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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------------------
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 0-9264
AMERICAN CLASSIC VOYAGES CO.
(Exact name of registrant as specified in its charter)
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<CAPTION>
<S> <C>
DELAWARE 31-0303330
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer identification No.)
TWO NORTH RIVERSIDE PLAZA, CHICAGO, IL 60606
(Address of principal executive offices) (Zip Code)
</TABLE>
(312) 258-1890
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ]
As of May 10, 1999, there were 18,436,536 shares of Common Stock outstanding.
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AMERICAN CLASSIC VOYAGES CO.
INDEX
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ITEM DESCRIPTION PAGE
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Part I. Financial Information:
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets at March 31, 1999
and December 31, 1998....................................................... 3
Condensed Consolidated Statements of Operations for the
Three Months Ended March 31, 1999 and 1998.................................. 4
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1999 and 1998.................................. 5
Notes to Condensed Consolidated Financial Statements........................ 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................................... 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk ................. 15
Part II. Other Information:
Item 1. Legal Proceedings........................................................... 16
Item 6. Exhibits and Reports on Form 8-K............................................ 16
</TABLE>
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AMERICAN CLASSIC VOYAGES CO.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except shares and par value)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
1999 1998
------------ ------------
ASSETS
<S> <C> <C>
Cash and cash equivalents................................................ $ 30,934 $ 27,004
Restricted short-term investments........................................ 60 60
Accounts receivable...................................................... 2,012 1,989
Prepaid expenses and other current assets................................ 13,831 9,053
-------- --------
Total current assets................................................ 46,837 38,106
Property and equipment, net.............................................. 162,585 162,129
Deferred income taxes, net............................................... 12,689 10,011
Other assets............................................................. 4,194 2,546
-------- --------
Total assets........................................................ $226,305 $212,792
======== ========
LIABILITIES
Accounts payable......................................................... $ 15,096 $ 13,493
Other accrued liabilities................................................ 15,125 16,500
Current portion of long-term debt........................................ 4,100 4,100
Unearned passenger revenues.............................................. 56,057 39,297
-------- --------
Total current liabilities........................................... 90,37 73,390
Long-term debt, less current portion..................................... 76,176 77,388
-------- --------
Total liabilities................................................... $166,554 $150,778
======== ========
COMMITMENTS AND CONTINGENCIES (NOTE 5 AND 6)
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value (5,000,000 shares
authorized, none issued and outstanding).............................. $ -- $ --
Common stock, $.01 par value (40,000,000 and 20,000,000
shares authorized, respectively; 14,457,036 and 14,293,931 shares
issued, respectively)................................................ 145 143
Additional paid-in capital............................................... 82,726 80,451
Accumulated deficit...................................................... (22,363) (17,823)
Common stock in treasury, at cost (51,000 shares)........................ (757) (757)
-------- --------
Total stockholders' equity.......................................... 59,751 62,014
-------- --------
Total liabilities and stockholders' equity.......................... $226,305 $212,792
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
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AMERICAN CLASSIC VOYAGES CO.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
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<CAPTION>
For the Three Months
Ended March 31,
---------------------------
1999 1998
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Revenues................................................................. $ 40,566 $ 40,668
Cost of operations (exclusive of depreciation expense shown
below) ................................................................ 28,768 29,459
---------- ---------
Gross profit............................................................. 11,798 11,209
Selling, general and administrative expenses............................. 13,935 13,096
Depreciation expense..................................................... 4,155 4,256
---------- ---------
Operating loss........................................................... (6,292) (6,143)
Interest income.......................................................... 322 251
Interest expense......................................................... 1,570 1,670
Other income............................................................. -- 300
---------- ---------
Loss before income taxes................................................. (7,540) (7,262)
Income tax benefit....................................................... 3,000 2,900
---------- ---------
Net loss................................................................. $ (4,540) $ (4,362)
========== =========
PER SHARE INFORMATION
Basic:
Basic weighted average shares outstanding............................. 14,321 14,068
Loss per share........................................................ $ (0.32) $ (0.31)
Diluted:
Diluted weighted average shares outstanding........................... 14,321 14,068
Loss per share........................................................ $ (0.32) $ (0.31)
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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AMERICAN CLASSIC VOYAGES CO.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
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<CAPTION>
For the Three Months
Ended March 31,
---------------------------
1999 1998
----------- ----------
OPERATING ACTIVITIES:
<S> <C> <C>
Net loss ....................................................................... $ (4,540) $ (4,362)
Depreciation expense........................................................ 4,155 4,256
Gain on sale of assets...................................................... -- (300)
Changes in working capital and other:
Working capital changes and other....................................... (6,758) (6,711)
Unearned passenger revenues............................................. 16,760 12,079
--------- ---------
Net cash provided by operating activities................................... 9,617 4,962
--------- ---------
INVESTING ACTIVITIES:
Capital expenditures............................................................ (4,775) ( 4,085)
Proceeds from sale of assets.................................................... -- 300
--------- ---------
Net cash used in investing activities....................................... (4,775) (3,785)
--------- ---------
FINANCING ACTIVITIES:
Repayment of borrowings......................................................... (1,212) (1,212)
Issuance of common stock........................................................ 880 754
Deferred financing fees......................................................... (580) --
--------- ---------
Net cash used in financing activities....................................... (912) (458)
--------- ---------
Increase in cash and cash equivalents.............................................. 3,930 719
Cash and cash equivalents, beginning of period..................................... 27,004 19,187
--------- ---------
Cash and cash equivalents, end of period........................................... $ 30,934 $ 19,906
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest.................................................................... $ 1,946 $ 1,998
Income taxes................................................................ 100 --
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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AMERICAN CLASSIC VOYAGES CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
(Unaudited)
1. BASIS OF PRESENTATION
These accompanying unaudited Condensed Consolidated Financial Statements
("Financial Statements") have been prepared pursuant to Securities and Exchange
Commission ("SEC") rules and regulations and should be read in conjunction with
the Consolidated Financial Statements and Notes thereto included on Form 10-K
for the year ended December 31, 1998 (the "Form 10-K") for American Classic
Voyages Co. ("AMCV") and its subsidiaries. These Financial Statements include
the accounts of AMCV and its wholly owned subsidiaries, The Delta Queen
Steamboat Co. ("DQSC") and Great Hawaiian Cruise Line, Inc. ("GHCL")
(collectively with such subsidiaries, the "Company"). The following notes to the
Financial Statements highlight significant changes to the notes included in the
Form 10-K and such interim disclosures as required by the SEC. These Financial
Statements reflect, in the opinion of management, all adjustments necessary for
a fair presentation of the interim financial statements. All such adjustments
are of a normal and recurring nature. Certain previously reported amounts have
been reclassified to conform to the 1999 presentation.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
2. EARNINGS PER SHARE
As the Company reported losses for the quarters ended March 31, 1999 and 1998,
diluted earnings per share was computed in the same manner as basic earnings per
share.
3. DEBT
Long-term debt consisted of (in thousands):
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<CAPTION>
March 31, December 31,
1999 1998
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U.S. Government Guaranteed Ship Financing Note, American Queen Series, LIBOR +
0.25% floating rate notes due semi-annually beginning February 24, 1996 through
August 24, 2005...................................................................... $ 15,597 $ 16,809
U.S. Government Guaranteed Ship Financing Bond, American Queen Series, 7.68% fixed
rate, sinking fund bonds due semi-annually beginning February 24, 2006 through
June 2, 2020......................................................................... 36,198 36,198
U.S. Government Guaranteed Ship Financing Note, Independence Series A, LIBOR +
0.27% floating rate notes due semi-annually beginning June 7, 1996 through
December 7, 2005..................................................................... 9,248 9,248
U.S. Government Guaranteed Ship Financing Bond, Independence Series A, 6.84% fixed
rate sinking fund bonds due semi-annually beginning June 7, 2006 through
December 7, 2015..................................................................... 13,215 13,215
U.S. Government Guaranteed Ship Financing Note, Independence Series B, LIBOR +
0.27% floating rate notes due semi-annually beginning December 7, 1996 through
December 7, 2005..................................................................... 2,478 2,478
U.S. Government Guaranteed Ship Financing Bond, Independence Series B, 7.46% fixed
rate sinking fund bonds due semi-annually beginning June 7, 2006 through
December 7, 2015..................................................................... 3,540 3,540
Revolving credit facility (maximum availability of $70 million) ......................... -- --
======== =========
80,276 81,488
Less current portion..................................................................... 4,100 4,100
-------- ---------
$ 76,176 $ 77,388
======== =========
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6
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In the first quarter of 1999, DQSC, as borrower, closed on a new long-term
credit facility with The Chase Manhattan Bank, as agent, and several participant
banks (the "Chase Facility"). The Chase Facility, which is a $70 million
revolving credit facility maturing in February 2004, replaces the previous
credit facility with Chase Manhattan. Borrowings under the new facility bear
interest at a rate, at the option of the Company, equal to either (1) the
greater of Chase's prime rate or certain alternative base rates plus a margin
ranging from 0.50% to 1.50%, or (2) the London Interbank Offered Rate plus a
margin ranging from 1.50% to 2.50%. The Company is also required to pay an
unused commitment fee at a rate of 0.50% per annum.
The Chase Facility will be used to fund the acquisition of the fourth Delta
Queen riverboat, the construction of the first two coastal vessels, and Delta
Queen working capital. The new facility is secured by all of the assets of DQSC
except the American Queen, and has various limitations and restrictions on
investments, additional indebtedness, the construction costs of the new vessels,
and other capital expenditures. The Chase Facility also limits dividends by
DQSC, when aggregated with investments and certain other payments, to amounts
ranging from $5 million to $15 million per annum. DQSC is required to comply
with certain financial covenants, including maintenance of minimum interest
coverage ratios and maximum leverage ratios.
As of March 31, 1999, the Company complied with all covenants under its various
debt agreements.
4. ACCUMULATED DEFICIT
Changes in accumulated deficit for the three months ended March 31, 1999 were
(in thousands):
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Accumulated deficit at December 31, 1998........................ $(17,823)
Net loss........................................................ (4,540)
--------
Accumulated deficit at March 31, 1999........................... $(22,363)
========
</TABLE>
5. CONSTRUCTION CONTRACT
On March 9, 1999, the Company executed definitive agreements with Ingalls
Shipbuilding, Inc. to construct at least two new vessels for the Hawaii cruise
market. The new Hawaii cruise ships will have the capacity to accommodate
approximately 1,900 passengers each and are currently estimated to cost $440
million each, plus approximately $30 million each for furnishings, fixtures and
equipment. The contract provides that Ingalls Shipbuilding will deliver the
first new ship in January 2003 and the second ship in January 2004. In addition,
the shipbuilding contract provides the Company an option to build up to four
additional vessels. The estimated contract price of the first option vessel is
$487 million and the contract price for the subsequent option vessels will be
negotiated between the parties. Ingalls Shipbuilding will provide a limited
warranty for the design, material and workmanship of each vessel for one year
after delivery.
6. SUBSEQUENT EVENTS
FINANCING GUARANTEES
On April 8, 1999, the Company received a commitment from the Maritime
Administration for up to $1.1 billion in financing guarantees. The commitment
amount represents 87.5% of the total cost of the initial two Hawaii vessels,
including shipyard costs, capitalized interest, and fees.
COMMON STOCK OFFERING
On April 27, 1999 and May 4, 1999, the Company completed offerings of an
additional 3,500,000 and 525,000 shares of common stock, respectively. The net
proceeds to the Company, before offering expenses, were $64.3 million and will
be used for construction of the initial Hawaii vessel.
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CONSTRUCTION CONTRACT
The Company entered into a Construction Contract, as of May 1, 1999, with
Atlantic Marine, Inc. of Jacksonville, Florida to construct at least two coastal
cruise vessels for its Delta Queen line. This contract is the culmination of the
previously announced plans to build a series of up to five new vessels to
provide cruises along U.S. coastal waterways. The price of the vessels will be
$30 million each and will have a total project cost, including Company provided
furnishings, fixtures and equipment, of approximately $35 million. The coastal
cruise vessels will be approximately 300 feet long and provide accommodations
for up to 226 passengers. The contract provides that the delivery date will be
early March, 2001 for the first vessel and mid-June, 2001 for the second vessel.
In addition, the contract provides the Company an option to purchase a third
vessel by notifying the shipyard by December 31, 1999. The contract price for
the third vessel will be subject to negotiation between the parties. Atlantic
Marine will provide a limited warranty for the work, parts and components
fabricated by the yard for the 12 months following delivery of each vessel.
RIVERBOAT ACQUISITION
On April 29, 1999, the Company entered into a contract to acquire the Capitol
Queen, a substantially complete riverboat built for the casino trade. The
contract is subject to bankruptcy court approval at a hearing scheduled for May
25, 1999. The Company anticipates converting the 218 foot boat into an overnight
passenger vessel with approximately 150 passenger berths for use as the fourth
Delta Queen riverboat. The purchase price for the vessel is $3.2 million and the
Company estimates that the total renovation, relocation, start-up and marketing
costs will require an additional $12 to $15 million . The Company expects the
conversion project will take between six and nine months and that the vessel
will enter service in the spring of 2000. The current plans call for the vessel
to be operated by Delta Queen in the Pacific Northwest, including the Columbia
River system near Portland, Oregon. The Company also terminated its agreement to
acquire the M/V Speculation, a riverboat it had previously entered into a
contract to acquire for $8.0 million.
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AMERICAN CLASSIC VOYAGES CO.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
American Classic Voyages Co. is a holding company which owns and controls The
Delta Queen Steamboat Co. and Great Hawaiian Cruise Line, Inc. Through our
various subsidiaries, we operate two cruise lines: Delta Queen, which owns and
operates the American Queen, Mississippi Queen and Delta Queen steamboats; and
American Hawaii, which owns and operates the Independence steamship.
Our revenues are comprised of:
(1) cruise fares,
(2) onboard revenues, such as those from gift shops and shore excursions,
and
(3) trip cancellation insurance and pre- and post-cruise hotel packages.
Additional revenue is also derived from the sale of airplane tickets to and from
points of embarkation or disembarkation. Our cost for air tickets typically
matches the revenue we generate from sales of airline tickets, so we recognize
minimal profits from such sales. Our cost of operations are comprised of:
(1) passenger expenses, such as employee payroll and benefits and the cost
of food and beverages,
(2) vessel operating costs including lay-up and drydocking costs for our
vessels,
(3) insurance costs,
(4) commissions paid to travel agents, and
(5) air ticket and hotel costs.
When we receive deposits from passengers for cruises, we establish a liability
for unearned passenger revenue. We recognize revenue when the passengers take
their cruises and make a corresponding reduction in our unearned passenger
revenues. Our revenues and some of our expenses vary considerably when measured
on a quarterly basis. This is due to the seasonality of our Delta Queen
revenues, the timing of our layups and drydockings, and fluctuations in
airfares. These variations are reflected in our fare revenues per passenger
night, which are commonly referred to as fare per diems, and our occupancy
rates.
Delta Queen's operations are seasonal. Historically, we have had greater
passenger interest and higher yields in the spring and fall months of the year.
The vessels typically undergo their annual lay-ups in December or January. While
American Hawaii has historically experienced greater passenger interest in the
summer and fall months of the year, quarterly variations in its revenues are
much smaller than those of Delta Queen. During the summer months, in particular,
American Hawaii tends to have average occupancies in excess of 100% as the
number of families sharing cabins with children increases significantly during
this period.
The following discusses the Company's consolidated results of operations and
financial condition for the three month period ended March 31, 1999 versus the
comparable period ended March 31, 1998. This section should be read in
conjunction with the Management's Discussion and Analysis of Financial Condition
and Results of Operations included in the Company's Form 10-K for the year ended
December 31, 1998.
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RESULTS OF OPERATIONS
The following tables set forth various financial results and operating
statistics for the three months ended March 31, 1999 and 1998:
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FINANCIAL HIGHLIGHTS
(in thousands, except per share data)
For the Three Months
Ended March 31,
-------------------------------------
1999 1998
---------- ----------
<S> <C> <C>
Revenues............................................ $ 40,566 $ 40,668
Gross profit........................................ 11,798 11,209
Operating loss ..................................... (6,292) (6,143)
Net loss............................................ (4,540) (4,362)
Diluted loss per share.............................. $ (0.32) $ (0.31)
</TABLE>
<TABLE>
<CAPTION>
OPERATING STATISTICS
For the Three Months
Ended March 31,
------------------------------
1999 1998
---------- ----------
<S> <C> <C>
Fare revenue per passenger night........................ $ 209 $ 210
Total revenue per passenger night....................... $ 309 $ 307
Weighted average operating days (1):
Delta Queen........................................ 67 73
American Hawaii.................................... 90 90
Vessels capacity per day (berths) (2):
Delta Queen........................................ 1,026 1,026
American Hawaii.................................... 867 867
Passenger nights (3).................................... 131,374 132,325
Physical occupancy percentage (berths) (4).............. 90% 87%
</TABLE>
(1) Weighted average operating days for each cruise line is determined by
dividing capacity passenger nights for each cruise line by the cruise
line's total vessel capacity per day. Capacity passenger nights is
determined by multiplying, for the respective period, the actual operating
days of each vessel by each vessel's capacity per day.
(2) Vessel capacity per day represents the number of passengers each cruise
line can carry assuming double occupancy for cabins which accommodate two
or more passengers. Some cabins on the Independence and the American Queen
can accommodate three or four passengers.
(3) A passenger night represents one passenger spending one night on a vessel;
for example, one passenger taking a three-night cruise would generate three
passenger nights.
(4) Physical occupancy percentage is passenger nights divided by capacity
passenger nights.
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QUARTER ENDED MARCH 31, 1999 COMPARED TO QUARTER ENDED MARCH 31, 1998
Consolidated first quarter 1999 revenues decreased $0.1 million to $40.6 million
from $40.7 million for the first quarter 1998. This represents a $0.3 million
decrease in fare revenues combined with a $0.2 million increase in other
revenues. Delta Queen's fare revenues decreased $1.2 million, reflecting a 9%
decrease in capacity due to six fewer average operating days and a 3% decrease
in occupancy, offset by a 4% increase in fare per diems. American Hawaii's fare
revenues increased $0.9 million on an 8% increase in passenger nights while fare
per diems decreased by 2%. The $0.2 million increase in other revenues was
mainly due to the increase in passenger nights at American Hawaii. As a result,
consolidated total revenues per passenger night increased to $309.
Consolidated cost of operations decreased $0.7 million to $28.8 million for the
first quarter of 1999 from $29.5 million for the comparable period of 1998.
Delta Queen's operating costs decreased $0.9 million primarily corresponding to
the decrease in passenger nights. American Hawaii's operating costs increased
$0.2 million as a result of increased passenger nights. Consolidated gross
profit increased $0.6 million for the first quarter 1999 as compared to 1998.
Consolidated selling, general and administrative expenses increased $0.8 million
to $13.9 million for the first quarter of 1999 from $13.1 million for the same
period in 1998. The increase was partially due to an increase of $0.4 million
over 1998 in capacity expansion expenses at both cruise lines.
Depreciation expense for the first quarter of 1999 was consistent with 1998.
The consolidated operating loss for the first quarter of 1999 was $6.3 million
as compared to $6.1 million for the comparable period of 1998.
Interest expense decreased slightly due to a lower outstanding debt balance in
the first quarter of 1999. In February 1998, we received $0.3 million of final
proceeds from the buyer of the Maison Dupuy hotel which we sold in October 1996.
Our consolidated effective tax rate was 40% for both periods in 1999 and 1998.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION
Operating Activities
For the three months ended March 31, 1999, cash provided by operations was $9.6
million compared to $5.0 million in 1998. The improvement reflected a greater
seasonal increase in unearned passenger revenues, which increased $16.8 million
in 1999, as compared to an increase of $12.1 million in 1998. The increase in
unearned passenger revenues was greater in 1999 than in 1998 due to (1) an
improvement in American Hawaii's bookings and (2) deposits received in 1999 for
charter cruises at Delta Queen and for millennium charter cruises for both
cruise lines.
Investing Activities
For the three months ended March 31, 1999, we made expenditures of $4.8 million
on capital projects, of which $2.6 million related to our existing vessels. On
January 21, 1999, the Mississippi Queen completed a 39-day lay-up. The American
Queen also completed a 15-day lay-up on February 10, 1999. The Delta Queen
completed a 54-day lay-up on February 27, 1999. The lay-ups for the three
vessels, including repairs and maintenance, cost approximately $5.5 million and
were funded from working capital. Other significant capital expenditures
included $2.2 million related to design fees and costs associated with new
shipbuilding programs at American Hawaii and Delta Queen, as discussed below.
Financing Activities
For the three months ended March 31, 1999, we made scheduled principal payments
of $1.2 million under the American Queen ship financing notes and received $0.9
million from the issuance of our common stock, principally from stock options
exercised by our current and former employees. We also paid $0.6 million for
financing efforts related to our new credit facility, as discussed below.
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Capital Expenditures and Debt
In October 1997, we announced plans to expand capacity in the Hawaii cruise
market. We intend to construct two new cruise ships over the next five years and
plan to introduce an existing foreign-built cruise ship in the Hawaii market
while awaiting construction of the new vessels. On March 9, 1999, we signed a
definitive agreement with Ingalls Shipbuilding to construct two passenger ships,
each containing approximately 1,900 passengers berths, with options to build up
to four additional vessels. The estimated construction cost of the two initial
ships will be approximately $470 million each. The agreement provides that the
first ship will be delivered in January 2003 and the second ship in January
2004.
We will finance a significant portion of the construction cost of the Hawaii
cruise ships through the Maritime Administration, which provides guarantees of
private financing for new vessel construction projects conducted in U.S.
shipyards. In April 1999, we received financing guarantees for debt up to 87.5%
of the cost of the vessels. The guaranteed debt will be accessed during the
construction period, with interest payments during that period capitalized as
part of the cost of construction. In the current market, this type of debt
generally bears interest at a rate of 100 to 150 basis points over the
comparable U.S. government obligations and can have a term of up to 25 years
from the date of delivery of the vessel. The loans generally amortize on a
straight line basis over the term of the loan commencing after the delivery
date. Fees associated with obtaining the financing guarantees included a
one-time investigation fee of approximately $1.4 million, which we paid to the
Maritime Administration in April 1999. In addition, the Maritime Administration
imposes an annual guarantee fee of not less than 1/4 of 1% and not more than 1%
of the indebtedness, reduced by any required escrow, based upon the obligor's
ratio of long-term debt to stockholders' equity. The present value of the annual
guarantee fees is payable at the closing of the Maritime Administration
guaranteed financing and will be capitalized as part of the vessel cost.
On April 27, 1999 and May 4, 1999, we completed offerings of an additional
3,500,000 and 525,000 shares of common stock, respectively. The net proceeds to
us, before offering expenses, were $64.3 million and will be used for
construction of the initial Hawaii vessel.
In 1999, we expect to spend between $70 million and $90 million on building the
two new Hawaii cruise vessels, which includes anticipated payments to Ingalls
Shipbuilding.
In April 1998, we announced plans to expand capacity at Delta Queen. For the
Delta Queen fleet, we intend to build up to five new small coastal ships over
the next seven to 10 years. We entered into a construction contract, as of May
1, 1999, with Atlantic Marine, Inc. of Jacksonville, Florida to construct at
least two coastal cruise vessels for our Delta Queen line. The price of the
vessels will be $30 million each and will have a total project cost, including
furnishing, fixtures and equipment, of approximately $35 million. The coastal
cruise vessels will be approximately 300 feet long and provide accommodations
for up to 226 passengers. The contract provides that the delivery date will be
early March, 2001 for the first vessel and mid-June, 2001 for the second vessel.
In addition, the contract provides us with an option to purchase a third vessel
by notifying the shipyard by December 31, 1999. The contract price for the third
vessel will be subject to negotiation between the parties. Atlantic Marine will
provide a limited warranty for the work, parts and components fabricated by the
yard for the 12 months following delivery of each vessel.
On April 29, 1999, we entered into a contract to acquire the Capitol Queen, a
substantially complete riverboat built for the casino trade. The contract is
subject to bankruptcy court approval at a hearing scheduled for May 25, 1999. We
anticipate converting the 218 foot boat into an overnight passenger vessel with
approximately 150 passenger berths for use as the fourth Delta Queen riverboat.
The purchase price for the vessel is $3.2 million and we estimate that the
total renovation, relocation, start-up and marketing costs will require an
additional $12 to $15 million. We expect the conversion project will take
between six and nine months and that the vessel will enter service in the spring
of 2000. The current plans call for the vessel to be operated by Delta Queen in
the Pacific Northwest, including the Columbia River system near Portland,
Oregon. We also terminated our agreement to acquire the M/V Speculation, a
riverboat we had previously entered into a contract to acquire for $8.0 million.
On February 25, 1999, The Delta Queen Steamboat Co. entered into a credit
agreement with a group of lenders, with The Chase Manhattan Bank as agent. This
credit agreement provides for a revolving credit facility of up to $70 million
to fund the expansion of our Delta Queen line. This new $70 million facility
replaced our prior credit facility with Chase Manhattan. Borrowings under the
new credit facility bear interest at either (1) the greater of Chase Manhattan's
prime rate or alternative base rates plus a margin ranging from 0.50% to 1.50%,
or (2) the London Interbank Offered Rate plus a margin ranging from 1.50% to
2.50%. We are also charged a fee of 0.50% per annum on any unused
12
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commitment. The new credit facility is secured by all of the assets of The Delta
Queen Steamboat Co., except for the American Queen. The new credit facility
limits the dividends The Delta Queen Steamboat Co. may pay to between $5 million
and $15 million per year when aggregated with investments and other payments.
In 1999, we expect to spend between $10 million and $15 million on building the
new coastal cruise vessels, which also includes anticipated payments to Atlantic
Marine, Inc. We estimate that costs to be incurred in 1999 to acquire and outfit
the fourth riverboat will be $11 to $14 million.
As of March 31, 1999, we complied with all covenants under our various debt
agreements.
We believe we will have adequate access to capital resources, both internally
and externally, to meet our current short-term and long-term capital
commitments. Such resources may include cash on hand and the ability to secure
additional financing through the capital markets. We continually evaluate
opportunities to increase capacity at both Delta Queen and in Hawaii and to
strategically grow our business. Although we believe that we will be able to
obtain sufficient equity and debt financing from the capital markets to
construct the new vessels, we cannot assure you that we will be able to obtain
additional financing at commercially acceptable levels to finance such new
construction and, if we so choose, to pursue strategic business opportunities.
In June 1997, our board of directors approved a stock repurchase plan. The plan
authorizes us to repurchase up to one million shares of our stock. These shares
may be purchased from time to time in the public market or through privately
negotiated transactions. As of March 31, 1999, we had repurchased 51,000 shares
at an average purchase price of $14.84 per share under the plan. We currently
have no intention to repurchase any additional shares of common stock.
Impact of Year 2000
Many computer programs have been written using two digits rather than four to
define the applicable year. Any of our computer programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a major system failure, miscalculations
and/or other unanticipated problems.
State of Readiness
We have established internally staffed project teams to address Year 2000
issues. Each team is formulating a plan that focuses on Year 2000 compliance
efforts for information technology systems and non-information technology
systems. This plan addresses (1) information technology systems software and
hardware such as reservations, accounting and associated systems, personal
computers and software and (2) non-information technology systems such as
embedded chip systems in building facilities, shipboard navigation, control,
power generation systems, and communication systems.
Our Year 2000 plan addresses the Year 2000 issues in various phases for both
types of systems including: (1) inventory of our systems, equipment and
suppliers that may be vulnerable to Year 2000 issues; (2) assessment of
inventoried items to determine the risks associated with their possible failure
to be Year 2000 compliant; (3) testing of systems and components to determine if
they are Year 2000 compliant, both prior to and subsequent to remediation; (4)
remediation and implementation of new systems; and (5) contingency planning to
address reasonably likely worst case scenarios.
