As filed with the Securities and Exchange Commission on November 19, 1996
Registration No. 333-________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PAN AM CORPORATION
(Exact name of registrant as specified in its charter)
FLORIDA 65-0450311
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9300 N.W. 36TH STREET
MIAMI, FLORIDA 33178
(305) 873-3877
(Address of principal executive offices, including zip code)
---------------------------------
JOHN J. OGILBY, JR.
9300 N.W. 36TH STREET
MIAMI, FLORIDA 33178
(305) 873-6039
(Name, address and telephone number, including
area code, of agent for service)
WITH A COPY TO:
TEDDY D. KLINGHOFFER, ESQ.
STEARNS WEAVER MILLER WEISSLER
ALHADEFF & SITTERSON, P.A.
150 WEST FLAGLER STREET, SUITE 2200
MIAMI, FLORIDA 33130
(305) 789-3200
Approximate date of commencement of proposed sale to the public:
as soon as practicable after the effective date of the Registration Statement.
---------------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
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, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
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. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===================================================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE (1) OFFERING PRICE(1) FEE (1)
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<S> <C> <C> <C> <C>
Common Stock, par value 250,000 $9.81 $2,452,500 $743.18
$.0001 per share shares
===================================================================================================================================
</TABLE>
(1) Estimated solely for purpose of calculating the registration fee
pursuant to Rule 457(g) on the basis of the average of the high and low
prices of the Common Stock as quoted on the AMEX on November 14, 1996.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON
SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS
EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER
AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE
AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MIGHT DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION, DATED NOVEMBER 19, 1996
PROSPECTUS
250,000 SHARES
PAN AM CORPORATION
COMMON STOCK
This Prospectus relates to (i) the offering by Pan Am Corporation
(f.k.a. "Frost Hanna Mergers Group, Inc.") (the "Company") of up to 250,000
shares (the "Shares") of common stock, par value $.0001 per share, of the
Company ("Common Stock"), issuable by the Company upon the exercise of
outstanding warrants and options (the "Warrants"), and (ii) the offering of the
Shares received upon exercise of such Warrants from time to time by those
certain security holders named herein (the "Selling Shareholders"). See "Selling
Shareholders and Plan of Distribution." Unless the context indicates otherwise,
the "Company" refers to Pan Am Corporation and its subsidiaries.
The Selling Shareholders have advised the Company that they may
exercise the Warrants and sell all or a part of the Shares in transactions on
the American Stock Exchange (the "AMEX"), at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Selling Shareholders may effect such transactions by
selling the Shares to or through agents, dealers or underwriters designated from
time to time and such agents, dealers or underwriters may receive compensation
in the form of discounts, concessions or commissions from the Selling
Shareholders and/or the purchasers of Shares for whom they may act as agent or
to whom they may sell as principals, or both. See "Selling Shareholders and Plan
of Distribution." The Company will not receive any of the proceeds from the sale
of the Shares. The Company will receive proceeds upon the exercise of the
Warrants, but will bear all expenses of the offering hereunder other than
underwriter discounts, concessions or commissions incurred, if any, in
connection with the sale of the Shares.
The Common Stock is quoted on the AMEX under the symbol "PAA." On
November 14, 1996, the closing sale price of the Common Stock on the AMEX was
$9.9375 per share.
INVESTMENT IN THE COMPANY'S COMMON STOCK IS
SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS ON PAGE 5."
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION SHOULD 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 PURCHASE THE SECURITIES OFFERED BY THIS
PROSPECTUS IN ANY JURISDICTION IN WHICH, OR TO OR FROM ANY PERSON TO OR FROM
WHOM, IT IS UNLAWFUL TO MAKE SUCH AN OFFER, OR SOLICITATION OF AN OFFER. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY DISTRIBUTION OF THE SECURITIES OFFERED
PURSUANT TO THIS PROSPECTUS SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN OR
IN THE AFFAIRS OF THE COMPANY SINCE THE DATE OF THIS PROSPECTUS OR THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
The date of this Prospectus is November __, 1996.
<PAGE>
TABLE OF CONTENTS
PAGE
----
Available Information................................... 2
Information Incorporated by Reference................... 3
The Company............................................. 4
Risk Factors............................................ 5
Use of Proceeds ........................................ 12
Selling Shareholders and Plan of Distribution........... 12
Legal Matters........................................... 13
Experts................................................. 13
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files periodic reports, proxy and information statements
and other information, with the Securities and Exchange Commission (the "SEC")
pursuant to the Exchange Act, relating to its business, financial statements and
other matters. Such reports, proxy and information statements and other
information can be inspected and copied at the public reference facilities
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the SEC's regional offices at 7 World Trade Center, Suite 1300, New York, N.Y.
10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material can also be obtained from
the Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. Such information is also available on the
internet at http;//www.sec.gov
This Prospectus does not contain all the information set forth in the
Registration Statement on Form S-3 (the "Registration Statement") filed by the
Company with the SEC with respect to the securities to which the Prospectus
relates, certain parts of which are omitted in accordance with the rules and
regulations of the SEC. For further information with respect to the Company and
the Common Stock, reference is made to the Registration Statement including the
exhibits thereto, which may be inspected at the above referenced public
reference facilities of the SEC. Statements contained herein concerning the
provisions of any document are not necessarily complete and in each instance
reference is made to the copy of the document filed as an exhibit or schedule to
the Registration Statement. Each such statement is qualified in its entirety by
reference to the copy of the applicable documents filed with the SEC.
The Common Stock is listed on the AMEX and reports and proxy statements
and other information concerning the Company also can be inspected at the
offices of the AMEX at 86 Trinity Place, New York, New York 10006.
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<PAGE>
INFORMATION INCORPORATED BY REFERENCE
The following documents previously filed with the SEC by the Company
are incorporated herein by this reference:
(1) The Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1995, filed with the
SEC on March 29, 1996.
(2) The Company's Quarterly Report on Form 10-QSB for the
quarterly period ended March 31, 1996, filed with the
SEC on May 15, 1996.
(3) The Company's Quarterly Report on Form 10-QSB for the
quarterly period ended June 30, 1996, filed with the
SEC on August 14, 1996.
(4) The Company's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 1996, filed
with the SEC on November 14, 1996.
(5) The Company's Current Report on Form 8-K, dated
September 23, 1996, filed with the SEC on October 8,
1996.
(6) The Company's Current Report on Form 8-K, dated
October 14, 1996, as amended, filed with the SEC
on October 18, 1996.
(7) The description of the Company's common stock, par
value $.0001 per share, contained in the Company's
Registration Statement on Form SB-2, declared
effective on March 21, 1994 (Registration No.
33-73428-A).
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of this offering shall be deemed to be incorporated
by reference herein and made a part hereof from the date of filing of such
documents. Any statements contained in a document incorporated by reference
herein shall be deemed to be modified or superseded for purposes hereof to the
extent that a statement contained herein (or in any other subsequently filed
document which also is incorporated by reference herein) modifies or supersedes
such statement. Any statement so modified or superseded shall not be deemed to
constitute a part hereof except as so modified or superseded.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH DOCUMENTS, OTHER THAN
EXHIBITS TO SUCH DOCUMENTS, ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROSPECTUS IS DELIVERED UPON
WRITTEN OR ORAL REQUEST TO PAN AM CORPORATION, 9300 N.W. 36TH STREET, MIAMI,
FLORIDA 33178, ATTENTION: JOHN J. OGILBY, JR., TELEPHONE (305) 873-6039.
