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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
October 31, 1996
----------------
(Date of Report)
AMERICAN CLASSIC VOYAGES CO.
(Exact name of Registrant as specified in its charter)
Delaware
----------------------------
(State or other jurisdiction)
0-9264 31-0303330
- ------------------------ -----------------------------------
(Commission file number) (IRS employer identification number)
Two North Riverside Plaza, Chicago, IL 60606
- -------------------------------------- -------------
(Address of principal executive offices) (Zip code)
(312) 258-1890
--------------------------------------------------
(Registrant's telephone number, include area code)
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ITEM 2--ACQUISITION OR DISPOSITION OF ASSETS
On October 16, 1996, American Classic Voyages Co. (the "Company") sold its
subsidiary which owns the Maison Dupuy Hotel ("Hotel") in New Orleans to the
Thayer Lodging Group ("Thayer") for $22.0 million in cash. In addition, the
Company entered into a Profit Participation Agreement with Thayer which will
provide for future payments of up to $2.0 million based on the future
performance of the Hotel within the next seven years. The Company will also
receive preferred rates at the Hotel for its passengers and employees who
require lodging in New Orleans for the next two years. In return, the Company
has agreed to provide Thayer a minimum of $0.6 million of this business in each
of these years.
Upon the sale of the Hotel, the Company was required to pay down its outstanding
borrowings, which were $9.5 million under its credit agreement with a group of
financial institutions with The Chase Manhattan Bank (formerly Chemical Bank),
as agent (the "Credit Agreement"). The borrowing availability under the Credit
Agreement was reduced from $25.0 million to $15.0 million and the Company will
be required every calendar year to maintain a 30-day period when the
outstanding borrowings cannot exceed $7.5 million. The balance of the Hotel
sale proceeds will be used for general corporate purposes.
ITEM 7--FINANCIAL STATEMENTS AND EXHIBITS
A. Financial Statements.
--------------------
Not Applicable.
B. Pro Forma Financial Information.
-------------------------------
- Pro Forma Condensed Consolidated Balance Sheet as of June 30,
1996
- Pro Forma Condensed Consolidated Income Statement for the year
ended December 31, 1995
- Pro Forma Condensed Consolidated Income Statement for the six
months ended June 30, 1996
- Notes to the Pro Forma Condensed Consolidated Financial
Statements
C. Exhibits.
---------
2.(d)(1) Profit Participation Agreement made as of October 16,
1996 by and between THI FQ L.P. and Great AQ Steamboat
Co.
2.(d)(2) Preferred Provider Agreement executed as of October 16,
1996 by The Delta Queen Steamboat Co. and THI FQ L.P.
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AMERICAN CLASSIC VOYAGES CO.
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following unaudited Pro Forma Condensed Consolidated Financial Statements
of American Classic Voyages Co. (the "Company") give effect to the sale (the
"Disposition") of the Maison Dupuy Hotel ("Hotel"). The unaudited Pro Forma
Condensed Consolidated Financial Statements reflect the Company's Disposition.
The unaudited Pro Forma Condensed Consolidated Statements of Income have been
prepared as if the Disposition had been consummated as of the beginning of the
respective periods presented. The unaudited Pro Forma Condensed Consolidated
Balance Sheet has been prepared as if the Disposition had been consummated at
June 30, 1996. Such unaudited Pro Forma Condensed Consolidated Financial
Statements are not necessarily indicative of the results of historical
operations had the Disposition been consummated at such dates. The unaudited
Pro Forma Condensed Consolidated Financial Statements should be read in
conjunction with the accompanying Notes to Pro Forma Condensed Consolidated
Financial Statements.