For information technology systems, inventories and risk assessments have been
substantially completed for all our shoreside software applications, hardware
and operating systems. Most of our reservations systems functions have been
tested and were found to be compliant. The remaining functions will be tested
and remediated, if necessary, by mid-1999. We have also determined that our
shoreside phone system and onboard financial systems on the Delta Queen vessels
are Year 2000 compliant. The Independence's onboard financial system and our
shoreside accounting system, however, are not Year 2000 compliant. We will
utilize both internal and external resources to continue testing, reprogramming
and replacing our information technology systems that require Year 2000
modifications. We anticipate completing the system improvements and the Year
2000 project no later than September 30, 1999. This is prior to any anticipated
impact on our operating systems. We anticipate that these modifications and
improvements will enable our information systems to function properly with
respect to dates in the Year 2000 and thereafter.
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<PAGE> 14
Inventories and risk assessments have been substantially completed for all
non-information technology systems. No Year 2000 issues with respect to
navigation and propulsion systems are believed to exist on our vessels. Certain
galley and air conditioning equipment on the American Queen is not Year 2000
compliant. The process of testing, remediation and implementation is expected to
be completed by September 30, 1999.
Risks of Year 2000 Issues
If any of our suppliers or travel partners do not, or if we do not, successfully
deal with the Year 2000 issue, we could experience delays in scheduled cruises
which could result in lost revenues or increases in costs and could subject us
to claims and damages. To determine the most reasonably likely sources of these
risks, we have been communicating with our major suppliers and travel partners
on their Year 2000 compliance issues. For example, our external air ticketing
and credit card processing software have been determined to be Year 2000
compliant.
Based on these procedures, management believes that the most reasonably likely
sources of risk to us include (1) the disruption of transportation channels
relevant to our operations, including ports and transportation vendors,
primarily airlines, as a result of a general failure of support systems and
necessary infrastructure; (2) the disruption of travel agency and other sales
distribution systems; and (3) the inability of principal product suppliers to
deliver goods and services. The severity of these possible problems would depend
on the nature of these problems and how quickly they could be corrected or
alternatives implemented.
Our major suppliers and travel partners consist of our transportation vendors,
our primary external airline ticketing vendors, and our primary credit card
processing software vendors. Our primary external airline ticketing vendor has
certified that its systems are Year 2000 complaint. Our primary credit card
processing software vendors have also certified that their systems are Year 2000
complaint. We have not received written assurance from our transportation
vendors indicating that they will be Year 2000 complaint before the end of 1999.
Because we have no contingency plan to transport our customers long distance to
and from our embarkation and disembarkation points, failure by our
transportation vendors to provide transportation services could have a material
adverse effect on our operations and our financial condition.
Some risks of the Year 2000 issue are beyond our control and our other travel
partners and suppliers. For example, no preparations or contingency plan will
protect us from a downturn in economic activity caused by the possible ripple
effect throughout the entire economy that could be caused by problems of others
with Year 2000 issues.
Costs
We have estimated our total costs for system improvements and the Year 2000
project to be approximately $1.0 million. These efforts are being funded from
working capital. Of the total project cost, approximately $0.5 million is
attributable to the implementation of a new accounting system. This amount
includes new software, new hardware, and consulting fees, all of which will be
capitalized. Another $0.3 million of capital outlays is attributable to the
upgrading of the Independence's onboard financial system and to the replacement
of imbedded chip systems in several of our vessels. The remaining $0.2 million
is expected to be expensed as incurred and is not expected to have a material
impact on the results of operations. The Year 2000 project represents less than
10% of our information systems budget. To date, we have incurred and expensed
approximately $125,000 related to our systems improvements and the Year 2000
project. These costs do not include costs incurred by us as a result of the
failure of any third parties, including suppliers, to become Year 2000 compliant
or costs to implement any contingency plans.
The costs of the project and the date on which we believe we will complete the
Year 2000 modifications are based on our best estimates given presently
available information. These estimates were derived utilizing numerous
assumptions of future events, including the continued availability of the
resources we rely on, third party modification plans and other factors. We
cannot assure you, however, that these estimates will be achieved, and actual
results could differ materially from those anticipated. Specific factors that
might cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer code, and similar uncertainties.
Contingency Plans
We are preparing our contingency plans to identify and determine how to handle
our most probable worst case scenarios. Preliminary contingency plans are
currently being reviewed. Comprehensive contingency plans are estimated to be
complete by mid-1999.
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<PAGE> 15
Factors Concerning Forward-Looking Statements
Certain statements in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" constitute "forward-looking statements"
which we believe are within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause our actual results,
performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. These forward-looking statements are not guarantees of future
performance and are subject to certain risks, uncertainties and assumptions.
Such factors include, among others, the following: construction delays and
deviations from specifications for the new vessels may adversely affect
expansion plans and future financial performance; limited remedies against
shipyards in the event of shipbuilding delays which would delay the introduction
of new vessels; failure to obtain significant amounts of capital to build,
purchase and renovate vessels, may adversely affect our expansion plans and
future operating results; increased leverage may adversely affect our financial
performance and cash flow; inability to locate and introduce a foreign-built
vessel in Hawaii would delay our growth in Hawaii; inability to manage our
financial resources during our expansion may adversely affect our financial
performance; if demand for our new cruise products fails to develop as expected
or competition increases, our business may be adversely affected; increased
capacity in Hawaii may reduce occupancy at the Independence, adversely affecting
revenues; increased expenditures for the Independence may adversely impact our
operating results; loss of exclusive rights of the Pilot Project Statute may
adversely affect our revenue growth in Hawaii; modification of existing
governmental regulations may adversely affect our business; increased
competition in the Hawaii cruise market and from other vacation alternatives may
adversely impact our financial performance; sensitivity of the vacation and
leisure industry to general economic and business conditions; failure to
complete drydocking on schedule or within budget may adversely affect our
revenues; weather factors can adversely affect our operations and our financial
performance; the loss of vessels from service would adversely impact our
business; our controlling stockholder may take actions that adversely affect our
business; sales of our controlling stockholder's shares could have an adverse
effect on our ability to raise capital; and our controlling stockholder may have
conflicts of interest with competing interests.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
For a discussion of certain market risks related to us, see Part I Item 7A
"Quantitative and Qualitative Disclosures About Market Risks" in our Annual
Report on Form 10-K for the fiscal year ended December 31, 1998. There have been
no significant developments with respect to exposure to market risk.
15
<PAGE> 16
AMERICAN CLASSIC VOYAGES CO.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
There are no other material legal proceedings, to which the
Company is a party or of which any of its property is the subject,
other than ordinary routine litigation and claims incidental to
the business. The Company believes it maintains adequate insurance
coverage and reserves for such claims.
ITEM 6. Exhibits and Reports on Form 8-K
a) Exhibits:
<TABLE>
<S> <C>
10.(iv)(a)(3) Construction Contract for Coastal Queen Class Vessel dated May 1, 1999
by and between Coastal Queen Holdings, L.L.C. and Atlantic Marine, Inc.*
Appendix One - Coastal Queen Milestone Payments
Appendix Two - Affidavit for Exemption of Boat Sold for Removal from the
State of Florida by a Nonresident Purchaser
Appendix Three - Maker's List
10.(iv)(a)(4) Guaranty dated May 1, 1999 made by The Delta Queen Steamboat Co. in favor
of Atlantic Marine Inc.
10.(iv)(a)(5) Asset Purchase and Sale Agreement dated April 28, 1999 by and between
Capitol Queen & Casino, Inc., as Seller, and The Delta Queen Steamboat Co.,
as Purchaser.
Exhibit A - Escrow Agreement
Exhibit B - Vessel Inventory
Exhibit C - Order Approving Sale of Personal Property Free and Clear of Liens,
Claims and Encumbrances
27. Financial data schedule.
</TABLE>
b) Reports on Form 8-K:
Form 8-K dated February 22, 1999 announcing the following:
1. Status of contract negotiations with Ingalls
Shipbuilding, Inc.
2. Agreement to acquire a recently completed vessel and
outfit as a riverboat.
3. Filing of a Registration Statement on Form S-3.
4. Increase in authorized capital stock.
Form 8-K dated March 26, 1999 announcing signing of a
contract with Ingalls Shipbuilding, Inc.
*Certain portions of this exhibit filed herewith have been
omitted pursuant to an application for an order of
confidential treatment pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended. This non-public
information has been filed separately with the Securities
and Exchange Commission.
16
<PAGE> 17
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/ Philip C. Calian
--------------------------------------------
Philip C. Calian
Chief Executive Officer
By: /s/ Randall L. Talcott
--------------------------------------------
Randall L. Talcott
Vice President-Finance and Treasurer
(Principal Financial and Accounting Officer)
Dated: May 14, 1999
-------------------------
17
<PAGE> 1
EXHIBIT 10(iv)(a)(3)
CONSTRUCTION CONTRACT
FOR
COASTAL QUEEN CLASS VESSEL
The Construction Contract ("Contract") is made as of this 1st day of
May 1999, by and between Coastal Queen Holdings, L.L.C., a Delaware limited
liability company ("Owner") and Atlantic Marine, Inc., a Florida corporation
("Shipyard").
NOW, THEREFORE, Owner and Shipyard hereby AGREE that Shipyard shall
supply the material, perform the work and comply with the other various
obligations described below, and that Owner shall compensate Shipyard for such
work, all in accordance with the covenants, terms and provisions hereinafter set
forth.
ARTICLE 1 - DEFINITIONS AND INTERPRETATION
SECTION 1.1. -- DEFINITIONS
In addition to such other definitions as may be provided elsewhere in
this Contract, the following terms and definitions are used and shall have the
respective meanings ascribed to such term:
CHANGE(S): As defined in Section 11.3.
COMPENSABLE CAUSES: As defined in Section 11.1.
CONTRACT: As defined in the preamble.
CONTRACT DOCUMENTS: Shall be this Contract, the Specifications and
Guidance Drawings.
CONTRACT PRICE: As defined in Section 3.1.
CONTRACT TIME: As defined in Section 10.1.
CONTRACT WORK: As defined in Section 2.1.
CPM: Critical Path Method as defined in Section 10.3.
DAY or CALENDAR DAY: Whenever the terms "day" or "calendar day" are
used, they shall mean calendar days (i.e., Monday through Sunday)
regardless of weekends or holidays.
DEFAULT TERMINATION: As defined in Section 6.6.
DELIVERY: As defined in Section 9.1.
Page 1 of 40
<PAGE> 2
GUIDANCE DRAWINGS: The Coastal Queen Class Guidance Drawings prepared
by Guido Perla & Associates, Inc. in accordance with the
Specifications.
OPTION: The Option granted to Owner by Shipyard for the construction
of a third Vessel as provided in Article 13.
OWNER'S CONTRACTORS: Any party, other than the Shipyard, with whom the
Owner enters into a contract for the performance of work.
METHOD OF PAYMENT: As defined in Section 3.2.
OWNER FURNISHED MATERIALS: Any equipment, materials, fixtures,
furnishings or the like supplied by the Owner.
REGULATORY AGENCIES OR BODIES: Whether used singularly or together, all
such entities, promulgating regulations or standards applicable in any
way to, or having jurisdiction over the Vessels, including, but not
limited to, those identified in this Contract and the American Bureau
of Shipping ("ABS"), but excluding classification societies other than
ABS.
SHIPYARD INDEMNITIES: As defined in Section 5.3.
SPECIFICATIONS: Coastal Queen Class Technical Specifications Rev. P6
dated May 1, 1999.
TERMS OF PAYMENT: As defined in Section 3.3.
VESSELS: The two 300' Coastal Queen Class vessels described in the
Specifications which will operate in the United States domestic
coastwise trade and international waters as an overnight cruiseliner.
Individually referred to as a "Vessel". In the event the Owner
exercises the Option described in Article 13, the term "Vessel" shall
include the vessel described in the Option.
WORKING DRAWINGS: All drawings including detailed system arrangement
drawings and construction drawings prepared by Shipyard as are
necessary for Shipyard to comply with its obligation under this
Contract.
SECTION 1.2 -- PRECEDENCE
If any discrepancy, difference or conflict exists between the
provisions of this Contract and the Specifications or the Guidance Drawings,
then to the extent of such discrepancy, difference or conflict only, the
Contract shall prevail, but in all other respects the Specification, or the
Guidance Drawings, as the case may be, shall be in full force and effect. If
there is any discrepancy, difference or conflict between the Specifications and
the Guidance Drawings, then to the extent of such discrepancy, difference or
conflict only, the Specifications shall prevail but in all other respects the
Guidance Drawings shall be in full
Page 2 of 40
<PAGE> 3
force and effect. Any work and materials called for by the Specifications and
not shown on the Guidance Drawings and any work and materials shown on the
Guidance Drawings but not called for in the Specifications shall be performed
and supplied by the Shipyard as part of the Contract Work.
SECTION 1.3 -- INTERPRETATION
Wherever the following abbreviations and terms, or pronouns in place of
them, are used, the intent and meaning shall be interpreted as set forth below.
Terms not defined in this Contract shall have their ordinary accepted
meanings within the context in which they are used. Words which have a
well-known technical or trade meaning when used to describe work, materials or
equipment shall be interpreted in accordance with such meaning.
The titles and headings of the sections, subsections and subparts
herein are intended for convenience of reference and shall not be considered as
having a bearing on their interpretation. Working titles which have a masculine
gender, such as "workman" and "flagman" and the pronouns and adjectives "he",
"his" and "him" are utilized in the contract documents for the sake of brevity,
and are intended to refer to persons of either sex.
When a publication is specified, it shall refer to the most recent date
of issue prior to the date of Contract execution unless the issue as of a
specific date or year is specified.
ARTICLE 2 -- SCOPE OF WORK
SECTION 2.1 -- SCOPE OF WORK
(a) The Contract Documents set forth the scope of the work for the
design and engineering services required to produce the
Working Drawings, construction and outfitting of the Vessels
(the "Contract Work"). The Working Drawings, details, and all
other engineering and design work consistent with good marine
practice necessary for the performance of the Contract Work
and whether or not included in the Contract Documents are the
responsibility of the Shipyard except as otherwise set forth
herein. The Contract Work shall include the furnishing or
providing of all plant facilities, labor, materials, supplies
and equipment, supervision and the performance of all work
necessary to construct, test and deliver each Vessel in
accordance with the Contract Documents.
(b) References in the Specifications and in this Contract to "the
satisfaction of the Owner" or to "Owners satisfaction" or to
"the satisfaction of Owners Representatives" or providing that
certain acts "be approved by the Owner" or words of similar
import shall be construed to be the reasonable satisfaction or
approval of the Owner in good faith as required by this
Contract and the Specifications.
SECTION 2.2. -- COOPERATION
Page 3 of 40
<PAGE> 4
The Shipyard shall give the Contract Work its constant attention so as
to facilitate the progress thereof, and shall cooperate with the Owner and
Owner's Contractors in every way reasonably possible.
The Shipyard shall have on the work site at all normal business times,
as its representative and agent, a competent superintendent capable of reading
and thoroughly understanding the Contract, Contract Documents and Working
Drawings and thoroughly experienced in the type of work being performed. The
superintendent shall have full authority to supply such materials, equipment,
tools, labor and incidentals as may be required and shall be deemed to be an
authorized representative of the Shipyard for purposes of this Contract.
Authority to give directions under this Contract and approve actions
taken by the Shipyard in the performance of the Contract Work shall be vested in
such representative of Owner as may be designated in writing to the Shipyard.
Any person so designated by Owner shall be deemed an authorized representative
of Owner for the purposes of this Contract.
The Shipyard shall keep at least one set of Contract Documents and
approved Working Drawings available at the Shipyard and at all times available
to Shipyard personnel, the Owner and Owner's Contractors.
Owner shall, for its own account or through sub-contractors, have the
right to perform work onboard the Vessels with ship's crew or Owner's
Contractors during the time that the Contract Work is being performed so long as
Owner's work does not interfere with Shipyard's work. The Owner and the Shipyard
shall cooperate in the coordination of the work to be performed by the Owner.
Owner and Owner's Contractors performing work at Shipyard's yard or aboard the
Vessels while it is at the Shipyard's yard, shall familiarize themselves with
the Shipyard's safety and security regulations and shall comply therewith while
within the Shipyard's facility including, but not limited to, personal
protective gear.
Page 4 of 40
<PAGE> 5
ARTICLE 3 -- PAYMENT
SECTION 3.1 -- CONTRACT PRICE
As payment in full for the complete performance of the Contract Work,
satisfaction of all terms, conditions, and obligations under this Contract, and
for all risks, losses, damage, or expenses of whatever character arising out of
the nature of the work or the Shipyard's performance hereunder, the Owner shall
pay to Shipyard, and Shipyard agrees to accept, the total sum of Thirty Million
Dollars ($30,000,000) for the first Vessel and the total sum of Thirty Million
Dollars ($30,000,000) for the second Vessel (each hereinafter referred to with
respect to the respective Vessel as the "Contract Price"). The Contract Price
shall be subject to adjustment only in compliance with Article 11 of this
Contract.
SECTION 3.2 -- METHOD OF PAYMENT
Payment of the Contract Price shall be made based upon the percentage
of completion of the milestones set forth in the Progress Payment Milestones
attached as Appendix One to this Contract.
SECTION 3.3. -- TERMS OF PAYMENT
(a) The invoices submitted by Shipyard shall:
(i) Include properly executed waivers of mechanic's and
materialmen's liens from the Shipyard and all subcontractors
or suppliers having performed any portion of the Contract Work
or supplied any materials, equipment, labor, or services in
excess of $50,000 for the period covered by the invoice; these
waivers shall be in a form satisfactory to the Owner and shall
be effective for the period from execution of the Contract
through the date of the invoice; and
(ii) Identify the milestones achieved (or portions thereof).
(iii) Include the following statement signed by an authorized,
responsible representative of the Shipyard: "In submitting
this invoice, the Shipyard hereby waives any and all claims
for or entitlement to damages and time extensions resulting
from any cause, whether compensable or excusable, where such
causal event or condition (a) commenced, occurred or was first
encountered on or before [HERE INSERT THE DATE TWO DAYS
PRECEDING THE DATE OF THE INVOICE], and (b) has not been
noticed to the Owner in accordance with the Contract."
(b) It shall be a condition to payment under Section 3.2 that
Shipyard execute and deliver a certificate, to the following
effect (a "Payment Certificate"):
(i) there are no liens against the Vessel arising by or
through the Shipyard including, but not limited to,
any lien asserted by subcontractors, vendors,
suppliers, materialmen and mechanics arising in
connection
Page 5 of 40
<PAGE> 6
with the construction of the Vessel except such
materialmen's and mechanics liens that may arise in
connection with work performed by Owner's
Contractors;
(ii) that neither the Vessel, nor any part thereof, or any
of the equipment or any other property to be
installed thereon or attached thereto has suffered
any damage by fire or any other casualty or otherwise
(in each case other than any damage theretofore
repaired or restored or which will be repaired or
restored prior to subsequent invoices, as the case
may be);
(iii) that Shipyard is not in default under this Contract;
and
(iv) all items for which payment is being made have been
incorporated into the Vessel or are located at
Shipyard's facility properly marked where reasonably
possible for purposes of identification and
segregated from the Shipyard's general inventory.
(c) Acceptance of the Final Payment by the Shipyard for each
Vessel shall constitute acceptance of the amount shown as full
and final payment of the total amount due it under the
Contract for the Vessel and shall be conditioned upon the
Shipyard's execution of a Release of Contract which shall
relieve the Owner of any further liabilities to the Shipyard.
Any claims or disputes not listed as exceptions on the Final
Payment, regardless of whether such were timely filed and
otherwise valid, will be considered null and void should the
Shipyard accept the Final Payment as prepared. Final Payment
shall also be contingent upon the Shipyard's providing
properly executed waivers of mechanic's and materialmen's
liens from the Shipyard and any subcontractors or suppliers as
set forth in Section 3.3(a)(i) above. These waivers shall be
in a form satisfactory to the Owner and shall be effective for
the period from execution of the Contract through the date of
Final Payment.
(d) All progress payments shall take account of the increased or
decreased Contract Price based upon Changes which have been
entered into by the parties in accordance with Section 11.3.
Additionally, the first progress payment after a Change shall
be adjusted by an amount equal to the product of (i) the
amount of the increase or decrease in the Contract Price and
(ii) the aggregate percentage of the Contract Price required
to be paid on or before the due date of such progress payment.
(e) Shipyard shall give Owner notice, at least five (5) days in
advance of each progress payment milestone. Progress payments
will be made by Owner no later than ten (10) days after
receipt of Shipyard's invoice setting forth the progress
payment milestone achieved as approved by the Owner's
representative.
ARTICLE 4 -- FURTHER AGREEMENTS
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<PAGE> 7
SECTION 4.1 -- REPRESENTATIONS, WARRANTIES AND COVENANTS
In addition to any warranties and covenants made by Shipyard elsewhere
in this Contract, the Shipyard hereby represents, warrants and covenants as
follows:
(a) The Contract Work shall be performed in accordance with the
requirements of the Contract Documents. In those instances
where a specific tolerance, standard, or level of quality is
not specified in the Contract Documents, the Contract Work
shall be performed consistent with good Shipbuilding practices
for luxury passenger vessels.
(b) All materials and equipment furnished by the Shipyard and
incorporated into the Vessels shall be new and in accordance
with the Contract Documents. All workmen (whether employed by
Shipyard or subcontractor) shall have sufficient skill and
experience to perform properly the work assigned to them.
Workmen engaged in special work or skilled work shall have
sufficient experience in such work and in the operation of the
equipment required to perform all work properly and
satisfactorily and shall be properly supervised. All equipment
which is proposed to be used shall be of appropriate size and
in such mechanical condition as to meet the requirements of
the Contract Work and to produce a satisfactory quality of
work.
(c) The Shipyard assumes responsibility for all detail and design
development necessary to perform the Contract Work; provided,
however, that Shipyard shall not be responsible for any costs
associated with detail and design development which exceeds
the scope of the Specifications or Guidance Drawings.
SECTION 4.2 -- STORAGE, HANDLING, AND MAINTENANCE OF MATERIALS AND EQUIPMENT
Shipyard shall store, handle and maintain all materials and equipment
intended for use in the Contract Work and any Owner Furnished Materials so as to
assure the preservation of their quality and fitness and any applicable
manufacturer's or supplier's warranties. All manufacturer's and supplier's
recommendations regarding storage, handling, and maintenance shall be followed.
Materials and equipment shall be stored so as to allow for inspection by the
Owner at any time.
Shipyard shall inspect all materials and equipment delivered in
connection with the Contract Work, whether furnished by Owner or Shipyard, and
Shipyard shall notify Owner of any detected damage to such materials and
equipment within five (5) days of receipt. Records of receipt and inspection
shall be maintained by the Shipyard for all such materials and equipment.
Owner's representative will participate in the receipt and inspection of Owner
Furnished Materials.
Shipyard will use reasonable efforts to mark or stamp all materials and
equipment intended for use on the Contract Work or in the Vessels, whether
furnished by Owner or Shipyard, to establish that they belong to the Vessel and
shall segregate such material and
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<PAGE> 8
equipment from the general inventory of the Shipyard. Said marking or stamping
to include, at a minimum, the hull number of the Vessel.
SECTION 4.3 -- SUPPORT SERVICES AND FIELD OFFICES
The Shipyard shall provide, at no additional charge to Owner, the
following support services to Owner and Owner's Contractors: (i) suitable
storage space reasonably acceptable to Owner in close proximity to the area
where the Vessels are being constructed; (ii) access to the Vessels and storage
spaces aboard the Vessels so long as such access and storage does not
unreasonably interfere with Shipyards work; (iii) use of pier or dock space from
launch until not more than thirty (30) days after Delivery for the Owner's
outfitting period, sanitation and health facilities; (iv) utilities such as
power, air, water and light; (v) Shipyard's normal security; and (vi) disposal
of non-hazardous waste. In addition, Shipyard shall provide crane service to
Owner and Owner's Contractor's, so long as such crane service does not
unreasonably interfere with Shipyards work. Such necessary support services
shall be made available to the Owner's Contractors during all Shipyard working
hours provided the required services do not exceed the Shipyard's existing
capabilities. The Shipyard shall provide all other support services requested by
Owner for its performance of work, at the Shipyard's standard rates and prices
for such services and as agreed by the parties.
The Shipyard shall furnish and maintain the facilities and spaces
specified in the Contract Documents for the Owner's and Owner's Contractor's use
at the Shipyard until 60 days following Delivery. Shipyard shall furnish
promptly, without additional charge, all reasonable facilities, including
suitably furnished offices with light, heat, air conditioning and bathroom
facilities, as required by climatic conditions, local telephone, copy machine,
desks, drawing tables, and filing cabinets, necessary for the safe and
convenient administration of the inspection and tests that may be required by
the authorized representatives of the Owner. The facilities and spaces shall
reasonably accommodate no more than nine (9) people. Access to the Shipyard for,
and the performance and administration therein of, all inspections, tests and
other work under this Contract shall at all times be subject to Shipyard's
safety and security requirements.
SECTION 4.4 -- PERMITS, LICENSES, AND TAXES
The Shipyard shall procure all permits and licenses, pay all charges,
and fees, and give all notices necessary and incidental to the due and lawful
prosecution of the Contract Work. The Shipyard shall pay all federal, state, and
local taxes (other than sales tax resulting from delivery of a Vessel) incurred
by the Shipyard in the performance of this Contract.
Shipyard does hereby acknowledge and accept exclusive liability for
payment of all taxes (other than sales and use tax resulting from delivery of a
Vessel), franchise taxes, income taxes or unemployment contributions or other
taxes or contributions which may become due or payable by virtue of performance
of Shipyard's obligations hereunder.
The Owner shall be liable and responsible for the payment of any and
all sales and use tax in connection with the purchase and Delivery of the
Vessels. In connection with the Delivery of each Vessel, Owner shall deliver to
Shipyard an affidavit for exemption in a form
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substantially similar to that attached hereto as Appendix Two claiming an
exemption under s.212.05(1)(a)(2)., F.S. from Florida sales and use tax on the
purchase of each of the Vessels. Shipyard shall be responsible for properly
filing such affidavit.
SECTION 4.5 -- COMPLIANCE WITH REGULATORY REQUIREMENTS AND INDUSTRY STANDARDS
Shipyard shall comply with all requirements pertaining to Regulatory
Agencies or Bodies set forth in the Contract Documents. In addition, the
Shipyard shall be responsible for designing, engineering and constructing the
Vessels in such a manner that, upon completion of the Contract Work, the Vessels
shall comply with the industry standards set forth in the Contract Documents. It
is the Shipyard's responsibility to identify, become familiar with, stay abreast
of current developments in, and comply with all applicable local, state, and
federal rules and regulations including, but not limited to those promulgated by
Regulatory Agencies or Bodies affecting the construction of the Vessels and
shall procure at its own expense such permits from the United States, state and
local authorities as may be necessary to construct the Vessels.
Any requirements of Regulatory Agencies or Bodies becoming effective
subsequent to the date of this Contract will be evaluated as to whether they
give rise to a financial impact on the Contract in which event the impact of
such requirement shall be administered in accordance with Section 11.3.
SECTION 4.6 -- CONSTRUCTION FINANCING
If the United States Government guarantees the payment of all or any
portion of the costs associated with the construction of the Vessels (whether
during construction or otherwise), the federal laws and rules and regulations
made pursuant to such laws must be observed by the Shipyard, and the Contract
Work shall be subject to the inspection of the appropriate federal agency and
the Shipyard shall execute all necessary documents reasonably requested and take
such actions to comply with said Federal requirements provided such actions do
not conflict with the Contract Documents.
