SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): JULY 8, 1997
PAN AM CORPORATION
9300 N.W. 36TH STREET, MIAMI, FLORIDA 33178
305-873-3000
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<S> <C> <C>
Incorporation under the laws of the Commission File Number I.R.S. Employer Identification Number
STATE OF FLORIDA 0-23444 65-0450311
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ITEM 5. OTHER EVENTS.
NATIONSBANK FACILITY. On July 8, 1997, Carnival Air Lines, Inc., as
borrower ("Carnival Air"), Pan Am Corporation (the "Company") and Mr. Micky
Arison, as guarantors, (the "Company"), and NationsBank, N.A., as lender (the
"Lender"), executed a commitment letter (the "NationsBank Commitment Letter")
which sets forth the basis on which the Lender will provide two revolving credit
bridge facilities (each a "Facility" and collectively, the "NationsBank
Facility") of up to an aggregate of $25 million for use by Carnival Air for
working capital and general corporate purposes and for the repayment by Carnival
Air of up to $5 million in existing bank debt. Each of the Facilities would
permit Carnival Air to borrow up to $12.5 million, with borrowings under such
Facilities maturing one-year after the date of closing, subject to certain
repayment requirements. Funding of the NationsBank Facility will be subject to a
number of conditions, including but not limited to, negotiating definitive
documentation with respect to the NationsBank Facility (the "NationsBank
Facility Agreements"). It is anticipated that the NationsBank Facility
Agreements will contain conditions and covenants, including, among other things,
dividend or other restricted payment limitations, capital expenditure
requirements and negative pledge covenants. There can be no assurances as to the
final terms and conditions of the NationsBank Facility, or that the NationsBank
Facility will be finalized.
Prior to the consummation of the merger of a subsidiary of the Company
with and into Carnival Air (the "Merger"), Mr. Arison, whose affiliate is the
principal shareholder of Carnival Air, will provide a guaranty of payment with
respect to one of the Facilities ("Facility B"), and after the consummation of
the Merger, this guaranty will be converted from a guarantee of payment to a
guaranty of collection. Prior to the consummation of the Merger, the Company
will provide a guaranty of collection of the other Facility ("Facility A", which
will be binding on the Company even in the event the Merger is not consummated).
In the event that the Merger is consummated, the Company's guaranty of Facility
A will be converted into a guaranty of payment of the entire NationsBank
Facility. Carnival Air's obligations will be secured by all or substantially all
of its assets. The Company's guaranty will be secured by a first priority lien
on all or substantially all of its assets. Mr. Arison's guaranty will be secured
by a pledge of certain securities beneficially owned by Mr. Arison.
In order to induce Mr. Arison to provide his guaranty under the
NationsBank Facility, the Company, Carnival Air and Mr. Arison entered into a
Compensation Agreement, dated July 9, 1997, which provides that Carnival Air,
prior to the Merger, and the Company after consummation of the Merger, will be
required to pay Mr. Arison a guaranty fee in an amount equal to the difference
between the cost to Carnival Air of Facility A and Facility B; provided, that if
the Merger does not occur for certain reasons, the Company will not be required
to pay Mr. Arison the guaranty fee. Such fee is subject to increases and the
issuance of additional warrants in certain circumstances.
Amounts borrowed under the NationsBank Facility will bear interest at
the prime rate of interest as quoted by the Lender for Facility B, and at a
fixed percentage over such prime rate for Facility A (beginning at 3% per annum
over such prime rate for the first six months and increasing by 1.5% per annum
for each of the next three month periods). Carnival Air will be required to pay
to the Lender substantial fees relating to the NationsBank Facility.
Additionally, the Company will be required to issue to the Lender, as further
consideration, warrants to purchase up to 550,000 shares of Common Stock at an
exercise price equal to the market price as reported on the
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American Stock Exchange, exercisable over ten years with a staggered vesting
schedule based on the funding of the NationsBank Facility.