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AMERICAN CLASSIC VOYAGES CO.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1996
(Amounts in thousands except shares and par value)
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents................ $ 7,108 $ 8,730 (1) $ 15,838
Restricted short-term investments........ 3,003 -- 3,003
Accounts receivable...................... 1,562 (13)(2) 1,549
Prepaid expenses and other current assets 7,700 (128)(2) 7,572
-------- ----------- --------
Total current assets............. 19,373 8,589 27,962
Property and equipment, net.............. 181,831 (9,913)(3) 171,918
Other assets............................. 6,462 -- 6,462
-------- --------- ---------
Total assets..................... $207,666 $(1,324) $206,342
======== =========== ========
LIABILITIES
Accounts payable......................... $ 10,501 $ -- $ 10,501
Other accrued expenses................... 23,240 827 (4) 24,067
Current portion of long-term debt........ 4,100 -- 4,100
Unearned passenger revenues.............. 40,310 -- 40,310
-------- ----------- --------
Total current liabilities........ 78,151 827 78,978
Long-term debt, less current maturities.. 100,948 (13,000)(5) 87,948
-------- ----------- --------
Total liabilities................ 179,099 (12,173) 166,926
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value
(5,000,000 shares authorized, none
issued and outstanding).................. -- -- --
Common stock, $.01 par value (20,000,000
shares authorized; 13,776,122 issued and
outstanding)............................ 138 -- 138
Additional paid-in capital............... 74,092 -- 74,092
Accumulated deficit...................... (45,663) 10,849 (6) (34,814)
-------- ----------- --------
Total stockholders' equity....... 28,567 10,849 39,416
-------- ----------- --------
$207,666 $(1,324) $206,342
</TABLE> ======== =========== ========
The accompanying notes are an integral part of these pro forma condensed
consolidated financial statements.
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AMERICAN CLASSIC VOYAGES CO.
PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
YEAR ENDED DECEMBER 31, 1995
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>>
Maison
Dupuy Pro Forma
Historical Disposition(a) Adjustments Pro Forma
---------- -------------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues.................................... $ 189,821 $ (7,507) $ 435 (b) $ 182,749
Cost of operations (exclusive of
depreciation and amortization shown below).. 137,926 (2,436) 435 (c) 135,925
---------- ---------- ---------- ----------
Gross profit................................ 51,895 (5,071) -- 46,824
Selling, general and administrative expenses 48,613 (2,132) 28 (d) 46,509
Depreciation and amortization expense....... 11,917 (396) (15)(e) 11,506
Non-recurring charges....................... 5,900 -- -- 5,900
---------- ---------- ---------- ----------
Operating loss.............................. (14,535) (2,543) (13) (17,091)
Interest income............................. 1,706 -- -- 1,706
Interest expense............................ 5,708 -- (645)(f) 5,063
Other income................................ -- -- 11,359 (g) 11,359
---------- ---------- ---------- ----------
(Loss) income before income taxes and
minority interest.......................... (18,537) (2,543) 11,991 (9,089)
Income tax benefit (expense)................ 6,308 865 (4,077)(h) 3,096
Minority interest in loss................... (2,558) -- -- (2,558)
---------- ---------- ---------- ----------
Net (loss) income........................... $ (9,671) $ (1,678) $7,914 $ (3,435)
========== ========== ========== ==========
Per Share Information:
Average common shares outstanding........... 13,763 13,763
========== ==========
Loss per share.............................. $ (0.70) $ (0.25)
========== ==========
</TABLE>
The accompanying notes are an integral part of these pro forma condensed
consolidated financial statements.
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AMERICAN CLASSIC VOYAGES CO.
PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
SIX MONTHS ENDED JUNE 30, 1996
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Maison
Dupuy Pro Forma
Historical Disposition(i) Adjustments Pro Forma
---------- -------------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues.................................... $ 91,250 $ (3,842) $ 354 (j) $ 87,762
Cost of operations (exclusive of
depreciation and amortization shown below) 59,973 (1,206) 354 (k) 59,121
---------- ------------ ----------- ----------
Gross profit................................ 31,277 (2,636) -- 28,641
Selling, general and administrative expenses 24,962 (1,028) 14 (l) 23,948
Depreciation and amortization expense....... 7,386 (221) -- 7,165
Impairment write-down....................... 38,390 -- -- 38,390
---------- ------------ ----------- ----------
Operating loss.............................. (39,461) (1,387) (14) (40,862)
Interest income............................. 451 -- -- 451
Interest expense............................ 4,329 -- (630)(m) 3,699
Other income................................ -- -- 11,499 (n) 11,499
---------- ------------ ----------- ----------
(Loss) income before income taxes........... (43,339) (1,387) 12,115 (32,611)
Income tax benefit (expense)................ 449 97 (848)(o) (302)
---------- ------------ ----------- ----------
Net (loss) income........................... $ (42,890) $ (1,290) $11,267 $(32,913)
========== ============ =========== ==========
Per Share Information:
Average common shares outstanding........... 13,771 13,771
========== ==========
Loss per share.............................. $ (3.11) $ (2.39)
========== ==========
</TABLE>
The accompanying notes are an integral part of these pro forma condensed
consolidated financial statements.
