<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 May 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
July 18, 1996 was 16,137,119.
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<TABLE>
<CAPTION>
PAGE
NUMBER
------
PART I
FINANCIAL INFORMATION
<S> <C> <C>
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 15
Item 2. Changes in Securities 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
</TABLE>
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
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RMS TITANIC, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
================================================================================
<TABLE>
<CAPTION>
MAY 31, FEBRUARY 29,
1996 1996
- ---------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 98,538 $ 43,803
Accounts receivable 1,820 19,510
Refundable withholding tax 87,500 --
Other current assets 10,000 10,000
- ---------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 197,858 73,313
Artifacts Recovered, at cost 5,918,376 5,922,350
Deferred Income Tax Asset, net of valuation allowance of
$1,720,000 and $1,640,000, respectively -- --
Property and Equipment, net of accumulated depreciation
of $43,405 and $41,333, respectively 24,110 26,182
Other 38,611 38,611
- ---------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 6,178,955 $ 6,060,456
===================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 126,050 $ 126,050
Accounts payable and accrued liabilities 1,949,464 2,023,574
Deferred revenue 400,000 --
Loans payable to partners 45,000 45,000
- ---------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 2,520,514 2,194,624
- ---------------------------------------------------------------------------------------------------
Stockholders' Equity:
Common stock - $.0001 par value; authorized 30,000,000 shares,
issued and outstanding 16,137,128 shares 1,614 1,614
Additional paid-in capital 13,869,963 13,869,963
Deficit accumulated during the development stage (10,213,136) (10,005,745)
- ---------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY 3,658,441 3,865,832
- ---------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,178,955 $ 6,060,456
===================================================================================================
</TABLE>
See Notes to Financial Statements
4
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RMS TITANIC, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
PERIOD FROM
THREE-MONTH THREE-MONTH AUGUST 5, 1987
PERIOD ENDED PERIOD ENDED (INCEPTION) TO
MAY 31, MAY 31, MAY 31,
1996 1995 1996
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue:
Licensing fees -- -- $ 575,000
Exhibitions -- $ 290,516 865,799
Merchandise and other $ 3,095 55,487 251,226
Sale of coal 47,725 -- 78,430
- ------------------------------------------------------------------------------------------------------
Total revenue 50,820 346,003 1,770,455
- ------------------------------------------------------------------------------------------------------
Expenses:
General and administrative 256,139 249,882 6,678,264
Depreciation and amortization 2,072 3,089 108,838
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 258,211 308,464 11,983,591
- ------------------------------------------------------------------------------------------------------
Net income (loss) $ (207,391) $ 37,539 $(10,213,136)
======================================================================================================
Net income (loss) per common share $ (.01) $ .00 --
======================================================================================================
Weighted average number of common shares outstanding 16,137,128 14,914,778 --
======================================================================================================
</TABLE>
See Notes to Financial Statements
5
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RMS TITANIC, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
PERIOD FROM
THREE-MONTH THREE-MONTH AUGUST 5, 1987
PERIOD ENDED PERIOD ENDED (INCEPTION) TO
MAY 31, MAY 31, MAY 31,
1996 1995 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $(207,391) $ 37,539 $(10,213,136)
- -------------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 2,072 3,089 108,838
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 3,974 -- 6,974
Changes in operating assets and liabilities, net of
effect from acquisition:
Decrease (increase) in accounts receivable 17,690 (32,274) (1,820)
Increase in refundable withholding tax (87,500) -- (87,500)
Decrease (increase) in other current assets -- 11,065 (10,000)
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 (74,110) (498,708) 4,087,859
Increase in deferred revenue 400,000 -- 400,000
- -------------------------------------------------------------------------------------------------------------------
TOTAL ADJUSTMENTS 262,126 (505,661) 8,706,035
- -------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 54,735 (468,122) (1,507,101)
- -------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Artifact recovery costs, including related deposits -- -- (3,852,975)
Purchases of property and equipment -- -- (72,465)
- -------------------------------------------------------------------------------------------------------------------
CASH USED IN INVESTING ACTIVITIES -- -- (3,925,440)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(continued)
See Notes to Financial Statements
6
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RMS TITANIC, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
PERIOD FROM
THREE-MONTH THREE-MONTH AUGUST 5, 1987
PERIOD ENDED PERIOD ENDED (INCEPTION) TO
MAY 31, MAY 31, MAY 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 - $ 921,954 7,209,446
Stock issuance costs - - (1,150,707)
Repayment of advances from TVLP partner - - (475,000)
Repayment of notes payable - (255,926) (1,135,365)
- -----------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES - 666,028 5,531,079
- -----------------------------------------------------------------------------------------------------------------------
Net increase in cash $54,735 197,906 98,538
Cash at beginning of period 43,803 531 - 0 -
- -----------------------------------------------------------------------------------------------------------------------
CASH AT END OF PERIOD $98,538 $ 198,437 $ 98,538
=======================================================================================================================
</TABLE>
See Notes to Financial Statements
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 May 31, 1996 and its results of operations and its cash flows for
the three months ended May 31, 1996 and 1995. Results of operations
for the three month period ended May 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. For the calculation of the net
loss per share on common stock for the three months ended May 31,
1996, options and warrants to purchase common stock have been
excluded from the computation of weighted average shares outstanding
since their inclusion would have an anti-dilutive effect.