AMENDMENTS TO ACQUISITION AGREEMENT. On July 8, 1997, the parties to
the Acquisition Agreement dated March 20, 1997 by and between the Company,
Carnival Air, CAL Acquisition Corporation and Air Holding Company (the
"Acquisition Agreement") executed a first amendment to the Acquisition Agreement
(the "First Amendment") extending the outside date upon which the Merger may be
consummated to August 31, 1997. On July 9, 1997, the parties to the Acquisition
Agreement executed a second amendment to the Acquisition Agreement (the "Second
Amendment"), pursuant to which the conditions required to close the Merger were
further limited and which presented a mechanism for either party to extend the
latest date upon which the Merger could occur to September 30, 1997. The Second
Amendment provides that, among other things, the conditions relating to
governmental and other consents are eliminated, as well as the provision
concerning Carnival Air's ability to terminate the Acquisition Agreement if the
price of the Common Stock falls below $6.00 per share. The Second Amendment
becomes effective only upon the closing of the NationsBank Facility. Copies of
the First Amendment and the Second Amendment are being filed as exhibits to this
Current Report on Form 8-K. For a complete description of the terms of the First
Amendment or the Second Amendment, reference is made to such exhibits.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
10.1 First and Second Amendment of Acquisition Agreement
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, Pan Am has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PAN AM CORPORATION
By: /S/ JOHN J. OGILBY, JR.
----------------------------
John J. Ogilby, Jr.
Chief Financial Officer and
General Counsel
Dated: July 15, 1997
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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10.1 First and Second Amendment of Acquisition Agreement
EXHIBIT 10.1
FIRST AMENDMENT
OF
ACQUISITION AGREEMENT
This First Amendment of Acquisition Agreement is made as of this 8th
day of July 1997, by and among Pan Am Corporation, a Florida corporation, CAL
Acquisition Corporation, a Florida corporation, Air Holding Company, a Florida
corporation, Carnival Air Lines, Inc., a Florida corporation, and the
individuals whose names appear on the signature pages hereto.
W I T N E S S E T H :
WHEREAS, the parties hereto have entered into that certain Acquisition
Agreement dated as of March 20, 1997 (the "Acquisition Agreement"); and
WHEREAS, the parties hereto desire to modify the Acquisition Agreement
as hereinafter provided.
NOW, THEREFORE, in consideration of the foregoing and the sum of Ten
Dollars ($10.00) and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree to
amend the Acquisition Agreement as follows:
1. CAPITALIZED TERMS. Unless otherwise defined herein all capitalized
terms used herein shall have the same meaning ascribed to such terms in the
Acquisition Agreement.
2. AMENDMENT. The parties agree to the following amendments to the
Acquisition Agreement:
(a) The first sentence of Section 7.1 is amended to read in
its entirety as follows:
"The consummation of the transactions contemplated by this
Agreement (the "CLOSING") shall take place at the offices
of Stearns Weaver Miller Weissler Alhadeff & Sitterson,
P.A. as promptly as practicable and in any event within 15
days after the satisfaction or waiver of the conditions
precedent to the obligations of the parties set forth in
this Article VII (the "CLOSING DATE), or on such other
date and at such other place as may be agreed to by the
parties, but in no event beyond August 31, 1997."; and
(b) Section 7.5 shall be amended to read in its entirety as
follows:
"7.5 TERMINATION. This Agreement and the transactions
contemplated hereby may be terminated prior to the
Closing: (i) at any time by mutual consent of the parties;
(ii) by either party if the Closing has not occurred on or
prior to August 31, 1997 (the "Termination Date"),
provided the failure of the Closing to occur by such date
is not the result of the failure of
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the party seeking to terminate this Agreement to perform
or fulfill any of its material obligations hereunder;
(iii) by AHC at any time in its sole discretion if any of
the representations or warranties of Pan Am or Acquisition
in this Agreement are not in all material respects true
and accurate or if Pan Am or Acquisition breaches in any
material respect any covenant contained in this Agreement,
provided that if such misrepresentation or breach is
curable, it is not cured following notice and a reasonable
opportunity to cure, which shall in no event extend beyond
the Termination Date or, if later, ten days after such