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AMERICAN CLASSIC VOYAGES CO.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following pro forma adjustments have been applied to the historical
condensed consolidated balance sheet of the Company to give effect to the
Disposition as if it had occurred on June 30, 1996.
(1) Represents: (i) Disposition proceeds of $22.0 million, net of $0.3
million of commissions and estimated closing expenses; (ii) the
paydown by the Company of $13.0 million of amounts outstanding under
the Company's revolving credit facility; and (iii) apportionment
adjustments received/paid by the Company from/to the purchaser for
certain prepaid, inventory, receivables and accrual items of the
Hotel.
(2) Reflects the elimination of certain prepaid items and receivables
of the Hotel for which the Company received consideration from the
purchaser.
(3) Reflects the elimination of the net book value of the Hotel
property upon the Disposition.
(4) Reflects the estimated tax liability created upon the Disposition
and adjustment of certain accrual items.
(5) Represents use of a portion of the proceeds to pay down amounts
outstanding under the Company's revolving credit facility.
(6) Reflects the after-tax gain of $10.9 million recognized upon the
Disposition on the pro forma consolidated balance sheet net of
additional expenses of $0.1 million recognized pertaining to the
apportionment adjustments.
The following pro forma adjustments have been applied to the Company's
historical condensed consolidated statement of income for the year ended
December 31, 1995 to give effect to the Disposition as if it had occurred on
January 1, 1995. Accordingly, the Hotel's results have been excluded for the
twelve months ended December 31, 1995.
(a) Reflects the Hotel's operating results for the twelve months ended
December 31, 1995.
(b) Reflects intercompany revenues between the Company and the Hotel
previously eliminated in consolidation.
(c) Reflects intercompany expenses between the Company and the Hotel
previously eliminated in consolidation.
(d) Reflects additional expenses recognized pertaining to the
apportionment adjustments.
(e) Reflects a reduction in depreciation expense due to a lower
capitalized interest balance as proceeds received from the Disposition
were used to repay amounts outstanding on the Company's long-term
credit facility, and therefore, less interest expense was incurred and
subject to capitalization.
(f) Reflects the reduction in interest expense due to reduced
borrowings under the Company's credit facility as a result of the
proceeds received from the Disposition.
(g) Represents the pre-tax gain recognized on the Disposition.
(h) Reflects the income tax effect of the pro forma adjustments.
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The following pro forma adjustments have been applied to the Company's
historical condensed consolidated statement of income for the six months ended
June 30, 1996 to give effect to the Disposition as if it had occurred on
January 1, 1996. Accordingly, the Hotel's results have been excluded for the
six months ended June 30, 1996.
(i) Reflects the Hotel's operating results for the six months ended
June 30, 1996.
(j) Reflects intercompany revenues between the Company and the Hotel
previously eliminated in consolidation.
(k) Reflects intercompany expenses between the Company and the Hotel
previously eliminated in consolidation.
(l) Reflects the elimination of one-time expenses recognized in the
Company's historical results related to the Disposition and the
addition of expenses pertaining to the apportionment adjustments.
(m) Reflects the reduction in interest expense due to repayments on
the Company's revolving credit facility as a result of the proceeds
received from the Disposition.
(n) Represents the pre-tax gain recognized on the Disposition.
(o) Reflects the income tax effect of the pro forma adjustments.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN CLASSIC VOYAGES CO.
By: /s/ Kathryn F. Gray
------------------------
Kathryn F. Gray
Controller and Treasurer
Dated: October 31, 1996
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EXHIBIT 2.(d)(1)
MAISON DUPUY HOTEL
NEW ORLEANS, LOUISIANA
PROFIT PARTICIPATION AGREEMENT
------------------------------
THIS PROFIT PARTICIPATION AGREEMENT (this "Agreement") is made as of this
16th day of October, 1996, by and between THI FQ L.P., a Delaware limited
partnership ("THI") and Great AQ Steamboat Co. ("Participant"), a Delaware
corporation.
