consultation with such Lender) as a
result of any early termination of any arrangement, or the entry into a new
arrangement, with any other member of the London interbank market for the
funding of such Lender's portion of the Facility (determined as though such
Lender had funded 100% of such portion in the London interbank market and
calculated as of the date of the applicable repayment or acceleration).
LIBOR LENDING OFFICE: The principal office of Scotiabank in
London, England, or such other office or branch of Scotiabank as it may
hereafter designate as its LIBOR Lending Office.
LIBOR PERIOD: As to each LIBOR Portion, a period commencing
on a LIBOR Banking Day and ending one, two, three, six or twelve months
thereafter, in each case as specified by Borrower or otherwise determined in
accordance with the terms of this Agreement; provided, however, that any LIBOR
Period that would otherwise end on a day that is not a LIBOR Banking Day shall
be extended to the next succeeding LIBOR Banking Day that is also a Business
Day unless such LIBOR Banking Day falls in another calendar month, in which
case such LIBOR Period shall end on the next preceding LIBOR Banking Day that
is also a Business Day. The duration of each LIBOR Period shall be selected by
Borrower with respect to each LIBOR Portion upon notice received by the Lender
in accordance with Section 2.4(b); provided, however, that Borrower may not
select any LIBOR Period which ends after the date upon which any principal
repayment of the Facility is due under Section 2.2 unless, after giving effect
to such selection, the aggregate unpaid principal amount of (i) Base Rate
Portions and (ii) LIBOR Portions having LIBOR Periods which end on or prior to
such principal repayment date shall be greater than or equal to the principal
amounts due and payable on and prior to such date.
<PAGE> 21
14
LIBOR PORTION: Any portion of the Facility with respect to
which interest shall be calculated in accordance with Section 2.4(a)(i).
LIBOR RESERVE PERCENTAGE: With respect to any LIBOR Portion,
the percentage representing the reserve requirement, if any, applicable to
Eurodollar Obligations of the Lenders pursuant to Regulation D. In determining
the LIBOR Reserve Percentage, Agent shall take into account any transitional
adjustment or phase-in provisions of the reserve requirements otherwise
applicable to Eurodollar Obligations during the applicable LIBOR Period, and,
in the event of any change or variation in the reserve requirements during the
applicable LIBOR Period, Agent may use any reasonable averaging or attribution
methods which it deems appropriate. The determination by Agent of any
applicable LIBOR Reserve Percentage shall be conclusive, absent manifest error.
LIMITED PARTNER: Panthers BRLP Corporation, a Florida
corporation.
LINE ITEM: A line item in the Conference Construction Budget
or Annual Budget, as the context may require.
LIQUOR LICENSE FILING: The notice filing of Borrower's
collateral assignment of the Liquor Licenses to the Lenders, in form and
substance satisfactory to the Lenders.
LIQUOR LICENSES: As defined in the Mortgage.
LOAN DOCUMENTS: This Agreement, the documents listed in
Section 3.1(b) and all other instruments, certificates, legal opinions and
documents executed and delivered by any or all of Borrower, Agent or the
Lenders in connection with the Facility, and all amendments, supplements, and
modifications thereto and extensions and restatements thereof.
MANAGER: Panthers BRHC Management Corporation.
MANAGEMENT AGREEMENT: That certain Management Agreement,
dated as of June 25, 1997, between Manager and Borrower.
MANAGEMENT SUBORDINATION AGREEMENT: That certain
Subordination Agreement, dated as of the date hereof, among Agent, Manager and
Borrower.
MANAGING GENERAL PARTNER: Panthers BRGP Corporation, a
Florida corporation.
MATERIAL ADVERSE CHANGE: Any material adverse change in the
business, condition (financial or otherwise), operations, prospects or
performance of Borrower or the Property.
<PAGE> 22
15
MATERIAL AGREEMENTS: The Management Agreement, the Liquor
Licenses, the Premier Club Membership Documents, the Conference Construction
Contract and the Architect's Agreement.
MATURITY DATE: August 22, 2001.
MINIMUM LIQUIDITY AMOUNT: As of any Restricted Payment
Release Date and based upon the actual performance of the Real Property to such
Restricted Payment Release Date and the anticipated Revenues and Operating
Expenses set forth in Borrower's then-current Annual Budget, that maximum
amount (not less than zero) equal to the sum of Borrower's estimated required
draws from the Facility Escrow Account to the Operating Account (after giving
credit for all amounts anticipated to be swept from the Operating Account into
the Facility Escrow Account and the timing of such sweeps) calculated to permit
Borrower to (i) pay all Operating Expenses and maintain the Operating Account
at the Operating Account Target Balance at all times through the end of the
then-current calendar year and (ii) to pay all required debt service with
respect to the Total Debt (calculated taking into account any payments to or
from the Hedge Provider under the Interest Rate Protection Agreements) and to
make the required disbursements to the Replacement Reserve Account and Tax
Reserve Account in accordance with the Security Agreement through the end of
the then-current calendar year. The Minimum Liquidity Amount shall be
calculated by Borrower and certified by Borrower to Agent as correct and
calculated in the manner set forth herein not less than ten (10) Business Days
prior to each Restricted Payment Release Date and shall be subject to Agent's
approval, such approval not to be unreasonably withheld and notice of such
approval or the withholding of such approval to be given by Agent to Borrower
on or prior to such Restricted Payment Release Date.
MONTHLY RESERVE DEPOSIT: The amount required to be deposited
by Borrower in the Replacement Reserve Account each month pursuant to the terms
and provisions of the Security Agreement.
MORTGAGE: The Second Amended and Restated Mortgage, Security
Agreement and Financing Statement, dated as of August 22, 1996, from BRHC in
favor of Agent granting Agent, on behalf of the Lenders, a first priority lien
on, and security interest in, the Property.
MORTGAGE REIT: Any real estate investment trust primarily
engaged in providing mortgage financing (as opposed to equity investment in
real property) and which, at the time of determination, does not own or
maintain equity investments in any luxury hotels of a similar quality and class
to that of the Real Property (other than as a result of foreclosure, deed in
lieu of foreclosure or other exercise of remedies in connection with a mortgage
financing).
NET SALES PROCEEDS: With respect to the sale of any part of
the Real Property approved by Agent in accordance with Article 9, an amount
equal to the gross sales price and
<PAGE> 23
16
all other consideration from whatever source derived from the sale of such Real
Property (such amount to be no less than the prevailing fair market value for
such Real Property), minus the sum of (a) the amount of any sales commission
actually paid to an independent broker unaffiliated with Borrower with respect
to such sale, (b) the amount of any transfer taxes actually paid by Borrower
with respect to such sale, (c) Borrower's reasonable legal fees associated with
such sale and (d) such other reasonable expenses paid by Borrower in connection
with such sale and customarily paid by sellers of real property in Palm Beach
County, Florida at the time of such sale.
NOTE: Each Amended and Restated Note, dated as of the
Effective Date, in the form of Exhibit A given by Borrower in favor of a Lender
evidencing a portion of Borrower's indebtedness under the Facility, as the same
may, from time to time, be amended, supplemented or otherwise modified.
OFF-SITE REQUIREMENTS: Borrower's satisfaction of all of the
following:
(a) Borrower has delivered to Agent bills of sale
or other evidence reasonably satisfactory to Agent, showing
the cost of such materials and that Borrower has acquired, or
will acquire upon payment of the amount requested in the
applicable Request for Conference Construction Disbursement,
title to such materials;
(b) Borrower has delivered to Agent a letter from
Borrower, Contractor, the appropriate subcontractor or the
material supplier certifying that such materials are properly
identified and adequately protected;
(c) Borrower shall provide proof to Agent that
such materials are insured for their full replacement cost;
and
(d) Agent shall have received, or will receive
upon payment of such Conference Construction Disbursement,
UCC-1 financing statements, warehouseman's receipts or other
evidence satisfactory to Agent of the Lenders' first priority
security interest in such materials.
OPERATING ACCOUNT: As defined in the Security Agreement.
OPERATING ACCOUNT DEPOSITARY: As defined in the Security
Agreement.
OPERATING ACCOUNT MAXIMUM BALANCE: Six Million Dollars
($6,000,000.00).
OPERATING ACCOUNT MONTHLY PROJECTED DEFICIT: The amount, if
any, by which the Operating Account is projected to decline below the Operating
Account Target Balance through the end of the then-current month considering
anticipated Revenues and Operating
<PAGE> 24
17
Expenses through the end of such calendar month or below $1,000,000 at any time
during such month (after taking into account all outstanding checks at such
time) as determined with reference to the then-current Annual Budget and other
information with respect to the actual timing of Revenues and Operating
Expenses provided by Borrower and reasonably satisfactory to Agent.
OPERATING ACCOUNT TARGET BALANCE: Three Million Dollars
($3,000,000.00).
OPERATING EXPENSES: Any and all (i) actual cash operating
expenses relating to the operation of Borrower and the Real Property, (ii) the
cost of ordinary maintenance and repairs of, and necessary capital improvements
to, the Real Property, but, in the case of necessary capital improvements, only
to the extent that such costs are treated as current expenses in accordance
with the Accounting Rules, (iii) Impositions (other than real estate taxes or
other Impositions reserved for and paid from the Tax Reserve Account but
including amounts disbursed from the Facility Escrow Account into the Tax
Reserve Account), (iv) (A) the management fees paid by Borrower to Manager in
accordance with the Management Agreement, (B) the supervisory fee paid by
Borrower to BRHC and (C) the consulting fee paid by Borrower to John Temple
(provided, however, that in no event shall Operating Expenses include an
aggregate annual expenditure for items (A), (B) and (C) in excess of
$600,000.00) and (D) out-of-pocket expenses paid by Manager and reimbursed by
Borrower under the Management Agreement that would have otherwise qualified as
Operating Expenses if the same had been directly paid by Borrower; (v) cash
refunds of Premier Club Deposits pursuant to the provisions of the Premier Club
Membership Documents and (vi) out-of-pocket expenses paid by Borrower in
defending any litigation brought against Borrower or the Real Property or
prosecuting any litigation brought by Borrower relating to the preservation of
the value of the Real Property. Operating Expenses shall not include any (A)
interest, principal amortization or other payments made with respect to any of
the Total Debt, (B) expenses (other than as expressly described in clause (vi)
above) which are extraordinary in nature and which would, under the Accounting
Rules be considered "non-recurring", (C) amounts disbursed from the
Operating Account into the Facility Escrow Account, from the Facility Escrow
Account into the Operating Account or from the Replacement Reserve Account or
Tax Reserve Account pursuant to the Security Agreement, (D) Conference
Construction Costs or the costs of completing the Beach Club Construction, (E)
costs associated with a Capital Expenditure Plan, or (F) payments made to any
Person that is an Affiliate of any Borrower Entity for materials or service to
the Real Property to the extent that such payment is greater than that which
would be paid for such materials or services pursuant to an arm's length
agreement with unaffiliated entities.
PERMITTED DEBT: (i) Borrower's Indebtedness under the Loan
Documents, (ii) any obligations of Borrower created or arising under any
conditional sale or other title retention agreement (other than an operating
lease) with respect to Furnishings and Equipment acquired by Borrower, (iii)
capital leases of Furnishings and Equipment or vehicles entered into by
Borrower, (iv) Borrower's obligations with respect to the return of Premier
Club
<PAGE> 25
18
Deposits or repurchase of Premier Club Memberships, (v) Indebtedness in
connection with the financing of premiums for Required Insurance, (vi)
mechanic's liens that are discharged or fully paid or bonded before the earlier
of (A) thirty (30) days after notice thereof or (B) the commencement of any
action to foreclose any such lien, (vii) judgments against Borrower that do not
exceed $500,000 in the aggregate or that have been stayed on appeal or fully
bonded or discharged within thirty (30) days of entry, (viii) Indebtedness of
Borrower to General Partner or Manager that is not secured by any portion of
the Property, does not mature prior to the Maturity Date and the terms of which
expressly provide that such Indebtedness is fully subordinated to the Facility
and is only payable from funds which would otherwise be distributed to Borrower
as Restricted Payments and (ix) Indebtedness of Borrower under any Interest
Rate Protection Agreement; provided, however, that any Indebtedness described
in clauses (ii) or (iii) above is incurred by Borrower in the ordinary course
of its business and that the aggregate annual payment obligations of Borrower
with respect to any such Indebtedness at any time outstanding does not exceed
$1,000,000.
PERMITTED EXCEPTIONS: As defined in the Mortgage.
PERSON: An individual, estate, unincorporated association,
corporation, company, partnership, trust, joint stock company, voluntary
association, joint venture, Governmental Authority, juridical entity or any
other entity of whatever nature.
PERSONAL PROPERTY: As defined in the Mortgage.
PLAN: An employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under Part 3 of
Title I of ERISA or Section 412 of the Code and is either (a) maintained by any
Person or any member of a Controlled Group for employees of such Person or any
member of such Controlled Group or (b) maintained pursuant to a collective
bargaining agreement or any other arrangement under which more than one
employer makes contributions and to which such Person or any member of a
Controlled Group is then making or has any obligation to make contributions or,
within the preceding five plan years, has made or has had any obligation to
make contributions.
PREAMBLE: The preamble to this Agreement.
PREMIER CLUB: The membership plan managed and operated by
Borrower known as the "Premier Club".
PREMIER CLUB CASH DEPOSITS: Amounts paid by members of the
Premier Club in cash, either in full payment or as downpayments on their
membership deposit fees.
PREMIER CLUB DEPOSITS: The sum of Premier Club Cash Deposits,
principal payments made on Premier Club Notes and the remaining aggregate
outstanding principal balance of the Premier Club Notes.
<PAGE> 26
19
PREMIER CLUB MEMBERSHIP DOCUMENTS: The documents entitled
"Premier Club Membership Program" and "Club Rules and Regulations," each
prepared in connection with the Premier Club.
PREMIER CLUB NOTES: All evidence of indebtedness of Premier
Club members for the unpaid portion of their obligations to pay membership
acquisition fees.
PREPAYMENT NOTICE: As defined in Section 2.2(c).
PROHIBITED TRANSFER: As defined in the Mortgage.
PROHIBITED EQUITY TRANSFER: Any Equity Transfer resulting in
a Change of Control.
PROPERTY: As defined in the Mortgage.
QUARTERLY AMORTIZATION AMOUNT: The amount set forth in the
second column of Schedule 1 for each corresponding Quarterly Amortization Date.
QUARTERLY AMORTIZATION DATE: Each date set forth on Schedule
1.
REAL PROPERTY: As defined in the Mortgage.
REGULATION D: Regulation D of the Board of Governors of the
Federal Reserve System as now or from time to time hereafter in effect and any
other regulation issued in substitution thereof.
RENTS AND PROFITS: As defined in the Mortgage.
REPLACEMENT RESERVE ACCOUNT: As defined in the Security
Agreement.