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<PAGE>
THE COMPANY
The Company was formed in October 1993 to serve as a vehicle to effect
a merger, exchange of capital stock, asset acquisition or other similar business
combination (a "Business Combination") with an operating business (an "Acquired
Business") which the Company believed had growth potential. In March 1994, the
Company successfully consummated its initial public offering from which it
derived net proceeds of approximately $10,142,000 (the "Net Proceeds").
Approximately 80% of the Net Proceeds was held in escrow pending the
consummation of a Business Combination and was released to the Company upon
consummation of the merger (the "Merger") of PA Acquisition Corporation, a
Florida corporation and a wholly-owned subsidiary of the Company (the "Sub"),
with and into Pan American World Airways, Inc., a Florida corporation ("PAWA"),
on September 23, 1996, the terms of which are described below.
On March 13, 1996, the Company, PAWA and Sub entered into a definitive
agreement (the "Acquisition Agreement"), providing for, among other things, the
Merger of Sub with and into PAWA with PAWA becoming a wholly-owned subsidiary of
the Company. PAWA was a newly organized corporation established to operate a new
low fare, full service airline under the "Pan Am" name, serving selected
long-haul routes between major United States cities. Upon consummation of the
Merger on September 23, 1996, among other things, (i) each outstanding share of
common stock of PAWA (the "PAWA Common Stock") was converted into one share of
Common Stock, and as a result, the Company issued an aggregate of approximately
7.5 million shares of its Common Stock to the owners of all of the issued and
outstanding shares of PAWA Common Stock which constituted approximately 69% of
the then outstanding shares of the Common Stock, without giving effect to the
issuance of approximately 1.8 million shares of Common Stock issuable,
subsequent to the Merger, upon the exercise of certain warrants and options;
(ii) each outstanding option, warrant, or other right to purchase PAWA Common
Stock was converted into a right to acquire shares of Common Stock with the
terms and conditions of vesting, the number of shares of common stock subject
thereto and the exercise price thereof remaining the same; and (iii) the Company
name was changed to "Pan Am Corporation."
The Merger was treated, for accounting purposes, as a capital
transaction equivalent to the issuance of stock by PAWA for FH's net monetary
assets, accompanied by a recapitalization of PAWA.
The Company's principal executive offices are located at 9300 N.W.
36th Street, Miami, Florida 33178, and its telephone number is (305) 873-6039.
For further information about the business and operations of the Company,
reference is made to the Company's reports incorporated herein by reference. See
"Information Incorporated by Reference."
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<PAGE>
RISK FACTORS
An investment in the shares of Common Stock offered by this Prospectus
involves a high degree of risk. In addition to the other information contained
or incorporated by reference herein, the following factors should be considered
carefully in evaluating the Company and its business prospects.
RISKS RELATING TO THE COMPANY
DEVELOPMENT STAGE ENTERPRISE. The Company is a development stage
enterprise that has devoted substantially all its efforts since inception to
establishing its business. The Company has only recently commenced airline
operations and has minimal revenues to date and there is no assurance that it
will be able to increase its revenues significantly. Prior to commencement of
its airline operations, Pan Am incurred significant expenses while developing
and implementing its systems, standards and procedures for its operation. Pan Am
will continue to incur such expenses while it continues to attract customers and
increase its revenues. Neither the Company nor PAWA is a successor to nor should
the Company or PAWA be confused with Pan American World Airways, Inc., a New
York corporation ("Former PAWA"), which ceased operations in 1991. The rights
and obligations of the Former PAWA were discharged in bankruptcy. As part of the
bankruptcy proceedings, PAWA indirectly purchased the various "Pan Am" trade
names, trademarks and other intellectual property rights previously owned by the
Former PAWA. In addition, certain of the Company's employees, including Mr.
Martin Shugrue, President and Chief Executive Officer of the Company, were once
employed by the Former PAWA. However, the Company has no other association with
the Former PAWA.
NEED FOR ADDITIONAL FINANCING; LIMITED OPERATING REVENUES. The
Company's business is capital intensive, and the Company's capital requirements
are expected to increase significantly in connection with the continued
development of its airline operations. The Company anticipates, based on
currently proposed plans and assumptions relating to its operations, that its
current working capital, the proceeds from the Merger, anticipated proceeds from
a certain advance relating to future ticket sales and projected cash flow from
operations will be sufficient to satisfy its contemplated cash requirements for
at least 12 months following the consummation of the Merger. In the event the
Company's plans change or its assumptions change or prove to be inaccurate, or
if the proceeds from the Merger, such anticipated advance or projected cash flow
prove to be insufficient, the Company may be required to seek additional
financing or curtail its growth activities. To the extent the Company incurs
indebtedness, the Company will be subject to risks associated with incurring
substantial indebtedness, including the risks that interest rates may fluctuate
and cash flow may be insufficient to pay principal and interest on any such
indebtedness. The Company has no current arrangements with respect to, or
sources of, additional financing and it is not anticipated that existing
shareholders of the Company will provide any portion of the Company's future
financing requirements. There can be no assurance that additional financing will
be available to the Company on acceptable terms, or at all.
OPERATING PLAN. The Company's success will depend primarily on the
extent to which its assumptions as to future revenues and costs prove to be
correct. Those assumptions are based on the management of the Company's
knowledge and experience and on historical industry data available from
government sources. No independent market studies have been conducted concerning
the extent to which travelers would use the Company's proposed airline services,
nor are any such studies planned. Although many of the Company's managerial and
supervisory
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<PAGE>
personnel have had substantial airline industry experience and some have worked
together in the past, the Company has virtually no operating history. The
Company's operating plan also is based on existing market conditions for airline
service to the routes it initially intends to service. The Company's routes
could become uneconomical if the economies of its market area or other parts of
the United States deteriorate. Accordingly, there is no firm basis, other than
the management of the Company's judgment, on which to estimate the volume of
passenger traffic or the amount of revenues the Company's planned operations
will generate.
REGULATION. The Company is an air carrier subject to the jurisdiction
of and regulation by the United States Department of Transportation (the "DOT")
and the United States Federal Aviation Administration (the "FAA") under the
Federal Aviation Act. The DOT is primarily responsible for regulating economic
aspects of air transportation including, but not limited to, air carrier
certification and fitness, insurance, leasing arrangements, allocation of route
rights, authorization of proposed scheduled and charter operations, tariffs,
consumer protection, unfair methods of competition, unjust discrimination, and
deceptive practices. The DOT is authorized to prescribe forms of account, to
require reports from air carriers, to review and approve/disapprove contracts
between carriers for cooperative purposes, and to inspect a carrier's books,
records, and property. The DOT also has authority to investigate and institute
proceedings for the enforcement of the Federal Aviation Act and its economic
regulations, and may in certain circumstances assess civil penalties, revoke a
carrier's operating authority and/or seek criminal sanctions.
In authorizing air carrier services, the DOT must determine whether a
carrier is fit, willing, and able to engage in the air transportation services
it has proposed and to comply with the requirements of the Federal Aviation Act
and related regulations, and that the air transportation services proposed are
consistent with public convenience and necessity. In determining an air
carrier's fitness, the DOT primarily examines managerial competence, operating
and financial plans and compliance disposition. Certificates issued by the DOT
confer no proprietary rights on the certificate holder. The DOT may impose
conditions or restrictions on the certificates it issues; the DOT may also
modify, amend, or revoke such certificates. Certificates may be revoked for
various reasons including the willful failure to comply with the certificate's
terms, statutory provisions, or the orders, rules or regulations of the DOT.
