<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 5, 1997
REGISTRATION STATEMENT NO. 333-30925
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
FLORIDA PANTHERS HOLDINGS, INC.
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<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... 7,680,135 $20 1/8 $154,562,717 $0(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. Includes 6,900,000 shares which were
previously registered on this Registration Statement on Form S-1. Also
includes 300,000 shares which were previously registered on a Registration
Statement on Form S-1 (333-23133) filed March 11, 1997 and 480,135 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.
(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 August 4, 1997,
pursuant to Rule 457(c) solely for the purpose of determining the amount of
the registration fee.
(3) For the reasons set forth in Footnote (1) above, no additional registration
fee is required to be paid herewith.
---------------------
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 AUGUST 5, 1997
PROSPECTUS
, 1997
6,780,135 SHARES
FLORIDA PANTHERS HOLDINGS, INC.
'[LOGO] CLASS A COMMON STOCK
Of the 6,780,135 shares of Class A Common Stock offered hereby 6,000,000
are being sold by Florida Panthers Holdings, Inc. and 780,135 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 August
4, 1997, the last reported sale price of the Class A Common Stock as reported by
the New York Stock Exchange was $20 1/8 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................ 780,135 shares
Total................................. 6,780,135 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 3,762,451 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 and regulations 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, regulations 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 and regulations 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 under the symbol "PAW." 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 August 4, 1997)...................... 247/8 $201/8
</TABLE>
On August 4, 1997, the last reported sale price of the Class A Common Stock
was $20 1/8. There were approximately 7,650 record holders of the Class A Common
Stock at August 4, 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 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, in addition to a minimum annual rent payment of
$300,000. During the Second Extended Term the annual rental payment (payable in
quarterly installments) will be equal to 4.25% of the annual gross operating
revenue, as defined in the Rahn Lease Agreement, and 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 management fee of
approximately $500,000, payable in monthly installments, and it requires Pier 66
Management to set aside cash from Pier 66 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 4.0% of
Pier 66's gross revenues each month during the term of the Pier 66 Management
Agreement.
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, it provides for an annual 2.0%
management fee, payable in monthly installments 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 4.0% 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 environmental 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 and regulations 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
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<PAGE> 39
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 Assessments") have
been obtained for the real property on which each of the Resort Facilities is
located. Phase I assessments are intended to identify existing, potential and
suspected environmental contamination and regulatory compliance concerns, and
generally include 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 assessment generally
does not include invasive procedures, such as soil sampling or ground water
analysis.
The Phase I Assessments 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
material liability or concern. Nevertheless environmental assessments cannot
provide full and complete knowledge of environmental conditions and compliance
matters. Therefore, no assurances can be given that material environmental
liabilities or compliance concerns do not exist or that there are no material
environmental liabilities or compliance concerns of which the Company is
unaware. 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 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
40
<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 4, 1997 and March 18, 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., South
Florida Chapter of NAMC, 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.
49
<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 STOCKHOLDERS
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. The following table does not include shares
of Class A Common Stock which directors and executive officers may purchase in
the Offering. See "Underwriting."
<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 August 4, 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 August 4, 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.
51
<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
Enide B. Allison(3)............................... 17,963(6) 7,500 10,463(6) *
Sherrell J. Aston, M.D.(3)........................ 8,982(5) 7,567 1,415(5) *
Mark S. Bazrod(3)................................. 17,963(6) 15,133 2,830(6) *
Gloria R. Bleck(3)................................ 8,982(5) 7,567 1,415(5) *
Donald B. Brout and Rose Marie Burkhardt, as Joint
Tenants(3)...................................... 8,982(5) 7,567 1,415(5) *
SunTrust Bank, South Florida, N.A., and Burl F.
George, as successor co-trustees under Agreement
with John G. Bull FBO Constance TAM dated
12/17/93 Irrevocable(3)......................... 8,982(5) 7,567 1,415(5) *
SunTrust Bank, South Florida, N.A., and Burl F.
George, as successor co-trustees under Agreement
with John G. Bull FBO Patricia TAR dated
12/17/93 Irrevocable(3)......................... 8,982(5) 7,567 1,415(5) *
Richard S. Coons(3)............................... 10,397(6) 7,567 2,830(6) *
David C. Copley Trust UA 12/16/83(3).............. 17,963(6) 15,133 2,830(6) *
Helen K. Copley Revocable Trust UA 12/7/83(3)..... 35,925(7) 30,265 5,660(7) *
Equity Resource Fund VIII, a Massachusetts
Partnership(3).................................. 8,982(5) 7,567 1,415(5) *
Equity Resource Fund X Limited Partnership(3)..... 8,982(5) 7,567 1,415(5) *
Gerald B. Evans & Ruby F. Evans, held as Community
Property(3)..................................... 8,982(5) 7,567 1,415(5) *
Neil J. Feola(3).................................. 17,963(6) 15,133 2,830(6) *
Nancy Firestone Kuehn, Executrix of the Estate of
Albert D. Firestone(3).......................... 17,963(6) 15,133 2,830(6) *
The Jill Fox Memorial Fund, Inc.(3)............... 8,982(5) 7,567 1,415(5) *
Sheldon E. Friedman and Ellen G. Friedman, as
Joint Tenants(3)................................ 8,982(5) 7,567 1,415(5) *
Michael Futerman(3)............................... 8,982(5) 7,567 1,415(5) *
A. Hamilton Gardner(3)............................ 10,397(6) 7,000 3,397(6) *
Paul W. Gikas, M.D. and L. Suzanne Gikas, as Joint
Tenants(3)...................................... 8,982(5) 7,567 1,415(5) *
Marvin Goldberg, M.D.(3).......................... 8,982(5) 7,567 1,415(5) *
Sherman Harmelin(3)............................... 8,982(5) 7,567 1,415(5) *
Patrick B. Hasburgh(3)............................ 8,982(5) 7,567 1,415(5) *
John L. Hauer(3).................................. 17,963(6) 15,133 2,830(6) *
Hoffman Investment Group(3)....................... 8,982(5) 7,567 1,415(5) *
Thomas J. Jones, Jr.(3)........................... 8,982(5) 7,567 1,415(5) *
Ralph and Alice Kelmon, and Norman and Jean Moore,
as Joint Tenants(3)............................. 8,982(5) 7,400 1,582(5) *
</TABLE>
52
<PAGE> 56
<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>
Irwin Laufman(3).................................. 8,982(5) 7,567 1,415(5) *
John E. Leek, Jr.(3).............................. 17,963(6) 10,452 7,511(6) *
Benjamin Lobel(3)................................. 8,982(5) 7,567 1,415(5) *
Carmen Lopez(3)................................... 4,492(4) 3,784 708(4) *
F.H. Nelson Lopez, M.D.(3)........................ 4,492(4) 3,784 708(4) *
Philip S. Morse(3)................................ 17,963(6) 7,000 10,963(6) *
John P. O'Leary and Janice A. O'Leary, as Joint
Tenants(3)...................................... 8,982(5) 7,567 1,415(5) *
Lawrence Orenstein(3)............................. 8,982(5) 7,567 1,415(5) *
Alfred B. Pentony(3).............................. 10,397(6) 7,567 2,830(6) *
Robert J. Pitocchelli(3).......................... 8,982(5) 7,567 1,415(5) *
Dan Raymond Quisenberry(3)........................ 17,963(6) 15,133 2,830(6) *
Selma Rappaport(3)................................ 17,963(6) 15,133 2,830(6) *
Marcia Samuels(3)................................. 8,982(5) 7,567 1,415(5) *
Michael A. Sarche, M.D.(3)........................ 8,982(5) 7,567 1,415(5) *
Schaeffer Family Trust UA 2/3/83(3)............... 17,963(6) 15,133 2,830(6) *
Orrin M. Scheff, M.D. and Joanne K. Scheff, as
Joint Tenants(3)................................ 8,982(5) 7,567 1,415(5) *
James T. Smith, M.D.(3)........................... 6,614(6) 3,784 2,830(6) *
William B. Stiller(3)............................. 8,982(5) 3,800 5,182(5) *
Robert N. Thurston(3)............................. 17,963(6) 15,133 2,830(6) *
Estate of James Tucker(3)......................... 8,982(5) 7,567 1,415(5) *
Charles J. Voelker(3)............................. 10,397(6) 7,567 2,830(6) *
Tim L. Watkins and Victoria A. Watkins, as Joint
Tenants(3)...................................... 17,963(6) 15,133 2,830(6) *
Jerome A. Wensinger, M.D.(3)...................... 8,982(5) 7,567 1,415(5) *
Raymond R. Wernig(3).............................. 3,307(5) 1,892 1,415(5) *
Robert George Wilder(3)........................... 8,982(5) 7,567 1,415(5) *
Duane G. Wombolt, M.D.(3)......................... 8,982(5) 7,567 1,415(5) *
--------- ------- -------
1,580,396 780,135 800,261
========= ======= =======
</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.
(4) Includes 707.50 shares of Class A Common Stock underlying a portion of the
total warrants (the "Warrants") which were issued in connection with the
Company's acquisition of Boca Resort. The Warrants are exercisable at $29.01
per share. 50% of the Warrants will expire on December 31, 1998 and the
remaining 50% of the Warrants will expire on December 31, 1999.
(5) Includes 1,415 shares of Class A Common Stock underlying a portion of the
Warrants.
(6) Includes 2,830 shares of Class A Common Stock underlying a portion of the
Warrants.
(7) Includes 5,660 shares of Class A Common Stock underlying a portion of the
Warrants.
53
<PAGE> 57
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 August 4, 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
54
<PAGE> 58
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
55
<PAGE> 59
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.
56
<PAGE> 60
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............................................. 6,780,135
==========
</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
57
<PAGE> 61
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.
The Company currently anticipates that up to 10% of the shares of Class A
Common Stock to be sold in the Offering may be sold to certain affiliates of the
Company, including Mr. Huizenga. The price of such shares to such persons will
be the Offering price set forth on the cover of this Prospectus. The number of
shares available to the general public will be reduced to the extent such
persons purchase shares.
58
<PAGE> 62
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.
59
<PAGE> 63
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> 64
<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> 65
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> 66
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> 67
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> 68
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> 69
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> 70
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> 71
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> 72
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> 73
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> 74
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> 75
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> 76
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> 77
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> 78
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> 79
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> 80
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> 81
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> 82
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> 83
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> 84
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> 85
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> 86
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> 87
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> 88
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> 89
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> 90
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> 91
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> 92
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> 93
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> 94
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> 95
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> 96
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> 97
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> 98
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> 99
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> 100
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> 101
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> 102
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> 103
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> 104
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> 105
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> 106
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> 107
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> 108
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> 109
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> 110
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> 111
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> 112
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> 113
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> 114
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> 115
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> 116
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 Panthers Holdings, 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> 117
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> 118
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> 119
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> 120
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> 121
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> 122
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> 123
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> 124
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> 125
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> 126
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> 127
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> 128
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> 129
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> 130
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> 131
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> 132
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> 133
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> 134
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> 135
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> 136
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
</TABLE>
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
========
- ---------------
(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> 137
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> 138
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> <S> <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> 139
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> 140
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> 141
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> 142
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> 143
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> 144
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> 145
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> 146
======================================================
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............. 54
Underwriting............................. 57
Legal Matters............................ 59
Experts.................................. 59
Additional Information................... 59
Index to Financial Statements............ F-1
</TABLE>
======================================================
======================================================
6,780,135 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> 147
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> 148
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> 149
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> 150
<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
***** 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> 151
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Fort
Lauderdale, State of Florida, on the 4th day of August, 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 August 4,
- ----------------------------------------------------- (Principal Executive Officer) 1997
H. Wayne Huizenga
* Vice Chairman August 4,
- ----------------------------------------------------- 1997
Richard C. Rochon
* President and Director August 4,
- ----------------------------------------------------- 1997
Richard H. Evans
* President of Florida Panthers August 4,
- ----------------------------------------------------- Hockey Club, Inc. and 1997
William A. Torrey Director
/s/ WILLIAM M. PIERCE Senior Vice President and Chief August 4,
- ----------------------------------------------------- Financial Officer (Principal 1997
William M. Pierce Financial Officer)
* Vice President and Corporate August 4,
- ----------------------------------------------------- Controller (Principal 1997
Steven M. Dauria Accounting Officer)
</TABLE>
II-5
<PAGE> 152
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Director August 4,
- ----------------------------------------------------- 1997
Steven R. Berrard
Director
- -----------------------------------------------------
Dennis J. Callaghan
Director
- -----------------------------------------------------
Michael S. Egan
Director
- -----------------------------------------------------
Chris Evert
* Director August 4,
- ----------------------------------------------------- 1997
Harris W. Hudson
Director
- -----------------------------------------------------
George D. Johnson, Jr.
*By: /s/ William M. Pierce
- -----------------------------------------------------
William M. Pierce
Attorney-in-Fact
</TABLE>
II-6
<PAGE> 153
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
***** Previously Filed
<PAGE> 1
6,780,165 SHARES
FLORIDA PANTHERS HOLDINGS, INC.
CLASS A COMMON STOCK
UNDERWRITING AGREEMENT
August __, 1997
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
ALLEN & COMPANY INCORPORATED
RAYMOND JAMES & ASSOCIATES, INC.
As representatives of the
several Underwriters
named in Schedule I hereto
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue, 16th Floor
New York, New York 10172
Dear Sirs:
Florida Panthers Holdings, Inc., a Florida corporation (the "COMPANY")
proposes to issue and sell to the several underwriters named in Schedule I
hereto (the "UNDERWRITERS"), and certain stockholders of the Company named in
Schedule II hereto (the "SELLING STOCKHOLDERS") severally propose to sell to the
several Underwriters, an aggregate of 6,780,165 shares of Class A Common Stock,
par value $.01 per share (the "FIRM SHARES"), of which 6,000,000 shares are to
be issued and sold by the Company and 780,165 are to be sold by the Selling
Stockholders, each Selling Stockholder selling the amount set forth opposite
such Selling Stockholder's name in Schedule II hereto. The Company also proposes
to issue and sell to the several Underwriters not more than 900,000 additional
shares of the Class A Common Stock, par value $.01 per share (the "ADDITIONAL
SHARES") if requested by the Underwriters as provided in Section 2 hereof. The
issuance by the Company and the sale to the Underwriters of the Firm Shares and
the Additional Shares is hereinafter referred to as the "OFFERING." The Firm
Shares and the Additional Shares are hereinafter collectively referred to as the
"SHARES." The Company and the Selling Stockholders are hereinafter sometimes
referred to as the "SELLERS."
1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has prepared and
filed with the Securities and Exchange Commission (the "COMMISSION") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the
<PAGE> 2
Commission thereunder (collectively, the "ACT"), a registration statement on
Form S-1 including a prospectus relating to the Shares. The registration
statement as amended at the time it became effective, including the information
(if any) deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A under the Act, is hereinafter referred to as
the "REGISTRATION STATEMENT"; and the prospectus in the form first used to
confirm sales of the Shares is hereinafter referred as the "PROSPECTUS." If the
Company has filed or is required pursuant to the terms hereof to file a
registration statement pursuant to Rule 462(b) under the Act registering
additional shares of Common Stock (a "Rule 462(b) Registration Statement"),
then, unless otherwise specified, any reference herein to the term "Registration
Statement" shall be deemed to include such Rule 462(b) Registration Statement.
2. AGREEMENTS TO SELL AND PURCHASE AND LOCK-UP AGREEMENTS. On the basis
of the representations and warranties contained in this Agreement, and subject
to its terms and conditions, (i) the Company agrees to issue and sell 6,000,000
Firm Shares, (ii) each Selling Stockholder agrees, severally and not jointly, to
sell the number of Firm Shares set forth opposite such Selling Stockholder's
name in Schedule II hereto, and (iii) each Underwriter agrees, severally and not
jointly, to purchase from each Seller at a price per Share of $___ (the
"PURCHASE PRICE") the number of Firm Shares (subject to such adjustments to
eliminate fractional shares as you may determine) that bears the same proportion
to the total number of Firm Shares to be sold by such Seller as set forth
opposite the name of such Underwriter in Schedule I hereto bears to the total
number of Firm Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to issue
and sell the Additional Shares and the Underwriters shall have the right to
purchase, severally and not jointly, up to 900,000 Additional Shares from the
Company at the Purchase Price. Additional Shares may be purchased solely for the
purpose of covering over-allotments made in connection with the offering of the
Firm Shares. The Underwriters may exercise their right to purchase Additional
Shares in whole or in part on one occasion only, by giving written notice
thereof to the Company within 30 days after the date of this Agreement. You
shall give any such notice on behalf of the Underwriters and such notice shall
specify the aggregate number of Additional Shares to be purchased pursuant to
such exercise and the date for payment and delivery thereof, which date shall be
a business day (i) no earlier than two business days after such notice has been
given (and, in any event, no earlier than the Closing Date (as hereinafter
defined)), and (ii) no later than ten business days after such notice has been
given. If any Additional Shares are to be purchased, each Underwriter, severally
and not jointly, agrees to purchase from the Company the number of Additional
Shares (subject to such adjustments to eliminate fractional shares as you may
determine) which bears the same proportion to the total number of Additional
Shares to be purchased from the Company as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I bears to the total number of
Firm Shares.
-2-
<PAGE> 3
The Company hereby agrees 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 Class A Common Stock or any
shares of the Company's Class B Common Stock (the Class A Common Stock and the
Class B Common Stock shall hereinafter be collectively referred to as the
"COMMON STOCK") or any securities convertible into or exercisable or
exchangeable for shares of the Common Stock or (ii) enter into any swap or other
arrangement that transfers all or a portion of the economic consequences
associated with the ownership of any shares of the 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),
except to the Underwriters pursuant to this Agreement, for a period of 180 days
after the date of the Prospectus without the prior written consent of Donaldson,
Lufkin & Jenrette Securities Corporation. Notwithstanding the foregoing, during
such period (i) the Company may issue shares of Common Stock in connection with
acquisitions; (ii) the Company may grant stock options pursuant to Company stock
option plans; (iii) the Company may issue shares of its Common Stock upon the
exercise of an option or warrant or the conversion of a security outstanding on
the date hereof; and (iv) shares of the Common Stock may be pledged as security
for obligations of the holders thereof. Except with respect to shares of Common
Stock which may be issued in acquisitions and registered under the Act in
connection therewith and shares of Common Stock underlying currently outstanding
stock options, the Company also agrees not to file any registration statement
with respect to any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock for a period of 180 days after the
date of the Prospectus without the prior written consent of Donaldson, Lufkin &
Jenrette Securities Corporation. The Company shall, prior to or concurrently
with the execution of this Agreement, deliver an agreement executed by (i) each
of the directors and officers of the Company and (ii) each stockholder listed on
Annex I hereto to the effect that such person will not, during the period
commencing on the date such person signs such agreement and ending 90 days after
the date of the Prospectus, without the prior written consent of Donaldson,
Lufkin & Jenrette Securities Corporation, (A) engage in any of the transactions
described in the first sentence of this paragraph or (B) make any demand for, or
exercise any right with respect to, the registration of any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock.
3. TERMS OF PUBLIC OFFERING. The Sellers are advised by you that the
Underwriters propose (i) to make a public offering of their respective portions
of the Shares as soon after the execution and delivery of this Agreement as in
your judgment is advisable and (ii) initially to offer the Shares upon the terms
set forth in the Prospectus.
4. DELIVERY AND PAYMENT. Delivery to the Underwriters of and payment
for the Firm Shares shall be made at 9:00 A.M., New York City time, on
____________, 1997 (the "CLOSING DATE"), at such place as you shall designate.
The Closing Date and the location of delivery of and payment for the Firm Shares
may be varied by agreement between you and the Company.
-3-
<PAGE> 4
Delivery to the Underwriters of and payment for any Additional Shares
to be purchased by the Underwriters shall be made at such place as you shall
designate at 9:00 A.M., New York City time, on the date specified in the
applicable exercise notice given by you pursuant to Section 2 (the "OPTION
CLOSING DATE"). The Option Closing Date and the location of delivery of and
payment for such Additional Shares may be varied by agreement between you and
the Company.
Certificates for the Shares shall be registered in such names and
issued in such denominations as you shall request in writing not later than two
full business days prior to the Closing Date or the Option Closing Date, as the
case may be. Such certificates shall be made available to you for inspection not
later than 9:30 A.M., New York City time, on the business day prior to the
Closing Date or the Option Closing Date, as the case may be. Certificates in
definitive form evidencing the Shares shall be delivered to you on the Closing
Date or the Option Closing Date, as the case may be, with any transfer taxes
thereon duly paid by the respective Sellers, for the respective accounts of the
several Underwriters, against payment to the Sellers of the Purchase Price
therefor, by wire transfer of Federal or other funds immediately available in
New York City.
5. AGREEMENTS OF THE COMPANY. The Company agrees with you:
(a) To use its best efforts to cause the Registration
Statement to become effective at the earliest possible time.
(b) To advise you promptly and, if requested by you, to
confirm such advice in writing, (i) when the Registration Statement has
become effective and when any post-effective amendment to it becomes
effective, (ii) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus
or for additional information, (iii) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration
Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction, or the initiation of any
proceeding for such purposes, (iv) if the Company is required to file a
Rule 462(b) Registration Statement after the effectiveness of this
Agreement, when the Rule 462(b) Registration Statement has become
effective, and (iv) of the happening of any event during the period
referred to in Section 5(e) below which makes any statement of a
material fact made in the Registration Statement or the Prospectus
untrue or which requires the making of any additions to or changes in
the Registration Statement or the Prospectus in order to make the
statements therein not misleading. If at any time the Commission shall
issue any stop order suspending the effectiveness of the Registration
Statement, the Company will make every reasonable effort to obtain the
withdrawal or lifting of such order at the earliest possible time.
-4-
<PAGE> 5
(c) To furnish to you, without charge, four signed copies of
the Registration Statement as first filed with the Commission and of
each amendment to it, including all exhibits, and to furnish to you and
each Underwriter designated by you such number of conformed copies of
the Registration Statement as so filed and of each amendment to it,
without exhibits, as you may reasonably request.
(d) To prepare the Prospectus in a form approved by you and to
file the Prospectus in such form with the Commission within the
applicable period specified in Rule 424(b) under the Act; not to file
any further amendment to the Registration Statement and not to make any
amendment or supplement to the Prospectus of which you shall not
previously have been advised or to which you shall reasonably object
after being so advised; and to prepare and file with the Commission,
promptly upon your reasonable request, any amendment to the
Registration Statement or amendment or supplement to the Prospectus
which may be necessary or advisable in connection with the distribution
of the Shares by you, and to use its best efforts to cause any such
amendment to the Registration Statement to become promptly effective.
(e) Prior to 10:00 A.M., New York City time, on the first
business day after the date of this Agreement, and from time to time
thereafter for such period as in the reasonable opinion of counsel for
the Underwriters a prospectus is required by law to be delivered in
connection with sales by an Underwriter or a dealer, to furnish in New
York City to each Underwriter and any dealer as many copies of the
Prospectus (and of any amendment or supplement to the Prospectus) as
such Underwriter or dealer may reasonably request.