REQUEST FOR CONFERENCE CONSTRUCTION DISBURSEMENT: A request
for a Conference Construction Disbursement signed by a duly authorized
representative of Borrower on the form of a certificate (AIA-G702) attached
hereto as Exhibit E accompanied by:
(a) a currently dated certificate from
Contractor, approved by Borrower, the Architect and the Lender
Construction Representative in the form of Exhibit G;
(b) the requisitions for payment then the subject
of such Request for Conference Construction Disbursement from
subcontractors and material suppliers engaged in the
construction of the Conference Improvements, in form and
content reasonably satisfactory to Agent;
<PAGE> 27
20
(c) an Inspection Certificate based upon an
on-site inspection of the Conference Improvements made by the
Lender Construction Representative which shall certify to all
work for which such Conference Construction Disbursement has
been requested in the form of Exhibit F;
(d) Required Lien Waivers;
(e) such evidence of Conference Construction
Legal Compliance as Agent may reasonably require; and
(f) such other information and documents as may
be reasonably requested or required by Agent or the Lender
Construction Representative.
REQUEST FOR DESIGNATION: As defined in Section 2.4(b).
REQUIRED INSURANCE: As defined in the Mortgage.
REQUIRED LENDERS: As of the date of determination, the
Lenders holding an aggregate of sixty-seven percent (67%) of the total
outstanding principal under the Notes.
REQUIRED LIEN WAIVERS: Waivers of liens executed by (a) for
each Request for Conference Construction Disbursement, Contractor and each
design professional with whom Borrower has a direct agreement, respectively,
waiving their respective rights, if any, and any right of a subcontractor
claiming through or under any of them, to file or maintain any construction
liens or claims, all substantially in the form of Attachment "C" to the
Conference Construction Contract and (b) for each Request for Conference
Construction Disbursement that includes a request for final payment to any
subcontractor who has delivered a "notice to owner" to Borrower under the
Florida Construction Lien Law, such subcontractor, waiving its right, to file
or maintain any construction liens or claims, in the form of Attachment "C" to
the Conference Construction Contract executed with respect to and applicable to
the extent such subcontractor has received payment. Such waivers may be
conditioned upon payment for work performed and materials supplied; provided,
that the Request for Conference Construction Disbursement following the Request
for Conference Construction Disbursement that includes the request described in
clause (b) above shall include (and in the case of the final Request for
Conference Construction Disbursement, within ten (10) days after the funding of
such final Request for Conference Construction Disbursement, Borrower shall
deliver to Agent) a duly executed, unconditional waiver for each person
described in clauses (a) or (b) above.
REQUIRED PARTNERSHIP TAX DISTRIBUTION: An amount,
distributable to the extent available on the Restricted Payment Release Date
occurring on the last Business Day in July of any calendar year, equal to (i)
.35 multiplied by (ii) the amount set forth as the Borrower's taxable income in
Borrower's partnership federal income tax return filed with the Internal
Revenue Service for the preceding fiscal year ended June 30.
<PAGE> 28
21
RESTRICTED PAYMENT RELEASE DATE: In each calendar year from
and after Conference Substantial Completion, each of the last Business Day in
January and the last Business Day in July.
RESTRICTED PAYMENTS: As defined in the Security Agreement.
RESTRICTED PAYMENTS AVAILABLE AMOUNT: As defined in the
Security Agreement.
REVENUES: Any and all revenues and receipts from the Property
or otherwise received by Borrower, including all room revenues, proceeds of the
sale of food and beverages (including in connection with the Premier Club but
not including proceeds of the sale of food and beverages collected pursuant to
the Deer Creek Agreements or Carolina Agreements), rents, additional rents and
all other amounts received under leases of the Real Property, proceeds of
rentals of dining rooms, conference rooms and banquet facilities, health club
receipts, golf course greens fees, cart and club rentals and other receipts,
annual Premier Club membership dues, interest payments on Premier Club Notes
(but excluding Premier Club Cash Deposits, principal payments on the Premier
Club Notes or other payments in connection with any Premier Club member's
membership acquisition fee), amounts received under any Assigned Agreement, the
proceeds of the sale of any property of Borrower in the ordinary course of
business (but excluding any Net Sales Proceeds), income derived from securities
and other property acquired and held by Borrower for investment, interest and
other earnings on any funds held in any of the Accounts and proceeds of any
business interruption insurance.
SCOTIABANK: As defined in the Preamble.
SECURITY AGREEMENT: The Amended and Restated Pledge,
Assignment and Security Agreement, dated as of the date hereof, between
Borrower and Agent, as the same may, from time to time, be amended,
supplemented or otherwise modified.
SENIOR SUPERVISORS: Michael F. Glennie, David S. Feder and
Edward E. March.
SHIP MORTGAGE: The First Preferred Mortgage, dated as of the
date hereof, from Borrower to Agent covering the motor vessel named "Mizner's
Dream."
SPECIAL PROJECT ACCOUNT: As defined in Section 9.1.
STARWOOD RELEASE: An instrument, in form and substance
satisfactory to Agent and the Title Company, executed by Starwood Mezzanine
Investors, L.P., releasing any and all of its security interests in any
property of Borrower or BRHC.
<PAGE> 29
22
SURVEY: Collectively, (i) (A) survey entitled "Boca Beach
Club", dated August 7, 1996 and (B) survey entitled "Boca Raton Hotel & Club",
updated August 15, 1996, each prepared by Michael G. Purmort & Associates, Inc.
and (ii) survey entitled "Boca Golf and Tennis Club-Section 1, Golf Course",
dated June, 1988 and updated July 2, 1996, survey no. 34844 (as to tract M),
updated July 2, 1996 and survey no. 33512 (as to tract N) updated July 2, 1996,
all prepared by C.C. Winningham Corporation, Surveying-Engineering.
SWAP BREAKAGE: The amounts payable to any Hedge Provider
under any Interest Rate Protection Agreement in the event any Interest Rate
Protection Agreement is or was to be terminated or cancelled by Borrower,
including as a result of any prepayment by Borrower of any or all of the
Facility.
TAXES: As defined in Section 2.10(a).
TAX RESERVE ACCOUNT: As defined in the Security Agreement.
TERMINATION FOR CAUSE: The termination of any Senior
Supervisor as a result of unsatisfactory performance, as reasonably determined
by Borrower.
TITLE INSURER: Chicago Title Insurance Company or such other
title insurer as may be acceptable to Agent.
TITLE POLICY: A standard ALTA lender's title insurance policy
(which may be in the form of a marked-up commitment), dated as of the Effective
Date, issued by the Title Insurer, in the aggregate amount of $110,000,000 the
obligations secured by the Mortgage, without exception for mechanic's or
materialman's liens and otherwise in form acceptable to Agent, with such
endorsements and facultative re-insurance agreements reasonably requested by
Agent, insuring the Lenders' interest in the Mortgage as a valid, enforceable
and subsisting first priority lien on the Property, subject only to the
Permitted Exceptions.
TOTAL DEBT: The sum of all outstanding amounts with respect
to the Facility.
TRADEMARK FILING: The notice filing of Borrower's collateral
assignment of the Trademarks to the Lenders, in form and substance satisfactory
to the Lenders.
TRADEMARKS: As defined in the Mortgage.
USAH: The Eighth Revised Edition (1986) of the Uniform System
of Accounts for Hotels published by International Association of Hospitality
Accountants.
VILLAS: The one hundred twenty (120) hotel units located on
the Real Property and which, from time to time, are leased to residents for
terms ranging from one (1) month to two (2) years.
<PAGE> 30
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ARTICLE 2
THE FACILITY
SECTION 2.1. THE FACILITY. The Lenders have advanced the
Facility to Borrower as evidenced by the Notes. Borrower shall not be
entitled to any readvance of any portion of the Facility paid by Borrower from
time to time and no Lender shall have any obligation to make any such
readvance.
SECTION 2.2. FACILITY AMORTIZATION. (a) Mandatory
Amortization. On each Quarterly Amortization Date, Borrower shall repay the
principal of the Facility in the amount of the corresponding Quarterly
Amortization Amount.
(b) Additional Cash Flow Amortization. Agent shall make
disbursements from the Facility Escrow Account to repay the principal of the
Facility in the amount of the Additional Cash Flow Amortization upon the
satisfaction of the conditions set forth, and to the extent provided, in the
Security Agreement.
(c) Optional Prepayments. Upon the delivery of a notice
to Agent at least five (5) Business Days' in advance of such prepayment (a
"PREPAYMENT NOTICE"), Borrower may prepay, in whole or in part, the outstanding
aggregate principal amount of the Facility, together with accrued interest to
the date of such prepayment on the aggregate principal amount of the Facility
so prepaid; provided, however, that each partial prepayment (other than any
prepayment made from the Beach Club Reserve in accordance with Section 5.1(v))
shall be in an aggregate principal amount of $2,000,000 or an integral multiple
of $1,000,000 in excess thereof. In the event that Borrower shall fail to
prepay all or a portion of the Facility in accordance with any Prepayment
Notice delivered to Agent pursuant to this Section 2.2(c), Borrower shall pay
to Agent an administrative fee established by Agent in its reasonable judgment
to compensate Agent and the Lenders for all costs and expenses incurred in
connection with such failure.
(d) Maturity. Borrower shall repay the aggregate unpaid
amount of the Facility, and accrued and unpaid interest thereon, on the
Maturity Date.
(e) Breakage. Except as otherwise expressly provided in
this Agreement, Borrower will reimburse the Lenders for any LIBOR Breakage (on
any LIBOR Portion prepaid on any day other than the last day of the applicable
LIBOR Period) and the Hedge Provider for any Swap Breakage resulting from any
prepayment of the Facility pursuant to this Section 2.2 or as a result of the
acceleration of the Facility following the occurrence of an Event of Default or
otherwise.
SECTION 2.3. [Intentionally omitted]
<PAGE> 31
24
SECTION 2.4. INTEREST. (a) Rates. Interest shall be
payable on the unpaid principal balance of the Facility outstanding from time
to time until payment in full at a rate of interest equal to:
(i) with respect to any portion of the outstanding
Facility from time to time that Borrower has designated as a LIBOR
Portion, at a rate per annum equal to the applicable LIBOR plus 2.25%;
and
(ii) with respect to any portion of the outstanding
Facility from time to time that Borrower has designated as a Base Rate
Portion or with respect to which this Agreement otherwise provides
shall be treated as a Base Rate Portion, at a rate per annum equal to
the Base Rate plus 0.25%.
(b) Requests for Designation. So long as no Event of
Default shall have occurred and be continuing and subject to Section 2.8,
Borrower may from time to time request that all or any portion of the then
outstanding Facility be designated as a LIBOR Portion or a Base Rate Portion.
Each such request (a "REQUEST FOR DESIGNATION") shall be conveyed by telecopier
or telex and, with respect to any LIBOR Portion, shall specify the requested
LIBOR Period and must be received by Agent at least three (3) LIBOR Banking
Days before the first day of the applicable LIBOR Period.
(c) Portions. Each Request for Designation shall specify
the portion of the then outstanding Facility to be designated as a Base Rate
Portion or a LIBOR Portion and, if applicable, the LIBOR Period.
(d) Maximum Number of Portions. Unless Agent otherwise
consents, (i) the principal amount of each LIBOR Portion shall be an integral
multiple of $100,000, but not less than $100,000 and (ii) no more than four (4)
LIBOR Portions shall be outstanding at any one time. Nothing contained herein
shall require Agent to actually fund any LIBOR Portion in the London Interbank
Market.
(e) After Default. If an Event of Default shall have
occurred and shall be continuing upon the expiration of a LIBOR Period
applicable to a given LIBOR Portion, then Borrower shall not be permitted to
continue to designate such LIBOR Portion as a LIBOR Portion and, from and after
the expiration of such LIBOR Period, such portion of the outstanding Facility
shall be deemed designated as a Base Rate Portion. The inability of Borrower
to designate portions of the outstanding Facility as LIBOR Portions shall be
applicable only for so long as an Event of Default shall remain uncured.
(f) Automatic Conversion. Subject to Section 2.4(b), if
Borrower shall fail to deliver a Request for Designation with respect to any
LIBOR Portion at least three (3) LIBOR Banking Days before the end of the then
applicable LIBOR Period, Borrower shall be deemed to have elected a one-month
LIBOR Period with respect to such LIBOR Portion.
<PAGE> 32
25
(g) Notice of Change in Base Rate. Agent shall endeavor
promptly to notify Borrower of any change in the Base Rate which occurs at any
time that any portion of the Facility has been designated as a Base Rate
Portion; provided, however, that Agent's failure to so notify Borrower shall in
no way impair, invalidate or otherwise affect the effectiveness of any change
in the Base Rate.
SECTION 2.5. INTEREST PAYMENT. (a) Facility Interest.
Borrower shall pay interest on the unpaid principal amount of the Facility
outstanding from time to time hereunder (i) with respect to any LIBOR Period
that has a duration of one month, on the last day of such LIBOR Period, (ii)
with respect to any LIBOR Period that has a duration of more than one month, in
arrears on the last day of each calendar month which occurs during such LIBOR
Period (except for the final interest payment with respect to such LIBOR
Period, which shall be paid on the last day of such LIBOR Period) or (iii) with
respect to any Base Portion, in arrears on the last Business Day of each
calendar month during the applicable Interest Period (except for the final
interest payment with respect to such Interest Period, which shall be paid on
the last day of such Interest Period); provided, however, that Borrower shall
be entitled to a credit against such interest payments in an amount equal to
the amount of any payments received by Agent from the Hedge Provider pursuant
to the Interest Rate Protection Agreements.
(b) Default Interest. Any amount which is not paid when
due hereunder, after the expiration of any applicable grace period, shall bear
interest from the date due until paid in full at the Default Rate.
SECTION 2.6. INCREASED COSTS. If, due to either (i) the
introduction of or any change (other than any change by way of imposition or
increase in reserve requirements that is accounted for in the LIBOR Reserve
Percentage) in or in the interpretation of any law or regulation not presently
applicable to the Lenders or (ii) the compliance with any guideline or request
from any central bank or other governmental authority (whether or not having
the force of law) not presently applicable to the Lenders, there shall be any
increase in the cost to any of the Lenders of agreeing to make or making,
funding or maintaining any LIBOR Portion, then Borrower shall from time to
time, upon demand by Agent, pay to Agent, on behalf of any Lender so affected,
additional amounts sufficient to compensate such Lenders for such increased
cost. A certificate as to the amount of such increased cost, submitted to the
Borrower by Agent, shall be conclusive and binding for all purposes, absent
manifest error.
SECTION 2.7. INCREASED CAPITAL. If any Lender determines
that compliance with any law or regulation or any guideline or request from any
central bank or other governmental authority (whether or not having the force
of law) affects or would affect the amount of capital required or expected to
be maintained by any Lender and that the amount of such capital is increased by
or based upon the existence of such Lender's commitment to lend hereunder and
other commitments of this type, then, within thirty (30) days after demand by
Agent, Borrower shall pay to Agent, on behalf of any Lender so affected, from
time to time as
<PAGE> 33
26
specified by Agent, additional amounts sufficient to compensate such Lender in
the light of such circumstances, to the extent that such Lender reasonably
determines such increase in capital to be allocable to the existence of such
Lender's commitment to lend hereunder. A certificate as to such amounts
submitted to Borrowers by Agent shall be conclusive and binding for all
purposes, absent manifest error.
SECTION 2.8. LIBOR. (a) Illegality. Notwithstanding any
other provision of this Agreement, if Agent shall notify Borrower that the
introduction of or any change in or in the interpretation of any law or
regulation makes it unlawful, or any central bank or other governmental
authority asserts that it is unlawful, for any Lender to perform its
obligations hereunder to fund or maintain any LIBOR Portion, such LIBOR Portion
shall be converted into a Base Rate Portion; provided, however, that Borrower
shall not be liable for any LIBOR Breakage with respect to such conversion.