Note 3- The Company has 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"). The agreement provides for the payment to IFREMER of
the sum of approximately $400,000 in June 1996 and $420,000 on July
15, 1996. These payments were amended and subject to the Company's
consummation of a transaction for the production
8
<PAGE> 9
RMS TITANIC, INC.
(A DEVELOPMENT STAGE COMPANY
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
of television programs relating to the Summer of 1996 Expedition,
pursuant to which such payments are to be made by third parties for
the account of the Company. 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 a
maximum of $980,000 due not later that September 1, 2000. The
artifacts recovered during the Summer of 1996 Expedition will serve
as collateral for this debt.
In connection with the Summer of 1996 Expedition, the Company has
entered into a sponsorship agreement with Guiness Import Company
("GIC"), whereby GIC has been designated as an official sponsor of
the Summer of 1996 Expedition. Pursuant to the agreement, the
Company will receive a sponsorship fee of $150,000. During the
quarter entered May 31, 1996, the Company received $50,000 as an
advance on the sponsorship fee. Such advance is included in deferred
revenue in the accompanying May 31, 1996 balance sheet.
Note 4 - The Company has entered into an agreement with an unrelated third
party to market cruises to the site of the Summer of 1996
Expedition. The agreement provides for the Company to receive 50% of
the net profits, as defined.
Note 5 - 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 quarter ended May 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 May 31,
1996 balance sheet.
9
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RMS TITANIC, INC.
(A DEVELOPMENT STAGE COMPANY
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Note 6 - The Company and two unrelated television production companies have
entered into an agreement 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
have been paid as a result of entering into this arrangement. The
Company is obligated 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 7 - 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
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.
10
<PAGE> 11
RMS TITANIC, INC.
(A DEVELOPMENT STAGE COMPANY
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
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 settlement, the
Company will pay to Lone Star $154,271.62 in twelve (12) equal
monthly installments commencing 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 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. The third-party has filed a notice of
appeal from such May 10, 1996 order, and the Company has filed a
cross-appeal with respect to the Court having granted standing to
such third-party. Management of the Company intends to vigorously
defend against such appeal and to vigorously prosecute its
cross-appeal.
11
<PAGE> 12
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 MAY 31, 1996 VERSUS
THE QUARTER ENDED MAY 31, 1995
During the first quarter of its 1997 fiscal year (the "1997 fiscal year"),
the Company's revenues decreased approximately 85% as compared to the first
quarter of its 1996 fiscal year (the "1996 fiscal year"). This decrease 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 activities during the first quarter of its 1997 fiscal year. The
Company's general and administrative expenses increased approximately 3% during
the first quarter of its 1997 fiscal year as compared to the first quarter of
its 1996 fiscal year, principally as a result of a combination of a decrease in
executive compensation and an increase in legal fees attributable to a legal
challenge to the Company's salvor-in-possession status. Interest expenses
decreased approximately 100% during the first quarter of its 1997 fiscal year as
compared to the first quarter of its 1996 fiscal year as a result of a decrease
in notes payable. Financing fees of $6,667 attributable to notes payable were
incurred in the first quarter of the Company's 1996 fiscal year, as compared to
zero in the first quarter of the Company's 1997 fiscal year. During the first
quarter of the 1996 fiscal year, the Company incurred an expense of $35,000
related to the settlement of litigation.
LIQUIDITY AND CAPITAL RESOURCES
Notes payable as of May 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 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 officers.
12
<PAGE> 13
In connection with its 1994 expedition to the wreck site of the RMS
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 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 the cruise ships which will accompany the Company on its
1996 research and recovery expedition. The $280,000 was reduced by approximately
$47,000 from the sale of coal during the quarter ended May 31, 1996. 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 proposed 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 has entered into an
agreement for a television production related to the Company's 1996 expedition,
pursuant to which the Company's obligations to make the June and July 1996
payments to IFREMER have been 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
13
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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.
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, sponsorship fees paid and to be paid by GIC in connection with the 1996
research and recovery expedition, revenues derived from marketing of cruises in
conjunction with the Company's research and recovery expedition to the Titanic
wreck site, and revenues from its sale of coal and other merchandise related to
the 1996 expedition. The Company also expects to obtain additional revenues in
the near term through execution of a definitive agreement for the exhibition of
Titanic artifacts in Memphis, Tennessee from on or about April 1, 1997 through
September 30, 1997. 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. Additionally, the commencement
of the touring of the Company's Waterborne Exhibition would further increase the
Company's requirements for conserved artifacts, and its conservation expenses
would increase further as a result thereof. In the event that revenues 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.