Preliminary Recitals
--------------------
A. Participant, as Seller, and Thayer Hotel Investments L.P. (the general
partner of THI), as Buyer, among others, have entered into that certain Amended
and Restated Purchase Agreement dated August 19, 1996 (the " Purchase
Agreement");
B. As additional consideration under the Purchase Agreement, THI provided
Participant a "Profit Participation" in the Property (as such term is
hereinafter defined), in an amount not to exceed $2.0 Million, in accordance
with and subject to the terms of this Agreement; and
C. As required by and in accordance with the Purchase Agreement, and for
Ten Dollars ($10.00) in hand paid, being good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, THI and Participant
have entered into this Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Preamble and Preliminary Recitals. The Preamble and Preliminary
Recitals set forth above are hereby incorporated in and made a part of this
Agreement.
2. Definition. As used in this Agreement, each of the following terms
shall have the meaning ascribed in this Section 2.
A. "Base Payment Amount" means the minimum amount to be paid on
account of the Profit Participation; which amount shall be $300,000 during the
period commencing on the date hereof and ending on the third anniversary
hereof, and $500,000 thereafter.
B. "Disposition" means any sale, exchange, refinancing or other
transaction with a bona fide third party which, constitutes a capital event
with respect to all or substantially all the Property or any portion thereof or
interest therein.
C. "Distribution" means any distribution made by THI to the
Partners (as such term is hereinafter defined) from revenues generated
by the Property (such as net operating income, sale and refinancing proceeds
and condemnation and insurance proceeds), whether the distribution is made in
cash or other property (with such other property being valued for this purpose
at its fair market value as of the date of the distribution), but only after
paying or providing for all expenses and other liabilities arising from or with
respect to the Property or any part thereof or interest therein; provided,
however, a "Distribution" shall not be deemed to include "Net Disposition
Proceeds" (as such term is hereinafter defined).
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D. "Equity Amount" means, as of any particular date, the amount
equal to all cash paid or invested in THI by the Partners from their
own funds (and not from revenues generated by the Property) in connection with
the ownership of the Property.
E. "Excess Operating Income" means, with respect to THI, for any
trailing twelve (12) month period, the surplus of: (i) income generated
from the Property before giving effect to interest expense, federal, state and
local income and franchise tax expense, depreciation expense, amortization
expense, related party expenses in excess of market rates, and any other
non-cash item which would have the effect of reducing net income for such
period (all as reflected by THI on its financial statements, consistently
applied); over (ii) the Pro Forma Operating Income for the periods and in the
amounts set forth on Exhibit A attached hereto (years 2-5 consistent with those
figures presented to the Partners advisory board), adjusted to reflect the
trailing twelve (12) month period as appropriate.
F. "Net Disposition Proceeds" means the net proceeds from the
Disposition of the Property after deducting any expenses in connection
therewith (but only bona fide third party expenses and related party expenses
at market rates) and any amounts applied toward the payment of any indebtedness
of THI (including Partner Loans).
G. "Partners" means Thayer Hotel Investments L.P., a Delaware
limited partnership, Thayer Hotel Investors II L.P., a Delaware limited
partnership and THIE New Orleans Investment L.P., a Delaware limited
partnership, and their respective successors and assigns, and any other
partners of THI.
H. "Person" means any individual, corporation, partnership or
entity.
I. "Preferred Return Amount" means the amount (not less than
zero) which, taking into account all other Distributions previously
made to the Partners, will result in such Partners having received total
Distributions that result in an "internal rate of return" to such Partners of
twenty-five percent (25%) with respect to the aggregate Equity Amount. As used
herein, "internal rate of return" is the annual discount rate at which the
aggregate present value, computed as of the date hereof, of all Distributions
made to Partners would equal the sum of (i) the initial Equity Amount plus (ii)
the aggregate present value, computed as of date hereof, of any additional
Equity Amounts contributed by the Partners, using in such calculation an annual
discount rate of twenty-five percent (25%) for the period from the date hereof
to the date of contribution of each Equity Amount. For purposes of this
calculation, Distributions (i) shall be made in accordance with THI's limited
partnership agreement and in no event shall excess cash flow from the Property
be distributed less frequently than every twelve (12) months, and (ii) made
other than on an anniversary of the date hereof shall be discounted back to the
nearest anniversary of the date hereof at an annual rate of twenty-five percent
(25%).
J. "Property" means that property commonly known as the Maison
Dupuy Hotel, 1001 Toulouse Street, New Orleans, Louisiana (the legal
description of which is set forth on Exhibit A to the Purchase Agreement); all
improvements and additions thereto, and all replacements of any thereof as
existing from time to time; and all rents, profits and proceeds thereof.