(b) Unavailable/Insufficient. If, with respect to any
LIBOR Portion, Agent notifies Borrower that Agent is unable to determine LIBOR,
such LIBOR Portion will automatically, on the last day of the then existing
LIBOR Period, be converted into a Base Rate Portion; provided, however, that
Borrower shall not be liable for any LIBOR Breakage with respect to such
conversion.
SECTION 2.9. PAYMENTS AND COMPUTATIONS. (a) Payments.
Borrower shall make each payment due hereunder or under the Notes not later
than 11:00 A.M. (New York City time) on the day when due in U.S. dollars to
Agent in same day funds. Agent will distribute each payment so received by the
end of business hours on the date of receipt (i) if such payment by Borrower is
in respect of principal, interest, fees or any other amount then payable
hereunder or under the Notes to more than one Lender, to such Lenders in
accordance with the terms of the Security Agreement (as it pertains to
disbursement of funds from the Facility Escrow Account) and the Lender
Intercreditor Agreement or (ii) if such payment by Borrower is in respect of
any amount then payable hereunder or under the Notes to one Lender, to such
Lender, in each case to be applied in accordance with the terms of this
Agreement. If and to the extent Agent shall not have so made such payment in
full to any Lender, on such day, Agent shall pay interest to the applicable
Lender on such late payment for each day from the date such amount is due from
Agent until the date such payment is made to the applicable Lender, at the
Federal Funds Rate. Borrower shall be deemed to be in compliance with this
Section 2.9 with respect to any payment due on any payment date if sufficient
funds to make such payment in accordance with the terms and provisions of the
Security Agreement are contained in the Facility Escrow Account as of 11:00
A.M. (New York City time) on such date and any conditions set forth in the
Security Agreement to disbursement of such funds have been satisfied, whether
or not Agent shall have directed the Depositary to make such payment on behalf
of Borrower in accordance with the terms of the Security Agreement.
<PAGE> 34
27
(b) Computations. All computations of interest and fees
shall be made by Agent on the basis of a year of 360 days and the actual number
of days (including the first day but excluding the last day) occurring in the
Interest Period or, in the case of any Base Rate Portion, month or partial
month, for which such interest or fees are payable. Each determination by
Agent of an interest rate or fee hereunder shall be conclusive and binding for
all purposes, absent manifest error.
(c) Business Days. Whenever any payment hereunder or
under the Notes shall be stated to be due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of payment
of interest.
(d) Distributions by Agent. Unless Agent shall have
received notice from Borrower prior to the date on which any payment is due to
any Lender hereunder that Borrower will not make such payment in full, Agent
may assume that Borrower has made such payment in full to Agent on such date
and Agent may, in reliance upon such assumption, cause to be distributed to
each such Lender on such due date an amount equal to the amount then due such
Lender. If and to the extent Borrower shall not have so made such payment in
full to Agent, each such Lender shall repay to Agent forthwith on demand such
amount distributed to such Lender together with interest thereon, for each day
from the date such amount is distributed to such Lender until the date such
Lender repays such amount to Agent, at the Federal Funds Rate.
SECTION 2.10. TAXES. (a) No Deduction. All payments made
by Borrower to Agent or any Lenders or other holder under this Agreement and
the Notes shall be made without any setoff or counterclaim, and free and clear
of, and without deduction for or on account of, any present or future income,
excise and other taxes of whatever nature (other than taxes generally assessed
on net income of Agent or any Lender or other holder), or any levies, imposts,
duties, charges or fees of any nature now or hereafter imposed by any
Governmental Authority (collectively "TAXES"). If Borrower is compelled by law
to make any such deductions or withholdings, it will pay, subject to the
limitations set forth in Section 2.10(b), such additional amounts as may be
necessary in order that the net amount received by Agent and each Lender and
other holder after such deductions or withholdings (including any required
deduction or withholding on such additional amounts) shall equal the amount
such payee would have received had no such deductions or withholdings been
made, and it will promptly provide Agent with evidence satisfactory to Agent
that it has paid such deductions or withholdings. Moreover, if any Taxes are
directly assessed against Agent or any Lender or other holder, such payee may
pay such Taxes and Borrower shall promptly pay such additional amount as may be
necessary in order that the net amount received by such payee after the payment
of such Taxes (including any Taxes on such additional amount) shall equal the
amount such payee would have received had not such Taxes been assessed. The
provisions of this Section 2.10 shall survive any termination of this
Agreement.
<PAGE> 35
28
(b) Indemnity. Borrower agrees to pay to Agent or any
Lender or other holder under this Agreement that is not a U.S. Person such
additional amounts as are necessary in order that the net payment of any amount
due to such non-U.S. Person hereunder after deduction for or withholding in
respect of any Taxes imposed with respect to such payment (or in lieu thereof,
payment of such Taxes by such non-U.S. Person), will not be less than the
amount stated herein to be then due and payable, provided, however, that the
foregoing obligation to pay such additional amounts shall not apply:
(i) to any payment to Agent or any Lender or other holder
under this Agreement unless Agent, such Lender or other holder is, on
the date hereof (or on the date it becomes Agent, a Lender or another
holder) and on the date of any change in the applicable lending office
of Agent, such Lender or other holder, entitled to submit either a
Form 1001 (relating to Agent, such Lender or other holder and
entitling Agent, such Lender or other holder to a complete exemption
from withholding on all interest to be received by it hereunder in
respect of the Facility) or a Form 4224 (relating to all interest to
be received by such Lender or other holder hereunder in respect of the
Facility); or
(ii) to Taxes imposed solely by reason of the failure by
such non-U.S. Person to comply with applicable certification,
information, documentation or other reporting requirements concerning
the nationality, residence, identity or connections with the United
States of America of such non-U.S. Person if such compliance is
required by statute or regulation of the United States of America as a
precondition to relief or exemption from such Taxes.
As used herein, (w) "FORM 1001" shall mean Form 1001 (Ownership, Exemption, or
Reduced Rate Certificate) of the Department of the Treasury of the United
States of America, (x) "FORM 4224" shall mean Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a Trade
or Business in the United States) of the Department of the Treasury of the
United States of America (or in relation to either such form such successor and
related forms as may from time to time be adopted by the relevant taxing
authorities of the United States of America to document a claim to which such
form relates) and (y) "U.S. PERSON" shall mean a citizen, national or resident
of the United States of America, a corporation, partnership, limited liability
company or other entity created or organized in or under any laws of the United
States of America, or any estate or trust that is subject to Federal income
taxation regardless of the source of its income.
(c) Representation by Lenders. Each Lender that is not a
U.S. Person hereby certifies to Borrower that as of the date hereof (i) no
Taxes have been imposed which would require the payment of additional amounts
by Borrower as contemplated by Section 2.10(b) and (ii) such Lender is entitled
to submit Form 1001 or Form 4224.
<PAGE> 36
29
SECTION 2.11. SHARING OF PAYMENTS. If any Lender shall
obtain at any time any payment (whether voluntary, involuntary, through the
exercise of any right of set-off or otherwise) on account of any amount due and
payable to such Lender hereunder or under any Note at such time in excess of
the amount due and payable to such Lender at such time pursuant to the terms of
this Agreement and the Lender Intercreditor Agreement, such Lender shall repay
such excess amount to Agent and Agent shall distribute same in accordance with
the terms and provisions hereof and of the Lender Intercreditor Agreement.
SECTION 2.12. COSTS AND EXPENSES. Borrower shall reimburse
Agent, within ten (10) days after demand, for all third-party costs and
expenses, including the disbursements, other charges and reasonable fees of
counsel and all out-of-pocket costs of Agent (including the disbursements,
other charges and reasonable fees of professional advisors including, without
limitation, counsel) incurred by Agent in connection with (i) the preparation,
negotiation, execution and delivery of this Agreement, the other Loan Documents
and all certificates, agreements, instruments and opinions delivered in
connection herewith and therewith, (ii) inspection of the Conference
Improvements during construction, review of the Plans and Specifications
(including any proposed change orders) and the making of any Construction
Disbursements, (iii) any amendment, modification or supplement to this
Agreement, any other Loan Document or any agreement or instrument delivered in
connection herewith or therewith, (iv) if requested by Borrower, any waiver of
any provision of, or consent or approval granted pursuant to, this Agreement,
any other Loan Document or any agreement or instrument delivered in connection
herewith or therewith and (v) the amendment or other modification and
enforcement of this Agreement, any other Loan Document or any agreement or
instrument delivered in connection herewith or therewith. Borrower shall
further reimburse the Agent, within ten (10) days after demand, together with
interest thereon that shall accrue from and after the date of such demand at
the Default Rate, for all third-party costs and expenses, including the
disbursements, other charges and reasonable fees of counsel and other
professional advisors to Agent and each of the Lenders incurred by Agent or any
Lender in connection with any Event of Default, whether in any action, suit or
litigation, or any bankruptcy, insolvency or other similar proceeding affecting
creditors' rights generally or otherwise, including, without limitation, the
cost of any appraisals, reports or consultants obtained or retained by Agent.
SECTION 2.13. REPLACEMENT OF LENDER. In the event that
Borrower becomes liable for any amounts pursuant to Section 2.6, 2.7, 2.8 or
2.10(b) as a result of one or more Lenders' particular circumstances, the
Lenders will use reasonable efforts to cooperate with Borrower in replacing
such Lender or Lenders and any replacement Lender will be deemed to have made
the representations set forth in 2.10(c) as of the date such Person becomes a
Lender hereunder.
<PAGE> 37
30
ARTICLE 3
CONDITIONS PRECEDENT
SECTION 3.1. CONDITIONS PRECEDENT. The effectiveness of the
amendment and restatement of the Original Loan Agreement is subject to the
fulfillment on the date hereof, as determined in the sole discretion of Agent,
of the following conditions precedent:
(a) Authorization. Agent shall have received
satisfactory evidence to verify (i) the authority of the individual or
individuals executing this Agreement and the other Loan Documents to bind
Borrower legally and (ii) the authority of each individual who will sign the
other statements, reports, certificates and documents and otherwise act on
behalf of Borrower under this Agreement and the other Loan Documents.
(b) Loan Documents. Agent shall have received original
counterparts of the following documents executed by Borrower:
(i) the Notes;
(ii) the Security Agreement;
(iii) the Environmental Indemnity;
(iv) the Financing Statements;
(v) the Trademark Filing;
(vi) the Liquor License Filing;
(vii) the Ship Mortgage; and
(viii) the Assumption Agreement.
(c) Other Documents. Agent shall have also received the
following additional documents from Borrower:
(i) all certificates of insurance for the
Required Insurance;
(ii) the Title Policy;
(iii) a favorable written opinion or opinions,
dated as of the date hereof, of Borrower's counsel as to such matters
as Agent may reasonably request, in form and substance satisfactory to
Agent;
<PAGE> 38
31
(iv) a certificate, dated as of the Effective
Date, from the Secretary of Managing General Partner (together with
copies of the documents referred to below), certifying that attached
thereto are true, correct and complete copies (including any
amendments) of:
(A) the Certificate of Limited Partnership of
Borrower;
(B) the partnership agreement of Borrower;
(C) Managing General Partner's certificate of
incorporation and bylaws;
(D) the corporate resolutions adopted by Managing
General Partner's board of directors, authorizing the
execution and delivery of the Loan Documents by Managing
General Partner, as a general partner of Borrower;
(E) an incumbency certificate containing the
signatures of the officers of Managing General Partner
executing the Loan Documents on behalf of Managing General
Partner, as a general partner of Borrower;
(F) good standing certificates from the State of
Florida for Borrower and Managing General Partner; and
(G) all documents evidencing all necessary
approvals from Governmental Authorities necessary or
appropriate for the execution and delivery and performance
(other than the completion of the Expansion Plan Improvements)
by Borrower of this Agreement and the other Loan Documents,
and a statement to the effect that none of such approvals have
been revoked, annulled or modified in any manner and are in
full force and effect.
(v) a certificate, dated as of the Effective
Date, from the Secretary of BRHC (together with copies of the
documents referred to below), certifying that attached thereto are
true, correct and complete copies (including any amendments) of:
(A) the Certificates of Limited Partnership for
BRHC and BRHC's general partner, BRMC, L.P. ("BRMCLP");
(B) the partnership agreement of BRHC and BRMCLP;
(C) the bylaws of BRMCLP's general partner;
<PAGE> 39
32
(D) the corporate resolutions adopted by BRMCLP's
general partner's board of directors, authorizing the
execution and delivery of the Loan Documents by BRHC, as a
general partner of Borrower;
(E) an incumbency certificate containing the
signatures of the officers of the general partner of BRMCLP
executing the Loan Documents on behalf of BRHC, as a general
partner of Borrower; and
(F) good standing certificates from the State of
Florida for BRHC, BRMCLP and BRMCLP's general partner;
(vi) [Intentionally Omitted]
(vii) the Depository Agreements;
(viii) the Lender Intercreditor Agreement;
(ix) the Management Subordination Agreement;
(x) the Starwood Release;
(xi) certified copies of each Material Agreement
(including the applications for the Liquor Licenses but excluding the
Liquor Licenses);
(xii) consents from Contractor and Architect in
the form of Exhibit H;
(xiii) consents and estoppel certificates from the
lessors under the Deer Creek Agreements and Carolina Agreements, in
form and substance reasonably satisfactory to the Lenders;
(xiv) a Letter of Technical Advice from the Florida
Department of Revenue advisory that no stamp or intangible taxes are
or will be due as a result of the transactions contemplated hereby;
and
(xv) such other documents, instruments, approvals
as Agent may reasonably request.
(d) Establishment of Accounts. Borrower shall have
established the Operating Account, the Replacement Reserve Account and the
Facility Escrow Account in accordance with the Security Agreement.
(e) Other Conditions Satisfied. Each of the other
conditions precedent required to be satisfied, and each of the other documents
to be delivered, on or prior to the
<PAGE> 40
33
Effective Date in accordance with the Loan Documents shall have been properly
satisfied and delivered in accordance with the relevant provisions thereof.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. REPRESENTATIONS AND WARRANTIES. Borrower
represents and warrants to the Lenders and Agent as of the date hereof and as
of the Effective Date that each and every of the following representations and
warranties are true, complete and correct in every material respect:
(a) Borrower's Organization. (i) Borrower is a limited
partnership duly organized and validly existing in good standing under the laws
of the State of Florida, (ii) Borrower is qualified to do business in the State
of Florida and (iii) the character of the properties owned or leased by
Borrower and the nature of Borrower's business do not require it to be
qualified and in good standing in any other state in order to avoid any
liability.
(b) Managing General Partner's Organization. Managing
General Partner is a corporation, duly organized and validly existing in good
standing under the laws of the State of Florida and is qualified to do business
under the laws of the State of Florida. As of the date hereof, BRHC is a
limited partnership, duly organized and validly existing in good standing under
the laws of the State of Florida and is qualified to do business under the laws
of the State of Florida. As of the date hereof, Managing General Partner and
BRHC are the only general partners of Borrower.