(f) If during the period specified in Section 5(e) any event
shall occur or a condition shall exist as a result of which, in the
reasonable opinion of counsel for the Underwriters it becomes necessary
to amend or supplement the Prospectus in order to make the statements
therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if, in the reasonable
opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with any law, forthwith to prepare
and file with the Commission an appropriate amendment or supplement to
the Prospectus so that the statements in the Prospectus, as so amended
or supplemented, will not in the light of the circumstances when it is
so delivered, be misleading, or so that the Prospectus will comply with
law, and to furnish to each Underwriter and to any dealers as many
copies thereof as such Underwriter or dealers may reasonably request.
(g) Prior to any public offering of the Shares, to cooperate
with you and counsel for the Underwriters in connection with the
registration or qualification of the Shares for offer and sale by the
several Underwriters and
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<PAGE> 6
by dealers under the state securities or Blue Sky laws of such
jurisdictions as you may request, to continue such qualification in
effect so long as required for the original distribution of the Shares
and to file such consents to service of process or other documents as
may be necessary in order to effect such registration or qualification;
PROVIDED, HOWEVER, that the Company shall not be required in connection
therewith to register or qualify as a foreign corporation in any
jurisdiction in which it is not now so qualified or to take any action
that would subject it to general consent to service of process or
taxation other than as to matters and transactions relating to the
Prospectus, the Registration Statement, any preliminary prospectus or
the offering or sale of the Shares, in any jurisdiction in which it is
not now so subject.
(h) To mail and make generally available to its stockholders
as soon as reasonably practicable an earnings statement covering a
period of at least twelve months after the effective date of the
Registration Statement (but in no event commencing later than 90 days
after such date) which shall satisfy the provisions of Section 11(a) of
the Act, and to advise you in writing when such statement has been so
made available.
(i) During the period of five years after the date of this
Agreement, to mail as soon as reasonably practicable after the end of
each fiscal year to the record holders of its Common Stock a financial
report of the Company and its subsidiaries on a consolidated basis (and
a similar financial report of all unconsolidated subsidiaries, if any),
all such financial reports to include a consolidated balance sheet, a
consolidated statement of operations, a consolidated statement of cash
flows and a consolidated statement of stockholders' equity as of the
end of and for such fiscal year, together with comparable information
as of the end of and for the preceding year, certified by independent
certified public accountants.
(j) During the period referred to in paragraph (i), to furnish
to you as soon as available a copy of each report or other
communications of the Company mailed to the holders of Common Stock or
filed with the Commission and such other publicly available information
concerning the Company and its Subsidiaries (as hereinafter defined) as
you may reasonably request.
(k) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay all
costs, expenses, fees and taxes incident to the performance of Sellers'
obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Company's counsel, the Company's
accountants and any Selling Stockholder's counsel (in addition to the
Company's counsel) in connection with the registration and delivery of
the Shares under the Act and all other fees or
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<PAGE> 7
expenses in connection with the preparation, printing, filing and
distribution under the Act of the Registration Statement (including
financial statements and exhibits), of each preliminary prospectus (the
"PROSPECTUS") and all amendments and supplements to any of the
foregoing prior to or during the period specified in Section 5(e) to
the Underwriters and dealers, including the mailing and delivering of
copies thereof to the Underwriters and dealers in the quantities
specified herein, all costs and expenses related to the transfer and
delivery of the Shares to the Underwriters, including any transfer or
other taxes payable thereon, (ii) all costs and expenses related the
printing and delivery of the Prospectus and all amendments or
supplements to it during the period specified in Section 5(e) to the
Underwriters and dealers, (iii) the printing and delivery of this
Agreement, all other agreements, memoranda, correspondence and other
documents printed and delivered in connection with the offering of the
Shares (including in each case any disbursements of counsel for the
Underwriters relating to such printing and delivery), (iv) all expenses
in connection with the registration or qualification of the Shares for
offer and sale under the securities or Blue Sky laws of the several
states and all costs of printing or producing any Preliminary and
Supplemental Blue Sky Memoranda in connection therewith, if any,
(including in each case the filing fees and the fees and disbursements
of counsel for the Underwriters relating to such registration or
qualification and memoranda relating thereto), if required, (v) the
filing fees and disbursement of counsel in connection with the review
and clearance with the National Association of Securities Dealers, Inc.
in connection with the Offering, (vi) the listing of the Shares on the
New York Stock Exchange, Inc. ("NYSE"), (vii) furnishing such copies of
the Registration Statement, the Prospectus and all amendments and
supplements thereto as may be requested for use in connection with the
Offering or sale of the Shares by the Underwriters or by dealers to
whom Shares may be sold, (vii) the cost of printing certificates
representing the Shares, (viii) the costs and charges of any transfer
agent, registrar and/or depositary, and (ix) all other costs and
expenses incident to the performance of the obligations of the Company
and the Selling Stockholders hereunder which are not otherwise
specifically provided for in this Section.
(l) To use its best efforts to list, subject to notice of
issuance, the Shares on the NYSE and to maintain the inclusion of the
Class A Common Stock on the NYSE for a period of five years after the
effective date of the Registration Statement.
(m) If the Registration Statement at the time of the
effectiveness of this Agreement does not cover all of the Shares, to
file a Rule 462(b) Registration Statement with the Commission
registering the Shares not so covered in compliance with Rule 462(b) by
10:00 P.M., New York City time, on the date of this Agreement and to
pay to the Commission the filing fee for such Rule
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<PAGE> 8
462(b) Registration Statement at the time of the filing thereof or to
give irrevocable instructions for the payment of such fee pursuant to
Rule 111(b) under the Act.
(n) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by
the Company prior to the Closing Date or any Option Closing Date, as
the case may be, and to satisfy all conditions precedent to the
delivery of the Shares.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Underwriter that:
(a) The Registration Statement has become effective; (other
than any Rule 462(b) Registration Statement to be filed by the Company
after the effectiveness of this Agreement); any Rule 462(b)
Registration Statement filed after the effectiveness of this Agreement
will become effective no later than 10:00 P.M., New York City time, on
the date of this Agreement; and no stop order suspending the
effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or, to the best of the
Company's knowledge, threatened by the Commission.
(b) (i) Each document filed by the Company with the Commission
pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act") complied when so filed in all material respects with
the Exchange Act, (ii) the Registration Statement (other than any Rule
462(b) Registration Statement to be filed by the Company after the
effectiveness of this Agreement), when it became effective, did not
contain and, as amended, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, (iii) the Registration Statement (other than any Rule
462(b) Registration Statement to be filed by the Company after the
effectiveness of this Agreement) and the Prospectus comply and, as
amended or supplemented, if applicable, will comply in all material
respects with the Act, (iv) if the Company is required to file a Rule
462(b) Registration Statement after the effectiveness of this
Agreement, such Rule 462(b) Registration Statement and any amendments
thereto, when they become effective (A) will not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and (B) will comply in all material respects with the Act,
and (v) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and
warranties set forth in this paragraph (b) do not apply to
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<PAGE> 9
statements or omissions in the Registration Statement or the Prospectus
based upon information relating to any Underwriter furnished to the
Company in writing by such Underwriter through you expressly for use
therein.
(c) Each preliminary prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Act, and each
Registration Statement filed pursuant to Rule 462(b) under the Act, if
any, complied when so filed in all material respects with the Act; and
did not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(d) The Company and each of its subsidiaries, including those
subsidiaries organized as limited partnerships, (collectively, the
"SUBSIDIARIES") has been duly incorporated or organized, is validly
existing as a corporation or limited partnership, as the case may be,
in good standing under the laws of its jurisdiction of incorporation or
organization and has the corporate or partnership power and authority
to carry on its business as it is currently being conducted and to own,
lease and operate its properties, and each is duly qualified and is in
good standing as a foreign corporation or partnership authorized to do
business in each jurisdiction in which the nature of its business or
its ownership or leasing of property requires such qualification,
except where the failure to be so qualified would not have a material
adverse effect on the Company and the Subsidiaries, taken as a whole.
(e) All of the outstanding shares of capital stock of, or
other ownership interests in, each of the Company's subsidiaries have
been duly authorized and validly issued and are fully paid and
non-assessable, and with the exception of certain shares and ownership
interests which have been pledged to the Chase Manhattan Bank and
certain ownership interests which are subject to rights of the NHL to
the proceeds from any sale of Florida Panthers Hockey Club Ltd. under
the NHL Constitution and Bylaws, are owned by the Company, free and
clear of any security interest, claim, lien, encumbrance or adverse
interest of any nature.
(f) All the outstanding shares of capital stock of the Company
(including the Shares to be sold by the Selling Stockholders) have been
duly authorized and validly issued and are fully paid, non-assessable
and not subject to any preemptive or similar rights; and the Shares
have been duly authorized and, when issued and delivered to the
Underwriters, against payment therefor as provided by this Agreement,
will be validly issued, fully paid and non-assessable, and the issuance
of such Shares will not be subject to any preemptive or similar rights.
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<PAGE> 10
(g) The authorized capital stock of the Company, including the
Common Stock, conforms as to legal matters to the description thereof
contained in the Prospectus.
(h) Neither the Company nor the Subsidiaries is in violation
of its respective charter, by-laws or partnership agreement or in
default in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of
indebtedness or in any other agreement, indenture or instrument
material to the conduct of the business of the Company and the
Subsidiaries, taken as a whole, to which the Company or any of the
Subsidiaries is a party or by which it or any of the Subsidiaries or
their respective property is bound, including, but not limited to, the
NHL Lex Scripta.
(i) The execution, delivery and performance of this Agreement,
compliance by the Company with all the provisions hereof and the
consummation of the transactions contemplated hereby will not require
any consent, approval, authorization or other order of the National
Hockey League (the "NHL") or any court, regulatory body, administrative
agency or other governmental body (except as such may be required under
the securities or Blue Sky laws of the various states) and will not
conflict with or constitute a breach of any of the terms or provisions
of, or a default under, the charter, by-laws or partnership agreement
of the Company or any of the Subsidiaries, the NHL Lex Scripta or any
agreement, indenture or other instrument to which the Company or any of
the Subsidiaries is a party or by which it or any of the Subsidiaries
or their respective property is bound, or violate or conflict with any
laws, administrative regulations or rulings or court decrees applicable
to the Company, any of the Subsidiaries or their respective property.
(j) Except as otherwise set forth in the Prospectus, there are
no material legal or governmental proceedings pending to which the
Company or any of the Subsidiaries is a party or of which any of their
respective property is the subject, and, to the best of the Company's
knowledge, no such proceedings are threatened or contemplated. No
contract or document of a character required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit
to the Registration Statement is not so described or filed as required.
(k) Neither the Company nor any of the Subsidiaries has
violated any foreign, federal, state or local law or regulation
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
("ENVIRONMENTAL LAWS"), nor any federal or state law relating to
discrimination in the hiring, promotion or pay of employees nor any
applicable federal or state wages and hours laws, nor any provisions of
the Employee Retirement Income Security Act or the rules and
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<PAGE> 11
regulations promulgated thereunder, which in each case might result in
any material adverse change in the business, prospects, financial
condition or results of operations of the Company and the Subsidiaries,
taken as a whole.
(l) The Company and each of the Subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("PERMITS"), including, without limitation, under any
applicable Environmental Laws, as are necessary to own, lease and
operate its respective properties and to conduct its business and such
permits are valid and in full force and effect; the Company and each of
the Subsidiaries has fulfilled and performed all of its material
obligations with respect to such permits and no event has occurred
which allows, or after notice or lapse of time would allow, revocation
or termination thereof or results in any other material impairment of
the rights of the holder of any such permit; and, except as described
in the Prospectus, such permits contain no restrictions that are
materially burdensome to the Company or any of the Subsidiaries.
(m) In connection with the acquisitions of the Boca Resort,
Pier 66, Bahia Mar, Incredible Ice and Gold Coast and the development
of the Broward County Civic Arena, the Company has conducted a review
of the effect of Environmental Laws on the business, operations and
properties of the Company and the Subsidiaries, in the course of which
it identified and evaluated associated costs and liabilities
(including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to
third parties). On the basis of such review, the Company has reasonably
concluded that such associated costs and liabilities would not, singly
or in the aggregate, have a material adverse effect on the Company and
the Subsidiaries, taken as a whole.
(n) Except as otherwise set forth in the Prospectus or such as
are not material to the business, prospects, financial condition or
results of operations of the Company and the Subsidiaries, taken as a
whole, the Company and each of the Subsidiaries has good and marketable
title, free and clear of all liens, claims, encumbrances and
restrictions except liens for taxes not yet due and payable, to all
property and assets described in the Registration Statement as being
owned by it. Except as otherwise set forth in the Prospectus, all
leases to which the Company or any of the Subsidiaries is a party are
valid and binding and no default has occurred or is continuing
thereunder, which might result in any material adverse change in the
business, prospects, financial condition or results of operations of
the Company and the Subsidiaries taken as a whole, and the Company and
the Subsidiaries enjoy peaceful and undisturbed possession under all
such leases to which any of them is a party as lessee with such
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<PAGE> 12
exceptions as do not materially interfere with the use made by the
Company or such Subsidiary.
(o) This Agreement has been duly authorized, executed and
delivered by the Company.
(p) The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the
businesses in which they are engaged; and neither the Company nor any
of its Subsidiaries (i) has received notice from any insurer or agent
of such insurer that substantial capital improvements or other material
expenditures will have to be made in order to continue such insurance
or (ii) has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers at a cost that would not
have a material adverse effect on the business, prospects, financial
conditions or results of operations of the Company and its
Subsidiaries, taken as a whole.
(q) Arthur Andersen LLP are independent public accountants
with respect to the Company as required by the Act.
(r) The financial statements, together with related schedules
and notes forming part of the Re istration Statement and the Prospectus
(and any amendment or supplement thereto), present fairly the
consolidated financial position, results of operations and changes in
financial position of the Company and the Subsidiaries on the basis
stated in the Registration Statement at the respective dates or for the
respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the
periods involved, except as disclosed therein; and the other financial
and statistical information and data set forth in the Registration
Statement and the Prospectus (and any amendment or supplement thereto)
are, in all material respects, accurately presented and prepared on a
basis consistent with such financial statements and the books and
records of the Company.
(s) The PRO FORMA financial statements of the Company and its
Subsidiaries and the related notes thereto set forth in the
Registration Statement and the Prospectus (and any supplement or
amendment thereto) have been prepared on a basis consistent with the
historical financial statements of the Company and its Subsidiaries,
give effect to the assumptions used in the preparation thereof on a
reasonable basis and in good faith and present fairly the historical
and proposed transactions contemplated by the Registration Statement
and the Prospectus. Such PRO FORMA financial statements have been
prepared in accordance with the applicable requirements of Rule 11-02
of
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<PAGE> 13
Regulation S-X promulgated by the Commission. The other PRO FORMA
financial and statistical information and data set forth in the
Registration Statement and the Prospectus (and any supplement or
amendment thereto) are, in all material respects, accurately presented
and prepared on a basis consistent with the PRO FORMA financial
statements.
(t) The Company is not and, after giving effect to the
offering and sale of the Shares and the application of the proceeds
thereof as described in the Prospectus, will not be, an "INVESTMENT
COMPANY" as such term is defined in the Investment Company Act of 1940,
as amended.
(u) Except as otherwise set forth in the Prospectus, no holder
of any security of the Company has any right to require registration of
shares of Common Stock or any other security of the Company under the
Act, which registration has not been effected.
(v) The Company has registered the Class A Common Stock
pursuant to Section 12(b) of the Exchange Act and has filed an
application to list the Shares on the NYSE, and has received
notification that the listing has been approved, subject to notice of
issuance of the Shares.
(w) There are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities, commitments of sale or liens
related to or entitling any person to purchase or otherwise to acquire
any shares of the capital stock of, or other ownership interest in, the
Company or any of the Subsidiaries except as otherwise disclosed in the
Registration Statement.
(x) Except as disclosed in the Prospectus, there are no
business relationships or related party transactions required to be
disclosed therein by Item 404 of Regulation S-K of the Commission.
(y) There is (i) no significant unfair labor practice
complaint pending against the Company or any of the Subsidiaries or, to
the best knowledge of the Company, threatened against any of them,
before the National Labor Relations Board or any state or local labor
relations board, and no significant grievance or more significant
arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against the Company or any of the
Subsidiaries or, to the best knowledge of the Company, threatened
against any of them, and (ii) no significant strike, labor dispute,
slowdown or stoppage pending against the Company or any of the
Subsidiaries or, to the best knowledge of the Company, threatened
against it or any of the Subsidiaries except for such actions specified
in clause (i) or (ii) above, which, singly or in the aggregate could
not reasonably be expected to have a material adverse effect on the
Company and the Subsidiaries, taken as a whole.
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<PAGE> 14
(z) The Company and each of the Subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(aa) All material tax returns required to be filed by the
Company and each of the Subsidiaries in any jurisdiction have been
filed, other than those filings being contested in good faith, and all
material taxes, including withholding taxes, penalties and interest,
assessments, fees and other charges due pursuant to such returns or
pursuant to any assessment received by the Company or any of the
Subsidiaries have been paid, other than those being contested in good
faith and for which adequate reserves have been provided.
(ab) The Company and its Subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title
to all personal property owned by them which is material to the
business of the Company and its Subsidiaries, in each case free and
clear of all liens, encumbrances and defects except such as are
described in the Prospectus or such as do not materially affect the
value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and its
Subsidiaries; and any real property and buildings held under lease by
the Company and its Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company and its Subsidiaries, in
each case except as described in the Prospectus.
(ac) Since the respective dates as of which information is
given in the Prospectus other than as set forth in the Prospectus
(exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), (i) there has not occurred any material
adverse change or any development involving a prospective material
adverse change in the condition, financial or otherwise, or the
earnings, business, management or operations of the Company and its
Subsidiaries, taken as a whole, (ii) there has not been any material
adverse change or any development involving a prospective material
adverse change in the capital stock or in the long-term debt of the
Company or any of its Subsidiaries and (iii) neither the Company nor
any of its Subsidiaries has incurred any material liability or
obligation, direct or contingent.
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<PAGE> 15
7. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS. Each
Selling Stockholder represents and warrants, severally and not jointly, to each
Underwriter that:
(a) Such Selling Stockholder is the lawful owner of the Shares
to be sold by such Selling Stockholder pursuant to this Agreement and
has, and on the Closing Date will have, good and clear title to such
Shares, free of all restrictions on transfer, liens, encumbrances,
security interests, equities and claims whatsoever.
(b) The Shares to be sold by such Selling Stockholder have
been duly authorized and are validly issued, fully paid and
non-assessable.
(c) Such Selling Stockholder has, and on the Closing Date will
have, full legal right, power and authority, and all authorization and
approval required by law, to enter into this Agreement, the Custody
Agreement, as appropriate, signed by such Selling Stockholder and The
First National Bank of Boston, as Custodian, relating to the deposit of
the Shares to be sold by such Selling Stockholder (the "CUSTODY
AGREEMENT") and the Power of Attorney of such Selling Stockholder
appointing certain individuals as such Selling Stockholder's
attorneys-in-fact (the "ATTORNEYS") to the extent set forth therein,
relating to the transactions contemplated hereby and by the
Registration Statement and the Custody Agreement, as appropriate (the
"POWER OF ATTORNEY") and to sell, assign, transfer and deliver the
Shares to be sold by such Selling Stockholder in the manner provided
herein and therein.
(d) This Agreement has been duly authorized, executed and
delivered by or on behalf of such Selling Stockholder.
(e) The Custody Agreement, as appropriate, of such Selling
Stockholder has been duly authorized, executed and delivered by such
Selling Stockholder and is a valid and binding agreement of such
Selling Stockholder, enforceable in accordance with its terms.
(f) The Power of Attorney of such Selling Stockholder has been
duly authorized, executed and delivered by such Selling Stockholder and
is a valid and binding instrument of such Selling Stockholder,
enforceable in accordance with its terms, and, pursuant to such Power
of Attorney, such Selling Stockholder has, among other things,
authorized the Attorneys, or any one of them, to execute and deliver on
such Selling Stockholder's behalf this Agreement and any other document
that they, or any one of them, may deem necessary or desirable in
connection with transactions contemplated hereby and thereby and to
deliver the Shares to be sold by such Selling Stockholder pursuant to
this Agreement.
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<PAGE> 16
(g) Upon delivery of and payment for the Shares to be sold by
such Selling Stockholder pursuant to this Agreement, good and clear
title to such Shares will pass to the Underwriters, free of all
restrictions on transfer, liens, encumbrances, security interests,
equities and claims whatsoever.
(h) The execution, delivery and performance of this Agreement
and the Custody Agreement, as appropriate, and Power of Attorney of
such Selling Stockholder by or on behalf of such Selling Stockholder,
compliance by such Selling Stockholder with all the provisions hereof
and thereof and the consummation of the transactions contemplated
hereby and thereby will not require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the
securities or Blue Sky laws of the various states) and will not
conflict with or constitute a breach of any of the terms or provisions
of, or a default under, the organizational documents of such Selling
Stockholder, if such Selling Stockholder is not an individual, or any
indenture, loan agreement, mortgage, lease or other agreement or
instrument to which such Selling Stockholder is a party or by which
such Selling Stockholder or any property of such Selling Stockholder is
bound, or violate or conflict with any applicable law or any rule,
regulation, judgment, order or decree of any court or any governmental
body or agency having jurisdiction over such Selling Stockholder or any
property of such Selling Stockholder.
(i) The information in the Registration Statement under the
caption "Selling Stockholders" which specifically relates to such
Selling Stockholder does not, and will not on the Closing Date, 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
therein, in the light of the circumstances under which they were made,
not misleading.
(j) At any time during the period described in Section 5(d),
if there is any change in the information referred to in Section 7(i),
such Selling Stockholder will immediately notify you of such change.
