<PAGE> 1
MANUALLY SIGNED COPY
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended August 31, 1996
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
-------- -------
Commission file number: 000-24452
RMS TITANIC, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-2753162
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
17 BATTERY PLACE, SUITE 203, NEW YORK, NY 10004
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 558-6300
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
The number of shares outstanding of the registrant's common stock on
October 18, 1996 was 16,137,119.
<PAGE> 2
PAGE
NUMBER
------
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
PART II
OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 2. Changes in Securities 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 19
2
<PAGE> 3
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The financial statements of RMS Titanic, Inc. (the "Company"), formerly
First Response Medical, Inc. ("FRM") included herein were prepared, without
audit, pursuant to rules and regulations of the Securities and Exchange
Commission. The Financial Statements include the assets acquired and liabilities
assumed from Titanic Ventures Limited Partnership ("TVLP") on May 4, 1993 (the
"Acquisition"). Since TVLP owns a controlling interest in FRM after the
Acquisition, the transaction has been accounted for as a "reverse acquisition"
with TVLP deemed to be the acquiring entity. Because certain information and
notes normally included in financial statements prepared in accordance with
generally accepted accounting principles were condensed or omitted pursuant to
such rules and regulations, these financial statements should be read in
conjunction with the financial statements and notes thereto included in the
audited financial statements of the Company as reported on Form 10-K for the
Company's fiscal year ended February 29, 1996.
3
<PAGE> 4
RMS TITANIC, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
<TABLE>
<CAPTION>
===============================================================================================================
AUGUST 31, FEBRUARY 28,
1996 1996
- ----------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 28,739 $ 43,803
Accounts receivable 18,742 19,510
Refundable withholding tax 87,500
Other current assets 14,474 10,000
- ---------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 149,455 73,313
Artifacts Recovered, at cost 7,715,373 5,922,350
Deferred Income Tax Asset, net of valuation allowance of
$1,910,000 and $1,640,000, respectively
Property and Equipment, net of accumulated depreciation
of $45,477 and $41,433, respectively 24,122 26,182
Other 38,611 38,611
- ---------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 7,927,561 $ 6,060,456
===============================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Note payable $ 126,050 $ 126,050
Accounts payable and accrued liabilities 3,020,557 2,023,574
Deferred revenue 350,000
Loans payable to partners 45,000 45,000
- ---------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 3,541,607 2,194,624
- ---------------------------------------------------------------------------------------------------------------
Stockholders' Equity:
Common stock - $.0001 par value; authorized 30,000,000 shares,
issued and outstanding 16,137,128 and 16,137,128 shares, respectively 1,614 1,614
Additional paid-in capital 13,869,963 13,869,963
Deficit accumulated during the development stage (9,485,623) (10,005,745)
- ---------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY 4,385,954 3,865,832
- ---------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,927,561 $ 6,060,456
===============================================================================================================
</TABLE>
4
<PAGE> 5
RMS TITANIC, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE-MONTH PERIOD THREE-MONTH PERIOD SIX-MONTH PERIOD
ENDED AUGUST 31, ENDED AUGUST 31, ENDED AUGUST 31,
1996 1995 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue:
Licensing fees $ 860,000 $ 860,000
Exhibitions $ 199,219
Merchandise and other 4,811 55,322 7,906
Sponsorship fees 150,000 150,000
Sale of coal 18,371 66,096
- -----------------------------------------------------------------------------------------------------------------------------
Total revenue 1,033,182 254,541 1,084,002
- -----------------------------------------------------------------------------------------------------------------------------
Expenses:
General and administrative 303,597 147,555 559,736
Depreciation and amortization 2,072 3,089 4,144
Interest
Financing fees
Acquisition of Management Agreement Option
Settlement expense
Provision for uncollectible advances to affiliates
- -----------------------------------------------------------------------------------------------------------------------------
Total expenses 305,669 150,644 563,880
- -----------------------------------------------------------------------------------------------------------------------------
Net income (loss) 727,513 $ 103,897 $ 520,122
=============================================================================================================================
Net income per common share $ .05 $ .01 $ .03
=============================================================================================================================
Weighted average common shares outstanding 16,137,128 16,115,172 16,137,128
=============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM
AUGUST 5, 1987
SIX-MONTH PERIOD (INCEPTION)
ENDED AUGUST 31, TO AUGUST 31,
1995 1996
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenue:
Licensing fees $ 1,435,000
Exhibitions $ 489,735 865,799
Merchandise and other 110,809 256,037
Sponsorship fees 150,000
Sale of coal 96,801
- -------------------------------------------------------------------------------------------------------
Total revenue 600,544 2,803,637
Expenses:
General and administrative 397,437 6,981,861
Depreciation and amortization 6,178 110,910
Interest 13,826 915,875
Financing fees 6,667 387,012
Acquisition of Management Agreement Option 3,400,000
Settlement expense 35,000 221,715
Provision for uncollectible advances to affiliates 271,887
- -------------------------------------------------------------------------------------------------------
Total expenses 459,108 12,289,260
- -------------------------------------------------------------------------------------------------------
Net income (loss) $ 141,436 $(9,485,623)
=======================================================================================================
Net income per common share $ .01
=======================================================================================================
Weighted average common shares outstanding 15,535,599
=======================================================================================================
</TABLE>
5
<PAGE> 6
RMS TITANIC, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
PERIOD FROM
SIX-MONTH SIX-MONTH AUGUST 5, 1987
PERIOD ENDED PERIOD ENDED (INCEPTION) TO
AUGUST 31, AUGUST 31, AUGUST 31,
1996 1995 1996
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 520,122 $ 141,436 $(9,485,623)
- ---------------------------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 4,144 6,178 110,910
Noncash financing costs 6,667 387,012
Acquisition of Management Agreement Option
for noncash consideration 3,400,000
Write-off of advances to affiliates 271,887
Noncash interest expense 4,500 886,202
Expenses paid by TVLP partners and TVLP affiliate
on behalf of TVLP 427,564
Reduction in artifacts recovered 6,977 9,977
Changes in operating assets and liabilities, net of effect from acquisition:
Increase (decrease) in accounts receivable 768 (103,545) (18,742)
Increase in refundable withholding tax (87,500) (87,500)
Decrease (increase) in other current assets (4,474) 10,631 (14,474)
Increase in advances to TVLP affiliates (271,887)
Increase in other assets (38,611)
Increase in organization costs (fully amortized) (60,483)
(Decrease) increase in note payable, accounts payable and
accrued liabilities 16,983 (449,349) 3,378,952
Increase in deferred revenue 350,000 350,000
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL ADJUSTMENTS 286,898 (524,918) 8,730,807
- ---------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 807,020 (383,482) (754,816)
- ---------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Artifact recovery costs, including related deposits (820,000) (4,672,975)
Purchases of property and equipment (2,084) (74,549)
- ---------------------------------------------------------------------------------------------------------------------------------
CASH USED IN INVESTING ACTIVITIES (822,084) (4,747,524)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(continued)
See Notes to Financial Statements
6
<PAGE> 7
RMS TITANIC, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
PERIOD FROM
SIX-MONTH SIX-MONTH AUGUST 5, 1987
PERIOD ENDED PERIOD ENDED (INCEPTION) TO
AUGUST 31, AUGUST 31, AUGUST 31,
1996 1995 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from financing activities:
Loans from TVLP partners $ 432,705
Proceeds from notes payable 650,000
Proceeds from issuance of common stock and capital contributions $ 921,956 7,209,446
Stock issuance costs (1,150,707)
Repayment of advances from TVLP partner (475,000)
Repayment of notes payable (436,492) (1,135,365)
- -----------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 485,464 5,531,079
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash $(15,064) 101,982 28,739
Cash at beginning of period 43,803 531 - 0 -
- -----------------------------------------------------------------------------------------------------------------------------
Cash at end of period $ 28,739 $ 102,513 $ 28,739
=============================================================================================================================
</TABLE>
7
<PAGE> 8
RMS TITANIC, INC.
(A DEVELOPMENT STAGE COMPANY
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 - The accompanying condensed financial statements of RMS
Titanic, Inc. (the "Company"), formerly First Response
Medical, Inc. ("FRM"), include the assets acquired and the
liabilities assumed from Titanic Ventures Limited Partnership
("TVLP") on May 4, 1993 (the "Acquisition"). Since TVLP owns a
controlling interest in FRM after the Acquisition, the
transaction has been accounted for as a "reverse acquisition"
with TVLP deemed to be the acquiring entity. Accordingly, the
historical financial statements of TVLP prior to May 4, 1993
have been substituted for the historical financial statements
of FRM.
The accompanying financial statements contain all adjustments
necessary to present fairly the financial position of the
Company as of August 31, 1996 and its results of operations
and its cash flows for the three months and six months ended
August 31, 1996 and 1995. Results of operations for the three
and six month periods ended August 31, 1996 are not
necessarily indicative of the results that may be expected for
the year ending February 28, 1997.
Note 2 - Net income per share on common stock is based upon the
weighted average number of shares outstanding. The dilutive
effect of common stock equivalents is not material.
Note 3- The Company entered into a charter agreement with
IFREMER for the charter of equipment to conduct the
Company's fourth expedition to the Titanic wreck site in the
Summer of 1996 ("Summer of 1996 Expedition"). Pursuant to
the charter agreement, sums aggregating $820,000 were paid to
IFREMER during the quarter ended August 31, 1996. See
Note 6 below. In addition, the Company is obligated to pay
additional amounts to IFREMER based upon a percentage of
the Company's future revenue, as defined, up to $980,000 due
not later that September 1, 2000. The artifacts recovered
during the Summer of 1996 Expedition serve as collateral for
this debt.
8
<PAGE> 9
RMS TITANIC, INC.
(A DEVELOPMENT STAGE COMPANY
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
In connection with the Summer of 1996 Expedition, the Company
entered into a sponsorship agreement with Guiness Import
Company ("GIC"), whereby GIC was designated as an official
sponsor of the Summer of 1996 Expedition. Pursuant to the
agreement, the Company earned a sponsorship fee of $150,000.
Note 4 - The Company has entered into an agreement with CRE-CO Finanz
GmbH, a German company, for an exhibition of Titanic artifacts
in Europe in 1997. Pursuant to the agreement, the Company will
receive two-thirds of the net profits, as defined, after the
recoupment of certain project expenses, as defined. During the
six months ended August 31, 1996 the Company received a
$350,000 advance against the Company's share of profits, less
a 25% ($87,500) refundable withholding tax. The advance is
secured by a lien on the currency recovered from the Titanic
until the artifacts are delivered. Such exhibition profit
advance is included in deferred revenue in the accompanying
August 31, 1996 balance sheet.
The Company has entered into an agreement with the City of
Memphis, Tennessee for an exhibition of Titanic artifacts in
Memphis, Tennessee from April 3, 1997 to September 30, 1997.
Pursuant to the agreement, the Company will receive $720,000
in installments between September 1996 and August 1, 1997, and
will receive two-thirds of the net profits, as defined,
derived from ticket, merchandise and sponsorship revenues in
excess of $4,850,000.
Subsequent to August 31, 1996, the Company has entered into an
agreement with the National Maritime Center ("Nauticus"), a
political subdivision of the City of Norfolk, Virginia, for an
exhibition of Titanic artifacts at Nauticus from November 27,
1996 through March 31, 1997. Pursuant to the agreement, the
Company will receive one-third of revenues from the sale of
the first 150,000 tickets and fifty (50%) percent of revenues
from the sale of more than 150,000 tickets. In addition, the
Company will receive fifty (50%) percent of net profits, as
9
<PAGE> 10
RMS TITANIC, INC.
(A DEVELOPMENT STAGE COMPANY
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
defined, from the sale of merchandise at the exhibition, and
fifty (50%) of sponsorship revenues net of the difference, if
any, between $500,000 expended by Nauticus for the design,
construction and marketing of the exhibition and Nauticus'
share of ticket revenues and net profits from the sale of
merchandise at the exhibition.
Note 5 - The Company and two unrelated television productions companies
entered into an agreement whereby the Company granted certain
rights to the production companies for the production and
exploitation of audio and visual recordings with respect to
the Summer of 1996 Expedition (the "Productions"). Pursuant to
the terms of the agreement, the Company's obligations to pay
IFREMER approximately $820,000 prior to the commencement of
the Summer of 1996 Expedition were satisfied as a result of
entering into this arrangement. The Company agreed to
contribute $100,000 to such production, $40,000 of which was
satisfied through the grant to one of such unrelated third
parties certain rights to present information and images
concerning the Summer of 1996 expedition on the Internet, and
the balance of $60,000 of which is due from the Company on
April 16, 1997. The Company has retained the rights for
commercial exploitation of recordings made at the Titanic
wreck site in a print format and certain royalty and other
rights with respect to the marketing and sale of home videos
based upon the Summer of 1996 Expedition.