Furthermore, in order for the Company to design, construct and embark on
the planned worldwide touring exhibition, additional debt and/or equity
financing will be required. Management of the Company is actively pursuing such
financing. 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 such funding, or alternatives are 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.
With respect to its long-term exhibition plans, the Company has the
alternative of arranging other income producing exhibitions similar to the
prelude exhibition at the National Maritime Museum, and the planned 1997
exhibitions in Europe and Memphis, without the need for substantial additional
capital. The Company is also presently exploring the possibility of establishing
a short-term exhibition in New York City or elsewhere for the exhibit of the
section of the hull of the Titanic and other artifacts that may be recovered
during the 1996 expedition. Such an exhibition, if established, would commence
no earlier than the middle of September 1996 and end no later than February
1997. The Company's ability to establish such an exhibition will be dependent
upon obtaining capital from external sources, through a co-venture with a third
party or otherwise. No assurances can be made that such financing will be
available on terms that are acceptable to the Company, or, if available, that
the Company will be successful in securing a suitable venue in New York City or
elsewhere for such an exhibition.
14
<PAGE> 15
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 quarter 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.
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
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
15
<PAGE> 16
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.
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 Promotion Agreement dated March 8, 1995 between the Company and
Guiness Import Company.
10.2 Agreement dated April 15, 1996 between the Company and CRE-CO
Finanz GmbH.
10.3 Pledge Agreement dated April 15, 1996 between the Company and
CRE-CO Finanz GmbH.
10.4 Bailment Agreement dated April 15, 1996 between the Company and
CRE-CO Finanz GmbH.
(b) REPORTS ON FORM 8-K
The Company filed a report on Form 8-K dated March 27, 1996 reporting
on Items 1 and 5.
16
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
RMS TITANIC, INC.
(Registrant)
Dated: July 22, 1996 By: /s/ George Tulloch
-------------------------------------------
George Tulloch, Principal Executive Officer
and Acting Principal Accounting Officer
17
<PAGE> 18
EXHIBIT INDEX
-------------
Exhibit No. Description
- ----------- -----------
10.1 Promotion Agreement dated March 8, 1995 between the Company and
Guiness Import Company.
10.2 Agreement dated April 15, 1996 between the Company and CRE-CO
Finanz GmbH.
10.3 Pledge Agreement dated April 15, 1996 between the Company and
CRE-CO Finanz GmbH.
10.4 Bailment Agreement dated April 15, 1996 between the Company and
CRE-CO Finanz GmbH.
27 Financial Data Schedule
<PAGE> 1
PROMOTION AGREEMENT
AGREEMENT effective this 8th day of March, 1996 by and between RMS
Titanic, Inc., located at 17 Battery Place, Suite 203, New York, NY 10004
("Titanic") and Guinness Import Company, located at 6 Landmark Square, Stamford,
CT 06901 ("GIC").
WHEREAS Titanic has the sole and exclusive salvage rights to the wreck
of the RMS Titanic (the "Vessel") pursuant to court order dated June 7, 1994;
WHEREAS Titanic is mounting an expedition to the site of the wreck of
the Vessel to explore and perform certain salvage operations on the Vessel,
including, among other things, the recovery of cases of 1912 Bass(R) Ale
believed to be on the Vessel when it sank, such expedition presently scheduled
to take place during July and August, 1996 or summer, 1997 (the "Expedition");
WHEREAS GIC desires to be an official sponsor of the Expedition and to
conduct a consumer promotion (the "Promotion") whereby a select number of
consumers will be given the opportunity to view portions of the Expedition on
closed circuit TV from a boat in the vicinity of the Expedition to be chartered
by GIC (the "Guest Boat"); and
WHEREAS Titanic desires that GIC be such a sponsor and conduct the
Promotion under the terms and conditions herein set forth.
NOW THEREFORE, the parties hereto agree as follows:
1. The Expedition Name and Promotion Logo
The Promotion shall be known as "The Bass(R) Ale Voyage to
the Titanic"' or such other name as Titanic and GIC shall agree upon. GIC
shall be responsible for the creation of a Promotion logo (the "Promotion Logo")
which may include the name of the Expedition and the Bass(R) Ale logo (as
determined by GIC). The Promotion Logo shall be subject to the approval of
Titanic, which approval shall not be unreasonably withheld. Titanic agrees to
use its best efforts to cause the crew and staff of the Expedition to wear
hats, t-shirts, patches, and crew uniforms displaying the Promotion Logo
during the Dive as hereinafter defined.