(c) Power and Authority. Borrower has full partnership
power and authority, as applicable, (i) to own the Property, (ii) to conduct
its business as now conducted and as to be conducted in connection with the
construction and operation of the Expansion Plan Improvements and (iii) to
execute, deliver and comply with the provisions of this Agreement and each of
the other Loan Documents. Each other Borrower Entity has full partnership or
corporate power and authority to authorize and consent to the execution and
delivery by the Borrower of this Agreement and each of the other Loan Documents
and the performance by Borrower of its obligations hereunder and thereunder.
All of the consents of the general and limited partners or shareholders, as
applicable, of each Borrower Entity required in connection with the execution,
delivery and performance of the Loan Documents have been obtained.
(d) Due Execution/Enforceability. This Agreement and the
other Loan Documents have been duly executed and delivered by Borrower, and
assuming due authorization, execution and delivery by the Lenders and the other
parties to such Loan Documents, constitute the legal, valid and binding
obligations of Borrower, enforceable against it in accordance with the terms
hereof and thereof, except as enforceability may be limited by
<PAGE> 41
34
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(e) Litigation. Except as set forth in Schedule 3, there
is no action, suit or proceeding pending or, to the knowledge of Borrower or
either General Partner, threatened against or affecting Borrower or either
General Partner that relates to all or any portion of the Property before or by
any Governmental Authority, except for actions, suits and proceedings fully
covered by insurance or which, if adversely determined, would not materially
impair Conference Substantial Completion from occurring before the Conference
Completion Date, or materially impair the ability of Borrower or Managing
General Partner to perform any of their respective obligations under this
Agreement or to cause to be paid when due any amounts payable under the Notes.
(f) Conflict. Neither the execution nor the delivery of
any of the Loan Documents, nor the performance by Borrower or any Borrower
Entity party to any Loan Document of any of the provisions thereof, will
conflict with or result in a breach of any of the provisions of Borrower's or
such Borrower Entity's governing documentation, any applicable Legal
Requirements, or any agreement or other instrument to which Borrower or such
Borrower Entity is a party or by which Borrower or such Borrower Entity is
bound, or constitute a default under any of the foregoing or result in the
creation or imposition of any lien, charge or encumbrance upon any property of
Borrower or any Borrower Entity, all or a portion of the Property other than
any lien created pursuant to any of the Loan Documents.
(g) Governmental Consent. No consent, approval or other
authorization of or by any Governmental Authority is required in connection
with the execution or delivery by Borrower of any of the Loan Documents or
compliance with any of the provisions thereof, except for (i) those approvals
or permits in connection with the completion of the Expansion Plan Improvements
that, in accordance with good construction practice and in the normal course of
construction, would not be obtained as of the then-current stage of
construction of such Expansion Plan Improvements and (ii) Liquor Licenses from
the state of Florida and licenses and permits from local authorities,
applications for all of which have been, or will be, made in the ordinary
course of Borrower's business.
(h) Compliance; Zoning. Borrower has complied with all
Legal Requirements and all recorded instruments affecting the Property. The
use of the Real Property complies, and after Conference Substantial Completion
and Beach Club Substantial Completion shall continue to comply, with all zoning
and use-related Legal Requirements.
(i) Regulation U. No Borrower Entity is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying Margin Stock (as
defined in Regulation U of the Board of Governors of the Federal Reserve System
of the United States, as the same is from time to time in effect, and all
official
<PAGE> 42
35
rulings and interpretations thereunder and thereof); and no part of the
proceeds of the Notes will be used, whether directly or indirectly, and whether
immediately, incidentally or ultimately, (i) to purchase or carry Margin Stock
or to extend credit to others for the purpose of purchasing or carrying Margin
Stock or to refund indebtedness originally incurred for such purpose or (ii)
for any purpose which entails a violation of, or which is inconsistent with,
the provisions of Regulation G, T, U, X or any other Regulation of the Board of
Governors of the Federal Reserve System of the United States, as each of the
same is from time to time in effect, and all official rulings and
interpretations thereunder and thereof.
(j) Financial Statements. Each of Borrower's and each
General Partner's unaudited Financial Reports previously delivered to Agent (i)
is true and correct on and as of the dates and periods covered by such
statements and (ii) was prepared in accordance with GAAP, applied consistently.
No event or circumstance since the dates of such statements makes any of them
untrue or misleading in any material adverse manner.
(k) Taxes and Assessments. All federal, state and other
tax returns and reports of Borrower and each General Partner required to be
filed have been duly filed, and all federal, state and other taxes, assessments
(including assessments for municipal improvements), fees or other governmental
charges imposed upon Borrower, either General Partner, the Land or the
Improvements which are due and payable have been paid. Borrower knows of no
proposed material tax or other assessments against Borrower, the Land or the
Improvements, and no extension of time for assessment or payment of any
federal, state or local tax requested by Borrower is in effect.
(l) Title.
(i) Borrower holds good, indefeasible and marketable fee
simple title to the Land and existing Improvements, free and clear of
all mortgages, deeds of trust, liens, encumbrances, ground rents,
leases, tenancies, licenses, contracts of sale, options, security
interests, covenants, conditions, restrictions, rights of way,
easements, encroachments and any other matters affecting title except
the Permitted Exceptions;
(ii) The completion of the Expansion Plan and the use of
the Expansion Plan Improvements will not violate any Permitted
Exception;
(iii) To the best of each Borrower Entity's knowledge, no
Improvement encroaches upon any adjacent property, building line,
setback line, side yard line, or any recorded or visible easement (or
other easement of which Mortgagor is aware or has reason to believe
may exist) with respect to the Land, except insofar as the same may be
a Permitted Exception or as disclosed on the Survey; and
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(iv) The Real Property is taxed separately without regard
to any other property and has been subdivided from all other property
in compliance with applicable laws.
(m) Condemnation. There is no pending condemnation,
expropriation, eminent domain or similar proceeding affecting the Real Property
or any portion thereof, and Borrower has no knowledge and has not received any
written or oral notice that any such proceeding is contemplated.
(n) Management Agreement. The Management Agreement is in
full force and effect and has not been amended, restated or otherwise modified.
(o) Certain Regulations. Borrower is not an "investment
company" or a company "affiliated" with or "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended,
or a "public utility company" or a "holding company" within the meaning of The
Public Utility Holding Company Act of 1935, as amended, and Borrower will not
become such by reason of its execution and delivery of, or performance of its
obligations under, this Agreement or any of the other Loan Documents.
(p) ERISA. Neither Borrower nor any member of a
Controlled Group of which Borrower is a member maintains any Plan for the
benefit of employees of Borrower and neither Borrower nor any member of such
Controlled Group is obligated to make contributions in respect of any such
Plan.
(q) Insurance. All Required Insurance has been obtained,
is in full force and effect and all premiums due and payable therefor have been
paid in full.
(r) Written Information. When considered in the
aggregate, all written information (including all updates to the current Annual
Budget) furnished to Agent or the Lenders by Borrower on and prior to the date
hereof is true and correct in all material respects and does not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
(s) Deer Creek and Carolina Agreements. (i) Borrower has
delivered to Agent true and complete copies (except for exhibits identifying
inventory, employees and schedules of various matters relating to the operation
of the facilities) of all of the Deer Creek Agreements and all of the Carolina
Agreements including any modifications and amendments made thereto, (ii) the
Deer Creek Agreements and the Carolina Agreements remain in full force and
effect and (iii) the Deer Creek Agreements and the Carolina Agreements are the
only agreements to which Borrower is a party with respect to the subject matter
thereof.
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ARTICLE 5
COVENANTS
SECTION 5.1. AFFIRMATIVE COVENANTS. Borrower covenants and
agrees that, from the date hereof and so long as this Agreement shall remain in
effect or any Note shall remain outstanding, Borrower shall:
(a) Existence. Do or cause to be done all things
necessary to preserve and keep its partnership existence in full force and
effect and to remain qualified and licensed in Florida and all other
jurisdictions in which such qualification or licensing is required for the
conduct of Borrower's business.
(b) Required Notices. Give, or cause to be given, prompt
written notice to Agent of:
(i) any action or proceeding instituted or threatened by
or against Borrower, either General Partner or any of the Property by
or before any Governmental Authority;
(ii) any action or proceeding or group of related actions
or proceedings instituted or threatened in writing by or against
Borrower, Managing General Partner or, with respect to litigation
relating to the Property, BRHC claiming amounts or seeking damages in
an aggregate amount exceeding $5,000,000;
(iii) any other action, event or condition of any nature
which is reasonably likely to have a Material Adverse Change or which,
with notice or the passage of time or both, would constitute an Event
of Default or a default under any Material Agreement; or
(iv) any written notice received by Borrower from any
insurer regarding any material modification to, or termination of, any
insurance policy covering any or all of the Property; or
(v) any Equity Transfer in Borrower or either General
Partner other than (A) a transfer of any limited partnership interest
in Borrower or BRHC (except for any such transfer of limited
partnership interests that results in a Change of Control) or (B) any
transfer of any interest in BRHC to Holdings or any wholly owned
subsidiary thereof.
(c) Compliance. Promptly and faithfully comply in all
material respects with the Material Agreements.
(d) Authorized Persons. From time to time, at the
request of Agent, certify to the Lenders the names, signatures, and positions
of all persons authorized to make requests or certifications required under the
Loan Documents.
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(e) Financial Statements. Keep and maintain or shall
cause to be kept and maintained on a calendar year basis, in accordance with
the Accounting Rules, proper and accurate books, records and accounts
reflecting all of the financial affairs of Borrower with respect to all items
of income and expense in connection with the operation of the Property. Agent
or its representatives or designees shall have the right from time to time at
all times during normal business hours upon reasonable prior notice to examine,
with respect to the Property, such books, records and accounts at the office of
Borrower or other person maintaining such books, records and accounts and to
make copies or extracts thereof as Agent shall desire. Agent shall also have
the right to discuss Borrower's affairs, finances and accounts with
representatives of Borrower, at such reasonable times as may be requested by
Agent. In addition, Borrower shall deliver to Agent the following financial
information (the "FINANCIAL STATEMENTS"):
(i) Within one hundred twenty (120) days after the close
of each calendar year:
(A) financial statements audited by an
independent certified public accountant satisfactory to Agent
(it being hereby agreed that any "Big Six" accounting firm is
acceptable to Agent), containing a balance sheet as of the end
of such year and profit and loss statements for such year,
with such detailed supporting schedules covering the operation
of the Property as Agent shall reasonably require, certified
by such accounting firm as being in accordance with the
Accounting Rules;
(B) a statement prepared by Borrower and
certified as true and correct by its chief financial officer
of Available Cash Flow for such calendar year, together with a
report of the foregoing accounting firm of its review thereof,
which report shall state that said statement has been prepared
in accordance with this Agreement; and
(C) a rent roll certified by Borrower to be
correct showing each tenant, the term of the lease, the
rentable area demised thereunder and the fixed annual rent,
percentage rent, other charges, if any, payable thereunder,
date of last rental payment, amount of security deposit,
nature and amounts of defaults (if any) and such other matters
as Agent may require.
(ii) Within twenty (20) days after the end of each month:
(A) an operating statement on a monthly and
year-to-date basis, with comparisons of each item of income
and loss to the Annual Budget for such year, certified as true
and correct and in accordance with Accounting Rules by the
chief financial officer of Borrower;
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39
(B) a comparison, on a monthly and year-to-date
basis, for all deviations incurred with respect to Operating
Expense line items in the then-current Annual Budget;
(C) a statement prepared by Borrower and
certified as true and correct by its chief financial officer
of Revenues, Operating Expenses and Available Cash Flow for
the applicable month, certified by said officer that it has
been prepared in accordance with the Accounting Rules; and
(D) a revised schedule of all Premier Club
Deposits and Premier Club Notes as of the end of such month.
(f) Annual Budget. (i) On or before (x) November 1st of
each year, commencing in 1997, and (y) a date that is no more than sixty (60)
days nor less than thirty (30) days prior to the June Restricted Payments
Release Date during each calendar year from and after 1997, prepare and submit
to Agent a proposed annual budget for the succeeding calendar year (or in the
case of clause (y) above, the remainder of the then-current calendar year)
which proposed annual budget shall forecast in reasonable detail Available Cash
Flow, requirements for capital repairs and replacements (including a
contingency reserve therefor and projected disbursements from the Replacement
Reserve Account), debt service payments and other amounts which Borrower
reasonably expects to be required to be expended for the maintenance, repair
and operation of the Property for such succeeding calendar year (it being
agreed and acknowledged that, in the case of the updated budget prepared and
updated pursuant to clause (y) above, such updated budget need only disclose
changes for the remaining calendar year from amounts forecasted for such period
in the annual budget submitted under clause (x) above).
(ii) With respect to any proposed annual budget submitted
pursuant to clause (x) of this subsection (f), Agent shall promptly furnish to
Borrower any and all comments or disagreements with the proposed annual budget
or any aspect or component thereof, and the parties shall endeavor to resolve
any differences over any aspect of the annual budget during the thirty (30)
days immediately following the submission of the proposed annual budget. Agent
agrees not to unreasonably withhold or delay its approval of the proposed
annual budget. If Agent disapproves any proposed annual budget, it shall state
which Line Items therein are disapproved. If Borrower has not received notice
from Agent of disapproval of any proposed annual budget within thirty (30) days
after furnishing the same and provided that Borrower shall have promptly
responded to any reasonable requests for additional information made by Agent,
such proposed budget shall be deemed approved. Upon the approval of the
proposed annual budget for a calendar year, such proposed annual budget shall
be deemed the "ANNUAL BUDGET" for such calendar year.
(iii) In the event that Borrower fails in a timely manner
to submit a proposed annual budget pursuant to clause (x) of this subsection
(f) or until any such proposed annual
<PAGE> 47
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budget is approved by Agent, the most recent Annual Budget shall continue in
effect until approval of the Annual Budget for such calendar year. In the
event a proposed annual budget has been submitted pursuant to clause (x) of
this subsection (f) but specific Line Items therein have been disapproved,
those Line Items which have been approved or deemed approved in accordance with
this Section 5.1(f) shall be incorporated into the Annual Budget for such year
and the disapproved Line Items may be incorporated into the Annual Budget in
amounts as determined reasonably by Borrower, subject to the following
limitations:
(A) if the Line Item is for capital repairs and
replacements or other capital improvements, the budgeted amount
therefor shall not, when added to the other capital repair and
replacement and other capital improvements which are budgeted, result
in the aggregate budgeted amount for all such Line Items (not
including any Conference Construction Costs or the Beach Club
Construction) being less than (y) $3.5 million prior to January 1,
1999 and (z) $4.5 million from and after January 1, 1999 or more than
(1) $5.4 million prior to January 1, 1999 and (2) $6.5 million from
and after January 1, 1999; and
(B) with respect to all other Line Items, the amount
shall be not less than 90% nor more than 110% of the equivalent item
in the last approved Annual Budget.
(iv) The updated budget provided by Borrower pursuant to
clause (y) of this subsection (f) shall be used for purposes of
determining the Minimum Liquidity Amount or in making other
projections affecting the application of funds in any of the Accounts
only upon the approval of such updated budget by Agent and Starwood.
(g) Change in Circumstance. Promptly notify
Agent in writing of any material change in any fact or circumstance
represented or warranted by Borrower herein or in any other documents
furnished to Agent in connection with the Facility.
(h) Additional Instruments. Execute such
additional instruments as may be reasonably requested by Agent in
order to carry out the intent of this Agreement and to perfect or give
further assurances of any of the rights or security interests granted
or provided for hereunder or under any of the Loan Documents.