Shipyard agrees that it will execute such documents and make such
amendments to the Contract as reasonably requested by Owner in order to satisfy
the requirement of any lender. Shipyard further agrees that it will execute such
documents, take such actions, and make such amendments to the Contract as
necessary for Owner or any of its lenders to obtain or maintain a perfected
security interest in the Contract, the Vessels, or the Contract Work.
Owner shall reimburse Shipyard for Shipyard's reasonable attorney's
fees incurred with respect to Shipyard's involvement in the event the Owner
obtains construction financing from the United States Government or any other
lender.
SECTION 4.7 -- WASTE
The Shipyard shall, at all times, keep the Vessels reasonably free from
accumulations of waste material or rubbish caused by its employees, its
subcontractors, or its or their work and at the completion of the Contract Work,
it shall remove all rubbish from and about the
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Vessels and all its tools, scaffolding and surplus materials and it shall leave
the Contract Work and the Vessels "broom clean" at Delivery.
Responsibility for removal of any hazardous materials (which term shall
include, without limitation, hazardous wastes, substances or materials) that
arise out of or result from any Contract Work shall be as follows:
(a) Hazardous materials generated by the Shipyard during the
performance of Contract Work shall be lawfully removed and
disposed of by Shipyard; and
(b) Hazardous materials generated by Owner (its employees, agents,
or Owner's Contractors) during the time a Vessel is at
Shipyard's facility shall be lawfully removed and disposed of
by Owner, provided, however, that upon request, Shipyard shall
assist Owner in arrangements for lawful removal or disposal.
ARTICLE 5 -- RISK OF LOSS, INSURANCE AND INDEMNIFICATION
SECTION 5.1 -- RISK OF LOSS
Until Delivery of each Vessel, risk of loss and damage to each Vessel
and the Contract Work thereunder and all materials, components, machinery, work,
equipment and inventory including, without limitation, Owner Furnished Materials
delivered to Shipyard, whether or not already attached to or installed in the
Vessel shall vest with the Shipyard. Delivery of a Vessel shall transfer to
Owner risk of loss. Until Delivery of the Vessel to the Owner, the Shipyard
shall have the charge and care of all portions of the Contract Work (including
Owner Furnished Materials) and shall take every precaution against injury or
damage to any part thereof by the action of the elements or from any other
cause, whether arising from the execution or the non-execution of the Contract
Work or due to unforeseeable causes beyond the control of and without the fault
or negligence of the Shipyard, including but not limited to acts of God, of the
public enemy or governmental authorities. The Shipyard shall rebuild, repair,
restore and make good all injuries or damages to any portion of the Contract
Work, the Owner Furnished Materials or the Vessel occasioned by any of the above
causes arising prior to Delivery and shall bear the expense thereof.
In case of suspension of work from any cause other than actions by
Owner, the Shipyard shall be responsible for the Contract Work and the Vessel
and shall, at its own expense, take such precautions as may be necessary to
prevent damage to the Vessel and the Contract Work from the elements.
SECTION 5.2 -- INSURANCE
(a) Owner shall maintain its existing Comprehensive General
Liability and Worker's Compensation Insurance coverage during
the performance of the Contract Work. Owner's representatives
and separate contractors performing work on or in connection
with a Vessel shall, at all times, be deemed to be agents or
contractors of Owner. Owner's representatives and separate
contractors shall provide Shipyard with evidence of insurance
(including
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longshoremen and harbor workers compensation coverage) which
covers them under normal commercial terms and limits, with
waiver of subrogation provisions, at no cost or expense to
Shipyard.
(b) The Shipyard shall purchase, at its own expense, and maintain
in force at all times during the performance of services under
this Contract, the policies of insurance listed below in such
form and with such underwriters as are reasonably acceptable
to Owner. Where specific limits are shown, it is understood
that they shall be the minimum acceptable limits. Acceptance
by the Owner of deficient evidence does not constitute a
waiver of this requirement. Evidence of the following coverage
is required:
(i) Worker's Compensation and Employer's Liability
Insurance. The Shipyard shall maintain for all
employees of the Shipyard engaged in work under this
Contract, employer's liability insurance which shall
include coverage for up to $10,000,000.00 of the
United States Longshoremen's and Harbor Worker's Act,
the statutory limits of the applicable State
Compensation Insurance and employer's liability limit
of not less than $1,000,000.00 and in the instance of
the Jones Act, employer's liability protection of not
less than $10,000,000.00 per claim.
(ii) Commercial General Liability Insurance. Coverage
limits shall be not less than $10,000,000.00 combined
single limit per occurrence and annual aggregates
where generally applicable and shall include
premises-operations, independent contractors,
products/completed operations, broad form property
damage with the watercraft exclusion deleted, blanket
contractual and personal injury endorsements, blanket
additional insured and blanket waiver of subrogation.
(iii) Automobile Liability Insurance. Such insurance shall
cover all owned, hired and non-owned vehicles with
coverage limits not less than $2,000,000.00 combined
single limit per occurrence.
(iv) Excess Liability Insurance. Excess of the policies
enumerated in (i), (ii) and (iii) above (except U.S.
Longshoremen's and Harbor Worker's coverage for which
no excess coverage is required), in an amount serving
to increase primary limits to $20,000,000.00 for any
one occurrence.
(c) The cost of any deductibles for the above-stated insurance
provided by the parties shall be the responsibility of the
party required to obtain said insurance.
(d) Broker's Certificates of insurance for coverage required by
this Section 5.2 must be furnished to the Owner within fifteen
(15) days of execution of the Contract. Such evidence,
executed by the carrier's representative and issued to the
Owner, shall consist of a certificate of insurance naming the
Owner as
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additional insured with waiver of subrogation in favor of
Owner, its parent, subsidiaries, affiliates, sub-contractors
and lenders without liability for the payment of premiums and
shall further provide for a thirty (30) day prior written
notice of cancellation, non-renewal or material change.
(e) Owner shall procure at its cost Builders' Risks Insurance for
"all risk" of physical loss or damage, under a form no less
broad than the American Institute Builder's Risk Clauses (Feb.
8, 1979), with deductibles no greater than $100,000.00 per
occurrence and which shall include coverage for Protection and
Indemnity, and covering tests and sea trials, during the
course of the Contract Work at Shipyard's yard under this
Contract and until Delivery. The insurance will cover the
Vessels and the Contract Work, including work, materials and
equipment to be furnished by the Owner (including Owner
Furnished Materials) and by parties other than the Owner, in
an amount at least equal to the value of the Contract Price,
plus the value of any work to be conducted by Owner and
Owner's Contractors and Owner Furnished Materials and
materials received by the Shipyard for use in or incorporated
in the Vessels or work not yet so used or incorporated. The
policy shall include loss or damage caused by strikes,
locked-out workmen, or persons taking part in labor
disturbances or riot or civil commotion and protection and
indemnity clauses, including loss of life and personal injury.
The policy shall insure while the subject matter of the
insurance (ashore or afloat) is in transit to and from and
whilst at the yard(s) of Shipyard, while in transit within the
port of construction, while on trial and/or demonstration
trips (including proceeding to and returning from the trial
and/or demonstration course), and/or whilst being stored and
including final delivery within one hundred miles of Shipyard.
The amount of insurance, the terms of the policies, the
insurance companies and underwriters shall be reasonably
satisfactory to Shipyard. Evidence of insurance shall be
provided to Shipyard by certificate of insurance and upon
request all cover notes and policies shall be delivered to
Shipyard and Owner. The Builders' Risks Insurance policy shall
name the Shipyard and Owner as named insureds and shall
provide that all losses under such policy shall be made
payable to Shipyard or for distribution by it to itself and to
Owner as their respective interests may appear. Shipyard shall
fully cooperate with insurer issuing the Builder's Risks
Insurance and shall take all steps reasonably necessary to
maintain the coverage throughout the term of this Contract.
The Shipyard shall be responsible for the stated deductibles
for the Builders' Risks Insurance.
SECTION 5.3 -- INDEMNIFICATION
The rights of indemnity between the parties shall be as follows:
(a) Liability for Shipyard's Personnel
Shipyard releases Owner and all of its affiliated and related
entities and all of its and their officers, directors, agents,
employees, independent contractors,
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subcontractors, or representatives (hereinafter collectively "Owner
Indemnities") from any liability to Shipyard for, and Shipyard will
defend, indemnify and hold Owner and Owner Indemnities harmless from
and against, all suits, actions, claims and demands, by whomever
brought, based on personal injury or death, whenever occurring,
suffered or incurred by Shipyard, its contractors or subcontractors and
the officers, employees, agents and representatives of any of them
arising from or related in any way to performance of the Contract Work,
regardless of how such personal injury or death is caused and even if
caused by the negligence, whether sole or concurrent or active or
passive, or other legal fault, including strict liability, of Owner and
Owner Indemnities.
(b) Liability for Owner's Personnel
Owner releases Shipyard and all of its affiliated and related
entities and all of its and their officers, directors, agents,
employees, independent contractors, subcontractors or representatives
(hereinafter collectively "Shipyard Indemnities") from any liability to
Owner for, and Owner will defend, indemnify and hold Shipyard and
Shipyard Indemnities harmless from and against, all suits, actions,
claims and demands, by whomever brought, based on personal injury or
death, whenever occurring, suffered or incurred by Owner its
contractors or subcontractors and the officers, employees, agents and
representatives of any of them arising from or related in any way to
performance of the Contract Work, regardless of how such personal
injury or death is caused and even if caused by the negligence, whether
sole or concurrent or active or passive, or other legal fault,
including strict liability, of Shipyard and Shipyard Indemnities.
(c) Liability for Shipyard's Property
Shipyard releases Owner and Owner Indemnities from any
liability to Shipyard for, and Shipyard will defend, indemnify and hold
Owner Indemnities harmless from and against, all suits, actions, claims
and demands, by whomever brought, based on property damage or loss,
whenever occurring, suffered or incurred by Shipyard, its contractors
and subcontractors and the officers, employees, agents and
representatives of any of them, arising from or related in any way to
performance of the Contract Work, regardless of how such damage or loss
is caused and even if caused by the negligence, whether sole or
concurrent or active or passive, or other legal fault, including strict
liability, of Owner and Owner Indemnities.
SECTION 5.4 -- PERFORMANCE BOND
Shipyard, if required by Owner at any time during the term of this
Contract, shall, at Owner's expense pursuant to a Change, furnish a Performance
Bond, a Labor and Material Payment Bond or other bonds covering the faithful
performance of the Contract Work and the performance of all obligations arising
in connection therewith, said bonds to be in such form and amount as Owner
prescribes and with sureties which it approves.
ARTICLE 6 -- ADMINISTRATION OF THE CONTRACT
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SECTION 6.1 -- SUBLETTING OF CONTRACT WORK
The Shipyard shall not, nor shall it permit any subcontractor to,
sublet, sell, transfer, assign or otherwise dispose of the Contract (or the
Contract Work) or any portion thereof, or of its right, title, or interest
therein, without prior written consent of the Owner. Such consent, if granted,
to sublet, assign or otherwise dispose of any portion of the Contract shall not
relieve the Shipyard of its sole responsibility for the fulfillment of the
Contract and, except as specifically set forth in this Contract, no subcontracts
or transfer of contracts shall in any case release the Shipyard of its liability
under the Contract. Subcontracts which are submitted for approval shall be
signed by both parties and dated in order to be considered by the Owner. The
Shipyard shall furnish the Owner with copies of all proposed subcontracts.
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<PAGE> 15
The purchase of equipment and materials produced at and furnished from
established and recognized commercial plants, together with the delivery of such
materials to the site of work by means of vehicles owned and operated by such
plants or by recognized commercial hauling companies, shall not be considered as
subcontracting under these provisions.
SECTION 6.2 -- VALUE ENGINEERING
Following execution of this Contract and during the period the Guidance
Drawings are being revised in accordance with Section 7.2, the Owner and
Shipyard shall mutually review the Contract Documents to identify areas of
potential cost savings (a "Value Engineering Change"). Such Value Engineering
Change shall not compromise or adversely affect the quality, performance or
passenger capacity of the Vessels as set forth in the Specifications. The cost
savings of the Value Engineering Changes shall be used first to offset any
increases in the Contract Price pursuant to Section 11.3 and the balance, if
any, shall be split on a 50%/50% basis between the Shipyard and the Owner. Based
on a joint review of the Specifications and Contract Work prior to the execution
of this Contract, the parties have identified and agreed upon a Value
Engineering Change credit to Owner equal to ____________________________________
per Vessel due to a reduction in price quoted by the vendor for the bow thruster
(Schottel).
SECTION 6.3 -- "OR EQUAL" ALTERNATIVES
In some instances the Contract Documents may expressly allow the use of
an "or equal" alternative to a specified product. However, no such alternative
shall be used without the prior written approval of the Owner, which shall not
be unreasonably withheld. Demonstration of the "or equal" status of any proposed
alternative shall be the responsibility of the Shipyard. An "or equal" product
is one which exhibits the same salient characteristics, performance,
reliability, warrantability and maintainability as the product identified in the
Specifications. In certain cases, physical size and/or weight must be
considered. In any instance where a proposed "or equal" alternative is approved
by the Owner and will apparently result in a cost savings to the Shipyard, the
apparent cost savings shall be split on a 50%/50% basis between the Shipyard and
the Owner.
SECTION 6.4 -- WAIVERS AND AMENDMENTS
The failure of the Owner to require strict compliance with the terms of
the Contract Documents, regardless of when or how often such occurs, shall not
constitute a waiver of such terms for the remainder of the Shipyard's
performance. However, Owner agrees that it will timely inspect the work and
respond to Shipyard so as to not delay the completion of the work. Neither the
acceptance by the Owner, nor any payment for, or review, approval, inspection,
testing, observance, or acceptance of the whole or any part of the work, nor any
extension of time, nor any possession taken by the Owner, shall (i) operate as a
waiver of any portion of the Contract Documents or of any power or right to
damages therein established, nor (ii) relieve the Shipyard of its sole
responsibility for the Contract Work.
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<PAGE> 16
No amendments or changes to the Contract Documents shall be effective
unless made in accordance with Article 11. If at any time the Shipyard feels it
has received directions from the Owner which constitute a change or amendment to
the Contract Documents or require work which is not within the scope of the
Contract Work, the Shipyard shall provide notification in writing to the Owner
of this belief prior to commencement of the work at issue and demand that such
directions be put in writing by the Owner in accordance with Article 11. Any and
all work performed without such written directions shall be held to be work
within the Shipyard's existing scope of work or work voluntarily performed by
the Shipyard at no additional cost or time impact.
SECTION 6.5 -- GRATUITIES AND CONFLICTS OF INTEREST
The Shipyard agrees that it will neither extend nor offer any loan,
gratuity or gift of money in any form whatsoever to any employee or agent of the
Owner nor will it rent or purchase any equipment or materials from any employee
or agent of the Owner, other than Owner Furnished Materials. Before Final
Payment, the Shipyard shall execute and furnish the Owner an affidavit
certifying that it has complied with the above provisions of the Contract.
SECTION 6.6 -- TERMINATION FOR DEFAULT OF SHIPYARD
The Shipyard shall be deemed to be in default of its obligations under
this Contract, and the Owner shall thereupon be entitled (but not bound) to
terminate this Contract (hereinafter "Default Termination") in the following
circumstances:
(a) Where the Shipyard commits a breach of the terms of, or fails
to perform any of its obligations under, the Contract and
fails to remedy the same within ten (10) days of receipt of a
written notice by the Owner stipulating the breach that has
occurred; or in the case of a default or breach which by its
nature cannot be cured within the ten (10) day period, if
Shipyard shall not have begun and continued working diligently
toward effecting a cure and fails to remedy the same within
sixty (60) days; or
(b) Where the Shipyard fails to staff or prosecute the Contract
Work in accordance with the Project Schedule or shows a
prospective inability to timely complete the Contract Work and
fails to remedy same within ten (10) days of receipt of a
written notice by the Owner stipulating that such a condition
exists; or in the case of a default or breach which by its
nature cannot be cured within the ten (10) day period, if
Shipyard shall not have begun and continued working diligently
toward effecting a cure and fails to remedy the same within
sixty (60) days; or
(c) If any material representation or warranty made in this
Contract or by an authorized Shipyard representative
(including financial or other information on the Shipyard
provided to Owner) is or becomes false, inaccurate or
incomplete, and such default is not cured or waived, within
ten (10) days of receipt of a written notice thereof is given
to the Shipyard; or in the case of a default or breach which
by its nature cannot be cured within the ten (10) day period,
if
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<PAGE> 17
Shipyard shall not have begun and continued working diligently
toward effecting a cure and fails to remedy the same within
sixty (60) days; or
(d) If the Shipyard fails to pay any principal of or interest on
any material indebtedness for borrowed money, or any guarantee
thereof, beyond the period of grace, if any, provided with
respect thereto, or defaults in the observance or performance
of any other material term, covenant, agreement, condition,
undertaking or provision contained in any agreement or
instrument evidencing or securing or related to any
indebtedness for borrowed money or guarantee; or
(e) Where the Shipyard suffers the issuance by any court of a writ
of attachment or similar process or judgment in respect of any
claim exceeding in value $50,000.00 which is not stayed or is
not released within thirty (30) days after the entry or levy
thereof or after any stay is vacated or set aside; or
(f) Where the Shipyard admits in writing an inability to pay its
debts as they become due or, generally, demonstrates by its
actions that it is failing to pay its debts as they become
due; or
(g) Where the Shipyard commences a case under any Chapter of the
Title 11 of the United States Code as now comprised or in the
future amended ("Bankruptcy Code"); or
(h) Where the Shipyard has commenced against it an involuntary
case under the Bankruptcy Code, which case is not dismissed
within thirty (30) days from the date of commencement; or
(i) Where the Shipyard consents to the entry of an order for
relief under the Bankruptcy Code or a similar law in any
country; or
(j) Where the Shipyard consents to or suffers the appointment of a
custodian, receiver or trustee for all or a major part of its
property; or
(k) Where the Shipyard makes an assignment for the benefit of
creditors under applicable state insolvency laws; or
(l) Where the Shipyard consents to the entry of a court order
under any law ordering the winding up or liquidation of its
affairs, or suffers the entry of such an order, which order,
if not consented to, is not vacated, denied, set aside, or
stayed within thirty (30) days from the date of entry.
In the event that the Owner shall choose to exercise its right of
Default Termination of this Contract, then the Owner shall so notify the
Shipyard in writing. Such notice of cancellation shall be effective as of the
date of receipt of the same by the Shipyard and, at the Owners direction, the
Shipyard shall then: (i) complete at Shipyard's cost all works required at a
minimum to permit the Vessel to depart from the Shipyard in a safe and seaworthy
condition; (ii) thereafter remove its employees, agents and contractors,
together with their
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equipment, from the Vessels; and (iii) render all necessary assistance to the
Vessel(s) and the Owner in leaving the Shipyard at the earliest moment
convenient to the Owner. In case of Default Termination of the Contract, the
Owner shall be liable to pay to the Shipyard only those parts of the Contract
Work already incorporated into, supplied or delivered to the Vessel(s) by the
Shipyard less the amount of the Contract Price then paid by the Owner and less
any other amounts due to the Owner under the provisions of this Contract,
including the costs and damages incurred due to the Default Termination.
Provided, however, that no such payments shall be made to the Shipyard until all
portions of the Contract Work have been completed by the replacement shipyard
and all damages incurred by the Owner as a result of the Shipyard's Default are
known. The remedies available to Owner under Article 11 are in addition to, and
not in lieu of, its other remedies available at law or in equity.
Default Termination of the Contract shall in no sense prejudice any
accrued claim the Owner may at the time of such termination assert, whether in
law or equity, against the Shipyard including, but not limited to, a claim for
liquidated damages in accordance with Section 10.2. The Shipyard shall further
be liable in the event of Default Termination to pay to the Owner all additional
cost incurred by the Owner in changing shipyards and completing the Contract
Work at another shipyard.
In the event of a Default Termination by the Shipyard, Owner shall
irrevocably be made, constituted and appointed the true and lawful attorney for
Shipyard (without requiring any of them to act as such) with full power of
substitution to do the following: (a) execute in the name of Shipyard any
applications, bill of sales, instruments, documents and statements that Shipyard
is required to execute in connection with the documentation of the Vessel in the
name of the Owner; and (b) do such other and further acts and deeds in the name
of the Shipyard that Owner may deem necessary or desirable to enforce its
interest in the Vessels, the Contract Work, the related materials, equipment and
supplies.
SECTION 6.7 -- LIENS
The Shipyard shall reimburse the Owner for all costs and damages,
including attorneys fees incurred by the Owner in connection with or as a result
of the existence or discharge of any lien or other claim which is not discharged
by a bond obtained at the Shipyard's expense or which is not otherwise satisfied
at the Shipyard's expense. If at any time there shall be evidence of the
existence of any such lien or claim, the Owner may use money then due or to
become due under the Contract to discharge such lien or satisfy such claim and
may credit such amounts against the amounts due or to become due to the
Shipyard.
SECTION 6.8 -- OWNER DEFAULT AND REMEDIES
In the event that (a) Owner shall fail to timely make a progress
payment as set forth in Section 3.3(e), and (b) Owner has failed to make the
required progress payment within twenty (20) days following receipt of a written
notice by the Shipyard that Owner has failed to timely make a progress payment,
then Shipyard, in addition to any of the legal remedies and recourse available
at the time, at its option, may terminate and cancel this Contract.
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Owner further agrees to pay to Shipyard interest at the prime rate of
Citicorp Bank in New York, New York, plus Two Percent (2%) interest per annum on
any sums of money not timely paid in accordance with Section 3.3(e), with
interest being computed from the due date of such progress payment until the
date on which payment is actually received by Shipyard.
ARTICLE 7 - ENGINEERING AND DESIGN
SECTION 7.1 -- SHIPYARD REVIEW OF THE VESSEL AND CONTRACT DOCUMENTS
The Shipyard acknowledges that prior to execution of this Contract,
Shipyard has had ample opportunity to fully review and acquaint, and has, in
fact, fully reviewed and acquainted itself with the Vessel and Contract
Documents. The Shipyard warrants that it has, prior to execution of this
Contract, notified the Owner of all errors, ambiguities, or omissions (whether
regulatory or otherwise) discovered during its review of the Contract Documents
and has received adequate responses thereto.
SECTION 7.2 -- SHIPYARD RESPONSIBILITY FOR DESIGN AND ENGINEERING
(A) The Shipyard shall provide and perform all the design and engineering
services necessary for the complete performance of the Contract Work. No test,
inspection, review, approval, or acceptance by the Owner, any Regulatory
Agencies or Bodies, or any other entity or organization shall relieve the
Shipyard of its sole responsibility to perform the Contract Work, including all
associated design and engineering services, in accordance with this Contract.
Owner agrees that Shipyard is not responsible for the design and engineering of
equipment and systems provided by third parties.
(B) As a part, but not all, of its design and engineering services under
this Contract, the Shipyard shall prepare and timely submit a full set of
Working Drawings for the Vessel covering all portions of the Contract Work. The
purposes of these Working Drawings are as follows:
(i) Provide details required for Owner and Shipyard review and
determination that the structure or system displayed is in
accordance with the Contract;
(ii) Provide the details required to produce other associated
drawings and to permit Shipyard workers to obtain the proper
materials and to perform the Contract Work;
(iii) Provide the details required to gain the approval of any and
all applicable Regulatory Agencies or Bodies; and
(iv) Provide a permanent record of the Contract Work so that future
operating personnel can understand, troubleshoot, maintain and
repair the structure or systems displayed.
(C) Also, as part, but not all, of its design and engineering services
under this Contract, the Shipyard shall, upon completion of the Contract Work,
prepare a complete set of deck
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arrangements, diagrams and profiles of the Vessel. Arrangements, diagrams and
profiles shall be drawn as set forth in the Contract Documents and shall reflect
the final as-built and delivered condition of the Vessel. All arrangement,
diagram and profile drawings required to be delivered to Owner shall be properly
folded and delivered to Owner within the Owner Outfitting Period defined in
Section 9.1; provided, however, the piping diagrams and the electrical one line
drawings shall be properly folded and delivered to Owner no later than the
Delivery Date.
(D) Owner and Shipyard agree that the Guidance Drawings must be revised to
conform to the Specifications. Owner and Shipyard shall jointly review any
changes to the Guidance Drawings. The parties agree that changes made to the
Vessel's propulsion and electrical systems as a result of such revisions may be
of a magnitude that will require an adjustment to the Contract Price, although
it is agreed that changes to the other systems shall have no effect on the
Contract Price. Notwithstanding the foregoing, any changes to the Contract Work
required by the review of the Guidance Drawings by the Regulatory Agencies or
Bodies shall be for the Owner's account. Changes in connection with this
paragraph shall be made in accordance with paragraph (f) of Section 11.3 below.
(E) Engineering calculations and Guidance Drawings shall be submitted to
the Owner and Owners reply to the submittal shall be within fourteen (14) days
of Owners receipt of same. The timing and processing of Shipyard submittals to
Regulatory Agencies and Bodies other than the Owner are the responsibility of
the Shipyard.
SECTION 7.3 -- MAKERS' LIST
The potential makers and suppliers of major items of machinery and
equipment are set forth on the Makers' List which is attached hereto as Appendix
Three. The Makers' List includes the Shipyard's selection of manufacturers for
various equipment listed and Owner has accepted such selections by the Shipyard.
If the Shipyard is unable to obtain the machinery or equipment from the selected
manufacturer, or if Shipyard desires to change its selection of a manufacturer,
the Shipyard shall select its choice of alternate maker or supplier in a timely
manner in order to allow Owner to approve or disapprove such selection.
Concurrently with each such selection of an alternate, Shipyard shall provide
Owner with such supplier's technical specifications and other information
sufficient to enable Owner to make its decision to accept or reject such
selection. Owner shall have fourteen (14) calendar days after receipt to respond
to Shipyard and accept or reject Shipyard's selections. If Owner disapproves of
Shipyard's alternate selection, Owner shall have the right to make its own
selection from the Makers' List provided: (i) Owner can reasonably establish
that the Owner's selection complies with the relevant technical specification;
and (ii) if there is any impact on the Contract Price or Delivery date, the
parties agree to a Change in accordance with Section 11.3 below.
If Shipyard suggests an "or equal" alternative to a specified product
which is approved by Owner, any cost savings will be handled in accordance with
Section 6.3 of this Contract. If Owner suggests a change from a previously
selected and approved manufacturer and such change is approved by Shipyard, such
change shall be handled in accordance with Section 11.3 of this Contract.
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<PAGE> 21
SECTION 7.4 -- OPERATING AND TECHNICAL MANUALS
As more specifically set forth in the Specifications, the Shipyard
shall provide Owner with standard commercial operating manuals prepared by
vendors for any new equipment and technical manuals for said equipment, with
respect to equipment furnished to and incorporated in the Vessel by Shipyard.
SECTION 7.5 -- NOISE AND VIBRATION
The parties agree that the Shipyard is not warranting the noise and
vibration levels of the Vessel. Upon the execution of the Contract, Shipyard
shall at its cost engage a noise and vibration consultant (the "Consultant")
mutually agreeable to the Owner who shall review the Specifications and Guidance
Drawings and all other available relevant data for the purpose of estimating and
predicting the noise and vibration levels for the Vessels. If the noise and
vibration levels predicted by the Consultant do not meet the levels set forth in
the Specifications, the Owner shall have the opportunity to modify the
Specifications to improve the predicted noise and vibration levels. The Shipyard
agrees to perform at no additional cost to the Owner up to 400 man hours of
corrective work, which shall be the Shipyard's sole responsibility for guarantee
work as it applies to noise and vibration. Any corrective measures over the 400
man hours set forth herein will be handled as a change order. If Owner request
Shipyard to provide any of the 400 man hours of corrective work away from
Shipyard's Jacksonville, Florida facility, then Owner will be responsible for
the cost of any travel and per diem of Shipyard's employees.