The Company is also subject to the jurisdiction of and regulation by
the FAA primarily with respect to aircraft maintenance and operations generally,
including flight operations, equipment maintenance, aircraft noise, ground
facilities and equipment, flight dispatch, communications, training and
licensing of flight crews, maintenance and flight dispatch personnel, flight
time, aircraft registration and inspection and other matters relating to air
safety. The FAA requires each air carrier to obtain and maintain an operating
certificate and certificates of airworthiness for all of its aircraft. The FAA
has the authority to suspend temporarily or revoke permanently the operating
authority and certificates of the Company or its licensed personnel for failure
to comply with FAA regulations and to assess civil penalties for such failures.
The Company's flight personnel, flight and emergency procedures, aircraft and
maintenance facilities will be subject to periodic inspections and tests by the
FAA. The Company believes that the FAA often applies strict scrutiny to the
operations of small, newer airlines to ensure proper compliance with FAA
regulations making them susceptible to regulatory demands that can negatively
impact their operations.
The DOT and FAA also have authority under the Aviation Safety and Noise
Abatement Act of 1979, as amended, under the Airport Noise and Capacity Act of
1990 and, along with
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<PAGE>
the Environmental Protection Agency, under the Clean Air Act, as amended, to
monitor and regulate aircraft engine noise and exhaust emissions. All air
carriers are also subject to certain provisions of the Communications Act of
1934, as amended, because of their extensive use of radio and other
communication facilities, and are required to obtain an aeronautical radio
license from the Federal Communications Commission ("FCC"). To the extent that
the Company is subject to FCC requirements, it will need to comply with those
requirements.
The Company is also subject to the state and local laws and regulations
at locations where it operates and the regulations of various local authorities
operating the airports it serves. For example, local governments and authorities
in certain markets have adopted regulations governing various aspects of
aircraft operations, including noise abatement, curfews, and use of airport
facilities. The Company's operations will be, and may become, subject to
additional regulatory requirements. From time to time, legislation is proposed
in Congress, state legislatures, and local governments, and regulations are
proposed by the DOT, FAA, and other government agencies, which could materially
impact the Company's operations and financial condition.
Given the recent airline incidents and the current concern for airline
safety, the Company and other new entrant airlines will likely come under
increased scrutiny from various governmental agencies, including without
limitation, the DOT and the FAA. It appears that companies that outsource
maintenance operations may receive particularly heightened attention.
Additionally, as a result of such events, it has been suggested that the FAA
will be substantially restructured. It is impossible for the Company to predict
the impact of such increased scrutiny or restructuring on its ability to
maintain or procure all required licenses from governmental agencies or upon its
future operations.
COMPETITION. The Company faces significant and varying competition from
a large number of airlines. The Company's competitors include many airlines
which are larger and have greater financial resources than the Company. The
Company also faces competition from other carriers pursuing low-cost/low-fare
strategies similar to that of the Company. Carriers compete for travel customers
in a variety of ways, including wholesaling discounted seats to tour operators,
promoting to travel agents prepackaged tours for sale to retail customers, and
selling discounted excursion airfare products to the public. As a result, the
Company generally must compete for customers against the lowest
revenue-generating seats of other airlines. Other airlines may meet or price
their fares below the Company's fares or introduce new non-stop service between
cities served by the Company and prevent the Company from attaining load factors
necessary to maintain profitable operations. The Company's ability to compete
successfully on the basis of price depends on its ability to operate at costs
equal to or lower than its competitors or potential competitors. In addition,
competitors with greater financial resources than the Company may have the
financial capacity to price their fares below the Company's fares or increase
their service on routes served by the Company, which could adversely affect the
Company's profitability. In this regard, competitors are more likely to react to
competition on long-haul routes such as the ones the Company services and
intends to service as such routes tend to be the most profitable. Apart from the
need for certain government licenses and the need for and the availability of
financing, there are few barriers to entry into the airline business in the
United States. Since 1990, the DOT has received in excess of 45 new applications
for approval to operate a scheduled airline and in excess of 38 new applications
for approval to operate as a charter or cargo carrier. A number of small
airlines with low-cost/low-fare strategies have commenced operations in recent
years. The Company may face competition from existing and new start-up airlines
in selected markets from time to time.
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<PAGE>
RISKS ASSOCIATED WITH GROWTH. The Company intends to expand its
operations as it adds aircraft to its fleet and enters new markets. The
Company's growth may also take the form of acquisitions or mergers with other
airline operators. The resulting growth in the Company's operations may strain
the Company's management and operational resources. The Company's future success
will depend in large part upon its ability to expand and manage its organization
as its operations expand. The Company's failure to manage growth effectively
could have a materially adverse effect on the Company's results of operations
and financial condition and on its ability to execute its expansion plans.
LIMITED NUMBER OF AIRCRAFT AND ROUTES. The Company commenced its
operations by leasing five A-300-B4 aircraft and may lease additional A-300-B4
aircraft, if market or other conditions justify leasing additional aircraft.
Because of its small fleet size and limited number of routes, the Company is at
a competitive disadvantage compared to other airlines who can spread their
operating costs across more equipment and routes and retain connecting traffic
(and revenue) within their much more extensive route networks. The Company has a
limited capability to place spare aircraft into service if necessary. The
Company has entered into agreements with contractors to perform scheduled and
unscheduled maintenance on its aircraft at locations within its route system.
The contractors work under the supervision of an onsight maintenance supervisor
of the Company and are FAA certified mechanics who are qualified to perform
scheduled and unscheduled maintenance and repairs. If the maintenance were to
require special parts not stocked by the Company, an additional delay could be
incurred while necessary parts were delivered to the site. Since reliable
service is important to the Company's business, any interruption of service as a
result of maintenance requirements or equipment problems could materially and
adversely affect the Company's service and reputation.
TRADEMARK MATTERS. The Company believes that one of its principal
assets are the various "Pan Am" trade names, trademarks and other intellectual
property rights (collectively, the "Pan Am Intellectual Property") acquired by
PAWA in December 1993 indirectly from Former PAWA. There can be no assurance
that the Company will have the financial and other resources necessary to
enforce the Pan Am Intellectual Property from infringement by others. In
addition, while PAWA has recorded all registered trademarks included in the Pan
Am Intellectual Property with the United States Patent and Trademark Office,
PAWA has until recently been unable to effect certain foreign registrations
because of the failure of Eclipse Holdings, Inc. ("Eclipse") to execute and
deliver certain assignments. Eclipse had initially submitted the winning bid in
bankruptcy court to purchase the Pan Am Intellectual Property, but was unable to
secure financing for its bid and subsequently assigned its rights to purchase
the Pan Am Intellectual Property to PAWA. PAWA has an action against Eclipse
seeking to compel Eclipse to execute and deliver the required assignment
documentation. Pursuant to such action, Eclipse was compelled to execute such
assignment documentation. Eclipse has appealed such order. Additionally, Eclipse
has filed an action against PAWA challenging PAWA's ownership to the Pan Am
Intellectual Property. The Company's management believe that this action will be
resolved in PAWA's favor and that the likelihood of an unfavorable outcome for
PAWA in this matter is remote. However, in the unlikely event that PAWA does not
prevail in that action, the loss of PAWA's rights to the Pan Am Intellectual
Property would have a material adverse effect on the Company. In addition,
although the Company and PAWA are not successors to Former PAWA, certain foreign
creditors of Former PAWA might seek within their foreign jurisdictions to
recover debts of Former PAWA from the Company or PAWA and their property
(including the Pan Am Intellectual Property) might be subject to attachment or
seizure on a "successor liability" theory if they were to commence operations in
certain foreign countries. The Company's management does not have any plans to
commence operations in any
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<PAGE>
foreign countries where this may be a problem and does not believe that any such
claims are meritorious.