8. INDEMNIFICATION. (a) The Company agrees to indemnify and hold
harmless each Underwriter, its directors, its officers and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and judgments (including, without limitation, any legal or
other expenses incurred in connection with investigating or defending any
matter, including any action, that could give rise to any such losses, claims,
damages, liabilities or judgments) caused by (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement (or
any amendment thereto), the Prospectus (or any amendment or supplement thereto)
or any preliminary prospectus, or caused by any omission or alleged omission to
state therein a material fact required to be
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<PAGE> 17
stated therein or necessary to make the statements therein not misleading, and
(ii) any claim, action, suit or proceeding relating to or arising out of any
allegation that any sale of Shares to any persons designated by the Company
violates any applicable law, rule, regulation or order; PROVIDED, HOWEVER, that
the Company shall not be liable in the case of clause (i) insofar as such
losses, claims, damages, liabilities or judgments are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished in writing to the Company by
or on behalf of any Underwriter through you specifically for use therein; and
PROVIDED FURTHER, that the foregoing indemnity agreement in clause (i) with
respect to any preliminary prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages,
liabilities and judgments purchased Shares, or any person controlling such
Underwriter, if a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not sent
or given by or on behalf of such Underwriter to such person, if required by law
so to have been delivered, at or prior to the written confirmation of the sale
of the Shares to such person, and if the Prospectus (as so amended and
supplemented) would have cured the defect giving rise to such loss, claim,
damage, liability or judgment. The Selling Stockholders, severally and not
jointly, agree to indemnify and hold harmless each Underwriter, its directors,
its officers and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages, liabilities and judgments
(including, without limitation, any legal or other expenses incurred in
connection with investigating or defending any matter, including any action,
that could give rise to any such losses, claims, damages, liabilities or
judgments) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or any amendment
thereto), the Prospectus (or any amendment or supplement thereto) or any
preliminary prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; PROVIDED, HOWEVER, that the Selling
Stockholders shall not be liable insofar as such losses, claims, damages,
liabilities or judgments are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to any
Underwriter furnished in writing to the Selling Stockholder by or on behalf of
any Underwriter through you specifically for use therein; and PROVIDED FURTHER,
that the foregoing indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting any such losses, claims, damages, liabilities and judgments
purchased Shares, or any person controlling such Underwriter, if a copy of the
Prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given by or on behalf of
such Underwriter to such person, if required by law so to have been delivered,
at or prior to the written confirmation of the sale of the Shares to such
person, and if the Prospectus (as so amended and supplemented) would have cured
the defect giving rise to such loss, claim, damage, liability or judgment.
Notwithstanding the foregoing, the aggregate liability of any Selling
Stockholder pursuant to this Section 8(a) shall be limited to an amount equal to
the total proceeds (before deducting expenses) received by such Selling
Stockholder from the Underwriters for the sale of the Shares sold by such
Selling Stockholder hereunder.
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(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
each Selling Stockholder and each person, if any, who controls such Selling
Stockholder within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Sellers to
such Underwriter but only with reference to information relating to such
Underwriter furnished in writing to the Company by or on behalf of such
Underwriter through you specifically for use in the Registration Statement (or
any amendment thereto), the Prospectus (or any amendment or supplement thereto)
or any preliminary prospectus.
(c) In case any action shall be commenced involving any person
in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b)
(the "indemnified party"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "indemnifying party") in
writing and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) and 8(b), the Underwriter shall not be
required to assume the defense of such action pursuant to this Section 8(c), but
may employ separate counsel and participate in the defense thereof, but the fees
and expenses of such counsel, except as provided below, shall be at the expense
of such Underwriter). Any indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the indemnified
party unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for (i) the fees and expenses of more than one separate firm of attorneys
(in addition to any local counsel) for all Underwriters, their officers and
directors and all persons, if any, who control any Underwriter within the
meaning of either Section 15 of the Act or Section 20 of the Exchange Act, (ii)
the fees and expenses of more than one separate firm of attorneys (in addition
to any local counsel) for the Company, its directors, its officers who sign the
Registration Statement and all persons, if any, who control the Company within
the meaning of either such Section and (iii) the fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) for all
Selling Stockholders and all persons, if any, who control any Selling
Stockholder within the meaning of either such Section, and all such fees and
expenses shall be
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reimbursed as they are incurred. In the case of any such separate firm for the
Underwriters, their officers and directors and such control persons of any
Underwriters, such firm shall be designated in writing by Donaldson, Lufkin &
Jenrette Securities Corporation. In the case of any such separate firm for the
Company and such directors, officers and control persons of the Company, such
firm shall be designated in writing by the Company. In the case of any such
separate firm for the Selling Stockholders and such control persons of any
Selling Stockholders, such firm shall be designated in writing by the Attorneys.
The indemnifying party shall indemnify and hold harmless the indemnified party
from and against any and all losses, claims, damages, liabilities and judgments
by reason of any settlement of any action (i) effected with its written consent
or (ii) effected without its written consent if the settlement is entered into
more than twenty business days after the indemnifying party shall have received
a request from the indemnified party for reimbursement for the fees and expenses
of counsel (in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened action in respect of which
the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims that
are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent the indemnification provided for in this
Section 8 is unavailable to an indemnified party or insufficient in respect of
any losses, claims, damages, liabilities or judgments referred to therein, then
each indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Sellers on the one hand and the Underwriters on the other hand from the offering
of the Shares or (ii) if the allocation provided by clause 8(d)(i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause 8(d)(i) above but also the
relative fault of the Sellers on the one hand and the Underwriters on the other
hand in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Sellers on the
one hand and the Underwriters on the other hand shall be deemed to be in the
same proportion as the total net proceeds from the Offering (before deducting
expenses) received by the Sellers, and the total underwriting discounts and
commissions received by the Underwriters, bear to the total price to the public
of the Shares, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the Sellers on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a
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<PAGE> 20
material fact relates to information supplied by the Company or the Selling
Stockholders on the one hand or the Underwriters on the other hand and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Sellers and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 8(d) were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any matter, including any
action that could have given rise to such losses, claims, damages, liabilities
or judgments. Notwithstanding the provisions of this Section 8, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 8(d) are several in proportion to the respective number
of Shares purchased by each of the Underwriters hereunder and not joint.
(e) The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(f) Each Selling Stockholder hereby designates the Company at
the address set forth in Section 12 hereof, as its authorized agent, upon which
process may be served in any action which may be instituted in any state or
federal court in the State of New York by any Underwriter, any director or
officer of any Underwriter or any person controlling any Underwriter asserting a
claim for indemnification or contribution under or pursuant to this Section 8,
and each Selling Stockholder will accept the jurisdiction of such court in such
action, and waives, to the fullest extent permitted by applicable law, any
defense based upon lack of personal jurisdiction or venue. A copy of any such
process shall be sent or given to such Selling Stockholder, at the address for
notices specified in Section 12 hereof.
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of
the Underwriters to purchase the Firm Shares under this Agreement are subject to
the satisfaction of each of the following conditions:
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<PAGE> 21
(a) All the representations and warranties of the Company
contained in this Agreement shall be true and correct on the Closing
Date with the same force and effect as if made on and as of the Closing
Date.
(b) If the Company is required to file a Rule 462(b)
Registration Statement after the effectiveness of this Agreement, such
Rule 462(b) Registration Statement shall have become effective by 10:00
P.M., New York City time, on the date of this Agreement or such later
date as you may approve in writing; and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and
no proceedings for that purpose shall have been commenced or shall be
pending before or contemplated by the Commission.
(c) The Registration Statement shall have become effective not
later than 5:00 P.M. (and in the case of a Registration Statement filed
under Rule 462 (b) of the Act, not later than 10:00 p.m.), New York
City time, on the date of this Agreement or at such later date and time
as you may approve in writing, and at the Closing Date no stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been
commenced or shall be pending before or, to the knowledge of the
Company or the Underwriters, be contemplated by the Commission.
(d) You shall have received on the Closing Date a certificate
dated the Closing Date, signed by the President and the Chief Financial
Officer of the Company, confirming the matters set forth in Sections
8(a), 8(b), 8(c) and 8(e).
(e)(i) Since the date of the latest balance sheet included in
the Registration Statement and the Prospectus, there shall not have
been any material adverse change, or any development involving a
prospective material adverse change, in the condition, financial or
otherwise, or in the earnings, affairs or business prospects, whether
or not arising in the ordinary course of business, of the Company, (ii)
since the date of the latest balance sheet included in the Registration
Statement and the Prospectus there shall not have been any change, or
any development involving a prospective material adverse change, in the
capital stock or in the long-term debt of the Company from that set
forth in the Registration Statement and Prospectus and (iii) the
Company and the Subsidiaries shall have no liability or obligation,
direct or contingent, which is material to the Company and the
Subsidiaries, taken as a whole, other than those reflected in the
Registration Statement and the Prospectus.
(f) All the representations and warranties of the Selling
Stockholders contained in this Agreement shall be true and correct on
the Closing Date with the same force and effect as if made on and as of
the Closing Date and you
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shall have received a certificate to such effect, dated the Closing
Date, from each Selling Stockholder.
(g) You shall have received on the Closing Date an opinion
(reasonably satisfactory to you and counsel for the Underwriters),
dated the Closing Date, of Akerman, Senterfitt & Eidson, P.A., counsel
for the Company and the Selling Stockholders, to the effect that:
(i) the Company and each of the Subsidiaries has been
duly incorporated or organized, is validly existing as a
corporation or limited partnership, as the case may be, in
good standing under the laws of its jurisdiction of
incorporation or organization and has the corporate or
partnership power and authority required to carry on its
business as it is currently being conducted and to own, lease
and operate its properties;
(ii) the Company and each of the Subsidiaries is duly
qualified and is in good standing as a foreign corporation or
partnership authorized to do business in each jurisdiction in
which the nature of its business or its ownership or leasing
of property requires such qualification, except where the
failure to be so qualified would not have a material adverse
effect on the Company and the Subsidiaries, taken as a whole;
(iii) all of the outstanding shares of capital stock
of, or other ownership interests in, each of the Subsidiaries
have been duly and validly authorized and issued and are fully
paid and non-assessable, and, with the exception of certain
shares and ownership interests which have been pledged to the
Chase Manhattan Bank and certain ownership interests which are
subject to rights of the NHL to the proceeds from any sale of
Florida Panthers Hockey Club, Ltd. under the NHL Constitution
and Bylaws, are owned by the Company, free and clear of any
security interest or, to the best of such counsel's knowledge,
any other claim, lien, encumbrance or adverse interest of any
nature;
(iv) all the outstanding shares of the Common Stock
(including the Shares to be sold by the Selling Stockholders)
have been duly authorized and validly issued and are fully
paid, non-assessable and not subject to any preemptive or
similar rights;
(v) the Shares have been duly authorized, and when
issued and delivered to the Underwriters against payment
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<PAGE> 23
therefor as provided by this Agreement will have been validly
issued and will be fully paid and non-assessable, and the
issuance of such Shares is not subject to any preemptive or
similar rights;
(vi) this Agreement has been duly authorized,
executed and delivered by the Company and is a valid and
binding agreement of the Company enforceable in accordance
with its terms subject to applicable bankruptcy, insolvency,
and similar laws affecting creditors' rights generally and
subject to general principles of equity;
(vii) this Agreement has been duly authorized,
executed and delivered by each Selling Stockholder and is a
valid and binding agreement of each such Selling Stockholder
enforceable in accordance with its terms subject to applicable
bankruptcy, insolvency and similar laws affecting creditors
rights generally and subject to general principals of equity;
(viii) the authorized capital stock of the Company,
including the Common Stock, conforms as to legal matters to
the description thereof contained in the Prospectus;
(ix) the Registration Statement has become effective
under the Act, no stop order suspending its effectiveness has
been issued and no proceedings for that purpose are, to the
knowledge of such counsel, pending before or contemplated by
the Commission;
(x) the statements under the captions "Business-
Litigation" and "Description of Capital Stock" in the
Prospectus and Items 14 and 15 of Part II of the Registration
Statement insofar as such statements constitute a summary of
legal matters, documents or proceedings referred to therein,
fairly present the information called for with respect to such
legal matters, documents and proceedings;
(xi) neither the Company nor any of the Subsidiaries
is in violation of its respective charter, by-laws or
partnership agreements and, to the best of such counsel's
knowledge after due inquiry, neither the Company nor any of
the Subsidiaries is in default in the performance of any
obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in
any other agreement, indenture or
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<PAGE> 24
instrument material to the conduct of the business of the
Company and the Subsidiaries, taken as a whole, to which the
Company or any of the Subsidiaries is a party or by which it
or any of the Subsidiaries or their respective property is
bound, including, but not limited to, the NHL Lex Scripta;
(xii) the execution, delivery and performance of this
Agreement by the Company, compliance by the Company with all
the provisions hereof and thereof and the consummation of the
transactions contemplated hereby and thereby will not require
any consent, approval, authorization or other order of the NHL
or any court, regulatory body, administrative agency or other
governmental body (except as such may be required under the
Act or other securities or Blue Sky laws) and will not
conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the charter, by-laws or
partnership agreement of the Company or any of the
Subsidiaries, the NHL Lex Scripta or any agreement, indenture
or other instrument to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the
Subsidiaries or their respective properties are bound, or
violate or conflict with any laws, administrative regulations
or rulings or court decrees applicable to the Company or any
of the Subsidiaries or their respective properties;
(xiii) such counsel does not know of any legal or
governmental proceeding pending or threatened to which the
Company or any of the Subsidiaries is a party or to which any
of their respective property is subject which is required to
be described in the Registration Statement or the Prospectus
and is not so described, or of any contract or other document
which is required to be described in the Registration
Statement or the Prospectus or is required to be filed as an
exhibit to the Registration Statement which is not described
or filed as required;
(xiv) the Company is not an "INVESTMENT COMPANY" or a
company "CONTROLLED" by an "INVESTMENT COMPANY" within the
meaning of the Investment Company Act of 1940, as amended;
(xv) to the best of such counsel's knowledge, except
as otherwise set forth in the Prospectus no holder of any
security of the Company has any right to require registration
of shares of
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<PAGE> 25
Common Stock or any other security of the Company under the
Act, which registration has not been effected;
(xvi) to the best of such counsel's knowledge, after
due inquiry, except as otherwise set forth in the Prospectus
all material leases to which the Company or any of its
Subsidiaries is a party and which are described in the
Prospectus or filed as exhibits to the Registration Statement
are valid and binding and no default has occurred or is
continuing thereunder, which might result in any material
adverse change in the business, prospects, financial condition
or results of operations of the Company and its Subsidiaries
taken as a whole, and the Company and its Subsidiaries enjoy
peaceful and undisturbed possession under all such leases to
which any of them is a party as lessee with such exceptions as
do not materially interfere with the use made by the Company
or such Subsidiary;
(xvii) (1) the Registration Statement (including any
Registration Statement filed under 462(b) of the Act, if any)
and the Prospectus and any supplement or amendment thereto
(except for financial statements as to which no opinion need
be expressed) comply as to form in all material respects with
the Act, and (2) nothing has come to the attention of such
counsel, which leads it to believe that (except for financial
statements, as aforesaid) the Registration Statement and the
prospectus included therein at the time the Registration
Statement became effective contained any untrue statement of a
material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus, as amended or
supplemented, if applicable (except for financial statements,
as aforesaid) contained any untrue statement of a material
fact or omitted to state a material fact necessary in order to
make the statements therein, in the light of the circumstances
under which they were made, not misleading; and
(xviii) each document filed by the Company with the
Commission pursuant to the Exchange Act (except for financial
statements and other financial data included therein as to
which no opinion need be expressed) complied when so filed as
to form with the Exchange Act.
(xix) each Selling Stockholder is the lawful owner
of the Shares to be sold by such Selling Stockholder
pursuant to this
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Agreement and has good and clear title to such Shares, free of
all restrictions on transfer, liens, encumbrances, security
interests, equities and claims whatsoever;
(xx) each Selling Stockholder has full legal right,
power and authority, and all authorization and approval
required by law, to enter into this Agreement and the Custody
Agreement, as appropriate, and the Power of Attorney of such
Selling Stockholder and to sell, assign, transfer and deliver
the Shares to be sold by such Selling Stockholder in the
manner provided herein and therein;
(xxi) the Custody Agreement, as appropriate, of each
Selling Stockholder has been duly authorized, executed and
delivered by such Selling Stockholder and is a valid and
binding agreement of such Selling Stockholder, enforceable in
accordance with its terms;
(xxii) the Power of Attorney of each Selling
Stockholder has been duly authorized, executed and delivered
by such Selling Stockholder and is a valid and binding
instrument of such Selling Stockholder, enforceable in
accordance with its terms, and, pursuant to such Power of
Attorney, such Selling Stockholder has, among other things,
authorized the Attorneys, or any one of them, to execute and
deliver on such Selling Stockholder's behalf this Agreement
and any other document they, or any one of them, may deem
necessary or desirable in connection with transactions
contemplated hereby and thereby and to deliver the Shares to
be sold by such Selling Stockholder pursuant to this
Agreement;
(xxiii) upon delivery of and payment for the Shares
to be sold by each Selling Stockholder pursuant to this
Agreement, good and clear title to such Shares will pass to
the Underwriters, free of all restrictions on transfer, liens,
encumbrances, security interests, equities and claims
whatsoever; and
(xxiv) the execution, delivery and performance of
this Agreement and the Custody Agreement, as appropriate, and
Power of Attorney of each Selling Stockholder by such Selling
Stockholder and the compliance by such Selling Stockholder
with all the provisions hereof and thereof and the
consummation of the transactions contemplated hereby and
thereby will not require any consent, approval, authorization
or other order of, or
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<PAGE> 27
qualification with, any court or governmental body or agency
(except such as may be required under the securities or Blue
Sky laws of the various states) and will not conflict with or
constitute a breach of any of the terms or provisions of, or a
default under, the organizational documents of such Selling
Stockholder, if such Selling Stockholder is not an individual,
or any indenture, loan agreement, mortgage, lease or other
agreement or instrument to which such Selling Stockholder is a
party or by which any property of such Selling Stockholder is
bound, or violate or conflict with any applicable law or any
rule, regulation, judgment, order or decree of any court or
any governmental body or agency having jurisdiction over such
Selling Stockholder or any property of such Selling
Stockholder.
In giving such opinions, such counsel may rely, as to the matters of
fact, on certificates of officers of the Company and public officials.
In giving such opinions with respect to the matters covered by clause
(xvii)(2)) such counsel may state that their opinion and belief are based upon
their participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto and review and discussion
of the contents thereof, but are without independent check or verification
except as specified.
The opinion of Akerman, Senterfitt & Eidson, P.A. described in
paragraph (d) above shall be rendered to you at the request of the Company and
the Selling Stockholders and shall so state therein.
(h) You shall have received on the Closing Date an opinion,
dated the Closing Date, of McDermott, Will & Emery, counsel for the
Underwriters, as to the matters referred to in clauses (v), (vi),
(viii), (ix) (but only with respect to the statements under the caption
"DESCRIPTION OF CAPITAL STOCK" and "UNDERWRITING") and (xvii) of the
foregoing paragraph (d). In giving such opinion with respect to the
matters covered by clause (xvii) such counsel may state that their
opinion and belief are based upon their participation in the
preparation of the Registration Statement and Prospectus and any
amendments or supplements thereto and review and discussion of the
contents thereof, but are without independent check or verification
except as specified.
(i) You shall have received a letter on and as of the Closing
Date, in form and substance satisfactory to you, from Arthur Andersen
LLP, independent public accountants, with respect to the financial
statements and certain financial information contained in the
Registration Statement and the Prospectus and substantially in the form
and substance of the letter delivered to you by Arthur Andersen LLP on
the date of this Agreement.
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(j) The Company shall have delivered to you the agreements
specified in Section 2 hereof.
(k) The Shares shall have been duly listed, subject to notice
of issuance, on the NYSE.
(l) The Company and the Selling Stockholders shall not have
failed at or prior to the Closing Date to perform or comply with any of
the agreements herein contained and required to be performed or
complied with by the Company or the Selling Stockholders at or prior to
the Closing Date.
(m) You shall have received on the Closing Date, a certificate
of each Selling Stockholder who is not a U.S. Person (as defined under
applicable U.S. federal tax legislation) to the effect that such
Selling Stockholder is not a U.S. Person, which certificate may be in
the form of a properly completed and executed United States Treasury
Department Form W-8 (or other applicable form or statement specified by
Treasury Department regulations in lieu thereof).
The several obligations of the Underwriters to purchase any Additional Shares
hereunder are subject to the delivery to you on the Option Closing Date of such
documents as you may reasonably request with respect to the good standing of the
Company, the due authorization and issuance of such Additional Shares and other
matters related to the issuance of such Additional Shares.
10. EFFECTIVE DATE OF AGREEMENT AND TERMINATION. This Agreement shall
become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time prior to the Closing Date
by you by written notice to the Company if any of the following has occurred:
(i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or
development involving a prospective material adverse change in the condition,
financial or otherwise, of the Company and the Subsidiaries, taken as a whole,
or the earnings, affairs, or business prospects of the Company or any of the
Subsidiaries, taken as a whole, whether or not arising in the ordinary course of
business, which would, in your judgment, make it impracticable to market the
Shares on the terms and in the manner contemplated in the Prospectus, (ii) any
outbreak or escalation of hostilities or other national or international
calamity or crisis or change in economic conditions or in the financial markets
of the United States or elsewhere that, in your judgment, is material and
adverse and would, in your judgment, make it impracticable to market the Shares
on the terms and in the manner contemplated in the Prospectus, (iii) the
suspension or material limitation of trading in securities or other instruments
on the NYSE, the American Stock Exchange, the Chicago Board of Options Exchange,
the Chicago Mercantile Exchange, the Chicago Board of Trade or the Nasdaq
National Market or limitation on prices for securities or other instruments on
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any such exchange or the Nasdaq National Market, (iv) the suspension of trading
of any securities of the Company on any exchange or in the over-the-counter
market, (v) the enactment, publication, decree or other promulgation of any
federal or state statute, regulation, rule or order of any court or other
governmental authority which in your opinion materially and adversely affects,
or will materially and adversely affect, the business, prospects, financial
condition or results of operations of the Company and its Subsidiaries, taken as
a whole, (vi) the declaration of a banking moratorium by either federal or New
York State authorities or (vii) the taking of any action by any federal, state
or local government or agency in respect of its monetary or fiscal affairs which
in your opinion has a material adverse effect on the financial markets in the
United States.
If on the Closing Date or on the Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase the
Firm Shares or Additional Shares, as the case may be, which it or they have
agreed to purchase hereunder on such date and the aggregate number of Firm
Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused to
purchase is not more than one-tenth of the total number of Shares to be
purchased on such date by all Underwriters, each non-defaulting Underwriter
shall be obligated severally, in the proportion which the number of Firm Shares
set forth opposite its name in Schedule I bears to the total number of Firm
Shares which all the non-defaulting Underwriters, as the case may be, have
agreed to purchase, or in such other proportion as you may specify, to purchase
the Firm Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused to
purchase on such date; PROVIDED that in no event shall the number of Firm Shares
or Additional Shares, as the case may be, which any Underwriter has agreed to
purchase pursuant to Section 2 hereof be increased pursuant to this Section 10
by an amount in excess of one-ninth of such number of Firm Shares or Additional
Shares, as the case may be, without the written consent of such Underwriter. If
on the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased by all Underwriters and arrangements satisfactory to you,
the Company and the Selling Stockholders for purchase of such Firm Shares are
not made within 48 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter, the Company or
the Selling Stockholders. In any such case which does not result in termination
of this Agreement, either you or the Sellers shall have the right to postpone
the Closing Date but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or
any other documents or arrangements may be effected. If, on the Option Closing
Date, any Underwriter or Underwriters shall fail or refuse to purchase
Additional Shares and the aggregate number of Additional Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of
Additional Shares to be purchased on such date, the non-defaulting Underwriters
shall have the option to (i) terminate their obligation hereunder to purchase
such Additional Shares or (ii) purchase not less than the number of Additional
Shares that such non-defaulting Underwriters would have been obligated to
purchase on such date in the
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<PAGE> 30
absence of such default. Any action taken under this paragraph shall not relieve
any defaulting Underwriter from liability in respect of any default of any such
Underwriter under this Agreement.