(i) Insurance. Maintain from and after the date hereof
and at all times while this Agreement is in effect or any Note remains
outstanding, at Borrower's sole expense, the Required Insurance. Borrower
shall furnish to Agent duplicate copies of policies of insurance or
certificates of Borrower's insurance agent certifying to the insurance required
and including photocopies of all policies certified by such agent to be
correct, complete and current (i) on or before the date hereof, (ii) upon the
renewal or replacement of existing coverage or the obtaining of additional
coverage, and (iii) at any other time upon the reasonable request of Agent.
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41
(j) Management. Operate the Property at all times as a
first-class luxury hotel, cause the Property to be managed by Manager in
accordance with the terms of the Management Agreement, perform and observe all
the terms and provisions of the Management Agreement to be performed or
observed by Borrower, maintain the Management Agreement in full force and
effect, enforce the Management Agreement in accordance with its terms, take all
such action to such end as may be from time to time as reasonably requested by
Agent and, upon request of Agent, make to Manager such demands and requests for
information and reports or for action as the Borrower is entitled to make under
the management Agreement, except, in any case, where the failure to do so,
either individually or in the aggregate, would not be reasonably likely to have
a Material Adverse Change. The Management Agreement may be terminated by Agent
upon thirty (30) days' prior written notice to the Borrower and Manager if (i)
Manager commits any act which would permit termination under the Management
Agreement or (ii) there is a change of Control of Manager, other than a change
of Control resulting from the death or incapacity of any natural person. Any
appointment of a manager not directly or indirectly owned 100% by Holdings
shall be subject to the prior written consent of Agent, which consent may be
withheld in Agent's sole and absolute discretion. Notwithstanding the
foregoing, any successor manager not owned 100% by Holdings selected hereunder
by Agent or the Borrower to manage the Property shall be a nationally
recognized first-class manager of luxury hotels, with all license agreements
necessary or appropriate to permit such replacement Manager to operate the
Property. Any agreement between Borrower and the new Manager shall be subject
to Agent's prior written approval provided that (a) the new Manager enters into
an agreement to subordinate its fees in the same form as the Management
Subordination Agreement or in such other form as Agent may approve in Agent's
sole and absolute discretion and (b) such management agreement may be
terminated by Agent upon the foreclosure, deed in lieu of foreclosure or other
remedial transfer of the Property to the Lenders or their designee. Borrower
shall cause the management of the Property at all times to be supervised by the
Senior Supervisors and cause such Senior Supervisors to devote that portion of
their time necessary in the supervision of the management of the Real Property
to assure Borrower's performance hereunder and under the other Loan Documents.
Except for changes beyond the control of Borrower (such as Termination for
Cause, retirement, resignation (but no Senior Supervisor may resign in order to
take any position with any Affiliate of Borrower or any Affiliate of any other
Borrower Entity), death or disability of a Senior Supervisor), no change in the
Senior Supervisors shall be made without the Agent's prior written consent.
The foregoing notwithstanding, none of the Senior Supervisors or Manager is
intended to be, or shall be, a third-party beneficiary to this Agreement.
(k) Single Purpose Entity. Borrower hereby represents
and warrants to, and covenants with, Agent that, as of the date hereof and
until such time as all amounts payable under the Notes and the other Loan
Documents shall be paid in full, Borrower:
(i) does not own and shall not own any asset other than
the Property;
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(ii) is not engaged and shall not engage in any business
other than those necessary for the ownership,
management or operation of the Property;
(iii) shall conduct and operate its business substantially
as presently conducted and operated;
(iv) shall maintain books and records and bank accounts
separate from those of its Affiliates or any other
entity, including Permitted Subsidiaries;
(v) shall maintain its own separate business office;
(vi) shall be, and at all times shall hold itself out to
the public as, a legal entity separate and distinct
from any other entity (including any Affiliate,
including each General Partner);
(vii) shall file its own tax returns;
(viii) shall as of the date hereof have adequate capital for
the normal obligations reasonably foreseeable in a
business of its size and character and in light of
its contemplated business operations; and
(ix) shall not commingle the funds and other financial
assets of the Borrower with those of either General
Partner, any Affiliate or any other person; and
(l) Appraisal Updates. From and after the first
anniversary of Conference Substantial Completion, from time to time upon the
request of Agent, but no more than once in any calendar year, deliver to Agent,
an Appraisal Update.
(m) Construction Notices. Promptly upon the giving or
receipt of such notice, forward to Agent copies of all material written notices
given or received by Borrower with respect to the Conference Construction to or
from: (i) Contractor or any subcontractor or material supplier, or any of the
design professionals (including notices relating to any nonconforming
construction, any refusal or inability to pay or perform pursuant to the terms
of any contract or other agreement or any delay, default or change order) or
(ii) any claim of default, or relating to any work stoppage, notice of
violation or cease and desist order, stop order, construction liens, strike,
claim, litigation, damage, loss or any other materially adverse condition,
circumstance or event.
(n) Construction Payments. Pay and discharge or cause to
be paid and discharged promptly all payments due for labor, materials and
supplies unless the same shall be contested by Borrower in good faith by
appropriate proceedings and sufficient funds are available in the Facility
Escrow Account to pay such contested amount in full; provided,
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43
however, that Borrower shall not be deemed to be in default under this
subsection (n) if at the time such payments are due, (i) the balance of the
Facility Escrow Account is sufficient to make such payments, (ii) the
conditions for the release of such payments from the Facility Escrow Account
set forth in the Security Agreement have been satisfied and (iii) such funds
are not disbursed from the Facility Escrow Account for such payments in
accordance with the Security Agreement.
(o) Subcontracts. Make available for inspection at all
times by the Lender Construction Representative and Agent copies of all
subcontracts entered into by Contractor and furnish to the Lender Construction
Representative and Agent, upon request, copies of the same.
(p) Prosecution and Completion of Construction.
(i) Cause all work on the Conference Construction
and, in the event Borrower commences the Beach Club Construction, the
Beach Club Construction to proceed diligently and continuously, with
sufficient workers employed and sufficient materials supplied for that
purpose so that, subject to Force Majeure, Conference Substantial
Completion and Beach Club Substantial Completion are achieved no later
than the Conference Completion Date and, in the event Beach Club
Construction is commenced, that Beach Club Substantial Completion
occurs in a reasonably expeditious manner;
(ii) Cause all construction work on the Conference
Construction to be performed in accordance with the Conference Plans
and Specifications (other than deviations therefrom that are
immaterial individually or in the aggregate) and any and all
construction work performed at the Real Property at any time to be in
conformity with the Legal Requirements, the requirements of all
insurers and fire underwriters, and with the requirements set forth
herein and in the other Loan Documents;
(iii) Cause all materials acquired or furnished in
connection with the construction of the Conference Improvements but
not affixed or incorporated into the Real Property to be stored under
adequate safeguards to minimize the possibility of loss, theft, damage
or commingling with other materials or projects;
(iv) To the extent not already included in
Requests for Conference Construction Disbursement, from time to time
upon the request of Agent, deliver to Agent such certificates and
other documentation evidencing that the Conference Construction is
proceeding in accordance with the schedule set forth in the Conference
Construction Contract and confirming the matters set forth in the
preceding clauses (i) through (iii); and
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(v) Cause all work on the golf course located on
the Real Property to proceed diligently and continuously in accordance
with the Capital Expenditure Plan previously approved by Agent in
connection therewith.
(q) Inspection; Repair. At all times during normal
business hours and upon reasonable prior notice, provide Agent, its
representatives and the Lender Construction Representative full and free access
to the Conference Improvements, the Conference Plans and Specifications and all
shop and related drawings. Prior to Conference Substantial Completion, as soon
as reasonably practical after receipt of written notice from Agent, Borrower
shall proceed diligently to remove all fixtures, equipment and other materials
which do not substantially conform to the Conference Plans and Specifications
and immediately thereafter repair and replace all work and materials so removed
or damaged thereby, in each case at Borrower's sole cost and expense and not
from the proceeds of any Conference Construction Disbursement.
(r) Final Lien Waivers. Within ten (10) Business Days
after the Final Conference Construction Disbursement, deliver to Agent the
Required Lien Waivers from the Contractor and each subcontractor who has
delivered a "notice to Owner" to Borrower under the Florida Construction Lien
Law and who has not previously delivered the Required Lien Waivers.
(s) Post-Completion. Within ninety (90) days after
Conference Substantial Completion, (i) complete, or cause to be completed, all
punch list items relating to the Conference Improvements, (ii) deliver to Agent
the As-Built Survey and the As-Built Conference Plans and Specifications and
(iii) obtain all final permits and approvals required for the normal use and
occupancy of the Conference Improvements (including a permanent certificate of
occupancy if required for occupancy under applicable laws or its equivalent for
each of the Conference Improvements).
(t) Deficiencies. Within twenty (20) days after receipt
from Agent of a notice of any Deficiency, which notice Agent may send to
Borrower at any time or times as Agent may deem appropriate to notify Borrower
that there is a Deficiency, deposit into the Facility Escrow Account an amount
sufficient to eliminate such Deficiency.
(u) Indemnity. Indemnify, defend and hold harmless the
Indemnified Parties from and against any and all liabilities, losses, claims,
damages and expenses incidental thereto, including reasonable attorneys' fees
and expenses, of any kind or nature directly or indirectly resulting from or
arising out of the Conference Construction Disbursements, the construction of
the Expansion Plan Improvements or any act or omission to act by the Lenders or
their respective officers, directors, employees or agents in connection
therewith, including, without limitation, all claims for commissions to any
broker or intermediary, disputes between or among Borrower, Contractor,
Architect, any design professional, subcontractors, material
<PAGE> 52
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suppliers and purchasers, unless caused by the gross negligence or willful
malfeasance of any Indemnified Party.
(v) Beach Club Construction. Borrower shall provide for
the Beach Club Reserve within the Facility Escrow Account which shall be
deducted from the Restricted Payments Available Amount. In the event Beach
Club Substantial Completion has not occurred by the Beach Club Completion Date
and Agent has not approved a plan for the Beach Club Construction on or prior
to the Beach Club Completion Date that contemplates a completion date
acceptable to Agent, then Borrower shall prepay the Facility on or prior to the
Beach Club Completion Date by an amount equal to the Beach Club Reserve.
(w) Interest Rate Protection Agreement. Enter into, and
perform its obligations under, such Interest Rate Protection Agreements such
that at all times while any Note shall remain outstanding, Borrower has
effectively hedged its risk against an increase in the LIBOR Base to a per
annum rate in excess of 8.75%.
(x) TAA. Within ninety (90) days after the Effective
Date, Borrower shall obtain from the Florida Department of Revenue a Technical
Assistance Advisement advising that no stamp or intangible taxes are or will be
due as a result of the transactions contemplated hereby and shall deliver a
copy of the same to Agent.
(y) Licenses and Permits. Within one hundred eighty
(180) days after the date hereof, obtain all licenses and permits described in
Section 4.1(g)(ii).
SECTION 5.2. NEGATIVE COVENANTS. Borrower covenants and
agrees that from the date hereof and for so long as this Agreement shall remain
in effect or any Note shall remain outstanding, Borrower shall not:
(a) Amendment or Modification. Amend, terminate or
modify, or permit to be amended, terminated or modified, or waived any
provisions or requirements of (i) in any manner that is not
immaterial, the Conference Plans and Specifications, (ii) in respect
of any monetary, financial or economic matter, or in respect of any
other material manner, the Conference Construction Contract or (iii)
in any material adverse manner, any Material Agreement.
(b) Change of Control. Without the written consent of
Agent (which consent may be withheld by Agent in its sole and absolute
discretion) cause, permit or suffer any Change of Control.
(c) Assignment. Assign this Agreement or any of the Loan
Documents.
(d) Governing Documents. Without the prior written
consent of Agent, (i) amend, or permit to be amended, the Partnership
Agreement or Borrower's Certificate
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of Limited Partnership or (ii) materially amend Managing General
Partner's Articles of Incorporation or by-laws.
(e) Other Indebtedness. Incur, or allow Borrower or
either General Partner to incur, any Indebtedness other than Permitted
Debt.
(f) Payments; Distributions. Pay any distributions,
dividends or other payments with respect to any Borrower Entity, any
partnership or other equity interest in any Borrower Entity, or return
any capital to any Borrower Entity or any partner or shareholder
thereof or make any distribution of assets, rights, options,
obligations or securities to any partner or shareholder thereof, or
pay any interest on or repay any principal of any loan made to any
Borrower Entity by any of the foregoing (each of the foregoing, a
"DISTRIBUTION") except as a Restricted Payment disbursement from the
Facility Escrow Account in accordance with the conditions set forth
in, and only to the extent permitted under, the Security Agreement.
(g) [Intentionally Omitted].
(h) Negative Pledge. Enter into or suffer to exist any
agreement prohibiting or conditioning the creation or assumption of
any lien upon any of its property or assets other than any such
agreement in favor of Agent and the Lenders or in connection with
Permitted Debt.
(i) Partnership. Become a general partner in any general
or limited partnership.
(j) Use of Property. Use, or cause to be used, the Real
Property as anything other than a first class resort hotel complex,
business conference center and resort membership club. Borrower shall
not use, or permit the use of, the Real Property for any other use
without the prior written consent of Agent, which consent may be
withheld by Agent in its sole and absolute discretion.
(k) Change Orders. Make or allow any material revision
to the Conference Plans and Specifications unless each of the
following conditions are satisfied:
(i) Agent shall have received written notice of
such revision signed by Borrower and the Lender Construction
Representative that includes a description of the changes;
(ii) Such revision shall not create a Deficiency
that is not cured by Borrower pursuant to Section 5.1(t); and
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47
(iii) subject to the next sentence, Agent shall
have consented to such revisions, such consent not to be
unreasonably withheld or delayed. Such consent, however, will
not be required if such revisions are necessary to comply with
Legal Requirements or correct errors or insufficiencies in the
Conference Plans and Specifications or if the Lender
Construction Representative certifies to Agent that such
revisions, and the changes to be made in the Conference
Improvements reflected thereby, shall not, individually or in
the aggregate, (A) cause Conference Substantial Completion to
occur after the Conference Completion Date, (B) materially
alter the architectural format or style of the Conference
Improvements, (C) materially alter the structural, electrical
or mechanical components of the Conference Improvements, (D)
increase the cost of constructing the Conference Improvements
by more than $500,000 individually or $1,500,000 in the
aggregate or (E) violate any Legal Requirements.
(l) Deer Creek and Carolina. Without Agent's prior,
written consent, such consent not to be unreasonably withheld or
delayed, materially modify or terminate the Deer Creek Agreements or
Carolina Agreements.
(m) Conference Construction Contract. (i) Modify the
retainage amounts under the Conference Construction Contract or (ii)
modify the guaranteed maximum price payable under the Conference
Construction Contract except as a result of change orders permitted
pursuant to Section 5.2(k).