DEPENDENCE ON KEY PERSONNEL. The Company is dependent on the active
participation of its principal executive officers. The Company has entered into
an employment agreement with Mr. Martin Shugrue, its President and Chief
Executive Officer, and intends to obtain a key person life insurance policy on
Mr. Shugrue. However, the loss of services of Mr. Shugrue or any other of the
Company's principal executive officers could materially and adversely affect the
business of the Company and its future prospects. In addition, the Company's
ability to successfully commence operations will be dependent upon its ability
to attract and retain additional qualified management personnel. Competition for
qualified management personnel in the airline industry is intense, and there can
be no assurance that the Company will be able to attract and retain such
personnel.
AIRPORT AND GATE ACCESS. The Company plans to establish a limited
number of routes to provide non-stop service from JFK to Los Angeles, San
Francisco, Miami and future plans for Chicago and San Juan. Presently,
operations at a number of airports, including JFK and Chicago-O'Hare, are
regulated by governmental authorities through "slot" allocations. Each slot
represents governmental authorization to take off or land at the particular
airport during a specified time period. Slots may be purchased or leased from
their current owners and lessees. There can be no assurance that the Company
will be able to obtain such slots at acceptable prices or for suitable times.
Moreover, any other condition such as operating curfews, that would deny or
limit the Company's access to the airports that the Company intends to utilize
or that diminishes the desire or ability of potential customers to travel
between any of those cities may have a materially adverse effect on the
Company's business. In addition, the Company will be required to acquire gate
access at each airport. Gates may be limited in some airports, which would
adversely affect the Company's operations.
AVAILABILITY OF AIRCRAFT. Although management believes there is
currently an adequate supply of A-300-B4 aircraft available for lease at
favorable prices and terms, the Company cannot predict how long these conditions
will continue, and additional aircraft may not be available on satisfactory
terms or at the time needed for additional growth. Such potential unavailability
of additional aircraft for lease at favorable prices and terms could adversely
impact the Company's ability to expand its operations.
EMPLOYEE RELATIONS. The Company's operating plan is based in part on
the premise that it will operate initially with lower personnel costs than many
established airlines principally due to significantly lower base salaries of
personnel. There can be no assurance that the Company will be able to attract
and retain qualified personnel at these lower base salaries or, if realized,
that any such advantages would exist for any extended period of time. The
Company's employees initially will not be represented by a labor union. If
unionization of the Company's employees occurs, the Company's costs could
materially increase.
RELIANCE ON OTHERS. The Company has entered and will continue to enter
into agreements with contractors, which may include other airlines, to provide
certain facilities and services required for its operations, including among
others, ground facilities, aircraft maintenance, ticketing, baggage handling and
other ground services. Not all outsourcing agreements have been entered into,
and there is no assurance that the Company will be able to contract for all of
the facilities and services it may require. Even if entered into, these
agreements may be subject to termination. The efficiency, timeliness and quality
of contract
-9-
<PAGE>
services is beyond the Company's direct control. If the cost to the Company of
contract services increases substantially, the Company's operating results would
be adversely affected.
ACQUISITIONS AND OTHER CORPORATE TRANSACTIONS. The Company intends to
expand its operations through internal growth as well as the acquisition of or
merger with other airline operators, and may engage in discussions with certain
companies with respect to various acquisitions which could result in material
changes in the Company's financial condition and operating results. As
consideration for any future acquisition, the Company may pay cash, incur
indebtedness or issue debt or equity securities. The Company does not intend to
seek shareholder approval for any such acquisitions unless required by law or
the rules of the securities exchange upon which the Common Stock is traded.
VOLATILITY OF STOCK PRICE. Prior to the Merger, there had been no
public market for the equity securities of PAWA and there can be no assurances
that an active trading market for the Common Stock will develop or be sustained
subsequent to the Merger. The market price of the Common Stock could be subject
to significant fluctuations in response to the Company's operating results and
other factors. In addition, the stock market in recent years has experienced
extreme price and volume fluctuations that either have been unrelated or
disproportionate to the operating performance of companies. These fluctuations,
as well as general economic and market conditions, may adversely affect the
market price of the Common Stock.
NO DIVIDENDS. The Company has never paid cash dividends on its Common
Stock and does not anticipate paying any cash dividends in the foreseeable
future. The Company intends to reinvest any funds that might otherwise be
available for the payment of dividends in further development of its business.
CERTAIN PROVISIONS OF THE COMPANY'S ARTICLES OF INCORPORATION. The
Company's Amended and Restated Articles of Incorporation provide, among other
things, that (i) officers and directors of the Company will be indemnified to
the fullest extent permitted under Florida law; and (ii) the Company shall not
be governed by Sections 607.0901 and 607.0902 of the Florida Business
Corporation Act (the "FBCA") and other laws relating thereto (the "Anti-
Takeover Sections").
As a result of the Company's election not to be governed by the
Anti-Takeover Sections, the Company will not be subject to the provisions of
Florida law which require that certain transactions between a Florida
corporation and an "interested shareholder" or any affiliate of the "interested
shareholder" be approved by two-thirds of such corporation's outstanding shares.
An "interested shareholder" as defined in Section 607.0901 of the FBCA is any
person who is the beneficial owner of more than 10% of the outstanding shares of
a corporation who is entitled to vote generally in the election of directors. In
addition, because of the Company's election not to be governed by the
Anti-Takeover Sections, the Company is not subject to the provisions of Florida
law which provide that a person who acquires shares in an issuing public
corporation in excess of certain specified thresholds will generally not have
any voting rights with respect to such shares unless the voting rights are
approved by a majority of the shares entitled to vote, excluding interested
shares.
AUTHORIZATION OF PREFERRED STOCK. The Company's Amended and Restated
Articles of Incorporation also provide for an authorized class of Preferred
Stock consisting of 100,000,000 shares, par value $.0001 per share (the
"Preferred Stock"), with rights, preferences and designations of such shares to
be determined by the Company's Board of Directors (the
-10-
<PAGE>
"Board"). Accordingly, the Board is empowered, without shareholder approval, to
issue the Preferred Stock with dividend, liquidation, conversion, voting or
other rights which could adversely affect the voting power or other rights of
the holders of the Common Stock. In the event of issuance, the Preferred Stock
could be utilized, under certain circumstances, as a method of discouraging and
delaying or preventing a change of control of the Company. Although the Company
has no present intention to issue any shares of Preferred Stock, there can be no
assurances that the Company will not do so in the future.
ADOPTION OF RESTRICTIONS ON FOREIGN OWNERSHIP OF THE COMMON STOCK. The
Company is subject to the provisions of the Federal Aviation Act which currently
prohibit non-United States citizens from owning more than 25% of the voting
interest of any company which owns a United States air carrier. The Company's
Amended and Restated Articles of Incorporation provide for certain restrictions
on the voting powers of the Common Stock owned or controlled by non-United
States citizens consistent with the requirements of the Federal Aviation
Act. Accordingly, the ability of shareholders to sell or transfer their shares
of Common Stock to non- United States citizens could be adversely affected. In
addition, the assumption of control of the Company by non-United States citizens
may be rendered more difficult, even if it is favorable to the interests of the
shareholders of the Company. Accordingly, these restrictions could have an
adverse effect upon the value of the Common Stock.
RISKS RELATING TO THE AIRLINE INDUSTRY GENERALLY
EFFECT OF GENERAL ECONOMIC CONDITIONS. The airline industry is
significantly affected by general economic conditions. Because a substantial
portion of business and personal airline travel is discretionary, the industry
tends to experience severe adverse financial results during general economic
downturns. During the last recession, most airlines reduced fares in an effort
to increase traffic. Economic and competitive conditions since deregulation of
the airline industry in 1978 have contributed to a number of bankruptcies and
liquidations among airlines. A worsening of current economic conditions, or an
extended period of recession nationally or regionally, could have a material
adverse effect on the Company's operations.