3. Profit Participation.
(a) Upon a Disposition, THI shall, not later than thirty (30) days
thereafter, pay to Participant an amount, not to exceed $2.0 Million, equal to
the greater of (i) the Base Payment Amount, or (ii) fifty percent (50%) of the
excess of the Net Disposition Proceeds over the Preferred
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Return Amount, whereupon this Agreement shall terminate and neither party shall
have any further liability hereunder.
(b) If, after the seventh (7th) anniversary hereof, THI has
neither completed a Disposition of the Property nor exercised its call
rights pursuant to Section 4 below, THI shall pay to Participant, not later
than thirty (30) days thereafter, the greater of (i) the Base Payment Amount,
or (ii) an amount, not to exceed $2.0 Million, equal to fifty percent (50%) of
the Excess Operating Income multiplied by ten (10), whereupon this Agreement
shall terminate and neither party shall have any further liability hereunder.
4. THI's Call Rights.
(a) Any time after the first anniversary hereof, THI shall
have the right to terminate the Profit Participation by giving written
notice to Participant and paying to Participant the greater of (i) the Base
Payment Amount, or (ii) an amount, not to exceed $2.0 Million, equal to fifty
percent (50%) of the Excess Operating Income multiplied by ten (10), whereupon
this Agreement shall terminate and neither party shall have any further
liability hereunder, except as expressly set forth in paragraph 4(b) below.
(b) Notwithstanding the terms of paragraph 4(a) above, if at
any time within six (6) months after THI exercises its rights as set
forth in paragraph 4(a) above, THI completes a Disposition of the Property,
then Participant shall be entitled to an amount (which, when added to any
amount paid pursuant to paragraph 4(a) does not to exceed $2.0 Million), which
is the excess of the amount calculated under paragraph 3(a) over the amount
paid under paragraph 4(a), whereupon this Agreement shall terminate and neither
party shall have any further liability hereunder.
5. Periodic Statements and Inspection Rights. THI shall deliver to
Participant annual operating and financial statements with respect to the
Property in such form as is then available within ninety (90) days following
year end. In addition, Participant shall, upon reasonable advance written
notice, have the right to review and inspect the books and records of THI with
respect to the Property, at the sole cost and expense of Participant.
6. Offset Rights. THI shall have the right to offset against any
amounts due to Participant hereunder any amounts due from Participant
under, and in accordance with, the Preferred Provider Agreement (as such term
is defined in the Purchase Agreement) of even date herewith.
7. Notices. All notices, requests, demands or other communications
required or permitted under this Agreement shall be in writing and delivered
personally or by certified mail, return receipt requested, postage prepaid, by
telecopy or other facsimile transmission, or by overnight courier (such as
Federal Express), addressed as follows:
If to Participant: With a copy to:
American Classic Voyages Co. Two North Riverside Plaza, Suite 1515
Two North Riverside Plaza, Suite 200 Chicago, Illinois 60606
Chicago, Illinois 60606 ATTN: Fred Langtry, Esq.
ATTN: Jordan B. Allen, FAX: 312/454-0335
Sr. VP/General Counsel
FAX: 312/466-6151
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If to THI: With a copy to:
Thayer Hotel Investments L.P. Hogan & Hartson L.L.P.
410 Severn Avenue, Suite 314 555 13th Street, N.W.
Annapolis, Maryland 21403 Washington, DC 20004
ATTN: Mr. William G. Moeckel ATTN: Carol Weld King, Esq.
ATTN: David J. Weymer, Esq. FAX: 202/637-5910
FAX: 410/268-1582
All notices given in accordance with the terms hereof shall be deemed received
forty-eight (48) hours after posting, or otherwise when delivered. Either
party hereto may change the address for receiving notices, requests, demands or
other communication by notice sent in accordance with the terms of this Section
7.
8. Modification. No provision of this Agreement may be changed,
modified, terminated or waived except by a written instrument executed
by both THI and Participant.
9. No Member or Partner. By its execution of this Agreement,
Participant does not become a member or partner of or with THI, and
accordingly, Participant does not and shall not maintain that it owns an equity
interest in the Property or that it is a partner of THI, whether for federal
income tax purposes or otherwise.
10. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of THI and Participant and their respective successors and
assigns.