ARTICLE 6
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1. EVENTS OF DEFAULT. The occurrence of any of the
following shall constitute an "EVENT OF DEFAULT" hereunder:
(a) Failure to Repay Notes. The failure to pay (i) on
the Maturity Date, the outstanding principal of the Notes or (ii) when due, any
installment of principal or interest due under any Note or due to any Hedge
Provider under any Interest Rate Protection Agreements on or before the fifth
(5th) day after the same has become due and payable; provided, however, that no
Event of Default shall be deemed to have occurred under this clause (ii) if at
the time such payment of interest or principal is due, the balance of the
Facility Escrow Account is sufficient to pay such principal or interest and
such funds are distributable for such payment at such time pursuant to the
Security Agreement.
(b) Failure to Pay Other Monetary Obligations. The
failure to pay when due any money obligation (other than those set forth in
Section 6.1(a)) under any of the Loan
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48
Documents on or before the fifth (5th) day after Agent has notified Borrower
that the same has become due and payable.
(c) Material Adverse Change. The occurrence of a
Material Adverse Change and such condition is not remedied within ten (10) days
after Agent has notified Borrower thereof; provided, however, that in the case
of a Material Adverse Change that is susceptible to cure but which cannot be
reasonably cured within such ten (10) days, such failure shall not constitute
an Event of Default provided that (A) Borrower shall submit to Agent, within
such ten (10) day period, a detailed plan to cure such Material Adverse Change
reasonably satisfactory to Agent and (B) Borrower shall diligently pursue the
curing of such Material Adverse Change.
(d) Litigation. The entry of any judgment against
Borrower or either General Partner in excess of $500,000 that is not satisfied
by the issuance of Permitted Debt, stayed on appeal or discharged or fully
bonded within thirty (30) days after such entry.
(e) [Intentionally omitted].
(f) Completion of Construction. The failure, subject to
Force Majeure, to effect Conference Substantial Completion on or before the
Conference Completion Date.
(g) Failure to Perform. The failure of Borrower to
perform any other term, covenant or condition of this Agreement or of any of
the other Loan Documents (other than any such failure specifically enumerated
in this Section 6.1) and the continuation of such default for thirty (30) days
following the giving of notice of such default to Borrower; provided, however,
that in the case of a failure which cannot be reasonably cured within such
thirty (30) days, such failure shall not constitute an Event of Default
provided that (A) Borrower shall submit to Agent, within such thirty (30) day
period, a detailed plan to cure such default reasonably satisfactory to Agent
and (B) Borrower shall diligently pursue the curing of such default. The
rights to notice and a cure period granted herein shall not be cumulative with
any other rights to notice or a cure period in any other Loan Document and the
giving of notice or a cure period pursuant to this paragraph shall satisfy any
and all obligations of Agent or the Lenders to grant any such notice or cure
period pursuant to any of the Loan Documents.
(h) Misrepresentations. The discovery that any
representation or warranty of any Borrower Entity under any of the Loan
Documents or other materials submitted to Agent or the Lenders in connection
with the Loan shall have been untrue or incorrect when made in any material
adverse respect.
(i) Change of Control. Any default in the performance of
Borrower's obligations under Section 5.2(b).
<PAGE> 56
49
(j) Insolvency. (i) The commencement by any Borrower
Entity of a voluntary case under the Bankruptcy Code or the taking by any
Borrower Entity of any equivalent or similar action by the filing of a petition
or otherwise under any other federal or state law in effect at the time
relating to bankruptcy or insolvency;
(ii) (A) the entry of an order for relief against any
Borrower Entity under the Bankruptcy Code or any other federal or
state law in effect at the time relating to bankruptcy or insolvency
or (B) the filing of a petition against Borrower under the Bankruptcy
Code or the filing of a petition seeking any such equivalent or
similar relief against Borrower under any other federal or state law
in effect at the time relating to bankruptcy or insolvency, and, in
either case, the failure of such Borrower Entity to have such petition
dismissed within sixty (60) days after the date of such filing;
(iii) the making by any Borrower Entity of a general
assignment for the benefit of its or any of their creditors;
(iv) the appointment of a receiver, trustee, custodian or
similar officer for any Borrower Entity or for all or substantially
all of the property of any Borrower Entity and the failure by such
Borrower Entity, to secure the discharge of such receiver, trustee,
custodian or similar officer within sixty (60) days after the date of
such appointment; or
(v) the admission in writing by any Borrower Entity of
any inability to pay debts generally as they become due.
SECTION 6.2. REMEDIES. Upon the occurrence of any Event of
Default, Agent, in addition to any other rights or remedies available to Agent
and/or the Lenders at law or in equity, or under any of the other Loan
Documents, may exercise any one or more of the following rights and remedies as
it, in its sole discretion, deems necessary or desirable:
(a) Acceleration. Declare immediately due and payable,
without further notice or demand, all monies advanced under this Agreement, the
Notes, the Mortgage and/or any of the Loan Documents which are then unpaid,
together with all interest then accrued thereon and all other amounts then
owing (including any LIBOR Breakage or Swap Breakage owed as a result of such
declaration), and exercise all rights and remedies hereunder and under the
Notes, the Mortgage and/or any of the other Loan Documents at law, in equity or
otherwise; provided, however, that in the event of an actual or deemed entry of
an order for relief with respect to any Borrower Entity under the Bankruptcy
Code, the Notes and all obligations thereunder and under any other Loan
Agreement shall automatically become due and payable, without presentment,
demand, protest or any notice of any kind, all of which are hereby expressly
waived by Borrower.
<PAGE> 57
50
(b) Possession. Enter upon and take possession of the
Real Property and proceed in the name of Agent, the Lenders or Borrower, as the
attorney-in-fact of Borrower (which authority is hereby granted by Borrower, is
coupled with an interest, and is irrevocable), as Agent shall elect. If Agent
elects to so enter upon and take possession of the Real Property, Agent (i) may
enforce or cancel all contracts entered into by Borrower (including the
Conference Construction Contract) or make other contracts which are in Agent's
sole opinion advisable, (ii) may complete the construction of the Conference
Construction and/or the Beach Club Construction and (iii) shall be reimbursed
by Borrower upon demand any reasonable amount or amounts expended by Agent for
such performance together with any reasonable costs, charges, or expenses
incident thereto or otherwise incurred or expended by Agent or its
representatives (including an Appraisal) on behalf of Borrower in connection
with the Real Property, and the amounts so expended (A) shall be considered
part of the Facility evidenced by the Notes and secured by the Mortgage and (B)
shall bear interest at the Default Rate.
(c) No Further Obligations. Terminate Agent's and the
Lenders' obligations under this Agreement.
(d) Injunctive Relief. Institute appropriate proceedings
for injunctive relief (including specific performance of the obligations of
Borrower hereunder).
(e) Cash Management. From and after the acceleration of
any Notes in accordance with paragraph (a) above resulting from either an Event
of Default described in Section 6.1(a), (b), (i), (j), any Prohibited Transfer
or any other material Event of Default, direct the Operating Account Depositary
to transfer the entire balance of the Operating Account to the Facility Escrow
Account to be held and applied first to Operating Expenses approved by Agent
and then to amounts payable under the Facility, in each case, in accordance
with a separate "lock-box" agreement between Agent and Borrower in form and
substance satisfactory to Agent and which shall govern the collection and
disbursement of the Rents and Profits until such time as such acceleration is
either rescinded or completion of a foreclosure of the Mortgage.
SECTION 6.3. REMEDIES CUMULATIVE; WAIVERS. All of the
remedies herein given to Agent and/or the Lenders or otherwise available at law
or in equity to Agent and/or the Lenders shall be cumulative and may be
exercised separately, successively or concurrently. Failure to exercise any
one of the remedies herein provided shall not constitute a waiver thereof by
Agent or the Lenders, nor shall the use of any such remedies prevent the
subsequent or concurrent resort to any other remedy or remedies vested in Agent
and/or the Lenders by the Loan Documents or at law or in equity. To be
effective, any waiver by Agent or the Lenders must be in writing and such
waiver shall be limited in its effect to the condition or default specified
therein, and no such waiver shall extend to any subsequent condition or
default.
<PAGE> 58
51
ARTICLE 7
MISCELLANEOUS
SECTION 7.1. AGENT'S DISCRETION. If any condition of this
Agreement requires the submission of evidence of the existence or non-existence
of a specified fact or facts, or implies as a condition the existence or
non-existence of such fact or facts, Agent will, at all times, be free
independently to establish to its sole satisfaction and in its sole discretion
such existence or nonexistence. Where any matter herein requires the approval
or consent of Agent, the giving or refusal to give such approval or consent
shall be within Agent's sole discretion and shall be valid only if given in
writing, except as may be expressly stated otherwise; provided, that Agent
shall endeavor to diligently and expeditiously review the matters involved with
such approval or consent and shall not unreasonably delay its notice to
Borrower of its decision as to whether or not to grant such approval or
consent.
SECTION 7.2. NO THIRD PARTY BENEFICIARY. The parties do not
intend the benefits of this Agreement to inure to any third party, nor shall
this Agreement be construed to make or render Agent or the Lenders liable to
Contractor, any subcontractor, materialman, laborer or other person for goods
or materials supplied or work or labor furnished or services rendered in
connection with the completion of the Expansion Plan Improvements, or for debts
or claims accruing to any such persons against Borrower. Neither Agent nor the
Lenders shall be liable for the manner in which the Facility may be applied by
Borrower. Notwithstanding anything contained herein, in the Notes or in any
other Loan Document, or any conduct or course of conduct by any one or more of
Borrower, Agent and the Lenders, before or after the execution of this
Agreement, this Agreement shall not be construed as creating, or operate to
create, any right, claim or cause of action against Agent or the Lenders or any
of their respective officers, directors, agents or employees, in favor of any
contractor, subcontractor, design professional, supplier of labor or materials,
or any of their respective creditors, or any other person other than Borrower.
No part of the Facility will be at any time subject, or liable to attachment or
levy at the suit of any creditor of Borrower, or at the suit of any contractor,
subcontractor or material supplier, or any of their creditors, and regardless
of any other term, condition or provision hereof, no such third party will have
any status, right or entitlement hereunder.
SECTION 7.3. NO JOINT VENTURE. Nothing contained in this
Agreement or the other Loan Documents shall create a partnership or joint
venture or principal-agent relationship among any of Borrower, Agent and the
Lenders or between Agent or the Lenders and any other party, or cause Agent or
the Lenders to be liable in any way for the debts or obligations of Borrower or
any other party.
SECTION 7.4. RELIANCE ON REPRESENTATIONS AND WARRANTIES.
Agent and the Lenders shall be entitled to rely upon the representations and
warranties of any Borrower Entity set forth in any of the Loan Documents
without any investigation by Agent or the
<PAGE> 59
52
Lenders and notwithstanding any investigation conducted by Agent or the Lenders
or on their behalf before or after the date hereof.
SECTION 7.5. NOTICES. All notices, approvals, consents,
requests, demands and other communications with, to, from or upon the
respective parties hereto shall be in writing and shall be hand delivered, sent
by facsimile (with request for confirmation) or sent by guaranteed overnight
delivery service or by registered mail, return receipt requested, postage
prepaid, addressed as follows:
If to Agent or the Lenders:
The Bank of Nova Scotia, New York Agency
One Liberty Plaza
New York, New York 10006
Attention: Office Head for Real Estate Banking,
New York Agency
Facsimile: (212) 225-5166
With a required copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Real Estate Notices
6405/4341 TGL
Facsimile: (212) 848-7179
If to Borrower:
Panthers BRHC Limited
450 Las Olas Boulevard
Suite 1500
Fort Lauderdale, Florida 33301
Attention: Richard L. Hundley, Esq.
Facsimile: (954) 627-5080
With a required copy to:
Akerman, Senterfitt & Eidson, P.A.
One Southeast Third Avenue
28th Floor
Miami, Florida 33131
Attention: Stephen K. Roddenberry, Esq.
<PAGE> 60
53
Facsimile: (305) 374-5095
and
The Private Merchant Banking Corporation
380 Lexington Avenue
Suite 4500
New York, New York 10168
Attention: Theodore V. Fowler
Facsimile: (212) 682-9519
or to such other address as either party may designate from time to time by
notice to the other in the manner set forth herein. All such communications
shall be deemed to be given (i) if hand delivered, sent by facsimile (with
confirmed receipt) or sent by guaranteed overnight delivery service, on the day
received (or, if such day is not a Business Day, on the first Business Day
thereafter), or (ii) if mailed, on the third Business Day following deposit
thereof in the U.S. Mail.
SECTION 7.6. TIME OF THE ESSENCE. All dates and times for
performance set forth herein or in any of the other Loan Documents (whether or
not elsewhere so stated) are of the essence; provided, however, that this
Section 7.6 shall not affect any notice or cure periods specifically set forth
in the Loan Documents.
SECTION 7.7. COUNTERPARTS. This Agreement may be executed in
any number of counterparts. All such counterparts will be deemed to be
originals and will together constitute but one and the same instrument.
SECTION 7.8. GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed solely within such State.
SECTION 7.9. SEVERABILITY. Any provision in any of the Loan
Documents that is unenforceable or invalid in any jurisdiction shall, as to
such jurisdiction, be ineffective, but only to the extent of such
unenforceability or invalidity and without affecting the remaining provisions
thereof or affecting the operation, enforceability or validity of such
provision in any other jurisdiction.
SECTION 7.10. JURISDICTION. Borrower hereby consents to the
jurisdiction of the courts of New York and/or the United States District Court
for the Southern District of New York in any and all actions or proceedings
arising hereunder or pursuant hereto, and irrevocably agrees to service of
process by any method permitted by applicable law.
<PAGE> 61
54
SECTION 7.11. SURVIVAL. All agreements, representations and
warranties made in this Agreement shall remain in full force and effect until
the entire unpaid principal amount of the Facility, together with accrued but
unpaid interest thereon and all other amounts due and payable by Borrower to
Agent and/or the Lenders, have been paid in full.
SECTION 7.12. CONTROLLING DOCUMENT; AMENDMENT. The
provisions of this Agreement (including the exhibits attached hereto) shall be
deemed complementary to the provisions of the other Loan Documents, but in the
event of conflict, the provisions hereof shall be deemed to modify and
supersede the conflicting provisions in such other Loan Documents and to
control to the extent enforceable under applicable law. Neither this Agreement
nor any of the other Loan Documents may be modified or amended except by a
written agreement executed by the party against whom enforcement thereof is
sought.
SECTION 7.13. WAIVER OF JURY TRIAL. EACH OF BORROWER, AGENT
AND THE LENDERS HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, THE
FACILITY OR THE ACTIONS OF AGENT OR ANY LENDER IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
SECTION 7.14. MERGER. This Agreement, the Loan Documents and
the Exhibits attached hereto and thereto set forth the full and complete
understanding of the parties with respect to the Facility. The terms and
provisions of any other agreement between the parties with respect to the
Facility, written or oral, are superseded by this Agreement, the Loan Documents
and the Exhibits attached hereto and thereto in their entirety and shall be of
no further force or effect.
SECTION 7.15. ASSIGNMENT BY LENDERS. Each Lender may,
without obtaining the consent of Borrower, (i) re-book its portion of the
Facility with any domestic or foreign lending office, (ii) assign all or any
part of its rights and obligations hereunder and under any Note to any other
party and/or (iii) sell to one or more banks, persons or other entities,
participating interests in or to its rights under any Note or any other
interest hereunder; provided, that (A) no action set forth in this Section 7.15
above by any Lender results in any increased costs to Borrower pursuant to
Section 2.6, 2.7, 2.8 or 2.10(b) and (B) prior to the occurrence of an Event of
Default, no Lender shall assign all or any part of its rights hereunder or
under any Note to any Person other than an Eligible Assignee. Each Lender may,
in connection with any such participation or sale, disclose to any participant
or assignee or proposed participant or assignee that is an Eligible Assignee,
any information relating to Borrower furnished to such Lender by or on behalf
of Borrower.