11. AGREEMENTS OF THE SELLING STOCKHOLDERS. Each Selling Stockholder
agrees with you and the Company:
(a) To pay or to cause to be paid all transfer taxes payable
in connection with the transfer of the Shares to be sold by such
Selling Stockholder to the Underwriters.
(b) To do and perform all things to be done and performed by
such Selling Stockholder under this Agreement prior to the Closing Date
and to satisfy all conditions precedent to the delivery of the Shares
to be sold by such Selling Stockholder pursuant to this Agreement.
12. MISCELLANEOUS. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (i) if to the Company or the Selling
Stockholders, to Florida Panthers Holdings, Inc., 100 Northeast Third Avenue,
Second Floor, Fort Lauderdale, Florida 33301; and (ii) if to any Underwriter or
to you, to you c/o Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park
Avenue, 16th Floor, New York, New York 10172, Attention: Syndicate Department,
or in any case to such other address as the person to be notified may have
requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, the Selling Stockholders and the
several Underwriters set forth in or made pursuant to this Agreement shall
remain operative and in full force and effect, and will survive delivery of and
payment for the Shares, regardless of (i) any investigation, or statement as to
the results thereof, made by or on behalf of any Underwriter or by or on behalf
of the Company, the officers or directors of any Underwriter, any person
controlling any Underwriter, the Company, any Selling Stockholder or any person
controlling such Selling Stockholder, the officers or directors of the Company
or any person controlling the Company, (ii) acceptance of the Shares and payment
for them hereunder and (iii) termination of this Agreement.
If for any reason the Shares are not delivered by or on behalf of any
Seller as provided herein (other than as a result of any termination of this
Agreement pursuant to Section 10), the Sellers agree, jointly and severally, to
reimburse the several Underwriters for all out-of-pocket expenses (including the
fees and disbursements of counsel) incurred by them. Notwithstanding any
termination of this Agreement, the Company shall be liable for all expenses
which it has agreed to pay pursuant to Section 5(k) hereof. The Sellers also
agree, jointly and severally, to reimburse the several Underwriters, their
directors and officers and any persons controlling any of the Underwriters for
any and all fees and expenses (including,
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<PAGE> 31
without limitation, the fees disbursements of counsel) incurred by them in
connection with enforcing their rights hereunder (including, without limitation,
pursuant to Section 8 hereof).
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the Selling
Stockholders, the Underwriters, the Underwriters' directors and officers, any
controlling persons referred to herein, the Company's directors and the
Company's officers who sign the Registration Statement and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "SUCCESSORS AND ASSIGNS" shall not include a purchaser of
any of the Shares from any of the several Underwriters merely because of such
purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
* * *
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<PAGE> 32
Please confirm that the foregoing correctly sets forth the agreement
between the Company, the Selling Stockholders and the several Underwriters.
Very truly yours,
FLORIDA PANTHERS HOLDINGS, INC.
By:
----------------------------------------------
William M. Pierce
Title: Senior Vice President and Chief Financial
Officer
THE SELLING STOCKHOLDERS NAMED IN
SCHEDULE II HERETO, ACTING
SEVERALLY
By:
----------------------------------------------
Attorney-in-fact
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
ALLEN & COMPANY INCORPORATED
RAYMOND JAMES & ASSOCIATES, INC.
Acting severally on behalf of themselves
and the several Underwriters named in
Schedule I hereto
By: DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
------------------------------------
Title:
---------------------------------
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<PAGE> 33
SCHEDULE I
Number of Firm Shares
Underwriters To Be Purchased
------------ ---------------
Donaldson, Lufkin & Jenrette
Securities Corporation
Allen & Company Incorporated
Raymond James & Associates, Inc. ---------
Total 6,780,135
=========
<PAGE> 34
SCHEDULE II
SELLING STOCKHOLDERS
Number of Firm
Name Shares Being Sold
------ ----------------------
-------
Total 780,135
=======
<PAGE> 1
Exhibit 2.10
MERGER AGREEMENT
THIS MERGER AGREEMENT (this "Agreement") is entered into as of July 8,
1997, by and among FLORIDA PANTHERS HOLDINGS, INC., a Florida corporation
("Panthers"); FPH/RHI MERGER CORP., INC., a Florida corporation and a
wholly-owned subsidiary of Panthers ("FPH/RHI"); RESORTHILL, INC., an Illinois
corporation ("ResortHill"); and GARY V. CHENSOFF, a resident of the State of
Illinois ("Chensoff"). Panthers, together with FPH/RHI, are collectively
referred to as the "Panther Companies" and individually as a "Panther Company".
RECITALS
A. LeHill Partners, L.P., a Delaware limited partnership
("LeHill" or "Partnership"), is the record fee simple title holder of 322
condominium units legally described on Schedule 3.12(a) attached hereto
("Units") being a part of The Registry Hotel at Pelican Bay, a Non-Residential
Hotel Condominium, according to the Declaration of Condominium thereof,
recorded in Official Records Book 1225, Page 696 of the Public Records of
Collier County, Florida ("Resort").
B. LeHill is the record holder of certain mortgages ("Mortgages")
and related promissory notes ("Notes") in the approximate aggregate outstanding
principal amount of $4,747,000 for the 36 performing Mortgages and an
approximate aggregate outstanding principal amount of $319,000 for the two
non-performing Mortgages as of July 1, 1997 and ancillary documents (together
with the Mortgages and the Notes, the "Loan Documents") more particularly
described on Schedule 3.12(a) attached hereto ("Mortgage Loans") encumbering
the condominium units within the Resort as set forth on the Schedule.
C. Pelican Hill Associates, L.P., a Delaware limited partnership
("Pelican Hill"), is the general partner of LeHill and owns a One percent (1%)
interest in LeHill.
D. ResortHill (i) is a general partner of Pelican Hill and owns a
Fifty percent (50%) interest in Pelican Hill and (ii) is a limited partner of
LeHill and owns a Three and eight-tenths percent (3.8%) percent interest in
LeHill.
E. Chensoff owns One Hundred percent (100%) of the outstanding
capital stock in ResortHill and has the power to vote One Hundred percent
(100%) of the outstanding voting interests of ResortHill, without the consent
of any other party.
F. Blakely Capital, Inc., an Illinois corporation ("Blakely") is
the record owner of a Seven-tenths percent (7/10%) limited partnership interest
in LeHill and, to date, no transfer of such interest has been approved under
the terms of the LeHill partnership agreement.
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<PAGE> 2
G. LW-LP, Inc. is a Delaware corporation ("LW-LP") and is the
record owner of a Ninety-four and Five-tenths percent (94.5%) limited
partnership interest in LeHill and, to date, no transfer of such interest has
been approved under the terms of the LeHill partnership agreement.
H. NP Investment III Co. is a Delaware corporation ("NPI") and a
general partner of Pelican Hill and is the record owner of a Five-tenths
percent (0.5%) general partnership interest in Pelican Hill and, to date, no
transfer of such interest has been approved under the terms of the LeHill
partnership agreement.
I. LW-RTC, Inc. is a Delaware corporation ("LW-RTC") and is the
record owner of a Forty-Nine and Five-tenths percent (49.5%) limited
partnership interest in Pelican Hill and, to date, no transfer of such interest
has been approved under the terms of the LeHill partnership agreement.
J. Chensoff has the right and power to cause the sale and
transfer of Blakely's Seven-tenths percent (0.7%) limited partnership interest
in LeHill (the "Blakely Interest") by virtue of a power of attorney given to
Chensoff by Blakely.
K. Chensoff entered into a Purchase Agreement with LW-LP, NPI and
LW-RTC (the "Lehman Purchase Agreement") dated as of May 19, 1997 pursuant to
which LW-LP, NPI and LW-RTC agreed to sell to Chensoff all of their general and
limited partnership interest in LeHill and Pelican Hill consisting of LW-LP's
94.5% limited partnership interest in LeHill, NPI's 0.5% general partnership
interest in Pelican Hill and LW-RTC's 49.5% limited partnership interest in
Pelican Hill, a true and correct copy of which is attached hereto on Exhibit
"A".
L. Chensoff has agreed to execute an Assignment, Assumption,
Contribution and Consent Agreement ("Assignment and Assumption") in the form
attached hereto as Exhibit "B" that assigns Chensoff's rights under the Lehman
Purchase Agreement to Panthers and which by virtue of its terms reinstates the
substantive provisions of the Lehman Purchase Agreement so that such agreement
remains enforceable against Chensoff by its terms and which LW-LP, NPI and LW-
RTC has represented is enforceable by its terms against them. Chensoff has also
agreed to execute, or to cause the delivery by Blakely of a duly executed
assignment or bill of sale (the "Blakely Assignment") to transfer and assign to
Panthers the Blakely Interest.
M. Simultaneous with the execution of this Agreement, LW-LP, NPI
and LW-RTC have consented to the assignment of the Lehman Purchase Agreement by
Chensoff to Panthers.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
2
<PAGE> 3
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this
Agreement and in accordance with the Business Corporation Act of the State of
Florida (the "Corporations Code"), at the Effective Time (as defined below)
pursuant to the terms and conditions set forth in the Plan of Merger and
Reorganization annexed hereto as Exhibit C (the "Plan of Merger"), FPH/RHI will
be merged with and into ResortHill (the "Merger"). The terms and conditions of
the Plan of Merger are incorporated herein by reference as if fully set forth
herein. As a result of the Merger, the separate corporate existence of FPH/RHI
shall cease and ResortHill shall continue as the surviving corporation and a
wholly-owned subsidiary of Panthers.
1.2 THE CLOSING. Subject to the terms and conditions of this
Agreement, the consummation of the Merger (the "Closing") shall take place as
promptly as practicable (and in any event within five (5) business days) after
satisfaction or waiver of the conditions set forth in Articles VI and VII, at
the offices of Panthers' counsel, Akerman, Senterfitt & Eidson, P.A., Miami,
Florida, or such other time and place as the parties may otherwise agree (the
"Closing Date"). The parties agree that the Closing shall not occur before
August 1, 1997 except upon the mutual agreement of the parties.
1.3 COMPLETION OF PLANS OF MERGER; MERGER CONSIDERATION. At least
three days prior to the Closing, the parties shall fill in and complete the
blank spaces in Article III of the Plan of Merger. Pursuant to the Plan of
Merger, Panthers will pay an amount ("Merger Consideration") equal to
$96,821,400 (subject to any adjustment pursuant to Section 1.7) ("Base
Amount"), minus the sum of (i) the amount payable by Panthers pursuant to the
Lehman Purchase Agreement with credit given for the $5,000,000 previously paid
by Panthers to LW-LP, NPI and LW-RTC in connection with the execution by the
parties of the Assignment and Assumption, and (ii) the amount payable for the
Blakely Interest (if such interest is purchased directly by Panthers) and (iii)
the amount of outstanding partners loans, third party loans or any other
indebtedness or liabilities of the LeHill Companies, including, without
limitation, the amount of all outstanding liabilities included in the balance
sheet of the Audited LeHill Financial Statements and included in the Closing
Balance Sheet such reduction to be made only to the extent that Chensoff has
not instructed Panthers to remit a portion of the Merger Consideration in
satisfaction of any such indebtedness or liabilities. The parties hereto
acknowledge that LeHill's liability for 1997 real property taxes in respect of
the Units shall be a liability assumed by Panthers for which no reduction in
the Merger Consideration shall be made. The Merger Consideration will be paid
(a) in cash in the amount of $3,000,000 less any
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<PAGE> 4
cash amounts paid to Blakely by Panthers and (b) the balance in the form of
shares of the Class A common stock, $0.01 par value per share, of Panthers
("Panthers Common Stock"). The number of shares of Panthers Common Stock
issued in the Merger will be determined by dividing that portion of the Merger
Consideration payable in the form of shares of Panthers Common Stock by $23.50
(the "Panthers Shares"). The Panthers Shares issued pursuant to the Plan of
Merger will be registered under the Securities Act of 1933, as amended,
pursuant to the Registration Statement.
1.4 FILING OF ARTICLES OF MERGER. At the time of the Closing (the
"Effective Date" or "Effective Time"), the parties shall cause the Merger to be
consummated by filing duly executed Articles of Merger (with the completed
Plans of Merger attached thereto) with the Secretaries of State of the State of
Illinois and Florida in such form as Panthers determines to be required to
lawfully effect the purposes of this Agreement.
1.5 ISSUANCE OF PANTHERS SHARES; DELIVERY OF CERTIFICATES AND
ASSIGNMENTS; RESTRICTIONS ON DISPOSITION OF PANTHERS SHARES. At the Effective
Time, Panthers shall issue to Chensoff the Panthers Shares issuable pursuant to
Section 1.3, registered in Chensoff's name. Panthers shall deliver such shares
in the following manner: (i) Panthers shall set aside and hold in accordance
with Article VIII certificates evidencing Panthers Shares having an aggregate
value of $4,000,000, based upon the per share price of $23.50 (the "Held Back
Shares") and (ii) Panthers shall deliver to Chensoff one or more certificates
evidencing the balance of Panthers Shares. The Panthers Shares being issued in
connection with this merger transaction will be registered under the Securities
Act pursuant to the Registration Statement. Chensoff agrees that during the
times set forth below he will not, directly or indirectly, offer, sell,
contract to sell or otherwise dispose of the balance of Panthers Shares as
described below without the Panthers' prior consent:
100% of Panthers Shares during the 90 day period commencing on the
Effective Date;
75% of Panthers Shares during the 1 year period commencing on the
Effective Date;
50% of Panthers Shares during the 18 month period commencing on the
Effective Date; and
25% of Panthers Shares during the 24 month period commencing on the
Effective Date.
Chensoff further agrees that, during the 1-year period commencing on
the Effective Date, he shall not sell any of the Panthers Shares except
pursuant to an underwritten offering of such shares or pursuant to a placement
approved by the Panthers. Upon receipt of written notice that Chensoff desires
to sell a permissible amount of Panthers Shares, the Panther Companies shall
use their reasonable best efforts to accommodate such sale and, in this regard,
the Panther Companies shall attempt to locate an appropriate underwriter or
placement agent for such offering and shall pay the expenses of such
underwriting and the expenses of placement other than the fees of the placement
agent (which fees shall be commercially reasonable). Chensoff shall be free to
sell the permissible amount of Panthers Shares, without the requirement that
such sale be by underwritten offering or pursuant to an approved placement if
the Panther Companies are unable (x) to locate an appropriate underwriter or
placement agent, or (y) having found an appropriate underwriter or placement
agent, to file a registration statement or prepare an appropriate placement
memorandum for the Panthers Shares (that Chensoff desires to sell), within
sixty (60) days from the date of such notice, or (z) to
4
<PAGE> 5
cause the registration statement to become effective or the placement to be
consummated within ninety (90) days of the date of Chensoff's notice. In the
event that the Panther Companies are able to find an appropriate placement
agent and consummate the placement of the Panthers Shares, or an appropriate
underwriter and file a registration statement which shall become effective, as
applicable within ninety (90) days of the date of Chensoff's notice, then
Chensoff agrees that he shall not attempt to sell any of his Panthers Shares
more than one time during the 1-year period following the Effective Date.
1.6 TAX TREATMENT. The parties hereto acknowledge and agree that
the transactions contemplated hereby are intended to be a tax-free transaction
under Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code").
1.7 ADDITIONAL PURCHASE PRICE. Panthers recognizes and agrees
that LeHill is pursuing the acquisition of title to three (3) additional Units
in the Resort, two (2) by foreclosure of non-performing Mortgages ("Foreclosure
Additional Units") and one (1) by purchase from a third party (the "Third Party
Additional Unit"), all three of which are identified on Schedule 1.7 hereto.
If LeHill shall obtain title to any of the Foreclosure Additional Units prior
to the Effective Date, the Base Amount set forth in Section 1.3 above shall not
be adjusted. However, if LeHill shall obtain title to the Third Party
Additional Unit, the Base Amount set forth in Section 1.3 shall be increased by
an amount mutually agreed upon by the parties. Other than for the contemplated
acquisition of the Foreclosure Additional Units, and the Third Party Additional
Units, Chensoff agrees, either directly or indirectly, not to pursue (and shall
be under no obligation to pursue) acquisition of any other Units at the Resort
prior to closing without having first obtained the agreement of Panthers, and
in such event the parties agree to use good faith negotiations to agree upon an
adjustment of the Base Amount attributable to any such further Unit
acquisitions agreed upon. It is further agreed that if it is determined that
LeHill does not hold record fee simple ownership of 322 Units, the parties
shall reduce the Base Amount by an amount that is mutually agreeable to the
parties for each Unit less than 322 held by LeHill, provided that LeHill shall
be required to hold record fee simple ownership of not less than 316 Units as
of Closing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE PANTHER COMPANIES
As a material inducement to each of Chensoff and ResortHill to enter
into this Agreement and to consummate the transactions contemplated hereby, the
Panther Companies make the following representations and warranties to such
parties:
2.1 CORPORATE STATUS. Each of the Panther Companies is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Florida (and, if reincorporated in any other state, shall
at all times be validly existing and in good standing in such other state in
5
<PAGE> 6
which the Panther Companies are reincorporated) and each Panther Company has
the requisite power and authority to carry on its business and to own or lease
its properties.
2.2 CORPORATE POWER AND AUTHORITY. Each of the Panther Companies
has the corporate power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. Each of the Panther Companies has taken all action
necessary to authorize its execution and delivery of this Agreement, the
performance of its respective obligations hereunder and the consummation of the
transactions contemplated hereby.
2.3 ENFORCEABILITY. This Agreement has been duly executed and
delivered by each of the Panther Companies and constitutes a legal, valid and
binding obligation of each of them, enforceable against each of the Panther
Companies in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and general equitable
principles regardless of whether such enforceability is considered in a
proceeding at law or in equity.
2.4 PANTHERS COMMON STOCK. Upon consummation of the transactions
contemplated hereunder and the issuance and delivery of certificates
representing the Panthers Shares to Chensoff, the Panthers Shares will be
validly issued, fully paid and non-assessable shares of Panthers Common Stock.
2.5 NO COMMISSIONS. None of the Panther Companies has incurred
any obligation for any finder's or broker's or agent's fees or commissions or
similar compensation in connection with the transactions contemplated hereby.
2.6 NO VIOLATION. The execution and delivery of this Agreement by
the Panther Companies and the performance by them of their respective
obligations hereunder and the consummation by them of the transactions
contemplated by this Agreement will not: (a) contravene any provision of the
articles of incorporation or bylaws of the Panther Companies; (b) violate or
conflict with any law, statute, ordinance, rule, regulation, decree, writ,
injunction, judgment or order of any Governmental Authority or of any
arbitration award which is either applicable to, binding upon or enforceable
against the Panther Companies; (c) conflict with, result in any breach of, or
constitute a default (or an event which would, with the passage of time or the
giving of notice or both, constitute a default) under, or give rise to a right
to terminate, amend, modify, abandon or accelerate, any Contract which is
applicable to, binding upon or enforceable against the Panther Companies; (d)
result in or require the creation or imposition of any Lien upon or with
respect to any of the property or assets of the Panther Companies; or (e)
require the consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, any court or tribunal or any other
Person, except any applicable filings required under the HSR Act, any SEC
filings required to be made by Panthers, any SEC and state filings contemplated
hereby.
2.7 SEC FILINGS/REGISTRATION STATEMENT. From November 8, 1996
through the date hereof, Panthers has duly and timely filed with the SEC all
reports, proxy statements and other
6
<PAGE> 7
information required to be filed by it under the Exchange Act (the "SEC
Filings"). The SEC Filings, at the time of filing did not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. Except as disclosed in the SEC
Filings, from November 8, 1996 to the date hereof, there has not been any
Material Adverse Change in the business, financial position or results of
operations of Panthers. The Panthers Shares will be issued pursuant to that
prospectus dated June 17, 1997, which forms a part of that post-effective
Amendment No. 1 to the Registration Statement, as supplemented by Supplement
No. 1 dated June 30, 1997. No stop order has been issued suspending the
effectiveness of the Registration Statement.
2.8 CAPITALIZATION. As of the date hereof, the authorized capital
stock of Panthers consists of 100,000,000 shares of Panthers Common Stock
(which number includes 2,600,000 shares of Panthers Common Stock reserved for
issuance under the Panthers' 1996 Stock Option Plan) and 10,000,000 shares of
Class B common stock ("Class B Common Stock"), par value $.01 per share.
Panthers has no shares of preferred stock authorized. As of the date hereof,
Panthers has 23,700,507 shares of Panthers Common Stock issued and outstanding,
with warrants to purchase 869,810 shares of Panthers Common Stock at a price of
$29.01 per share and exchange rights which are convertible, without further
consideration, into 4,242,586 shares of Panthers Common Stock issued and
outstanding; and (b) 255,000 shares of Class B Common Stock issued and
outstanding. In addition, as of the date hereof, Panthers has granted stock
options to purchase 1,962,672 shares of Panthers Common Stock under Panthers'
Stock Option Plan.
2.9 CONTINUATION OF BUSINESS. FPH/RHI is a wholly-owned direct
subsidiary of Panthers. Following the Merger, ResortHill will be a
wholly-owned direct subsidiary of Panthers. Panthers has no present intention
to liquidate, or dissolve ResortHill, or discontinue its business.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF CHENSOFF AND RESORTHILL
As a material inducement to the Panther Companies to enter into this
Agreement and to consummate the transactions contemplated hereby, each of
Chensoff and ResortHill, jointly and severally, make the following
representations and warranties. LeHill, Pelican Hill and ResortHill are
collectively hereinafter referred to as the "LeHill Companies."
3.1 REPRESENTATION CONCERNING RECITALS; CORPORATE/PARTNERSHIP
STATUS.
(a) All of the Recitals set forth in the Recitals section
of this Agreement are true and correct.
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<PAGE> 8
(b) ResortHill is a corporation, and each of Pelican Hill
and LeHill is a limited partnership duly organized or formed, validly existing
and in good standing under the laws of the state of its incorporation or
organization listed in the Recitals hereto and each has the requisite power and
authority to own or lease its properties and to carry on its business as now
being conducted. Each of the LeHill Companies is legally qualified to transact
business in Florida and in the jurisdiction of its organization and is in good
standing in each such jurisdiction. There is no pending or threatened
proceeding for the dissolution, liquidation, insolvency or rehabilitation of
any of the LeHill Companies. ResortHill is, and shall remain until the
Effective Date, an "S" corporation.