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<PAGE> 22
ARTICLE 8 - TESTING AND INSPECTION
SECTION 8.1 -- SHIPYARD QUALITY CONTROL
The construction of the Vessel, its machinery, equipment and outfitting
shall be subjected, throughout the entire period of construction, to a planned
system of quality control administered by an inspection department of the
Shipyard. The Shipyard is solely responsible for the quality and conformance of
the Contract Work with the Contract. Furthermore, quality control testing and
process control are the responsibility of the Shipyard. The necessary tests and
inspections by the classification society and other Regulatory Agencies or
Bodies concerned shall also be carried out and recorded.
The Owner, its representatives and/or Owner's Lenders may attend during
construction of the Vessel, tests and inspections of the Vessel, its machinery
and equipment. The Shipyard shall give to the Owner at least forty-eight (48)
hour advance notice stating nature, time and location of any tests or
inspections which may be attended by the Owner, provided that in exceptional
circumstances the manner in which such notice is given may be modified by mutual
agreements.
During working hours in the course of construction of the Vessel until
Delivery thereof, the Owner, its representative(s) and/or its lenders shall be
given free and ready access to the Vessel, its machinery and equipment, and to
any other place where work is being done, or materials are being processed or
stored, in connection with construction of the Vessel, including the yards,
workshops, stores and offices of the Shipyard and the premises of subcontractors
of the Shipyard, who are doing work or storing materials in connection with
construction of the Vessel, save and except areas which are controlled for
purposes of national security or otherwise provided that the Owner or his
assistant(s) shall not disturb or obstruct the Shipyard or its subcontractors in
construction of the Vessel.
In the event that the Owner or any Regulatory Agencies or Bodies
discover any material or workmanship which will not conform to the requirements
of this Contract and the Specifications, the Owner shall promptly give the
Shipyard a notice in writing as to such non-conformity, upon receipt of which
the Shipyard shall correct such non-conformity at no cost to Owner. Failure to
give such notice, however, will not be deemed a waiver of Owner's rights
hereunder.
SECTION 8.2 -- TESTS AND TRIALS
(a) Prior to Delivery, the Shipyard, at its expense, shall subject
each Vessel to those tests and trials required by good marine
practice and the Contract Documents.
(b) When the work on a Vessel is substantially complete, as
required by this Contract, and when the Shipyard shall have
made sufficient trials at the dock to be reasonably sure of
satisfactory performance under the requirements of this
Contract, the Vessel shall be subject to trials at sea as
prescribed by the
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<PAGE> 23
Contract Documents. The Shipyard's personnel shall operate the
Vessel's equipment and machinery during trials at dock and at
sea.
(c) Arrangements will be made so as to obtain specific data during
the trials which are required to determine compliance with the
Contract Documents. At a reasonable time before the Vessel is
ready for such trials, Shipyard shall submit a schedule of
trials to the Owner for approval by the Owner.
If, at and upon trials required by the Contract Documents, there shall
be any material failure of the Contract Work to meet the requirements of this
Contract, the Shipyard shall, after corrective action is taken, be required to
demonstrate compliance with the Contract Documents. The costs of any additional
trials or other demonstrations (exclusive of Owner's personnel and authorized
representatives) required by this Section shall be borne by the Shipyard, except
that with regard to any
demonstrations made necessary by failure or malfunction upon prior trial of
Owner Furnished Material, Owner shall bear the cost of such additional trials or
demonstration.
ARTICLE 9 - ACCEPTANCE AND GUARANTEES
SECTION 9.1 -- ACCEPTANCE AND DELIVERY
Final inspection shall be accomplished immediately upon completion of
successful sea trials and Owner and Shipyard shall jointly prepare a list of all
Contract Work that is not complete or is defective, including any items detected
at sea trials (the "Punch List"). Owner shall accept the Vessels at Shipyard's
yard when tendered by Shipyard ("Delivery"), provided the Vessel is
substantially complete as provided in the Contract Documents. At Owner's request
and at Owner's expense, Shipyard shall deliver the Vessel at a location other
than Shipyard's yard. In the event the Vessel is substantially complete, but the
requirements and conditions of this Contract shall not be met, Owner shall
accept Delivery of the Vessel and, at Owner's sole discretion, either (i) the
parties may stipulate money damages in lieu of full performance by the Shipyard
or (ii) such Delivery shall be subject to completion or correction of all items
on the Punch List. For purposes of this Section, the term "substantially
complete" shall mean seaworthy and complete within the requirements of the
Contract Documents.
In the event election (ii) of the preceding paragraph is made, Shipyard
shall complete all Punch List Items within the thirty (30) days following
Delivery (the "Owner Outfitting Period"). In the event such Punch List Items are
not complete within the Owner Outfitting Period, the Shipyard shall provide a
crew sufficient to properly complete the Punch List which shall travel on the
Vessel until the Punch List Items are completed. Such crew will include a
designated representative with sufficient authority to approve the performance
of work so as to complete the Punch List.
Shipyard shall furnish Owner on delivery of each Vessel a Builder's
Certificate (CG-1261) together with whatever other documents may be required by
law or by any Regulatory Agency of the United States having jurisdiction in
order for the Owner to document the Vessels in its name properly endorsed to
engage in the Coastwise trade. In addition, Shipyard
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<PAGE> 24
shall furnish Owner upon delivery of a Vessel with the affidavits, certificates
and lien waivers required by this Contract.
SECTION 9.2 -- GUARANTEE WORK
Shipyard warrants that (i) all work will be done in a good and
workmanlike manner and that all labor and installations shall meet the
requirements and standards described in the Contract Documents; and (ii) all
parts and components fabricated by the Shipyard shall be free from defects and
of the quality set forth in the Contract Documents and conform to the applicable
regulations and rules of all Regulatory Agencies or Bodies. The Shipyard shall
guarantee the Contract Work, including but not limited to design and engineering
work, all parts, and components fabricated by the Shipyard and workmanship
entering into the Vessel and furnished by it, or on its account, against defects
in design, material or workmanship, or latent defects which may develop within
twelve months after Delivery of the Vessel to the Owner (the "Guarantee
Period"). Any items found defective, in accordance with the requirements of the
Contract ("Warranty Work"), shall be repaired or replaced by the Shipyard
without expense to the Owner. If, in the opinion of the Owner, immediate repairs
or replacements are essential to keep the Vessel on its scheduled operations or
if because of geographical distance or other reasons Shipyard does not elect to
perform repairs that are immediately needed, then Owner may effect such repairs
on its own or by hiring an outside contractor, including a shipyard ("Repair
Contractor"), for the account of the Shipyard, but all such repairs will be
subject to a maximum reimbursement by Shipyard for the actual cost incurred by
Owner not to exceed ___ ________________________________ of the actual cost of
materials plus actual labor not to exceed ______________________ per hour. If
immediate repairs are not necessary, the Shipyard will be notified and be given
five days within which to examine and begin to correct the defects. If the
defects are not timely corrected, the Owner shall be entitled to have the
defects corrected by a Repair Contractor of Owner's choice or by the Vessel's
crew for the account of the Shipyard subject to maximum reimbursements by the
Shipyard for the actual cost incurred by Owner not to exceed ____ of the actual
cost of materials plus actual labor calculated on an hourly basis not to exceed
_____ per hour. Notwithstanding anything to the contrary herein, at Owner's
election, if it determines that the Warranty Work need not be conducted
immediately, Owner may return the Vessel to the Shipyard any time within 24
months following discovery of the Warranty Work and Shipyard shall repair the
Warranty Work provided such Warranty Work is reported to the Shipyard within the
12 month warranty period. All items or work repaired or replaced under this
guarantee, whether such was accomplished by the Shipyard, the Vessel' crew or
made by a Repair Contractor for the account of the Shipyard, shall be guaranteed
by the Shipyard for the greater of the remainder of the 12 month warranty period
or for an additional ninety (90) days beyond the date of said repair or
replacement.
Neither Delivery, nor any other pre-final payments, reviews, comments,
tests, inspections, observations, approvals, or acceptances shall constitute an
acceptance of work not done in accordance with the Contract or relieve the
Shipyard of liability for faulty design, materials or workmanship. The Shipyard
shall remedy any defects in its work and pay for any damage resulting from the
corrective work which shall appear within the period specified above.
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<PAGE> 25
In addition to the warranty being provided by Shipyard hereunder on all
Contract Work, but not in lieu thereof, the Shipyard shall use all reasonable
efforts to obtain warranties from vendors, suppliers and subcontractors
equivalent in scope and duration to the warranties being provided by Shipyard.
All such warranties shall be made for the benefit of the Shipyard and the Owner.
Shipyard shall promptly disclose to Owner any warranty which is not equivalent
in scope or duration to those provided by Shipyard.
The Shipyard warrants the installation of systems, equipment, engines
and components as installed by the Shipyard or its subcontractors. The
Shipyard's responsibility for defects in any item manufactured by a third party
shall be limited to such manufacturer's warranty and Owner will have no claim or
cause of action against Shipyard in the event that the manufacturer or supplier
does not honor its warranty obligation. The Shipyard shall be the agent for the
Owner for all Warranty Work regardless of who provides the warranty.
Notwithstanding the foregoing, Shipyard shall require the paint manufacturer to
provide the Owner with a three-year anti-corrosive paint warranty and Shipyard
shall have no further liability with respect to such warranty.
Immediately prior to expiration of the Guarantee Period, a Guarantee
Survey shall be conducted for the purpose of determining remaining deficiency
items to be corrected. The Guarantee Survey shall be made jointly by the Owner,
the Shipyard, and the applicable Regulatory Agencies and Bodies. The time and
place for the Guarantee Survey shall be at the convenience of the Owner, giving
due consideration to the Vessel schedule and commitments. All fees and expenses
required by Regulatory Agencies or Bodies for their participation in this Survey
shall be borne by the Owner.
Each and every warranty claim hereunder will be subject to a Two
Hundred Fifty Dollar ($250.00) deductible, nevertheless provided that when the
aggregate amount of deductibles regarding the warranty claims total Five
Thousand Dollars ($5,000.00), no additional deductible shall apply.
In the event of the failure of any part of the Vessel fabricated by
Shipyard as a result of defective workmanship or defective materials within the
aforesaid warranty period, it shall be the duty and obligation of Owner to
promptly give Shipyard written notice thereof, giving full information as
supported by photographs, where possible.
It is understood and agreed between the parties hereto that Shipyard
shall not in any way be liable or responsible for any paint failure or defective
painting of the Vessel after delivery of the Vessel to Owner, provided Shipyard
has properly applied the paint and has obtained from the paint manufacturer
certification to this effect.
Owner agrees that it will hold Shipyard harmless from any and all
claims asserted by third parties which are asserted after the Guarantee Period.
SECTION 9.3 -- DISCLAIMER OF WARRANTIES
(A) IT IS UNDERSTOOD AND AGREED BETWEEN THE PARTIES HERETO THAT
SHIPYARD SHALL NOT IN ANY WAY BE LIABLE OR
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<PAGE> 26
RESPONSIBLE FOR ANY NEGLIGENT CONSTRUCTION, DESIGN,
ENGINEERING OR DEFECTS IN THE VESSEL AFTER EXPIRATION OF THE
TWELVE (12) MONTHS AFTER DELIVERY OF A VESSEL.
(B) THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR
PURPOSE ARE SPECIFICALLY EXCLUDED.
(C) NO OTHER WARRANTIES, EXPRESS OR IMPLIED, ARE OR WILL BE DEEMED
TO HAVE BEEN MADE BY SHIPYARD EXCEPT THE WARRANTY HEREINBEFORE
SET FORTH.
(D) THE WARRANTY HEREINBEFORE SET FORTH IS GIVEN IN LIEU OF ANY
IMPLIED WARRANTIES.
(E) THERE ARE NO WARRANTIES GIVEN WHICH EXTEND BEYOND THE LANGUAGE
AND DESCRIPTION ON THE FACE HEREOF.
SECTION 9.4 -- ELIMINATION OF INCiDENTAL AND CONSEQUENTIAL DAMAGES
It is understood and agreed by the parties hereto that Shipyard shall
not in any way be liable or responsible for any incidental or consequential
damages, of any kind or nature, including but not limited to loss of profits and
loss of use of the Vessel, from any cause of action of any kind or nature,
including but not limited to negligence, contract, warranty or any other causes
of actions, arising out of or in connection with or pertaining to the Vessel
constructed hereunder. The elimination of incidental and consequential damages,
as provided herein, is an essential condition of this contract, and Owner
acknowledges that Shipyard would not have entered into this contract without
said elimination of incidental or consequential damages for the considerations
set forth herein for the construction of the Vessel.
ARTICLE 10 -- PROJECT TIME
SECTION 10.1 -- CONTRACT TIME
Time is of the essence in this Contract. The Owner's scheduled use of
the Vessel, and related promotional and operational plans, are based upon a
timely completion of the Contract Work. In support of these intentions and
plans, the Shipyard is required to achieve delivery of the first Vessel on March
1, 2001 and the second Vessel on June 22, 2001. The period of time from the date
of execution of this Contract until the required date of Delivery of the Vessel
will hereinafter be referred to as the "Contract Time." The Contract Time shall
be subject to adjustment only if (a) an Excusable Delay is encountered, and (b)
proper and timely notice is given.
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<PAGE> 27
"Excusable Delays" are defined as those delays resulting from events or
situations which occur or exist, or fail to occur or exist, through no fault or
negligence of the Shipyard, including (i) Compensable Causes, (ii) the delay or
default or non-performance of any supplier or manufacturer with whom Shipyard
may contract to furnish and deliver any materials, equipment, machinery or labor
necessary in the construction of the Vessel (provided that Shipyard demonstrates
that it has ordered such materials, equipment, machinery or labor in a timely
manner, that Shipyard has used its best efforts to obtain same on time and that
no alternate source of supply was reasonably available), (iii) the delay or
default by the Owner to timely furnish and deliver the Owner Furnished
Materials, and (iv) including wars, sabotage, bombing, fires, strikes, riots,
floods, insurrection, earthquakes, acts of God, hurricanes, delays in
transportation, blockades, embargoes, acts, demands, or requirements of the
United States Government or any state or political subdivision thereof, or
occasioned by command, restraint, condemnation or acquisition by the United
States Government or any political subdivision thereof; provided, however, that
as soon as any such cause is removed and no longer exists, except as may be
herein otherwise set forth, Shipyard shall thereupon continue, carry out and
perform the covenants and conditions of this Contract on Shipyard's part to be
performed.
Notwithstanding the foregoing, in the event that any Excusable Delay
lasts in excess of fifteen (15) consecutive days or thirty (30) days in the
aggregate, Owner shall be entitled to terminate the Contract without further
obligation to Shipyard other than the obligation to pay Shipyard for any and all
work performed by Shipyard including the purchase of materials and equipment up
until such termination of the Contract by Owner, and Shipyard shall be obligated
to prepare and place the Vessel at Owner's expense in a condition and mode by
which the Vessel can be transported by Owner to another shipyard for completion
of the Contract Work.
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SECTION 10.2 -- SHIPYARD'S LIQUIDATED DAMAGES
The Contract Price of each Vessel shall be subject to adjustment as
provided herein. The parties agree that the sums set forth below as liquidated
damages represent all the damages with respect to matters set forth below to
which Owner will be entitled from Shipyard including but not limited to lost
profits, loss of business opportunities or other damages. However, any reduction
of the Contract Price as provided in this section is by way of liquidated
damages which will not constitute a penalty and shall not affect any other
rights or remedies of the Owner or the Shipyard as to unrelated matters.
(a) Delayed Delivery
(i) In the event Shipyard fails to deliver either Vessel
on or before the respective Delivery Date, the Owner
will suffer damages which are difficult to ascertain.
The sums to be paid as liquidated damages will be
based on the number of days beyond the Delivery Date
up to and including the actual delivery, as follows:
<TABLE>
<CAPTION>
Time Period of Delay Vessel I (per day) Vessel II (per day)
- -------------------- ------------------- -------------------
<S> <C> <C>
Day 1 to Day 10 _________ _________
Day 11 to Day 20 _________ _________
Day 21 to Day 30 _________ _________
Day 31 to thereafter _________ _________
</TABLE>
(ii) In no event shall the total amount payable by
Shipyard under sub-paragraph (i) above exceed in the
aggregate ___ of the Contract Price for each Vessel.
(iii) For the purpose of this Section, the delivery of the
Vessel shall be deemed to be delayed if the Vessel,
after taking into full account any extension of the
Delivery Date by reason of Excusable Delays is not
delivered by the date upon which delivery is required
under the terms of the Contract.
(iv) Shipyard's completion of Punch List items as
described in Section 9.1 during the Owner Outfitting
Period shall not be counted in determining any
liquidated damages for delayed delivery.
(b) Insufficient Speed
(i) The Vessel has been designed for a speed over ground
of __ knots in the design draft condition in calm
seas and winds. The design draft condition is a draft
of 12'0" as defined in Group 0 of the Specifications.
Shipyard's engineering subcontractor, Guido Perla &
Associates, Inc., shall verify the effective
horsepower "EHP" requirements of the hull through a
model testing program. The model testing program will
be performed as soon as reasonably possible after
Contract execution in
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<PAGE> 29
order to predict the speed of the Vessels based upon
the design set forth in the Guidance Drawings and
Specifications. Owner may participate in the model
testing program if so desired and the results of the
model testing program will be reported to Owner. Any
hull form modifications necessary to enhance flow and
reduce EHP shall be reviewed and approved by Owner.
Shipyard is responsible to construct the hull meeting
the tested EHP requirements.
(ii) Shipyard will be responsible for the speed of the
Vessels up to the predicted speed from the model test
or ___ knots, whichever is lower (the "Target
Speed"). If Owner determines that the speed predicted
by the model test is not acceptable to Owner, then it
is the responsibility of Owner to initiate a Change
in accordance with Section 11.3 of this Contract in
an attempt to increase the speed. If a Change is made
in order to increase the speed and if Owner desires a
second model test, the second model test will be at
the sole cost and expense of Owner.
(iii) If, following final trials, there exists a deficiency
of greater than one fourth of one knot in actual
speed below the Target Speed, and if Shipyard is not
able within a reasonable period, to correct such
deficiency the Contract Price shall be reduced
__________ for a speed deficiency of more than one
quarter knot to one-half knot, and an additional
_________ penalty for a speed deficiency from
one-half to three quarter knot, and an additional
___________ penalty for a speed deficiency from three
quarters of a knot to one knot; provided, however, in
no event shall the total amount payable by Shipyard
under this sub-paragraph (iii) exceed in the
aggregate ___________.
(iv) If the deficiency in the actual speed of the Vessel
upon trial run is more than one (1) full knot below
the Target Speed, then Shipyard shall be required to
correct the deficiency in order that the actual speed
of the Vessel is within one (1) knot of the Target
Speed.
SECTION 10.3 -- PROJECT SCHEDULE
Within ninety (90) days of execution of this Contract, the Shipyard
shall prepare and submit to the Owner for approval a resources quantity (i.e.,
materials and equipment) and critical path method ("CPM") schedule using
Shipyard's standard system (hereinafter referred to as the Project Schedule).
This Project Schedule shall be reasonably consistent with the Preliminary CPM
Schedule which accompanied the Shipyard's bid. The purpose of the Project
Schedule shall be to:
(a) assure adequate planning, scheduling and monitoring of both
the Contract Work and the joiner work, if contracted to a
third party;
(b) assure coordination of and between all portions of the
Contract Work and work to be performed by Owner's Contractors;
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(c) assist the Shipyard and Owner in evaluating proposed changes
to the contract and the impact (if any) such changes may have
on the Project Schedule; and
(d) evaluate the Shipyard's applications for Progress Payments.
SECTION 10.4 -- PROGRESS MEETINGS
The Shipyard shall be required to prepare for and participate in weekly
progress meetings to be held at the Shipyard. Both the person designated by the
Shipyard as its authorized representative responsible for coordinating the
preparation and maintenance of the Project Schedule and the Shipyard's project
superintendent shall attend such meetings. These meetings shall be conducted by
the Shipyard, who shall be responsible for recording the minutes of the meetings
and distributing same to all attendees within three (3) business days. Owner
will be provided the opportunity to attend Shipyard production meetings as Owner
deems necessary.
SECTION 10.5 -- SHIPYARD RECORDS
The Shipyard shall maintain accurate management and financial records
of actual costs incurred during the course of the Contract Work from contract
execution through Delivery. In the event that a lien claim is made against the
Owner or a Vessel after Delivery, the Shipyard will, upon reasonable notice,
allow the Owner and/or Owner's lenders to review records (except general or
operating overhead or its components or profits) kept by the Shipyard relating
in any way to the lien claim.
Books and records shall be maintained during the performance of this
Contract by the Shipyard and its subcontractors and shall be retained for a
period of three years after the date of Delivery. Such records shall include,
but not be limited to, all work done pursuant to change orders performed on a
time and materials basis, all invoices, purchase orders, Working Drawings, and
other documents pertaining to the Contract Work, including those records
relating to equipment furnished by Shipyard's vendors and subcontractors. In the
event that a lien claim is made against the Owner or a Vessel after Delivery,
the Shipyard will make such books and records available to the Owner and its
lenders upon request regarding such lien claim. The Shipyard shall render
reasonable assistance to the Owner and its lenders in locating specifically
requested or identified books and records.
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ARTICLE 11-- CHANGES AND CLAIMS
SECTION 11.1 -- COMPENSABLE CAUSES
The Shipyard may, during the course of its performance under this
Contract, incur costs over and above what it reasonably anticipated in executing
this Contract or which are included in the Contract Price. Such costs will be
recoverable from the Owner only to the extent that: (a) a Compensable Cause as
defined in this Section 11.1 is encountered; (b) proper and timely notice is
provided by the Shipyard pursuant to Section 11.2; (c) the Shipyard shows that
such costs would not have been incurred but for the Compensable Cause so
noticed; and (d) the incurrence of such costs was not a risk borne by the
Shipyard under the Contract Documents. The Shipyard shall not be entitled to
recover any additional costs or damages resulting from events or conditions
other than Compensable Causes.
"Compensable Causes" are defined as the following:
(a) Changes enacted pursuant to Section 11.3;
(b) Damage to Contract Work caused by Owner's Contractors where
such damage was not due to a failure on the part of the
Shipyard to properly protect the work;
(c) Untimely rejections, disapproval's, acceptances, or approvals
of the Contract Work or Shipyard submittals by the Owner, or
late deliveries of Owner Furnished Materials; or
(d) Regulatory requirements which become effective subsequent to
the date of execution of this Contract.
SECTION 11.2 -- NOTICE
The Shipyard shall notify the Owner of each and every instance where
the Shipyard believes it has encountered an event or condition which may be
either an Excusable Delay or a Compensable Cause. These notices shall comply
with Section 14.5, shall be received by the Owner within ten (10) days of the
Shipyard's encountering the alleged Excusable Delay or Compensable Cause, shall
specifically identify the event or condition was an Excusable Delay, a
Compensable Cause, or both.
For alleged Excusable Delay and/or Compensable Causes, the specific
identification of the event or condition required by this Section shall include,
at a minimum: (a) the date the event or condition was encountered, including a
specific description of how, when, and where it was discovered; (b) the document
or documents by which the change or alleged change or unjustifiable or untimely
Owner decision was communicated; (c) a statement citing specific sections of the
Contract which permit an adjustment to the Contract Price or Contract Time; (d)
any relevant documents which describe or relate to the event or condition; and
(e) its duration if such is an ongoing condition.
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An individual notice shall be provided by the Shipyard for each
specific alleged Excusable Delay or Compensable Cause. However, one notice shall
be sufficient for an ongoing condition.
Every event, act, omission, condition or absence thereof, or other
causal item which is not noticed to the Owner in strict accordance with this
Section 11.2 shall be conclusively held not to be an Excusable Delay or a
Compensable Cause.
SECTION 11.3 -- CHANGES
(a) It is acknowledged and agreed that changes to the Contract
Work ("Changes") will occur and arise during performance and
Shipyard shall perform any and all such Changes in accordance
with the provisions of this Section 11.3.
(b) For the purposes of this Section 11.3, changes to the Contract
Work shall be classified as either "essential" changes or
"nonessential" changes (collectively, "Change(s).") Essential
changes shall consist of changes in the Contract Work due to
(i) design defects which, if unchanged, would reduce passenger
habitability or the economic life or economic value of the
Vessel in any meaningful way, or (ii) an action of any
Regulatory Agencies or Bodies or any other promulgation of a
new law, lawful regulation or interpretation of any Regulatory
Agencies or Bodies, as provided in Section 4.5.
(c) The Shipyard shall perform all essential changes specified in
writing by the Owner and shall be entitled to a fair and
reasonable adjustment in the Contract Price and the Delivery
Date as provided in this Section 11.3. Within two (2) days of
discovery of the need for an essential change, Shipyard shall
initiate action to issue a change estimate, which shall be in
writing and contain a description of the work to be performed
or deleted or portions of the Contract Work being changed, the
materials to be used, construction requirements, the method of
quantifying and basis of price and adjustments in Contract
Price (including a detailed labor and materials summary) and
change in Delivery Date, if any. Within [two (2)] days after
receipt of such change estimate, Owner shall either accept or
reject same. In the event Owner rejects the Change estimate,
Shipyard shall proceed on a "time and materials" basis if
Owner so directs. If Owner accepts the change estimate, Owner
and Shipyard shall promptly thereafter execute a contract
modification incorporating amendments in the Contract
resulting from the change. EACH CHANGE ESTIMATE SHALL INCLUDE
ALL DIRECT AND INDIRECT COSTS, ANY RESULTING DELAY,
DISRUPTIONS OF ANY AND ALL KINDS, ACCELERATION AND LIKE COSTS
ASSOCIATED WITH, RESULTING FROM, OR INCIDENTAL THERETO. THE
SHIPYARD AGREES THAT UPON THE OWNER'S TIMELY ACCEPTANCE OF A
FIXED PRICE CHANGE ESTIMATE, SHIPYARD WAIVES AND RELEASES ALL
CLAIMS FOR ANY AND ALL ADDITIONAL COSTS OR TIME RESULTING
THEREFROM.
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(d) Nonessential changes shall be conducted in a similar manner as
essential changes, although the Shipyard shall not be required
to perform a nonessential change in the event, and only in the
event, such change would materially impact the Delivery Date.
(e) Pricing of Changes which result in an increase in the Contract
Price shall be quoted as unit pricing based upon _____ of the
cost of materials plus labor at a blended rate of ____ per
straight time man hour and if requested or approved by Owner
_____ per overtime man hour. Pricing of Changes which result
in a decrease in the Contract Price shall be quoted as unit
pricing based upon ____ of the cost of materials plus labor at
a blended rate of ______ per straight time man hour.
Shipyard's failure to comply with the provisions of paragraph
(c) above shall not relieve it of its obligation to perform
Changes, and in such event, the pricing of Changes shall be
done on a time and material basis.
(f) Notwithstanding the terms of sub-paragraph (e) above, any
Changes arising out of modifications to the Contract Work
pursuant to Section 7.2(D) shall be priced as follows:
(i) Changes resulting from modifications to the Vessel's
propulsion and electrical systems in connection with revisions
to the Guidance Drawings necessary to conform to the
Specifications shall be priced using the same unit pricing
parameters as used in determining the Contract Price in the
first instance; and
(ii) Change resulting from modifications to the Contract Work
required by the review of the Guidance Drawings by the
Regulatory Agencies or Bodies which result in an increase in
the Contract Price shall be quoted as unit pricing based upon
____ of the cost of materials plus labor at a blended rate of
____ per straight time man hour and, if requested or approved
by Owner, _____ per overtime man hour.