Note 6 - The Company is a named defendant in a lawsuit commenced in the
Supreme Court of the State of New York, County of New York on
or about September 22, 1994 (Glenville Properties Incorporated
v. RMS Titanic, Inc. et al., 94/127087). The plaintiff therein
alleges Lone Star Casino Corporation ("Lone Star") has
assigned to it Lone Star's rights under a promissory note (the
"Note") executed by the Company in favor of Lone Star in May,
1993, certain security interests granted to Lone Star in
connection therewith, and other contractual rights related
thereto. The complaint alleges, inter alia, that the Company
breached its obligations owed under the Note and its
10
<PAGE> 11
RMS TITANIC, INC.
(A DEVELOPMENT STAGE COMPANY
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
obligations under the agreement granting a security interest
to Lone Star, misrepresented the value of the property which
is the subject of such security interest, and interfered with
rights under the agreements relating to the grant of such
security interest. The relief sought is an award of
compensatory damages approximating $360,000, punitive damages
of a minimum of $1,080,000, and declaratory and injunctive
relief. The Company denied the material allegations of the
Complaint and asserted counterclaims for a judgment declaring
the promissory note paid and additional counterclaims and
third-party claims seeking an award of compensatory and
punitive damages. In July 1996, a settlement of this
proceeding was reached, subject to the execution of definitive
settlement documents. Pursuant to the contemplated settlement,
the Company will pay to Lone Star $154,271.62 in twelve (12)
equal monthly installments commencing as of September 15,
1996, subject to acceleration if the Company achieves certain
revenue levels ("Threshold Amounts") during such twelve month
period. The Company has agreed to issue 15,000 shares of its
Common Stock in escrow, with such shares to be either released
in 5,000 shares increments to Lone Star in the event such
Threshold Amounts are not achieved as of the end of the
Company's quarterly periods, or to be cancelled in the event
such Threshold Amounts are achieved. Additionally, affiliates
of Lone Star have agreed to release the Company from
liabilities amounting to approximately $40,000, and the
Company has agreed to issue 40,000 unregistered shares of
Common Stock to Lone Star.
On February 20, 1996, a third-party filed a motion pursuant to
Rule 60(b) of the Federal Rules of Civil Procedure in the
United States District Court for the Eastern District of
Virginia motion for an order rescinding the June 7, 1994 award
to the Company of salvor-in-possession status with respect to
the Titanic (R.M.S. Titanic, Inc. v. The Wrecked and Abandoned
Vessel believed to be the RMS TITANIC, in rem, No. 2:93cv902).
By order entered May 10, 1996, such motion was denied and the
Court modified its June 7, 1994 order awarding
11
<PAGE> 12
RMS TITANIC, INC.
(A DEVELOPMENT STAGE COMPANY
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
salvor-in-possession status to the Company to the extent of
requiring the Company to file more frequent periodic reports
as to the status of its activities. On August 13, 1996, the
Court amended such May 10, 1996 order so as to include the
award of exclusive rights to photograph the Titanic within the
award of salvor-in-possession status. The third-party has
filed a notice of appeal from such May 10, 1996 and August 13,
1996 orders, and the Company has filed a cross-appeal with
respect to the Court having granted standing to such
third-party. In October 1996, it was agreed, subject to the
execution of definitive agreements relating to the settlement
of an unrelated action between such third-party and the
principal shareholder of the Company, that such appeals and
cross-appeal will be dismissed. In the event that such appeal
and cross-appeal are not dismissed by a consummated
settlement, management of the Company intends to vigorously
defend against such appeal and to vigorously prosecute its
cross-appeal.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion provides information to assist in the
understanding of the Company's financial condition and results of operations,
and should be read in conjunction with the financial statements and related
notes appearing elsewhere herein.
RESULTS OF OPERATIONS
FOR THE QUARTER ENDED AUGUST 31, 1996 VERSUS
THE QUARTER ENDED AUGUST 31, 1995
FOR THE SIX MONTHS ENDED AUGUST 31, 1996 VERSUS
THE SIX MONTHS ENDED AUGUST 31, 1995
During the second quarter of the Company's 1997 fiscal year and the
first six months of its 1997 fiscal year, the Company's total revenues increased
approximately 306% and approximately 81%, respectively, as compared to the
corresponding periods of its 1996 fiscal year. These changes were principally
attributable to the Company having earned licensing fees of $860,000 during the
second quarter of its 1997 fiscal year related to the production and
exploitation of audio and visual recordings with respect to the Company's
expedition to the Titanic wreck site during the Summer of 1996 (the "Summer of
1996 Expedition"), and $150,000 from the granting of sponsorship rights with
respect to the Summer of 1996
12
<PAGE> 13
expedition, as compared to zero revenues during the first six months of the 1996
fiscal year from licensing or sponsorship fees. Additionally, the Company earned
revenue of $66,096 from the sale of coal during the first six months of its 1997
fiscal year, of which $18,371 was earned during the second quarter, as compared
to zero revenue from the sale of coal during the first six months of the 1996
fiscal year. During the second quarter of its 1996 fiscal year and the first six
months of its 1996 fiscal year, the Company earned exhibition revenue of
$199,219 and $489,735, respectively, and merchandise and other revenue of
$55,322 and $110,809, respectively, as compared to zero revenues from exhibition
activities during the first six months of its 1997 fiscal year and $7,906 of
merchandise and other revenue during the first six months of its 1997 fiscal
year, of which $4,811 was earned during the second quarter of its 1997 fiscal
year. This decrease in exhibition and merchandise revenue was principally
attributable to the Company having presented its prelude exhibition at the
National Maritime Museum of Greenwich, London, England (the "National Maritime
Museum") during its 1996 fiscal year, as compared to not having had exhibition
and related merchandise activities during the first six months of its 1997
fiscal year.
The Company's general and administrative expenses increased
approximately 106% during the second quarter of its 1997 fiscal year as compared
to the second quarter of its 1996 fiscal year, and increased approximately 41%
during the first six months of its 1997 fiscal year as compared to the first six
months of its 1996 fiscal year. Such increases were primarily attributable to
expenses of $100,000 related to the production of audio and visual recordings of
the Summer of 1996 Expedition, travel expenditures related to the Summer of 1996
Expedition and an increase in legal fees attributable to a legal challenge to
the Company's salvor-in-possession status. Interest expenses decreased 100%
during the first six months of the Company's 1997 fiscal year as compared to the
first six months of its 1996 fiscal year, primarily as a result of the reduction
of notes payable. Financing fees attributable to notes payable decreased 100%
during the first six months of the Company's 1997 fiscal year as compared to the
first six months of its 1996 fiscal year.
The Company has entered into an agreement with the City of Memphis,
Tennessee for the presentation of an exhibition of Titanic artifacts in Memphis,
Tennessee from April 3, 1997 through September 30, 1997. Pursuant to the
exhibition agreement, the City of Memphis is responsible for payment of all
costs and expenses related to the design, construction and operation of the
exhibition. Additionally, pursuant to the agreement, the Company will receive
$720,000 in installments between September 1996 and August 1, 1997, and will
also receive two-thirds of the net profits, as defined, derived from ticket,
merchandise and sponsorship revenues in excess of $4,850,000. The Memphis
exhibition will display in themed galleries approximately 300 artifacts
recovered between 1987 and 1994 by the Company, including a bronze cherub,
stained glass window, ship's binoculars, steward's jacket, wrought-iron bench
end from a deck chair, and antique jewelry. This exhibition will also include an
18-foot scale model of the Titanic, replications of a First Class stateroom,
dining rooms, Third Class and crew cabins and recreational areas of the Titanic,
the Marconi Room, and a model of the wrecked bow.
13
<PAGE> 14
Additionally, subsequent to August 31, 1996, the Company entered into
an agreement with the National Maritime Center ("Nauticus"), a political
subdivision of the City of Norfolk, Virginia, to exhibit artifacts, expedition
equipment, photographs and film footage from the 1996 Titanic expedition from
November 27, 1996 through March 31, 1996 (the "Norfolk Exhibition").
Approximately twenty-five (25) unrestored artifacts recovered during the Summer
of 1996 expedition (including a telegraph, a large silver soup tureen,
binoculars in a leather case, a ship's whistle and a porthole) and ten (10)
conserved artifacts from prior expeditions will be displayed at the Norfolk
Expedition, together with a life-size rendition of the 20 ton section of the
Titanic hull that the Company sought to raise from the debris field surrounding
the Titanic wreck site during the Summer of 1996 Expedition, a two-ton flotation
bag used in artifact recovery operations, and a full-size replica of a three-ton
light tower that the Company utilized to illuminate portions of the wreck during
the Summer of 1996 Expedition. Pursuant to the Norfolk Exhibition Agreement,
Nauticus is responsible for payment of all costs and expenses related to the
design, construction and operation of the exhibition. The Company will receive
one-third of revenues from the sale of the first 150,000 tickets and fifty (50%)
of revenues from the sale of more than 150,000 tickets. In addition, the Company
will receive fifty (50%) percent of net profits, as defined, from the sale of
merchandise at the Norfolk Exhibition, and fifty (50%) of sponsorship revenues
net of the difference, if any, between $500,000 expended by Nauticus for the
design, construction and marketing of the exhibition and Nauticus' share of
ticket revenues and net profits from the sale of merchandise at the exhibition.
LIQUIDITY AND CAPITAL RESOURCES
Notes payable as of August 31, 1996 represent approximately $126,000
(excluding accrued interest of approximately $25,000) owed to Lone Star Casino
Corporation ("Lone Star") pursuant to a promissory note executed in May 1993.
Pursuant to a settlement agreement to resolve legal proceedings to enforce such
promissory note and counterclaims and third-party claims asserted by the
Company, it was agreed that the Company would pay Lone Star $154,271.62 in
twelve (12) equal monthly installments, commencing as of September 15, 1996,
subject to acceleration in the event that the Company achieves certain levels of
revenue during such period. See Part II, Item 1 of this report. The Company's
capital commitments during its 1997 fiscal year also include lease payments for
principal offices in the base amount of $61,000 per annum, and compensation to
its executive officer. Material contingencies include the outcome of pending
lawsuits. The Company has agreed to pay to LP3 for conservation of the artifacts
to be exhibited at the Memphis exhibition $200,000 of the $720,000 to be paid to
the Company pursuant to the Memphis exhibition agreement.
In connection with its 1994 expedition to the wreck site of the
Titanic, the Company entered into an agreement with IFREMER to charter equipment
and crew necessary to conduct research and recovery efforts. Pursuant to the
terms of such charter agreement, the Company has paid IFREMER the sum of
$300,000 and was obligated to pay an additional $700,000 in two installments of
$350,000 each payable on September 30 and
14
<PAGE> 15
December 1, 1994. The installment due to IFREMER on September 30, 1994 was paid
during the first quarter of the Company's 1996 fiscal year, payment of the final
$350,000 installment was extended to October 1, 1995. During the 1996 fiscal
year, the Company paid $70,000 on account of such obligation, with the $280,000
balance thereof having been paid subsequent to February 29, 1996. The source of
such $280,000 payment was an advance against the Company's share of profits from
Titanic coal sales and sales of cabins of cruise ships which accompanied the
Company on its 1996 research and recovery expedition. The $280,000 was reduced
by approximately $68,000 from the sale of coal during the six months ended
August 31, 1996. There were no profits from sale of cruise ship cabins for the
1996 expedition. The Company cannot forecast when, if ever, reimbursement of
such 1994 charter expenses will be made to the Company by RMS Foundation, Inc.
(an unrelated entity) which had undertaken to provide such funding under its
agreement for the exhibition planned at the Queen Mary Seaport Complex in Long
Beach, California, or when, if ever, construction and fabrication of such
exhibit will commence.
The Company entered into an agreement with IFREMER to charter equipment
and crew necessary to conduct a research and recovery expedition to the wreck
site of the Titanic in the Summer, 1996. Pursuant to the terms of such charter
agreement, the Company agreed to pay IFREMER 2,000,000 French francs
(approximately $400,000 U.S. Dollars) on or before June 20, 1996; 2,100,000
French francs (approximately $420,000 U.S. Dollars) on or before July 15, 1996;
and the sum of $980,000, payable as follows: (a) remittance of fifty (50%) of
the wholesale price of any products sold by the Company involving the 1996
expedition, up to a maximum of $480,000; and (b) up to a maximum of $500,000
payable from the following sources: (i) $.50 per visitor to any exhibition
organized by the Company; (ii) a lump sum of $250,000 for the Memphis
exhibition, payable prior to March 1, 1997; and (iii) one-third of the Company's
revenues from any exhibition of artifacts organized by a third party. The
agreement further provides that in the event the payments from these sources do
not amount to $980,000 within three (3) years after September 1, 1996, any
remaining balance shall be paid from the Company's exhibition revenues, as
defined above. All objects recovered during the 1996 expedition will be the
subject of a lien granted to IFREMER until the Company pays all sums due and
owing to IFREMER for the 1996 expedition. The Company entered into an agreement
for a television production whereby the Company granted certain rights to the
production companies for the production and exploitation of audio and visual
recordings related to the 1996 expedition. The Company's obligations to make the
June and July 1996 payments to IFREMER were paid as part of the television
production budget. The Company is obligated to contribute $100,000 to such
production, $40,000 of which was satisfied through the grant of certain rights
to present information and images concerning the 1996 expedition on the
Internet, and the balance of $60,000 of which is due from the Company on April
16, 1997. The Company has retained the rights for commercial exploitation of
recordings made at the Titanic wreck site in a print format and certain royalty
and other rights with respect to the sale of home videos based upon the 1996
expedition. The Company has also granted
15
<PAGE> 16
to the television production companies a right of first negotiation with respect
to the Company's next expedition to the Titanic wreck site.