notice of breach, or such other date as the parties may
agree in writing; (iv) by Pan Am at any time in its sole
discretion if any of the representations or warranties of
AHC in this Agreement are not in all material respects
true and accurate or if AHC or Carnival breaches in any
material respect any covenant contained in this Agreement,
provided that if such misrepresentation or breach is
curable, it is not cured following notice and a reasonable
opportunity to cure, which shall in no event extend beyond
the Termination Date or, if later, ten days after such
notice of breach, or such other date as the parties may
agree in writing; (v) by AHC if the Average Price falls
below $6.00 per share, provided that if this right to
terminate is not exercised by AHC prior to the date the
Proxy Statement is mailed to the shareholders of Pan Am,
then such right to terminate shall be deemed to have been
waived by AHC; and provided, further, that Pan Am shall
provide AHC at least five business days prior notice of
such mailing. If this Agreement is terminated pursuant to
this SECTION 7.5, written notice thereof shall promptly be
given by the party electing such termination to the other
party and, subject to the expiration of the cure periods
provided in clauses (iii) and (iv) above, if any, this
Agreement shall terminate without further actions by the
parties and no party shall have any further obligations
under this Agreement; provided that any termination of
this Agreement pursuant to this SECTION 7.5 shall not
relieve any party from any liability for any breach or
violation hereof. Notwithstanding the termination of this
Agreement, the respective obligations of the parties under
SECTIONS 5.3, 8.7, 8.10, 8.11, 8.12, 8.13, 8.14 AND 8.15
shall survive the termination of this Agreement."
3. ENTIRE AGREEMENT. Except for the amendment set forth in Section 2
herein, the Agreement shall in all other respects remain in full force and
effect. This First Amendment
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together with the Acquisition Agreement, represents the entire understanding and
agreement between the parties hereto with respect to the subject matter hereof
and cannot be amended, supplemented or modified except by an instrument in
writing signed by the parties against whom enforcement for such amendment,
supplement or modification is sought. In the event of an inconsistency between
the terms of the Acquisition Agreement and the terms of this First Amendment,
the terms of this First Amendment shall be controlling.
4. COUNTERPARTS. This First Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
5. GOVERNING LAW. This First Amendment shall be governed by, construed
and enforced in accordance with the laws of the State of Florida, both
substantive and remedial.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed as of the day and year first written above.
CARNIVAL AIR LINES, INC.
By:
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Name:
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Title:
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Address:
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PAN AM CORPORATION
By:
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Name:
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Title:
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Address:
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AIR HOLDING COMPANY
By:
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Name:
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Title:
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Address:
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CAL ACQUISITION CORPORATION
By:
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Name:
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Title:
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Address:
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MICKY ARISON
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REUVEN WERTHEIM
----------------------------------
A. DANIEL RATTI
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<PAGE>
SECOND AMENDMENT
OF
ACQUISITION AGREEMENT
This Second Amendment of Acquisition Agreement is made as of this 9th
day of July 1997, by and among Pan Am Corporation, a Florida corporation, CAL
Acquisition Corporation, a Florida corporation, Air Holding Company, a Florida
corporation, Carnival Air Lines, Inc., a Florida corporation, and the
individuals whose names appear on the signature pages hereof.
W I T N E S S E T H :
WHEREAS, the parties hereto have entered into that certain Acquisition
Agreement dated as of March 20, 1997, as heretofore amended (the "Acquisition
Agreement"); and
WHEREAS, the parties hereto desire to modify the Acquisition Agreement
as hereinafter provided.