(g) The Shipyard and the Owner agree and understand that changes
in the Contract Work and any resulting Contract modifications
shall be handled in an expeditious and timely manner in order
to support the Delivery schedule.
SECTION 11.4 -- CLAIMS
Immediately upon its preparation of a notice pursuant to Section 11.2,
the Shipyard shall begin to keep and maintain complete, accurate, and specific
daily records concerning every detail of the potential claim including actual
costs incurred. Unless otherwise resolved by negotiation, the Shipyard shall,
within thirty (30) calendar days of the date of its notice to the Owner, submit
a written Claim to the Owner. A separate Claim shall be prepared and presented
for each notice not other wise settled. The Claim shall include:
(a) A specific identification of the Compensable Cause or
Excusable Delay;
Page 33 of 40
<PAGE> 34
(b) An identification and discussion of each portion of the
Contract relating to the Claim;
(c) A list of new activities the Shipyard is proposing to
incorporate into the Project Schedule, including logic and
supporting discussion;
(d) The specific relief requested, including Contract Time if
applicable, and the basis upon which it was calculated ;and
(e) A certification that the Claim is made in good faith, that the
supporting data is accurate and complete to the best of the
Shipyard's knowledge and belief, and that the amount requested
accurately reflects the Contract adjustment for which the
Shipyard believes the Owner is liable.
The Shipyard shall have no entitlement to adjustments in either the
Contract Price or Contract Time for Claims not in compliance with the above.
In analyzing the Claim, the Owner may request access to the Shipyard's
supporting documentation and records. If the Owner agrees that the claim is
valid, the Owner's decision will be based on verification of actual costs. The
Owner's decision may deny the Claim based on its not being in compliance with
the above requirements while at the same time providing an independent analysis
of the facts or impacts alleged. Such dual response shall not be a waiver of the
above requirements regarding the content of the Claim.
In the event of a dispute, including an unresolved Claim, between the
parties arises under the terms of this Contract, either party may send to the
other a letter of dispute setting forth in particular the subject matter of the
dispute. The parties shall meet at a mutually convenient location not later than
thirty (30) days after the date of the receipt of the letter of dispute for the
purposes of negotiating a settlement of the disputed matter or to select an
alternate dispute resolution procedure.
In the event that either party determines after compliance with this
Section that the disputed matter cannot be resolved by the parties, the disputed
matter shall be submitted to binding arbitration in accordance with Section
14.8.
SECTION 11.5 -- COMPENSABLE COSTS
Changed, extra or deleted work will be priced using the unit prices or
lump sum stipulated in the approved Changes authorizing the work.
ARTICLE 12 - TITLE
SECTION 12.1 - TITLE TO THE VESSELS; CONTINUING SECURITY INTEREST
The Vessels being constructed under this Contract shall remain the
property of Shipyard and title thereto shall pass to Owner only upon (i) the
acceptance and Delivery
Page 34 of 40
<PAGE> 35
thereof as provided herein and (ii) payment by Owner of the Contract Price.
Title to any Owner Furnished Material shall remain with Owner until incorporated
into the Vessels subject to the insurance and risk of loss provisions contained
herein.
In order to secure the obligations of the Shipyard to the Owner under
this Contract, Shipyard hereby grants to the Owner a continuing security
interest in and to the Vessels, all materials, components, equipment, and work
in progress in any way related to the Vessels which security interest shall be
first in priority subject only to (i) the claims of the Shipyard for payment by
Owner of the progress payments set forth in Section 3.2 and (ii) Shipyard's
first and prior right, title and interest in the Vessels to the extent of any
sums due and owing from Owner to Shipyard for construction of the Vessels, and
in the event of a default by Owner, subject to dockage and other costs incurred
by Shipyard reasonably necessary to launch or make the Vessels seaworthy and to
safeguard the Vessels. Shipyard agrees to execute any and all financing
statements necessary to perfect the security interest granted herein and to
obtain any and all intercreditor agreements or subordination agreements in order
to provide Owner with the security interest in the collateral described above.
In the event of a default by the Shipyard, Owner shall have all the rights and
remedies available to a secured creditor under applicable law.
ARTICLE 13 - OPTION
SECTION 13.1 - OPTION FOR A THIRD VESSEL
Shipyard offers to Owner an option to purchase an additional Vessel as
part of this Contract. This option granted in favor of the Owner must be
exercised no later than December 31, 1999 for delivery of a third Vessel by
March 31, 2002. The Contract Price for the third Vessel will be subject to
negotiation by the parties which must be mutually agreed upon within the latter
of thirty (30) days from the exercise of the option or the expiration of the
option term.
ARTICLE 14 - MISCELLANEOUS
SECTION 14.1 - FREE TRADE ZONE
During the term of this Contract, the Owner may elect to have Shipyard
establish a "free trade zone" at the Shipyard's facility for the Vessels. In
such event, Owner shall be responsible for any and all costs to establish and
maintain the free trade zone and any direct Shipyard costs related to
maintaining the free trade zone. Any savings on duties or taxes resulting from
establishing the free trade zone will accrue to the Owner.
SECTION 14.2 - YEAR 2000 WARRANTY
Owner and Shipyard have each (i) undertaken a detailed review and
assessment of all areas within its business and operations that could reasonably
be affected by the risk that its and its customers and suppliers computer
applications may not be able properly to perform date sensitive functions after
December 31, 1999 (the Year 2000 Problem), (ii) developed a detailed plan and
timeline for addressing the Year 2000 Problem on a timely basis and (iii)
implemented that plan to date in accordance with such plan and timeline. To the
best of each
Page 35 of 40
<PAGE> 36
of Owners and Shipyards knowledge, all computer applications that are material
to its business and operations will on a timely basis be able to perform
date-sensitive functions for all dates before and after January 1, 2000.
SECTION 14.3 - CONFIDENTIAL TREATMENT
Owner and Shipyard agree to treat this Contract as confidential and not
to divulge any of its terms and conditions to any other person or entity except
to the United States Government and except, as disclosure to such person or
entity may be required by law or regulation, or may be required for the
performance hereof.
SECTION 14.4 - INTELLECTUAL PROPERTY RIGHTS
All data furnished to the Shipyard by the Owner or Owner's Contractors,
including the Specifications and Guidance Drawings, shall remain the property of
the Owner. However, the Shipyard shall have the right to use or reuse said data
as necessary to complete the Contract Work. All data, detail drawings or other
design and engineering data including reproductions, required by this Contract
and produced by the Shipyard or any of its subcontractors for construction of
the Vessel in performance of this Contract, shall (i) be used by Shipyard only
in connection with the Contract Work and (ii) upon Delivery of the Vessels and
payment in full therefor become the sole property of the Owner. Owner shall have
the full right to use the same in such manner as it may deem proper, including,
without limitation to the generality of the foregoing, the right to
reproductions and copies, the right to publish or withhold from publication, the
right to construct or cause to be constructed additional vessels using such
data, and the right to make any alterations, additions or other changes. Except
as provided for in this Contract, the Shipyard and any of its subcontractors
shall be entitled to recover the
Page 36 of 40
<PAGE> 37
reasonable cost of reproduction and handling in the event the Shipyard or such
subcontractor is required by Owner to provide copies of such data to the Owner
or any designee of the Owner. Unless prohibited by law relating to national
defense or security, the Shipyard shall be permitted to retain copies of such
data for its own official records.
Shipyard shall defend at its own expense any suit or action brought
against Owner based on a claim that the performance of this Contract, or any
part thereof, constitutes infringement of any patent, copyright or trademark of
the United States and Shipyard shall also indemnify and hold Owner harmless from
any claims, damages or costs incurred by Owner in connection therewith. In case
the performance of this Contract is in such suit held to constitute infringement
and its use is enjoined, Shipyard shall, at its option and own expense either:
procure for Owner the right to continue performance of this Contract or modify
it so that it becomes non-infringing. Where Owner has given written instructions
to Shipyard which direct a specified manner of performance of this Contract,
Owner shall defend at its own expense any suit or action based on a claim that
the performance of this Contract, or any part thereof, constitutes infringement
of any patent, copyright or trademark of the United States or unauthorized
disclosure or use of any trade secrets where such infringement results from such
written instructions and Owner shall also pay all costs and damages awarded
therein against Shipyard or incurred by Shipyard in connection therewith.
Shipyard shall furnish Owner with any information produced by Shipyard
in the process of undertaking the Contract Work which may be subject to being
patented or copyrighted. Notwithstanding anything above to the contrary, Owner
reserves all of its rights and interests to the artistic design or appearance of
the interior and exterior of the Vessels and Shipyard shall not utilize any such
designs or concepts.
SECTION 14.5 -- ASSIGNMENT
This Contract and the benefit and the payment of any benefit made
hereunder, may be assigned by Owner to any individual, firm or corporation which
it may designate, provided that (a) no such assignment may violate any
governmental rule or regulation issued or promulgated by any department or
agency or instrumentality of any government; and (b) regardless of such
assignment, Owner shall remain fully liable and responsible to Shipyard for the
performance of all obligations of Owner hereunder, as if said assignment had not
been executed. Shipyard agrees to consent to any such assignment by Owner but
subject to the limitations set forth above.
Shipyard shall be prohibited from assigning this Contract or any of the
obligations hereunder.
SECTION 14.6 -- NOTICES
In each and every instance where the Contract Documents require that
the Shipyard provide the Owner with notice or that the Owner provide the
Shipyard with notice, each such notice shall be in writing, shall specifically
reference the Section of the Contract Documents under which such notice is being
given, and shall provide a space for the other party to sign and date in
acknowledgment of receipt. Each notice shall also comply with any other
Page 37 of 40
<PAGE> 38
requirements established in such other Sections of the Contract Documents which
may be applicable thereto. Shipyard and Owner communications not in compliance
with this Section shall not be valid notices for the purposes of this Contract.
All notices, correspondence, submittals, and other communications
relating to this Contract shall be addressed as follows:
(a) To the Owner: Ocean Development Co.
1428 Brickell Avenue
Miami, Florida 33131
Attn: Joe Maka
Fax: 503/533-2907
With a copy to: American Classic Voyages Co.
Two North Riverside Plaza, Suite 200
Chicago, Illinois 60606
Attn: Jordan B. Allen, Exec. Vice President
and General Counsel
Fax: 312/466-6151
(b) To the Shipyard: Atlantic Marine, Inc.
8500 Hechscher Dr.
Jacksonville, FL 32226
Attn: Edward P. Doherty
Fax: (904) 251-1798
With a copy to: Richard K. Jones, Esq.
Moseley, Warren, Prichard & Parrish
501 W. Bay St.
Jacksonville, FL 32202
Fax: (904) 354-0194
Either party may change such address or telephone numbers by written
notice to the other in accordance herewith and such change shall take effect on
receipt of such notice by the other.
All notices and communications under the Contract shall, unless
otherwise provided elsewhere in the Contract Documents, be mailed, postage
prepaid, or by facsimile, with confirmation of receipt of transmittal or by
overnight mail through a nationally utilized overnight carrier, and shall be
effective upon receipt thereof by the parties to whom they are addressed.
SECTION 14.7 -- ENTIRE AGREEMENT
The Contract Documents, Appendices and the applicable regulations,
constitute the entire agreement between the parties hereto and supersedes all
prior negotiations, representations and agreements with respect to any aspect
thereof.
Page 38 of 40
<PAGE> 39
SECTION 14.8 -- CHOICE OF LAW; VENUE
The Contract shall be governed by and interpreted under the laws
applicable in the State of Florida, and where relevant, the General Maritime Law
of the United States. Owner and Shipyard agree that any suit for the enforcement
of this Contract shall be brought in a federal court sitting in Orlando, Florida
and Owner and Shipyard consent to the exclusive jurisdiction of such court and
to service of process in any such suit being made upon such party by mail at the
address specified in Section 14.5. Owner and Shipyard hereby waive any objection
that they may now or hereafter have to the venue of any such suit or any such
court or that such suit is brought in an inconvenient court.
SECTION 14.9 -- ARBITRATION
In the event a dispute arises hereunder between the Shipyard and the
Owner, the Shipyard shall continue performance as set forth in this Contract,
including the construction and delivery of the Vessels, pending final resolution
of any dispute. In the event of any dispute hereunder, the parties shall attempt
in good faith to reach a negotiated resolution by designating an officer of
appropriate authority to resolve the dispute.
Any controversy, claim or dispute pertaining to the subject matter
listed below shall be submitted to binding arbitration. Such arbitration shall
be before a panel of three (3) arbitrators in Orlando, Florida experienced in
vessel construction matters, at least one of which shall be an attorney licensed
to practice law for more than ten (10) years and conducted in accordance with
the applicable rules of the American Arbitration Association. Judgment upon the
award by the arbitrators may be entered in any court having jurisdiction
thereof. As part of such award the arbitrators may establish their fee and
expenses in connection therewith. The fees and expenses of the arbitrator shall
be apportioned between the parties by the arbitrators in accordance with the
findings and results of the arbitration. The matters subject to mandatory
arbitration are: (a) causes of delay; and (b) changes to the Contract Price as a
result of change orders initiated by Owner.
In the event any other dispute arises hereunder, if both Owner and
Shipyard agree, they may elect, binding arbitration in accordance with this
Section.
Page 39 of 40
<PAGE> 40
SECTION 14.10 -- NO THIRD PARTY BENEFICIARY
No provision contained in the Contract shall create or give to third
parties other than the Shipyard any claim or right of action against the Owner.
No provision contained in the Contract shall create or give to third parties
other than the Owner any claim or right of action against the Shipyard.
SECTION 14.11 -- PARTIES' RIGHTS AND REMEDIES
Any rights and remedies granted to the Parties in any part of the
Contract shall not be exclusive of, but shall be in addition to, any other
rights or remedies available at law or in equity or granted in any other part of
the Contract.
SECTION 14.12 -- SEVERABILITY CLAUSE
In case any one or more of the provisions contained in the Contract
shall for any reason be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provisions hereof, and the Contract shall be construed as if such invalid,
illegal, or unenforceable provision had never been contained herein.
SECTION 14.13 -- AMENDMENTS
No modification or amendment of this Agreement shall be effective
unless such modification or amendment shall be in writing and executed by the
parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Contract to be
duly executed in multiple counterparts on this 1st day of May, 1999.
WITNESS: COASTAL QUEEN HOLDINGS, L.L.C.
/s/ Pam Stringer /s/ Jordan B. Allen
- ------------------------------- ----------------------------------
BY: Jordan B. Allen
Title: Executive Vice President
/s/ Shahem Zenni
- -------------------------------
WITNESS: ATLANTIC MARINE, INC.
/s/ Vivian N. Ivey /s/ Edward P. Doherty
- ------------------------------- ----------------------------------
BY: Edward P. Doherty
Title: President
/s/ William F. Clifford
- -------------------------------
Page 40 of 40
<PAGE> 41
APPENDIX ONE COASTAL QUEEN MILESTONE PAYMENTS MAY 1, 1999
<TABLE>
<CAPTION>
% OF CONTRACT
AMOUNT
PAYMENT VESSEL VESSEL
NUMBER MONTH VESSEL ONE VESSEL TWO ONE TWO
- ------- ----- ---------- ---------- --- ---
<S> <C> <C> <C> <C>
1 0 CONTRACT SIGNING CONTRACT SIGNING 5 5
2 2 START LOFTING (COMPUTER GENERATION OF 3 0
PARTS FOR MODULE 6 PROGRESSING) MODEL
TEST COMPLETE
3 4 START CUTTING OF STEEL FOR MODULE 6 5 0
4 6 SUBSTANTIAL COMPLETION OF HULL MODULE 6 6 0
FROM KEEL TO MAIN DECK (INCLUDES
DECKPLATE, SIDE SHELL PLATING, BOTTOM
SHELL PLATING AND INTERNAL BULKHEADS
AND STRUCTURAL STEEL) ROLL MODULE TO
UPRIGHT POSITION. 65% OF WELDING COMPLETE
5 7 SET MAIN PROPULSION ENGINES AND DIESEL 8 0
GENERATOR SETS ON THEIR FOUNDATIONS.
MODULE 6 OUTFITTING PROGRESSING
(PIPING, MAIN CABLEWAYS AND AUXILIARY
MACHINERY)
6 8 SUBSTANTIAL COMPLETION OF HULL MODULES 5 0
4, 5 & 7 FROM KEEL TO FORE/MAIN DECK
(INCLUDES DECKPLATE, SIDE SHELL PLATING,
BOTTOM SHELL PLATING AND INTERNAL
BULKHEADS AND STRUCTURAL STEEL).
ROLL MODULES TO UPRIGHT POSITION AND
65% OF WELDING COMPLETE. MODULE
7 9 SUBSTANTIAL COMPLETION OF HULL MODULES START CUTTING OF STEEL FOR MODULE 6 6 5
1, 2 & 3, FROM KEEL TO FORE DECK/MAIN DECK.
INCLUDES DECK PLATE, SIDE SHELL PLATING,
BOTTOM SHELL PLATING AND INTERNAL BULKHEADS
AND STRUCTURAL STEEL. MODULES ROLLED TO
UPRIGHT POSITION AND 65% OF HULL WELDING
COMP
</TABLE>
Page 1 of 5
<PAGE> 42
APPENDIX ONE COASTAL QUEEN MILESTONE PAYMENTS MAY 1, 1999
<TABLE>
<CAPTION>
% OF CONTRACT
AMOUNT
PAYMENT VESSEL VESSEL
NUMBER MONTH VESSEL ONE VESSEL TWO ONE TWO
- ------- ----- ---------- ---------- --- ---
<S> <C> <C> <C> <C>
8 10 SUBSTANTIAL COMPLETION OF FABRICATION 6 0
OF MODULES 11 THROUGH 17 FROM FORE/MAIN
DECK TO SALOON DECK (INCLUDES SHELL AND
DECK PLATING, AND INTERNAL BULKHEADS AND
STRUCTURAL STEEL). MODULES ROLLED TO
UPRIGHT POSITION AND 65% OF WELDING
COMPLETE. MODULE OUTFI
9 11 SUBSTANTIAL COMPLETION OF FABRICATION OF SUBSTANTIAL COMPLETION OF HULL MODULE 6 6 7
MODULES 21 THROUGH 27 FROM SALOON DECK FROM KEEL TO MAIN DECK (INCLUDES
TO CABIN DECK (INCLUDES SHELL AND DECK DECKPLATE, SIDE SHELL PLATING, BOTTOM
PLATING, AND INTERNAL BULKHEADS AND SHELL PLATING AND INTERNAL BULKHEADS
STRUCTURAL STEEL). MODULES ROLLED TO AND STRUCTURAL STEEL) ROLL MODULE
UPRIGHT POSITION AND 65% OF WELDING TO UPRIGHT POSITION. 65% OF WELDING
COMPLETE. MODULE OUTFITTIN COMPLETE
10 12 SUBSTANTIAL COMPLETION OF FABRICATION SET MAIN PROPULSION ENGINES AND 4 9
OF MODULES 31 THROUGH 36 FROM CABIN DIESEL GENERATOR SETS ON THEIR
DECK TO OBSERVATION DECK (INCLUDES FOUNDATIONS. MODULE 6 OUTFITTING
SHELL AND DECK PLATE, BULKHEADS AND PROGRESSING (PIPING, MAIN CABLEWAYS
STRUCTURAL STEEL). MODULES ROLLED TO AND AUXILIARY MACHINERY)
UPRIGHT POSITION AND 65% OF WELDING
COMPLETE. MODULE OUTFITTING PROGRES
11 13 SUBSTANTIAL COMPLETION OF FABRICATION SUBSTANTIAL COMPLETION OF HULL 4 6
OF MODULES 41 THROUGH 46 FROM MODULES 4, 5 & 7 FROM KEEL TO
OBSERVATION DECK TO TOP DECK (INCLUDES FORE/MAIN DECK (INCLUDES DECKPLATE,
SHELL AND DECK PLATE, BULKHEADS AND SIDE SHELL PLATING, BOTTOM SHELL
STRUCTURAL STEEL). MODULES ROLLED TO PLATING AND INTERNAL BULKHEADS AND
UPRIGHT POSITION AND 65% OF WELDING STRUCTURAL STEEL). ROLL MODULES
COMPLETE. MODULE OUTFITTING TO UPRIGHT POSITION AND 65% OF
PROGRESSI WELDING COMPLETE. MODUL
12 14 SUBSTANTIAL COMPLETION OF FABRICATION SUBSTANTIAL COMPLETION OF HULL 4 6
OF PILOTHOUSE AND STACKS, MODULES MODULES 1, 2 & 3, FROM KEEL TO FORE
51 & 52. MODULES ROLLED TO UPRIGHT DECK/MAIN DECK. INCLUDES DECK PLATE,
POSITION AND 65 % OF WELDING COMPLETE. SIDE SHELL PLATING, BOTTOM SHELL
MODULE OUTFITTING PROGRESSING ON PLATING AND INTERNAL BULKHEADS AND
PILOTHOUSE AND STACKS. ERECTION OF STRUCTURAL STEEL. MODULES ROLLED TO
MODULES 41 - 46 PROGRESSING. UPRIGHT POSITION AND 65% OF HULL
OUTFITTIN WELDING COMP
</TABLE>
<PAGE> 43
APPENDIX ONE COASTAL QUEEN MILESTONE PAYMENTS MAY 1, 1999
<TABLE>
<CAPTION>
% OF CONTRACT
AMOUNT
PAYMENT VESSEL VESSEL
NUMBER MONTH VESSEL ONE VESSEL TWO ONE TWO
- ------- ----- ---------- ---------- --- ---
<S> <C> <C> <C> <C>
13 15 LAUNCH OF VESSEL SUBSTANTIAL COMPLETION OF FABRICATION 6 6
OF MODULES 11 THROUGH 17 FROM
FORE/MAIN DECK TO SALOON DECK
(INCLUDES SHELL AND DECK PLATING,
AND INTERNAL BULKHEADS AND STRUCTURAL
STEEL). MODULES ROLLED TO UPRIGHT
POSITION AND 65% OF WELDING COMPLETE.
MODULE OUTFI
14 16 SUBSTANTIAL COMPLETION OF CREW SUBSTANTIAL COMPLETION OF FABRICATION 2 6
SPACES, MODULES 2 - 5. OF MODULES 21 THROUGH 27 FROM SALOON
DECK TO CABIN DECK (INCLUDES SHELL
AND DECK PLATING, AND INTERNAL BULKHEADS
AND STRUCTURAL STEEL). MODULES ROLLED
TO UPRIGHT POSITION AND 65% OF
WELDING COMPLETE. MODULE OUTFITTIN
15 17 SUBSTANTIAL COMPLETION OF MACHINERY SUBSTANTIAL COMPLETION OF FABRICATION 2 4
SPACES, MODULES 1, 6 & 7. OF MODULES 31 THROUGH 36 FROM CABIN DECK
TO OBSERVATION DECK (INCLUDES SHELL AND
DECK PLATE, BULKHEADS AND STRUCTURAL
STEEL). MODULES ROLLED TO UPRIGHT POSITION
AND 65% OF WELDING COMPLETE. MODULE
OUTFITTING PROGRES
16 18 START UP AND LOAD TEST MAIN DIESEL SUBSTANTIAL COMPLETION OF FABRICATION 7 4
GENERATOR SETS. START-UP OF MAIN OF MODULES 41 THROUGH 46 FROM
PROPULSION ENGINES AND Z - DRIVES. OBSERVATION DECK TO TOP DECK (INCLUDES
SUBSTANTIAL COMPLETION OF MODULES SHELL AND DECK PLATE, BULKHEADS AND
11 - 17 OUTFITTING. STRUCTURAL STEEL). MODULES ROLLED TO
UPRIGHT POSITION AND 65% OF WELDING
COMPLETE. MODULE OUTFITTING
PROGRESSI
</TABLE>
<PAGE> 44
APPENDIX ONE COASTAL QUEEN MILESTONE PAYMENTS MAY 1, 1999
<TABLE>
<CAPTION>
% OF CONTRACT
AMOUNT
PAYMENT VESSEL VESSEL
NUMBER MONTH VESSEL ONE VESSEL TWO ONE TWO
- ------- ----- ---------- ---------- --- ---
<S> <C> <C> <C> <C>
17 19 DOCK TRIALS. SUBSTANTIAL COMPLETION SUBSTANTIAL COMPLETION OF FABRICATION 5 4
OF MODULES 21 - 27 AND 51 - 52 OF PILOTHOUSE AND STACKS, MODULES
OUTFITTING. 51 & 52. MODULES ROLLED TO UPRIGHT POSITION
AND 65 % OF WELDING COMPLETE. MODULE
OUTFITTING PROGRESSING ON PILOTHOUSE
AND STACKS. ERECTION OF MODULES 41 - 46
PROGRESSING. OUTFITTIN
18 20 BUILDERS SEA TRIALS. SUBSTANTIAL LAUNCH OF VESSEL 3 6
COMPLETION OF MODULES 31 - 36 AND
41 - 46 OUTFITTING.
19 21 OWNER'S SEA TRIALS. COMPLETION OF SUBSTANTIAL COMPLETION OF CREW SPACES, 8 2
VESSEL AND DELIVERY. VESSEL TENDERED MODULES 2 - 5.
AND ACCEPTED. PUNCH LIST AGREED UPON.
20 22 FINAL PAYMENT. PUNCH LIST COMPLETE SUBSTANTIAL COMPLETION OF MACHINERY 5 2
CONTRACT, SECTION 3.3.(C) COMPLIED SPACES, MODULES 1, 6 & 7.
WITH
23 START UP AND LOAD TEST MAIN DIESEL 0 7
GENERATOR SETS. START-UP OF MAIN
PROPULSION ENGINES AND Z - DRIVES.
SUBSTANTIAL COMPLETION OF MODULES
11 - 17 OUTFITTING.
</TABLE>
<PAGE> 45
APPENDIX ONE COASTAL QUEEN MILESTONE PAYMENTS MAY 1, 1999
<TABLE>
<CAPTION>
% OF CONTRACT
AMOUNT
PAYMENT VESSEL VESSEL
NUMBER MONTH VESSEL ONE VESSEL TWO ONE TWO
- ------- ----- ---------- ---------- --- ---
<S> <C> <C> <C> <C>
24 DOCK TRIALS. SUBSTANTIAL COMPLETION 0 5
OF MODULES 21 - 27 AND 51 - 52
OUTFITTING.
25 BUILDERS SEA TRIALS. SUBSTANTIAL 0 3
COMPLETION OF MODULES 31 - 36
AND 41 - 46 OUTFITTING.
26 OWNER'S SEA TRIALS. COMPLETION OF 0 8
VESSEL AND DELIVERY. VESSEL TENDERED
AND ACCEPTED. PUNCH LIST AGREED
UPON.
27 FINAL PAYMENT. PUNCH LIST COMPLETE 0 5
CONTRACT, SECTION 3.3.(C) COMPLIED WITH
TOTAL: 100 100
</TABLE>
<PAGE> 46
APPENDIX TWO
AFFIDAVIT FOR EXEMPTION OF BOAT SOLD FOR
REMOVAL FROM THE STATE OF FLORIDA BY A
NONRESIDENT PURCHASER
STATE OF FLORIDA )
) SS:
COUNTY OF ____________ )
AFFIDAVIT
Personally appears the below named affiant, who being duly sworn,
deposes and says:
1. I have read the Florida Department of Revenue Rule 12A-1.007(9),
F.A.C., and s. 212.05, F.S.; and
2. I am not a resident of the State of Florida and do not make my
permanent place of abode in Florida at the time of taking delivery of the boat
designated below; and
3. I am not engaged in Florida in any employment, trade, business, or
profession in which the designated boat will be used in Florida; and
4. I represent a corporation which has no officer or director who is
a resident of, or makes his permanent place of abode in, Florida; and
5. I represent an artificial entity other than a corporation which
has no individual vested with authority to participate in the management,
direction, or control of the affairs of the entity who is a resident of, or
makes his or her permanent place of abode in, Florida.