11. Remedies. Upon a default by either THI or Participant under this
Agreement, the nondefaulting party shall have such rights and remedies as are
available with respect thereto at law (but not in equity).
12. Governing Law. This Agreement shall be governed by and interpreted
and construed in accordance with the laws of the State of Louisiana.
13. Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience of reference only and do not in any way limit or
amplify, and shall not be used to construe, the terms and provisions hereof.
IN WITNESS WHEREOF, THI and Participant have executed and delivered this
Agreement as of the date first above written.
THI
THI FQ L.P., a Delaware limited partnership
By: /s/ David J. Weymer
---------------------------------------
Title: Vice President
------------------------------------
PARTICIPANT
-----------
Great AQ Steamboat Co., a Delaware corporation
By: /s/ Jordan B. Allen
------------------------------------------
Title: Vice President
----------------------------------------
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The following are attachments not contained herein:
A Pro Forma Operating Income
5
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EXHIBIT 2.(d)(2)
PREFERRED PROVIDER AGREEMENT
THIS PREFERRED PROVIDER AGREEMENT (this "Agreement") is executed as of the
16th day of October, 1996 by The Delta Queen Steamboat Co., a Delaware
corporation ("DQSC") and THI FQ L.P., a Delaware limited partnership (together
with any permitted assignee, "THI").
Preliminary Recitals
WHEREAS, DQSC is the sole owner of the stock of Great AQ Steamboat Co., a
Delaware corporation ("Great AQ") and also owns and operates, through various
subsidiaries, The Delta Queen Steamboat Co. cruise line (the "Cruise Line");
and
WHEREAS Great AQ, Blackland Vistas, Inc. ("BVI") and Thayer Hotel
Investments L.P. (an affiliate of THI) have entered into that certain Amended
and Restated Purchase Agreement dated as of August 19, 1996 (the "Purchase
Agreement") whereby Great AQ and BVI agreed to sell their interest in the
limited partnership which owns the Maison Dupuy Hotel, New Orleans, Louisiana
(the "Hotel") and THI agreed to buy such partnership interest; and
WHEREAS, in connection with the Cruise Line, DQSC has passengers embarking
or disembarking from New Orleans, Louisiana and as such requires the use of
hotel rooms in the Hotel; and
WHEREAS, the parties to the Purchase Agreement agreed to enter into this
Agreement setting forth the terms upon which DQSC will provide, and THI will
accept, business at the Hotel for a twenty-four (24) month period following the
Closing Date.
NOW, THEREFORE, the parties hereby AGREE to the following:
1. Preamble and Preliminary Recitals. The Preamble and Preliminary
Recitals set forth above shall be incorporated herein and made a part hereof.
2. Commitment to Provide Hotel Business. Following Closing under the
Purchase Agreement, DQSC agrees to use the Hotel as a preferred provider for at
least a twenty-four (24) month period, commencing on the date hereof and ending
on the second anniversary of the Closing Date (the "Term"). The period
commencing on the date hereof and terminating on October 15, 1997 shall be
referred to as "Year One" and the period commencing on October 16, 1997 and
ending on the last day of the Term shall be referred to as "Year Two". During
the Term and subject to the terms of this Agreement, DQSC agrees to provide, at
a minimum, business totaling $584,179 in each of Year One and Year Two (the
"Minimum Commitment"). Such Minimum Commitment may be satisfied by any
business in connection with the operation of the Cruise Line, including DQSC's
passengers, employees (including employees of affiliated entities) or other
persons booking through DQSC or its affiliated travel agency, Cruise America
Travel and shall include all room revenue.
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3. Room Rates/Terms.
(a) THI agrees to provide the hotel rooms at a rate of $85 per
night through December 31, 1997 and at a rate of $90 per night for any dates in
1998. Notwithstanding the foregoing, the retail rates shall be $140 per night
for the following dates in 1997 and $148 per night for the following dates in
1998:
(i) three-day period of the Sugar Bowl;
(ii) four-day period (Friday through Monday) prior to
Mardi Gras;
(iii) four-day period (Thursday through Sunday) for the first
weekend and three-day period (Friday through Sunday) for
the second weekend of The New Orleans Heritage Jazz
Festival; and
(iv) three-day period (Friday through Sunday) of the French
Quarter Festival.