2. Dates of the Expedition
The Expedition will begin on or about July 15, 1996 and end
on or about August 30, 1996 or, at Titanic's discretion, during the summer of
1997 (collectively the "Expedition Dates"). The Expedition Dates are of the
essence of this Agreement and may not be changed without GIC's prior written
permission.
<PAGE> 2
RMS Titanic, Inc. With Guinness Import Company
March 8, 1996
Page 2
3. Description of the Promotion
The Promotion is presently planned to be a sweepstakes based
format with the following critical elements:
(a) Up to twenty (20) individuals, including winners and
brand and agency contacts (collectively, the "Guests") designated by GIC shall
partially witness the Expedition from the Guest Boat, of which two to three days
will be at the actual Vessel site, between August 1, 1996 through August 31,
1996 or in the event the Expedition is not held in 1996, during the summer of
1997 the "Promotion Period"), such individuals being-consumers who have won in
the Promotion and GIC's employees, representatives, agents, or media personnel.
Titanic acknowledges that the dates of the Promotion Period are of the essence
of this Agreement and cannot be changed without the prior written agreement of
GIC. GIC shall be solely responsible for the planning and operation of the
Promotion, including, but not limited to, advertising, promotion, rules,
registration, judging, and confirmation of winners. Titanic will work with GIC's
publicity agent, Cohn & Wolfe, regarding any advertising or publicizing of the
Promotion Titanic endeavors to undertake prior to, during, or after the
Expedition, all of which shall be subject to the approval of GIC.
(b) One of the purposes of the Expedition which will be
advertised in the Promotion will be to conduct a one (1) day dive during the
three days in which GIC joins the Expedition (such three (3) day period to be
known as the "Dive") which will be devoted to recovering bottles of 1912 Bass(R)
Ale, although the failure to locate any such bottles will not be considered a
breach of this Agreement by Titanic. Nonetheless, Titanic agrees to use its best
efforts to search for and, if possible, recover, such bottles during the Dive.
Any bottles recovered will remain the property of Titanic. GIC will provide
Titanic with appropriate descriptions of the bottle style that is likely to be
aboard the vessel to assist Titanic's divers in the identification and recovery
of any bottles found.
(c) Reference to Titanic and the Expedition, including
the Promotion Logo and the RMS Titanic logo, may be included, where, when, and
in what manner deemed appropriate in GIC's discretion, in advertising, public
relations, and promotional materials and events broadcast, published or
conducted in connection with the Promotion.
(d) Titanic logo and worldwide web address will be
displayed in all point-of-sale materials created by GIC that have price areas
and on the back panel of the postcard entry form for the Promotion.
<PAGE> 3
RMS Titanic, Inc. with Guinness Import Company
March 8, 1996
Page 3
(e) Without limiting the provisions of paragraph 25
hereof, Titanic expressly agrees that Titanic, together with its employees,
officers, directors, agents, subcontractors, and any other party involved with
the Expedition will not make any public statements announcements, releases, or
other communication, unless required by law, concerning GICs involvement in the
Expedition or Promotion prior to GIC's public announcement of the Promotion,
between or about March 1, 1996 to March 15, 1996. In addition, any such
statements made after GIC's public announcement shall be subject to GIC's prior
approval (which shall not be unreasonably withheld).
4. Exclusive Sponsorship Rights
Titanic hereby grants to GIC the following rights:
(a) Exclusive sponsorship rights to the Expedition
within the beer and malt liquor category (hereinafter referred to as the
"Products" or the "Product Category"). Without limiting the foregoing, GIC shall
also be the sole company in the alcoholic beverage category conducting a
promotion in conjunction with the Expedition as well as the sole company in the
Product Category accompanying the Expedition. In no event shall Titanic allow or
grant rights to any other sponsor of the Expedition that may interfere with
GIC's exercise of its exclusive rights hereunder.
(b) The right to advertise and publicize the Promotion
and use the Promotion Logo by any and all means, including, without limitation,
radio, television, on-line, Internet, merchandising, and print advertising
throughout the world. All photographs, recordings, or other materials relating
to the Expedition or Titanic in such marketing and promotion efforts shall be
subject to the approval of Titanic, which approval shall not be unreasonably
withheld.
(c) The right to participate in any press conferences
promoting the Expedition that in any manner promotes the Dive and/or the
Promotion, such press conferences to be held at such times and locations as
Titanic and GIC shall mutually determine. In addition, subject to Titanic's
reasonable discretion, GIC shall have the right to participate in press
conferences promoting the Expedition in general.
(d) The right to place the Promotion Logo on Product
packaging and labeling.