Apart from the Company's obligations to IFREMER in connection with its
1996 research and recovery expedition, the Company's near term operating needs
will be financed principally from the advance distribution of profits paid to
the Company under its agreement for the exhibition of Titanic artifacts in
Europe in 1997, revenues from the Norfolk Exhibition, payment of exhibition fees
to the Company for the Memphis Exhibition, and revenues from its sale of coal
and other merchandise through direct market activities. The Company expects its
conservation expenses to increase in its fiscal year commencing March 1, 1996 as
a result of the need to prepare artifacts for exhibition in Europe and Memphis.
In the event that cash flows are not adequate to satisfy the Company's future
operating needs, inclusive of payment of outstanding liabilities, additional
debt and/or equity financing will be required.
With respect to its long-term exhibition plans, the Company is
exploring the possibility of arranging other income producing exhibitions
similar to the prelude exhibition at the National Maritime Museum, or the
Norfolk, Memphis and planned 1997 European exhibitions, without the need for
substantial additional capital, prior to the commencement of the planned
worldwide touring Waterborne Exhibition.
In order for the Company to design, construct and embark on the planned
Waterborne Exhibition, additional debt and/or equity financing will be required.
While management believes that such financing will be available, no assurances
can be given that the Company will be successful in its efforts to obtain
additional financing, or that such financing will be available on a satisfactory
timetable. If the Company is unable to arrange income producing exhibitions
similar to the prelude exhibition at the National Maritime Museum, or the
Norfolk, Memphis and planned 1997 European exhibitions, or funding for the
planned worldwide touring exhibition is not obtained, there could be a
curtailment of the Company's long-term business activities and material delays
in the implementation of its business plans.
In connection with its activities outside of the United States, the
Company is exposed to the risk of currency fluctuations between the United
States dollar and certain foreign currency. If the value of the United States
dollar increases in relation to the foreign currency, the Company's potential
revenues from exhibition and merchandising activities outside of the United
States will be adversely affected. During the first six months of its 1997
fiscal year, there were no significant fluctuations in the exchange rates.
Although the Company's financial arrangements with the National Maritime Museum
and other entities have been based in whole or in part upon foreign currencies,
the Company has sought and will continue to seek to base its financial
commitments and understandings upon the United States dollar in its material
business transactions so as to minimize the adverse potential effect of currency
fluctuations.
16
<PAGE> 17
The Company has been seeking and intends to continue to seek debt
financing to fund as much of the Waterborne Exhibition as may be available on
terms satisfactory to the Company. In connection with any such debt financing
that may be obtained, no assurances of which can be given, the Company expects,
among other things, to be required to pledge its assets to a lender, to be
restricted in its ability to incur additional obligations, and/or to abide by
certain financial covenants.
To the extent that the Company has transactions outside of the United
States, the Company could be affected by nationalizations or unstable
governments or legal systems or intergovernmental disputes. These economic and
political uncertainties may affect the Company's results of operations,
especially to the extent that these matters affect the Company's exhibition
plans in Europe.
In order to protect its salvor-in-possession status and to prevent
third-parties from salvaging the Titanic wreck and wreck site, or interfering
with the Company's rights and ability to salvage the wreck and wreck site, the
Company may have to commence judicial proceedings against third-parties. Such
proceedings could be expensive and time-consuming.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The lawsuit previously reported commenced against the Company in the
Supreme Court of the State of New York, County of New York on or about September
22, 1994 (Glenville Properties Incorporated v. RMS Titanic, Inc. et al.,
94/127087) has been settled, subject to the execution of definitive settlement
documents. Pursuant to the settlement, the Company will pay to an affiliate of
the plaintiff $154,271.62 in twelve (12) equal monthly installments commencing
as of September 15, 1996, subject to acceleration if the Company achieves
certain revenue levels ("Threshold Amounts") during such twelve month period.
The Company has agreed to issue 15,000 shares of its Common Stock in escrow,
with such shares to be either released in 5,000 shares increments to Lone Star
in the event such Threshold Amounts are not achieved as of the end of the
Company's quarterly periods, or to be cancelled in the event such Threshold
Amounts are achieved.
The appeal and cross-appeal in the legal proceedings in the United
States District Court for the Eastern District of Virginia previously reported
pertaining to the motion of a third-party seeking an order rescinding the
salvor-in-possession status of the Company will be voluntarily dismissed,
subject to the execution of definitive agreements relating to the settlement of
an unrelated action between such third party and other parties, including the
principal shareholder of the Company.
17
<PAGE> 18
There has been no other material change in litigation reported in the
Company's Annual Report on Form 10-K for its fiscal year ended February 29,
1996.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULT UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS
10.1 1996 Charter Agreement with IFREMER.
10.2 Agreement dated August 8, 1996 between the Company
and the City of Memphis.
10.2 Agreement dated July 22, 1996 between Discovery
Communications, Inc., Ellipse Programme and the
Company (omitted and filed separately as confidential
information).
(B) REPORTS ON FORM 8-K
None.
18
<PAGE> 19
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.
RMS TITANIC, INC.
(Registrant)
Dated: October 21, 1996 By: /s/George Tulloch
-------------------------------------------
George Tulloch, Principal Executive Officer
Dated: October 21, 1996 By: /s/Nicholas Vitti
--------------------------------------------
Nicholas Vitti, Principal Accounting Officer
19
<PAGE> 1
Paris, June 12, 1996 UNIFORM TIME CHARTER PARTY FOR OFFSHORE
SERVICE VESSELS CODE NAME: "SUPPLYTIME"
PART 1
2. Owners/Disponent Owners/Place of business
IFREMER, hereafter called the OWNERS or IFREMER
155, rue Jean-Jacques Rousseau
92138 ISSY-LES-MOULINEAUX CEDEX
FRANCE
3. Charterers/Place of business
RMS TITANIC, INC.
17, Battery Place
Suite 203
NEW-YORK 10004
UNITED STATES OF AMERICA
4. Vessel's name
NADIR SURFACE VESSEL together with:
- - NAUTILE SUBMERSIBLE (- 6000 m)
- - ROBIN (ROV) - OCEANO (Positioning System)
5. Date of delivery (CI. 2(A))
AUGUST 1, 1996
6. Cancelling Date (CI. 2(A))
NOT APPLICABLE
7. Port or place of delivery (CI. 2(A))
St JOHN'S NEWFOUNDLAND (CANADA)
8. Port or place of re-delivery (CI. 8(A))
St JOHN'S NEWFOUNDLAND (CANADA)
9. Period of hire (CI. 1(A))
34 days
10. Extension of period of hire (optional) (CI. 1(B))
NOT APPLICABLE
- --------------------------------------------------------------------------------
11. Trading limits (CI. 3(A))
NORTH ATLANTIC OCEAN AND WESTERN
MEDITERRANEAN SEA
- --------------------------------------------------------------------------------
12. Employment of vessel restricted to (state nature of service(s)) (CI. 3(A))
DIVING ON RMS TITANIC TO PROMOTE THE SURVEY OF THE WRECK AND
TO RECOVER OBJECTS OF THE TITANIC.
- --------------------------------------------------------------------------------
13. Charter hire (CI. 7(A))
SEE ARTICLE 25
14. Hire payment (state currency, mode and place of payment: also bene-
ficiary and bank account) (CI. 7(A))
FRENCH FRANCS
Payments in favour of IFREMER by
transfer to account n- 307 T opened
with CREDIT LYONNAIS, 11, rue d'Argenson
75008 PARIS - FRANCE
15. Mobilisation charge (lump sum) (CI. 2(B))
INCLUDED
16. Port or place of delivery (Mobilisation) (CI. 2(B))
St JOHN'S NEWFOUNDLAND (CANADA)
17. Demobilisation charge (lump sum) (CI. 8(B))
INCLUDED
18. Number of days' notice of re-delivery (CI. 8(C))
NOT APPLICABLE
SEE BOX 10
19. Early termination of charter (state number of months; hire payable)
NOT APPLICABLE (CI. 8(D))
20. Number of months' notice of early termination (CI. 8(D))
NOT APPLICABLE
21. Meals (state rate agreed) (CI. 9(i))
FREE OF CHARGE
22. Passenger accommodation (state rate agreed) (CI. 9(i))
FREE OF CHARGE
23. Port or place of drydocking (CI. 11(C))
IRRELEVANT
24. War (only to be filled in if Sub-Clause (C) agreed) (CI. 22)
SEE ARTICLE 13
25. Sub-let (state amount of daily increment to charter hire) (CI. 20(B))
SEE ARTICLE 12
26. Place of arbitration (only to be filled in if place other than London
LONDON agreed) (CI. 27)
- --------------------------------------------------------------------------------
27. Numbers of additional clauses covering special provisions, if agreed
1 to 28
- --------------------------------------------------------------------------------
It is mutually agreed that this Contract shall be performed subject to the
conditions contained in the Charter consisting of Part I, including additional
clauses, if any agreed and slated in Box 27, and Part II as well as Appendix A
and Appendix B as annexed to this Charter. In the event of a conflict of
conditions, the provisions of Part I shall prevail over those of Part II and
Appendix A and Appendix B.
- --------------------------------------------------------------------------------
Signature (Owners) Signature (Charterers) --
--------
Le President-Directeur General /s/ G.H. TOLLOC'H
/s/ P. DAVID
- --------------------------------------------------------------------------------
Adopted by
the Documentary Committee of the General
Council of British Shipping, London
Copyright, published by The Baltic
and International Maritime Conference (BIMCO).
Copenhagen.
Issued December 1975.
<PAGE> 2
PART II
AMENDED "SUPPLY TIME" FORM PART II
1. PERIOD OF CHARTER:
1.1. The OWNERS let and the CHARTERERS hire the Vessel described in Appendix
"A" and "B" for the period as indicated in Box 9 from the time the vessel is
delivered to the CHARTERERS subject to clause 1.2. hereunder.
1.2. The basic period of the charter shall be 34 days made up in the manner, and
subject to the provisos, set out below:
2. DELIVERY
The Vessel shall be delivered by the OWNERS and accepted by the
CHARTERERS on the date indicated in Box 5.
3. EMPLOYMENT
(A) The Vessel shall be employed in activities restricted to the
service(s) stated in Box 12 within the trading limits indicated in Box 11 which
shall, in no circumstances, be exceeded without prior agreement and adjustment
of the Charter Hire and such other terms as appropriate to be agreed.
(B) The OWNERS hereby confirm that they are authorized to enter into
and perform this Charter under French Law. Permission from any other responsible
Authorities for Vessel and its Crew to work in the area defined in Clause 19 and
Box 11, if required, shall be the responsibility of CHARTERERS and OWNERS shall
assist, if necessary, in every way possible to secure such permission. If any
other country than France prevents the performance of the TITANIC expedition,
the total charter hire defined in BOX 13 shall be paid to the OWNERS.
<PAGE> 3
4. OWNERS TO PROVIDE
(A) The OWNERS shall provide and pay for all provisions and wages, for
third party insurance of the Vessel, for all deck and engineroom stores (except
those which by the terms of this Charter Party are expressly payable by the
CHARTERERS) and the expense of maintaining the hull and machinery of the Vessel
during her employment.
MAINTENANCE OF VESSEL
(B) The OWNERS undertake that throughout the period under this Charter
they will take all reasonable steps to maintain the Vessel in efficient state in
hull and machinery or to restore the Vessel to such state.
(C) The OWNERS shall further provide and pay for all fuel and
lubricants and transport thereof (including auxiliary machinery and galley
fuel), water, port charges, pilotage and boatmen (whether compulsory or not)
canal steersmen, light dues, solid ballast, tug assistance, consular charges,
canal, dock and other dues and charges, dock, harbour and tonnages dues at the
ports of delivery and re-delivery, agencies and commissions costs for security
or other watchmen, expenses of fumigation (including de-ratisation and
extermination of vermin) and of quarantine (if occasioned by the nature of the
cargo carried or the port visited whilst employed under this Charter).
The OWNERS shall also provide and pay for the loading and unloading of
cargoes except the objects covered by clause 21 and for all necessary dunnage,
uprights and shoring equipment for securing deck cargo, all cordage (excluding
such as is required for ordinary ship's purposes, mooring alongside in harbour
but including such as is required for securing to the offshore units or
necessitated by any special requirements of the harbour authorities), and all
ropes, slings and special runners (including bulk cargo discharge hoses)
actually used for loading and discharging.
OWNERS shall further provide and pay for custom duties, permits, import
duties, including costs involved in establishing temporary or permanent
importation bond(s), clearance expenses both for the Vessel and/or equipment
except in respect of the objects covered by clause 21, also special mooring
lines to offshore platforms, wires, nylons, spring lines, slings etc. used for
offshore works with hose connections and adaptors, refill oxygen/acetylene
bottles and supply electrodes for offshore works.