(b) The rates described above are net, non-commissionable and
subject to all applicable taxes. Check-in time shall be 3:00 p.m. and
check-out time shall be 11:00 a.m. Early check-in and late check-out are
subject to hotel availability and require confirmation by the Front Desk
Manager. A full "American Style" breakfast shall be served, consistent with
existing practices, for DQSC's passengers at a rate of $13.00 per person for
1996 and 1997 and $14.00 per person for 1998, including taxes and gratuities.
The charge for baggage handling and parking shall be at rates consistent with
other French Quarter hotels of similar class. All other terms and conditions
shall be consistent with the Hotel's practices in effect at the given time.
4. Room Block Process.
(a) DQSC has previously provided THI with its room request setting
forth the desired room block for any given calendar day (any single block, a
"Room Block") for the balance of 1996 and 1997. No later than October 15,
1996, DQSC will provide its desired Room Blocks for the period of January 1,
1998 through the end of the Term. The Room Blocks for the balance of 1996 and
the first half of 1997 shall be deemed accepted. Within thirty (30) days
following the Closing Date, THI shall inform DQSC of the Room Blocks for the
second half of 1997 THI does not wish to honor and on or before January 15,
1997, THI shall inform DQSC of the Room Blocks for 1998 it does not wish to
honor.
(b) THI will hold and reserve all Room Blocks which it does not
reject in accordance with sub-paragraph (a) above. DQSC will regularly
review and revise the Room Block. Upon identifying that a Room Block is no
longer needed or can be reduced, DQSC will release such Room Block at its
earliest opportunity, but in no event later than sixty (60) days before the
commencement of such Room Block.
(c) From time to time DQSC may determine that additional space is
needed, in which case DQSC shall notify THI of an additional or increased Room
Block. THI shall have the right to accept any such requested Room Block by
giving notice to DQSC within two (2) business days after receiving the request.
THI acknowledges that it is DQSC's intent to keep all group business at the
same hotel. In the event THI cannot, or chooses not to, accommodate an entire
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group it shall be DQSC's prerogative to move the entire group to another hotel
and release the corresponding Room Block.
5. Cancellations and No-Shows. DQSC may cancel any given individual room
reservation, subject to the following: if a cancellation occurs more than 30
days prior to arrival, no penalty will be assessed; if less than 30 days but
more than 72 hours prior to arrival a cancellation occurs on more than 10% of
any Room Block, a charge equal to 50% of the room rate plus taxes for the
period of the Room Block will be assessed to DQSC; and, if 72 hours or less
prior to arrival a cancellation occurs on more than 10% of any Room Block, a
charge equal to the room rate plus taxes for the period of the Room Block will
be assessed to DQSC. No-shows will be considered canceled if arrival does not
occur on the date reserved and DQSC will be assessed one night's room rate plus
taxes. Notwithstanding the foregoing, cancellations resulting from force
majeure, Acts of God or other causes beyond the control of DQSC shall not
subject DQSC to liability under this Section 5.
6. Billing Procedures. THI will invoice DQSC for all rooms, including
taxes, no more than two (2) times per month, for all completed business.
Payment will be due within ten (10) days after receipt of the invoice.
7. DQSC's Failure to Satisfy the Minimum Commitment.
(a) Within sixty (60) days after the end of Year One and Year Two,
THI shall deliver to DQSC a statement in the form of Exhibit A, calculating the
shortfall, if any, from the Minimum Commitment for the period. DQSC shall
have the right to review and approve the statement, which approval shall not
be unreasonably withheld or delayed.
(b) In the event DQSC fails to satisfy the Minimum Commitment in
either Year One or Year Two, DQSC shall be obligated to THI for the
shortfall. Any shortfall, as computed in sub-paragraph (a) above, shall be
paid to THI by means of an offset against amounts due under the Participation
Agreement. To the extent the amounts due under the Participation Agreement do
not satisfy the liabilities under sub-paragraph (a), THI shall have any
remedies available at law against Great AQ or DQSC.
8. Standard of Hotel. THI agrees to maintain the Hotel, as a first-class
hotel generally consistent with the Hotel's current practices, although the
parties acknowledge that certain renovation and remodeling work will be
performed during the Term. In the event the service or accommodations at the
Hotel are deficient at any time during the Term, DQSC shall notify THI in
writing. If such deficiencies are material and THI fails or refuses to correct
such deficiencies within thirty (30) days of receiving notice, DQSC shall have
the right to terminate this Agreement and shall have no further obligations
hereunder.