SEASONALITY OF BUSINESS. The airline business is significantly affected
by seasonal factors. As a result, the Company may experience reduced demand
during the spring and fall seasons, which are typically slower periods for the
airline industry. The Company's business would also be adversely affected by
unusual weather conditions that interrupt flight service.
LOW MARGIN AND FIXED COST BUSINESS. The airline industry is
characterized by low gross profit margins, with fixed costs that are high in
relation to revenues. Accordingly, a significant shortfall from expected revenue
levels could have a material adverse effect on the Company's profitability.
FUEL. Fuel is a major component of operating expense for all airlines.
Both the cost and availability of fuel are subject to many economic and
political factors and events occurring throughout the world. The Company
estimates its fuel costs at between 20% and 25% of total expenses, although
these estimates are dependent upon global energy prices. Aviation fuel costs are
quite volatile and reached over 30% of industry-wide costs in the early 1980's.
The Company has no agreement with any fuel suppliers assuring the availability
and price stability of fuel. In addition, a 4.3 cents-per-gallon increase in the
federal tax on aircraft fuel became effective as of October 1, 1995 and remains
in effect today. As a result of the foregoing, the future cost and availability
of fuel to the Company cannot be predicted, and substantial price
-11-
<PAGE>
increases or the unavailability of adequate fuel supplies could have a material
adverse effect on the Company's operations and profitability. In addition,
larger airlines may have a competitive advantage because they pay lower prices
for higher quantities of fuel. The Company intends generally to follow industry
trends by raising fares in response to significant fuel price increases.
However, the Company's ability to pass on increased fuel costs through fare
increases may be limited by economic and competitive conditions.
USE OF PROCEEDS
In the event that the Warrants are exercised in full, the Company will
receive proceeds ranging from approximately $1,777,000 to $2,025,000, before
deducting related expenses. The Company will use the proceeds received upon
exercise of the Warrants for general working capital purposes. After exercise of
the Warrants, the Shares will be offered solely by the Selling Shareholders and
none of the proceeds of the sale thereof will be received by the Company.
SELLING SHAREHOLDERS AND PLAN OF DISTRIBUTION
An aggregate of up to 250,000 shares of Common Stock issuable upon
exercise of the Warrants may be offered and sold pursuant to this Prospectus by
the Selling Shareholders. The Company has agreed to pay all expenses in
connection with the registration of the Shares under the Securities Act (other
than brokerage commissions and fees and expenses of counsel for the Selling
Shareholders). The Shares have been included in the Registration Statement of
which this Prospectus forms a part.
The following table sets forth certain information with respect to the
Selling Shareholders:
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
OF THE COMPANY NUMBER OF OWNERSHIP
PRIOR TO SALE (3) SHARES BEING AFTER SALE (4)
BENEFICIAL OWNER NUMBER OF SHARES PERCENT OFFERED NUMBER OF SHARES PERCENT
- ---------------- ---------------- ------- ------- ---------------- -------
<S> <C> <C> <C> <C> <C>
Robert T. Kirk(1) 139,000 1% 139,000 0 0
Michael Morrisett(1) 2,500 * 2,500 0 0
Lawrence R. Turel(1) 2,500 * 2,500 0 0
Dan O'Halloran(1) 2,500 * 2,500 0 0
Kent Grimm(1) 2,500 * 2,500 0 0
Euro-Atlantic Securities, Inc.(1) 1,500 * 1,500 0 0
Brian Herman(1) 2,000 * 1,500 500 *
Louis N. Nizza(1) 1,000 * 1,000 0 0
Wendy Tand Gusrae(1) 17,000 * 17,000 0 0
Community Investment
Services, Inc.(2) 20,000 * 20,000 0 0
Larry J. Ames(2) 2,000 * 2,000 0 0
Christopher Sweeney(2) 5,000 * 5,000 0 0
Hershel F. Smith, Jr.(2) 93,000 * 43,000 50,000 *
Robert Escobio(2) 12,000 * 5,000 7,000 *
Russell A. Post(2) 10,000 * 5,000 5,000 *
</TABLE>
- -----------------------
* Less than one percent (1%)
-12-
<PAGE>
(1) The Shares herein are issuable upon the exercise of Warrants received
in connection with services rendered by Barron Chase Securities, Inc.
("Barron"), the underwriter for the initial public offering of the
Company, at an exercise price of $8.10 per share.
(2) The Shares herein are issuable upon the exercise of warrants held in
the name of Community Investment Services, Inc. ("CISI"), issued in
connection with services rendered by CISI in connection with a private
offering of equity securities of PAWA in April 1996, for the account of
CISI and those affiliates of CISI at an exercise price of (i) $5.00 per
share during the period ending 5/22/97 and (ii) $8.10 per share during
the three-years thereafter.
(3) Assumes that all Warrants have been exercised.
(4) Assumes that all of the Shares are sold by the Selling Shareholders
and no additional shares of Common Stock are acquired.
The Selling Shareholders may sell the Shares in transactions on the
AMEX, at market prices prevailing at the time of the sale, at prices related to
such prevailing market prices or at negotiated prices. The Selling Shareholders
may effect the transactions by selling the Shares to or through agents, dealers
or underwriters designated from time to time, and such agents, dealers or
underwriters may receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Shareholders and/or the purchasers
of the Shares for whom they may act as agent or to whom they may sell as
principals or both. The Selling Shareholders and any agents, dealers or
underwriters that act in connection with the sale of the Shares might be deemed
to be "underwriters" within the meaning of Section 2(11) of the Securities Act,
and any discount or commission received by them and any profit on the resale of
Shares as principals might be deemed to be underwriting discounts or commissions
under the Securities Act.
To the extent required, the number of Shares to be sold, the purchase
price and public offering price, the name or names of an agent, dealer or
underwriter, and any applicable commissions or discounts with respect to a
particular offering will be set forth in a supplement to this Prospectus to be
filed with the SEC pursuant to Rule 424 under the Securities Act.
LEGAL MATTERS
The validity of the shares of Common Stock offered in this Prospectus
will be passed upon for the Company by Stearns Weaver Miller Weissler Alhadeff &
Sitterson, P.A., 150 West Flagler Street, Suite 2200, Miami, Florida 33130-1557.
EXPERTS
The financial statements of Frost Hanna Mergers Group, Inc. as of
December 31, 1995 and 1994, and the related statements of operations,
stockholders' equity and cash flows for the years then ended and the period from
inception (October 4, 1993) to December 31, 1995, incorporated by reference
herein and elsewhere in the Registration Statement have been audited by Arthur
Andersen LLP, independent certified public accountants as indicated in their
report with respect thereto, and are included herein in reliance and upon the
authority of said firm as experts in accounting and auditing.
The combined financial statements of PAWA and Affiliate as of December
31, 1995 and for each of the two years in the period ended December 31, 1995 and
for the period from
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<PAGE>
inception to December 31, 1995 and the consolidated balance sheet of PAWA and
Subsidiaries as of March 8, 1996 incorporated in this prospectus by reference
from Pan Am Corporation's (f/k/a Frost Hanna Mergers Group, Inc.) Current Report
on Form 8-K dated October 8, 1996 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports, which are incorporated herein
by reference (such reports express an unqualified opinion and include an
explanatory paragraph referring to PAWA as a development stage company), and
have been so incorporated in reliace upon the reports of such firm given upon
their authority as experts in accounting and auditing.