5. BUNKERS AND LUBRICANTS
The OWNERS shall be responsible for providing and paying for all
bunkers and lubricants.
6. RE-DELIVERY
The Vessel shall be re-delivered on the expiration of this
Charter-Party.
<PAGE> 4
7. THE VESSEL'S SPACE
The whole reach and burden and decks of the Vessel shall be at the
CHARTERER'S disposal reserving proper and sufficient space for the Vessel's
tackle, apparel, furniture, provisions and stores. The CHARTERERS shall be
entitled to carry, so far as space is available and for their purpose in
connection with their operations:
(i) Passengers including T.V. and filming crews, and for such purposes
to make use of the Vessel's available accommodation not being used
on the voyage by the Vessel's Master, Officers and Crew. The
OWNERS shall provide suitable provisions and requisites for such
passengers.
(ii) Lawful cargo whether carried on or under deck.
(iii) Explosives and dangerous cargo provided such are packed and
stowed in accordance with ship's national regulations and/or IMCO
Dangerous Goods Code and/or other pertinent regulations. The
CHARTERERS accept responsibility for any additional expenses
(including restoration expenses) incurred by the OWNERS in
relation to the carriage of such cargo.
(iv) The OWNERS shall permit passengers including film or T.V.
personnel to travel aboard "Nautile" but those passengers will be
carried at their own risk and subject to satisfactory medical
assessment.
8. MASTER AND CREW
(A) For the purpose of this clause, the CHARTERER'S representative at
sea shall deal solely with the OWNERS' Senior Representative at sea and the
OWNERS will implement the CHARTERERS wishes in respect of the Master, Engineer
and Crew in relation to this clause.
(B) The OWNERS shall get the master to carry out his duties promptly
and the Vessel shall render all reasonable services within her capabilities by
day and by night and at such time and on schedules as the CHARTERERS may
reasonably require without any obligations of the CHARTERERS to pay to the
OWNERS or the Master, Officers or the Crew of the Vessel any excess or overtime
payments. The Master through OWNERS Senior Representative shall be under the
orders of the CHARTERERS as regards employment, agency and other arrangements.
The Master and Engineer shall keep full and correct logs accessible to the
CHARTERERS or their agents. The Master shall sign cargo documents as and in the
form presented.
(C) If the CHARTERERS have reason to be dissatisfied with the conduct
of the Master or any Officer, Engineer or member of the Crew, the OWNERS on
receiving particulars of the complaint shall promptly investigate the matter
and, if, in their opinion, it is necessary and practicable, make a change in the
appointment.
<PAGE> 5
9. DEVIATION TO ASSIST
The Vessel shall be entitled at all times to assist vessels and other
property in distress, to deviate for the purpose of saving life or property and
for that purpose to call at any port or ports for fuel and/or other supplies
and to carry cargo on or under deck. Such deviation shall be considered as a
period of hire.
10. SALVAGE
All salvage (other than might be determined to arise from the
activities described in Box 12) and assistance to other vessels shall be for the
OWNERS' and the CHARTERERS' equal benefit after deducting the Master's and
Crew's proportion and all legal and other expenses including hire paid under the
Charter for time lost in the salvage, repairs or damage and oil consumed. The
CHARTERERS shall be bound by all measures taken by the OWNERS in order to secure
payment of salvage and fix its amount. CHARTERERS agree and if within their
control shall so arrange that all salvage assistance unless alternative terms be
agreed with OWNERS, shall be on terms of Lloyd's Open Form "no cure-no pay".
The OWNERS shall indemnify and hold harmless the CHARTERERS from any
claim for salvage made by the Master, any crew servant of agent of the Owner.
If any conflict arises between this clause and clause 21 then the
latter shall prevail.
11. LIEN
The OWNERS shall have a lien upon all cargoes for all claims against
the CHARTERERS under this Charter and the CHARTERERS shall have a lien on the
Vessel for all moneys paid in advance and not earned. CHARTERERS will not
suffer, nor permit to be continued, any lien or encumbrance incurred by them or
their agents, which might have priority over the title and interest of the
OWNERS in the Vessel.
CHARTERERS shall indemnify and hold OWNERS harmless against any lien of
whatsoever nature arising upon the Vessel during the Charter period while she is
under the control of CHARTERERS, and against any claims against OWNERS arising
out of the operation of the Vessel by CHARTERERS or out of any neglect of
CHARTERERS in relation to the Vessel or the operation thereof. Should the Vessel
be arrested by reason of claims or liens arising out of her operation hereunder
by CHARTERERS, CHARTERERS shall at their own expense take all reasonable steps
to secure that within a reasonable time the Vessel is released and at their own
expense put up bail to secure release of the Vessel.
12. SUB-LET
Subject to the prior written approval of the OWNERS, the CHARTERERS
shall be authorized of sub-letting the vessel to any person or company not
competing with the OWNERS.
<PAGE> 6
13. WAR
(A) The Vessel, unless the consent of the OWNERS be first obtained, not
to be ordered nor continue to any place or on any voyage nor be used on any
service which will bring her within a zone which is dangerous as the result of
any actual or threatened act of war, war, hostilities, warlike operations, acts
of piracy or of hostility or malicious damage against this or any other vessel
or its cargo by any person, body or State whatsoever, revolution, civil war,
civil commotion or the operation of international law, nor be exposed in any way
to any risks or penalties whatsoever consequent upon the imposition of
sanctions.
(B) If as a result of such aforementioned acts or warlike operations
the Vessel is prevented from carrying out her duties under this Charter Party,
both the OWNERS and the CHARTERERS may cancel the Charter and, unless otherwise
agreed, the Vessel to be redelivered to the OWNERS in port of re-delivery
defined in box 8.
The OWNERS shall not be liable for the consequences of such early
termination of the charter and the total charter hire defined in box 13 shall be
paid to the OWNERS.
14. GENERAL AVERAGE
General Average to be adjusted according to York/Antwerp Rules, 1974.
Hire not to contribute to General Average.
15. BOTH-TO-BLAME COLLISION CLAUSE
If the Vessel comes into collision with another ship as a result of the
negligence of the other ship and any act, neglect or default of the Master,
mariner, pilot or the servants of the OWNERS in the navigation or the management
of the Vessel, the CHARTERERS will indemnify the OWNERS against all loss or
liability to the other or non-carrying ship or her owners in so far as such loss
or liability represent loss of or damage to, or any claim whatsoever of the
owners of any goods carried under this Charter paid or payable by the other or
non-carrying ship or her owners to the owners of the said goods and set-off,
recouped or recovered by the other or non-carrying ship or her owners as part of
their claim against the Vessel or the owners. The foregoing provisions shall
also apply where the owners, operators or those in charge of any ship or ships
or objects other than or in addition to the colliding ships or objects are at
fault in respect of a collision or contact.
16. STRUCTURAL ALTERATIONS - DURABLE BREAK-DOWN
(A) The CHARTERERS shall have the option of making at their expense
structural alterations to the Vessel with the written consent of the OWNERS but
unless otherwise agreed the Vessel is to be re-delivered re-instated to her
original condition. The Vessel is to remain on hire during any period of these
alterations or re-instatement.
(B) In case of break-down affecting durably technical or operational
capabilities of the Vessel NADIR or the submersible NAUTILE, the CHARTERERS
shall be entitled to terminate this Agreement.
<PAGE> 7
In such case, the CHARTERERS shall release the OWNERS, at the date of
the failure, from any further obligations under this Agreement.
All sums paid at the date of failure by the CHARTERERS will be kept by
the OWNERS.
17. ARBITRATION
Any dispute arising under this Charter which cannot be settled in an
amicable manner be referred to arbitration in London according to the rules and
regulations of the International Chamber of Commerce of LONDON.
This Charter Party shall be governed by English law.
18. POSITION OF TITANIC WRECK
OWNERS warrant that they have accurate knowledge of the exact position
of the "TITANIC" wreck and undertake to bring the vessel to such position and to
dive their submersible on the TITANIC site (as defined in Clause 19). OWNERS
undertake to supply the TITANIC's accurate position to the CHARTERERS. The
CHARTERERS will not unnecessarily divulge the position of the "TITANIC" wreck to
any third party.
19. DEFINITION OF THE SITE
"THE SITE" is :
1. The bow and stem sections of "RMS TITANIC".
2. The area which lies half a nautical mile to either side of the
line from the front of the bow section to the rear of the stern
section, extended one nautical mile to the rear of the stern
section.
ARTICLE 20 - OPERATION OF THE SUBMERSIBLE NAUTILE
20.1. ORGANISATION ABOARD THE VESSEL
On the day before a Nautile's dive an "operation order" will be drafted
by both OWNERS and CHARTERERS representatives.
After each Nautile's dive a "daily work-report" will be drafted by both
OWNERS and CHARTERERS representatives.
An operation order form and a daily work report form are annexed
herewith as Exhibit C.
<PAGE> 8
20.2. NORMAL OPERATION OF THE SUBMERSIBLE NAUTILE
Provided that weather conditions permit dive operations, the NAUTILE
shall perform one dive during each period of 24 hours on site.
A dive shall be considered as performed in so far as the submersible
has stayed a minimum period of one hour on the seabed.
20.3. BAD WEATHER CONDITIONS :
By bad weather conditions is to be understood win storm superior to 25
knots or through of wave superior to 2 metres or fog which may make work
dangerous or hazardous.
If bad weather conditions were to prevent the NAUTILE from diving
during the period of hire, the global CHARTER hire defined in article 25.1. here
above shall be unchanged.
20.4. TECHNICAL FAILURE :
a) If during the period of hire on the Titanic Site, the NAUTILE submersible is
unable to dive due to a technical failure, i.e. technical breakdown, crew
illness or any other reason under the control of the OWNERS during a total
period(s) exceeding an aggregate of 48 hours, the amount defined in article
22.3.3. hereafter shall be lowered of 15.000 US $ for each period totalling 24
hours without dive for technical failure arising after the said period(s)
aggregating 48 hours.
b) If the NAUTILE submersible does not make any dives due to technical failure,
then the OWNERS shall refund to CHARTERERS all sums paid under article 25.1. and
shall release CHARTERERS from any further obligations under this Agreement.
c) After lowering of the amount defined in paragraph a hereabove or after
refunding of the sums defined in paragraph b hereabove, OWNERS shall have no
further obligations or liability to the CHARTERERS and CHARTERERS shall
indemnify and hold harmless OWNERS against all and any claim made by third
parties related to the technical failure, including consequential, incidental
or special damages and including, without limitation, loss of profits.
20.5. INSTALLATION OF EQUIPMENT ON THE NAUTILE AND ON THE NADIR
The installation of equipment belonging to the CHARTERERS on the
NAUTILE shall be done by the CHARTERERS under the supervision of the OWNERS.
The OWNERS may prevent the CHARTERERS from installing certain
equipments on the NAUTILE for technical reasons.
In any case, the OWNERS shall not be liable if the equipment belonging
to the CHARTERERS do not work correctly. The NAUTILE is to be re-instated to her
original condition. The NAUTILE is to remain on hire during any period of these
re-instatements by the CHARTERERS.
OWNERS agree to cooperate with any person or entity contracting to
study the feasibility of technical improvements regarding the expedition
(including but not limited to acoustic transmission and real time broadcast
transmissions).
<PAGE> 9
21. RECOVERY OF OBJECTS
21.1. OWNERS will forthwith hand over to the CHARTERERS all objects
collected on or from the Titanic SITE during the performance of
this charter party.
OWNERS and CHARTERERS will draw up a list of objects recovered
under this Agreement. OWNERS renounce all property rights in the
objects collected during the expedition performed under this
charter party, both for themselves and on behalf of the Master,
Officers, crew, servants and agents, provided all payments
defined in article 22.3. and 25 be made to the OWNERS.
The OWNERS shall have a lien against all objects recovered
during the 1996 TITANIC expedition until the revenues defined in
article 22.3.1. and 22.3.2. hereabove are received by the OWNERS.
The CHARTERERS shall provide free of charge assistance to the
OWNERS to register and maintain the OWNER's lien on the recovered
objects in any country designated by the OWNER's.
21.2. Owing to the fact that the objects collected by OWNERS on behalf
of the CHARTERERS are not the property of OWNERS, the CHARTERERS
shall indemnify and hold harmless OWNERS against all and any
claim related to the recovery of the aforementioned objects
excepting always any claims made by any master, crew, agents,
servants or employees of OWNERS.
CHARTERERS shall reimburse OWNERS of all legal expenses
incurred by OWNERS in connection with such claims.
CHARTERERS shall not sell the artefacts collected by OWNERS to
any individual or private collector, but shall use them only for
exhibition purposes. However the collection may be sold to any
entity that will make them available for exhibition to the
public.
For the purposes of this Agreement an artefact is defined as
any object collected from the RMS TITANIC that was either a part
of the ship or a possession of a person on board.
Coins, currency, diamonds (non jewellery), precious metals,
gems stones, coal, etc. are not considered artefacts.