3.2 POWER AND AUTHORITY. Each of Chensoff and ResortHill, as
applicable, has the power and authority to execute and deliver this Agreement,
the Lehman Purchase Agreement, the Assignment and Assumption and the Blakely
Assignment, to perform its respective obligations hereunder and thereunder and
to consummate the transactions contemplated hereby. Each of Chensoff and
ResortHill has taken all action necessary to authorize the execution and
delivery of this Agreement, the performance of its respective obligations
hereunder and the consummation of the transactions contemplated hereby.
3.3 ENFORCEABILITY.
(a) This Agreement, the Lehman Purchase Agreement, the
Assignment and Assumption and the Blakely Assignment, have been duly executed
and delivered by Chensoff and this Agreement has been duly executed and
delivered by ResortHill and each of these constitute the legal, valid and
binding obligation of Chensoff and ResortHill, respectively, enforceable
against them in accordance with their respective terms, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
(b) The Lehman Purchase Agreement, which by its terms has
expired, has substantively been reinitiated by execution and delivery of the
Assignment and Assumption and is hereby fully enforceable against Chensoff, as
the date hereof.
3.4 CAPITALIZATION; OWNERSHIP. Chensoff is the record and
beneficial owner of all the outstanding shares of capital stock of ResortHill
free and clear of any Liens. All of the record owners of the partnership
interests in Pelican Hill and LeHill are set forth in the Recitals hereto.
Further, ResortHill owns its partnership interest in LeHill and Pelican Hill,
free and clear of all Liens. To the Best of Chensoff's Knowledge, the
interests of LW-LP, NPI and LW-RTC in Pelican Hill and/or LeHill are free of
all Liens. Provided that LW-LP, NPI and LW-RTC own the partnership interests
in LeHill and Pelican Hill as set forth in the Recitals hereto, then upon
concluding the Merger, the acquisitions contemplated by the Lehman Purchase
Agreement and receipt of the assignment of the Blakely Interest, the Panther
Companies shall own all of the capital stock of ResortHill and all of the
partnership interests of LeHill and Pelican Hill.
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3.5 NO VIOLATION. Except for the restrictions upon transfer of
partnership interests contained in the respective partnership agreements of
LeHill and Pelican Hill, the execution and delivery of this Agreement by
Chensoff and ResortHill, the performance by them of their respective
obligations hereunder and the consummation by them of the transactions
contemplated by this Agreement, the Lehman Purchase Agreement, the Assignment
and Assumption and the Blakely Assignment, will not (i) contravene any
provision of ResortHill's articles of incorporation or bylaws, or the
partnership agreement of Pelican Hill or LeHill, (ii) violate or conflict with
any law, statute, ordinance, rule, regulation, decree, writ, injunction,
judgment or order of any Governmental Authority or of any arbitration award
which is either applicable to, binding upon or enforceable against Chensoff or
ResortHill, (iii) conflict with, result in any breach of, or constitute a
default (or an event which would, with the passage of time or the giving of
notice or both, constitute a default) under, or give rise to a right to
terminate, amend, modify, abandon or accelerate, any Contract which is
applicable to, binding upon or enforceable against any of Chensoff and
ResortHill, (iv) result in or require the creation or imposition of any lien
upon or with respect to any of the property, assets or the issued and
outstanding equity interests of Chensoff or ResortHill, or (v) require the
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Authority, any court or tribunal or any other Person,
except any applicable filings required under the HSR Act, and any SEC and other
filings required to be made by the Panther Companies.
3.6 RECORDS OF THE LEHILL COMPANIES. The copies of the respective
articles of incorporation, bylaws, certificate of limited partnership,
partnership agreement and other organizational documents, as appropriate, of
the LeHill Companies which were provided to the Panther Companies or will be
provided prior to Closing, are true, accurate and complete and reflect all
amendments made through the date of this Agreement or the date of delivery to
Panthers, if later. The minute books and partnership records for the LeHill
Companies made available to the Panther Companies for review were correct and
complete in all material respects as of the date of such review, no further
entries have been made through the date of this Agreement. All material
actions taken by each of the LeHill Companies have been duly authorized or
ratified. All accounts, books, ledgers and official and other records of each
of the LeHill Companies have been fully, properly and accurately kept and
completed in all material respects, and there are no material inaccuracies or
discrepancies of any kind contained therein.
3.7 SUBSIDIARIES. Except as set forth elsewhere in this
Agreement, ResortHill, LeHill and Pelican Hill do not own, directly or
indirectly, any outstanding voting securities of or other interests in, or
control, any other corporation, partnership, joint venture or other business
entity.
3.8 RESORT FINANCIAL STATEMENTS. The Panther Companies have been
delivered the financial statements for the Resort, including the notes thereto,
for the year ended December 31, 1996, audited by Grant Thornton, which has
issued its report thereon (the "Resort Financial Statements"). To the Best of
Chensoff's Knowledge, the Resort Financial Statements fairly and accurately
present the financial condition of the Resort and the results of its operations
as of the date thereof and for the period covered thereby.
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3.9 LEHILL FINANCIAL STATEMENTS.
(a) Prior to the Closing, Chensoff and ResortHill will
deliver to the Panther Companies the financial statements for LeHill, including
the notes thereto, for the year ended December 31, 1996, audited by Altschuler
Melvoin & Glasser, which will issue its report thereon (the "Audited LeHill
Financial Statements"). The Audited LeHill Financial Statements will fairly
and accurately present the financial condition of LeHill and the results of its
operations as of the date thereof and the period covered thereby and will be
prepared in accordance with generally accepted accounting principles
consistently applied, and will reflect all adjustments necessary for a fair
presentation of the financial information contained therein.
(b) At the Closing, Chensoff and ResortHill will deliver
to the Panther Companies an unaudited balance sheet of LeHill as of the
Effective Date (the "Closing Balance Sheet"), which balance sheet will reflect
net assets equal to the sum of (a) $1,000,000 of LeHill's share of the
approximately $1,600,000 quarterly distribution by the Association to be paid
on or about July 15, 1997 to the extent such distribution is actually paid plus
(b) $1.00 plus (c) the principal amounts of any Mortgage that have been
satisfied or paid between the execution of this Agreement and Closing. The
Closing Balance Sheet will fairly present the financial condition of LeHill as
of the Effective Date and will be prepared on a basis consistent with the
balance sheet included in the Audited LeHill Financial Statements.
(c) At the Closing, Chensoff and ResortHill will deliver
to the Panther Companies an unaudited balance sheet of ResortHill as of the
Effective Date which balance sheet will reflect net assets equal to $1.00 (in
addition to its interest in Pelican Hill and LeHill).
3.10 LIABILITIES OF THE RESORT AND THE LEHILL COMPANIES. The
LeHill Companies will not have any liabilities or obligations not reflected in
the balance sheet included in the Audited LeHill Financial Statements except
(a) liabilities incurred by LeHill in the ordinary course of business since
such date and (b) normal accruals, reclassifications and audit adjustments in
respect of LeHill which would be reflected on an audited financial statement
and which would not be material in the aggregate; and the LeHill Companies will
not have any liabilities or obligations not reflected on the Closing Balance
Sheet except for property taxes not due and payable with respect to the Units
as of Closing, liability for which Panthers shall assume. The parties agree
that following Closing the Panthers may receive revenues and receive claims for
expenses of LeHill that relate to a period prior to Closing or that relate to
an obligation owed to LeHill (the revenues derived from the sources identified
on Schedule 3.10 attached hereto) or an obligation owed by LeHill (e.g.
attorneys' fees, title insurance and closing expenses) in connection with
LeHill's acquisition of a Unit prior to Closing or in connection with any of
LeHill's activities including this transaction. The parties agree that
Chensoff shall be entitled to such prior revenues and shall be responsible for
such prior expenses and liabilities. Since December 31, 1996, LeHill has not
(i) incurred any obligations or liabilities (including any indebtedness)or
entered into any transaction or series of transactions involving in excess of
$100,000 in the aggregate out of the ordinary course of business, except for
this Agreement, the Lehman Purchase Agreement, the Assignment and Assumption
and the Blakely
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Assignment, and the transactions contemplated hereby and thereby; (ii) suffered
any theft, damage, destruction or casualty loss, not covered by insurance and
for which a timely claim was filed, in excess of $100,000 in the aggregate;
(iii) waived, canceled, compromised or released any rights having a value in
excess of $100,000 in the aggregate out of the ordinary course of business;
(iv) imposed any security interest or other Lien on any of its Units, Mortgages
or other assets other than in the ordinary course of business consistent with
past practice; or (v) entered into any other transaction or been subject to any
event which has or may have a Material Adverse Effect on LeHill. To the Best
of Chensoff's Knowledge, the Resort does not have any liabilities or
obligations not reflected in the balance sheet included in the Resort Financial
Statements except (a) liabilities incurred by the Resort in the ordinary course
of business since such date, (b) normal accruals, reclassifications and audit
adjustments which would be reflected on an audited financial statement and
which would not be material in the aggregate.
3.11 LITIGATION. Except for (i) any foreclosure suits in
connection with non-performing Mortgages, (ii) that certain class action
lawsuit by Unit-Owners of the Resort against, among others, Shelter Seagate
Corporation ("Shelter Seagate Class Action"), and (iii) the interpleader action
filed in connection with the Shelter Seagate Class Action, to the Best of
Chensoff's Knowledge, there is no action, suit, or other legal or
administrative proceeding or governmental investigation pending, threatened,
anticipated or contemplated against, by or affecting any of the LeHill
Companies or, to the Best of Chensoff's Knowledge, the Resort, or any of their
properties or assets (other than, with respect to the Resort only, any actions
of a type commonly instituted against hotel/resort type properties in the
ordinary course of business which, on the whole, shall not result in a Material
Adverse Effect on the operations of the Resort) or which questions the validity
or enforceability of this Agreement or the transactions contemplated hereby,
and there is no basis for any of the foregoing. There are no outstanding
orders, decrees or stipulations issued by any Governmental Authority in any
proceeding to which any of the LeHill Companies or, to the Best of Chensoff's
Knowledge, the Resort is or was a party which have not been complied with in
full or which continue to impose any material obligations on any of the LeHill
Companies or, to the Best of Chensoff's Knowledge, the Resort.
3.12 REAL ESTATE
(a) LeHill is the record fee simple title holder of 322
Units the legal description of which is set forth on Schedule 3.12(a). LeHill
is also the record holder of the Mortgages, Notes and Mortgage Loans
encumbering certain condominium units at the Resort. The current outstanding
principal balance, status and condominium unit encumbered by each Mortgage is
set forth on Schedule 3.12(a). LeHill owns the Mortgages free and clear of any
Liens. Other than the Units and Mortgages, neither LeHill, Pelican Hill nor
ResortHill owns any other real property or any interest therein (the Units and
Mortgages owned by LeHill are collectively hereinafter referred to as the
"LeHill-Owned Properties"). Schedule 3.12(a) sets forth (i) the legal
description of each Unit and the Declaration of Condominium; and (ii) legal
descriptions of each condominium unit subject to a Mortgage, together with a
list of all title insurance policies relating to such LeHill-Owned Properties,
all of which policies have previously been delivered or will, by Closing, be
delivered to
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the Panther Companies by Chensoff and ResortHill, provided, however, that this
representation and warranty shall not be deemed breached in any way so long as
LeHill holds title to at least 316 Units free of any Liens and subject only to
the matters disclosed on LeHill's existing title policies and Panthers has
received, at Closing, an appropriate reduction of the Base Amount with respect
to the reduction in the number of Units owned by LeHill, as provided under
Section 1.7 hereof. Further, in the event that, prior to Closing, any Mortgage
is repaid, such event shall not result in a breach of this representation, but
LeHill shall retain the principal amount of the Mortgage repaid on the Closing
Balance Sheet.
(b) With respect to each such parcel of LeHill-Owned
Property:
(i) LeHill shall use its best efforts to have,
as of Closing, marketable title to each parcel of LeHill-Owned
Properties free and clear of any Lien other than (x) liens for real
estate taxes not yet due and payable; and (y) encumbrances, easements,
covenants and restrictions and other matters described in the
permitted exceptions listed on Schedule 3.12(b) and (z) any other
exceptions to title Panthers may agree to accept (the "Permitted
Exceptions"). Title to any Unit shall be deemed marketable and this
covenant shall not be deemed breached in any way so long as title to
the Units is subject only to the Permitted Exceptions. LeHill's best
efforts shall include, if necessary, the expenditure of an amount not
to exceed $200,000 to obtain documentation necessary to clear title
exceptions (other than the matters described in clauses (x), (y) and
(z) above) which render title unmarketable. In consideration for
LeHill's exerting its best efforts in connection with this Section,
Panthers agree that it shall obtain a title insurance commitment with
respect to the Units and request that a title insurance policy based
upon this commitment be issued by a title insurance company of
Panthers' choice and at Panthers' expense, such policy to be effective
as of the Closing Date.
(ii) Neither Chensoff nor ResortHill has received
notice of any condemnation proceedings, suits or administrative actions
relating to the LeHill-Owned Properties and to the Best of Chensoff's
Knowledge, none are threatened;
(iii) None of the LeHill-Owned Properties have been
mortgaged by LeHill;
(iv) To the Best of Chensoff's Knowledge, no
notice has been received from any Governmental Authorities alleging
that the Resort facilities lack any approval (including licenses or
permits) of any Governmental Authority required in connection with the
operation thereof, or that such facilities have not been operated and
maintained in substantial accordance with applicable laws, regulations,
ordinances or rules;
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(v) Except for the Agency Agreement and other
agreements executed by Agent in connection with his duties and
responsibilities thereunder, and except for agreements (which require
advance reservations to be made through LeHill and are made subject to
availability) with certain former owners of the Units and certain
personnel associated with certain LeHill Companies relating to their
use, in the aggregate, of not more than 200 room nights during the
remainder of 1997 and not more than 300 nights in 1998, LeHill has not
executed any Contracts granting to any party or parties the right of
use or occupancy of any portion of the parcels of LeHill-Owned
Property;
(vi) Except for the provisions contained in the
Declaration of Condominium, there are no outstanding options or rights
of first refusal to purchase the parcels of LeHill-Owned Property, or
any portion thereof or interest therein;
(vii) To the Best of Chensoff's Knowledge, there
are no material defects affecting the improvements or buildings
constituting the Resort which would render them inadequate for the use
in connection with the operation of the Resort in the manner currently
operated, or, if the former is not the case, provision has been made
to remedy such material defects or to reserve for such remedy in the
Association budget;
(viii) Except for the Agency Agreement and any other
agreements executed by Agent in connection with its duties and
responsibilities thereunder and a Loan Servicing Agreement between
LeHill and Wendover Funding, Inc., LeHill has not executed any service
contracts, management agreements or similar agreements which affect
the LeHill-Owned Property; and
(ix) Except for the special assessments related
to Pelican Bay and its environs which are included as line items on
the real estate tax bills for the Units, neither Chensoff, nor any
LeHill Company has received notice of any special assessment which may
affect any parcel of the LeHill-Owned Property, and to the Best of
Chensoff's Knowledge, no such special assessment is contemplated by
any Governmental Authority.
(c) The Resort is not a lessee, licensee or tenant under,
nor (except for the Agency Agreement and the agreements with the former
unit owners referenced at clause (v) above) are any of the LeHill Companies a
party to any leases, licenses or similar agreements for the use of any real
property.
(d) In its acquisition of Units, LeHill has complied in
all material respects with all applicable requirements of the Association
Governing Documents, Declaration of Condominium and the requirements of
appropriate Governmental Authorities necessary for the proper recording of the
deeds for the Units and has paid all relevant transfer fees to the Association
and all sales or
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use taxes, non-recurring intangibles tax, documentary stamp tax or other excise
tax payable in connection with the acquisition of the Units and Mortgages, the
recording of deeds for the Units and the recording of Mortgages.
3.13 GOOD TITLE TO AND CONDITION OF ASSETS
(a) To the Best of Chensoff's Knowledge, the Fixed Assets
(as hereinafter defined) currently in use in connection with the business and
operations of the Resort are sufficient for the business operations of the
Resort and none of the LeHill Companies shall take any action to cause the
removal, without adequate replacement, of any of the Fixed Assets. For
purposes of this Agreement, "Fixed Assets" means all vehicles, machinery,
equipment, tools, supplies, leasehold improvements, furniture and fixtures used
by or located on the premises of the Resort.
(b) Since October 1, 1995, pursuant to the Management
Contract the Association has reserved four percent (4%) of the Resort's annual
gross revenues on a monthly basis for repair and replacement of Fixed Assets of
the Resort, and, to the Best of Chensoff's Knowledge, the unused balance of the
Resort's replacement reserve on May 31, 1997 was $848,248, as stated in the
Resort's financial statements as of such date.
3.14 COMPLIANCE WITH LAWS.
(a) Each of the LeHill Companies and, to the Best of
Chensoff's Knowledge, the Resort is and has been in compliance with all
material laws, regulations and orders applicable to it, its business and
operations (as conducted by it now and in the past), and the LeHill-Owned
Properties. Neither Chensoff, ResortHill, any of the LeHill Companies nor, to
the Best of Chensoff's Knowledge, the Resort has been cited, fined or otherwise
notified by any Governmental Authority of any asserted past or present failure
to comply with any laws, regulations or orders which has not been corrected or
which failure would cause Material Adverse Affect upon the results of
operations of the Resort and, to the Best of Chensoff's Knowledge, no
proceeding with respect to any such violation is pending or threatened.
(b) Neither Chensoff, any of the LeHill Companies nor, to
the Best of Chensoff's Knowledge, the Resort or any of their employees or
agents, has made any payment of funds in connection with the business of the
Resort or the LeHill Companies which is prohibited by law, and no funds have
been set aside to be used in connection with the business of the Resort or the
LeHill Companies for any payment prohibited by law.
3.15 LABOR AND EMPLOYMENT MATTERS. None of the LeHill Companies
has any employees.
3.16 EMPLOYEE BENEFIT PLANS. None of the LeHill Companies has any
employees and does not have any employee benefit plans.
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3.17 TAX MATTERS. Except with respect to the 1996 tax returns of
the LeHill Companies, all Tax Returns required to be filed prior to the date
hereof with respect to the LeHill Companies or any of their income, properties,
franchises or operations have been timely filed, each such Tax Return has been
prepared in compliance with all applicable laws and regulations, and all such
Tax Returns are true and accurate in all respects. All Taxes due and payable
by or with respect to each of the LeHill Companies have been paid and are
accrued on the Current Balance Sheets or will be accrued on the LeHill
Companies' respective books and records as of the Closing. Further, (i) all
taxable periods of each of the LeHill Companies are open; (ii) no deficiency or
proposed adjustment which has not been settled or otherwise resolved for any
amount of Taxes has been asserted or assessed by any taxing authority against
any of the LeHill Companies; (iii) none of the LeHill Companies has consented
to extend the time in which any Taxes may be assessed or collected by any
taxing authority; (iv) except for its 1996 tax returns, none of the LeHill
Companies has requested or been granted an extension of the time for filing any
Tax Return to a date later than the Effective Time; (v) there is no action,
suit, taxing authority proceeding, or audit or claim for refund now in
progress, pending or threatened against or with respect to any of the LeHill
Companies regarding Taxes; (vi) none of the LeHill Companies has made an
election or filed a consent under Section 341(f) of the Code (or any
corresponding provision of state, local or foreign law) on or prior to the
Effective Time; (vii) there are no Liens for Taxes (other than for current
Taxes not yet due and payable) upon the assets of any of the LeHill Companies;
(viii) none of the LeHill Companies will be required (A) as a result of a
change in method of accounting for a taxable period ending on or prior to the
Effective Date, to include any adjustment under Section 481(c) of the Code (or
any corresponding provision of state, local or foreign law) in taxable income
for any taxable period (or portion thereof) beginning after the Effective Time
or (B) as a result of any "closing agreement,"as described in Section 7121 of
the Code (or any corresponding provision of state, local or foreign law), to
include any item of income or exclude any item of deduction from any taxable
period (or portion thereof) beginning after the Effective Time; (ix) none of
the LeHill Companies has been a member of an affiliated group (as defined in
Section 1504 of the Code) or filed or been included in a combined, consolidated
or unitary income Tax Return; (x) except as provided in their respective
partnership agreements, none of the LeHill Companies is a party to or bound by
any tax allocation or tax sharing agreement or has any current or potential
contractual obligation to indemnify any other Person with respect to Taxes;
(xi) no taxing authority will claim or assess any additional Taxes against any
of the LeHill Companies for any period for which Tax Returns have been filed;
(xii) none of the LeHill Companies has made any payments, and will not become
obligated (under any contract entered into on or before the Effective Date) to
make any payments, that will be non-deductible under Section 280G of the Code
(or any corresponding provision of state, local or foreign law); (xiii) no
claim has ever been made by a taxing authority in a jurisdiction where any of
the LeHill Companies does not file Tax Returns that such LeHill Company is or
may be subject to Taxes assessed by such jurisdiction; and (xiv) none of the
LeHill Companies has any permanent establishment in any foreign country, as
defined in the relevant tax treaty between the United States of America and
such foreign country; (xv) true, correct and complete copies of all income and
sales Tax Returns filed by or with respect to each of the LeHill Companies for
the past two years (it being acknowledged these are the only years for which
filings have been required), will have furnished or made available to the
Panther Companies, and (xvi) none of the LeHill Companies will be subject
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to any Taxes for the period ending at the Effective Time for any period for
which a Tax Return has not been filed imposed pursuant to Section 1374 or
Section 1375 of the Code (or any corresponding provision of state, local or
foreign law); other than closing the Section 361 transaction pursuant to this
Agreement.
In the event any taxing authority examines any return or the LeHill
Companies for any period prior to the Effective Time, or otherwise proposes an
adjustment or deficiency for any such period, and it appears that Panthers will
not bear any liability with respect to such audit, adjustment or deficiency,
Chensoff shall be permitted, at his election, to defend against such audit,
adjustment or deficiency or direct the manner in which such defense is carried
out, including without limitation decisions concerning acceptance or rejection
of settlement offers and filing of appeals and protests. If Chensoff makes
such election, Panthers shall use its best efforts to cooperate in such defense
and Chensoff shall bear the costs thereof.
3.18 INSURANCE. The Association maintains the insurance described
on the Certificate of Insurance attached hereto as Schedule 3.18, and LeHill is
insured thereunder by virtue of being a Unit owner. There are currently no
claims being made on such insurance with respect to any of the LeHill-Owned
Property.