6. I hereby agree to provide the Florida Department of Revenue within
90 days of the date of purchase written proof that the boat herein identified
and described was licensed, registered, or documented outside Florida.
7. I hereby agree to provide the Florida Department of Revenue within
30 days of the boat departing Florida invoices for fuel, dockage charges, or
repairs issued by out-of-state vendors or suppliers, or other documentary
evidence which specifically identify the boat herein described, including the
hull I.D. number.
8. I claim exemption under s. 212.05(1)(a)2., F.S., from Florida
sales and use tax on the purchase of the boat designated below for the following
reasons:
(___) Boat will be removed by me or by my designated agent from
the State of Florida within 10 days of the date of purchase.
1
<PAGE> 47
(___) Boat is to be repaired or altered and will be removed from
the State of Florida by me or by my designated agent within 20 days (excluding
tolled days) after completion of the repairs or alterations consistent with s.
212.05, F.S.
Name of Purchaser_______________________
Purchaser's Permanent Address___________________________________________(Street)
_________________________ (City)_________________________________(State/Country)
Purchaser's Telephone Number (_____)_________________
Name of Selling Dealer__________________________________________________________
Address of Selling Dealer_______________________________________________(Street)
__________________________(City)_________________________________(State/Country)
Selling Dealer's Florida Sales and Use Tax Registration No._____________________
Dealer's Telephone No. (_____)___________________
Date of Sale ___________ (Month) ___________ (Day) __________ (Year) _________
DESCRIPTION OF BOAT
Make __________________ Model ___________________ Year ________________
Hull No. ___________________________ (____) New (____) Used
Name of Vessel__________________________________________________________________
State/Country Registration and/or Coast Guard Documentation No._________________
Sales Price__________________________________Trade-In Allowance_________________
Net Amount Paid___________________________
Under the penalties of perjury, I declare that I have read the
foregoing, and the facts alleged are true to the best of my knowledge and
belief.
-------------------------------
(Signature of Purchaser)
Sworn to and subscribed before me
this _____ day of ____________, 199___
- --------------------------------------
Notary Public, State of Florida
My Commission Expires:_________________
NOTARY SEAL
Personally known (____)
Produced Identification (____) Type:________________________
Original to be submitted to the Florida Department of Revenue,
Compliance Enforcement, Enforce Operations, P.O. Box 6417,
Tallahassee, Florida 32314-6417
1st copy to be retained by the dealer and made part of the dealer's records
2nd copy: Purchaser's copy
2
<PAGE> 48
APPENDIX THREE REVISED
APRIL 30, 1999
MAKER'S LIST
300'X50'X20' PASSENGER VESSELS
<TABLE>
<CAPTION>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SPEC
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SECTION ITEM MANUFACTURER
- ---------------------- ----------------------------------------- ----------------------------------------------------------
<S> <C> <C>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
245 Z- Drive Units Aquamaster
- ---------------------- ----------------------------------------- ----------------------------------------------------------
& Propulsion Diesels Ulstein
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Schottel
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference SCHOTTEL
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
247 Tunnel Bow Thruster Aquamaster
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Ulstein
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Schottel
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Brunvoll
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference SCHOTTEL
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
256 Combined Jacket Water Cooler Alfa-Laval
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Weka Marine Box
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference ALFA-LAVAL
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Strainer Hayward
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Tate-Andale
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HAYWARD
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
259 Silencers Harco
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Maxim
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HARCO
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
264 Dirty Oil Pump Roper
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Viking
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference VIKING
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Lube Oil Pump Strainer Hayward
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Tate-Andale
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HAYWARD
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
301 Shore Connection PT Coupling Co
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Dixon
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Meltric
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference MELTRIC
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
302 Motors GE
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Reliance
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference GE
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Motor Controllers Square-D
- ---------------------- ----------------------------------------- ----------------------------------------------------------
G.E.
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Seimens
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference SIEMANS
- ---------------------- ----------------------------------------- ----------------------------------------------------------
</TABLE>
Page 1 of 14
<PAGE> 49
APPENDIX THREE REVISED
APRIL 30, 1999
<TABLE>
<CAPTION>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SPEC
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SECTION ITEM MANUFACTURER
- ---------------------- ----------------------------------------- ----------------------------------------------------------
<S> <C> <C>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
303 Disconnect Switches Square-D
- ---------------------- ----------------------------------------- ----------------------------------------------------------
G.E.
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference GE
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
311 Ships Service Generators Caterpillar
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Wartsila
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Detroit Diesel
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Mitsubishi
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference CATERPILLAR/KATO
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Emergency Generator Caterpillar
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Cummins
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Detroit Diesel
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference CATERPILLAR/KATO
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
313 Batteries Dyno
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference DYNO
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Battery Chargers Saft-Nife
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference SAFT-NIFE
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
314 Transformer Olsun Electric
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference OLSUN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
320 Main Switchboard/ G.E.
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Generator Controls ABB
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Power Conversion Cegelec
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Siemens
- ---------------------- ----------------------------------------- ----------------------------------------------------------
M&I Electric Industries
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference CON-SELECT/SIEMANS
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Emergency Switchboard/ G.E.
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Generator Controls ABB
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Cegelec
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Siemens
- ---------------------- ----------------------------------------- ----------------------------------------------------------
M&I Electric Industries
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference CON-SELECT/SIEMANS
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Circuit Breakers Same vendor
- ---------------------- ----------------------------------------- ----------------------------------------------------------
throughout vessel
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference SIEMANS
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
321 Power Panels Square-D
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Siemens
- ---------------------- ----------------------------------------- ----------------------------------------------------------
</TABLE>
Page 2 of 14
<PAGE> 50
APPENDIX THREE REVISED
APRIL 30, 1999
<TABLE>
<CAPTION>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SPEC
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SECTION ITEM MANUFACTURER
- ---------------------- ----------------------------------------- ----------------------------------------------------------
<S> <C> <C>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference SIEMANS
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
332 Lighting Fixtures -General Vector
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Lightolier
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Bega
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference ALL ABOVE
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Dining Room Dimming System Lutron
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference LIGHTOLIER
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Canopy Bar Glamox
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference VECTOR
- ---------------------- ----------------------------------------- ----------------------------------------------------------
(PER SPEC)
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Pauluhn
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference VECTOR
- ---------------------- ----------------------------------------- ----------------------------------------------------------
(PER SPEC)
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Exterior Pauluhn
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference VECTOR
- ---------------------- ----------------------------------------- ----------------------------------------------------------
(PER SPEC)
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Seachlights Carlisle & Finch
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference CARLISLE & FINCH
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Spotlights Phoenix
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference PHOENIX
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Low Level Lighting DME
- ---------------------- ----------------------------------------- ----------------------------------------------------------
American PermaLight Marine
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference DME
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
333 Lighting Distribution Panel Square-D
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Siemens
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference SIEMANS
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
421 Air Whistle Kahlenberg
- ---------------------- ----------------------------------------- ----------------------------------------------------------
AirChime
- ---------------------- ----------------------------------------- ----------------------------------------------------------
ShipyardPreference KAHLENBERG
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Compass C. Plath
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference C. PLATH
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
422 Navigation Lights Aqua Signal
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Pauluhn
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference PERKO
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
423 Radar Raytheon
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Furuno
- ---------------------- ----------------------------------------- ----------------------------------------------------------
</TABLE>
Page 3 of 14
<PAGE> 51
APPENDIX THREE REVISED
APRIL 30, 1999
<TABLE>
<CAPTION>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SPEC
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SECTION ITEM MANUFACTURER
- ---------------------- ----------------------------------------- ----------------------------------------------------------
<S> <C> <C>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference RAYTHEON
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
VHF Radio Raytheon
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference RAYTHEON
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Depth Sounder Sperry
- ---------------------- ----------------------------------------- ---------------------------------------------------------
Furuno
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference RAYTHEON *
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Doppler Speed Log Furuno
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Sperry
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference CONSILIUM/RAYTHEON *
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Global Positioning System Sperry
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference RAYTHEON *
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Gyrocompass Sperry
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference RAYTHEON/ANSCHULTZ *
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Wind Spd and Direction Maximum
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference MAXIMUM
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
432 Sound Powered Telephone Hose McCann
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Henschel
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference MULTI-COM
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
433 Announcing System MAVCO
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Hose-McCann
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Multi-Com
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference MULTI-COM
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
436 Alarm and Monitoring System GE Cimplicity
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Siemens
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Sperry
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Scana Moland
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Tano
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference CONTROL GENERAL
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
TLI's Gems
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Druck
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference CONTROL GENERAL
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Fire Alarm System Consilium
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Pyrotronics
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Notifier
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Ansul, Inc.
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Scana Servoteknikk
- ---------------------- ----------------------------------------- ----------------------------------------------------------
</TABLE>
Page 4 of 14
<PAGE> 52
APPENDIX THREE REVISED
APRIL 30, 1999
<TABLE>
<CAPTION>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SPEC
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SECTION ITEM MANUFACTURER
- ---------------------- ----------------------------------------- ----------------------------------------------------------
<S> <C> <C>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference CONSILIUM
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Fire Door Magnetic Holdbacks Rixson
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference RIXSON
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Fire Detection and Monitoring Consilium
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Control General
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Scana Servoteknikk
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Pyrotronics
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Unitor
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference CONSILIUM
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
436 Engine Order Telegraph PMC, Inc.
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Marine Interface, Inc.
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference CONTROL GENERAL
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
441 Radio System (GMDSS) Radio Holland
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Furuno
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Sperry
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference RAYTHEON
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
450 Voyage Data Recorder Consilium
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference CONSILIUM
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
506 Tanks & Void Vents Marine Venting System
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Tate-Andale
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Hayward
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Winel
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference WINEL
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Sight Level Gage Kenko
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference KENKO
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
513 Machinery Space Fans Hartzell
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Aerovent
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Industrial Air
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Buffalo Forge
- ---------------------- ----------------------------------------- ----------------------------------------------------------
New York Blower
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Stork
- ---------------------- ----------------------------------------- ----------------------------------------------------------
ABB Flakt
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Novenco
- ---------------------- ----------------------------------------- ----------------------------------------------------------
American Fan/Woods
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference STORK
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Vent Louvers & Juniper
- ---------------------- ----------------------------------------- ----------------------------------------------------------
</TABLE>
Page 5 of 14
<PAGE> 53
APPENDIX THREE REVISED
APRIL 30, 1999
<TABLE>
<CAPTION>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SPEC
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SECTION ITEM MANUFACTURER
- ---------------------- ----------------------------------------- ----------------------------------------------------------
<S> <C> <C>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Fire Dampers Spiral
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Swartwout
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Stork
- ---------------------- ----------------------------------------- ----------------------------------------------------------
ABB Flakt
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Novenco
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Halton Fire Dampers
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference STORK
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Demisters Munters
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Peerless
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference STORK
- ---------------------- ----------------------------------------- ----------------------------------------------------------
(PER SUB)
- ---------------------- ----------------------------------------- ----------------------------------------------------------
514 HVAC System ABB Flakt
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Stork
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Novenco
- ---------------------- ----------------------------------------- ----------------------------------------------------------
York
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference STORK
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Chilled Water Pump As recommended by HVAC vendor
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference GOULDS
- ---------------------- ----------------------------------------- ----------------------------------------------------------
(PER SUB)
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Condensate Cooling Sea As recommended by HVAC vendor
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Water Pump GOULDS
- ---------------------- ----------------------------------------- ----------------------------------------------------------
(PER SUB)
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Air Handling Unit Novenco
- ---------------------- ----------------------------------------- ----------------------------------------------------------
ABB Flakt
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Stork
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference STORK
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Fan Coil Unit First Company
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Williams
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Novenco
- ---------------------- ----------------------------------------- ----------------------------------------------------------
ABB Flakt
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Stork
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference STORK
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Exhaust Fans Carnes
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Novenco
- ---------------------- ----------------------------------------- ----------------------------------------------------------
ABB Flakt
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Stork
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Hartzell
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Aerovent
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Industrial Air
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Buffalo Forge
- ---------------------- ----------------------------------------- ----------------------------------------------------------
New York Blower
- ---------------------- ----------------------------------------- ----------------------------------------------------------
</TABLE>
Page 6 of 14
<PAGE> 54
APPENDIX THREE REVISED
APRIL 30, 1999
<TABLE>
<CAPTION>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SPEC
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SECTION ITEM MANUFACTURER
- ---------------------- ----------------------------------------- ----------------------------------------------------------
<S> <C> <C>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
American Fan/Woods
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference STORK
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Electric Wall Heater Markel
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Smith
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Novenco
- ---------------------- ----------------------------------------- ----------------------------------------------------------
ABB Flakt
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Stork
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Indeeco
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference STORK
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Canopy Heaters Fostoria
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference INDEECO
- ---------------------- ----------------------------------------- ----------------------------------------------------------
(PER SUB)
- ---------------------- ----------------------------------------- ----------------------------------------------------------
516 Refrigeration Units Grassco
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Bailey
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Cospolich
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HOPEMAN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Icemakers Ice-O-Matic
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference ICE-O-MATIC
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
521 Fire Pumps G&L Gould
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Peerless
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference PEERLESS
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Strainers Hayward
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Tate-Andale
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HAYWARD
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Fire Equipment Akron Brass
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Powhatan
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference AKRON/POWHATAN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
522 Sprinkler System Grinnel Automatic Sprinkler Company
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Viking Automatic Sprinkler Company
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Novenco
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Scana Marine
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference QUALITY FPS/GRINNEL
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
526 Weather Deck Drains Tate-Andale
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Hayward
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference WAGER
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
527 Laundry Pressure Set Jacuzzi
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference JACUZZI
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
</TABLE>
Page 7 of 14
<PAGE> 55
APPENDIX THREE REVISED
APRIL 30, 1999
<TABLE>
<CAPTION>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SPEC
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SECTION ITEM MANUFACTURER
- ---------------------- ----------------------------------------- ----------------------------------------------------------
<S> <C> <C>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
528 Vacuum Sewage/Greywater Jets
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Collection System Envirovac
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Jarad Brown
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference ENVIROVAC/ORCA II
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Sewage/Greywater As recommended by sewage/greywatr
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Transfer Pump treatment vendor
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference ENVIROVAC/ORCA II
- ---------------------- ----------------------------------------- ----------------------------------------------------------
(PER SUB)
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shore Connections PT Coupling Co
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Dixon
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference PT COUPLING CO
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Interior Deck Drains Tate-Andale
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Hayward
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference WAGER
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
529 Bilge/Ballast Pump G&L Gould
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Durco
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Peerless
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference PEERLESS
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Oily Water Separator Heli-Sep
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Harco
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Nelson
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Sigma
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HELI-SEP
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Strainer Hayward
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Tate-Andale
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HAYWARD
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Foot Valves Streamflo Strainer Inc
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Flowmatic
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Crane
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference FLOWMATIC
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
533 Potable Water Pump Crane-Deming
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Gould
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Durco
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Peerless
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference PEERLESS
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
HW Circulating Pump G&L Gould
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Armstrong
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference G&L GOULD
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
</TABLE>
Page 8 of 14
<PAGE> 56
APPENDIX THREE REVISED
APRIL 30, 1999
<TABLE>
<CAPTION>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SPEC
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SECTION ITEM MANUFACTURER
- ---------------------- ----------------------------------------- ----------------------------------------------------------
<S> <C> <C>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Hot Water Heater Rheem
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Ruud
- ---------------------- ----------------------------------------- ----------------------------------------------------------
A.O. Smith
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference A.O. SMITH/RHEEM
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Hydropneumatic Tank Well-X-Trol
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference MYERS
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Reverse Osmosis Desalinator Lifestream
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Aquamar
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Matrix
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Lifestream
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference VILLAGE MARINE
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shore Connection PT Coupling Co
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Dixon
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference PT COUPLING CO
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Brominator and Recording Everpure,Inc.
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Equipment Howell Laboratories
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference VILLAGE MARINE
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
541 Fuel Oil Transfer Pump Roper
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Viking
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference VIKING
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Fuel Oil Priming Pump McMaster-Carr
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference MCMASTER-CARR
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Fuel Oil Strainer Hayward
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Tate-Andale
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HAYWARD
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Fuel Oil Filter Racor
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Separ
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference RACOR
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Fuel Oil Coalescer Kaydon
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Racor
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Separ
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference RACOR
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
551 Air Compressor Quincy
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Air Dryer Ultra Air
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference QUNICY
- ---------------------- ----------------------------------------- ----------------------------------------------------------
ULTRA AIR
- ---------------------- ----------------------------------------- ----------------------------------------------------------
</TABLE>
Page 9 of 14
<PAGE> 57
APPENDIX THREE REVISED
APRIL 30, 1999
<TABLE>
<CAPTION>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SPEC
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SECTION ITEM MANUFACTURER
- ---------------------- ----------------------------------------- ----------------------------------------------------------
<S> <C> <C>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Filter/Regulator Watts
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference QUNICY
(PER SPEC)
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
555 CO2 System Walter Kidde
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Ansul
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Fire Protection Services
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference WALTER KIDDE
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
567 Fin Stabilizer Deleted Koopnautics
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Jered Industries
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Naid
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
573 Crane Fassi
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Krupp
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference: FASSI
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
581 Anchor Windlass, Winch McElroy
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Capstans New England Trawler
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference MCELROY
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
582 Deck Fittings Washington Chain & Supply
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Obert Marine
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Nashville Bridge & Iron
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference WASH. CHAIN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
583 Lifeboats/Rescue Boats/Davits Mulder & Rijke
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Welin Lambie
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Fassmer Lifeboats & Davits
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference FASSMER
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Liferafts/Evacuation Slides DBC Marine
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Viking
- ---------------------- ----------------------------------------- ----------------------------------------------------------
MGI
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference DBC MARINE
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
589 Elevator Bagby
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Otis
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Montgomery Kone
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference MONTGOMERY/KONE
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Dumbwaiter, 1500# Material MacGregor Navire
- ---------------------- ----------------------------------------- ----------------------------------------------------------
B&F Equipment Co.
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference GILLESPIE
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
</TABLE>
Page 10 of 14
<PAGE> 58
APPENDIX THREE REVISED
APRIL 30, 1999
<TABLE>
<CAPTION>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SPEC
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SECTION ITEM MANUFACTURER
- ---------------------- ----------------------------------------- ----------------------------------------------------------
<S> <C> <C>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
593 Sewage Processing Hamann Wassertechnic
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Orca
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Red Fox
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference ENVIROVAC/ORCA II
- ---------------------- ----------------------------------------- ----------------------------------------------------------
(PER SPEC)
- ---------------------- ----------------------------------------- ----------------------------------------------------------
604 Locks (mechanical) Best
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HOPEMAN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Door Closers LCN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Norton
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HOPEMAN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Panic Hardware Monarch
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Van Duprin
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HOPEMAN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Door Control Hardware Glynn Johnson
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference OFM
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Bumpers, Holdbacks, Etc Ives
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HOPEMAN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
612 Decorative Railings Julius Blum
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HOPEMAN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
620 Joiner Bulkhead System Maritime Services Corp.
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Jamestown Metal
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Hopeman Brothers
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Custom Ship Interiors
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HOPEMAN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
621 Staterooms per Joiner Bhd Manufacturer
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Suspended Ceiling W.F. Norman
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Systems - Public Spaces Shipyard Preference HOPEMAN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
623 Accommodation Ladders Aluminum Ladder Co.
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference RAMPMASTER
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
624 Joiner Doors Henges
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Dean Steel
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HOPEMAN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Hatches Freeman Marine
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Nashville Bridge Company
- ---------------------- ----------------------------------------- ----------------------------------------------------------
</TABLE>
Page 11 of 14
<PAGE> 59
APPENDIX THREE REVISED
APRIL 30, 1999
<TABLE>
<CAPTION>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SPEC
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SECTION ITEM MANUFACTURER
- ---------------------- ----------------------------------------- ----------------------------------------------------------
<S> <C> <C>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Pacific Coast Marine
- ---------------------- ----------------------------------------- ----------------------------------------------------------
R&S Fabricators
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Rapp Bomek
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference CEN-TEX
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Manholes Centex
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Pacific Coast Marine
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Ace Tank
- ---------------------- ----------------------------------------- ----------------------------------------------------------
R&S Fabricators
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Rapp Bomek
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference CEN-TEX
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Sliding Watertight IMS
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Doors Waltz & Krenzer
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Rapp Bomek
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference IMS
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Weathertight Doors Pacific Coast Marine
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Manly
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Beclawat
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Rapp Bomek
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HOPEMAN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Watertight Drs (Quick Acting) Pacific Coast Marine
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Manly
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Beclawat
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Rapp Bomek
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference CEN-TEX
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
625 Windows Pacific Coast Marine
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Manley Marine
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Beclawat
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Freeman Marine
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference BECLAWAT
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Window Wipers Kearfott
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Wynn
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference KEARFOTT
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
631 Paint System Devoe
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Proline
- ---------------------- ----------------------------------------- ----------------------------------------------------------
International
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference JOTUN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
633 Impressed Current System Wilson Walton
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference WILSON WALTON
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
</TABLE>
Page 12 of 14
<PAGE> 60
APPENDIX THREE REVISED
APRIL 30, 1999
<TABLE>
<CAPTION>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SPEC
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SECTION ITEM MANUFACTURER
- ---------------------- ----------------------------------------- ----------------------------------------------------------
<S> <C> <C>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
634 Hardwood Floor H.F. Buel Hardwood Floors (Dallas, Texas, 214-827-9269)
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HOPEMAN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
635 Fire Insulation Pelican
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Owens Corning
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HOPEMAN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Thermal Insulation Pelican
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Owens Corning
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HOPEMAN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Acoustic Insulation Sonolead
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Soundown
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HOPEMAN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
636 Vibration Isolators Korfund
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Ace
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference ACE
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
644 Bathroom Modules Amtech
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference OFE
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Plumbing Fixtures, Public Grohe
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HOPEMAN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Crew Sinks American Standard
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HOPEMAN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Crew Faucets, Shower Valves Powers
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HOPEMAN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Rest Room Accessories Bobrick
- ---------------------- ----------------------------------------- ----------------------------------------------------------
McKinney
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HOPEMAN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Pass. Custom Toilets, Sinks American Standard
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HOPEMAN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Pass. Custom Toilets, Faucets Grohe
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HOPEMAN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
651 Built In Refrigeration Boxes Cospolich
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Bailey
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference HOPEMAN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Galley & Bar Equipment HOPEMAN
- ---------------------- ----------------------------------------- ----------------------------------------------------------
</TABLE>
Page 13 of 14
<PAGE> 61
APPENDIX THREE REVISED
APRIL 30, 1999
<TABLE>
<CAPTION>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SPEC
- ---------------------- ----------------------------------------- ----------------------------------------------------------
SECTION ITEM MANUFACTURER
- ---------------------- ----------------------------------------- ----------------------------------------------------------
<S> <C> <C>
- ---------------------- ----------------------------------------- ----------------------------------------------------------
See Specification Section and Drawing
for Makers List
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
655 Laundry, Washer Extractors Milnor
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference MILNOR
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Ironer Chicago Dryer
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference CHICAGO DRYER
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
665 Machine Shop - Drill Machy Lablond
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference LA BLOND
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Precision Engine Lathe Lablond
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference: LA BLOND
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Pedestal Grinder Baldor
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference BALDOR
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Welding Machines Linc Welder
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Miller
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference LINC WELDER
- ---------------------- ----------------------------------------- ----------------------------------------------------------
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Tig Welder Thermal Dynamics
- ---------------------- ----------------------------------------- ----------------------------------------------------------
Shipyard Preference THERMAL DYNAMICS
- ---------------------- ----------------------------------------- ----------------------------------------------------------
</TABLE>
Page 14 of 14
<PAGE> 1
EXHIBIT 10(iv)(a)(4)
GUARANTY
This guaranty ("Guaranty") is made as of May 1, 1999 by The Delta
Queen Steamboat Co. ("Guarantor") in favor of Atlantic Marine Inc. ("AMI").
WHEREAS, AMI and Coastal Queen Holdings, L.L.C. (the "Owner") are
parties to that certain Construction Contract dated May 1, 1999 (the
"Construction Contract") pursuant to which AMI agrees to construct for the Owner
the Coastal Queen Class Vessels described therein and Owner agrees to pay the
Contract Price and perform the other obligations of the Owner as set forth
therein. Unless otherwise defined herein, capitalized terms used herein shall
have the meanings described to them in the Construction Contract.
WHEREAS, the Guarantor owns 100% of the stock of the Owner and will
derive both direct and indirect benefits from the Construction Contract; and
WHEREAS, as a condition to AMI's willingness to enter into the
Construction Contract with the Owner, AMI has required that the Guarantor enter
into this Guaranty.
NOW, THEREFORE, in consideration of the premises set forth herein and
other good and valuable consideration, the receipt and sufficiency which are
hereby acknowledged, the Guarantor agrees as follows:
1. Guaranty. For value received, the Guarantor unconditionally and
irrevocably guarantees for the benefit of AMI the full and prompt payment when
due of the Contract Price as provided for in the Construction Contract and all
other obligations of the Owner to AMI under the Construction Contract.
2. Obligations Unconditional. The Guarantor hereby agrees that its
obligation under this Guaranty shall be unconditional and shall include all
present and
<PAGE> 2
future obligations of Owner to AMI under the Construction Contract, as same may
presently exist or as altered, amended or changed in the future and Guarantor
does hereby waive notice of default, notice of alteration, amendment or change
to the Construction Contract and further agrees that in the event of default by
Owner under said Construction Contract, AMI may, at its option, then and there
demand payment and performance from Guarantor of all of Owner's obligations
under the Construction Contract. Guarantor does hereby waive notice of
acceptance by AMI.
3. Choice of Law; Venue. This Guaranty shall be governed by and
interpreted under the laws applicable in the State of Florida. AMI and Guarantor
agree that any suit from enforcement of this Guaranty shall be brought in a
federal court sitting in Orlando, Florida and AMI and Guarantor consent to the
exclusive jurisdiction of such court and the service of process in any such suit
being made upon such party by mail at the address specified in Section 14.5 of
the Construction Contract. AMI and Guarantor hereby waive any objection that
they may now or hereafter have to the venue of any such suit or any such court
or that such suit is brought in an inconvenient court.
IN WITNESS WHEREOF, this Guaranty has been duly executed by the
Guarantor as of the day and year first set forth above.
THE DELTA STEAMBOAT CO.
/s/ Jordan B. Allen
----------------------------------
By: Jordan B. Allen
Title: Executive Vice President
-2-
<PAGE> 1
EXHIBIT 10(iv)(a)(5)
ASSET PURCHASE AND SALE AGREEMENT
THIS ASSET PURCHASE AND SALE AGREEMENT (the "Agreement"), is made and
entered into as of this 28th day of April, 1999, by and among CAPITOL QUEEN &
CASINO, INC., a Missouri corporation, as debtor and debtor-in-possession
("Seller") and The Delta Queen Steamboat Co., a Delaware corporation
("Purchaser").
W I T N E S S E T H:
A. Seller is the debtor and debtor-in-possession in proceedings filed
under Chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court
for the District of Nevada (the "Bankruptcy Court"), Case No. BK-S-98-22172 (the
"Bankruptcy Case").