21.3. OWNERS shall not be responsible for the process of conditioning
and preservation of these objects on board the Vessel but will
assist CHARTERERS in bringing artefacts on board and in the
packing process.
21.4. OWNERS shall be entitled to collect a few specific samples of the
Titanic wreck only for scientific experimental purposes in
corrosion research and/or biological research, and such results
will be provided to the CHARTERERS.
<PAGE> 10
The selection of samples and the collection of the same shall
be mutually agreed between the representative of OWNERS and of
the CHARTERERS on the Vessel and the collection of these samples
shall in no way interfere with the CHARTERERS use of the Vessel.
22. AUDIO VISUAL RIGHTS AND OTHER COMMERCIAL RIGHTS
22.1. CHARTERER'S MEDIA RIGHTS
(A)The CHARTERERS shall at all times have and be entitled to the
benefit of all media, T.V., audio-visual rights relating to and
arising from the activities of the charter provided the
CHARTERERS quote the OWNERS as the performer of the expedition.
(B)All logos appearing on the Vessel will remain as they are and
where they are; nevertheless the CHARTERERS shall have the right
to place such additional logos as they wish on the Vessel and/or
ancillary equipment and/or overalls in such a position that they
wish, provided that such positioning shall not interfere with the
operation of the Vessel or any part of it or obscure any of
OWNERS or other logos or names currently on the Vessel and its
ancillary equipments.
(C)In the same way the OWNERS shall be permitted to have its crew
wearing overalls with its logo.
22.2. OWNERS MEDIA RIGHTS
(A)In recognition of the fact that OWNERS are a French Public
Agency, OWNERS shall be entitled to inform the French speaking
news agencies (not magazines) and domestic French T.V. agencies
other than those in Canada of the RMS TITANIC expedition
performed under this charter party.
All press materials, releases and other information regarding
the RMS Titanic expedition intended to be distributed to the
media shall be prepared by CHARTERERS' public relations
consultants and provided to OWNERS, and CHARTERERS and OWNERS
shall communicate in advance regarding such releases, provided
that CHARTERERS may select the release date.
The images and sound sources to be transmitted by news agencies
and TV news will be supplied to OWNERS no later than their
transmission date to the CHARTERERS own medias.
The OWNERS shall be kept informed of the performance of the
Expedition.
In any case, OWNERS actions shall in no way affect the
commercial value to the CHARTERERS or its assigns of the media
literary and merchandising rights and/or interests all of which
are reserved exclusively to the CHARTERERS.
<PAGE> 11
OWNERS shall have access free of charge to all non confidential
still images approved by the CHARTERERS for distribution to the
French speaking news agencies and French speaking T.V. news
agencies (but not magazines) other than those in Canada with the
express consent of the CHARTERERS.
OWNERS will be authorized to use film footage selected with
CHARTERERS. Such film footage will be used free of charge by
OWNERS for distribution to French speaking T.V., news agencies
(other than those in Canada).
The OWNERS are hereby also authorized to offer free of charge
to such channels the following footage to be included in news
broadcast : the 88 second extract of the film "La face cachee de
la terre" concerning RMS Titanic produced by the OWNERS ;
provided that for the period from the commencement of the
expedition until 90 days after conclusion, OWNERS shall not make
copies of such footage until available to any person or entity.
(B) OWNERS shall also have the right to use free of charge the
above mentioned images for their own communication and
advertising with the express consent of the CHARTERERS.
(C) All press conferences or announcements of the Expedition,
both before the Expedition and after, shall be communicated among
the parties in order to allow real time broadcast.
(D) OWNERS shall receive an advance copy of CHARTERERS media plan
developed by CHARTERERS's public relations consultant.
22.3. MERCHANDISING ARRANGEMENTS FOR DERIVED PRODUCTS. EXHIBITIONS.
22.3.1. MERCHANDISING OF DERIVED PRODUCTS
Subject to the provisos of this section, the CHARTERERS shall retain
and be entitled to the benefit of all merchandising and other
commercial right relating to and arising from the activities of the
Charter.
The OWNERS shall be entitled to receive 50 % of the whole sale
turnover of the sales of derived products of the 1996 TITANIC
expedition (books, videos, posters, T-shirts etc ... ). Any product
involving the 1996 expedition shall be considered product of the 1996
TITANIC expedition within the scope of this paragraph.
The amounts defined in this article 22.3.1. shall not exceed
US $480 000.
<PAGE> 12
22.3.2. EXHIBITIONS
The OWNERS shall receive
a) 0.50 US $ per visitor of any exhibition organized by
the CHARTERERS, Inc, after April 29, 1996 and
b) a lump sum of 250 000 US $ for the proposed Memphis
Exhibition of 1997, this sum is to be paid prior to March
1, 1997, and
c) one third of CHARTERERS revenues received after April
29, 1996 from any non CHARTERERS organized exhibition.
The amounts defined in a, b and c hereabove shall not
exceed a total amount of 500 000 US $.
22.3.3. If, after three years from September 1, 1996, the
980 000 US $ in income have not been received by the
OWNERS, the CHARTERERS agree to allow the balance to be
earned from the method described and applied in article
22.3.2. a and 22.3.2. c hereabove.
Earned revenues referred to in article 22.3.1. and
22.3.2., shall be remitted by the CHARTERERS to the
OWNERS in a timely fashion but under no conditions later
than 45 days after the receipt of the aforementioned
revenues by the CHARTERERS
If, after four years from September 1, 1996, the OWNERS
have not received revenues equal to 980 000 US $ relevant
to article 22.3.1. and 22.3.2., the first refusal right
granted to the CHARTERERS by the OWNERS shall be cancelled
in previous charter agreements as well as in this charter
agreement as defined in article 23 hereafter.
22.3.4. The CHARTERERS, so as to provide the OWNERS with
the full disclosure information required to observe
compliance with its payment obligations defined above,
hereby agrees to provide the OWNERS with copies of all
relevant contracts and documents relating to the
aforementioned revenues and their opportunities. This
obligation will be performed in a timely fashion and the
documents shall be transmitted to the OWNERS within 30
days of receipt by the CHARTERERS.
The OWNERS shall maintain the right to examine the books
and records of the CHARTERERS upon 14 days notice, such
right expiring upon receipt by the OWNERS of the 980 000
US $ described in article 22.3.1. and 22.3.2. hereabove.
If the OWNERS consider that CHARTERERS do not fulfill
their obligations as defined in article 22.3.1. to
22.3.4. hereabove, the OWNERS shall have the right to take
possession of the objects recovered during the 1996
Titanic expedition, such right expiring upon receipt by
the OWNERS of the total amount of 980 000 US $ described
in article 22.3.1. and 22.3.2. hereabove.
22.4. After the 1996 Titanic Expedition, the CHARTERERS shall
notify the OWNERS before entering into any contract for
any film or book relating to the RMS TITANIC expeditions
or to the Titanic site and shall allow OWNERS a period of
60 days to decide whether to participate in any such film
or book.
<PAGE> 13
23. FUTURE EXPEDITIONS ON THE TITANIC SITE
23.1. In the event the OWNERS will be approached during the
years 1996 to 2003 by an entity other than the CHARTERERS
in order to perform similar expeditions on the TITANIC
site, the OWNERS shall grant a first refusal right to the
CHARTERERS in order to allow them to participate in a new
TITANIC expedition.
The first refusal right has to be exercised by the
CHARTERERS within 90 days after notice given in writing by
the OWNERS.
23.2. In the event the CHARTERERS intend to plan additional
expeditions to the TITANIC site during the years 1996 to
2003, the CHARTERERS shall grant a first refusal right to
the OWNERS in order to allow them to participate in an new
TITANIC expedition.
The first refusal right has to be exercised by the OWNERS
within 90 days after notice given in writing by the
CHARTERERS.
23.3. It is being precised that for the enforcement of the above
provisions, OWNERS and CHARTERERS will not perform
expeditions more than once a year.
24. LIABILITY
24.1. OWNERS warrant that the Vessel is seaworthy and fit in all
aspects for her duties under this charter.
24.2. The navigation management and operation of the Vessel, the
diving operations and the overall safety of the Vessel and
all loss damages costs expenses and liabilities arising
out of or connected therewith shall be to sole
responsibility of the OWNERS.
OWNERS shall be solely liable for all loss damages
expenses and claims for death or for personal injury to
any Master, crew, servant, agent or employee of OWNERS or
any other person on board the Vessel at their request and
for all damage or loss caused to or incurred by the Vessel
or other property of OWNERS or OWNERS itself arising out
of or in any way connected with the performance of the
work at sea or sub-sea under this Agreement, howsoever
caused.
Subject to sub-clause 24.3. hereof, OWNERS shall be
liable for all loss damages expenses or costs suffered or
incurred in connection with claims made by third parties
excepting the journalists, T.V. companies and all persons
invited on board by the CHARTERERS and OWNERS shall
indemnify and hold harmless the CHARTERERS from all claims
for such losses, damages, expenses, costs.
Nothing in this clause or in the charter-party as a
whole may be regarded as transferring the aforesaid
responsibilities and liabilities to the CHARTERERS.
<PAGE> 14
OWNERS shall not however be liable for loss or damage
caused to the objects from the wreck of RMS TITANIC from
the time of collection or recovery by OWNERS until such
objects are handed over to the CHARTERERS pursuant to
clause 21.1.
24.3. The CHARTERERS shall be solely liable for all loss damages
expenses and claims for death or for personal injury to
any passenger or other person (not being the Master, crew
servant agent or employee of OWNERS) on board the vessel
at their request or with the knowledge or consent of the
CHARTERERS.
The CHARTERERS shall be responsible for all loss or damage
to objects from the wreck of RMS TITANIC after they are
handed over by OWNERS. For the avoidance of doubt the
CHARTERERS and his insurance companies waive any right to
sue the OWNERS in respect of all matters covered by this
paragraph.
24.4. The OWNERS shall not be held liable for any delay caused
by a strike by persons other the OWNERS own employees or
agents.
ARTICLE 25 - CHARTER HIRE AND CONDITIONS OF PAYMENT
25.1. The global charter hire for the basic charter period of 34
days shall be a lump sum of French Francs 4 100 000 (Four
Millions and one Hundred Thousand French Francs) in
addition to the payments defined in article 22.3.
hereabove.
The CHARTERERS shall transfer by wire the amount of FF 4
100 000 to IFREMER :
CREDIT LYONNAIS
Unite d'Appui Commercial Champs-Elysees
UB COMEX
Account n- 307 T
11, rue d'Argenson
75008 PARIS - FRANCE
Fax n- 33 1 49 24 54 25 - Phone : 33 1 49 24 54 27
with following conditions of payment :
- FF 2 000 000, on or before June 20, 1996, upon
presentation of an invoice of IFREMER.
- FF 2 100 000, on or before July, 15, 1996, upon
presentation of an invoice of IFREMER.
If the CHARTERERS do not make all the payments in the
schedule mentioned hereabove, this agreement shall be
cancelled.
<PAGE> 15
In this event, all the partial payment made by the
CHARTERERS shall be forfeited to the OWNERS and the OWNERS
shall be released from all obligations and liabilities to
the CHARTERERS.
25.2. Except as provided in section 20.4, it is understood that
the Charter hire is payable whatever will be the number of
dives performed by IFREMER.
26. COMPLETE AGREEMENT
This CHARTER contains the entire Agreement between the OWNERS and
the CHARTERERS and supersedes all previous written or oral
agreements.
27. OTHER COMMITMENTS OF THE CHARTERERS
27.1. Upon signature of this agreement, the CHARTERERS will cooperate
in linking, at IFREMER's request, IFREMER's web site with CHARTERER's
one and with any other web site related to the TITANIC project.
27.2. During the 1996 TITANIC expedition, the CHARTERERS will not
engage IFREMER nor GENAVIR personnel without the previous written
consent of IFREMER.