<PAGE> 4
RMS Titanic, Inc. with Guinness Import Company
March 8, 1996
Page 4
5. Titanic's Endorsement of GIC's Products
Titanic shall refer to GIC Products during the Expedition and
at all promotional activities referring to the Dive and/or Promotion as the
official and exclusive Products in the Product Category for the Expedition and
shall display GIC's point-of-sale signage provided by GIC (which shall portray
the Promotion Logo and/or the Guinness Logo) at all public events promoting the
Dive and/or the Promotion. In addition, subject to Titanic's reasonable
discretion, Titanic shall refer to GIC Products as the official and exclusive
Products in the Product Category for the Expedition and display GIC's
point-of-sale signage provided by GIC at public events promoting the Expedition
in general. The Products shall be the only products offered in the Product
Category at any events promoting the Expedition at any time, unless, such other
products in the Product Category are approved in writing by GIC, which approval
shall be in GIC's sole discretion.
6. Duties In Conjunction With Expedition
(a) Titanic shall conduct the Expedition in a first class and
professional manner and shall at all times portray GIC, and its involvement with
the Expedition, in the most positive fashion.
(b) Titanic shall be solely responsible for arranging for and
staging all operational aspects of the Expedition, including, without limitation
obtaining all permits, licenses and other permissions necessary for the
planning, developing, marketing, production, and staging of the Expedition,
including charter agreements with IFREMER and other partners in the Expedition
and clearances with any other necessary party. Titanic will provide copies of
all contracts with third parties involved in the operation of the Expedition,
other than other sponsors, to GIC by no later than fourteen (14) days from
execution of such contracts provided that GIC agrees not to disclose the terms
of such contracts (except to GIC's employees or agents as GIC deems necessary).
Copies of all contracts related to the operation of the Dive must be provided
to GIC by no later than fourteen (14) days prior to the beginning of the
Expedition.
(c) Titanic shall not be responsible for the care and safety
of the Guests and GIC employees and agents on the Guest Boat. Weather and sea
conditions permitting, all Guests will be allowed to videotape and/or photograph
their experience for their own personal use, provided that the Guests give the
negative of the film or videotape to Titanic to dupe at a reasonable cost to
GIC, such negatives and videotapes to be returned to the Guests promptly.
<PAGE> 5
RMS Titanic, Inc. with Guinness Import Company
March 8, 1996
Page 5
(d) Titanic shall use its best efforts to commit to going
forth with the Expedition in 1996 by March 27, 1996. In the event that Titanic
does not notify GIC of its commitment to do so by such date, then GIC, in its
sole discretion, shall have the right to postpone its participation in the
Expedition to and conduct the Promotion in 1997.
(e) Titanic will provide the video and audio feed to the
Guest Boat so that the Guests may view the Expedition. In addition, Titanic will
assist GIC in establishing the necessary technological capability on the Guest
Boat for such video and audio connection, including without limitation,
identifying, securing and setting up equipment and establishing appropriate
connections between the Expedition and Guest Boat.
(f) Titanic will provide, at GIC's cost, access to
communications facilities to GIC and the Guests while at the site on an as
needed basis subject to Titanic's reasonable judgement.
(g) During the Dive, all media coverage and press releases.by
Titanic shall be limited to its efforts to recover the Bass(R) Ale from the
Vessel. All other purposes of the Expedition, including the recovery of coal
and a 30' portion of the Vessel itself, shall be subject to a media "blackout"
during the days the Guests are present at the site, including any satellite
transmission of the recovery of any coal. All media coverage of the Bass(R) Ale
recovery during the Promotion Period shall be coordinated between GIC and
Titanic's agents and media representatives, with appropriate mention of GIC and
Bass(R) Ale and the names of Guests, if appropriate, in all publicity and
media announcements regarding such recovery attempt.
(h) In the event that Titanic contracts with a third party to
produce a documentary regarding the Expedition, Titanic will promptly notify GIC
of such project and in addition, if requested by GIC, provide information
regarding the parties involved, provided that Titanic is able to do so based
upon any confidentiality agreement entered into by Titanic with any such third
party.
(i) Titanic will include mention of GIC, Bass(R) Ale, and the
Promotion in all coverage of the Dive in a manner mutually agreed upon by
Titanic and GIC, including coverage on or in print, radio, satellite,
television, on-line, Internet or otherwise in a manner.
<PAGE> 6
RMS Titanic, Inc. with Guinness Import Company
March 8, 1996
Page 6
7. Information on the Expedition
Titanic shall conduct lectures, discussions, etc. for the
Guests while on Guest Boat at the site, to educate them on the Expedition and
procedures for the recovery and salvage operation.