B. Seller is the sole and exclusive owner of a casino riverboat
commonly known as the M/V Capitol Queen, and of certain assets useful for the
operation of the M/V Capitol Queen (collectively referred to herein as the
"Riverboat");
C. Purchaser desires to acquire from Seller, and Seller desires to sell
to Buyer, the Riverboat on an "as is, where is" basis, free and clear of all
liens, claims and encumbrances with any and all such liens, claims and
encumbrances to attach to the proceeds, all upon and subject to the terms and
conditions hereinafter set forth.
D. The Bankruptcy Court approved the retention of Plant & Machinery,
Inc. and Continental Plants, Inc. as joint selling agent (collectively, the
"Selling Agent").
NOW, THEREFORE, for good and valuable consideration, the receipt,
adequacy and sufficiency of which is hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF RIVERBOAT
1.1 Sale. At the closing ("Closing") hereunder, Seller shall
grant, sell, convey, assign, transfer and deliver to Purchaser, on an "as is,
where is" basis, and subject to the terms and conditions of this Agreement, and
pursuant to Section 363(b) of Title 11 U.S. Code (the "Bankruptcy Code") all
right, title and interest of Seller in and to the Riverboat, including the
assets, properties and rights of Seller relating to the Riverboat in the
Seller's possession, custody and control, including without limitation all
information, files, records, data, plans, blueprints, mechanical and other
specifications, correspondence with any governmental agencies, including the
United States Coast Guard, correspondence with any classification societies, and
recorded knowledge, related to the foregoing and other books and records of
Seller relating to the Riverboat, in each case to the extent, but only to the
extent, presently owned by and in the possession of Seller or its agents
(collectively "information").
1.2 Purchase. At the Closing hereunder, Purchaser shall purchase
the Riverboat from Seller, upon and subject to the terms and conditions of this
Agreement, in exchange for the Purchase Price (as hereinafter defined).
1
<PAGE> 2
1.3 Purchase Price. The "Purchase Price" shall be an amount equal
to $3,200,000 in cash, inclusive of the buyer's premium owed to the Selling
Agent.
1.4 Deposit. Upon execution of this Agreement, Purchaser shall
deliver to Seller's counsel, Bernhard and Leslie, Chtd. ("BLC"), a deposit in
the amount of $320,000 (the "Deposit"), subject to the terms of Section 6
hereof. The Deposit shall be subject to a letter agreement between Purchaser and
BLC in the form attached as Exhibit A.
1.5 Payment at Closing. On the Closing Date Purchaser shall pay
the balance of the Purchase Price of $2,880,000 by wire transfer to such bank
account as shall be designated in writing by Seller to Purchaser.
1.6 Liabilities. Purchaser shall not assume, pay, discharge,
perform or in any way be responsible or liable for any claims, liabilities or
obligations of Seller, whether fixed or unfixed, known or unknown, asserted or
unasserted, choate or inchoate, liquidated or unliquidated, secured or
unsecured.
1.7 Physical Inventory. The inventory ("Inventory") listed on
Exhibit B annexed hereto has been identified by Purchaser as located on or
within the Riverboat, and shall be conveyed to Purchaser with the Riverboat.
Seller has not inspected the Inventory and makes no representation or warranty
as to the presence of any items on or in the Riverboat.
ARTICLE II
CLOSING DELIVERIES, THIRD PARTY CONSENTS, AND FURTHER ASSURANCES
2.1 Closing. The closing of the sale and purchase of the Riverboat
and the other transactions contemplated hereunder shall take place on the first
business day following the entry of an order substantially in the form annexed
hereto as Exhibit C by the Bankruptcy Court authorizing the sale of the
Riverboat pursuant hereto ("Order"), provided that no stay of the effectiveness
of the Order shall be in effect ("Closing Date"). The closing shall take place
at the offices of Bernhard & Leslie, Chtd., 3980 Howard Hughes Parkway, Suite
550, Las Vegas, Nevada 89109, or on such other date and at such other place as
the parties may mutually agree. In the event that the Order is stayed, the
parties shall remain obligated to close for ten days. If the stay has not been
vacated within such ten-day period, either Purchaser or Seller may terminate
this Agreement.
2.2 Items to be Delivered by Seller at Closing. At the Closing and
subject to the terms and conditions herein contained, Seller shall deliver to
Purchaser the following:
(a) a bill of sale (including United States Coast Guard Form
CG-1340 bill of sale for the Riverboat), and such other good and
sufficient instruments and documents of conveyance and transfer in form
reasonably satisfactory to Purchaser and its counsel as shall be
necessary to transfer to, and vest in, Purchaser all of Seller's right,
title and interest in and to the Riverboat and the Inventory, including
good and valid title in and to the Riverboat and the Inventory, free
and clear of any and all liens, claims or encumbrances pursuant to
Section 363(f) of the Bankruptcy Code; and
(b) all Information belonging to Seller which are part of the
Riverboat and which are in the possession of Seller;
2
<PAGE> 3
and shall take all such steps as may be reasonably required to put Purchaser in
actual possession and operating control of the Riverboat as of the Closing.
2.3 Further Assurances. Seller shall, from time to time after the
Closing, at Purchaser's request and without further consideration but without
the obligation of Seller to incur expense of any kind, use its reasonable
efforts to execute, acknowledge and deliver to Purchaser such other instruments
of conveyance and transfer and will take such other actions and execute and
deliver such other documents, and certifications as Purchaser may reasonably
require in order to vest more effectively in Purchaser, or to put Purchaser more
fully in possession of, the Riverboat.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Disclaimer of Warranty. Purchaser acknowledges and agrees
that it is relying solely upon its own investigation as to the condition of the
Riverboat and is purchasing the Riverboat on an AAS IS, WHERE IS@ basis, with
all faults, latent and patent. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
PURCHASER ACKNOWLEDGES THAT SELLER AND SELLING AGENT HAVE NOT MADE AND ARE NOT
HEREBY MAKING AND EXPRESSLY DISCLAIM AND NEGATE ANY REPRESENTATIONS OR
WARRANTIES OF ANY KIND WHATSOEVER WITH RESPECT TO THE CONDITION OF THE
RIVERBOAT, EITHER EXPRESS, IMPLIED OR STATUTORY (INCLUDING, WITHOUT LIMITATION,
ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, OR USE, SEAWORTHINESS, ENVIRONMENTAL CONSIDERATIONS OR REQUIREMENTS FOR
LICENSES, PERMITS OR BONDS THAT MAY BE NEEDED FOR USE), ON WHICH PURCHASER IS OR
MAY BE RELYING AS TO THE CONDITION OF THE RIVERBOAT (INCLUDING ANY ASSETS USED
IN THE OPERATION OF THE RIVERBOAT) OR COMPLIANCE WITH ANY RELEVANT LAWS, RULES
OR REGULATIONS, OR ANY OTHER REPRESENTATIONS OR WARRANTIES.
3.2 No Pending Litigation. Seller hereby represents and warrants
to Purchaser that to the best of Seller's knowledge, (a) no litigation,
including any arbitration or other proceeding of or before any court,
governmental authority or arbitration panel is pending or threatened against
Seller which relates to the Riverboat, the Inventory or the transactions
contemplated by this Agreement, and (b) other than the Bankruptcy Case, the
Riverboat is not subject to the provisions of any judgment, order, writ,
injunction, decree or award of any governmental authority which could have an
adverse effect on the Riverboat, the Inventory or the transactions contemplated
hereby.
3.3 Citizenship. Seller represents and warrants to Purchaser that:
(a) it is a corporation duly organized and existing under the laws of the State
of Missouri; (b) its President (and any other chief executive officer, if any)
are citizens of the United States; (c) the Chairman of the Board is a citizen of
the United States; (d) no more of its directors are non-citizens of the United
States than a minority of the number necessary to constitute a quorum; and (e)
at least 75% of the stock interest in Seller is owned by a corporation of which
75% of its stock interest is owned by citizens of the United States.
3
<PAGE> 4
ARTICLE IV
CONDITIONS PRECEDENT TO THE CLOSING
4.1 Conditions Precedent to Purchaser's and Seller's Obligations.
The obligations on the part of each of Purchaser and Seller to consummate the
transactions to be consummated by it at the Closing pursuant to this Agreement
are subject to the Bankruptcy Court's entry of the Order at the conclusion of
the Hearing.
4.1.1 Compliance with this Agreement. Seller and
Purchaser, as the case may be, shall have performed and complied, in all
material respects, with all agreements and conditions required by this Agreement
to be performed or complied with by it prior to or at the Closing, including
delivery to Purchaser or Seller, as the case may be, of all of the items to be
delivered by Seller or Purchaser, as the case may be, pursuant to Section 2.2.
Seller's obligation to deliver title and possession of the Inventory shall be
satisfied by placing Purchaser in possession and control of the Riverboat and by
delivery of a bill of sale of the items set forth on Exhibit B.
4.2 Conditions Precedent to the Obligations of Purchaser. The
obligations on the part of Purchaser to consummate the transactions to be
consummated by it at the Closing pursuant to this Agreement are subject to the
satisfaction at or prior to the Closing of each of the conditions set forth in
this Section 4.2, any of which may be waived by Purchaser in its sole
discretion.
4.2.1 Material Adverse Change. There shall have occurred
no casualty or loss materially adversely affecting the physical condition or
seaworthiness of the Riverboat.
4.2.2 Adoption of Order; No Stay of Order. The
Bankruptcy Court shall have adopted and approved the Order in substantially the
form attached hereto as Exhibit C and, subject to the last two sentences of
Section 2.1, there shall be no order, injunction or other legal restraint
against Seller's performance of the Agreement.
4.2.3 Representation of Title. Seller shall represent
and warrant at the Closing that it is the sole and exclusive owner of the
Riverboat and that it has granted no licenses or leases with respect to the
Riverboat.
4
<PAGE> 5
ARTICLE V
AGREEMENTS PENDING CLOSING
5.1 Agreements of Seller Pending the Closing. Seller covenants and
agrees that, pending the Closing and except as otherwise agreed to in writing by
Purchaser:
5.1.1 Bankruptcy Court Approval. Seller shall immediately
prepare and file a written motion (the "Motion") with the Bankruptcy Court
seeking entry of the Order, in the form attached hereto as Exhibit C, at a
hearing (the "Hearing") to be held before the Bankruptcy Court on May 25, 1999
or such other date as soon as possible after May 25, 1999, subject to the
availability of the court. The Motion shall not request any auction or bidding
process.
5.1.2 Maintenance of Physical Assets. Seller shall
continue to maintain and service the physical assets, including the Riverboat,
used in the conduct of the operation of the Riverboat, consistent with current
practice.
5.1.3 Insurance. Seller shall maintain in full force and
effect, and at least at such levels as are in effect on the date hereof, if any,
all insurance policies held with respect to the Riverboat as of the date of this
Agreement. Seller shall cause Purchaser to be an additional named insured under
such policies. All proceeds payable under such policies arising from a loss
thereunder occurring between the date of this Agreement and the Closing Date,
shall be paid as follows: (a) to Seller if the Closing does not take place, or
(b) to Purchaser, if the Closing does take place, up to an amount equal to the
lesser of (i) $3.2 million and (ii) the fair market value of the Inventory, and
the balance, if any, to Seller.
5.1.4 Exclusivity and Auction. Following execution of
this Agreement by Purchaser, Seller shall not, (i) directly or indirectly, sell
or encumber all or any part of the Riverboat, or (ii) initiate or participate in
any discussions or negotiations or enter into any agreement to directly or
indirectly do any of the foregoing.
5.1.5 Access. From and after execution of this Agreement
by Purchaser, Seller shall give to Purchaser and its representatives reasonable
access to and the right to inspect, during normal business hours, the Riverboat
and shall permit them to consult with Seller and its agents for the purpose of
making such investigation of the Riverboat as Purchaser shall reasonably desire
to make. Seller shall immediately furnish to Purchaser all Information as
Purchaser shall from time to time reasonably request and shall permit Purchaser
and its agents to make such physical inventories and inspections of the
Riverboat as Purchaser may request from time to time.
5.1.6 Material Adverse Change. From the date hereof
through the Closing, each of Seller and Purchaser shall promptly inform the
other party, in writing, of any actual or threatened change in the physical
condition or seaworthiness of the Riverboat, of which it has notice, which have
had or are reasonably likely to cause a material and adverse effect on the
physical condition or seaworthiness of the Riverboat or the consummation of the
transactions contemplated under this Agreement.
5
<PAGE> 6
ARTICLE VI
MISCELLANEOUS
6.1 Termination.
Anything herein or elsewhere to the contrary notwithstanding, this
Agreement may be terminated only:
6.1.1 by Purchaser or Seller in the event that (i) the
Order is not adopted in substantially the form attached hereto as Exhibit C,
(ii) the Bankruptcy Court orders that an auction for the Riverboat be conducted
prior to the approval of this Agreement, or (iii) any stay of the Order is not
vacated as contemplated pursuant to Section 2.1 hereof; or
6.1.2 by Purchaser in the event that (i) Seller is unable
to or fails to deliver title to the Riverboat to Purchaser at the Closing, (ii)
Seller is in material breach of any covenant of this Agreement, and such breach
remains uncured, if capable of being cured, for a period of 10 days following
delivery of notice of such breach or (iii) any condition precedent to
Purchaser's obligations under this Agreement is not satisfied; or
6.1.3 by Seller in the event that (i) Purchaser fails to
close when required to do so or is otherwise in material breach of any covenant
and such breach remains uncured, if capable of being cured, for a period of 10
days following delivery of notice of such breach or (ii) any condition precedent
to Seller's obligations under this Agreement is not satisfied.
6.1.4 In the event of termination of this Agreement by
Seller pursuant to Section 6.1.3(i), written notice thereof shall forthwith be
given to the Purchaser, Seller shall retain the Deposit and Purchaser shall
forfeit all rights thereto and Seller shall retain its rights to seek monetary
damages or specific performance from Purchaser. In the event of termination of
this Agreement by Purchaser pursuant to Sections 6.1.2(i) or (ii), written
notice thereof shall forthwith be given to Seller, the Deposit shall be returned
promptly to Purchaser and Purchaser shall retain its rights to seek specific
performance. In the event of termination of this Agreement by Purchaser or
Seller pursuant to Section 6.1.1, or by Purchaser pursuant to Section
6.1.2(iii), or by Seller pursuant to Section 6.1.3(ii), the Deposit shall be
returned promptly to Purchaser, this Agreement shall forthwith become void and
there shall be no liability on the part of the parties hereto (or their
respective obliges, directors or affiliates).
6.2 Brokers' and Finders' Fees. Purchaser warrants to Seller that
it has not retained or authorized any investment banker, broker, finder or other
intermediary to act on behalf of Purchaser who might be entitled to any fee or
commission in connection with the transactions contemplated under this
Agreement. Seller warrants to Purchaser that it has retained and authorized
Selling Agent to act as its agent for purposes of the sale of the Riverboat and
that it has not retained or authorized any other investment banker, broker,
finder or other intermediary to act on behalf of Seller who might be entitled to
any fee or commission in connection with the transactions contemplated under
this Agreement. Any commissions, fees, expenses, reimbursements or other amounts
of any nature whatsoever that may be owed to Selling Agent are the sole and
exclusive obligation of Seller and such amounts shall not, in any way, or under
any circumstance, be chargeable to Purchaser or the Riverboat. Purchaser, on the
one hand, and Seller, on the other hand, agree to indemnify, defend and hold the
other party and their respective affiliates harmless from and against any
losses, claims, liabilities, costs or expenses incurred by them as a result of
Purchaser's or Seller's, respectively, dealings with any such person, as the
case may be.
6
<PAGE> 7
6.3 Expenses. Each party hereto shall pay its own expenses
incidental to the preparation of this Agreement, the carrying out of the
provisions of this Agreement and the consummation of the transactions
contemplated hereby.
6.4 Entire Agreement. This Agreement, sets forth the entire
understanding of the parties hereto with respect to the transactions
contemplated hereby. It shall not be amended or modified except by written
instrument duly executed by all of the parties hereto. Any and all previous
agreements and understandings between or among the parties regarding the
subjec0t matter hereof, whether written or oral, are superseded by this
Agreement.
6.5 Assignment and Binding Effect. This Agreement may not be
assigned prior to the Closing by any party hereto without the prior written
consent of the other parties; provided, however, that Purchaser may assign the
right to take title to the Riverboat under this Agreement to an affiliate of
Purchaser without obtaining such consent so long as Purchaser continues to be
obligated in accordance with the terms of this Agreement and agrees to cause
such affiliate to perform Purchaser's obligations under this Agreement.
6.6 Notices. All notices required to be given under the terms of
this Agreement or which any of the parties desires to give hereunder shall be in
writing and delivered personally, by overnight delivery with a nationally
recognized delivery service or sent by registered or certified mail, postage
prepaid, return receipt requested with an additional copy sent by facsimile (and
confirmed by registered or certified mail or overnight delivery), each addressed
as follows:
as to Seller: Capitol Queen & Casino, Inc., 740 S. Decatur Boulevard, Las
Vegas, Nevada 89103;
with copies to: Georganne W. Bradley, Esq., Bernhard & Leslie, Chtd., 3980
Howard Hughes Parkway, Suite 550, Las Vegas, Nevada 89109 and Jonathan L.
Flaxer, Esq., Winick & Rich, P.C., 919 Third Avenue, New York, New York 10022;
as to Purchaser: The Delta Queen Steamboat Co., c/o American Classic Voyages
Co., Two North Riverside Plaza, Suite 200, Chicago, IL 60606, Attention: Jordan
B. Allen, Esq., Executive Vice President and General Counsel, Fax: (312)
466-6151;
with a copy to: Seyfarth, Shaw, Fairweather & Geraldson, 55 East Monroe Street,
Suite 4200, Chicago, Illinois 60603; Attention: David S. Stone, Esq., Fax: (312)
269-8869.
or to such other address and to the attention of such other person as the party
to whom such notice is to be given may have theretofore designated in a notice
to the other party hereto. Any notice given in accordance with the foregoing
shall be deemed to have been given when delivered in person or by overnight
delivery against receipt or received by facsimile or, if mailed, on the third
business day next following the date on which it shall have been deposited in
the mails.
6.7 Governing Law. This Agreement shall be governed by and
interpreted and enforced in accordance with the United States Bankruptcy Code
and the internal laws of the State of Nevada. Seller and Purchaser agree that
the Bankruptcy Court shall have exclusive personal and subject matter
jurisdiction of any dispute, action or other proceeding arising out of or
otherwise relating to this Agreement, to which Purchaser and any assignee
thereof irrevocably submits.
7
<PAGE> 8
6.8 No Third Party Beneficiaries. The representations, warranties,
covenants and agreements contained in this Agreement are for the sole benefit of
the parties hereto and they shall not be construed as conferring any rights on
any other persons.
6.9 Interpretation. All section headings contained in this
Agreement are for convenience of reference only, do not form a part of this
Agreement and shall not affect in any way the meaning or interpretation of this
Agreement. Words used herein, regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine, or neuter, as the context
requires. Any reference to a "person" herein shall include an individual, firm,
corporation, partnership, trust, governmental authority or body, association,
unincorporated organization or any other entity; any use of the term "include"
or "including" shall mean "including without limitation"; and any use of
"hereof," "hereto," "herein" or "hereunder" shall mean this Agreement.
6.10 Schedules and Exhibits. All schedules and exhibits referred to
herein are intended to be and hereby are specifically made a part of this
Agreement.
6.11 Counterparts; Facsimile. This Agreement may be executed in any
number of counterparts and any party hereto may execute any such counterpart,
each of which when executed and delivered shall be deemed to be an original and
all of which counterparts taken together shall constitute but one and the same
instrument. The parties hereto agree that facsimile transmission of original
signatures shall constitute and be accepted as original signatures. This
Agreement shall become binding when one or more counterparts taken together
shall have been executed and delivered by the parties. It shall not be necessary
in making proof of this Agreement or any counterpart hereof to produce or
account for any of the other counterparts.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
CAPITOL QUEEN & CASINO, INC. THE DELTA QUEEN STEAMBOAT CO.
By: /s/ Bruce Becker By: /s/ Jordan B. Allen
----------------------------------- ----------------------------------
Title: President Title: Executive Vice President
-------------------------------- -------------------------------
9
<PAGE> 10
EXHIBIT A
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Escrow Agreement") is made this 28th day
of April, 1999, by and among CAPITOL QUEEN & CASINO, INC., a Missouri
corporation, as debtor-in-possession ("Seller"), THE DELTA QUEEN STEAMBOAT CO.,
a Delaware corporation ("Purchaser") and BERNHARD AND LESLIE, CHTD., as escrowee
(the "Escrowee").
Preliminary Recitals
A. Seller and Purchaser are parties and subject to that certain Asset
Purchase Agreement of even date herewith (the "Asset Purchase Agreement"). A
copy of the Asset Purchase Agreement is attached to and by this reference made a
part of this Escrow Agreement. Unless otherwise defined in this Escrow
Agreement, any capitalized term used herein shall have the meaning ascribed to
such term in the Asset Purchase Agreement.
B. Section 1.4 of the Asset Purchase Agreement requires Purchaser to
deposit Three Hundred Twenty Thousand Dollars ($320,000.00) in escrow with the
Escrowee subject to the terms of Section 6 of the Asset Purchase Agreement and
in accordance with and subject to the terms of this Escrow Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Preamble; Preliminary Recitals. The Preamble and Preliminary
Recitals set forth above are hereby incorporated in and made a part of this
Escrow Agreement.
2. Deposit of Escrowed Funds. Simultaneously with the execution of
this Escrow Agreement, Purchaser has deposited Three Hundred Twenty Thousand
Dollars ($320,000.00) (the "Escrowed Funds") with the Escrowee subject to the
terms of Section 6 of the Asset Purchase Agreement. As used in this Escrow
Agreement the term "Escrowed Funds" includes the original deposit and all
interest accrued thereon.
3. Investment of and Accounting for Escrowed Funds. The Escrowee
shall hold and maintain the Escrowed Funds in its name as Escrowee under this
Escrow Agreement in a segregated account. The Escrowee shall invest and reinvest
the Escrowed Funds solely in any one or more of the following:
a. marketable obligations of or guaranteed by the United States
of America; or
b. a savings account in, or certificates of deposit or banker's
acceptances issued by, Colonial Bank or any other national bank having a
combined capital, surplus and undivided profits of not less than $250 million.
Subject to the limitations set forth in this Section, the Escrowee
shall invest the Escrowed Funds on the written direction of Seller and Purchaser
or, in the absence of such direction, as the Escrowee determines.
4. Release of Escrowed Funds. The Escrowee shall disburse the Escowed
Funds as follows:
<PAGE> 11
a. Upon the Closing under the Asset Purchase Agreement, the
Escrowee shall disburse the original deposit to Seller by wire transfer to such
bank account as shall be
<PAGE> 12
designated in writing by Seller, and any interest on the original deposit to
Purchaser as directed by Purchaser.
b. In the event the Asset Purchase Agreement is terminated in
accordance with Section 6.1.1, 6.1.2 or 6.1.3 (ii) thereto, Purchaser shall
notify Escrowee of such termination (a "Purchaser's Certificate") and direct the
Escrowed Funds be returned to Purchaser. Escrowee shall then promptly notify
Seller of the receipt of the Purchaser's Certificate. Escrowee shall return the
Escrowed Funds to Purchaser five (5) business days after the receipt of the
Purchaser's Certificate unless Seller shall within said five (5) business days
send to Escrowee a written objection to the Purchaser's Certificate certifying
that Purchaser is not entitled to the Escrowed Funds.
c. In the event Seller terminates the Asset Purchase Agreement
in accordance with Section 6.1.3 (i), Seller shall notify Escrowee of such
termination (a "Seller's Certificate") and direct the Escrowed Funds be
disbursed to Seller. Escrowee shall then promptly notify Purchaser of the
receipt of the Seller's Certificate. Escrowee shall disburse the Escrowed Funds
to Seller five (5) business days after the receipt of the Seller's Certificate
unless Purchaser shall within said five (5) business days send to Escrowee a
written objection to the Seller's Certificate certifying that Purchaser is not
entitled to the Escrowed Funds
d. The Escrowee shall pay or release Escrowed Funds to a party
at the address at which the party then is to receive notices under this Escrow
Agreement.
5. Limitations on Liability of Escrowee; Indemnification.
a. Investments. The Escrowee shall have no responsibility or
liability for any diminution of the Escrowed Funds that may result from any
investment made pursuant to the terms of this Escrow Agreement.
b. Signatures and Documents. The Escrowee shall not be
responsible for the genuineness of any signature or document presented to it
pursuant to this Escrow Agreement and may rely conclusively upon and shall be
protected in acting upon any arbitration or judicial order or decree,
certificate, notice, request, consent, statement, instruction or other
instrument believed by it in good faith to be genuine or to be signed or
presented by the proper person hereunder, or duly authorized by such person or
properly made. The Escrowee may require such evidence, documents, certificates
or opinions, as it deems appropriate.
c. Interpleader. Before taking any action under this Escrow
Agreement if in doubt regarding its obligations, the Escrowee may seek
instructions from Seller and Purchaser or if such instructions are in conflict,
file an appropriate action with, and seek instruction from an arbitrator or any
court of competent jurisdiction, in accordance with the terms and provisions of
this Escrow Agreement.
d. Limited Duties. The duties and obligations of the Escrowee
under this Escrow Agreement shall be governed solely by the provisions of this
Escrow Agreement. The Escrowee shall have no duties other than the duties
expressly imposed upon it in this Escrow Agreement and shall not be required to
take any action other than in accordance with the terms hereof.
e. Amendment and Modification. The Escrowee shall not be bound
by any notice of, or demand with respect to, any waiver, modification,
amendment, termination, cancellation or rescission of this Escrow Agreement,
unless in writing and signed by or on
<PAGE> 13
behalf of Seller and Purchaser and, if the duties of the Escrowee are affected
thereby, unless and until it shall have given its written consent to the notice
or demand.
f. Good Faith. In the event of any controversy or dispute under
this Escrow Agreement or with respect to any question as to the construction of
this Escrow Agreement, or any action to be taken by the Escrowee hereunder, the
Escrowee shall incur no liability for any action taken or suffered in good
faith. The Escrowee shall be liable only for gross negligence or willful
misconduct on its part.
g. Indemnification. Purchaser and Seller jointly and severally
shall forever indemnify, defend and hold harmless the Escrowee from and against
any costs, losses, expenses (including reasonable attorneys' fees), damages,
liabilities and judgments incurred by the Escrowee as a consequence of any
action taken or omitted to be taken by it in the performance of its obligations
under this Escrow Agreement, with the exception of any costs, losses, expenses,
liabilities and damages arising from the Escrowee's gross negligence or willful
misconduct.
6. Fees and Expenses of Escrowee. The Escrowee's fees for its
services under this Escrow Agreement shall be $100.00 and shall continue as long
as the Escrowee holds any portion of the Escrowed Funds. Seller and Purchaser
shall share the fees and all expenses of the Escrowee (including fees and
disbursements of counsel) equally and shall pay or reimburse the Escrowee for
same promptly. The Escrowee shall have a lien on the Escrowed Funds as security
for payment of all amounts payable to it under this Escrow Agreement.
7. Notices and Communications. Any notice of other communication
under this Escrow Agreement shall be in writing or by written telecommunication.
A notice or other communication to a party shall be deemed to have been duly
given or made on the earlier of (a) the date of receipt and (b) three (3)
business days after the date posted by registered or certified mail, return
receipt requested, in any post office in the United States of America, postage
prepaid, and addressed to the party at the address set forth below or at such
other address as such party shall designate by written notice to the other
parties
IF TO SELLER:
Capitol Queen & Casino, Inc.
740 S. Decatur Boulevard
Las Vegas, Nevada 89103
Attn: Bruce Becker
with copies to:
Georganne W. Bradley, Esq.
Bernhard & Leslie, Chtd.
3980 Howard Hughes Parkway, Suite 550
Las Vegas, Nevada 89109
AND
Jonathan L. Flaxer, Esq.
Winick & Rich, P.C.
919 Third Avenue
New York, New York 10022
<PAGE> 14
IF TO PURCHASER:
The Delta Queen Steamboat Co.
c/o American Classic Voyages Co.
Two North Riverside Plaza, Suite 200
Chicago, Illinois 60606
Attn: Jordan B. Allen, Esq.
Executive Vice President
and General Counsel
Fax No.: 312/466-6151
with a copy to:
Seyfarth, Shaw, Fairweather & Geraldson
55 East Monroe Street, Suite 4200
Chicago, Illinois 60603
Attn: David S. Stone, Esq.
Fax No.: 312/269-8869
8. Term; Amendments; Successors. This Escrow Agreement shall continue
until the date on which all of the Escrowed Funds have been distributed as
provided in Section 4 hereof, may be amended only as provided herein and shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.
9. Counterparts. This Escrow Agreement may be executed in any number
of counterparts, each of which shall be an original and all of which taken
together shall constitute one and the same instrument. In making proof of this
Escrow Agreement it shall be necessary to produce or account for only one such
counterpart signed by or on behalf of the party sought to be charged herewith.
10. Successor Escrowee. The Escrowee may resign upon ten (10) business
days' written notice to Seller and Purchaser. Upon the resignation of Bernhard
and Leslie, Chtd. as the Escrowee, Winick & Rich, P.C. shall become the
successor escrowee or Seller and Purchaser shall appoint a successor escrow
agent or otherwise provide for the disposition of the Escrowed Funds by joint
notice in writing to the Escrowee. The Escrowee shall pay over the Escrowed
Funds, less its unpaid fees and expenses, as provided in the notice.
11. Entire Agreement. This Escrow Agreement contains the entire
agreement and understanding of the parties with respect to the transactions
contemplated hereby. No prior agreement, either written or oral, shall be
construed to change, amend, alter, repeal or invalidate this Escrow Agreement.
12. Miscellaneous.
a. Headings. The headings set forth in this Escrow Agreement
are for convenience of reference only and do not, and shall not be construed to,
limit or otherwise define the terms or provisions of this Escrow Agreement or
otherwise have any substantive effect.
b. Gender. As used in this Escrow Agreement, where appropriate,
the singular shall include the plural, and the masculine, the feminine and
neuter genders, and vice versa.
<PAGE> 15
c. Invalidity. If any term or provision of this Escrow Agreement
is held to be invalid as applied to any fact or circumstance, it shall be
modified to the minimum extent necessary to render it valid and in any event
shall not affect the validity of any other term or provision or of the same term
or provision as applied to any other fact or circumstance.
d. State Law. This Escrow Agreement is made in, and shall be
construed and enforced in accordance with, the internal (and not the conflicts)
laws of the State of Nevada.
e. Exclusive Benefit. This Escrow Agreement is binding on and
shall inure to the exclusive benefit of the parties hereto and their respective
beneficiaries, representatives, successors and assigns and not to the benefit of
any third party.
f. Cooperation. The parties are entering into this Escrow
Agreement in a spirit of good faith and shall cooperate with one another in
making effective all the terms and provisions of this Escrow Agreement. Before,
at and, as the case may be, after closing each party shall execute, acknowledge
and deliver such documents and take any and all other actions necessary or
proper to render all the terms and provisions of this Escrow Agreement effective
and to enable the party requesting the cooperation to exercise and enjoy the
rights granted to it in or contemplated by this Escrow Agreement.
g. No Waiver. No delay or failure (or repeated delays or
failures) in exercising any right, power or privilege under this Escrow
Agreement shall operate as a waiver of the right, power or privilege (or of any
other right, power or privilege). No waiver of a breach of a provision shall
constitute a waiver of a breach of any other provision or of a prior or
subsequent breach of the same provision. No extension of time of performance of
an act or obligation under this Escrow Agreement shall constitute an extension
of time of performance of any other act or obligation.
h. Escrowee's Right to Represent Seller. Escrowee has agreed to
act hereunder as an accommodation to both Purchaser and Seller. In the event of
any dispute, Escrowee may continue to act as legal counsel for Seller and to
represent Seller in any such dispute.
i. Counterparts; Facsimile. This Agreement may be executed in
any number of counterparts and any party hereto may execute any such
counterpart, each of which when executed and delivered shall be deemed to be an
original and all of which counterparts taken together shall constitute but one
and the same instrument. The parties hereto agree that facsimile transmission of
original signatures shall constitute and be accepted as original signatures.
This Escrow Agreement shall become binding when one or more counterparts taken
together shall have been executed and delivered by the parties. It shall not be
necessary in making proof of this Escrow Agreement or any counterpart hereof to
produce or account for any of the other counterparts.
<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as of the date first above written.
SELLER:
CAPITOL QUEEN & CASINO, INC.,
a Missouri corporation, as Debtor-in-Possession
By:
------------------------------------
Its:
-----------------------------------
PURCHASER:
THE DELTA QUEEN STEAMBOAT CO.,
a Delaware corporation
By:
------------------------------------
Its:
-----------------------------------
ESCROWEE:
BERNHARD AND LESLIE, CHTD.
By:
------------------------------------
<PAGE> 17
- -
EXHIBIT B
MV CAPITOL QUEEN
VESSEL INVENTORY
Pilot House Top
1 One (1) triple trumpet Kahlenberg Horn with whistle light.
2 Two (2) 16" incandescent carlisle finch 1000W searchlights P/S
3 One (1) Furuno GAASFET 1730 Radar Scanner
4 Two (2) VHF Radio Antennas
Pilot House Interior
1 One (1) ICOM 55 channel VHF Radio - Model IC-M125
2 One (1) SI-TEX, 55 channel VHF Radio - Model 950A
3 Hose-McCann multiple station phone system - hand operated
4 One (1) Furuno GAASFET 1730 Control station
5 One (1) Datamarine DART 4 2490 Depthsounder - Bronze thru hull transducer
6 One (1) Datamarine DART 240 2000 Depthsounder - Bronze thru hull
transducer
7 One (1) Control General Rudder Indicator
8 One (1) New 58" wooden ships wheel
9 Control General dual system steering controls
10 One (1) audible general alarm
11 System (3) Cerberus Alarm & Monitor Panel - (74) Stations
12 One (1) ADT Fire Alert Monitor System
13 One (1) Control Systems Fire Pump Monitor & Controls
14 Main Engine Bow Thruster Instruments: Tachometer, Hours, Water & Lube Oil
15 Control General Shaft RPM for both engines
16 ICOM Loudhailer
17 PACE P.A. Monitor
Bridge Deck - Open Area
1 Four (4) Fiberglass Deck Box lifejacket containers - 34 persons
2 Two (2) 1 1/2" 100' Firehoses with Bronze nozzle
3 One (1) 10" Bronze bell on centerline FWD Bulkhead of Pilot House
4 One (1) Control General Stbd Bridgewing control station.
5 One (1) Hose McCann Sound Powered Phone - side of control station
6 Two (2) Atlas Soundlier Speakers - P/S of Pilot House
Page 1
<PAGE> 18
EXHIBIT B
MV CAPITOL QUEEN
VESSEL INVENTORY
Texas Deck
Exterior / Fwd to Aft
1 Four (4) Dock Box fiberglass lifejacket containers - port
2 Four (4) Dock Box fiberglass lifejacket containers - stbd
3 One (1) 1 1/2" 100' Firehose with Bronze nozzle - port
4 One (1) 1 1/2" 100' Firehose with Bronze nozzle - stbd
5 One (1) Fire Ax & Life ring on bulkhead
6 Two (2) Atlas Soundlier Speakers - P/S
7 Two (2) 1000W Mercury Vapor Lamps - P/S + Two (2) on AFT Bulkhead
8 Two (2) T3 Lamps FWD/AFT of Life rafts - P/S
9 Four (4) Zodic 25-person life rafts - P/S
10 Two (2) 3-person 16' Aluminum Rescue Boats - P/S
11 Two (2) manual operated winches with steel cable for rescue boats - P/S
12 Four (4) Bose Speakers under cover
13 Seven (7) exterior globes with guard - Stbd
14 Nine (9) exterior globes with guard - Port
15 Sixteen (16) exterior globes with guard - under cover + (2) AFT
stairwell - P/S
16 One (1) ABC Grade 2 - Forged steel spare shaft
17 Two (2) Five (5) blade stainless steel spare propellers
Interior / FWD
1 USCG life jackets model 8830 - USCG No. 160.055/149/0 - Hundreds
2 Firestation #24 - One (1) 1 1/2" firehose with Bronze nozzel
One (1) 10# ABS Amerex Extinguisher
3 One (1) Emergi-Lite on Bulkhead
4 Four (4) rolls Axminister carpet
5 Six (6) overhead Bose Speakers
6 Fourteen (14) 6" can lights in overhead
Interior / AFT space with Bar
1 Two (2) Emergi-lites
2 Six (6) overhead Bose Speakers
3 Twenty-four (24) 6" can lights
Emergency Diesel Room - Same Deck
1 Two (2) Feather Brand wooden oars
2 Two (2) Evin Rude 25 HP outboard engines - for rescue boats
3 One (1) Amerex 10# ABC Fire extinguisher STA#23
Hurricane Deck / Exterior
1 Four (4) fiberglass Dock Box life jacket containers - 34 persons
Page 2
<PAGE> 19
EXHIBIT B
MV CAPITOL QUEEN
VESSEL INVENTORY
2 One (1) 1000W Mercury vapor lamp FWD on centerline
3 One (1) 1000W Mercury vapor lamp FWD end of passageway
4 Four (4) Atlas Soundlier speakers - P/S
5 One (1) Fire Ax and Life ring
6 Eleven (11) outside globes with Guard - Port
7 Eleven (11) outside globes with Guard - Stbd
8 Three (3) Dual plug outlets - P/S
9 One (1) Hose bib - Port side under stairwell
Hurricane Deck / Interior
FWD Space
1 Life Jackets - 135 units
2 One (1) 1 1/2" Hose 100' with Bronze nozzel - Station #20
3 One (1) ABC 10# CO2 - Station #19
4 Twenty (20) 6" can lights
5 Six (6) overhead Bose Speakers
6 Fifteen (15) 2" high intensity cans
AFT Space
1 One (1) ABC 10# Extinguisher - Station #20
2 One (1) ABC 10# Extinguisher/100' hose 1 1/2" with Bronze nozzle -
Station 21
3 One (1) 1 1/2" Hose 100' with Bronze nozzel - Station #22
4 One (1) 1 1/2" Hose 100' with Bronze nozzel - Station #23
STBD Soffet / Overhead
1 Fifteen (15) 6" cans
2 Six (6) overhead Bose Speakers
3 Nine (9) 2" high intensity cans
PORT Side Fwd / Overhead
1 Twenty-One (21) 6" cans
2 Nine (9) Bose speakers
On Centerline / Overhead
1 Fifty-seven (57) 6" cans
2 Forty-two (42) 2" high intensity cans
3 Seventeen (17) Dose Speakers
On Centerline / On deck
1 Thirteen (13) 5 gal pails Selby Levelite
2 Seven (7) rolls Axminster Carpet
3 Four (4) Emergi-Lite
Page 3
<PAGE> 20
EXHIBIT B
MV CAPITOL QUEEN
VESSEL INVENTORY
Exterior / AFT
1 Four (4) Dock Box fiberglass life jacket containers - 34 persons
2 One (1) 1000W Mercury Vapor Lamp - P/S
3 Six (6) Globes with guards - P/S
4 One (1) Hose bib - P/S
5 One (1) Duplex outlet - P/S
6 Two (2) Atlas Soundlier Speakers - P/S
Boiler Deck
Exterior / FWD
Port
1 Twelve (12) Globes with guards
2 Four (4) Atlas Soundlier Speakers
3 One (1) Hose bib - fwd
4 Three (3) Duplex outlets
Stbd
1 One (1) 1 1/2" Hose 100' with bronze nozzel - Station #14
2 One (1) Fire Ax
3 Eleven (11) lights with globes
4 Four (4) Atlas Soundlier Speakers
5 One (1) 1000W Mercury Vapor Lamp
6 Two (2) Duplex outlets
Interior / FWD
1 One (1) ABC 10# Extinguisher - Station #16
2 One (1) 1 1/2" firehose 100' with bronze nozzel
3 One (1) Roll carpet
4 Two (2) Emergi-Lites
5 Twenty-five (25) 6" can lights
6 Eight (8) Bose speakers
Page 4
<PAGE> 21
EXHIBIT B
MV CAPITOL QUEEN
VESSEL INVENTORY
Interior / AFT
1 One (1) ABC 10# Extinguisher - Station #17
2 One (1) 1 1/2" firehose 100' with bronze nozzel - Station #16
3 One (1) 1 1/2" firehose 100' with bronze nozzel - Station #17
4 One (1) ABC 10# Extinguisher/100' 1 1/2" Firehose with Bronze nozzle -
Station #18
5 Five (5) Emergi-Lites
6 Fifty-seven (57) 6" soffet cans / Twenty-two (22) Bose Speakers
7 Five (5) High intensity 2" cans
8 Fifty-seven (57) 6" cans (copper overhead) / Thirty-six (36) 2" high
intensity cans
9 Two (2) Chandeliers
10 Sixteen (16) Bose Speakers (copper overhead)
11 Four (4) rolls carpet
Main Deck / Exterior
1 Ten (10) Global lights with guards - P/S
2 Three (3) Atlas Soudlier Speakers - P/S
3 One (1) 1000W Mercury Vapor Lamp - P/S
4 Four (4) fiberglass Dock Box life jacket containers - 34 person
5 One (1) Fire Ax on bulkhead
6 One (1) slide board anchor on centerline (no chain)
Interior FWD
1 Two (2) rolls carpet
2 Three (3) Appleton Shore Connection Plugs
3 Eighteen (18) Worcester Stair treads
4 Seven (7) Rug Boarders
5 One (1) Wooden paddle
6 One (1) 1 1/2" firehose with bronze nozzle - Station #11
7 One (1) ABC 10# Extinguisher - Station #12
8 Two (2) Emergi-Lites
9 Life Jackets - Numerous
10 Twenty-five (25) 6" cans
11 Six (6) Bose Speakers
Interior AFT
1 One (1) ABC 10# Extinguisher/100' 1 1/2" Firehose with Bronze nozzle -
Station #13
2 One (1) ABC 10# Extinguisher/100' 1 1/2" Firehose with Bronze nozzle -
Station #12
3 One (1) ABC 10# Extinguisher - Station #14
Interior AFT - On Deck Port Side
1 Twenty (20) boxes Fresco / 25 units 24" x 24"
Page 5
<PAGE> 22
EXHIBIT B
MV CAPITOL QUEEN
VESSEL INVENTORY
2 Six (6) sets table spiders
3 Three (3) boxes small spiders
4 Six (6) 36 x 36 table tops
5 Six (6) boxes / 2 ea - 24" x 48" Table Tops
6 One (1) Track Air / Air Fryer
7 Two (2) boxes of signage
8 One (1) HATCO food machine
9 One (1) Panasonic Microwave
10 One (1) Popcorn Machine
11 One (1) Electric Pizza Oven
12 Two (2) office chairs
13 One (1) Bookcase
14 Three (3) Hump Racks
15 One (1) Parabolick fixture
16 One (1) Natcho Machine
17 Twenty-eight (28) boxes - 2 chairs ea - white frame- mulberry cushion
18 Three (3) section Banquet
19 One (1) set metro shelving
20 Seven (7) Atlas Soundlier Power Racks
21 One (1) desk
22 Four (4) Token cabinets
23 One (1) box safety equipment / Signage
24 One (1) box parts for air fryer
25 One (1) box serving station
26 Eight (8) boxes / 2 chairs ea
27 Three (3) boxes glass mirrors
28 One (1) massage table
29 Fourty (40) 6" cans on soffet
30 Fourty-three (43) 6" cans inboard soffet
31 Thirteen (13) Bose speakers in soffet
32 Nine (9) Bose speakers in inboard soffet
33 Nine (9) rolls of carpet
Main Deck / Outside AFT
1 Two (2) 1000W Mercury Vapor Lamps
2 Five (5) Atlas Soudlies Speakers
3 Thirteen (13) globes with guards
Bow Thruster Room
1 One (1) 1 1/2" firehose 100' with bronze nozzle
2 One (1) 5# ABC Amerex entinguisher
3 Passageway going aft
Page 6
<PAGE> 23
EXHIBIT B
MV CAPITOL QUEEN
VESSEL INVENTORY
One (1) ABC 5# Amerex extinguisher #2 station
Emergi-Lite / 3 units
One (1) 5# Amerex extinguisher / One (1) 1 1/2" 100' firehose with
bronze nozzle - station #3
4 Five (5) Bose speakers to 1st WTD
Between WTD
1 One (1) firehose 1 1/2" 100' with bronze nozzle
2 Four (4) Bose ceiling speakers
3 Two (2) Emergi-lites
Aft of 2nd WTD
1 One (1) firehose 1 1/2" 100' with bronze nozzle - station #4
2 One (1) 2.5 # ABC Amerex Extinguisher - Station #5
3 Six (6) Bose Speakers
4 One (1) Fire Ax
5 Four (4) Emergi-Lites
6 Ten (10) Surveliance Racks - No Equipment
Aft Area
1 One (1) liquor tru-measure sys - wall mounts only + misc. plastic tubes
2 Four (4) Stainless steel racks
3 Two (2) carbonator pumps for TMI system
4 One (1) master built beer cooler with fan coils
5 Two (2) Manitowoc Series 1800Ice Machines
6 One (1) 2.5# Amerex ABC Extinguisher - Station #6
Engine Spaces
1 Misc. hoses & entinguishers
Bar Equipment
One (1) Delfield Undercounter Refrigerator/Freezer Model# 406/407 w/cord
and plug
One (1) Hobart Undercounter Dishwasher Model #LX18
One (1) Delfield Refrigerated Display Case Model #9048
One (1) Traulsen Glass Door Refrigerator Model #G11010
One (1) American Permanent Ware Bun Warner Model #WD-2B
Bar Equipment - Cont.
One (1) Custom S/S Wall Shelf 24"L x 1'6"D
One (1) Custom S/S Counter "u" shaped, 30"Dx36"H including Serap chute,
trash can, and drawer assemblies
One (1) Perlick Bottle cooler Model #7260
One (1) National Bar System Bar Sink (3) compartment Model# NCWS-03-60
One (1) National Bar System Liquor Display Model# NPLDS-48
Page 7
<PAGE> 24
EXHIBIT B
MV CAPITOL QUEEN
VESSEL INVENTORY
One (1) Perlick Back Bar Refrigerator Model# C5064E-SCHP
One (1) National Bar System Jockey Station w/ sealed-in cold plate
Two (2) National Bar System Blender/Mixer Station Model #NCMSD-18
One (1) National Bar System Jockey Station w/ sealed-in cold plate Model
#NCJS-12-42
One (1) Perlick Bottle cooler Model #7260
One (1) National Bar System Bar Sink (3) compartment Model# NCWS-03-60
One (1) National Bar System Liquor Display Model# NPLDS-48
One (1) National Bar System Jockey Station w/ sealed-in cold plate Model
#NCJS-16-48
One (1) Perlick Bottle cooler Model #7260
One (1) Stero Dump Sink Model #SW-46C
One (1) Stero Glass Washer Model #DF.208/1 w/ cord and plug
One (1) National Bar System Drainboard Model# NPDC-18
One (1) National Bar System Liquor Display Model# NPLDS-48
One (1) Perlick Back Bar Refrigerator Model# C5064E-SCHP
One (1) National Bar System Jockey Station w/ sealed-in cold plate Model
#NCJS-16-48
Two (2) National Bar System Blender/Mixer Station Model #NCMSD-18
One (1) National Bar System Jockey Station w/ sealed-in cold plate Model
#NCJS-12-42
Eight (8) Intermetro Metroseal II Shelving 2442NK2
Eight (8) Intermetro Metroseal II Shelving 2442NK2
Sixteen (16) Intermetro Metroseal II Shelving 2442NK2
Thirty-two (32) Intermetro Metroseal II Shelving 74PK2
Two (2) Intermetro Beer Keg Shelving 2KR345DC rack
Two (2) Intermetro Beer Keg Shelving 2KR345DC rack chrome finish
Two (2) Manitowoc Ice Cuber Model #1350-56S
Sixteen (16) Intermetro Liquor Shelving 3048NC
Twelve (12) Intermetro Liquor Shelving 3060NC
Four (4) Intermetro Liquor Shelving 3072NC
Thirty-two (32) Intermetro Liquor Shelving 74P Chrome finish
One (1) National Bar System Jockey Station w/ sealed-in Cold Plate Model
#NCJS-12-42
Two (2) National Bar System Blender/Mixer Station Model #NCMSD-18
Page 8
<PAGE> 25
EXHIBIT C
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEVADA
In Re: Case No. BK-S-98-22172
CAPITOL QUEEN & CASINO, INC. In Proceedings Under Chapter 11
a Missouri Corporation,
Date of Hearing: 5/25/99
Debtor. Time of Hearing: 3:00 p.m.
- --------------------------------------------------------------------------------
ORDER APPROVING SALE OF PERSONAL PROPERTY
FREE AND CLEAR OF LIENS, CLAIMS AND ENCUMBRANCES
A hearing having been concluded on the 25th day of May, 1999, on the
motion (the "Motion") of the Debtor and Debtor-in-Possession, Capitol Queen &
Casino, Inc. ("CQC"), for authority to sell and convey CQC's floating casino
vessel known as the M/V Capitol Queen (the "Riverboat"), the Inventory and
Information (each as defined in the Agreement) (the Riverboat, Inventory and
Information collectively referred to as the "Riverboat Assets") in accordance
with the Asset Purchase and Sale Agreement between CQC and The Delta Queen
Steamboat Co. ("Delta Queen") dated April ___, 1999 (the "Agreement"); and
Georganne W. Bradley of the law firm of Bernhard & Leslie, CHTD, having appeared
on behalf of CQC; Jonathan L. Flaxer of the law firm of Winick & Rich, P.C.,
having appeared on behalf of IBJ Whitehall Bank and Trust Company ("IBJ
Whitehall"); Brian J. Holthus of the law firm of Jolley, Urge, Wirth & Woodbury
having appeared as local counsel for IBJ Whitehall; and Gus A. Paloian of
Seyfarth, Shaw, Fairweather & Geraldson having appeared on behalf of Delta
Queen; and other appearances having been noted on the record; and upon the
record of the hearing; for good cause appearing.
-1-
<PAGE> 26
1. IT IS HEREBY ORDERED, that CQC be, and hereby is, authorized and
instructed to sell the Riverboat Assets to Delta Queen under and in accordance
with the Agreement and, upon payment of the consideration recited in the
Agreement (the "Proceeds") free and clear of all liens, mortgages, pledges,
security interests, claims and encumbrances in accordance with 11 U.S.C.
ss.363(l) and the Agreement; and
2. IT IS FURTHER ORDERED, that any and all valid and perfected liens,
mortgages, pledges, security interests, claims and encumbrances on the Riverboat
Assets shall attach to the Proceeds; and
3. IT IS FURTHER ORDERED, that upon the closing of the sale of the
Riverboat Assets pursuant to the Agreement, Delta Queen shall acquire good,
valid, sole and exclusive title to the Riverboat Assets; and
4. IT IS FURTHER ORDERED, that any amounts that may be owing to
Continental Plants Corp. and Plant and Machinery, Inc. at any time in connection
with the sale, maintenance, storage, marketing, preservation or care of the
Riverboat Assets shall be payable solely from the proceeds of the sale and
neither of them shall have any claim or right to payment against or from Delta
Queen or the Riverboat Assets; and
5. IT IS FURTHER ORDERED, that the Court finds that Delta Queen, as the
purchaser of the Riverboat Assets, has provided sufficient evidence of its good
faith and therefore, pursuant to ss.363(m) of the Bankruptcy Code, Delta Queen
is a purchaser in good faith, as that term is defined in ss.363(m) of the
Bankruptcy Code, and all protections and rights accorded by ss.363(m) of the
Bankruptcy Code are hereby granted to Delta Queen; and
6. IT IS FURTHER ORDERED, that CQC be, and it hereby is, authorized to
execute any and all documents necessary to effectuate the sale of the Riverboat
Assets under the terms and conditions set forth in the Agreement and this Order;
and
-2-
<PAGE> 27
7. IT IS FURTHER OREDERED, that the Clerk of Court of the Parish of
Jefferson Davis, State of Louisiana and the United States Coast Guard, National
Vessel Documentation Center are hereby authorized and instructed to release and
discharge all liens or encumbrances recorded of record or otherwise affecting
the M/V Capitol Queen, O/N 1023608.
8. IT IS FURTHER OREDERED, that nothing contained in any plan of
reorganization (or liquidation) confirmed in this case or the order of
confirmation confirming any plan of reorganization (or liquidation) in this
case, nor any order dismissing this case or converting it to a Chapter 7
liquidation shall conflict with or derogate from the provisions of the Agreement
or this Order.
9. IT IS FURTHER ORDERED, that this Court retain jurisdiction (a) to
enforce, implement and interpret the terms and provisions of the Agreement and
this Order; and (b) to compel any party with custody of the Riverboat Assets to
deliver the Riverboat Assets to Delta Queen or its nominee.
10. IT IS FURTHER ORDERED, that all persons and entities holding any
liens, privileges, claims or encumbrances of any kind and nature against or with
respect to the Riverboat Assets are hereby barred from asserting such lien,
claim, privilege, encumbrance against the Riverboat Assets or Delta Queen, its
successors, assigns, or their respective affiliates, shareholders, members,
officers, directors or agents.
11. IT IS FURTHER ORDERED, that the Proceeds may be utilized to pay all
sums due the Selling Agent as contemplated in this Court's Order dated
___________, 1999 and in accordance with the Consortium Agreement between CQC
and the Selling Agent
-3-
<PAGE> 28
described in such Order; and the Debtor shall not otherwise use the Proceeds for
any purpose pending further order of this Court after notice to
parties-in-interest.
DATED this ____ day of May, 1999
-----------------------------
LINDA B. RIEGLE
UNITED STATES BANKRUPTCY JUDGE
Prepared and submitted by:
WINICK & RICH, P.C.
Attorneys for IBJ Whitehall Bank & Trust Company
f/k/a IBJ Schroder Bank & Trust Company
By:
--------------------------------------
Jonathan L. Flaxer, Esq.
David M. Olasov, Esq.
Elizabeth H. Singer, Esq.
919 Third Avenue, 6th Floor
New York, NY 10022
(212) 935-9360
-4-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 30,994<F1>
<SECURITIES> 0
<RECEIVABLES> 2,012
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 46,837
<PP&E> 242,377
<DEPRECIATION> 79,792
<TOTAL-ASSETS> 226,305
<CURRENT-LIABILITIES> 90,378
<BONDS> 76,176
0
0
<COMMON> 145
<OTHER-SE> 59,606
<TOTAL-LIABILITY-AND-EQUITY> 226,305
<SALES> 0
<TOTAL-REVENUES> 40,566
<CGS> 0
<TOTAL-COSTS> 28,768
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,570
<INCOME-PRETAX> (7,540)
<INCOME-TAX> (3,000)
<INCOME-CONTINUING> (4,540)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,540)
<EPS-PRIMARY> (0.32)
<EPS-DILUTED> (0.32)
<FN>
<F1>Includes restricted short-term investments of $60.
</FN>
</TABLE>