SECTION 7.16. RIGHT OF SET-OFF. Subject to Section 6.2(e),
upon the occurrence and during the continuance of any Event of Default, Agent
is hereby authorized at
<PAGE> 62
55
any time and from time to time, to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final, but excluding any accounts expressly designated to be
owned by Borrower in trust for unrelated parties), including, without
limitation, the Facility Escrow Account, the Operating Account and the
Replacement Reserve Account at any time held and other indebtedness at any time
owing by Agent to or for the credit or the account of Borrower against any and
all of the obligations of Borrower now or hereafter existing under this
Agreement or any other Loan Document; provided, however, that unless Agent
shall have accelerated the Facility, prior to Conference Substantial
Completion, Agent shall set off and apply amounts from the Facility Escrow
Account only to pay the costs of curing any default by, or enforcing the
obligations of, Borrower under the Loan Documents. Agent shall give Borrower
prompt notice of any such set-off and application; provided, however, that the
failure to give such notice shall not affect the validity of such set-off and
application.
SECTION 7.17. LIMITATION ON LIABILITY. (a) Subject to the
limitations and exceptions contained in subsections (b), (c) and (d) below, no
Exculpated Party shall have any personal liability under this Agreement or any
of the Loan Documents, and no deficiency judgment shall be sought or enforced
against any Exculpated Party. Recourse of Agent shall, subject to the
limitations and exceptions contained in subsections (b), (c) and (d) below, be
limited to, and satisfied exclusively from, the assets of the Borrower,
including but not limited to the collateral and security provided under the
Loan Documents.
(b) A judgment may be sought, obtained, entered and
enforced against an Exculpated Party to the extent necessary to preserve or
enforce the rights and remedies of Agent in, to or against the collateral and
other security provided under the Loan Documents, and nothing contained in this
Section shall be construed to limit, prejudice or impair the rights of Agent to
enforce its rights and remedies against any property mortgaged, pledged,
encumbered, assigned or granted to secure payment or performance under the Loan
Documents, so long as no deficiency judgment or any judgment in the nature of a
deficiency judgment or for money damages is obtained or enforced against an
Exculpated Party.
(c) Each General Partner shall be personally liable to
Agent and the Lenders for their respective damages (including loss of principal
or interest and the Lenders' attorneys' fees and collection costs) arising out
of any of the following circumstances:
(i) fraud of Borrower or either General Partner;
(ii) the making by Borrower or either General Partner of
any representation or warranty that was incorrect or untrue in any
material respect at the time made; and
(iii) any misappropriation or misapplication of Rents and
Profits, security deposits, insurance proceeds or condemnation awards
relating to the Property or other collateral security provided under
the Loan Documents in violation of the Loan
<PAGE> 63
56
Documents or any Distribution to a partner of Borrower in violation of
the Loan Documents.
(d) Nothing contained herein shall affect any liability
of any party under the Environmental Indemnity.
SECTION 7.18. INDEMNITY. Subject to Section 7.17, Borrower
agrees to indemnify and hold harmless Agent, the Lenders and their respective
partners, officers, directors, employees, agents and shareholders (the
"INDEMNIFIED PARTIES") from and against any and all losses, damages, claims,
costs and expenses (including reasonable attorneys' fees and disbursements)
which may be imposed on, incurred by or asserted against any of the Indemnified
Parties in connection with any transaction or matter at any time arising
(including, without limitation, such time as BRHC was the owner of the
Property) and in any way connected with the Property, the Facility, the
Original Loan Documents or the Loan Documents, including, without limitation,
(i) the grant by Borrower or BRHC (as predecessor in title to Borrower) to
Agent of security title to the Property pursuant to the Mortgage, (ii) all
claims and demands whatsoever that may be asserted against any Indemnified
Parties by reason of any alleged obligations or undertaking on Agent's part by
virtue of the Mortgage to collect the Rents and Profits or (iii) the exercise
by Agent of any of its rights pursuant to the Security Agreement, except, in
each case, to the extent any such loss, damage, claim, cost or expense is the
result of the willful misconduct or gross negligence of the Indemnified Party.
Any amount payable under this Section shall be deemed a demand obligation,
shall bear interest at the Default Rate and shall be secured by the Mortgage
and the Security Agreement.
SECTION 7.19. CONFIDENTIALITY. Neither Agent nor any Lender
shall disclose any Borrower Confidential Information to any Person without the
consent of Borrower, other than (i) to Agent's or such Lender's Affiliates and
their officers, directors, employees, agents and advisors involved in
originating, administering or servicing the Facility and to actual or
prospective assignees and participants, and then only on a confidential basis
(and, in the case of participants and prospective assignees, only after
receiving their written agreement to preserve such confidentiality), (ii) as
required by any law, rule or regulation or judicial process and (iii) as
requested or required by any state, federal or foreign authority or examiner
regulating banks or banking.
SECTION 7.20. LENDER EXCULPATION. AGENT AND THE LENDERS
SHALL HAVE NO LIABILITY HEREUNDER FOR ANY CONSEQUENTIAL, SPECIAL, PUNITIVE OR
INDIRECT DAMAGES UNLESS FOUND BY A COURT OF COMPETENT JURISDICTION TO HAVE
ACTED HEREUNDER IN BAD FAITH OR IN A GROSSLY NEGLIGENT MANNER.
<PAGE> 64
57
ARTICLE 8
AGENT
SECTION 8.1. AUTHORIZATION AND ACTION. Each Lender
irrevocably appoints and authorizes Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement and the other Loan
Documents as are delegated to Agent by the terms hereof and thereof, together
with all such powers as are reasonably incidental thereto. Borrower may rely,
without inquiry, on the authority of Agent to act on behalf of Lender until
Borrower receives notice of the appointment of a successor Agent.
SECTION 8.2. SUCCESSOR AGENT. For purposes of this Agreement
and all the other Loan Documents to which Agent is a party, subject to the
appointment and acceptance of another Lender (approved by the Required Lenders
and Borrower, if applicable) as successor Agent, Agent may resign as such at
any time upon giving written notice thereof to the Lenders and Borrower. Agent
may be removed at any time upon the consent of the Required Lenders other than
Scotiabank, and a successor Agent approved by the Required Lenders shall
thereupon be immediately appointed by the Lenders. The Lenders shall promptly
notify Borrower of any removal of Scotiabank as Agent and the appointment of
any successor Agent. Upon any resignation or removal of Scotiabank or any
successor Agent as Agent, Scotiabank or such successor Agent, as applicable,
shall deliver to any successor Agent all documents, records or instruments in
its possession relating to it as Agent. Upon acceptance of any appointment as
Agent, the successor Agent shall thereupon succeed to all the rights, powers,
privileges and duties of the retiring Agent. After any Agent's resignation, the
provisions of this Article 8 shall continue in effect for its benefit in
respect of any actions taken or omitted by it while it was acting as Agent.
ARTICLE 9
COLLATERAL RELEASE PROVISIONS
SECTION 9.1. PARTIAL RELEASE OF COLLATERAL. In the event
Borrower desires to sell or otherwise convey any portion of the Real Property,
including in connection with a determination by Borrower to (a) convert the
Villas and/or certain other Real Property to a condominium or time-sharing form
of ownership and to sell interests therein or (b) redesign the main complex
golf course and, in connection therewith, create, develop and sell residential
lots thereon, Borrower may request a release from the lien of the Mortgage on
the applicable portion of the Real Property. Upon receipt of such request,
Agent shall execute and deliver such documents and other instruments in
recordable form as shall be necessary to release the applicable parcels from
the lien of the Mortgage; provided, that each of the following conditions shall
have been satisfied:
<PAGE> 65
58
(i) No Event of Default shall have occurred and be
continuing;
(ii) Agent shall have approved all documents and
agreements relating thereto, including any condominium declaration,
reciprocal easement agreement, management agreement or other agreement
relating thereto;
(iii) Borrower has effected a valid subdivision of the
applicable parcels from the Land and has otherwise complied with, and
such development shall comply with, all Legal Requirements;
(iv) Borrower has provided Agent with such endorsements to
the Title Policy as Agent shall request insuring the Lenders' interest
in the Mortgage with respect to the remaining Real Property as a
valid, enforceable and subsisting first priority lien on such Real
Property, subject only to the Permitted Exceptions;
(v) Borrower shall have provided Agent with satisfactory
evidence that the parcels to be released are or will be assessed and
taxed separately from the remaining Property upon recording of the
transferring deed;
(vi) In the case of a release of Real Property currently
constituting a portion of the main complex golf course, Borrower shall
have delivered evidence satisfactory to the Agent that (A) the
redesign of the golf course will not materially adversely affect the
value and utility of the main complex golf course as an amenity to the
Real Property and (B) such redesign shall not result in a Material
Adverse Change either upon completion or during any period of redesign
or reconstruction, in each case, as reasonably determined by Agent;
(vii) Borrower shall have provided Agent with such surveys,
drawings, plans, specifications, certificates, proposed easements,
consents, agreements and opinions of counsel acceptable to Agent and
other evidence as Agent may reasonably request or require to enable
Agent to determine that the foregoing conditions have been satisfied;
(viii) Borrower shall have paid all of Agent's costs and
expenses (including the reasonable fees and expenses of all attorneys
and other consultants retained by Agent) incurred in connection with
Agent's review of such request for release (whether or not such
request is approved) and in connection with the preparation,
negotiation, execution and delivery of all documents, instruments and
agreements relating thereto;
(ix) Borrower shall pay to Agent the Net Sales Proceeds as
a prepayment of the Facility to the extent outstanding and then to the
Subordinate Facility; and
(x) Such release shall not cause a Material Adverse
Change.
<PAGE> 66
59
Notwithstanding paragraph (ix) above, there shall be no
release price payable to Agent with respect to a release of a portion of the
Real Property if (A) the Net Sale Proceeds realized from the sale or other
disposition of such assets are deposited into a segregated account that is
pledged to, and under the sole dominion and control of Agent (the "SPECIAL
PROJECT ACCOUNT") for application solely in accordance with a capital
expenditure plan (a "CAPITAL EXPENDITURE PLAN") (including any nonrecourse
project debt or other debt or equity financing which Borrower proposes to
employ to finance a portion of such capital expenditures) that has been
approved by Agent in its sole and absolute discretion and (B) Agent reasonably
determines that, upon completion of the capital improvements to be funded by
such amounts, there will be adequate Available Cash Flow in the absence of such
released Real Property to make payment of Total Debt Service and Operating
Expenses and to fund the Replacement Reserve Account and Tax Reserve Account in
accordance with the terms and provisions of the Security Agreement. Upon any
such deposit of Net Sales Proceeds into the Special Project Account, Borrower
shall execute and deliver such amendments and modifications to the Security
Agreement as Agent requests in connection with the depositing of Net Sales
Proceeds into, and the subsequent disbursement of such amounts from, Special
Project Account.
* * *
[SIGNATURES BEGIN ON NEXT PAGE]
<PAGE> 67
IN WITNESS WHEREOF, Borrower, Agent and the Lenders have
executed this Agreement as of the date first above written.
BORROWER:
PANTHERS BRHC LIMITED, a
Florida Limited partnership
By: Panthers BRGP Corporation, a Florida
corporation, Managing General Partner
By:
--------------------------------------
Steven M. Dauria
Vice President
By: Boca Raton Hotel and Club Limited
Partnership, a Florida limited partnership,
a General Partner
By: BRMC, L.P., a Delaware limited
partnership, general partner
By: BRMC, Inc., a Delaware corporation,
general partner
By:
--------------------------------
Robert D. Hughes
Authorized Officer
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE> 68
AGENT:
THE BANK OF NOVA SCOTIA,
NEW YORK AGENCY
By:
-------------------------------------------
Mel Mandelbaum
Vice President
LENDERS:
THE BANK OF NOVA SCOTIA,
NEW YORK AGENCY
By:
-------------------------------------------
Mel Mandelbaum
Vice President
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE> 69
BANKERS TRUST COMPANY
By:
-------------------------------------------
Name:
Title:
THE ROYAL BANK OF SCOTLAND PLC
By:
-------------------------------------------
Name:
Title:
BANKBOSTON, N. A. (formerly known as The First
National Bank of Boston)
By:
-------------------------------------------
Name:
Title:
THE INTERNATIONAL COMMERCIAL BANK OF CHINA,
NEW YORK AGENCY
By:
-------------------------------------------
Name:
Title:
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE> 70
KREDIETBANK N. V.
By:
-------------------------------------------
Name:
Title:
By:
-------------------------------------------
Name:
Title:
<PAGE> 71
Schedule 1
Quarterly Facility Amortization
<TABLE>
<CAPTION>
Quarterly Amortization Date Quarterly Amortization Amount
--------------------------- -----------------------------
<S> <C>
September 30, 1998 $750,000
December 31, 1998 $750,000
March 31, 1999 $750,000
June 30, 1999 $750,000
September 30, 1999 $1,250,000
December 31, 1999 $1,250,000
March 31, 2000 $1,250,000
June 30, 2000 $1,250,000
September 30, 2000 $1,750,000
December 31, 2000 $1,750,000
March 31, 2001 $1,750,000
June 30, 2001 $1,750,000
</TABLE>
<PAGE> 72
Schedule 2
[Intentionally omitted]
<PAGE> 73
Schedule 3
Litigation
[To follow]
<PAGE> 74
Exhibit A
Form of Amended and Restated Note
$_____________ As of June ___, 1997
New York, New York
FOR VALUE RECEIVED, the undersigned, PANTHERS BRHC LIMITED, a
Florida limited partnership ("BORROWER"), HEREBY PROMISES TO PAY to the order
of _______________ ("LENDER") the principal sum of ______________________
______________________________ ($__________) (the "PRINCIPAL AMOUNT"), which
amount constitutes a portion of the Facility (as defined in the Loan Agreement
(as hereinafter defined)) made by Lender to Borrower pursuant to the Loan
Agreement, in the manner provided in the Loan Agreement together with (i)
interest on any and all principal amounts remaining unpaid hereunder until said
principal amounts are paid in full, payable as provided in the Loan Agreement,
and (ii) any and all other amounts that may be due by Borrower to Lender in
connection with the Principal Amount in accordance with the Loan Documents.
Capitalized terms used in this Amended and Restated Note (this
"NOTE") and not otherwise defined are used as defined in that certain Amended
and Restated Loan Agreement, dated as of the date hereof, among Borrower, The
Bank of Nova Scotia, New York Agency, as agent ("AGENT") for itself, Lender and
the other bank parties thereto (the "Loan Agreement").
Both principal and interest are payable in lawful money of the
United States of America to the Lender not later than 11:00 a.m., New York City
Time, at the place set forth in the Loan Agreement, in immediately available
funds.