-14-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following statement sets forth the estimated amount of expenses
(other than underwriting discounts and commissions) to be borne by Pan Am
Corporation (the "Registrant") in connection with the offering:
SEC Registration Fee....................................$ 743.18
Legal and Accounting Fees and Related Expenses...........25,000.00
Miscellaneous Expenses................................. 4,256.82
---------
TOTAL FEES AND EXPENSES........................$30,000.00
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant has authority under Section 607.0850 of the Florida
Business Corporation Act (the "FBCA") to indemnify its directors and officers to
the extent permitted in such statute. With respect to the indemnification of the
Registrant's directors and officers, the Registrant's Amended and Restated
Articles of Incorporation provide that the Registrant shall indemnify its
directors and officers to the fullest extent permitted by law in existence now
or hereafter. In addition, the Registrant carries insurance permitted by the
laws of the State of Florida on behalf of its directors and officers which may
cover liabilities under the Securities Act of 1933, as amended (the "Securities
Act").
The provisions of the FBCA that authorize indemnification do not
eliminate the duty of care of a director, and in appropriate circumstances
equitable remedies such as injunctive or other forms of nonmonetary relief will
remain available under Florida law. In addition, each director will continue to
be subject to liability for (a) violations 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) deriving an improper
personal benefit from a transaction; (c) voting for or assenting to an unlawful
distribution; and (d) willful misconduct or a conscious disregard for the best
interests of the Registrant in a proceeding by or in the right of the Registrant
to procure a judgment in its favor or in a proceeding by or in the right of a
shareholder. These provisions do not affect a director's responsibilities under
any other law, such as the federal securities laws or state or federal
environmental laws.
ITEM 16. EXHIBITS
The following exhibits either are filed herewith or incorporated by
reference to documents previously filed or will be filed by amendment, as
indicated below:
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
- -------- -----------
<S> <C>
2.1 Acquisition Agreement, dated March 13, 1996, among Registrant, PA Acquisition
Corporation and Pan American World Airways, Inc. (incorporated by reference to
Exhibit 2.1 to the Registrant's Registration Statement on Form S-4, filed on June
19, 1996 (Registration No. 333-4350)).
II-1
<PAGE>
3.2 Amended and Restated Articles of Incorporation of Registrant.
3.3 Bylaws of Registrant (incorporated by reference to Exhibit 3.3 to the Registrant's
Registration Statement on Form S-4, filed on June 19, 1996 (Registration No. 333-
4350)).
5.1 Form of Opinion of Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A.
regarding the legality of the securities being registered.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A. (included in
Exhibit 5.1).
24.1 Power of Attorney (included with signature pages to this Registration Statement).
</TABLE>
ITEM 17. UNDERTAKINGS
(1) The Registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
PROVIDED, HOWEVER, that paragraphs (1)(a)(i) and (ii) do not apply
if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act") that are incorporated by reference in the Registration
Statement.
(b) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment
shall be deemed to be a new Registration Statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
(2) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to
II-2
<PAGE>
Section 13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new
Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) 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 Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant, has duly
caused this Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Miami, State of Florida,
on the 31st day of October, 1996.
PAN AM CORPORATION
By: /S/ MARTIN R. SHUGRUE, JR.
---------------------------------------------------
Martin R. Shugrue, Jr., Chief Executive Officer
and President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Martin R. Shugrue, Jr. and John J.
Ogilby, Jr. and each of them acting alone, his true and lawful attorneys-in-fact
and agents, each with full power of substitution and resubstitution, for him and
in his name, place and stead, in any and all capacities, to sign any and all
amendments, including post-effective amendments, to this Registration Statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that each said attorneys-in-fact and agents or any
of them, or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Amendment to
the Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/S/ CHARLES E. COBB, JR. Chairman of the Board October 31, 1996
- ------------------------------------
Charles E. Cobb, Jr.
/S/ PHILLIP FROST, M.D. Vice Chairman of the Board October 31, 1996
- ------------------------------------
Phillip Frost, M.D.
/S/ MARTIN R. SHUGRUE, JR. President, Chief Executive October 31, 1996
- ------------------------------------ Officer, Director
Martin R. Shugrue, Jr.
/S/ JOHN J. SICILIAN Director October 31, 1996
- ------------------------------------
John J. Sicilian
/S/ RICHARD C. PFENNIGER, JR. Director October 31, 1996
- --------------------------------
Richard C. Pfenniger, Jr.
/S/ RICHARD B. FROST Director October 31, 1996
- ------------------------------------
Richard B. Frost
/S/ MARK J. HANNA Director October 31, 1996
- ------------------------------------
Mark J. Hanna
</TABLE>
II-4
EXHIBIT 3.2
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
FROST HANNA MERGERS GROUP, INC.
Pursuant to Sections 607.1006 and 607.1007 of the Florida Business
Corporation Act, the following Amended and Restated Articles of Incorporation of
Frost Hanna Mergers Group, Inc., a Florida Corporation (the "Corporation") were
duly adopted and approved by at least a majority of the shareholders at a
Special Meeting of Shareholders of the Corporation held on September 4, 1996,
and (ii) all of the directors of the Corporation by unanimous written consent in
lieu of meeting on May 8, 1996. The number of votes cast for the amendment was
sufficient for approval. The undersigned President of the Corporation hereby
executes and submits for filing with the Department of State, State of Florida,
these Amended and Restated Articles of Incorporation, to read as follows:
ARTICLE I - NAME
The name of the Corporation is Pan Am Corporation (the "Corporation").
ARTICLE II - PURPOSE
The Corporation is organized for the purposes of transacting any or all
lawful business for which corporations may be organized under the laws of the
United States and the laws of the State of Florida.
ARTICLE III - CAPITAL STOCK
The aggregate number of shares which the Corporation shall have the
authority to issue is two hundred million (200,000,000) shares, of which one
hundred million (100,000,000) shares shall be "Common Stock," par value $.0001
per share, and of which one hundred million (100,000,000) shares shall be
"Preferred Stock," par value $.0001 per share. The Board of Directors is
authorized, subject to limitations prescribed by law and the provisions of these
Amended and Restated Articles of Incorporation, to provide for the issuance of
shares of Preferred Stock in one or more series by adoption of amendments to the
articles of incorporation, to establish from time to time the number of shares
to be included in such series and to fix the designation, voting powers,
preferences and relative participating, optional or other special rights of the
shares of each of such series, and the qualifications, limitations or
restrictions thereof. The Board of Directors may authorize the issuance of stock
to such persons upon such terms and for such consideration in cash, property or
services as the Board of Directors may determine and as may be allowed by law.
The just valuation of such property or services shall be fixed by the Board of
Directors. All such stock when issued shall be fully paid and exempt from
assessment.
ARTICLE IV - REGISTERED
OFFICE AND AGENT
The name of the registered agent of the Corporation and the street
address of the registered office of this Corporation is:
John J. Ogilby, Jr., Esq.
Pan American World Airways, Inc.
9300 N.W. 36th Street
Doral Building, 2nd Floor
Miami, Florida 33178
<PAGE>
ARTICLE V - CORPORATE MAILING ADDRESS
The principal office and mailing address of the Corporation is:
9300 N.W. 36th Street
Miami, Florida 33178
ARTICLE VI - INCORPORATOR
The name and address of the incorporator of the Corporation is as
follows:
NAME ADDRESS
---- -------
Carrie F. Rinehart 1110 Brickell Avenue
Penthouse Suite
Miami, FL 33131
ARTICLE VII - POWERS
The Corporation shall have all of the corporate powers enumerated under
Florida law.
ARTICLE VIII - DIRECTOR-CONFLICTS OF INTEREST
No contract or other transaction between the Corporation and one or
more of its directors, or between the Corporation and any other corporation,
firm, association or other entity in which one or more of the directors are
directors or officers, or are financially interested, shall be either void or
voidable because of such relationship or interest or because such director or
directors are present at the meeting of the Board of Directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction or
because his or her votes are counted for such purpose, if:
(a) The fact of such relationship or interest is disclosed or known to
the Board of Directors, or a duly empowered committee thereof, which authorizes,
approves or ratifies the contract or transaction by a vote or consent sufficient
for such purpose without counting the vote or votes of such interested director
or directors; or
(b) The fact of such relationship or interest is disclosed or known to
the shareholders entitled to vote and they authorize, approve or ratify such
contract or transaction by vote or written consent; or
(c) The contract or transaction is fair and reasonable as to the
Corporation at the time it is authorized by the Board, committee or the
shareholders.
A director of the Corporation may transact business, borrow, lend, or
otherwise deal or contract with the Corporation to the full extent and subject
only to the limitations and provisions of the laws of the State of Florida and
the laws of the United States.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction.
-2-
<PAGE>
ARTICLE IX - NO ANTI-TAKEOVER LAW GOVERNANCE
The Corporation shall not be governed by Sections 607.0901 or 607.0902
of the Florida Business Corporation Act or any laws related thereto.
ARTICLE X - INDEMNIFICATION
The Corporation shall indemnify and shall advance expenses on behalf of
its officers and directors to the fullest extent permitted by law in existence
either now or hereafter.
ARTICLE XI - FISCAL YEAR
The fiscal year of this Corporation shall be the calendar year, unless
otherwise established by the Board of Directors.
ARTICLE XII - DURATION
The duration of the Corporation is perpetual, unless sooner liquidated
or dissolved in accordance with law.
ARTICLE XIII
A. CERTAIN DEFINITIONS. For the purposes of this Article XIII:
1. "Alien" means (i) any person who is not a Citizen or any
nominee of such person; (ii) any foreign government or representative thereof;
(iii) any corporation organized under the laws of any foreign government; or
(iv) any corporation, partnership, trust, association or other entity that is an
Affiliate of an Alien or Aliens.
2. "Alien Owned Shares" means any shares of any class
of outstanding voting stock of the Corporation that are then owned of record or
beneficially owned, or otherwise controlled, by any Alien.
3. "Citizen" means any person who is a citizen of the
United States (as defined in 49 U.S.C. 40102(a)(15), as amended, or in any
successor provision).
4. "Excess Shares" at any time means shares of voting stock
then beneficially owned by an Alien the ownership of which, as a result of
paragraph D of this Article XIII, cannot then be registered on the Foreign Stock
Record.
5. "Foreign Ownership Restrictions" means United States
statutory and United States Department of Transportation (DOT) regulatory or
interpretive restrictions on foreign ownership or control of the Corporation the
breach of which would result in the loss of any operating certificate or
authority of the Corporation or any of its subsidiaries.
6. "Foreign Stock Record" means a separate stock record
for the registration of Alien Owned Shares maintained by the Corporation in
accordance with the Bylaws of the Corporation.
-3-
<PAGE>
7. "Independent Director" means a director of the
Corporation who is not employed by or affiliated in any material respect with
the Corporation or any of its subsidiaries other than solely by virtue of acting
as a director.
8. "Permitted Percentage" at any time means the maximum
voting power of the then-outstanding shares of voting stock permitted to be
beneficially owned by Aliens under Foreign Ownership Restrictions.
9. "Redemption Date" means the date fixed by action of
a majority of the Independent Directors for the redemption or exchange of any
shares of voting stock pursuant to paragraph F of this Article XIII.
10. "Redemption Securities" means any debt or equity
securities of the Corporation, any of its subsidiaries or any other corporation
or any combination thereof, having such terms and conditions as shall be
approved by the Independent Directors and which, together with any cash to be
paid as part of the redemption price, in the opinion of any nationally
recognized investment banking firm selected by the Independent Directors (which
may be a firm that provides other investment banking, brokerage or other
services to the Corporation), has a value, at the time notice of redemption is
given pursuant to clause (4) of paragraph F of this Article XIII, at least equal
to the price required to be paid pursuant to clause (1) of paragraph F of this
Article XIII (assuming, in the case of Redemption Securities to be publicly
traded, such Redemption Securities were fully distributed and subject only to
normal trading activity).
B. EFFECTIVENESS. The limitations on the rights of the holders
of shares of voting stock and the other limitations and rights of the
Corporation provided for in this Article XIII shall be effective notwithstanding
any other provision of these Amended and Restated Articles of Incorporation but
only for so long as the Corporation or any of its subsidiaries (a) is subject to
any Foreign Ownership Restriction or (b) if not then subject to any Foreign
Ownership Restriction, intends to reinstate any license, franchise or operating
certificate or authority lost as a result of a Foreign Ownership Restriction
within a reasonable time after ceasing to hold the same.
C. GENERAL. It is the policy of the Corporation that,
consistent with 49 U.S.C. Section 41101 et. seq., as amended, and other Foreign
Ownership Restrictions, and to prevent the loss by the Corporation or any
subsidiaries, or to permit the Corporation or any of its subsidiaries to
reinstate, any license, franchise or operating certificate of authority referred
to in paragraph B above, Aliens, in the aggregate, shall not be permitted to
beneficially own shares of voting stock the voting power of which, but for the
provisions of this Article XIII, would exceed the Permitted Percentage.
D. LIMITATION OF VOTING RIGHTS. At no time shall Alien Owned Shares
have voting rights on any matter (except as otherwise expressly required by law)
unless such shares are registered on the Foreign Stock Record. At no time shall
ownership of shares representing more than the Permitted Percentage be
registered on the Foreign Stock Record. Without limitation, at no time shall
Excess Shares have voting rights on any matter (except as otherwise expressly
required by any federal law of the United States or the Florida Business
Corporation Act).
E. BENEFICIAL OWNERSHIP INQUIRY.
1. The Corporation may by notice in writing (which may
be included in the form of proxy or ballot distributed to shareholders of the
Corporation in connection with any
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<PAGE>
annual meeting (or any special meeting) of the shareholders of the Corporation,
or otherwise) require a person that is a holder of record of equity securities
of the Corporation or that the Corporation knows to have, or has reasonable
cause to believe has, beneficial ownership of equity securities of the
Corporation to certify in such manner as the Corporation shall deem appropriate
(including by way of execution of any form of proxy or ballot by such person)
that, to the knowledge of such person:
(a) All equity securities of the Corporation
as to which such person has record ownership or beneficial
ownership are owned and controlled only by a Citizen; or
(b) The number and class or series of equity
securities of the Corporation owned of record or beneficially
owned by such person that are owned or controlled by Aliens
are as set forth in such certificate.
2. With respect to any equity securities of the Corporation
identified by such person in response to subsection (a) of preceding clause (1)
of this paragraph E the Corporation may require such person to provide such
further information as the Corporation may reasonably require to implement the
provisions of this Article XIII.
3. For purposes of applying the provisions of this Article
XIII with respect to any equity securities of the Corporation, in the event of
the failure of any person to provide the certificate or other information to
which the Corporation is entitled pursuant to this paragraph E, the Corporation
may presume that the equity securities in question are beneficially owned or
controlled by Aliens.