9. Miscellaneous.
(a) Applicable Law. This Agreement shall be governed by the laws
of the State of Louisiana, without resort to the choice of law rules thereof.
(b) Headings; Exhibits. The headings of articles and sections of
this Agreement are inserted only for convenience; they are not to be construed
as a limitation of the scope of the
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particular provision to which they refer. All exhibits attached or to be
attached to this Agreement are incorporated herein by this reference.
(c) Notices. Notices and other communications required by this
Agreement shall be in writing and delivered by hand against receipt, sent by
recognized overnight delivery service, by certified or registered mail,
postage prepaid, with return receipt requested or facsimile and promptly
confirmed by first class U.S. mail. All notices shall be addressed as follows:
If to DQSC:
AMERICAN CLASSIC VOYAGES CO.
Two North Riverside Plaza, Suite 200
Chicago, Illinois 60606
Attention: Jordan B. Allen, Esq.
Senior Vice President and General Counsel
Fax No. 312/466-6151
If to THI:
THAYER HOTEL INVESTMENTS L.P.
410 Severn Avenue, Suite 314
Annapolis, Maryland 21403
Attention: Mr. William G. Moeckel
Attention: David J. Weymer, Esq.
Fax No. 410/268-1582
With a copy to:
HOGAN & HARTSON L.L.P.
555 13th Street, N.W.
Washington, DC 20004
Attention: Carol Weld King, Esq.
Fax No. 202/637-5910
or to such other address as may be designated by a proper notice. Notices
shall be deemed to be effective upon receipt (or refusal thereof) if personally
delivered or sent by recognized overnight delivery service, three (3) days
following the date of mailing if sent by certified mail, or upon receipt of
confirmation if sent by facsimile.
(d) Waiver. The failure of either party to insist on strict
performance of any of the provisions of this Agreement or to exercise
any right granted to it shall not be construed as a relinquishment or future
waiver; rather, the provision or right shall continue in full force. No waiver
of any provision or right shall be valid unless it is in writing and signed by
the party giving it.
(e) Partial Invalidity. If any part of this Agreement is
declared invalid by a court of competent jurisdiction, this Agreement
shall be construed as if such portion had never existed, unless this
construction would operate as an undue hardship on THI or DQSC or would
constitute a substantial deviation from the general intent of the parties as
reflected in this Agreement.
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(f) Entire Agreement. This Agreement, together with the other
writings signed by the parties and incorporated by reference and together with
any instruments to be executed and delivered under this Agreement, constitutes
the entire agreement between the parties with respect to the subject matter and
supersedes all prior oral and written understandings. Amendments to this
Agreement shall not be effective unless in writing and signed by the parties
hereto.
(g) Time is of the Essence. Time is of the essence with respect to
performance of all obligations under this Agreement.
(h) Waiver of Jury Trial. THI and DQSC each hereby waives any
right to jury trial in the event any party files an action relating to
this Agreement or to the transactions or obligations contemplated hereunder.
(i) Counterparts. This Agreement may be executed in any number of
counterparts which, when taken together, shall constitute a single, binding
instrument.
(j) Defined Terms. All defined terms not otherwise defined in this
Agreement shall have the meanings ascribed to such terms in the Purchase
Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date indicated below.
THE DELTA QUEEN STEAMBOAT CO., AN ILLINOIS
CORPORATION
By: /s/ Jordan B. Allen
----------------------------------------
Name: Jordan B. Allen
-------------------------------------
Its: Vice President
--------------------------------------
THI FQ L.P., A DELAWARE
LIMITED PARTNERSHIP
BY: THAYER HOTEL INVESTMENTS L.P.,
A DELAWARE CORPORATION
ITS: GENERAL PARTNER
By: /s/ David J. Weymer
----------------------------------------
Name: David J. Weymer
-------------------------------------
Its: Vice President
--------------------------------------
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EXHIBIT A
<TABLE>
<S> <C> <C> <C> <C>
I. Minimum Commitment $584,179
II Business Provided During Period
TOTAL $ $_______
III. Business Rejected by THI
During Twelve Month Period $_______
IV. Cancellation/No-Show Charges
Paid During Twelve Month
Period $_______
V. Sum of II, III and IV $________
VI. Calculate Shortfall from
Minimum Commitment Subtract V
from I (if $0 or less, then
insert $0) $________
</TABLE>
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