<PAGE> 16
28. NOTICES
All notices required or contemplated by this CHARTER and
particulary for the performance of article 22.3. hereabove, shall be
in writing and shall be deemed effective upon personal delivery,
receipt of telex, telefax, certified mail, return receipt requested,
addressed to the parties at their respective addresses as set forth
below, or to such other addresses by written notice delivered in
accordance with this section :
If to: IFREMER
Bureau des Operations Commerciales
Pointe du Diable
B.P. 70
29280 PLOUZANE
FRANCE
PHONE: 33 98 22 44 90
TELEFAX: 33 98 45 38 57
TELEX: 941 405 F
For the attention of Mr Frederic
MUNAGORRI
If to: RMS TITANIC, INC
17, Battery Place
Suite 203
NEW YORK, NY 10004
UNITED STATES OF AMERICA
PHONE: 19 212 558 6300
TELEFAX: 19 212 482 1912
For the attention of M. G. TULLOCH
Executed this 12 day of June 1996, at
Issy-les-Moulineaux
For and on behalf of OWNERS For and on behalf of CHARTERERS
Le President-Directeur General /s/ G.H. TULLOC'H
-------------
/s/ P. DAVID
--------
G.H. TULLOC'H
RMS TITANIC
P. DAVID President and Chief Executive
Officer
<PAGE> 17
APPENDIX "A" TO THE CHARTER PARTY
Name of VESSEL NADIR
-----
SUPPORT VESSEL for UNDERWATER RESEARCH
- main characteristics :
class of VESSEL : BV + I - 3 - 3 E (haute mer) Glace III
length overall : 55,75 m
beam overall : 11,89 m
draught max : 4,68 m
depth moulded : 5,50 m et main deck
displacement : 2 025 tons
deck cargo : 360 tons
deck area : 33 m x 11 m
deadweigh : 1 173 tons
- main propulsion :
- four engines, total output 2 400 HP
- two engines on each controllable pitch propeller
- auxiliary propulsion : grill jet bow thruster 420 HP
- electrical power 970 KVA
380 V 50 Hz 3 phases
- Equipment
Satellite navigation system
Telephone - telex by IMMARSAT NMR 111 02 25
- facilities for carrying Nautile
- one special stern gantry (20 tons)
- one rolling platform for transfering the submersible to the workshop
<PAGE> 18
- facilities for carrying major surface equipment
- one main crane (3 tons at 14,7 m)
- laboratory containers (20')
- accomodation, officers and men : 14
- technical personnel : 15
- passengers : 10
<PAGE> 19
APPENDIX "B" TO THE CHARTER PARTY
PARTICULARS OF VESSEL'S EQUIPMENT
NAUTILE
manned submersible
- depth rating 6 000 m
- weight in air 18,5 T
- length 8,00 m
- width 2,70 m
- height 3,45 m
- pay-load (without ROBIN) 200 kg
manned sphere
- crew 1 pilot - I navigator (Owner)
- passenger *
- inside diameter 2,10 m
- sphere material titanium allog
- view ports
number 3
diameter 120 mm
pitch and trim control with mercury pump 12 degrees
power system : lead acid 40 Kwh
propulsion : 1 axial motor
2 vertical thrusters
2 lateral thruster
highspeed 2 knots
underwater range at 1 knot : 6 miles
autonomy
safety 130 hours
standard dive 5 hours on bottom
* a medical certificate is required attesting for passage non claustrophobia, no
heart problem, aptitude for normolar diving.
<PAGE> 20
telemanipulation
- 2 manipulators
communications
- 1 underwater telephone
- miscellaneous equipments
- 1 scanning sonar
- 1 TV camera 3 CCD
- 2 photo cameras
- 6 extern lights
- 1 dead reckoning
An acoustic LBL positioning system will be supplied to position Nautile on
the seabed.
<PAGE> 21
APPENDIX "B" TO THE CHARTER PARTY
PARTICULARS OF VESSEL'S EQUIPMENT
R.O.V. ROBIN
- - Tethered remote operated vehicle powered and controlled from the Nautile
max. operating depths 5 000 m
neutral umbilical length 70 m
weight 130 kg
dimensions L 0,67 m
W 0,70 m
H 0,55 m
forward speed up to 1 knot
propulsion 4 oil filled electrical thrusters
(5 kg thrust each)
sensors - kow drift gyro
- high accuracy pressure sensor
auto heading and auto depth capability
light 2 x 250 W quartz iodide
1 x 100 W quartz iodide
television 1 colour low ligth
2 black and white
still picture camera (option)
flash head 100 j
emergency locator flashes
telemetry MUX date and video
<PAGE> 22
APPENDIX C (1) CONTRACT Nr 96/1212570/F
TITANIC 1996
on NADIR (date)
DIVING WORK REPORT dive NMR:
on bottom from to
Equipments operated VIDEO :
STILL CAMERA :
MANIPULATORS :
ROBIN :
TIVA :
OTHER :
Surface meteo conditions :
Report of dive chronology :
Problems if any :
CHARTERERS REPRESENTATIVE IFREMER REPRESENTATIVE
<PAGE> 23
APPENDIX C (2) CONTRAT Nr 96/1212570/F
TITANIC 1996
on NADIR (date):
OPERATION ORDER for dive NMR:
- ---------------
- Pilot :
- Copilot :
- Passenger :
- ROBIN NO YES
- TIVA NO YES
Ideal chronology of bottom operations
Time Ops
PRIORITIES VIDEO :
(indicate priority number) STILL CAMERAS :
FILM :
ROBIN :
ARTEFACTS RECOVERY :
OTHER :
CHARTERERS REPRESENTATIVE IFREMER REPRESENTATIVE
<PAGE> 1
E X H I B I T I O N
A G R E E M E N T
THIS EXHIBITION AGREEMENT, entered into this 8th day of
August, 1996 by and between RMS Titanic, Inc., a corporation organized under the
laws of the State of Florida and having its principal place of business at 17
Battery Place, New York, New York 10004 ("RMST") and the City of Memphis, a
municipal corporation chartered under the laws of the State of Tennessee and
having its principal place of business at City Hall, 125 North Main Street,
Memphis, Tennessee 38103 (the "City").
WHEREAS, RMST and the City wish to work in association with
one another to present an exhibition in the City of artifacts recovered by RMST
from the wreck site of the Titanic (the "Exhibition"), together with supporting
material, and
WHEREAS, RMST wishes to provide artifacts recovered from the
Titanic wreck site, together with supporting material, and the City wishes to
finance, design, construct and operate the Exhibition, subject to the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions contained in this Agreement, the parties hereto agree as follows:
1. DEFINITIONS.
Except as otherwise indicated elsewhere in this Agreement, the
following words and expressions shall have the following meanings:
1.1 "Artifacts" shall mean approximately 300 of the objects in
the ownership of RMST recovered from the wreck site of the Titanic in RMST's
1987, 1993 and 1994 recovery expeditions, all as enumerated on Schedule A and B
annexed hereto (and in addition thereto, objects, if any, that RMST, in its sole
and absolute discretion, agrees to make available from its 1996 research and
recovery expedition), with Schedule A identifying objects conserved and restored
as of this date and other objects ("Star Objects") that RMST is required to
deliver to the City, and Schedule B consisting of the remainder of the objects
that have not yet undergone or completed restoration. Any additions, deletions
or modifications to Schedule A annexed hereto must be mutually approved by RMST
and the City; provided, however, that the list of objects on Schedule B shall be
subject to review based upon the state of conservation and restoration and
neither party shall unreasonably withhold consent to the substitution of similar
objects based upon conservation and restoration costs and the time for
completion of restoration.
1.2 "Exhibition Term" shall mean the period commencing April
3, 1997 and expiring on September 30, 1997.
1.3 "Pennec" shall refer to Stephane Pennec of LP3
Conservation, 8 Rue de Tanneries, 21140 Semur-en-Auxois, France;
<PAGE> 2
1.4 "Project Expenses" shall include, all costs and expenses
authorized by the City of every kind and description incurred in establishing
and presenting the Exhibition (except as may be otherwise expressly set forth
herein), including, without limitation, design and fabrication of the
Exhibition, operating the Exhibition and marketing the Exhibition.
1.5 "Revenue" shall mean and include the aggregate of:
1.5.1 "Ancillary Revenues," which shall include
all revenues derived from television
broadcast, film and music rights that may be
granted pursuant to and in accordance with
the terms of this Agreement, and, except as
set forth in Sections 1.5.2 through 1.5.4
hereof, other revenues related to the
Exhibition.
1.5.2 "Merchandising Revenue," which shall include
all revenues derived from the sale of
merchandise, food and beverage at the
Exhibition, or from merchandise sold at
satellite merchandise sites in the
metropolitan area of Memphis, Tennessee
pursuant to Section 7.3 hereof, minus sales
tax, credit card fees and check verification
fees.
1.5.3 "Sponsorship Revenue," which shall include
all revenues derived from the granting of
sponsorship or promotion rights to third
parties for the Exhibition.
1.5.4 "Ticket Revenue," which shall include all
sums generated by ticket sales at the
Exhibition and through authorized ticket
sale outlets, minus sales tax, credit card
fees, and check verification fees.
1.6 "Supporting Material" shall mean material relating
specifically to the recovery of the Artifacts and other objects recovered by
RMST from the wreck site of the Titanic, including but not limited to
photographs and video footage, supplied by RMST.
1.7 "Venue" shall mean the building in the City known as the
"Pyramid."
2. THEMES AND DURATION OF THE EXHIBITION, AND RMST'S
CONSULTATION RIGHTS.
2.1 The parties agree that the Exhibition will be presented in
the Venue and will cover the Edwardian Period, the design and construction of
the ship, life on board, passengers and crew, the tragedy, the aftermath, the
discovery of the wreck site, and the subsequent recovery and conservation of the
Titanic artifacts.
2
<PAGE> 3
2.2 The name of the Exhibition shall be "Titanic," or such
other name mutually agreed upon by the parties.
2.3 The Exhibition is to be presented by the City in
association with RMST, and will be advertised and promoted in such manner as
will reasonably give recognition to RMST's association with the Exhibition.
2.4 The City and RMST acknowledge that work on the design and
construction of the Exhibition will commence following the execution of this
Agreement, and that the City will have the responsibility for the design and
construction of the Exhibition. In connection with these matters, the City
acknowledges that RMST has sought, and intends to continue to seek, to preserve
and promote the memory of the Titanic with dignity and respect, and with due
regard to Titanic's historical and maritime significance. The City accordingly
agrees that the Exhibition will be designed and constructed in a manner that is
consistent with RMST's desire to preserve and promote the memory of the Titanic,
as described above. In furtherance of the foregoing, the City agrees:
2.4.1 (a) The design and content of the
Exhibition; (b) the content of all
marketing, advertising and public relations
materials; (c) the content of an Exhibition
catalogue and a pre-recorded audio tour of
the Exhibition to be produced by the City,
as provided elsewhere herein; and (d) and
the content of a catalogue for the
Exhibition to be published by the City, as
provided elsewhere herein, shall all be
subject to review and written approval in
advance by RMST, which approval shall not be
unreasonably withheld.
2.4.2 Upon reasonable request from RMST, the City
will arrange for its key design and other
specialist personnel to meet with
representatives of RMST to review the
progress of preparation of the Exhibition.
2.4.3 Upon reasonable request of RMST, the City
will provide reasonable access for RMST
representatives to observe the construction
of the Exhibition.
3. THE OBLIGATIONS OF THE CITY.
The City agrees to pay all Project Expenses and to:
3.1 Make all arrangements, and obtain all rights, permits and
licenses as may be required, for presentation of the Exhibition in the Venue,
and in connection therewith, the City represents and warrants that all
improvements of the Venue will be completed sufficiently in advance of the
opening of the Exhibition so as to permit the Exhibition to commence on April
3
<PAGE> 4
3, 1997 as scheduled;
3.2 Commission, provide and supervise all design and
construction work relating to the Exhibition, including, but not limited to:
3.2.1 All display cases, including alarm systems,
environmental control systems, and any integrated
lighting systems.
3.2.2 All theatrical displays or devices that may be
utilized to enhance the Exhibition.
3.2.3 All didactic panels and Artifact labels.
3.2.4 All lighting systems and equipment for
illumination of the galleries and ancillary
exhibition areas.
3.2.5 All necessary galleries and ancillary areas,
including furniture and equipment for an Artifact
retention area, box office, security, coat
check, cash control, orientation theater, queuing
area, concessions, and all other areas or
improvements that may be required to properly display
the Artifacts and present them in a manner that will
allow the public to safely view them.
3.3 Develop and implement a comprehensive marketing,
advertising, promotion and public relations plan for the Exhibition in
consultation with RMST.
3.4 Develop and implement a comprehensive admissions and sales
program including ticket sales, toll-free telephone sales, media and sales
blitzes, box office, group sales, and other means to maximize attendance at the
Exhibition.
3.5 Be responsible for the care and storage of the Artifacts
and Supporting Material, including conservation inspections so as to protect the
Artifacts from the elements, extreme lighting, temperature, humidity,
unauthorized photography, filming or videotaping, or handling by unauthorized
personnel in a manner that could damage the Artifacts.
3.6 Provide full insurance coverage for the Artifacts as
indicated on Schedule A, but not to exceed Ten Million ($10,000,000) Dollars in
assessed valuation, from the time the Artifacts are delivered by RMST to the
City until they are returned to RMST.
3.7 Be responsible for the installation and de-installation of
the Artifacts in the Exhibition.
3.8 Be responsible for all staffing and the daily operations
of the Exhibition.
4
<PAGE> 5
3.9 Be responsible for the safety and security of the
Artifacts and the Supporting Material from the time the Artifacts and Supporting
Material are delivered by RMST to the City and until returned to RMST.
3.10 Be responsible for all Artifact prepacking, packing,
handling, security, insurance, export and import customs charges and duties, and
the international transportation thereof from Semur-en-Auxois to the City and
for their subsequent return to RMST in Memphis, Tennessee within thirty (30)
days of the end of the Exhibition Term.
3.11 Provide secure, pest-free storage for shipping crates.
3.12 Publish an Exhibition catalogue, which shall be sold at
the Exhibition's Merchandise Shop to be established in accordance with Section
7.1 hereof or at satellite merchandise shops described in Section 7.3 hereof.
3.13 Produce a pre-recorded audio guide for the Exhibition.
3.14 Produce an audio-visual presentation for use solely in an
orientation theater in the Exhibition, the content of which shall be subject to
RMST's consent, which consent shall not be unreasonably withheld.
3.15 Grant RMST a right of first refusal for the purchase of
any or all display cases, theatrical pieces, didactic panels, models, lighting
instruments, and other display items that may be developed by the City for the
Exhibition at a price equal to seventy-five (75%) percent of the cost of the
production thereof, with such right of first refusal to be exercised no later
than the close of the Exhibition and with the City to furnish RMST with an
itemized list of the foregoing items, including the cost thereof, within thirty
(30) days of the opening of the Exhibition. Payment for such items shall be due
in full upon RMST's acceptance of delivery of the items at the Venue in an "as
is" condition no later than thirty (30) days after the end of the Exhibition
Term.
3.16 Design, construct, market and operate the Exhibition to
the highest standards possible and in the same manner as previous "WONDERS"
exhibitions developed by the City.
3.17 Produce color transparencies (the "Transparencies") of
each Artifact for use in connection with the marketing and promotion of the
Exhibition, and subject to the limitations set forth in Section 7.3 hereof, for
merchandising purposes. The City shall provide one (1) original set of
transparencies upon the production thereof. RMST shall have the sole right to
copyright the Transparencies.
4. RMST'S OBLIGATIONS.
RMST agrees to:
5
<PAGE> 6
4.1 Deliver the conserved and restored Artifacts listed in
Schedule A to the City in a restored and conserved condition no later than
October 31, 1996, and the balance of the Artifacts to the City no later than
February 1, 1997.
4.2 Make available such Supporting Material as the City shall
reasonably require following consultation with RMST, subject to RMST's
obligations to also make available Supporting Material for the exhibition of
Titanic artifacts in Europe commencing on or about May 1, 1997.
4.3 During the Exhibition Term, RMST shall not grant to any
third parties any rights to exhibit objects recovered from the Titanic in North
America, and prior to the opening of the Exhibition, RMST shall have the right
to produce an exhibition of unrestored objects from its 1996 expedition
augmented by no more than ten (10) conserved objects from the media of crystal,
ceramic, metal, textile, leather and paper.
4.4 Supply complete condition reports, including photographic
documentation, for each artifact.
4.5 To the extent that RMST does not have color transparencies
of each Artifact, to obtain, at the expense of the City, such additional color
transparencies as the City may request.
4.6 RMST shall assist the City in obtaining permission from
IFREMER for the inclusion of IFREMER's one-third scale model of its submersible
"Nautile" at the Exhibition.
5. DIVISION AND PAYMENT OF REVENUES.
5.1 The City shall pay an exhibition fee of Seven Hundred
Twenty Thousand ($720,000) Dollars to RMST, payable as follows: (a) One Hundred
and Fifty Thousand ($150,000) Dollars within fifteen (15) days of execution of
this Agreement; (b) One Hundred Thousand ($100,000) within fifteen (15) days of
delivery of the Artifacts to the City; (c) Two Hundred Thousand ($200,000)
Dollars on or before April 3, 1997; and (d) Two Hundred Seventy Thousand
($270,000) Dollars on or before August 1, 1997.
5.2. It is recognized that both RMST and the City will solicit
sponsors for the Exhibition, with the City to solicit sponsors from local and
regional City businesses and RMST to solicit sponsors from national and
international businesses, except for Delta airlines, which both parties
acknowledge is expected to be a sponsor of the Exhibition solicited by the City.
RMST and the City agree to jointly develop appropriate sponsorship packages for
the solicitation and procurement of sponsors for the Exhibition, and no sponsor
shall be entitled to rights and privileges other than those mutually agreed upon
by RMST and the City. RMST and the City shall each deliver to the other copies
of any sponsorship agreement with respect to the Exhibition within ten (10) days
of the execution thereof. The initial Seven Hundred Fifty Thousand
6
<PAGE> 7
($750,000) Dollars in sponsorship funds solicited and received by the City will
be applied to the target sponsorship goal of the exhibition budget. The initial
Seven Hundred Fifty Thousand ($750,000) in sponsorship funds solicited by RMST
will be retained by RMST. All sponsorship funds raised in excess of the
foregoing amounts by either or both parties Target Revenue described in Section
5.3 hereof. Nothing in this Agreement shall be construed as prohibiting or
limiting the rights of either party to solicit, before, during and after the
Exhibition Term, sponsors for its exhibition activities apart from the
Exhibition, and both parties expressly acknowledges that neither party shall
have any right to share in any sponsorship revenues derived from either party's
other exhibition activities.
5.3 In the event that the total of: (a) Sponsorship Revenue
raised in excess of the thresholds of $750,000 for RMST and the City described
in Section 5.2 hereof by either or both parties; (b) Ticket Revenue; (c)
Merchandising Revenue; and (d) Ancillary Revenue exceed the sum of Four Million
Eight Hundred and Fifty ($4,850,000) Dollars plus the verified, out-of-pocket
costs incurred by the City in connection with the Artifact prepacking, packing,
handling, security, insurance, export and import customs charges and duties, and
the international transportation thereof from Semur-en-Auxois to the City
pursuant to Section 3.10 hereof (the "Target Revenue"), any such excess (the
"Excess") shall be divided between the parties as follows: two/thirds (2/3)
thereof shall be paid to RMST and one/third thereof shall be paid to the City.
RMST's share of the Excess shall be paid to RMST in arrears on a monthly basis,
with such payment to be made within fifteen (15) days of the calendar end of
each month.
5.3 RMST shall not bear any responsibility for any financial
losses that may be incurred in connection with the presentation of the
Exhibition.
5.4 The City shall furnish to RMST monthly accountings
regarding Ticket Revenue, Sponsorship Revenues, Merchandise Revenue and
Ancillary Revenues no later than fifteen (15) days after the close of the month
covered by such accounting. RMST shall furnish to the City monthly accountings
regarding Sponsorship Revenue no later than fifteen (15) days after the close of
the month covered by such accounting.
5.5 The City shall not bear any responsibility or liability
for any financial losses that may be incurred by RMST.
5.6 The City shall maintain all books of accounts and all
documents necessary to audit, review and verify Revenue. The City agrees to
allow authorized representatives of RMST to have reasonable access to such books
and records, and to make such copies thereof as such representatives shall
reasonably require. In the event that an audit reflects a five (5%) percent or
greater discrepancy from the accounting furnished by the City to RMST pursuant
to Section 5.4 hereof, then the City shall be responsible for payment of the
costs of such audit.
5.7 RMST shall maintain books of accounts and all documents
necessary to audit, review and verify its receipt of Sponsorship Revenue. RMST
agrees to allow authorized representatives of the City to have reasonable access
to such books and records, and to make
7
<PAGE> 8
such copies thereof as such representatives shall reasonably require. In the
event that an audit reflects a five (5%) percent or greater discrepancy from the
accounting furnished by RMST to the City pursuant to Section 5.4 hereof, then
RMST shall be responsible for payment of the costs of such audit.
6. MARKETING, ADVERTISING AND PUBLICITY.
6.1 RMST shall be fully consulted about and shall participate
in the scheduling and details of all marketing, advertising and publicity
activities relating to the Exhibition. RMST shall cooperate and not unreasonably
withhold its consent to, or unreasonably refuse to participate in, promotional
activities.
6.2 The City shall make available to RMST any advertising or
promotional material in advance of the utilization thereof by the City for the
marketing or promoting the Exhibition. RMST shall make available to the City any
advertising or promotional material in advance of the utilization thereof by
RMST for marketing or promoting the Exhibition.
6.3 No advertising, promotional or other marketing materials
may be used by the City without RMST's prior written consent, which consent
shall not be unreasonably withheld.
7. MERCHANDISING.
7.1 The parties agree that the City shall have the sole and
exclusive right to sell merchandise at the Exhibition. For purposes of this
Agreement, the term "merchandise" shall include food and beverages. The City
agrees to arrange for adequate space within the Exhibition for a merchandise
shop (the "Merchandise Shop"). The items of merchandise to be sold at the
Merchandise Shop relating to or depicting the Titanic shall be subject to RMST's
consent, which consent shall not be unreasonably withheld, based upon RMST's
desires to preserve and promote the memory of the Titanic with dignity and
respect, and with due regard to Titanic's historical and maritime significance.
7.2 To the extent that the City obtains the names and/or
addresses of the purchasers of merchandise at the Exhibition, a list of such
names and addresses shall be furnished to RMST. Both parties shall have the
right to use the list of such purchasers as they may respectively determine
thereafter, independent of, and without claims or rights, of the other party
hereto.
7.3 No merchandise derived from, related to or depicting the
Artifacts, Supporting Material or other property rights of RMST shall be offered
for sale or sold by the City through any outlet other than the Merchandise Shop
or at satellite merchandise sites in the metropolitan area of Memphis, Tennessee
during the Exhibition Term, including, but not limited to, direct marketing
programs conducted by mail, telemarketing, any public or proprietary on-line
computerized interactive information retrieval network or system (the
"Internet"), or
8
<PAGE> 9
otherwise, without the express written consent of RMST.
7.4 Nothing in this Agreement shall be construed as
prohibiting or limiting the rights of RMST to market merchandise related to the
Titanic through non-retail means throughout the world and through retail means
outside of the State of Tennessee.
7.5 Subject to any licenses or rights that RMST has or may
grant to third parties, the City shall have the right to produce merchandise
based upon images or recreations of the Artifacts for sale in the Merchandise
Shop; provided, however, such items of merchandise shall be subject to RMST's
written consent as to the quality, style and appearance of each such product;
and provided further that RMST shall have the right to purchase such items of
merchandise at wholesale price for marketing and sale in a manner consistent
with Section 7.4 hereof.
8. AUDIO VISUAL RIGHTS.
8.1 Except for the sole purpose of the orientation theatre
presentation to be made pursuant to Section 3.14 hereof and except for the sole
purpose of promoting the Exhibition (the "Promotional Work"), no television,
video, film, music, photography or other audio visual rights, including but not
limited to, telecommunication mediums such as the Internet, are granted by RMST
to the City. The parties further agree that the subject of the Promotional Work
shall be limited to the Exhibition, and that subject to RMST's prior written
consent, a reasonable portion of RMST's Supporting Material shall be made
available for utilization in the Promotional Work. All rights and title to
photographs of the Artifacts and RMST's Supporting Material shall be owned
exclusively by RMST, and no rights or interests therein are hereby conferred
upon the City except as expressly set forth in this Agreement. RMST shall have
the right to approve the content and form of the Promotional Work prior to the
release thereof to the public, which consent shall not be unreasonably withheld.
Any revenues derived from the granting of rights pursuant to and in accordance
with this Section 9.1 shall be included in Ancillary Revenues under this
Agreement.
8.2 Any Internet site used by the City to promote or advertise
the Exhibition shall include a reference, on the initial screen thereof, that
the Exhibition is presented in association with RMST, and shall contain a
hypertext link to RMST's internet site at the first reference to RMST. Any
Internet site used by RMST shall include a reference, on the initial screen
thereof, that the Exhibition is being presented at the Pyramid in Memphis,
Tennessee, and shall contain a hypertext link to the Internet site used by the
City to promote or advertise the Exhibition.
8.3 Except as set forth in Section 9.1 hereof, the City will
refuse admission to the Exhibition to anyone carrying, or who has within their
control, sight or sound devices which enable them to film or record the
Exhibition, and will eject any person who refuses to relinquish such sight and
sound equipment prior to entering the Exhibition.
9
<PAGE> 10
9. TICKET SALES.
9.1 All ticket prices for the Exhibition shall be as follows:
Adults - $12; Seniors (60+) - $11; Youth (5-16 yrs.) - $6; and Season Pass -
$23, with special rates to be available to school and groups of 20 or more. The
City reserves the right to adjust or change any and all rates as may be required
to properly market the Exhibition.
9.2 To the extent that the City obtains the names and/or
addresses of the purchasers of tickets for the Exhibition, a list of such names
and addresses shall be furnished to RMST. Both parties shall have the right to
use the list of such purchasers as they may respectively determine thereafter,
independent of, and without claims or rights, of the other party hereto.
10. PRE-RECORDED TOUR GUIDE.
The City shall have the right to arrange for the pre-recording
at the Exhibition of a pre-recorded tour guide, subject, however, to RMST's
written approval thereof, which approval shall not be unreasonably withheld. It
is agreed that all persons attending the Exhibition will be entitled to receive
such pre-recorded tour guide without payment of additional charges or fees.
11. INDEMNITIES.
11.1 RMST agrees to indemnify, defend and hold harmless the
City, its subsidiaries, parent companies, affiliates, agents, and assigns and
their respective agents, officers, employees, and directors, from and against
any and all losses, damages, liabilities, claims, demands, suits and expenses
that the City may incur or be liable for as a result of any claim, suit or
proceeding made or brought against the City based upon, arising out of, or in
connection with RMST's breach of any of its duties or obligations hereunder.