8. Payments by GIC
GIC agrees to pay Titanic a sponsorship fee in the amount of
One Hundred Fifty Thousand Dollars ($150,000) ("Sponsorship Fee") as follows:
(a) Upon execution of this Agreement, GIC shall pay
Fifty Thousand Dollars ($50,000) directly to Titanic. In addition, GIC shall pay
One Hundred Thousand Dollars ($100,000) within fourteen (14) days of execution
of this Agreement to Hall Dickler (as hereinafter defined) as escrow agent
pursuant to paragraph 8(b)below. Such monies held in escrow shall be released to
Titanic upon the occurrences set forth in and in accordance with the terms of
the Escrow Agreement (as hereinafter defined).
(b) The Sponsorship Fee due pursuant to paragraph 8(a)
hereof shall be held in escrow by GIC's counsel, Hall Dickler Kent Friedman &
Wood LLP ("Hall Dickler") in accordance with Hall Dickler's standard escrow
agreement attached hereto (the "Escrow Agreement"). Hall Dickler will release
the portion of the Sponsorship Fee held in escrow to Titanic in accordance with
the terms of said Escrow Agreement. In all events, Hall Dickler shall bear no
responsibility or liability for its failure to remit payments to Titanic as
provided in the Hall Dickler Escrow Agreement.
9. Term
This Agreement shall remain in full force and effect for a
term commencing March 1, 1996 and ending at the conclusion of the Promotion
Period (the "Term").
10. Termination
(a) Either party shall have the right at any time to
terminate this Agreement, effective upon the other party's receipt of
termination notice, without prejudice to any other legal rights to which such
terminating party may be entitled, upon the occurrence of any one or more of,
the following:
<PAGE> 7
RMS Titanic, Inc. with Guinness Import Company
March 8, 1996
Page 7
(1) a material breach by the other party in performance
of any of the provisions of this Agreement, which breach is not or cannot be
cured within ten (10) days following written notice of such breach to the
defaulting party;
(2) the making by the other party of an assignment for
the benefit of creditors;
(3) the appointment of a trustee, receiver or similar
officer of any court for the other party or for a substantial part of the
property of the other party, whether with or without its consent, without such
appointment being dismissed or dissolved within thirty (30) days from the date
of such appointment; or
(4) the institution of bankruptcy, composition,
reorganization, insolvency or liquidation proceedings by or against the other
party without such proceedings being dismissed within thirty (30) days from the
date of the institution thereof.
(b) If GIC terminates this Agreement pursuant to the
provisions of paragraph 10(a) above, Titanic shall refund to GIC, within ten
(10) days after its receipt of notice, the total Sponsorship Fee paid by GIC
hereunder. Without limiting the foregoing, in the event of any such termination
pursuant to paragraph 10(a), Titanic shall not reimburse GIC for any of GIC's
expenses incurred in connection with the undertaking and conducting of the
Promotion, except as provided in paragraph 27(b) hereof.
(c) 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.
(d) Termination hereunder shall be without prejudice to any
existing rights and/or claims that the terminating party may have against the
other, and shall not relieve such other party from fulfilling the obligations
accrued prior to such termination.
11. Options to Renew
GIC shall have the right to renew as exclusive sponsor in the
Product Category as such term is defined herein, for an additional one-year
period which would cover any Expedition scheduled for the year 1997 if the
Expedition is executed in 1996, or any Expedition scheduled for the year 1998 if
the Expedition is
<PAGE> 8
RMS Titanic, Inc. with Guinness Import Company
March 8, 1996
Page 8
executed in 1997, on terms mutually agreed upon by both parties, provided that
GIC gives notice of its intention to renew to Titanic by December 1, 1996 for a
1997 Expedition or by December 1, 1997 for a 1998 Expedition and an agreement is
executed within forty five (45) days of that date.
12. Warranties and Representations
(a) Each party hereto hereby represents and warrants that,
(1) It has the right to enter into and fully perform
this Agreement and that there are no contractual-obligations or other
commitments which prevent said party from rendering any services called for by
this Agreement.
(2) There is no litigation or pending or threatened
claims or litigation existing, which may adversely affect either its ability to
fully perform its obligations or the rights granted by it to the other party
hereunder, except for the motion filed against Titanic on February 16th, 1996 by
John Joslyn to rescind the court order dated June 7, 1994 naming Titanic salvor
in possession of the Vessel (the "Pending Litigation").
(3) It will have the participants in the Expedition who
are on their respective vessels sign the Titanic's and GIC's mutual release form
as a condition of participating in the Expedition, substantially in the form
attached hereto in all material respects, at least fourteen (14) days prior to
the beginning of the Expedition.
(b) In addition to any other warranty or representation made
or responsibility assumed by Titanic herein, Titanic hereby represents and
warrants that:
(1) The order issued by U.S. District Court for the
Eastern District of Virginia, Norfolk Division, on June 7, 1994 finding Titanic
to be the salvor in possession of the Vessel is in full force and effect as of
the date hereof.
(2) There are no encumbrances on Titanic's right to use
the name of the Vessel in connection with the Expedition.
(3) The rights granted to GIC herein are in no way
inconsistent with the rights granted any other person or party connected with
the Expedition and that any rights granted to others will not interfere with or
encumber the rights granted to GIC hereunder.
<PAGE> 9
RMS Titanic, Inc. with Guinness Import Company
March 8, 1996
Page 9
(4) The rights granted to GIC hereunder will not
infringe upon or violate the rights of any other person or entity, whatsoever,
whether now existing or hereafter arising.
(5) It has not granted and shall not grant any rights or
opportunities in connection with the Expedition including, without limitation,
the sale of any other sponsorships, signage, or promotion or sale of advertising
space in any Expedition publication, to any company within the Product Category
or for products and/or services that are substantially similar to the Products.
(6) Titanic will use its best efforts to contract with
IFREMER to charter the Expedition to the Vessel site via the Nadir Research
Vessel and the Nautile Submersible Vessel in accordance with the specifications
and dates to be provided to GIC by Titanic, which specifications, when
finalized, are incorporated herein by reference and thereby made a part of this
Agreement.
(7) All Expedition personnel, including without
limitation, captains and crew are professionals and certified for all capacities
by which they will participate in the Expedition.
(8) Attached hereto are titles of all Expedition
participants. An updated list with full names of participants will be provided
to GIC at least fourteen (14) days prior to the start date of the Expedition.
(c) In addition to any other warranty or representation made
or responsibility assumed by GIC herein, GIC hereby represents and warrants
that:
(1) it has the sole and exclusive rights to use the
Bass(R) Ale trademark and logo in the United States; and
(2) the Promotion will be compliant with all
international, federal, state, and local laws and regulations governing such
promotions.
13. Indemnities
(a) Titanic agrees to indemnify, defend and hold harmless
GIC, its subsidiaries, parent companies, affiliates, divisions, 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 GIC may incur
<PAGE> 10
RMS Titanic, Inc. with Guinness Import Company
March 8, 1996
Page 10
or be liable for as a result of any claim, suit or proceeding made or brought
against GIC based upon, arising out of, or in connection with (i) Titanic's
breach of any of its warranties, representations or obligations set forth
herein, or (ii) the operation of the Nadir Research Vessel and the Nautile
Submersible Vessel, or any substitute vessels chartered by Titanic to conduct
the Expedition, including without limitation, claims or actions related to
personal injury or property damage allegedly resulting from the operation of
such vessels.
(b) GIC agrees to indemnify, defend and hold harmless
Titanic, its subsidiaries, divisions, 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 Titanic may incur
or be liable for as a result of any claim, suit or proceeding made or brought
against Titanic based upon, arising out of, or in connection with (i) GICs
breach of any of its warranties, representations or obligations set forth
herein, or (ii) the operation of the Guest Boat, including without limitation,
claims or actions related to personal injury or property damage allegedly
resulting from the operation of the Guest Boat.
(c) 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 an 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.
14. 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 of use as specified herein and hereby acknowledges and agrees
that all such use shall inure to the benefit of the respective owner.
15. 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 Titanic and GIC
except as expressly set forth herein, and both parties understand that, except
as otherwise expressly
<PAGE> 11
RMS Titanic, Inc. with Guinness Import Company
March 8,1996
Page 11
agreed to herein, each shall be responsible for its own separate debts,
obligations and other liabilities,
16. Remedies
Remedies provided to the parties by this Agreement are not
exclusive or exhaustive, but are cumulative of each other and in addition to any
other remedies the parties may have in law or equity.
17. Notices.
Notices or communications to be given under this Agreement
shall be given to the respective parties in writing either by personal delivery,
overnight delivery service or registered or certified mail, postage prepaid, as
follows:
Titanic.
RMS Titanic, Inc.
17 Battery Place
Suite 203
New York, NY 10004
Attn: Mr. George Tulloch, President
Tel: (212) 558-6300
Fax: (212) 482-1912
With a copy to:
Allan H. Carlin, Esq.
110 East 59th Street
New York, NY 10022
Tel: (212) 935-8300
Fax: (212) 593-8038
<PAGE> 12
RMS Titanic, Inc. with Guinness Import Company
March 8, 1996
Page 12
GIC:
Guinness Import Company
6 Landmark Square'
Stamford, CT 06901
Attn. Mr. Eric Ravett
Group Brand Director
Tel: (203) 359-7265
Fax; (203) 359-7204
with a copy to;
Hall Dickler Kent Friedman & Wood LLP
909 Third Avenue
New York, NY 10022
Attn: Douglas J. Wood, Esq,
Tel: (212) 339-5400
Fax: (212) 935-3121
or at such other addresses and to such other persons as either party may from
time to time designate by notice given as herein provided. Such notices or
communications shall be deemed to have been given on the date of delivery
reflected on the return receipt if sent by registered or certified mail, postage
prepaid, or the day of delivery by an overnight delivery service.