NOW, THEREFORE, in consideration of the foregoing and the sum of Ten
Dollars ($10.00) and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree to
amend the Acquisition Agreement as follows:
1. CAPITALIZED TERMS. Unless otherwise defined herein all capitalized
terms used herein shall have the same meaning ascribed to such terms in the
Acquisition Agreement.
2. AMENDMENT. The parties agree to the following amendments to the
Acquisition Agreement:
(a) SECTION 6.15. Section 6.15 is hereby amended to read
in its entirety as follows:
"6.15 ADDITIONAL CAPITAL CONTRIBUTION. It is agreed and
understood, as provided in SECTION 7.3(F) of this
Agreement, that a condition to Carnival's and AHC's
obligations to close the transaction contemplated hereby
is the procurement of the release of Micky Arison's
personal guaranty and AHC's limited recourse guaranty of
that certain Amended and Restated Revolving Line of Credit
Agreement, dated as of October 2, 1996 between Carnival
Air Lines, Inc. and Barnett Bank of South Florida, N.A., a
national banking association (the "REVOLVING LINE OF
CREDIT"). Micky Arison hereby agrees that either he, a
trust controlled by him or a trust of which he is a
beneficiary (including, but not limited to the Micky
Arison 1995 Air Holding Trust), will make a capital
contribution of Thirty Million Dollars ($30,000,000) prior
to the Closing (the "ADDITIONAL CAPITAL CONTRIBUTION") in
exchange for 1,900,000 shares of Carnival Common
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Stock. Micky Arison further agrees that either he, a trust
controlled by him or a trust of which he is a beneficiary
(including, but not limited to the Micky Arison 1995 Air
Holding Trust), will take any and all additional actions
which may be required (including the payment of money in
addition to the Additional Capital Contribution) to
discharge, pay in full and cancel the Revolving Line of
Credit and to procure the release of his personal guaranty
of the Revolving Line of Credit and the release of AHC's
limited recourse guaranty. Notwithstanding the foregoing,
Micky Arison shall remain personally liable and
responsible for the taking of all actions and the making
of all contributions which are required to be taken and
made by him, a trust controlled by him or a trust of which
he is a beneficiary (including, but not limited to the
Micky Arison 1995 Air Holding Trust) under this Section
6.15. Nothing contained herein shall be deemed to in any
way limit any other personal liability or obligation of
Micky Arison otherwise set forth or undertaken in this
Agreement."
(b) The first sentence of Section 7.1 is hereby amended to
read in its entirety as follows:
"The consummation of the transactions contemplated by this
Agreement (the "CLOSING") shall take place at the offices
of Stearns Weaver Miller Weissler Alhadeff & Sitterson,
P.A. as promptly as practicable and in any event within 15
days after the satisfaction or waiver of the conditions
precedent to the obligations of the parties set forth in
this Article VII (the "CLOSING DATE"), or on such other
date and at such other place as may be agreed to by the
parties, but in no event beyond August 31, 1997, as such
date may be extended pursuant to the provisions of Section
7.5 hereof.";
(c) Section 7.2(a) shall be deleted in its entirety;
(d) Section 7.2(b) is hereby amended to read in its
entirety as follows:
"NO ACTIONS. No judicial, administrative, regulatory
decision, order or decree shall have been rendered, in
either case, which enjoins, prohibits or materially
restricts the
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consummation of the transactions contemplated by this
Agreement.";
(e) Section 7.3(e) shall be deleted in its entirety;
(f) Section 7.4(c) shall be deleted in its entirety;
(g) Section 7.4(j) shall be amended to read in its
entirety as follows:
"(j) CONTINUOUS OPERATION AS A SCHEDULED AIR CARRIER.