11.2 The City, as may be permitted by law, agrees to
indemnify, defend and hold harmless RMST, its subsidiaries, parent companies,
affiliates, agents, and assigns and their respective agents, officers,
employees, and directors, from and against any and all losses, damages,
liabilities, claims, demands, suits and expenses that RMST may incur or be
liable for as a result of any claim, suit or proceeding made or brought against
the City based upon, arising out of, or in connection with the City's breach of
any of its duties or obligations hereunder.
11.3 Each party shall give the other party prompt notice of
any claim or suit coming within the purview of these indemnities. Upon the
written request of any indemnitee, the indemnitor shall assume the defense of
any claim, demand or action against such indemnitee, and shall upon the request
of the indemnitee, allow the indemnitee to participate in the defense thereof,
such participation to be at the expense of the indemnitee. Settlement by the
indemnitee without the indemnitor's prior written consent shall release the
indemnitor from the indemnity as to the claim, demand or action so settled.
10
<PAGE> 11
12. TRADEMARK RIGHTS.
Neither party, by virtue of this Agreement, shall obtain or
claim any right, title or interest in or to the other's name, trademark or logo,
except the right to use as specified herein and hereby acknowledges and agrees
that all such use shall inure to the benefit of the respective owner.
13. OBLIGATIONS UPON TERMINATION.
13.1 Within thirty (30) days of termination of the Exhibition
Term, RMST at the request of the City shall forthwith return to the City or
otherwise dispose of as the City may direct all pamphlets, literature,
photographs, catalogues, advertising material, specifications, cost estimates
and other materials, documents and papers whatsoever belonging to the City and
sent to RMST relating to the Exhibition (other than correspondence between the
City and RMST) which RMST may have in its possession or under its control,
except that RMST shall have the right to retain one (1) copy of each of the
foregoing for archival purposes.
13.2 Within thirty (30) days of termination of the Exhibition
Term, the City at the request of RMST shall forthwith return to RMST or
otherwise dispose of as RMST may direct all pamphlets, literature, contractual
documentation, photographs, catalogues, advertising material, specifications,
cost estimates and other materials, documents and papers whatsoever belonging to
RMST and sent to RMST relating to the Exhibition (other than correspondence
between the City and RMST) which the City may have in its possession or under
its control, except that RMST shall have the right to retain one (1) copy of
each of the foregoing for archival purposes.
13.3 If either party brings an action against the other to
enforce any condition or covenant of this Agreement or for breach of its
obligations under this Agreement, the prevailing party shall be entitled to
recover from the other party its court costs and reasonable attorney's fees
incurred in such action.
14. MISCELLANEOUS.
14.1 Other Documents. Each of the parties hereto shall execute
and deliver such other and further documents and instruments, and take such
other and further actions, as may be reasonably requested of them for the
implementation and consummation of this Agreement and the transactions herein
contemplated.
14.2 Parties in Interest. This agreement shall be binding upon
and inure to the benefit of the parties hereto, and the successors and assigns
of all of them, but shall not confer, expressly or by implication, any rights or
remedies upon any other party.
14.3 Governing Law. This agreement is made and shall be
governed in all respects, including validity, interpretation and effect, by the
laws of the State of New York,
11
<PAGE> 12
USA, without recourse to its conflict of laws principles. Any legal action or
proceeding with respect to this Agreement may be brought in the courts of the
State of New York or of the United States of America for the Southern District
of New York, and, by execution and delivery of this Agreement, the City and RMST
hereby accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The City and RMST
hereby irrevocably waive, in connection with any such action or proceeding, (i)
trial by jury, (ii) any objection, including, without limitation, any objection
to the laying of venue or based on the grounds of forum non conveniens, which it
may now or hereafter have to the bringing of any such action or proceeding in
such respective jurisdictions.
14.4 Notices. All notices required to be given under the terms
of this Agreement shall be in writing (including telegraphic, telex, and
facsimile transmissions, provided that a copy thereof is also sent by certified
or registered air mail on the same day as such telegraphic, telex or facsimile
transmission) and shall be deemed to have been duly given if delivered to the
addressee in person (and receipted on a copy of such notice), or transmitted, or
mailed by certified or registered air mail, return receipt requested, as
follows:
If to RMST, addressed to:
RMS Titanic, Inc.
17 Battery Place
Suite 203
New York, New York
Attention: George Tulloch, President
If to the City, addressed to:
WONDERS
Memphis Cook Convention Center
One Convention Plaza
Memphis, TN 38103
Attention: Jon Thompson, Director of Cultural Affairs,
City of Memphis
All such notices shall be effective upon the delivery thereof to the addressee
in person or via telegraph, telex or facsimile, or if mailed, five (5) business
days after the deposit thereof in the mails. Any party may change their
respective addresses by giving notice as herein provided.
14.5 Entire Agreement. This Agreement contains the entire
agreement between the parties and supersedes all prior agreements,
understandings and writings between the parties with respect to the subject
matter hereof and thereof. Each party hereto acknowledges that no
representations, inducement, promises, or agreements, oral or otherwise, have
been made by any party, which are not embodied herein or in an exhibit hereto,
and that no other agreement, statement or promise may be relied upon or shall be
valid or binding. Neither this agreement
12
<PAGE> 13
nor any term hereof may be changed, waived, discharged or terminated orally.
This agreement may be amended or supplemented or any term hereof may be changed,
waived, discharged or terminated by an agreement in writing signed by all
parties hereto.
14.6 Assignability. This agreement shall not be assignable by
either party hereto without the written consent of the other party hereto.
14.7 Severability. If any provision of the Agreement shall be
held invalid or unenforceable, the remainder of this Agreement which can be
given effect without such invalid or unenforceable provision shall remain in
full force and effect. If any provision is held invalid or unenforceable with
respect to particular circumstances, it shall remain in full force and effect in
all other circumstances.
14.8 No Waiver. The waiver by any party hereto of any breach
or violation of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach.
14.9 Force Majeure. If due to acts of God, insurrection, fire,
elements, national emergency, or any other similar cause outside of the
reasonable control of either party to this Agreement ("Force Majeure") the
Exhibition is canceled, delayed or the performance of either party under the
terms of this Agreement is made impossible, the parties agree that such
cancellation, postponement or failure to perform shall not be considered a
breach of this agreement. In such event, however, the parties agree to use their
best efforts to reschedule the Exhibition.
14.11 Publicity. Each of the parties agree that no press
announcement or press release in connection with this Agreement shall be made
unless the other party hereto shall have given its written consent to such
announcement (including the form thereof), which consent shall not be
unreasonably withheld.
14.12 Confidentiality. RMST and the City agree, as may be
permitted by law, not to divulge or permit or cause their officers, directors,
stockholders, employees or agents to divulge the substance of this Agreement
except to their representatives and attorneys or as may otherwise be required by
law in the opinion of counsel for the party required to make such disclosure.
Additionally, during and after the Term of this Agreement, neither RMST nor the
City shall disclose to anyone for any reason, without the prior written consent
of the other, any marketing plans, strategies, results or other confidential
information divulged to or learned by either party about the other from any
source whatsoever, unless and until such information has generally become
available to the public from sources other than the other party.
14.13 Independent Parties. Nothing in this Agreement is
intended to create, nor shall anything herein be construed or interpreted as
creating, an agency, a partnership, a joint venture or any other relationship
between RMST and the City except as expressly set forth
13
<PAGE> 14
herein, and both parties understand that, except as expressly agreed to herein,
each shall be responsible for its own separate debts, obligations and other
liabilities.
14.14 Remedies. Remedies provided to the parties by this
Agreement are not exhaustive or exclusive, but are cumulative of each other and
in addition to any other remedies the parties may have in law or equity.
14.15 Survival of Representations. The representations,
warranties, indemnification, and confidentiality provisions set forth in this
Agreement shall be continuing and shall survive the expiration of the Exhibition
Term.
14.14 Headings. The captions and headings used herein are for
convenience only and shall not be construed as a part of this agreement.
14.15 Counterparts. This agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute but one and the same document.
14
<PAGE> 15
IN WITNESS WHEREOF, the parties have executed this Agreement
and affixed their hands and seal the day and year first above written.
RMS TITANIC, INC. CITY OF MEMPHIS
By:____________________________________ ___________________________________
William S. Gasparrini, Chairman of Dr. W.W. Herenton, Mayor
the Board
ATTEST: ATTEST:
_______________________________________ ___________________________________
Deputy Comptroller
___________________________________
Jon K. Thompson, Director
Cultural Affairs of City of Memphis
APPROVED AS TO FORM:
___________________________________
City Attorney
15
<PAGE> 16
AGREEMENT
THIS AGREEMENT entered into this 8th day of August, 1996, by and among
RMS TITANIC, INC. ("RMST"), THE CITY OF MEMPHIS ("City") and LP3 CONSERVATION
("LP3").
RESOLUTIONS
1. On or about August 8, 1996 RMST and City entered into a certain
Exhibition Agreement regarding the exhibition in the City of certain Artifacts
recovered by RMST from the wreck site of the Titanic, together with supporting
materials ("Exhibition Agreement").
2. Pursuant to the Exhibition Agreement RMST is to provide certain
Artifacts to the City and the City is to make certain payments to RMST.
3. LP3 is presently conserving certain of the Artifacts in France.
4. RMST desires to assure LP3 that it will receive certain funds due it
for the conservation of such Artifacts.
5. LP3 desires to assure the City and RMST that it will conserve the
Artifacts and ship and deliver such Artifacts to the City in Semur en Auxois.
6. Any terms not herein defined shall have the same meaning set forth
in the Exhibition Agreement.
AGREEMENTS
NOW, THEREFORE, in consideration of the mutual convenants and
conditions contained in this Agreement, the parties hereto agree as follows:
1. RMST hereby directs the City to make distribution of certain of the
payments due from the City to RMST pursuant to Section 5.1 of the Exhibition
Agreement as follows:
a. The City shall pay the $150,000 payment due pursuant to
Section 5.1(a) of the Exhibition Agreement by paying $82,000 to LP3 and $68,000
to RMST pursuant to the terms and conditions of the Exhibition Agreement.
b. The City shall pay the $100,000 payment due pursuant to
Section 5.1(b) of the Exhibition Agreement by making a $50,000 payment to LP3
within fifteen (15) days of delivery to the City in Semur en Auxois of the
Artifacts that have been denoted "Restored" as set forth in Schedule A-1 to
the Exhibition Agreement (the delivery of which shall be made no later than
October 31, 1996) and $25,000 to LP3 within fifteen (15) days of delivery to
the City in Semur en Auxois of the Artifacts as set forth in Schedule A-2 of the
Exhibition Agreement (the delivery of which shall be made no later than
December 31, 1996) and $25,000 to LP3 within fifteen (15) days of the delivery
to the City in Semur en Auxois of the Artifacts as set forth in Schedule B of
the Exhibition Agreement (the delivery of which shall be made no later than
March 1, 1996). For purposes of this paragraph, "delivery" shall be deemed to
have
<PAGE> 17
occurred upon the delivery of the Artifacts to the City in Semur en Auxois for
shipment to the City.
c. LP3 shall receive an additional $100,000 for its work in the
conservation and restoration of the Artifacts from the following sources: (i)
in the event that RMST obtains sponsorship funds pursuant to Section 5.2 of the
Exhibition Agreement, the first One Hundred Thousand ($100,000) thereof shall
be paid to LP3 upon the later of February 1, 1997 or upon receipt of such
sponsorship funds; (ii) in the event that such $100,000 is not paid to LP3 from
sponsorship funds on or before the opening of the Exhibition, any unpaid portion
thereof shall be paid to LP3 by the City at the rate of $0.25 per ticket sold
for admission to the Exhibition, such payment to me made on a monthly basis
within ten (10) days of the end of each calendar month, and with the amount of
such payment made by the City to LP3 to be deducted from the $270,000 due to
RMST on August 1, 1997 pursuant to Section 5.1(d) of the Exhibition Agreement.
2. LP3 agrees that upon payment of the $82,000 as set forth in
Section 1(a) above that it shall begin to prepare the Artifacts from Schedule
A-1 of the Exhibition Agreement for shipping to the City for the Exhibition.
3. The payment by the City of the amounts set forth above is
subject to RMST and LP3 not being in breach of this Agreement or the Exhibition
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement and affixed
their hand and seal the day and year first above written.
RMS TITANIC, INC.
By: /s/ William Gasparrini
----------------------
Its: Chairman of the Board of Directors
----------------------------------
LP3 CONSERVATION
By: /s/ [Illegible]
-------------------
Its: [Illegible]
-----------------------
CITY OF MEMPHIS
By: /s/ W.W. Herenton
------------------------
Dr. W.W. Herenton, Mayor
<PAGE> 18
ATTESTED:
/s/ Linzie Thomas
- ------------------------
Deputy Controller
/s/ Jon K. Thompson
- -------------------------
Jon K. Thompson, Director,
Cultural Affairs of the
City of Memphis
APPROVED AS TO FORM:
/s/ Monice Moore Hogl
- -------------------------
City Attorney
/s/ [Illegible]
- -------------------------
Staff Attorney
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