This Note is a renewal of the indebtedness outstanding under a
certain Senior Note, dated as of August 22, 1996, made by Boca Raton Hotel and
Club Limited Partnership payable to the order of Lender. All Florida
documentary stamp taxes and intangible taxes on the indebtedness evidenced by
said Senior Note were previously paid and affixed to the mortgages and future
advance notices identified in that certain Note Consolidation and Renewal
Agreement, Mortgage Extension Agreement, Mortgage Spreader Agreement and
Mortgage Modification (Sixth) Agreement, dated as of August 22, 1996, recorded
in the Public Records of Palm Beach County, Florida. This Note evidences a
"refinancing" exempt from further intangible taxes under Fla. Stat. ss.
199.145(4) because the amount of this Note does not exceed the amount
outstanding under the Senior Note renewed hereby. This Note is exempt from
Florida documentary stamp taxes under Fla. Stat. ss. 201.08 because it has been
executed and delivered by the Borrower outside the State of Florida and because
no assumption agreement or other mortgage modification has been recorded in
said Public Records in connection herewith.
<PAGE> 75
A-2
This Note is entitled to the benefits of the Loan Agreement
and is secured by, inter alia, the Mortgage and the Security Agreement. The
Loan Agreement, the Mortgage and the Security Agreement are incorporated herein
by reference and shall be deemed a part of this Note as if set forth in full
herein.
The Principal Amount, together with all interest accrued and
unpaid thereon and all other sums then due and payable to Lender under this
Note, shall be due and payable in full on the Maturity Date; provided, however,
that prepayment of all or a portion of the Facility may be required under
certain circumstances as provided in the Loan Agreement; and provided, further,
that upon the occurrence of an Event of Default, at the option of Agent, the
entire unpaid balance of this Note, together with all interest accrued and
unpaid thereon and all other sums then due and payable hereunder, may become
immediately due and payable in the manner, upon the conditions, and with the
effect provided in, the Loan Agreement, and the rights and remedies provided in
the Loan Agreement, the Mortgage and the Security Agreement shall apply.
This Note may be prepaid, in whole or in part, under the
circumstances set forth in, and otherwise in accordance with and subject to the
terms of, the Loan Agreement, and any such prepayment shall be applied in the
manner provided in the Loan Agreement.
Borrower, for itself and its successors and assigns and any
endorsers of this Note from time to time, hereby waives presentment for
payment, demand, notice of dishonor, protest, notice of protest and any other
notice Borrower may lawfully waive and any and all lack of diligence or delays
in the collection or enforcement hereof, and waives and renounces all rights to
the benefits of any statute of limitations and any moratorium, appraisement,
exemption and homestead rights now provided or which may hereafter be provided
by any federal or state statute, including, but not limited to, exemptions
provided or allowed under the Bankruptcy Code, both as to itself and as to all
of its property, whether real or personal, against the enforcement and
collection of the obligations evidenced by this Note and any and all
extensions, renewals and modifications hereof.
No failure on the part of Lender to exercise, and no delay in
exercising, and no course of dealing with respect to, any right, power or
privilege under this Note shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege under this Note
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.
Borrower waives trial by jury in any action brought on, under
or by virtue of this Note.
The provisions of this Note shall be governed by and
interpreted in accordance with the laws of the State of New York applicable to
agreements made and to be performed within such State.
<PAGE> 76
A-3
Any notice, request, demand, consent, approval or other
communication which Borrower or Lender is obligated or may elect to give
hereunder shall be given in the form and in the manner set forth in the Loan
Agreement for the giving of notices thereunder and shall be deemed given for
the purposes hereof at such time as the same, if given under the Loan
Agreement, would be deemed given.
The provisions of this Note shall bind Borrower and its
successors and assigns and inure to the benefit of Lender and Borrower and
their respective successors and assigns. Without limiting the generality of
the foregoing, it is expressly agreed that for so long as the Property (as
defined in the Mortgage) or any portion thereof remains subject to the lien of
the Mortgage, the obligations assumed hereunder by Borrower shall be binding
upon all future owners of the interest of Borrower in the Property.
This Note may not be changed, amended, modified or discharged
orally, but only by an instrument signed by Borrower and Lender, and compliance
with the terms of this Note may be waived only by an instrument in writing
signed by the party waiving compliance.
This Note may not be assigned except as permitted by the Loan
Agreement.
If Borrower shall fail to make any payment due under this Note
after the notice and within the grace periods, if any, provided for in the Loan
Agreement, such failure shall constitute an Event of Default hereunder. The
Loan Agreement, the Mortgage and the Security Agreement specify other events
and circumstances which would constitute Events of Default hereunder and
thereunder.
Subject to the limitations and exceptions set forth below, no
Exculpated Party shall have any personal liability under this Agreement or any
of the Loan Documents, and no deficiency judgment shall be sought or enforced
against any Exculpated Party. Recourse of Agent shall, subject to the
limitations and exceptions set forth below, be limited to, and satisfied
exclusively from, the assets of the Borrower, including but not limited to the
collateral and security provided under the Loan Documents.
A judgment may be sought, obtained, entered and enforced
against an Exculpated Party to the extent necessary to preserve or enforce the
rights and remedies of Agent in, to or against the collateral and other
security provided under the Loan Documents, and nothing contained herein shall
be construed to limit, prejudice or impair the rights of Agent to enforce its
rights and remedies against any property mortgaged, pledged, encumbered,
assigned or granted to secure payment or performance under the Loan Documents,
so long as no deficiency judgment or any judgment in the nature of a deficiency
judgment or for money damages is obtained or enforced against an Exculpated
Party.
<PAGE> 77
A-4
Each General Partner shall be personally liable to Lender for
Lender's damages (including loss of principal or interest and Lender's
attorneys' fees and collection costs) arising out of any of the following
circumstances:
(i) fraud of Borrower or either General Partner;
(ii) the making by Borrower or either General Partner of
any representation or warranty that was incorrect or untrue in any
material respect at the time made; and
(iii) any misappropriation or misapplication of Rents and
Profits, security deposits, insurance proceeds or condemnation awards
relating to the Property or other collateral security provided under
the Loan Documents in violation of the Loan Documents or any
Distribution to a partner of Borrower in violation of the Loan
Documents.
Nothing contained herein shall affect any liability of any
party under the Environmental Indemnity.
* * *
[SIGNATURES ON NEXT PAGE]
<PAGE> 78
A-5
IN WITNESS WHEREOF, Borrower has executed this Note on the
date first set forth above.
BORROWER:
PANTHERS BRHC LIMITED, a
Florida Limited partnership
By: Panthers BRGP Corporation, a Florida
corporation, Managing General Partner
By: /s/ Steven M. Dauria
-------------------------------------
Steven M. Dauria
Vice President
By: Boca Raton Hotel and Club Limited
Partnership, a Florida limited partnership,
a General Partner
By: BRMC, L.P., a Delaware limited partnership,
general partner
By: BRMC, Inc., a Delaware corporation,
general partner
By: /s/ Robert D. Hughes
---------------------------------
Robert D. Hughes
Chief Executive Officer
<PAGE> 79
Exhibit B
[Intentionally Omitted]
<PAGE> 80
Exhibit C
Description of Conference Plans and Specifications
See Attachment "E" to the Conference Construction Contract
which is incorporated herein by this reference.
<PAGE> 81
Exhibit D
Construction Budget
[To be attached]
<PAGE> 82
Exhibit E
Form of Request for Conference Construction Disbursement
Panthers BRHC Limited ("BORROWER"), the borrower under that
certain Amended and Restated Loan Agreement (the "AGREEMENT"; capitalized terms
not otherwise defined herein have the meanings given in the Agreement), dated
as of June __, 1997 and entered into among Borrower, The Bank of Nova Scotia,
as agent for the Lenders, and the Lenders, hereby certifies to and requests of
Agent as follows:
(a) Construction Costs. Attached hereto as Schedule 1 is a
true and correct summary of the Conference Construction Disbursements
previously made to Borrower and the amount of the Conference
Construction Disbursement requested hereby for Conference Construction
Costs.
(b) Request to Agent for Disbursement. Borrower hereby
requests Agent to direct the Facility Depositary to make a Conference
Construction Disbursement in the amount of $____________.
(c) Representations. Borrower hereby represents to the
Lender and Starwood that (i) all Conference Construction Costs set
forth in previous Requests for Conference Construction Disbursement
have been paid in full, (ii) all Conference Construction Costs
incurred to date and set forth in this Request for Conference
Construction Disbursement, have been or will be paid in full out of
the Conference Construction Disbursement requested hereby, (iii) the
Conference Construction Disbursement requested hereby shall be used
solely for reimbursable Conference Construction Costs in accordance
with the Loan Documents, (iv) the representations and warranties set
forth in clauses (a) through (q) (except for (j)) of Section 4.1 of
the Loan Agreement) are true and correct in all material respects and
(v) no Default or Event of Default exists.
BORROWER:
PANTHERS BRHC LIMITED, a
Florida Limited partnership
By: Panthers BRGP Corporation, a Florida
corporation, Managing General Partner
By:
------------------------------------
Steven M. Dauria
Vice President
<PAGE> 83
E-2
By: Boca Raton Hotel and Club Limited
Partnership, a Florida limited
partnership, a General Partner
By: BRMC, L.P., a Delaware limited
partnership, general partner
By: BRMC, Inc., a Delaware corporation,
general partner
By: /s/ Robert D. Hughes
---------------------------
Robert D. Hughes
Authorized Officer
<PAGE> 84
Schedule 1 to Exhibit E
Conference Construction Costs
BILLING PERIOD
From: _________
Thru: _________
CONTRACTOR'S APPLICATION FOR PAYMENT
<TABLE>
<S> <C>
1. Original Contract Sum $
--------
2. Net Change by Change Orders $
--------
3. Contract Sum to Date (Line 1 & 2) $
--------
4. Total Completed & Stored to Date $
--------
5. Retainage Held by Owner $
--------
6. Total Earned Less Retainage $
--------
7. Less Previous Payments $
--------
8. Current Payment Due $
--------
9. Balance to Finish, Including Retainage $
--------
</TABLE>
<TABLE>
<CAPTION>
CHANGE ORDER SUMMARY ADDITIONS DEDUCTIONS NET CHANGE
<S> <C> <C> <C>
Change Orders Approved Previous Month
Time Extension
Total Change Order
</TABLE>
Time Extension to Date:
<PAGE> 85
Exhibit F
Form of Inspection Certificate
Reference is made to that certain Amended and Restated Loan
Agreement (the "AGREEMENT"; capitalized terms not otherwise defined herein have
the meanings given in the Agreement), dated as of _______ __, 1997, among
Panthers BRHC Limited ("BORROWER"), The Bank of Nova Scotia, New York Agency,
as agent for the Lenders, and the Lenders.
___________________ ("LENDER CONSTRUCTION REPRESENTATIVE")
hereby certifies to the Lenders on the basis of an inspection of the Conference
Improvements made by Inspecting Engineer on _______________, 19__ as follows:
(a) Lender Construction Representative estimates that, as
of the date of such inspection, _____% of the Conference Improvements
have been completed on the basis of work in place as part of the
Conference Improvements.
(b) The work in place as part of the Conference
Improvements as of the date of such inspection was completed
substantially in accordance with the Conference Plans and
Specifications therefor approved by the Lender Construction
Representative.
(c) The fair value of the Conference Construction Costs
actually incurred for work in place as part of the Conference
Improvements is $_________.
(d) Lender Construction Representative estimates that the
sum necessary to pay for all Conference Construction Costs to be
incurred after the date hereof in completing the Conference
Improvements is $_______________.
(e) Lender Construction Representative estimates that,
subject to Force Majeure, Conference Substantial Completion shall
occur on or about _____________________, 19__.
Dated:___________________, 19__ LENDER CONSTRUCTION REPRESENTATIVE
-------------------------------------
By:
----------------------------------
Name:
Title:
<PAGE> 86
Exhibit G
Form of Contractor's Certificate
BILLING PERIOD
From: _________
Thru: _________
CONTRACTOR'S APPLICATION FOR PAYMENT
<TABLE>
<S> <C>
1. Original Contract Sum $
--------
2. Net Change by Change Orders $
--------
3. Contract Sum to Date (Line 1 & 2) $
--------
4. Total Completed & Stored to Date $
--------
5. Retainage Held by Owner $
--------
6. Total Earned Less Retainage $
--------
7. Less Previous Payments $
--------
8. Current Payment Due $
--------
9. Balance to Finish, Including Retainage $
--------
</TABLE>
<TABLE>
<CAPTION>
CHANGE ORDER SUMMARY ADDITIONS DEDUCTIONS NET CHANGE
<S> <C> <C> <C>
Change Orders Approved Previous Month
Time Extension
Total Change Order
</TABLE>
Time Extension to Date:
THE UNDERSIGNED CONTRACTOR CERTIFIES TO THE BANK OF NOVA SCOTIA, NEW YORK
AGENCY, AS AGENT, THAT TO THE BEST OF THE CONTRACTOR'S KNOWLEDGE, INFORMATION
AND BELIEF THE WORK COVERED BY THIS APPLICATION FOR PAYMENT HAS BEEN COMPLETED
IN ACCORDANCE WITH ITS CONTRACT WITH PANTHERS BRHC LIMITED, THAT ALL AMOUNTS
HAVE BEEN PAID BY THE CONTRACTOR FOR WORK FOR WHICH PREVIOUS CERTIFICATES FOR
PAYMENT WERE ISSUED AND PAYMENTS RECEIVED FROM THE OWNER, AND THAT THE CURRENT
PAYMENT SHOWN HEREIN IS NOW DUE.
FLUOR DANIEL, INC.
------------------------------------------
Name:
Title:
<PAGE> 87
Exhibit H
Form of Consent to Assignment of Agreement
THIS CONSENT AND AGREEMENT is given as of the __ day of _____,
1997, by ___________________ ("CONSENTING PARTY") to, and for the benefit of,
THE BANK OF NOVA SCOTIA, NEW YORK AGENCY, individually and as agent ("AGENT")
for itself and the Lenders (as defined in the Loan Agreement (as hereinafter
defined)).
The undersigned hereby consents to the assignment of that
certain [IDENTIFY CONTRACT], dated ______ __, 199_ (the "CONTRACT"), between
Consenting Party and Panthers BRHC Limited ("BORROWER"), pursuant to that
certain Amended and Restated Pledge, Assignment and Security Agreement (the
"ASSIGNMENT") from Borrower to Agent and hereby agrees with Agent and the
Lenders that:
(a) Upon the occurrence of an Event of Default under that
certain Amended and Restated Loan Agreement (as the same may, from time to
time, be amended, supplemented or otherwise modified, the "LOAN AGREEMENT"),
dated as of ______ __, 1997, among Borrower, Agent and the Lenders and the
acceleration of Borrower's obligations thereunder, the Lenders shall be
entitled to the performance by the undersigned of all of the undersigned's
obligations under, and to exercise any and all rights and remedies of, Borrower
under, or in connection with, the Contract; provided, however, that in no event
shall Consenting Party's obligations to the Lenders exceed those existing under
the Contract.
(b) Consenting Party will not, without providing Agent thirty
(30) days' prior, written notice, (i) cancel or terminate the Contract or
consent to or accept any cancellation or termination thereof, or (ii)
materially amend or otherwise modify the Contract; and
(c) The undersigned acknowledges the security interest of the
Lenders created by the Assignment.
IN WITNESS WHEREOF, the undersigned has caused this Consent to
be duly executed and delivered as of the date first above written.
[Consenting Party]
By:
-----------------------------
Name:
Title:
