-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LTHU5ZH5/teskOffgdFMOiColD5S+euKMQhPMMiUR42pjahUeDKxdlZ/KfdcQEq3 gLYL+s/8PwurOf5mnw5ZQA== 0000950137-96-002096.txt : 19961101 0000950137-96-002096.hdr.sgml : 19961101 ACCESSION NUMBER: 0000950137-96-002096 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961031 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19961031 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN CLASSIC VOYAGES CO CENTRAL INDEX KEY: 0000315136 STANDARD INDUSTRIAL CLASSIFICATION: WATER TRANSPORTATION [4400] IRS NUMBER: 310303330 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-09264 FILM NUMBER: 96651421 BUSINESS ADDRESS: STREET 1: TWO N RIVERSIDE PLZ STREET 2: 2ND FLOOR CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3122581890 MAIL ADDRESS: STREET 1: TWO NORTH RIVERSIDE PLAZA STREET 2: 2ND FLOOR CITY: CHICAGO STATE: IL ZIP: 60606 8-K 1 FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 October 31, 1996 ---------------- (Date of Report) AMERICAN CLASSIC VOYAGES CO. (Exact name of Registrant as specified in its charter) Delaware ---------------------------- (State or other jurisdiction) 0-9264 31-0303330 - ------------------------ ----------------------------------- (Commission file number) (IRS employer identification number) Two North Riverside Plaza, Chicago, IL 60606 - -------------------------------------- ------------- (Address of principal executive offices) (Zip code) (312) 258-1890 -------------------------------------------------- (Registrant's telephone number, include area code) 1 2 ITEM 2--ACQUISITION OR DISPOSITION OF ASSETS On October 16, 1996, American Classic Voyages Co. (the "Company") sold its subsidiary which owns the Maison Dupuy Hotel ("Hotel") in New Orleans to the Thayer Lodging Group ("Thayer") for $22.0 million in cash. In addition, the Company entered into a Profit Participation Agreement with Thayer which will provide for future payments of up to $2.0 million based on the future performance of the Hotel within the next seven years. The Company will also receive preferred rates at the Hotel for its passengers and employees who require lodging in New Orleans for the next two years. In return, the Company has agreed to provide Thayer a minimum of $0.6 million of this business in each of these years. Upon the sale of the Hotel, the Company was required to pay down its outstanding borrowings, which were $9.5 million under its credit agreement with a group of financial institutions with The Chase Manhattan Bank (formerly Chemical Bank), as agent (the "Credit Agreement"). The borrowing availability under the Credit Agreement was reduced from $25.0 million to $15.0 million and the Company will be required every calendar year to maintain a 30-day period when the outstanding borrowings cannot exceed $7.5 million. The balance of the Hotel sale proceeds will be used for general corporate purposes. ITEM 7--FINANCIAL STATEMENTS AND EXHIBITS A. Financial Statements. -------------------- Not Applicable. B. Pro Forma Financial Information. ------------------------------- - Pro Forma Condensed Consolidated Balance Sheet as of June 30, 1996 - Pro Forma Condensed Consolidated Income Statement for the year ended December 31, 1995 - Pro Forma Condensed Consolidated Income Statement for the six months ended June 30, 1996 - Notes to the Pro Forma Condensed Consolidated Financial Statements C. Exhibits. --------- 2.(d)(1) Profit Participation Agreement made as of October 16, 1996 by and between THI FQ L.P. and Great AQ Steamboat Co. 2.(d)(2) Preferred Provider Agreement executed as of October 16, 1996 by The Delta Queen Steamboat Co. and THI FQ L.P. 2 3 AMERICAN CLASSIC VOYAGES CO. PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The following unaudited Pro Forma Condensed Consolidated Financial Statements of American Classic Voyages Co. (the "Company") give effect to the sale (the "Disposition") of the Maison Dupuy Hotel ("Hotel"). The unaudited Pro Forma Condensed Consolidated Financial Statements reflect the Company's Disposition. The unaudited Pro Forma Condensed Consolidated Statements of Income have been prepared as if the Disposition had been consummated as of the beginning of the respective periods presented. The unaudited Pro Forma Condensed Consolidated Balance Sheet has been prepared as if the Disposition had been consummated at June 30, 1996. Such unaudited Pro Forma Condensed Consolidated Financial Statements are not necessarily indicative of the results of historical operations had the Disposition been consummated at such dates. The unaudited Pro Forma Condensed Consolidated Financial Statements should be read in conjunction with the accompanying Notes to Pro Forma Condensed Consolidated Financial Statements. 3 4 AMERICAN CLASSIC VOYAGES CO. PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1996 (Amounts in thousands except shares and par value) (Unaudited)
Pro Forma Historical Adjustments Pro Forma ---------- ----------- --------- ASSETS Cash and cash equivalents................ $ 7,108 $ 8,730 (1) $ 15,838 Restricted short-term investments........ 3,003 -- 3,003 Accounts receivable...................... 1,562 (13)(2) 1,549 Prepaid expenses and other current assets 7,700 (128)(2) 7,572 -------- ----------- -------- Total current assets............. 19,373 8,589 27,962 Property and equipment, net.............. 181,831 (9,913)(3) 171,918 Other assets............................. 6,462 -- 6,462 -------- --------- --------- Total assets..................... $207,666 $(1,324) $206,342 ======== =========== ======== LIABILITIES Accounts payable......................... $ 10,501 $ -- $ 10,501 Other accrued expenses................... 23,240 827 (4) 24,067 Current portion of long-term debt........ 4,100 -- 4,100 Unearned passenger revenues.............. 40,310 -- 40,310 -------- ----------- -------- Total current liabilities........ 78,151 827 78,978 Long-term debt, less current maturities.. 100,948 (13,000)(5) 87,948 -------- ----------- -------- Total liabilities................ 179,099 (12,173) 166,926 STOCKHOLDERS' EQUITY Preferred stock, $.01 par value (5,000,000 shares authorized, none issued and outstanding).................. -- -- -- Common stock, $.01 par value (20,000,000 shares authorized; 13,776,122 issued and outstanding)............................ 138 -- 138 Additional paid-in capital............... 74,092 -- 74,092 Accumulated deficit...................... (45,663) 10,849 (6) (34,814) -------- ----------- -------- Total stockholders' equity....... 28,567 10,849 39,416 -------- ----------- -------- $207,666 $(1,324) $206,342
======== =========== ======== The accompanying notes are an integral part of these pro forma condensed consolidated financial statements. 4 5 AMERICAN CLASSIC VOYAGES CO. PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT YEAR ENDED DECEMBER 31, 1995 (In thousands, except per share amounts) (Unaudited)
> Maison Dupuy Pro Forma Historical Disposition(a) Adjustments Pro Forma ---------- -------------- ----------- ---------- Revenues.................................... $ 189,821 $ (7,507) $ 435 (b) $ 182,749 Cost of operations (exclusive of depreciation and amortization shown below).. 137,926 (2,436) 435 (c) 135,925 ---------- ---------- ---------- ---------- Gross profit................................ 51,895 (5,071) -- 46,824 Selling, general and administrative expenses 48,613 (2,132) 28 (d) 46,509 Depreciation and amortization expense....... 11,917 (396) (15)(e) 11,506 Non-recurring charges....................... 5,900 -- -- 5,900 ---------- ---------- ---------- ---------- Operating loss.............................. (14,535) (2,543) (13) (17,091) Interest income............................. 1,706 -- -- 1,706 Interest expense............................ 5,708 -- (645)(f) 5,063 Other income................................ -- -- 11,359 (g) 11,359 ---------- ---------- ---------- ---------- (Loss) income before income taxes and minority interest.......................... (18,537) (2,543) 11,991 (9,089) Income tax benefit (expense)................ 6,308 865 (4,077)(h) 3,096 Minority interest in loss................... (2,558) -- -- (2,558) ---------- ---------- ---------- ---------- Net (loss) income........................... $ (9,671) $ (1,678) $7,914 $ (3,435) ========== ========== ========== ========== Per Share Information: Average common shares outstanding........... 13,763 13,763 ========== ========== Loss per share.............................. $ (0.70) $ (0.25) ========== ==========
The accompanying notes are an integral part of these pro forma condensed consolidated financial statements. 5 6 AMERICAN CLASSIC VOYAGES CO. PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT SIX MONTHS ENDED JUNE 30, 1996 (In thousands, except per share amounts) (Unaudited)
Maison Dupuy Pro Forma Historical Disposition(i) Adjustments Pro Forma ---------- -------------- ----------- ---------- Revenues.................................... $ 91,250 $ (3,842) $ 354 (j) $ 87,762 Cost of operations (exclusive of depreciation and amortization shown below) 59,973 (1,206) 354 (k) 59,121 ---------- ------------ ----------- ---------- Gross profit................................ 31,277 (2,636) -- 28,641 Selling, general and administrative expenses 24,962 (1,028) 14 (l) 23,948 Depreciation and amortization expense....... 7,386 (221) -- 7,165 Impairment write-down....................... 38,390 -- -- 38,390 ---------- ------------ ----------- ---------- Operating loss.............................. (39,461) (1,387) (14) (40,862) Interest income............................. 451 -- -- 451 Interest expense............................ 4,329 -- (630)(m) 3,699 Other income................................ -- -- 11,499 (n) 11,499 ---------- ------------ ----------- ---------- (Loss) income before income taxes........... (43,339) (1,387) 12,115 (32,611) Income tax benefit (expense)................ 449 97 (848)(o) (302) ---------- ------------ ----------- ---------- Net (loss) income........................... $ (42,890) $ (1,290) $11,267 $(32,913) ========== ============ =========== ========== Per Share Information: Average common shares outstanding........... 13,771 13,771 ========== ========== Loss per share.............................. $ (3.11) $ (2.39) ========== ==========
The accompanying notes are an integral part of these pro forma condensed consolidated financial statements. 6 7 AMERICAN CLASSIC VOYAGES CO. NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The following pro forma adjustments have been applied to the historical condensed consolidated balance sheet of the Company to give effect to the Disposition as if it had occurred on June 30, 1996. (1) Represents: (i) Disposition proceeds of $22.0 million, net of $0.3 million of commissions and estimated closing expenses; (ii) the paydown by the Company of $13.0 million of amounts outstanding under the Company's revolving credit facility; and (iii) apportionment adjustments received/paid by the Company from/to the purchaser for certain prepaid, inventory, receivables and accrual items of the Hotel. (2) Reflects the elimination of certain prepaid items and receivables of the Hotel for which the Company received consideration from the purchaser. (3) Reflects the elimination of the net book value of the Hotel property upon the Disposition. (4) Reflects the estimated tax liability created upon the Disposition and adjustment of certain accrual items. (5) Represents use of a portion of the proceeds to pay down amounts outstanding under the Company's revolving credit facility. (6) Reflects the after-tax gain of $10.9 million recognized upon the Disposition on the pro forma consolidated balance sheet net of additional expenses of $0.1 million recognized pertaining to the apportionment adjustments. The following pro forma adjustments have been applied to the Company's historical condensed consolidated statement of income for the year ended December 31, 1995 to give effect to the Disposition as if it had occurred on January 1, 1995. Accordingly, the Hotel's results have been excluded for the twelve months ended December 31, 1995. (a) Reflects the Hotel's operating results for the twelve months ended December 31, 1995. (b) Reflects intercompany revenues between the Company and the Hotel previously eliminated in consolidation. (c) Reflects intercompany expenses between the Company and the Hotel previously eliminated in consolidation. (d) Reflects additional expenses recognized pertaining to the apportionment adjustments. (e) Reflects a reduction in depreciation expense due to a lower capitalized interest balance as proceeds received from the Disposition were used to repay amounts outstanding on the Company's long-term credit facility, and therefore, less interest expense was incurred and subject to capitalization. (f) Reflects the reduction in interest expense due to reduced borrowings under the Company's credit facility as a result of the proceeds received from the Disposition. (g) Represents the pre-tax gain recognized on the Disposition. (h) Reflects the income tax effect of the pro forma adjustments. 7 8 The following pro forma adjustments have been applied to the Company's historical condensed consolidated statement of income for the six months ended June 30, 1996 to give effect to the Disposition as if it had occurred on January 1, 1996. Accordingly, the Hotel's results have been excluded for the six months ended June 30, 1996. (i) Reflects the Hotel's operating results for the six months ended June 30, 1996. (j) Reflects intercompany revenues between the Company and the Hotel previously eliminated in consolidation. (k) Reflects intercompany expenses between the Company and the Hotel previously eliminated in consolidation. (l) Reflects the elimination of one-time expenses recognized in the Company's historical results related to the Disposition and the addition of expenses pertaining to the apportionment adjustments. (m) Reflects the reduction in interest expense due to repayments on the Company's revolving credit facility as a result of the proceeds received from the Disposition. (n) Represents the pre-tax gain recognized on the Disposition. (o) Reflects the income tax effect of the pro forma adjustments. 8 9 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMERICAN CLASSIC VOYAGES CO. By: /s/ Kathryn F. Gray ------------------------ Kathryn F. Gray Controller and Treasurer Dated: October 31, 1996 9 EX-2.(D)(1) 2 PROFIT PARTICIPATION AGREEMENT 1 EXHIBIT 2.(d)(1) MAISON DUPUY HOTEL NEW ORLEANS, LOUISIANA PROFIT PARTICIPATION AGREEMENT ------------------------------ THIS PROFIT PARTICIPATION AGREEMENT (this "Agreement") is made as of this 16th day of October, 1996, by and between THI FQ L.P., a Delaware limited partnership ("THI") and Great AQ Steamboat Co. ("Participant"), a Delaware corporation. Preliminary Recitals -------------------- A. Participant, as Seller, and Thayer Hotel Investments L.P. (the general partner of THI), as Buyer, among others, have entered into that certain Amended and Restated Purchase Agreement dated August 19, 1996 (the " Purchase Agreement"); B. As additional consideration under the Purchase Agreement, THI provided Participant a "Profit Participation" in the Property (as such term is hereinafter defined), in an amount not to exceed $2.0 Million, in accordance with and subject to the terms of this Agreement; and C. As required by and in accordance with the Purchase Agreement, and for Ten Dollars ($10.00) in hand paid, being good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, THI and Participant have entered into this Agreement. NOW, THEREFORE, the parties hereto hereby agree as follows: 1. Preamble and Preliminary Recitals. The Preamble and Preliminary Recitals set forth above are hereby incorporated in and made a part of this Agreement. 2. Definition. As used in this Agreement, each of the following terms shall have the meaning ascribed in this Section 2. A. "Base Payment Amount" means the minimum amount to be paid on account of the Profit Participation; which amount shall be $300,000 during the period commencing on the date hereof and ending on the third anniversary hereof, and $500,000 thereafter. B. "Disposition" means any sale, exchange, refinancing or other transaction with a bona fide third party which, constitutes a capital event with respect to all or substantially all the Property or any portion thereof or interest therein. C. "Distribution" means any distribution made by THI to the Partners (as such term is hereinafter defined) from revenues generated by the Property (such as net operating income, sale and refinancing proceeds and condemnation and insurance proceeds), whether the distribution is made in cash or other property (with such other property being valued for this purpose at its fair market value as of the date of the distribution), but only after paying or providing for all expenses and other liabilities arising from or with respect to the Property or any part thereof or interest therein; provided, however, a "Distribution" shall not be deemed to include "Net Disposition Proceeds" (as such term is hereinafter defined). 1 2 D. "Equity Amount" means, as of any particular date, the amount equal to all cash paid or invested in THI by the Partners from their own funds (and not from revenues generated by the Property) in connection with the ownership of the Property. E. "Excess Operating Income" means, with respect to THI, for any trailing twelve (12) month period, the surplus of: (i) income generated from the Property before giving effect to interest expense, federal, state and local income and franchise tax expense, depreciation expense, amortization expense, related party expenses in excess of market rates, and any other non-cash item which would have the effect of reducing net income for such period (all as reflected by THI on its financial statements, consistently applied); over (ii) the Pro Forma Operating Income for the periods and in the amounts set forth on Exhibit A attached hereto (years 2-5 consistent with those figures presented to the Partners advisory board), adjusted to reflect the trailing twelve (12) month period as appropriate. F. "Net Disposition Proceeds" means the net proceeds from the Disposition of the Property after deducting any expenses in connection therewith (but only bona fide third party expenses and related party expenses at market rates) and any amounts applied toward the payment of any indebtedness of THI (including Partner Loans). G. "Partners" means Thayer Hotel Investments L.P., a Delaware limited partnership, Thayer Hotel Investors II L.P., a Delaware limited partnership and THIE New Orleans Investment L.P., a Delaware limited partnership, and their respective successors and assigns, and any other partners of THI. H. "Person" means any individual, corporation, partnership or entity. I. "Preferred Return Amount" means the amount (not less than zero) which, taking into account all other Distributions previously made to the Partners, will result in such Partners having received total Distributions that result in an "internal rate of return" to such Partners of twenty-five percent (25%) with respect to the aggregate Equity Amount. As used herein, "internal rate of return" is the annual discount rate at which the aggregate present value, computed as of the date hereof, of all Distributions made to Partners would equal the sum of (i) the initial Equity Amount plus (ii) the aggregate present value, computed as of date hereof, of any additional Equity Amounts contributed by the Partners, using in such calculation an annual discount rate of twenty-five percent (25%) for the period from the date hereof to the date of contribution of each Equity Amount. For purposes of this calculation, Distributions (i) shall be made in accordance with THI's limited partnership agreement and in no event shall excess cash flow from the Property be distributed less frequently than every twelve (12) months, and (ii) made other than on an anniversary of the date hereof shall be discounted back to the nearest anniversary of the date hereof at an annual rate of twenty-five percent (25%). J. "Property" means that property commonly known as the Maison Dupuy Hotel, 1001 Toulouse Street, New Orleans, Louisiana (the legal description of which is set forth on Exhibit A to the Purchase Agreement); all improvements and additions thereto, and all replacements of any thereof as existing from time to time; and all rents, profits and proceeds thereof. 3. Profit Participation. (a) Upon a Disposition, THI shall, not later than thirty (30) days thereafter, pay to Participant an amount, not to exceed $2.0 Million, equal to the greater of (i) the Base Payment Amount, or (ii) fifty percent (50%) of the excess of the Net Disposition Proceeds over the Preferred 2 3 Return Amount, whereupon this Agreement shall terminate and neither party shall have any further liability hereunder. (b) If, after the seventh (7th) anniversary hereof, THI has neither completed a Disposition of the Property nor exercised its call rights pursuant to Section 4 below, THI shall pay to Participant, not later than thirty (30) days thereafter, the greater of (i) the Base Payment Amount, or (ii) an amount, not to exceed $2.0 Million, equal to fifty percent (50%) of the Excess Operating Income multiplied by ten (10), whereupon this Agreement shall terminate and neither party shall have any further liability hereunder. 4. THI's Call Rights. (a) Any time after the first anniversary hereof, THI shall have the right to terminate the Profit Participation by giving written notice to Participant and paying to Participant the greater of (i) the Base Payment Amount, or (ii) an amount, not to exceed $2.0 Million, equal to fifty percent (50%) of the Excess Operating Income multiplied by ten (10), whereupon this Agreement shall terminate and neither party shall have any further liability hereunder, except as expressly set forth in paragraph 4(b) below. (b) Notwithstanding the terms of paragraph 4(a) above, if at any time within six (6) months after THI exercises its rights as set forth in paragraph 4(a) above, THI completes a Disposition of the Property, then Participant shall be entitled to an amount (which, when added to any amount paid pursuant to paragraph 4(a) does not to exceed $2.0 Million), which is the excess of the amount calculated under paragraph 3(a) over the amount paid under paragraph 4(a), whereupon this Agreement shall terminate and neither party shall have any further liability hereunder. 5. Periodic Statements and Inspection Rights. THI shall deliver to Participant annual operating and financial statements with respect to the Property in such form as is then available within ninety (90) days following year end. In addition, Participant shall, upon reasonable advance written notice, have the right to review and inspect the books and records of THI with respect to the Property, at the sole cost and expense of Participant. 6. Offset Rights. THI shall have the right to offset against any amounts due to Participant hereunder any amounts due from Participant under, and in accordance with, the Preferred Provider Agreement (as such term is defined in the Purchase Agreement) of even date herewith. 7. Notices. All notices, requests, demands or other communications required or permitted under this Agreement shall be in writing and delivered personally or by certified mail, return receipt requested, postage prepaid, by telecopy or other facsimile transmission, or by overnight courier (such as Federal Express), addressed as follows: If to Participant: With a copy to: American Classic Voyages Co. Two North Riverside Plaza, Suite 1515 Two North Riverside Plaza, Suite 200 Chicago, Illinois 60606 Chicago, Illinois 60606 ATTN: Fred Langtry, Esq. ATTN: Jordan B. Allen, FAX: 312/454-0335 Sr. VP/General Counsel FAX: 312/466-6151 3 4 If to THI: With a copy to: Thayer Hotel Investments L.P. Hogan & Hartson L.L.P. 410 Severn Avenue, Suite 314 555 13th Street, N.W. Annapolis, Maryland 21403 Washington, DC 20004 ATTN: Mr. William G. Moeckel ATTN: Carol Weld King, Esq. ATTN: David J. Weymer, Esq. FAX: 202/637-5910 FAX: 410/268-1582 All notices given in accordance with the terms hereof shall be deemed received forty-eight (48) hours after posting, or otherwise when delivered. Either party hereto may change the address for receiving notices, requests, demands or other communication by notice sent in accordance with the terms of this Section 7. 8. Modification. No provision of this Agreement may be changed, modified, terminated or waived except by a written instrument executed by both THI and Participant. 9. No Member or Partner. By its execution of this Agreement, Participant does not become a member or partner of or with THI, and accordingly, Participant does not and shall not maintain that it owns an equity interest in the Property or that it is a partner of THI, whether for federal income tax purposes or otherwise. 10. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of THI and Participant and their respective successors and assigns. 11. Remedies. Upon a default by either THI or Participant under this Agreement, the nondefaulting party shall have such rights and remedies as are available with respect thereto at law (but not in equity). 12. Governing Law. This Agreement shall be governed by and interpreted and construed in accordance with the laws of the State of Louisiana. 13. Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience of reference only and do not in any way limit or amplify, and shall not be used to construe, the terms and provisions hereof. IN WITNESS WHEREOF, THI and Participant have executed and delivered this Agreement as of the date first above written. THI THI FQ L.P., a Delaware limited partnership By: /s/ David J. Weymer --------------------------------------- Title: Vice President ------------------------------------ PARTICIPANT ----------- Great AQ Steamboat Co., a Delaware corporation By: /s/ Jordan B. Allen ------------------------------------------ Title: Vice President ---------------------------------------- 4 5 The following are attachments not contained herein: A Pro Forma Operating Income 5 EX-2.(D)(2) 3 PREFERRED PROVIDER AGREEMENT 1 EXHIBIT 2.(d)(2) PREFERRED PROVIDER AGREEMENT THIS PREFERRED PROVIDER AGREEMENT (this "Agreement") is executed as of the 16th day of October, 1996 by The Delta Queen Steamboat Co., a Delaware corporation ("DQSC") and THI FQ L.P., a Delaware limited partnership (together with any permitted assignee, "THI"). Preliminary Recitals WHEREAS, DQSC is the sole owner of the stock of Great AQ Steamboat Co., a Delaware corporation ("Great AQ") and also owns and operates, through various subsidiaries, The Delta Queen Steamboat Co. cruise line (the "Cruise Line"); and WHEREAS Great AQ, Blackland Vistas, Inc. ("BVI") and Thayer Hotel Investments L.P. (an affiliate of THI) have entered into that certain Amended and Restated Purchase Agreement dated as of August 19, 1996 (the "Purchase Agreement") whereby Great AQ and BVI agreed to sell their interest in the limited partnership which owns the Maison Dupuy Hotel, New Orleans, Louisiana (the "Hotel") and THI agreed to buy such partnership interest; and WHEREAS, in connection with the Cruise Line, DQSC has passengers embarking or disembarking from New Orleans, Louisiana and as such requires the use of hotel rooms in the Hotel; and WHEREAS, the parties to the Purchase Agreement agreed to enter into this Agreement setting forth the terms upon which DQSC will provide, and THI will accept, business at the Hotel for a twenty-four (24) month period following the Closing Date. NOW, THEREFORE, the parties hereby AGREE to the following: 1. Preamble and Preliminary Recitals. The Preamble and Preliminary Recitals set forth above shall be incorporated herein and made a part hereof. 2. Commitment to Provide Hotel Business. Following Closing under the Purchase Agreement, DQSC agrees to use the Hotel as a preferred provider for at least a twenty-four (24) month period, commencing on the date hereof and ending on the second anniversary of the Closing Date (the "Term"). The period commencing on the date hereof and terminating on October 15, 1997 shall be referred to as "Year One" and the period commencing on October 16, 1997 and ending on the last day of the Term shall be referred to as "Year Two". During the Term and subject to the terms of this Agreement, DQSC agrees to provide, at a minimum, business totaling $584,179 in each of Year One and Year Two (the "Minimum Commitment"). Such Minimum Commitment may be satisfied by any business in connection with the operation of the Cruise Line, including DQSC's passengers, employees (including employees of affiliated entities) or other persons booking through DQSC or its affiliated travel agency, Cruise America Travel and shall include all room revenue. 1 2 3. Room Rates/Terms. (a) THI agrees to provide the hotel rooms at a rate of $85 per night through December 31, 1997 and at a rate of $90 per night for any dates in 1998. Notwithstanding the foregoing, the retail rates shall be $140 per night for the following dates in 1997 and $148 per night for the following dates in 1998: (i) three-day period of the Sugar Bowl; (ii) four-day period (Friday through Monday) prior to Mardi Gras; (iii) four-day period (Thursday through Sunday) for the first weekend and three-day period (Friday through Sunday) for the second weekend of The New Orleans Heritage Jazz Festival; and (iv) three-day period (Friday through Sunday) of the French Quarter Festival. (b) The rates described above are net, non-commissionable and subject to all applicable taxes. Check-in time shall be 3:00 p.m. and check-out time shall be 11:00 a.m. Early check-in and late check-out are subject to hotel availability and require confirmation by the Front Desk Manager. A full "American Style" breakfast shall be served, consistent with existing practices, for DQSC's passengers at a rate of $13.00 per person for 1996 and 1997 and $14.00 per person for 1998, including taxes and gratuities. The charge for baggage handling and parking shall be at rates consistent with other French Quarter hotels of similar class. All other terms and conditions shall be consistent with the Hotel's practices in effect at the given time. 4. Room Block Process. (a) DQSC has previously provided THI with its room request setting forth the desired room block for any given calendar day (any single block, a "Room Block") for the balance of 1996 and 1997. No later than October 15, 1996, DQSC will provide its desired Room Blocks for the period of January 1, 1998 through the end of the Term. The Room Blocks for the balance of 1996 and the first half of 1997 shall be deemed accepted. Within thirty (30) days following the Closing Date, THI shall inform DQSC of the Room Blocks for the second half of 1997 THI does not wish to honor and on or before January 15, 1997, THI shall inform DQSC of the Room Blocks for 1998 it does not wish to honor. (b) THI will hold and reserve all Room Blocks which it does not reject in accordance with sub-paragraph (a) above. DQSC will regularly review and revise the Room Block. Upon identifying that a Room Block is no longer needed or can be reduced, DQSC will release such Room Block at its earliest opportunity, but in no event later than sixty (60) days before the commencement of such Room Block. (c) From time to time DQSC may determine that additional space is needed, in which case DQSC shall notify THI of an additional or increased Room Block. THI shall have the right to accept any such requested Room Block by giving notice to DQSC within two (2) business days after receiving the request. THI acknowledges that it is DQSC's intent to keep all group business at the same hotel. In the event THI cannot, or chooses not to, accommodate an entire 2 3 group it shall be DQSC's prerogative to move the entire group to another hotel and release the corresponding Room Block. 5. Cancellations and No-Shows. DQSC may cancel any given individual room reservation, subject to the following: if a cancellation occurs more than 30 days prior to arrival, no penalty will be assessed; if less than 30 days but more than 72 hours prior to arrival a cancellation occurs on more than 10% of any Room Block, a charge equal to 50% of the room rate plus taxes for the period of the Room Block will be assessed to DQSC; and, if 72 hours or less prior to arrival a cancellation occurs on more than 10% of any Room Block, a charge equal to the room rate plus taxes for the period of the Room Block will be assessed to DQSC. No-shows will be considered canceled if arrival does not occur on the date reserved and DQSC will be assessed one night's room rate plus taxes. Notwithstanding the foregoing, cancellations resulting from force majeure, Acts of God or other causes beyond the control of DQSC shall not subject DQSC to liability under this Section 5. 6. Billing Procedures. THI will invoice DQSC for all rooms, including taxes, no more than two (2) times per month, for all completed business. Payment will be due within ten (10) days after receipt of the invoice. 7. DQSC's Failure to Satisfy the Minimum Commitment. (a) Within sixty (60) days after the end of Year One and Year Two, THI shall deliver to DQSC a statement in the form of Exhibit A, calculating the shortfall, if any, from the Minimum Commitment for the period. DQSC shall have the right to review and approve the statement, which approval shall not be unreasonably withheld or delayed. (b) In the event DQSC fails to satisfy the Minimum Commitment in either Year One or Year Two, DQSC shall be obligated to THI for the shortfall. Any shortfall, as computed in sub-paragraph (a) above, shall be paid to THI by means of an offset against amounts due under the Participation Agreement. To the extent the amounts due under the Participation Agreement do not satisfy the liabilities under sub-paragraph (a), THI shall have any remedies available at law against Great AQ or DQSC. 8. Standard of Hotel. THI agrees to maintain the Hotel, as a first-class hotel generally consistent with the Hotel's current practices, although the parties acknowledge that certain renovation and remodeling work will be performed during the Term. In the event the service or accommodations at the Hotel are deficient at any time during the Term, DQSC shall notify THI in writing. If such deficiencies are material and THI fails or refuses to correct such deficiencies within thirty (30) days of receiving notice, DQSC shall have the right to terminate this Agreement and shall have no further obligations hereunder. 9. Miscellaneous. (a) Applicable Law. This Agreement shall be governed by the laws of the State of Louisiana, without resort to the choice of law rules thereof. (b) Headings; Exhibits. The headings of articles and sections of this Agreement are inserted only for convenience; they are not to be construed as a limitation of the scope of the 3 4 particular provision to which they refer. All exhibits attached or to be attached to this Agreement are incorporated herein by this reference. (c) Notices. Notices and other communications required by this Agreement shall be in writing and delivered by hand against receipt, sent by recognized overnight delivery service, by certified or registered mail, postage prepaid, with return receipt requested or facsimile and promptly confirmed by first class U.S. mail. All notices shall be addressed as follows: If to DQSC: AMERICAN CLASSIC VOYAGES CO. Two North Riverside Plaza, Suite 200 Chicago, Illinois 60606 Attention: Jordan B. Allen, Esq. Senior Vice President and General Counsel Fax No. 312/466-6151 If to THI: THAYER HOTEL INVESTMENTS L.P. 410 Severn Avenue, Suite 314 Annapolis, Maryland 21403 Attention: Mr. William G. Moeckel Attention: David J. Weymer, Esq. Fax No. 410/268-1582 With a copy to: HOGAN & HARTSON L.L.P. 555 13th Street, N.W. Washington, DC 20004 Attention: Carol Weld King, Esq. Fax No. 202/637-5910 or to such other address as may be designated by a proper notice. Notices shall be deemed to be effective upon receipt (or refusal thereof) if personally delivered or sent by recognized overnight delivery service, three (3) days following the date of mailing if sent by certified mail, or upon receipt of confirmation if sent by facsimile. (d) Waiver. The failure of either party to insist on strict performance of any of the provisions of this Agreement or to exercise any right granted to it shall not be construed as a relinquishment or future waiver; rather, the provision or right shall continue in full force. No waiver of any provision or right shall be valid unless it is in writing and signed by the party giving it. (e) Partial Invalidity. If any part of this Agreement is declared invalid by a court of competent jurisdiction, this Agreement shall be construed as if such portion had never existed, unless this construction would operate as an undue hardship on THI or DQSC or would constitute a substantial deviation from the general intent of the parties as reflected in this Agreement. 4 5 (f) Entire Agreement. This Agreement, together with the other writings signed by the parties and incorporated by reference and together with any instruments to be executed and delivered under this Agreement, constitutes the entire agreement between the parties with respect to the subject matter and supersedes all prior oral and written understandings. Amendments to this Agreement shall not be effective unless in writing and signed by the parties hereto. (g) Time is of the Essence. Time is of the essence with respect to performance of all obligations under this Agreement. (h) Waiver of Jury Trial. THI and DQSC each hereby waives any right to jury trial in the event any party files an action relating to this Agreement or to the transactions or obligations contemplated hereunder. (i) Counterparts. This Agreement may be executed in any number of counterparts which, when taken together, shall constitute a single, binding instrument. (j) Defined Terms. All defined terms not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the Purchase Agreement. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date indicated below. THE DELTA QUEEN STEAMBOAT CO., AN ILLINOIS CORPORATION By: /s/ Jordan B. Allen ---------------------------------------- Name: Jordan B. Allen ------------------------------------- Its: Vice President -------------------------------------- THI FQ L.P., A DELAWARE LIMITED PARTNERSHIP BY: THAYER HOTEL INVESTMENTS L.P., A DELAWARE CORPORATION ITS: GENERAL PARTNER By: /s/ David J. Weymer ---------------------------------------- Name: David J. Weymer ------------------------------------- Its: Vice President -------------------------------------- 5 6 EXHIBIT A I. Minimum Commitment $584,179 II Business Provided During Period TOTAL $ $_______ III. Business Rejected by THI During Twelve Month Period $_______ IV. Cancellation/No-Show Charges Paid During Twelve Month Period $_______ V. Sum of II, III and IV $________ VI. Calculate Shortfall from Minimum Commitment Subtract V from I (if $0 or less, then insert $0) $________
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