F. REDEMPTION AND EXCHANGE. Notwithstanding any other provision of
these Amended and Restated Articles of Incorporation to the contrary, any Excess
Shares shall always be subject to redemption or exchange by the Corporation by
action of the Board of Directors, pursuant to the Florida Business Corporation
Act, or any other applicable provision of law, to the extent determined by a
majority of the Independent Directors to be necessary to comply with Foreign
Ownership Restrictions. As used in these Amended and Restated Articles of
Incorporation, "redemption" and "exchange" are hereinafter collectively referred
to as "redemption", references to Excess Shares being "redeemed" shall be deemed
to include Excess Shares that are being exchanged, and references to "Redemption
Price" shall be deemed to include the amount and kind of securities for which
any such Excess Shares are exchanged. The terms and conditions of such
redemption shall be as follows:
1. The Redemption Price of the shares to be redeemed pursuant
to this Article XIII shall be equal to the lower of (i) the fair market value of
the shares to be redeemed and (ii) such Alien's purchase price for such shares;
2. The Redemption Price of such shares may be paid in
cash, Redemption Securities or any combination thereof;
3. If less than all the shares held by Aliens are to be
redeemed, the shares to be redeemed shall be selected in any manner determined
by a majority of the Independent Directors to be fair and equitable;
4. At least 30 days' written notice of the Redemption
Date shall be given to the record holders of the shares selected to be redeemed
(unless waived in writing by any such
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<PAGE>
holder), provided that the Redemption Date may be the date on which written
notice shall be given to record holders if the cash or Redemption Securities
necessary to effect the redemption shall have been deposited in trust for the
benefit of such record holders and subject to immediate withdrawal by them upon
surrender of the stock certificates for their shares to be redeemed; and
5. From and after the Redemption Date, shares to be redeemed
shall cease to be regarded as outstanding and any and all rights attaching to
such shares of whatever nature (including without limitation any rights to vote
or participate in dividends declared on stock of the same class or series as
such shares) shall cease and terminate, and the holders thereof thenceforth
shall be entitled only to receive the cash or Redemption Securities payable upon
redemption.
G. BYLAWS. The Bylaws of the Corporation may make appropriate
provisions to effectuate the requirements of this Article XIII.
H. FACTUAL DETERMINATIONS. The Independent Directors shall have
the power and duty to construe and apply the provisions of this Article XIII and
to make all determinations necessary or desirable to implement such provisions,
including but not limited to whether (a) a person or entity "controls" or is
"controlled by" another person or entity; (b) the number of shares of voting
stock that are beneficially owned by any person; (c) whether a person is an
Affiliate or Associate of another person; (d) whether a person has an agreement,
arrangement or understanding with another person as to matters bearing on
beneficial ownership; (e) whether a person is an Alien; (f) the application of
any other definition of these Amended and Restated Articles of Incorporation to
a given fact; and (g) any other matter relating to the applicability or effect
of this Article XIII.
I. QUORUM. Except as otherwise provided or required by law, the
presence, in person or by proxy, of the holders of record of shares of voting
stock entitling the holders thereof to cast a majority of the voting power of
all shares of voting stock (after giving effect to the reduction of voting
rights prescribed in paragraph D of this Article XIII) shall constitute a quorum
at all meetings of the shareholders of the Corporation, and any quorum
requirement or any requirement for shareholder approval shall be determined
after giving effect to the reduction in voting rights prescribed in paragraph D
of this Article XIII.
J. SEVERABILITY. If any section or lesser provisions of this
Article XIII is determined to be invalid, void, illegal or unenforceable, then
the remaining sections and provisions of this Article XIII shall continue to be
void and enforceable and shall in no way be affected, impaired or invalidated.
The undersigned has executed these Amended and Restated Articles of
Incorporation this 23 day of September, 1996.
/s/ Martin R. Shugrue
------------------------------
Martin R. Shugrue, President
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<PAGE>
ACCEPTANCE OF REGISTERED AGENT
Having been named to accept service of process for FROST HANNA MERGERS
GROUP, INC. at the place designated in the Amended and Restated Articles of
Incorporation, JOHN J. OGILBY, JR. agrees to act in this capacity, and agrees to
comply with the provisions of Section 607.0505, Fla. Stat. (1991), relative to
keeping open such office until such time as it shall notify the Corporation of
his resignation.
Dated this 23 day of September, 1996.
/s/ John J. Ogilby, Jr.
-------------------------------
John J. Ogilby, Jr.
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EXHIBIT 5.1
LAW OFFICES
STEARNS WEAVER MILLER WEISSLER ALHADEFF & SITTERSON, P.A.
MUSEUM TOWER
150 WEST FLAGLER STREET
MIAMI, FLORIDA 33130
---------
MIAMI (305) 789-3200 - BROWARD (305) 463-5440
FAX (305) 789-3395
November 15, 1996
Pan Am Corporation
9300 N.W..36th Street
Miami, Florida 33178
RE: PAN AM CORPORATION
REGISTRATION STATEMENT ON FORM S-3
Gentlemen:
As counsel to Pan Am Corporation, a Florida corporation (the
"Corporation"), we have examined the Articles of Incorporation and Bylaws of the
Corporation as well as such other documents and proceedings as we have
considered necessary for the purposes of this opinion. We have also examined and
are familiar with the Corporation's Registration Statement on Form S-3 (the
"Registration Statement") as filed with the Securities and Exchange Commission
under the Securities Act of 1933, relating to 250,000 shares of the
Corporation's common stock, par value $.0001 per share (the "Common Stock")
issuable by the Corporation upon the exercise of certain outstanding options and
warrants (the "Warrants") and the offering of such shares of Common Stock
received upon exercise of the Warrants from time to time in the amount and in
the manner and on terms and conditions described in the Registration Statement.
Based upon the foregoing, and having regard to legal considerations
which we deem relevant, we are of the opinion that the Common Stock, when issued
and delivered by the Corporation in accordance with the Warrants, will be
legally issued, fully paid and non-assessable.
<PAGE>
Pan Am Corporation
November 15, 1996
Page 2
This opinion is intended solely for the Corporation's use in connection
with the registration of the shares and may not be relied upon for any other
purpose or by any other person. This opinion may not be quoted in whole or in
part or otherwise referred to or furnished to any other person except in
response to a valid subpoena. This opinion is limited to the matters expressly
stated herein, and no opinion is implied or may be inferred beyond the matters
expressly stated herein. This opinion is rendered as of the date hereof, and we
assume no obligation to update or supplement such opinion to reflect any facts
or circumstances that may hereafter come to our attention or any changes in
facts or law that may hereafter occur. We hereby consent to the inclusion of
this opinion letter as an exhibit to the Registration Statement.
Very truly yours,
STEARNS WEAVER MILLER WEISSLER
ALHADEFF & SITTERSON, P.A.
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference in this registration statement on Form S-3 of our
report dated January 29, 1996 (except with respect to the matter discussed in
Note 8, as to which the date is April 30, 1996) included in Forst Hanna Mergers
Group, Inc.'s Form 10-KSB for the year ended December 31, 1995 and to all
references to our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
Miami, Florida,
November 13, 1996.
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Pan Am Corporation on Form S-3 of our reports dated April 24, 1996 (except for
the matter described in Note 4 as to which the date is April 26, 1996) and
March 21, 1996 (except for the matters described in Note 7 as to which the date
is July 12, 1996) incorporated by reference in Pan Am Corporation's (f/k/a Frost
Hanna Mergers Group, Inc.) Current Report on Form 8-K dated October 8, 1996.
Such reports include an explanatory paragraph referring to the Company as a
development stage company. We also consent to the reference to us under the
heading "Experts" in the Prospectus, which is part of this Registration
Statement.
DELOITTE & TOUCHE LLP
Miami, Florida
November 13, 1996