Carnival shall have continuously operated as a
scheduled air carrier through the Closing Date."; and
(h) Section 7.5 shall be amended to read in its entirety
as follows:
"7.5 TERMINATION. This Agreement and the transactions
contemplated hereby may be terminated prior to the
Closing: (i) at any time by mutual consent of the parties;
(ii) by either party if the Closing has not occurred on or
prior to August 31, 1997 (the "TERMINATION DATE"),
provided the failure of the Closing to occur by such date
is not the result of the failure of the party seeking to
terminate this Agreement to perform or fulfill any of its
material obligations hereunder and provided further that
either party may automatically extend the Termination Date
for an additional thirty day period by providing written
notice to that effect to the other party on or prior to
the Termination Date (the "EXTENDED TERMINATION DATE");
(iii) by AHC at any time in its sole discretion if any of
the representations or warranties of Pan Am or Acquisition
in this Agreement are not in all material respects true
and accurate or if Pan Am or Acquisition breaches in any
material respect any covenant contained in this Agreement,
provided that if such misrepresentation or breach is
curable, it is not cured following notice and a reasonable
opportunity to cure, which shall in no event extend beyond
the Extended Termination Date or, if later, ten days after
such notice of breach, or such other date as the parties
may agree in writing; or (iv) by Pan Am at any time in its
sole discretion if any of the representations or
warranties of AHC in this Agreement are not in all
material respects true and accurate or if AHC or Carnival
breaches in any material respect any covenant contained in
this Agreement, provided that if such
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misrepresentation or breach is curable, it is not cured
following notice and a reasonable opportunity to cure,
which shall in no event extend beyond the Extended
Termination Date or, if later, ten days after such notice
of breach, or such other date as the parties may agree in
writing. If this Agreement is terminated pursuant to this
SECTION 7.5, written notice thereof shall promptly be
given by the party electing such termination to the other
party and, subject to the expiration of the cure periods
provided in clauses (iii) and (iv) above, if any, this
Agreement shall terminate without further actions by the
parties and no party shall have any further obligations
under this Agreement; provided that any termination of
this Agreement pursuant to this SECTION 7.5 shall not
relieve any party from any liability for any breach or
violation hereof. Notwithstanding the termination of this
Agreement, the respective obligations of the parties under
SECTIONS 5.3, 8.7, 8.10, 8.11, 8.12, 8.13, 8.14 AND 8.15
shall survive the termination of this Agreement."
3. SECOND AMENDMENT CONDITIONED UPON CLOSING OF NATIONSBANK LOAN
FACILITY. Notwithstanding any provisions contained herein to the contrary, this
Second Amendment shall be of no force and effect unless and until the closing of
that certain NationsBank $25,000,000 Revolving Bridge Facility as more
particularly described in that certain Commitment Letter and Term Sheet dated
July 8, 1997 by and among NationsBank, Carnival as borrower, Pan Am as guarantor
and Micky Arison as guarantor.
4. ENTIRE AGREEMENT. Except for the amendment set forth in Section 2
herein, the Agreement shall in all other respects remain in full force and
effect. This Second Amendment together with the Acquisition Agreement,
represents the entire understanding and agreement between the parties hereto
with respect to the subject matter hereof and cannot be amended, supplemented or
modified except by an instrument in writing signed by the parties against whom
enforcement for such amendment, supplement or modification is sought. In the
event of an inconsistency between the terms of the Acquisition Agreement and the
terms of this Second Amendment, the terms of this Second Amendment shall be
controlling.
5. COUNTERPARTS. This Second Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
6. GOVERNING LAW. This Second Amendment shall be governed by, construed
and enforced in accordance with the laws of the State of Florida, both
substantive and remedial.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be executed as of the day and year first written above.
CARNIVAL AIR LINES, INC.
By:
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Name:
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Title:
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Address:
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PAN AM CORPORATION
By:
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Name:
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Title:
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Address:
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AIR HOLDING COMPANY
By:
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Name:
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Title:
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Address:
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CAL ACQUISITION CORPORATION
By:
------------------------------------
Name:
-------------------------
Title:
-------------------------
Address:
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-------------------------
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MICKY ARISON
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REUVEN WERTHEIM
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A. DANIEL RATTI
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