3.19 DISTRIBUTIONS TO MEMBERS OF THE ASSOCIATION. Since the date
of the Association's disbursement for the first quarter of 1997 (which was made
on or about April 15, 1997), except for disbursements by the Association
related to the first quarter of 1997 (and except for disbursement of amounts
from prior quarters that had been previously withheld from disbursement to
certain non-LeHill unit owners), no more than $533,333 has been or will be
distributed to non-LeHill unit owners by the Association prior to the Closing
Date. LeHill warrants and agrees that it shall not distribute to its partners
more than the amount by which LeHill's share of the approximate $1,600,000
distribution to be made by the Association to the Unit Owners on or about July
15, 1997 exceeds $1,000,000. Notwithstanding the foregoing, the Interpleader
account holds approximately $3,600,000 of which $663,000 is to be distributed
in accordance with the settlement agreement, currently pending court approval,
to certain unit owners including LeHill. LeHill is obligated to distribute a
portion of those funds it receives to approximately 82 Persons from whom LeHill
had acquired certain of the Units (the "Grady and Simon Clients"). If this
settlement agreement disbursement is made prior to Closing such disbursement
may be distributed by LeHill to its partners and to the Grady and Simon Clients
and, if it is made after Closing, the Panther Companies acknowledge that it
shall distribute such disbursement to the Grady Clients and to Chensoff, LW-LP,
NPI and LW-RTC. The remainder of the Interpleader account, being
approximately $2,940,000 may be distributed to the Association prior to Closing,
but shall not be distributed to unit owners prior to Closing. Panthers
acknowledges that LeHill has agreed to pay certain former unit owners an amount
which in the aggregate, will not exceed $30,000, upon release of the
interpleader account funds to the Association, and that such obligation shall
not be assumed by Panthers but shall be paid by Chensoff. Other than the
foregoing and other than amounts derived from sources listed on Schedule 3.10,
LeHill shall not distribute any other amounts received by it from the
Association to its partners.
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3.20 LICENSES AND PERMITS. LeHill does not possess any licenses,
governmental approvals, permits or authorizations (collectively, the "Permits")
in respect of its ownership of the Units and Mortgages and LeHill is not
required to maintain any such Permits.
3.21 ENVIRONMENTAL MATTERS.
(a) To the Best of Chensoff's Knowledge, except as
disclosed in the Environmental Report, (i) the Resort has not conducted and
shall not hereafter conduct and (ii) no prior owner or current or prior tenant
or occupant of all or any portion of the Resort has conducted or is conducting,
any Hazardous Substance Activity at, on or under the property at the Resort (A)
in violation of Environmental Laws that would have a Material Adverse Effect on
the operation of the Resort or (B) in a manner inconsistent with the use of the
Resort as a first class resort hotel complex; and
(b) To the Best of Chensoff's Knowledge, except as
disclosed by the Environmental Report, the Resort does not contain asbestos or
any Asbestos-Containing Material and there is no current or potential
contamination of the Resort by asbestos fiber.
3.22 INTELLECTUAL PROPERTY. To the Best of Chensoff's Knowledge,
the Resort has the right to use the "Registry" name in connection with the
operation of its hotel business pursuant to the Management Agreement. None of
the LeHill Companies owns or has interest in and to any trademarks, service
marks, trade names, copyrights, know-how, patents, trade secrets, licenses
(including licenses for the use of computer software programs), and other
intellectual property used in the conduct of its respective business (the
"Intellectual Property"). The conduct of the business of each of the LeHill
Companies and, to the Best of Chensoff's Knowledge, the Resort, as presently
conducted does not infringe or misappropriate any intellectual property rights
held or asserted by any Person.
3.23 ACCURACY OF INFORMATION FURNISHED BY CHENSOFF AND RESORTHILL.
No representation, statement or information made or furnished by Chensoff or
ResortHill to the Panther Companies or any of the Panther Companies'
representatives, including those contained in this Agreement and the various
Schedules attached hereto and the other information and statements referred to
herein and previously furnished by Chensoff and ResortHill contains or shall
contain any untrue statement of a material fact or omits or shall omit any
material fact necessary to make the information contained therein not
misleading. Chensoff and ResortHill have provided or will provide by Closing
the Panther Companies with true, accurate and complete copies of all documents
listed or described in the various Schedules attached hereto.
3.24 BANK ACCOUNTS. Schedule 3.24 sets forth all accounts of each
of the LeHill Companies with any bank, broker or other depository institution,
and the names of all persons authorized to withdraw funds from each such
account. The LeHill-Owned Properties identified on Schedule 3.12(a), and
equipment, inventory, chattel paper and books and records of the Resort and
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each of the LeHill Companies is located as of the date hereof at the Resort or
the address listed in Section 12.1 below.
3.25 NO COMMISSIONS. Neither Chensoff, Resort Hill, Pelican Hill
nor LeHill has incurred any obligation for any finder's or broker's or agent's
fees or commissions or similar compensation in connection with the transactions
contemplated hereby.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS OF THE LEHILL COMPANIES PENDING THE
EFFECTIVE TIME. Chensoff and ResortHill covenant and agree that, between the
date of this Agreement and the Effective Time, the business of the LeHill
Companies shall be conducted only in and it shall not take any action except
in, the ordinary course of business, consistent with past practice. Chensoff
and ResortHill shall use their respective best efforts to preserve intact the
business organization of each of the LeHill Companies, and to preserve its
present relationships with customers, suppliers and other persons with which it
has significant business relations. By way of amplification and not
limitation, except as contemplated by this Agreement, none of the LeHill
Companies shall, between the date of this Agreement and the Effective Time,
directly or indirectly, do or propose or agree to do any of the following
without the prior written consent of the Panther Companies:
(a) amend or otherwise change its articles of
incorporation, bylaws, declaration of condominium, certificate of
limited partnership, partnership agreement or equivalent
organizational documents;
(b) issue, sell, pledge, dispose of, encumber, or,
authorize the issuance, sale, pledge, disposition, grant or
encumbrance of (i) any shares of its capital stock or partnership
interests of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of such
capital stock or partnership interest, or (ii) any of its assets,
tangible or intangible, except in the ordinary course of business
consistent with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock or partnership interests which
would result in a breach of the representations set forth in Sections
3.9(b) or 3.9(c).
(d) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its
capital stock or partnership interests;
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(e) (i) except for the possible acquisition of the Blakely
Interest, acquire (including, without limitation, for cash or shares
of stock or partnership interests, by merger, consolidation, or
acquisition of stock, partnership interest or assets) any interest in
any corporation, partnership or other business organization or
division thereof or any assets, or make any investment either by
purchase of stock, partnership interest or other securities,
contributions of capital or property transfer, or, except in the
ordinary course of business, consistent with past practice, purchase
any property or assets of any other Person, (ii) incur any
indebtedness for borrowed money (other than in the ordinary course of
business) or issue any debt securities or assume, guarantee or endorse
or otherwise as an accommodation become responsible for, the
obligations of any Person, or make any loans or advances, or (iii)
enter into any Contract other than in the ordinary course of business,
consistent with past practice;
(f) hire any employee(s);
(g) take any action other than in the ordinary course of
business and in a manner consistent with past practice with respect to
accounting policies or procedures;
(h) pay, discharge or satisfy any existing claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business and consistent with
past practice of due and payable liabilities reflected or reserved
against in its financial statements, as appropriate, or liabilities
incurred after the date hereof in the ordinary course of business and
consistent with past practice or incurred in connection with this
transaction and except for completing any currently pending
foreclosures of Mortgages, the acceptance of a deed in lieu in
discharge of any debt owed to LeHill or the acquisition of the
condominium unit currently under contract; or
(i) agree, in writing or otherwise, to take or authorize
any of the foregoing actions or any action which would make any
representation or warranty in Article III untrue or incorrect.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 FURTHER ASSURANCES. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby.
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5.2 COMPLIANCE WITH COVENANTS. Chensoff and ResortHill shall
comply and shall cause Pelican Hill and LeHill to comply with all of their
respective covenants under this Agreement.
5.3 COOPERATION. Each of the parties agrees to cooperate with the
other parties in the preparation and filing of all forms, notifications,
reports and information, if any, required or reasonably deemed advisable
pursuant to any law, rule or regulation or the rules of any exchange on which
the Panthers Common Stock is listed or the Nasdaq Stock Market, if applicable,
in connection with the transactions contemplated by this Agreement and to use
its respective best efforts to agree jointly on a method to overcome any
objections by any Governmental Authority to any such transactions.
5.4 HSR ACT AND OTHER ACTIONS. Each of the parties hereto shall
(i) make promptly (and in no event later than July 11, 1997 following the date
hereof) its respective filings, if any, and thereafter make any other required
submissions, under the HSR Act, with respect to the transactions contemplated
hereby, and (ii) use its reasonable best efforts to take, or cause to be taken,
all appropriate actions, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and
make effective the transactions contemplated herein, including, without
limitation, using its best efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of any Governmental
Authority and parties to Contracts with any of the LeHill Companies as are
necessary for the consummation of the transactions contemplated hereby. Each
of the parties shall make on a prompt and timely basis all governmental or
regulatory notifications and filings required to be made by it for the
consummation of the transactions contemplated hereby. The parties also agree
to use best efforts to defend all lawsuits or other legal proceedings
challenging this Agreement or the consummation of the transactions contemplated
hereby and to lift or rescind any injunction or restraining order or other
order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby.
5.5 ACCESS TO INFORMATION. From the date hereof to the Effective
Time, Chensoff and each of the LeHill Companies shall use their good faith best
efforts to (and shall cause its directors, officers, employees, auditors,
counsel and agents) afford the Panther Companies and their respective officers,
employees, auditors, counsel and agents reasonable access at all reasonable
times to the Resort, its properties, offices, and other facilities, to its
officers and employees and to all books and records, and shall furnish such
persons with all financial, operating and other data and information as may be
requested. No information provided to or obtained by the Panther Companies
shall affect any representation or warranty in this Agreement. The Panthers
shall contact and coordinate its activities with Chensoff prior to contacting,
viewing or inspecting the Resort, its properties, offices and other facilities.
5.6 NOTIFICATION OF CERTAIN MATTERS. Chensoff and the LeHill
Companies shall give prompt notice to the Panther Companies of the occurrence
or non-occurrence of any event which would likely cause any representation or
warranty contained herein to be untrue or inaccurate, or any covenant,
condition, or agreement contained herein not to be complied with or satisfied.
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5.7 TAX TREATMENT. The parties will use their respective best
efforts to cause the merger transactions contemplated hereunder to qualify as a
tax-free transaction under the provisions of Section 361 of the Code and do not
presently intend to take any action after the transactions contemplated
hereunder are effected to cause the transactions contemplated hereunder to lose
their tax-free status. All parties hereto agree to comply with the reporting
requirements of Section 361 of the Code and applicable Treasury Regulations
promulgated thereunder.
5.8 CONFIDENTIALITY; PUBLICITY. Except as may be required by law
or as otherwise permitted or expressly contemplated herein, no party hereto or
their respective Affiliates, employees, agents and representatives shall
disclose to any third party this Agreement or the subject matter or terms
hereof without the prior consent of the other parties hereto. No press release
or other public announcement related to this Agreement or the transactions
contemplated hereby shall be issued by any party hereto without the prior
approval of the other parties, except that the Panther Companies may make such
public disclosure which it believes in good faith to be required by law or by
the terms of any listing agreement with or requirements of a securities
exchange or the Nasdaq National Market (in which case the Panther Companies
will consult with Chensoff and ResortHill prior to making such disclosure).
5.9 NO OTHER DISCUSSIONS. Neither Chensoff nor any of the LeHill
Companies or their respective Affiliates, employees, agents and representatives
will (i) initiate, encourage the initiation by others of discussions or
negotiations with third parties, or respond to solicitations by third persons
in an affirmative manner (e.g. supply financials, documents or other material
information) relating to any merger, sale or other disposition of any
substantial part of the assets, business or properties of any of the LeHill
Companies (whether by merger, consolidation, sale of stock or otherwise) or
(ii) enter into any agreement or commitment (whether or not binding) with
respect to any of the foregoing transactions. Chensoff and the LeHill
Companies will promptly notify the Panther Companies if any third party, which
Chensoff has a good faith reason to believe has a genuine interest in the Units
or the Resort, attempts to initiate any solicitation, discussion or negotiation
with respect to any of the foregoing transactions.
5.10 DUE DILIGENCE REVIEW AND ENVIRONMENTAL ASSESSMENT. The
Panther Companies shall be entitled to have conducted, at the Panther
Companies' expense, prior to the Closing a due diligence review of the assets,
properties, books and records of the Resort and each of the LeHill Companies
and an environmental assessment of the Resort and LeHill-Owned Properties
(hereinafter referred to as "Environmental Assessment"). The Environmental
Assessment may include, but not be limited to, a physical examination of the
Resort and LeHill-Owned Properties, and any structures, facilities, or
equipment located thereon, soil samples, ground and surface water samples,
storage tank testing, review of pertinent records, documents, and Licenses of
the Resort and each of the LeHill Companies. Chensoff and the LeHill Companies
shall use their respective best efforts to provide the Panther Companies or
their designated agents or consultants with the access to such property which
the Panther Companies, their agents or consultants require to conduct the
Environmental Assessment. If the Environmental Assessment identifies
environmental contamination which requires remediation or further evaluation
under the Environmental, Health and Safety Laws or if
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the results of the Environmental Assessment are otherwise not satisfactory to
the Panther Companies in their sole discretion, then the Panther Companies may
elect not to close the transactions contemplated by this Agreement in which
case this Agreement shall be terminated. The Panther Companies' failure or
decision not to conduct any such Environmental Assessment shall not affect any
representation or warranty of Chensoff and ResortHill under this Agreement.
Panthers shall contact and coordinate its activities with Chensoff prior to
conducting its due diligence review or Environmental Assessment.
5.11 TRADING IN PANTHERS COMMON STOCK. Except as otherwise
expressly consented to by the Panther Companies, (i) from the date of this
Agreement until the Effective Time, none of Chensoff and ResortHill (or any
Affiliates thereof) will directly or indirectly purchase or sell (including
short sales) any shares of Panthers Common Stock in any transactions effected
on the Nasdaq National Market or any other exchange on which the Panthers
Common Stock shall hereafter be traded or otherwise, or sell, transfer, pledge,
dispose of or otherwise part with any interest in or with respect to or in any
other manner reduce their investment risk with respect to any shares of
Panthers Common Stock to be received pursuant to this Agreement and (ii) during
the two (2) year period following the Effective Date Chensoff will not directly
or indirectly sell or purchase or enter into any agreement, contract or
arrangement to sell or purchase any put or call options or other derivative
securities (including any short sales) with respect to Panthers Common Stock or
enter into any other agreements, contracts or arrangements providing for the
alteration of Chensoff's investment risk with respect to any shares of Panthers
Common Stock; provided, however, that the foregoing shall not prohibit Chensoff
from making outright, unhedged sales or purchases of Panthers Common Stock
after the Closing except as otherwise limited by Section 1.5 under this
Agreement.
5.12 HSR FILING FEES. Panthers agrees that it shall be responsible
for any filing fees payable to the Federal Trade Commission in connection with
Hart-Scott-Rodino Act filings and other required submissions in connection
therewith, however, if the Merger transaction shall not Close for any reason
then Chensoff agrees that he shall return the amount of such fees to Panthers.
5.13 NO ADDITIONAL ACQUISITIONS OF UNITS. Chensoff and ResortHill
agree that, except for the additional Units described in Section 1.7, neither
LeHill nor any other Affiliate of LeHill, Chensoff or ResortHill shall acquire
any other Units at the Resort without the prior written consent of Panthers.
5.14 NO ACQUISITION BY PANTHERS. No Panther Company, nor any of
its Affiliates or any of its directors or officers (including specifically
Dennis J. Callaghan and Theodore V. Fowler) (collectively, "Restricted Panthers
Parties") shall purchase or otherwise acquire any interest in any Unit at the
Resort from the date hereof through the Effective Date. In addition, in the
event this Agreement shall terminate for any reason, none of the Restricted
Panthers Parties shall acquire any Unit or any interest therein for a period of
two (2) years following the date of termination hereof.
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ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE PANTHER COMPANIES
The obligations of the Panther Companies to effect the transactions
contemplated hereunder shall be subject to the fulfillment at or prior to the
Effective Time of the following conditions, any or all of which may be waived
in whole or in part by the Panther Companies:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of Chensoff and ResortHill
contained in this Agreement shall be true and correct at and as of the
Effective Time with the same force and effect as though made at and as of that
time except (i) for changes specifically permitted by or disclosed pursuant to
this Agreement, and (ii) that those representations and warranties which
address matters only as of a particular date shall remain true and correct as
of such date. Chensoff and ResortHill shall have performed and complied with
all of their respective obligations required by this Agreement to be performed
or complied with at or prior to the Effective Time. Chensoff and ResortHill
shall have delivered to the Panther Companies a certificate, dated as of the
Effective Date, duly signed (in the case of ResortHill, by its President),
certifying that such representations and warranties are true and correct and
that all such obligations have been complied with and performed.
6.2 NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY.
Between the date hereof and the Effective Time, (i) there shall have been no
Material Adverse Change to any of the LeHill Companies or, to the Best of
Chensoff's Knowledge, the Resort, (ii) there shall have been no adverse
federal, state or local legislative or regulatory change affecting in any
material respect the services, products or business of the LeHill Companies or,
to the Best of Chensoff's Knowledge, the Resort, and (iii) none of the
properties and assets of the LeHill Companies, including, without limitation,
the Units or the units that secure the Mortgages sold by LeHill or, to the Best
of Chensoff's Knowledge, the Resort, shall have been damaged by fire, flood,
casualty, act of God or the public enemy or other cause (regardless of
insurance coverage for such damage) which damages may have a Material Adverse
Effect thereon, and there shall have been delivered to the Panther Companies a
certificate to that effect, dated the Effective Date and signed by or on behalf
of Chensoff and ResortHill.
6.3 CORPORATE CERTIFICATE AND PARTNERSHIP CERTIFICATE. Chensoff
and ResortHill shall have delivered to the Panther Companies (i) copies of the
articles of incorporation and bylaws of ResortHill as in effect immediately
prior to the Effective Time, (ii) copies of resolutions adopted by the board of
directors and shareholders of ResortHill, and (iii) a certificate of good
standing of ResortHill issued by the Secretary of State of the State of
Illinois and as of a date not more than thirty (30) days prior to the Effective
Date, certified in the case of subsections (i) and (ii) of this Section as of
the Effective Date by the Secretary of ResortHill as being true, correct and
complete. Each of LeHill and Pelican Hill shall have delivered to the Panther
Companies (x) copies of the certificate of limited partnership and the
agreement of limited partnership as in effect immediately prior to the
Effective Time and (y) copies of resolutions of Pelican Hill as general partner
of LeHill,
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and of ResortHill as general partner of Pelican Hill, authorizing the
transactions contemplated by this Agreement, certified in the case of
subsections (x) and (y) of this Section 6.3 as of the Effective Date by the
Secretary of each company as being true, correct and complete.
6.4 OPINION OF COUNSEL. The Panther Companies shall have received
an opinion dated as of the Effective Date from counsel for Chensoff and
ResortHill, in form and substance acceptable to the Panther Companies, to the
effect that:
(i) ResortHill is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Illinois and is authorized to carry on the business now conducted by
it and to own or lease the properties now owned or leased by it;
(ii) Each of LeHill and Pelican Hill is a limited
partnership, duly organized, validly existing and in good standing
under the laws of the State of Delaware and is authorized to carry on
the business now conducted by it and to own or lease the properties
now owned or leased by it;
(iii) ResortHill has obtained all necessary
authorizations and consents of its Board of Directors and its
shareholders to effect the transactions contemplated hereunder;
(iv) All issued and outstanding shares of capital
stock of each of the ResortHill and all partnership interests of
LeHill and Pelican Hill are owned as set forth in the Recitals;
(v) Except as to litigation referred to in this
Agreement, such counsel does not know or have reason to believe that
there is any litigation, proceeding or investigation pending or
threatened against any of the LeHill Companies, or which questions the
validity of this Agreement; and
(vi) This Agreement is a valid and binding
obligation of each of Chensoff and ResortHill, and is enforceable
against each of Chensoff and ResortHill, in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of
creditors' rights generally or general equitable principles.
6.5 CONSENTS. Each of Chensoff and ResortHill shall have received
consents to the transactions contemplated hereby and waivers of rights to
terminate or modify any material rights or obligations of any of them from any
Person from whom such consent or waiver is required under any Contract or
instrument as of a date not more than ten days prior to the Effective Date, or
who, as a result of the transactions contemplated hereby, would have such
rights to terminate or modify such Contracts or instruments, either by the
terms thereof or as a matter of law.
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6.6 SECURITIES LAWS. The Panther Companies shall have received
all necessary consents and otherwise complied with any state or federal
securities laws and requirements of the Nasdaq Stock Market or any other
securities exchange on which the Panthers Common Stock shall be listed
applicable to the issuance of the Panthers Shares, in connection with the
transactions contemplated hereby.
6.7 ACKNOWLEDGMENT OF RECEIPT OF SEC FILINGS. At or prior to the
Closing, Chensoff shall have delivered to Panthers a letter agreement
acknowledging receipt of SEC filings of Panthers, in form and substance
satisfactory to the Panthers.
6.8 LEHILL COMPANIES. At the Closing, Chensoff and ResortHill
shall have delivered to the Panther Companies all certificates evidencing the
shares of capital stock of ResortHill.
6.9 STOCK POWERS. At the Closing, Chensoff shall have delivered
to the Panther Companies, for use in connection with the Held Back Shares,
stock powers executed in blank, with signatures guaranteed.
6.10 NO ADVERSE LITIGATION. There shall not be pending or
threatened any action or proceeding by or before any court or other
governmental body which shall seek to restrain, prohibit, invalidate or collect
damages arising out of the transaction contemplated hereunder or any other
transaction contemplated hereby, and which, in the judgment of the Panther
Companies, makes it inadvisable to proceed with the transaction contemplated
hereunder and other transactions contemplated hereby.
6.11 BOARD APPROVAL. The Board of Directors of the Panther
Companies shall have authorized and approved this Agreement, the Merger and the
transactions contemplated hereby.
6.12 HSR ACT WAITING PERIOD. Any applicable HSR Act waiting period
shall have expired or been terminated.
6.13 DUE DILIGENCE REVIEW. The Panther Companies shall be
satisfied with the results of its due diligence review and Environmental
Assessment.
6.14 OTHER APPROVALS. The Panther Companies shall have received
approval for this transaction from its shareholders, if necessary, and shall
have received all necessary approvals of the Nasdaq National Market or any
other securities exchange on which the Panthers Common Stock shall be listed
and shall have obtained all other necessary approvals.
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ARTICLE VII
CONDITIONS TO THE OBLIGATIONS
OF CHENSOFF AND RESORTHILL
The obligations of Chensoff and ResortHill to effect the transactions
contemplated hereunder shall be subject to the fulfillment at or prior to the
Effective Time of the following conditions, any or all of which may be waived
in whole or in part by Chensoff and ResortHill.
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the Panther Companies
contained in this Agreement shall be true and correct at and as of the
Effective Time with the same force and effect as though made at and as of that
time except (i) for changes specifically permitted by or disclosed pursuant to
this Agreement, and (ii) that those representations and warranties which
address matters only as of a particular date shall remain true and correct as
of such date. The Panther Companies shall have performed and complied with all
of its obligations required by this Agreement to be performed or complied with
at or prior to the Effective Time. The Panther Companies shall have delivered
to a representative of Chensoff and ResortHill a certificate, dated as of the
Effective Date, and signed by an executive officer, certifying that such
representations and warranties are true and correct and that all such
obligations have been complied with and performed.
7.2 PANTHERS SHARES. At the Closing, Panthers shall have issued
all of the Panthers Shares and shall have delivered to Chensoff, as
appropriate, (i) certificates representing the Panthers Shares issued to them
hereunder (with restrictive legends, as appropriate, pursuant to Rule 145(d)
under the Securities Act and reflecting the restrictions set forth in this
Agreement), other than the Held Back Shares, and (ii) copies of stock
certificates representing the Held Back Shares.
7.3 NO ADVERSE LITIGATION. There shall not be pending or
threatened any action or proceeding by or before any court or other
governmental body which shall seek to restrain, prohibit, invalidate or collect
damages arising out of the transactions contemplated hereunder or any other
transaction contemplated hereby, and which in the reasonable collective
judgment of Chensoff and ResortHill, makes it inadvisable to proceed with the
transactions contemplated hereunder and other transactions contemplated hereby.
7.4 HSR ACT WAITING PERIOD. Provided Chensoff and ResortHill have
timely made any required HSR registration filing, any applicable HSR Act
waiting period shall have expired or been terminated.
7.5 EMPLOYMENT OF CHENSOFF. Chensoff and the Panther Companies
shall have entered into an employment agreement which shall provide for the
employment of Chensoff for a term of three (3) years at a compensation rate of
$250,000 per annum and which shall provide for staff expense reimbursements,
the issue of warrants to purchase Panthers Common Stock to Chensoff and
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the grant of options to purchase Panthers Common Stock to Christopher P.
Johnson, and certain non-compete and other provisions as more specifically
described on Schedule 7.5.
7.6 CONCURRENT CLOSING. The transactions contemplated by the
Lehman Purchase Agreement shall have closed concurrent with the closing of the
transaction contemplated by this Agreement.
7.7 JOHNSON OPTION. The Panthers shall have executed and
delivered to Chris Johnson a stock option agreement for that number of shares
of Panthers Common Stock set forth in Schedule 7.5 in accordance with the
Panthers Stock Option Plan. The Panther Companies agree that they shall take
any further action reasonably necessary to cause such stock options to be
issued under the Panthers Stock Option Plan or, if Chris Johnson is not
eligible thereunder, cause the issuance of warrants to purchase Panthers Common
Stock on substantially equivalent terms as Chensoff.
7.8 SECURITIES. Panthers shall have taken all action necessary to
file any necessary supplement to its Registration Statement and any
post-effective amendment to its Registration Statement.
ARTICLE VIII
INDEMNIFICATION
8.1 AGREEMENTS TO INDEMNIFY.
(a) By Chensoff. Subject to the terms set forth herein below
including the limitation contained in Section 8.6, Chensoff agrees to indemnify
and hold the Panther Companies harmless from and against the aggregate of all
expenses, losses, costs, deficiencies, liabilities and damages (including,
without limitation, related counsel and paralegal fees and expenses) incurred
or suffered by the Panther Companies arising out of or resulting from (i) any
material breach of a representation or warranty made by Chensoff or ResortHill
in or pursuant to this Agreement, (ii) any material breach of the covenants or
agreements made by Chensoff or ResortHill in or pursuant to this Agreement,
(iii) any material inaccuracy in any certificate, Schedule or other item
delivered by Chensoff or ResortHill pursuant to this Agreement (collectively,
"Panthers Indemnifiable Damages").
(b) By Panthers. Panthers agrees to indemnify
and hold Chensoff and, to the extent applicable, the LeHill Companies and the
Resort, harmless from and against the aggregate of all expenses, losses, costs,
deficiencies, liabilities and damages (including, without limitation, related
counsel and paralegal fees and expenses) incurred or suffered by any of them
arising out of or resulting from (i) any material breach by any Panther Company
of a representation or warranty made by it hereunder, (ii) any material breach
of covenants or agreements made by Panther Companies hereunder or (iii) any
physical damage to the Resort or the land, buildings or
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other improvements constituting the Resort, or any physical injury to persons,
resulting from any environmental due diligence investigation conducted thereon,
including, without limitation, any environmental testing made thereto
(collectively, the "Chensoff Indemnifiable Damages").
8.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by Chensoff and ResortHill and the Panther
Companies in this Agreement or pursuant hereto shall survive for a period of
one (1) year after the Effective Time (the "Indemnity Period"). No claim for
the recovery of Panthers Indemnifiable Damages or Chensoff Indemnifiable
Damages may be asserted by one of the parties against another after such
representations and warranties shall thus expire, provided, however, that
claims for Indemnifiable Damages first asserted within the applicable period
shall not thereafter be barred. Notwithstanding any knowledge of facts
determined or determinable by any party by investigation, each party shall have
the right to fully rely on the representations, warranties, covenants and
agreements of the other parties contained in this Agreement or in any other
documents or papers delivered in connection herewith. Each representation,
warranty, covenant and agreement of the parties contained in this Agreement is
independent of each other representation, warranty, covenant and agreement.
However, if a representation in this Agreement contains a disclosure that can
reasonably be inferred to apply to a required disclosure in another
representation in this Agreement then such disclosure shall be deemed contained
in such other representations.
8.3 SECURITY FOR CHENSOFF INDEMNIFICATION OBLIGATION. As security
for the agreement by Chensoff to indemnify and hold Panthers harmless as
described in this Article, at the Closing Panthers shall set aside and hold
certificates representing the Held Back Shares issued pursuant to this
Agreement. The entire amount of the Held Back Shares shall be held for the
Indemnity Period. Panthers may set off against the Held Back Shares any
Indemnifiable Damages for which Chensoff may be responsible pursuant to this
Agreement, subject, however, to the following terms and conditions:
(a) The entire amount of Held Back Shares is
subject to being set off for the actual amount of Panthers
Indemnifiable Damages. The Panthers may set off up to $4,000,000 in
Held Back Shares.
(b) Panthers shall give written notice to
Chensoff of any claim for Panthers Indemnifiable Damages hereunder,
which notice shall set forth (i) the amount of Panthers Indemnifiable
Damages which Panthers claims to have sustained by reason thereof, and
(ii) the basis of such claim;
(c) Such set off shall be effected on the later
to occur of the expiration of 30 days from the date of such notice
(the "Notice of Contest Period") or, if such claim is contested, the
date the dispute is resolved, and such set off shall be charged
proportionally against the shares set aside;
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(d) If, prior to the expiration of the
Notice of Contest Period, Chensoff shall notify Panthers in writing of
an intention to dispute the claim and if such dispute is not resolved
within 30 days after expiration of such period (the "Resolution
Period"), then either party may elect that such dispute shall be
resolved by a committee of three arbitrators (one appointed by
Chensoff, one appointed by Panthers and one appointed by the two
arbitrators so appointed), which shall be appointed within 60 days
after the expiration of the Resolution Period. The arbitrators shall
abide by the rules of the American Arbitration Association and their
decision shall be made within 45 days of being appointed and shall be
final and binding on all parties; and
(e) Chensoff may, not more than once
during the Indemnity Period, instruct Panthers in writing to sell some
or all of the Held Back Shares and Panthers shall utilize reasonable
efforts to promptly sell the Held Back Shares following such written
instruction and the net proceeds thereof shall be substituted for such
Held Back Shares in any set off to be made by Panthers pursuant to any
claim hereunder, subject to continued compliance with any applicable
SEC and other regulations. To the extent that Chensoff exercises his
right to request the sale of Held Back Shares, then any such election
shall reduce the number of Panthers Shares that Chensoff is able to
sell at that time under the restrictions on sale contained in Section
1.5. Such reduction to be applied first to the Panthers Shares with
the longest sale restriction.
(f) With respect to any claim made by a
third party which involves Panthers Indemnifiable Damages in an amount
(determined either on the face of such claim or reasonably determined
by mutual agreement of the parties) less than the potential maximum
liability of Chensoff hereunder at the time of the claim, then
Panthers agrees that Chensoff may undertake the defense and or
settlement of such claim at Chensoff's expense, and any payment by
Chensoff of a judgment on such claim or settlement of such claim shall
be made out of the Held Back Shares.
8.4 VOTING OF AND DIVIDENDS ON THE HELD BACK SHARES. Except with
respect to shares transferred pursuant to the foregoing right of setoff (and in
the case of such shares, until the same are transferred), all Held Back Shares
shall be deemed to be owned by Chensoff and Chensoff shall be entitled to vote
the same; provided, however, that, there shall also be deposited with Panthers
subject to the terms of this Article, all shares of Panthers Common Stock
issued to Chensoff as a result of any stock dividend or stock split and all
cash issuable to Chensoff as a result of any cash dividend, with respect to the
Held Back Shares. All stock and cash issued or paid upon Held Back Shares
shall be distributed to the person or entity entitled to receive such Held Back
Shares together with such Held Back Shares.
8.5 DELIVERY OF HELD BACK SHARES. The Panther Companies agree to
deliver to Chensoff no later than the expiration of the Indemnity Period any
Held Back Shares then held by it (or
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proceeds from the Held Back Shares) unless there then remains unresolved any
claim for Indemnifiable Damages or other damages hereunder as to which notice
has been given, in which event any Held Back Shares remaining on deposit (or
proceeds from the sale of Held Back Shares) after such claim shall have been
satisfied shall be returned to Chensoff promptly after the time of
satisfaction.
8.6 AVAILABILITY OF OTHER REMEDIES. Except as
hereinafter provided in this Section 8.6, if this Merger transaction shall
Close, then the set-off remedies contained in Section 8.3 shall be the
exclusive remedy of Panthers hereunder for financial recovery, provided that
this section shall not prohibit or in any way limit Panthers ability to seek
equitable remedies such as injunctive relief and specific performance, or, if
this Merger transaction shall not Close, from pursuing all of the remedies
available to Panthers under Section 10.2, if applicable, and Chensoff's
liability for Panthers Indemnifiable Damages shall be limited to the $4,000,000
value of Held Back Shares unless the Held Back Shares are insufficient to set
off any claim for Panthers Indemnifiable Damages made hereunder in connection
with a material breach of a representation or warranty made pursuant to
Sections 3.1, 3.2, 3.3, 3.4, 3.12(a) (the "Title Claims"). If Title Claims
arise and the Held Back Shares are insufficient to pay Panthers Indemnifiable
Damages related thereto, then, in such event, the Panther Companies may take
any other action or exercise any other remedy available to it by appropriate
legal proceedings to collect the Panthers Indemnifiable Damages for Title
Claims up to the aggregate value of the Panthers Shares delivered to Chensoff
hereunder (and Panthers ability to collect Panthers Indemnifiable Damages in
expressly limited to such aggregate value of the Panthers Shares delivered to
Chensoff). Panthers liability for Chensoff Indemnifiable Damages shall be
limited to an aggregate amount of $4,000,000.
ARTICLE IX
DEFINITIONS
9.1 DEFINED TERMS. As used herein, the following terms shall have
the following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as
in effect on the date hereof.
"Agency Agreement" means, collectively, that certain "Agency
Agreement" entered into between LeHill, as Unit owner, and Property
Directions, Inc. as the Agent with respect to each of the Units owned
by LeHill.
"Association" means the Association of Unit Owners of the
Registry Hotel at Pelican Bay, Inc., a non-profit corporation
organized to manage the condominium.
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"Association Governing Documents" means Declaration of
Condominium, Articles of Incorporation of the Association of Unit
Owners of the Registry Hotel at Pelican Bay, Inc., By-Laws of the
Association of Unit Owners of the Registry Hotel at Pelican Bay, Inc.
and AUO Management Agreement.
"Best of Chensoff's Knowledge" means that state of awareness
or knowledge without independent investigation or inquiry.
"Contract" means any agreement, contract, lease, note,
mortgage, indenture, loan agreement, franchise agreement, covenant,
employment agreement, license, instrument, purchase and sales order,
commitment, undertaking, obligation, whether written or oral, express
or implied.
"Declaration of Condominium" means the Declaration which sets
forth the nature of the property rights of the various owners of
property in the condominium and the covenants running with the land
which affect such rights. All Condominium Documents shall be subject
to the provisions of the Declaration.
"Environmental Report" shall mean the Phase I environment
audit of the Resort conducted on behalf of the Resolution Trust
Corporation (RTC) and presented to Chensoff at the time of his
acquisition of certain of the Mortgages and Units.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles in
effect in the United States of America from time to time.
"Governmental Authority" means any nation or government, any
state, regional, local or other political subdivision thereof, and any
entity or official exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, but not limited
to, any conditional sale or other title retention agreement, any lease
in the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code or comparable
law or any jurisdiction in connection with such mortgage, pledge,
security interest, encumbrance, lien or charge).
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"Management Agreement" means that certain Management Contract
dated as of October 1, 1995 between Property Directions, Inc., as
Agent for the Unit owners, and The Registry Hotel Corporation, a Texas
Corporation, as Operator.
"Material Adverse Change (or Effect)"means a change (or
effect) in the condition (financial or otherwise), properties, assets,
liabilities, rights, obligations, operations, business or prospects,
which change (or effect) individually or in the aggregate is
materially adverse to such condition, properties, assets, liabilities,
rights, obligations, operations, business or prospects.
"Partnership Interests" means the general and limited
partnership interests of the LeHill Partners, L.P., a Delaware limited
partnership.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, estate, trust, unincorporated
association, joint venture, Governmental Authority or other entity, of
whatever nature.
"Register", "registered" and "registration" refer to a
registration of the offering and sale of securities effected by
preparing and filing a registration statement in compliance with the
Securities Act and the declaration or ordering of the effectiveness of
such registration statement.
"Registration Statement" means the Registration Statement on
Form S-1 (Registration Number 333-23135) which was declared effective
by the SEC on June 17, 1997.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Tax Return" means any tax return, filing or information
statement required to be filed in connection with or with respect to
any Taxes; and
"Taxes" means all taxes, fees or other assessments, including,
but not limited to, income, excise, property, sales, franchise,
intangible, withholding, social security and unemployment taxes
imposed by any federal, state, local or foreign governmental agency,
and any interest or penalties related thereto.
9.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall
have the defined meanings when used in any certificates, reports or other
documents made or delivered pursuant hereto or thereto, unless the context
otherwise requires.
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(b) Terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa.
(c) All matters of an accounting nature in
connection with this Agreement and the transactions contemplated hereby shall
be determined in accordance with GAAP applied on a basis consistent with prior
periods, where applicable.
(d) As used herein, the neuter gender shall also
denote the masculine and feminine, and the masculine gender shall also denote
the neuter and feminine, where the context so permits.
ARTICLE X
TERMINATION
10.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time:
(a) by mutual written consent of all of
the parties hereto at any time prior to the Closing; or
(b) by the Panther Companies, in the
event of a material breach by Chensoff and ResortHill of any provision
of this Agreement; or
(c) by Chensoff and ResortHill in the
event of a material breach by the Panther Companies of any provision
of this Agreement; or
(d) by any of the Panther Companies or
Chensoff and ResortHill if the Closing shall not have occurred by (i)
August 15, 1997, or (ii) such later date as the transactions
contemplated by the Lehman Purchase Agreement shall close including,
upon the grant by LW-LP, NPI and LW-RTC (if any grant be made) of an
extension to the closing date by LW-LP, NPI and LW-RTC to such later
date on which the HSR Act waiting period shall have expired in
connection with the transactions contemplated under this Agreement..
10.2 EFFECT OF TERMINATION. Except for the provisions of Section
8.1(b)(iii) and Section 5.14 hereof, which shall survive any termination of
this Agreement, in the event of termination of this Agreement pursuant to
Section 10.1(b), the Panther Companies shall be entitled to the return of the
$5,175,000 paid pursuant to the Assignment and Assumption executed concurrently
herewith; otherwise, this Agreement shall forthwith become void and of no
further force and effect and the parties shall be released from any and all
obligations hereunder; provided, however, that nothing herein shall relieve any
party from liability for the willful and intentional
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<PAGE> 34
material breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
10.3 WILFUL BREACH OF LEHMAN PURCHASE AGREEMENT. In the event that
the purchase transaction contemplated by the Lehman Purchase Agreement does not
Close due to a breach by LW-LP, NPI or LW-RTC of that agreement then the
termination date set forth in Section 10.1(d) shall be extended until Panthers
shall be able to secure its benefits under the Lehman Purchase Agreement,
provided Panthers diligently and continuously pursue its remedies against such
parties and further such extension shall not exceed one (1) year after the date
of breach.
ARTICLE XI
GENERAL PROVISIONS
11.1 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by
certified or registered mail (first class postage pre-paid), guaranteed
overnight delivery, or facsimile transmission if such transmission is confirmed
by delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such party shall
designate in writing to the other party):
(a) IF TO THE PANTHER COMPANIES:
Florida Panthers Holdings, Inc.
100 N.E. Third Avenue, 10th Floor
Ft. Lauderdale, FL 33301
Attn: Steven M. Dauria
Telecopy: (954) 768-1948
WITH A COPY TO:
Florida Panthers Holdings, Inc.
450 East Las Olas Boulevard, Suite 1500
Ft. Lauderdale, Florida 33301
Attention: William M. Pierce
Telecopy: (954) 627-5080
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<PAGE> 35
WITH A COPY TO:
Akerman, Senterfitt & Eidson, P.A.
One Southeast Third Avenue, 28th Floor
Miami, Florida 33131
Attention: Stephen K. Roddenberry, Esq.
Telecopy: (305) 374-5095
(b) IF TO CHENSOFF OR RESORTHILL:
Gary V. Chensoff
Three First National Plaza, Suite 3600
Chicago, Illinois 60602
Telecopy: (312) 977-4405
WITH A COPY TO:
Ungaretti & Harris
Three First National Plaza, Suite 3500
Chicago, Illinois 60602
Attention: Richard Ungaretti
Telecopy: (312) 977-4405
Notice shall be deemed given on the date sent if sent by overnight
delivery or facsimile transmission and on the date delivered (or the date of
refusal of delivery) if sent by certified or registered mail.
11.2 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules attached hereto), the other documents delivered at the Closing
pursuant hereto and any agreements executed by the parties contemporaneously
with this Agreement, contains the entire understanding of the parties in
respect of its subject matter and supersedes all prior agreements and
understandings (oral or written) between or among the parties with respect to
such subject matter. The Exhibits and Schedules constitute a part hereof as
though set forth in full above.
11.3 EXPENSES. Except as otherwise provided herein, the parties
shall pay their own fees and expenses, including their own counsel fees,
incurred in connection with this Agreement or any transaction contemplated
hereby. The Panther Companies acknowledge that provided it will not result in
a breach of the representation set forth in Section 3.9(b), that LeHill and
ResortHill may use its funds to pay for their and Chensoff's fees and expenses.
11.4 AMENDMENT; WAIVER. This Agreement may not be modified,
amended, supplemented, canceled or discharged, except by written instrument
executed by all parties. No failure to exercise, and no delay in exercising,
any right, power or privilege under this Agreement
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<PAGE> 36
shall operate as a waiver, nor shall any single or partial exercise of any
right, power or privilege hereunder preclude the exercise of any other right,
power or privilege. No waiver of any breach of any provision shall be deemed
to be a waiver of any preceding or succeeding breach of the same or any other
provision, nor shall any waiver be implied from any course of dealing between
the parties. No extension of time for performance of any obligations or other
acts hereunder or under any other agreement shall be deemed to be an extension
of the time for performance of any other obligations or any other acts. Except
as expressly limited hereunder, the rights and remedies of the parties under
this Agreement are in addition to all other rights and remedies, at law or
equity, that they may have against each other.
11.5 BINDING EFFECT; ASSIGNMENT. The rights and obligations of
this Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall
be construed to give any other person any legal or equitable rights hereunder.
Except as expressly provided herein, the rights and obligations of this
Agreement may not be assigned by any party without the prior written express
consent of all other parties.
11.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together
shall constitute one and the same instrument.
11.7 INTERPRETATION. When a reference is made in this Agreement to
an article, section, paragraph, clause, schedule or exhibit, such reference
shall be deemed to be to this Agreement unless otherwise indicated. The
headings contained herein and on the schedules are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement
or the schedules. Whenever the words "include,""includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." Time shall be of the essence in this Agreement.
11.8 GOVERNING LAW; INTERPRETATION. This Agreement shall be
construed in accordance with and governed for all purposes by the laws of the
State of Florida applicable to contracts executed and to be wholly performed
within such State.
11.9 ARM'S LENGTH NEGOTIATIONS. Each party herein expressly
represents and warrants to all other parties hereto that (a) before executing
this Agreement, said party has fully informed itself of the terms, contents,
conditions and effects of this Agreement; (b) said party has relied solely and
completely upon its own judgment in executing this Agreement; (c) said party
has had the opportunity to seek and has obtained the advice of counsel before
executing this Agreement; (d) said party has acted voluntarily and of its own
free will in executing this Agreement; (e) said party is not acting under
duress, whether economic or physical, in executing this Agreement; and (f) this
Agreement is the result of arm's length negotiations conducted by and among the
parties and their respective counsel.
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[Signatures On Following Page]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
FLORIDA PANTHERS HOLDINGS, INC., a Florida
corporation
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
FPH/RHI ACQUISITION CORP., a Florida
corporation
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
/s/ GARY V. CHENSOFF
--------------------------------------------
GARY V. CHENSOFF, individually
RESORTHILL, INC., a Florida corporation
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
<PAGE> 39
EXHIBIT A
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") is entered into as
of May 19, 1997 by and between Gary V. Chensoff ("Buyer") and LW-LP, a
Delaware corporation ("LW-LP"), NP Investment III Co., Inc., a Delaware
corporation ("NPI") and LW-RTC, Inc., a Delaware corporation ("LW-RTC") (LW-LP,
NPI and LW-RTC being collectively referred to as "Seller").
RECITALS
A. ResortHill, Inc., a Delaware corporation and an
affiliate of Buyer ("ResortHill"), and NPI are the general partners and LW-RTC
is the sole limited partner of Pelican Hill, Associates, L.P., a Delaware
limited partnership ("Pelican Hill"), formed pursuant to the terms of a
Partnership Agreement dated as of February 22, 1995 (the "Pelican Hill
Partnership Agreement").
B. Pelican Hill is the sole general partner and
ResortHill and LW-LP are limited partners of LeHill Partners L.P., a Delaware
limited partnership ("LeHill"), formed pursuant to the terms of an Amended and
Restated Limited Partnership Agreement dated as of February 22, 1995, which
partnership owns condominium units and mortgages in a property known as the
Registry Resort and Convention Hotel at Pelican Bay in Naples, Florida (the
"LeHill Assets").
C. Buyer is currently engaged in negotiating with
Florida Panthers Holdings, Inc., a Florida corporation ("FPH"), a potential
transaction in which FPH may acquire, subject to various terms and conditions,
some of the partnership interests in LeHill (the "Potential FPH Transaction").
D. Seller desires, instead of participating in the
Potential FPH Transaction, to sell to Buyer, and Buyer is willing to purchase
from Seller, Seller's entire partnership interests in each of Pelican Hill and
LeHill, all upon the terms and conditions set forth herein.
AGREEMENT
In consideration of the mutual representations, warranties,
covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE
THE PURCHASE
1. THE CLOSING. Subject to the terms and conditions
of this Agreement, the consummation of the transactions contemplated herein
(the "Closing") shall take place at the offices of Ungaretti & Harris, 3500
Three First National Plaza, Chicago, Illinois 60602 on a date designated by
Buyer, which shall be (a) on or before June 30, 1997 or (b) if Buyer has made
the Extension
<PAGE> 40
Payment specified in Section 6, on or before August 15, 1997. The date on
which the Closing occurs is hereinafter referred to as the Closing Date.
2. SELLER'S DELIVERY AT CLOSING. On the Closing Date,
Seller shall deliver to Buyer an assignment of all of Seller's right, title and
interest as a general partner in Pelican Hill and a limited partner in Pelican
Hill and LeHill and of all rights, title and claims Seller may have to the
LeHill Assets as shall exist on the Closing Date (collectively, the "Purchased
Interests"). The Purchased Interests shall be delivered to Buyer at Closing
free and clear of liens, claims or encumbrances.
3. BUYER'S PURCHASE OF THE PURCHASED INTERESTS. On
the Closing Date, in consideration for the Purchased Interests, Buyer shall pay
Seller by wire transfer to an account designated by Seller the Purchase Price,
as defined below, minus (a) One Million Dollars ($1,000,000) of the Initial
Deposit specified in Section 5 of this Article 1 and (b) the Extension Payment,
if any, specified in Section 6 of this Article 1. The Purchase Price shall be
Seventy-Two Million Five Thousand Seven Hundred Fifty-Two Dollars
($72,005,752), subject to increase or decrease, as appropriate, to reflect any
changes in the assumed closing date of June 30, 1997 or the assumed capital
contributions of Two Million One Hundred Thousand Dollars ($2,100,000) needed
to close current condominium unit purchase transactions or the assumption that
the Proposed FPH Transaction is for 321 condominium units.
4. ASSUMED LIABILITIES. From and after the Closing
Date, Buyer shall assume and hold Seller harmless from any and all further
obligation or liability existing on the Closing Date or as may arise in the
future as a result of Seller's interests in Pelican Hill or LeHill. In return,
Seller, on or after the Closing Date, relinquishes any and all rights,
interests or claims it may have or assert against Buyer, other than claims
arising out of Buyer's fraud, bad faith or willful misconduct, with respect to
Pelican Hill, LeHill or the LeHill Assets, and relinquishes any claim on
proceeds derived by ResortHill, Pelican Hill, LeHill, Buyer or any of their
affiliates from consummation of the Potential FPH Transaction.
5. INITIAL DEPOSIT. On the date hereof, Buyer shall
pay Seller by wire transfer to an account designated by Seller the sum of One
Million One Hundred Twenty-Five Thousand Dollars ($1,125,000) (the "Initial
Deposit"). One Hundred Twenty Five Thousand Dollars ($125,000) shall not be
applied toward the Purchase Price.
6. EXTENSION PAYMENT. If at any time on or before
June 30, 1997, Buyer notifies Seller that Buyer is not prepared to close on
June 30, 1997 but still desires to acquire the Purchased Interests (an
"Extension Notice"), and Buyer pays to Seller by wire transfer to an account
designated by Seller the additional sum of Four Million Dollars ($4,000,000)
(the "Extension Payment"), Buyer may extend the Closing Date to a date not
later than August 15, 1997.
7. FORFEITURE OF INITIAL DEPOSIT AND EXTENSION
PAYMENT. The Initial Payment shall be nonrefundable and shall be forfeited to
Seller unless the Closing has occurred on or before June 30, 1997 or Buyer has
delivered the Extension Notice and made the Extension Payment. The Extension
Payment shall likewise be nonrefundable and shall be forfeited to Seller unless
the Closing has occurred on or before August 15, 1997. Forfeiture of the
Initial Deposit and the
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Extension Payment, if any, shall constitute liquidated damages for failure of
Buyer to close and shall constitute Seller's sole and exclusive remedy against
Buyer for such failure. Notwithstanding the foregoing, no forfeiture of the
Initial Payment or the Extension Payment, if any, shall occur, and such
payment(s) shall promptly be refunded, if Seller fails to approve the final
agreement referred to in Section 6 of Article 2 or Buyer's Closing Conditions,
as specified in Section 2 of Article 5 have not been satisfied on or before the
applicable Closing Date.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF BUYER
1. AUTHORITY. Buyer has, and any entity to which
Buyer assigns its rights under this Agreement pursuant to Section 5 of Article
6 (a "Permitted Assignee") will have, the power and authority to execute and
deliver the Agreement, to perform his or its obligations hereunder and to
consummate the transactions contemplated hereby.
2. ORGANIZATIONAL STATUS. Any Permitted Assignee to
which Buyer assigns its rights under this Agreement will be duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization and will have the requisite power and authority to conduct its
business.
3. ENFORCEABILITY. This Agreement has been duly
executed and delivered by Buyer and constitutes a legal, valid and binding
obligation of Buyer, and if Buyer assigns its rights under this Agreement to a
Permitted Assignee, will constitute a legal, valid and binding obligation of
such Permitted Assignee, enforceable against Buyer or such Permitted Assignee,
as the case may be, in accordance with its terms, except as the same may be
limited by applicable laws and general equitable principles regardless of
whether such enforceability is considered in a proceeding at law or in equity.
4. NO VIOLATION. The execution and delivery of this
Agreement by Buyer and the performance of Buyer's obligations hereunder by
Buyer or any Permitted Assignee will not violate or contravene any law,
article, writ, ordinance, rule, regulation, decree, injunction, judgment or
order to which Buyer or such Permitted Assignee is a party or by which either
Buyer or such Permitted Assignee or any of their respective properties is
bound.
5. NO COMMISSIONS. Buyer has not incurred any
obligation for a finder's or other fee or commission in connection with this
transaction.
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6. POTENTIAL FPH TRANSACTION TERMS. Attached hereto
as Exhibit 1 is a summary of the major terms of the Potential FPH Transaction
currently under discussion with FPH. Buyer will advise Seller in writing of
any proposed changes to the terms of the Potential FPH Transaction from those
summarized in Exhibit 1, and Seller will have the right to approve any changes
to such terms of the Potential FPH Transaction, as well as the right to approve
any final agreement between Buyer, any entity owned by Buyer and FPH.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
1. CORPORATE STATUS. Each of LW-LP, NPI and LW-RTC is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite power and authority to
conduct its business.
2. CORPORATE POWER AND AUTHORITY. Seller has the
power and authority to execute and deliver the Agreement, to perform their
obligations hereunder and to consummate the transactions contemplated hereby.
3. ENFORCEABILITY. This Agreement has been duly
executed and delivered by Seller and constitutes a legal, valid and binding
obligation of Seller, enforceable against it in accordance with its terms,
except as the same may be limited by applicable laws and general equitable
principles regardless of whether such enforceability is considered in a
proceeding at law or in equity.
4. NO VIOLATION. The execution and delivery of this
Agreement by Seller and its performance of its obligations hereunder will not
violate or contravene any law, article, writ, ordinance, rule, regulation,
decree, injunction, judgment or order to which it is a party to or by which
either it or any of its property is bound.
5. NO COMMISSIONS. Seller has not incurred any
obligation for a finder's or other fee or commission in connection with this
transaction.
6. OWNERSHIP. Seller has, and upon consummation of
the transactions contemplated by this Agreement, will convey to Buyer, good and
marketable title and interest to the Purchased Interests, free of any liens,
claims or encumbrances whatsoever.
ARTICLE 4
CONDUCT OF BUSINESS PENDING AND AFTER THE CLOSING DATE
1. SELLER'S AGREEMENTS. Seller hereby consents,
subject to its right to approve any final agreement between Buyer, any entity
owned by Buyer and FPH, to ResortHill's acceptance of the FPH Offer and
acknowledges and agrees that:
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(a) Prior to June 30, 1997 (or if Buyer has made
the Extension Payment specified in Section 6 of Article 1,
August 15, 1997), Seller will not solicit offers for, nor
engage in any discussions with respect to the sale of its
interest in, Pelican Hill or LeHill.
(b) Prior to June 30, 1997 (or if Buyer has made
the Extension Payment specified in Section 6 of Article 1,
August 15, 1997), NPI will not exercise its right to become
a "Buying General Partner" or a "Selling General Partner"
pursuant to the provisions of Section 5.1 of the Pelican
Hill Partnership Agreement.
(c) Pending consummation of the transactions
contemplated by the FPH Offer, Buyer and ResortHill may
cause Pelican Hill and LeHill to afford to FPH full and
complete access to the books and records of Pelican Hill and
LeHill and to the LeHill Assets.
(d) Seller will not be entitled to receive any
distributions from either Pelican Hill or LeHill between the
date hereof and the Closing Date or at any time after the
Closing Date, except as specified in Section 3 of this
Article 4.
2. BUYER'S AGREEMENTS. Buyer agrees that:
(a) Prior to the Closing Date Buyer will cause
ResortHill to exercise its fiduciary responsibilities as a
general partner of Pelican Hill and Pelican Hill to exercise
its fiduciary responsibilities as general partner of LeHill,
without regard to the pendency of the transactions
contemplated hereby and the Potential FPH Transaction.
Without limiting the generality of the foregoing, Buyer
agrees that it will not directly or indirectly acquire any
condominium units or mortgages in the Registry Resort other
than through LeHill.
(b) Buyer will include in any agreements with FPH
relating to the Potential FPH Transaction covenants by FPH
that it will not, at any time prior to the Closing Date, (i)
disclose the terms of the Potential FPH Transaction or (ii)
directly or indirectly acquire any condominium units or
mortgages in the Registry Resort.
3. CONSEQUENCE OF FAILURE TO CLOSE. In the event the
transactions contemplated in this Agreement fail to occur: (a) Buyer shall have
no liability to Seller beyond forfeiture of the Initial Deposit and the
Extension Payment, if any; (b) Seller shall remain a general and limited
partner of Pelican Hill and a limited partner of LeHill as if this Agreement
had never been executed; and (c) Seller shall be entitled to receive all
distributions from either Pelican Hill or LeHill that would have been made but
for Section 1(d) of Article 4 of this Agreement.
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ARTICLE 5
CLOSING CONDITIONS
1. SELLER'S CLOSING CONDITIONS. The obligation of
Seller to close the transactions contemplated by this Agreement shall be
conditioned upon (a) the continuing accuracy of Buyer's representations and
warranties in Article 2 and the delivery by Buyer to Seller of a certificate to
that effect; (b) the delivery by Buyer's counsel of an opinion with respect to
the matters specified in Sections 1, 2 and 3 of Article 2; (c) the delivery by
Buyer of the payment specified in Section 3 of Article 1; and (d) the approval
by Seller described in Section 6 of Article 2 of the Potential FPH Transaction.
2. BUYER'S CLOSING CONDITIONS. The obligation of
Buyer to close the transactions contemplated by this Agreement shall be
conditioned upon (a) the continuing accuracy of Seller's representations and
warranties in Article 3 and the delivery by Seller to Buyer of a certificate to
that effect; (b) the delivery by Seller's counsel of an opinion with respect to
the matters specified in Sections 1, 2, 3 and 4 of Article 3; and (c) the
delivery by Seller of the assignment specified in Section 2 of Article 1.
ARTICLE 6
GENERAL PROVISIONS
1. NOTICES. All notices, demands, claims and other
communications hereunder shall be in writing and shall be delivered by
certified mail, guaranteed overnight delivery or confirmed facsimile
transmission to the following addresses and telecopier numbers:
(a) if to Seller, to:
LW-LP, Inc.
190 South LaSalle Street
14th Floor
Chicago, Illinois 60603
Telecopier: (201)524-5467
NP Investment III Co. Inc.
1201 Elm Street
Suite 5400
Dallas, Texas 75270
Telecopier: (214) 745-5723
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LW-RTC, Inc.
190 South LaSalle Street
14th Floor
Chicago, Illinois 60603
Telecopier: (201)524-5467
(b) if to Buyer, to
Gary V. Chensoff
Three First National Plaza
Suite 3600
Chicago, Illinois 60602
Telecopier: (312)9774405
2. ENTIRE AGREEMENT. This Agreement represents the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all understandings, either written or oral, between them.
3. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of Illinois,
without regard to the principles thereof respecting the conflict of laws.
4. AMENDMENT: WAIVER. This Agreement may be amended
only in writing signed by both of the parties, and no provision hereof may be
waived by either party except in writing.
5. ASSIGNMENT. Buyer, upon written notice to Seller,
may assign Buyer's rights under this Agreement to an entity wholly-owned by
Buyer.
6. BINDING EFFECT. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective heirs,
administrators, successors and permitted assigns.
7. NONDISCLOSURE. Neither Seller nor Buyer nor any
Permitted Assignee of Buyer will disclose either the terms of this Agreement or
the terms of the Potential FPH Transaction at any time prior to the Closing
Date.
8. COUNTERPARTS. This Agreement may be executed in
multiple counterparts, which together will constitute one and the same
instrument.
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<PAGE> 46
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and the year first above written.
BUYER:
/s/ Gary V. Chensoff
---------------------------------------
Gary V. Chensoff
SELLER:
LW-LP, INC., a Delaware corporation
By:
------------------------------------
Its:
--------------------------------
NP INVESTMENT II CO., INC., a Delaware
corporation
By:
------------------------------------
Its:
--------------------------------
LW-RTC, INC., a Delaware corporation
By:
------------------------------------
Its:
--------------------------------
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<PAGE> 47
The undersigned, as the general partner of LeHill, hereby consents and
agrees to the transfer to Buyer of the limited partnership interest of Seller
in LeHill contemplated by the foregoing Agreement.
PELICAN HILL ASSOCIATES, L.P., a
Delaware limited partnership
By: ResortHill, Inc., an Illinois
corporation, its general partner
By: /s/ Gary V. Chensoff
----------------------------------
Gary V. Chensoff, President
The undersigned, as the general partner of Pelican Hill hereby consents
and agrees to the transfer to Buyer of the limited partnership interest of
Seller in Pelican Hill contemplated by the foregoing Agreement.
RESORTHILL, INC., an Illinois corporation
By: /s/ Gary V. Chensoff
---------------------------------------
Gary V. Chensoff, President
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<PAGE> 48
EXHIBIT B
ASSIGNMENT, ASSUMPTION, CONTRIBUTION AND CONSENT AGREEMENT
THIS ASSIGNMENT, ASSUMPTION, CONTRIBUTION AND CONSENT AGREEMENT (this
"Agreement") is entered into as of July ___, 1997, by and among Gary V.
Chensoff ("Chensoff") as assignor; Florida Panthers Holdings, Inc., a Florida
corporation and/or one or more of its assigns ("Panthers") as assignee; LW-LP,
a Delaware corporation ("LW-LP"); NP Investment III Co. Inc., a Delaware
corporation ("NPI") and LW-RTC, Inc., a Delaware corporation ("LW-RTC")
(LW-LP, NPI and LW-RTC are collectively referred to herein as "Seller").
WHEREAS, Chensoff is a party to that certain Purchase Agreement dated
May 19, 1997 (the "Purchase Agreement", a copy of which is attached hereto as
Exhibit "A") which contemplates the transfer by Seller to Chensoff and his
assigns of certain partnership interests in LeHill Partners L.P., a Delaware
limited partnership ("LeHill") and its sole general partner, Pelican Hill
Associates, L.P., a Delaware limited partnership ("Pelican Hill") (such
partnership interests collectively referred to herein as "Lehman Interests") in
accordance with the terms and conditions thereof. The Purchase Agreement
provides that Seller shall sell, transfer, convey and assign their respective
interests in the Lehman Interests to Chensoff for a Purchase Price of
Seventy-Two Million Five Thousand Seven Hundred Fifty-Two Dollars ($72,005,752)
subject to increase or decrease as set forth in the Purchase Agreement;
WHEREAS, Purchase Agreement did expire pursuant to its terms on June
30, 1997;
WHEREAS, Chensoff and Seller have agreed to renew, extend and reenter
into the Purchase Agreement on the same terms contained therein, except that
the Extension Notice date shall be July 8, 1997, such renewal to be dated as of
July 1, 1997 by Chensoff and Seller;
WHEREAS, Chensoff wishes to assign his rights under the Purchase
Agreement to Panthers and Panthers has agreed to assume all of Chensoff s
rights and obligations thereunder, and Seller has agreed to consent to such an
assignment and discharge all of Chensoff s obligations under the Purchase
Agreement;
WHEREAS, pursuant to that certain Merger Agreement of even date
herewith (the "Merger Agreement", a form of which is attached hereto as Exhibit
"B"), ResortHill, Inc. an Illinois corporation ("ResortHill") has agreed to
merge with a subsidiary of Panthers;
WHEREAS, pursuant to Section 1.5 of the Merger Agreement, some of the
shares to be delivered to Chensoff will be held back (the "Held Back Shares")
to secure the obligations of Chensoff to indemnify the Panther Companies (as
that term is defined in the Merger Agreement) for the Panthers Indemnifiable
Damages (as that term is defined in the Merger Agreement);
<PAGE> 49
WHEREAS, under Section 10.2 of the Merger Agreement in the event the
Merger Agreement is terminated under certain circumstances identified therein,
the Panther Companies are entitled to a return of amounts previously paid by
them.
WHEREAS, the Seller and Chensoff desire to allocate certain risks
between themselves.
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth in the Purchase Agreement and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged;
W I T N E S S E T H:
1. Subject to Panthers' payment, to be made not later than 5:00 p.m. local
time in New York City, New York on July 8, 1997, of both (i) an
assignment fee to Chensoff in the amount of $175,000 and (ii) the sum of
$5,000,000 to Seller (representing the $1,000,000 balance of the Initial
Deposit due Seller under Article 1, Section 5 of the Purchase Agreement
and the $4,000,000 Extension Payment under Article 1, Section 6 of the
Purchase Agreement) and subject to Seller extending the Purchase
Agreement until 5:00 p.m. local time in New York City, New York, July 8,
1997, Chensoff does hereby SELL, ASSIGN, TRANSFER, CONVEY, SET OVER AND
CONFIRM to Panthers to have and to hold forever, all of his right, title
and interest of every kind and character whatsoever in the Purchase
Agreement, such assignment and transfer SUBJECT, HOWEVER, to the
condition subsequent that the closing by Panthers of its acquisition of
Seller's interests under the Purchase Agreement must be made concurrently
with the closing of the transaction contemplated under the Merger
Agreement.
2. Panthers hereby agrees to assume and discharge all of Chensoff's rights,
powers, duties and obligations under the Purchase Agreement.
3. Chensoff and Panthers each covenants and agrees with the other that it
will do, execute, acknowledge and deliver, or cause to be done, executed,
acknowledged and delivered, any and all such further acts, instruments,
papers and documents, as may be necessary to carry out and effectuate the
intent and purposes of this Agreement, including, without limitation,
execution of another purchase agreement with Seller on the same terms as
the Purchase Agreement.
4. Except as specifically set forth in the section entitled "Consent of
Seller" below, notwithstanding any of the foregoing provisions, no
provision of this Agreement shall in any way modify, replace, amend,
change, rescind, waive or in any way affect the express provisions
(including, but not limited to, the warranties, covenants, agreements,
conditions, representations and indemnification obligations) set forth in
the Purchase Agreement.
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<PAGE> 50
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the day and year first above
written.
ASSIGNOR:
/s/ GARY V. CHENSOFF
-----------------------------------------
GARY V. CHENSOFF
ASSIGNEE:
FLORIDA PANTHERS HOLDING, INC., a
Florida corporation
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
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<PAGE> 51
EXHIBIT C
PLAN OF MERGER
This Plan of Merger (this "Plan") is adopted as of ________________,
1997 among FPH/RHI MERGER CORP., INC., a Florida corporation ("Merger Corp."),
and RESORTHILL, INC., an Illinois corporation (the "Company").
R E C I T A L S
The boards of directors and shareholders of Merger Corp. and the
Company have determined that it is advisable and in the best interests of each
such corporation and its respective shareholders that Merger Corp. be merged
(the "Merger") with and into the Company on the terms and subject to the
conditions set forth herein.
ARTICLE I
THE MERGER
At the Effective Time (as defined in Article V hereof), Merger Corp.
shall be merged with and into the Company in accordance with the Illinois
Business Corporation Act (the "Act"), and the separate existence of Merger
Corp. shall cease and the Company shall thereafter continue as the surviving
corporation (the "Surviving Corporation") under the laws of the State of
Illinois.
ARTICLE II
THE SURVIVING CORPORATION
A. At the Effective Time, the Articles of Incorporation of the
Company, as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation.
B. At the Effective Time, the Bylaws of the Company, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation, until thereafter altered, amended or repealed in accordance with
the Act and the Articles of Incorporation and Bylaws of the Surviving
Corporation.
C. At the Effective Time, the officers and directors of Merger
Corp. shall be the officers and directors of the Surviving Corporation until
their successors are elected and have qualified.
<PAGE> 52
ARTICLE III
MANNER AND BASIS OF CONVERTING SHARES
A. At the Effective Time, each share of common stock of the
Company, no par value (the "Company Common Stock"), which shall be issued and
outstanding (other than shares of Company Common Stock held in treasury) shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into ______________ shares of common stock, $0.01 par
value per share, of Florida Panthers Holdings, Inc., a Florida corporation and
the parent of Merger Corp. ("Panthers Common Stock").
B. At the Effective Time, each share of Company Common Stock held
in treasury shall be canceled and extinguished without any conversion thereof.
C. At the Effective Time, each share of common stock of Merger
Corp., $1.00 par value per share, issued and outstanding immediately prior to
the Effective Time, shall be automatically converted into one share of Company
Common Stock, which shall be the only outstanding common stock of the Surviving
Corporation immediately following the Effective Time.
ARTICLE IV
EFFECTIVE OF MERGER
At the Effective Time, all property, rights, privileges, powers and
franchises of the Company and Merger Corp. shall vest in the Surviving
Corporation, and all liabilities and obligations of the Company and Merger
Corp. shall become liabilities and obligations of the Surviving Corporation.
ARTICLE V
EFFECTIVE TIME
As used in this Agreement, the term "Effective Time" shall mean 12:01
a.m. on __________, 1997.
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