18. Successors and Assigns
This Agreement shall be binding and inure to the benefit of
the parties hereto and their successors and assigns, and nothing in this
Agreement is intended nor shall be deemed to confer any benefits on any third
party. No asssignment of this Agreement or the rights and obligations hereunder
shall be valid.
19. Governing Laws and Jurisdiction
This Agreement shall be construed and governed according to
the substantive laws of the State of New York, without resort to its choice of
law rules.
<PAGE> 13
RMS Titanic, Inc. with Guinness Import Company
March 8, 1996
Page 13
20. Waiver
Waiver by either party of a breach or violation of any
provision of this Agreement shall not operate as, or by construed to be, a
waiver of any prior, concurrent or subsequent breach. None of the provisions of
this Agreement shall be considered waived by either party except when such
waiver is given in writing.
21. Entire Agreement
This Agreement, any amendments or addenda hereto, and any
exhibits specifically mentioned herein constitute the entire Agreement between
the parties regarding the subject matter discussed herein and supersede all
prior or contemporaneous discussions, representations, correspondence and
agreements, whether oral or written, pertaining thereto. This Agreement may be
amended or modified only by a writing duly executed by both parties.
22. Unenforceable Provisions
If any term or provision of this Agreement is held invalid or
unenforceable to any extent, the remainder of this Agreement shall not be
affected thereby, and each term and provision of this Agreement shall be valid
and enforceable to the fullest extent permitted by law.
23. Survival of Representations
The representations, warranties, indemnification, and
confidentiality provisions set forth in this Agreement shall be continuing and
shall survive the termination of this Agreement.
24. Cooperation of Parties
The parties hereto agree to cooperate fully with each other
to take such further action and to execute such other documents or instruments
as are reasonably necessary or appropriate to implement this Agreement.
25. Confidentiality
Titanic and GIC agree 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 in the course of
any legal proceedings to which either of the parties hereto is a party for the
purpose of
<PAGE> 14
RMS Titanic, Inc. with Guinness Import Company
March 8,1996
Page 14
securing compliance with this Agreement 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 Titanic or
GIC 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.
26. Paragraph Headings
Paragraph headings contained herein are for convenience only
and are not to be given any weight in the construction of the Agreement.
27. Cancellation, Postponement, and Force Majeure
(a) If due to acts of God, insurrection, fire, elements,
national emergency, unforeseen mechanical failures of a material nature, or any
other similar cause or situation out of the reasonable control of either party
to this Agreement ("Force Majeure"), the Expedition is canceled, delayed, or the
performance of either party under the terms of this Agreement is made impossible
(other than cancellation or postponement), 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 Expedition and cure the failure to perform. If
such rescheduling or cure is not possible in the reasonable discretion of GIC,
then in such event, Titanic will return the portion of the Sponsorship Fee paid
by GIC to Titanic equal to the percentage of the fees paid by Titanic to IFREMER
in connection with the Expedition and recovered by Titanic in the event of any
such Force Majeure. Titanic will return this portion, if any, of the Sponsorship
Fee within ten (10) days from its receipt of a refund from IFREMER.
(b) If Titanic or its agents cancel the Expedition for
reasons other than a Force Majeure, including without limitation, an adverse
judgment for Titanic in the Pending Litigation referred to in Paragraph 12(a)(2)
above, then in such event, Titanic will (i) return the Spornsorship Fee to GIC
within ten (10) days following GIC's request for same and (ii) reimburse GIC for
any direct costs associated with taking GIC's Guests to view the Expedition,
including without limitation, cost of chartering the Guest Boat, non-refundable
travel arrangements and hospitality, provided that GIC incurred such expenses
after having received notice from Titanic that it has entered into a Charter
Agreement with IFREMER to
<PAGE> 15
RMS Titanic, Inc. with Guinness Import Company
March 8, 1996
Page 15
conduct the Expedition. In addition in the event that the Expedition is canceled
due to an adverse judgment for Titanic in the Pending Litigation, then Titanic
will reimburse GIC for any expenses and damages, including without limitation,
reasonable attorneys' fees, it may suffer as a result of any claim or action
brought against GIC by John Joslyn.
28. Contact Person
Titanic shall designate at least one (1) contact person to
exclusively handle the GIC account and to act as the liaison between GIC and
Titanic for all aspects of the sponsorship and Promotion.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and date as first appears above.
RMS TITANIC, INC
BY: /s/ George Tulloch
-------------------------------
George Tulloch
President/CEO
GUINNESS IMPORT COMPANY
BY: /s/ A. John Wheelhouse
-------------------------------
A. John Wheelhouse
Vice President
<PAGE> 16
Guinness Import Company
6 Landmark Square
Stamford, Connecticut 06901
Titanic, Inc.
17 Battery Place
Suite 203
New York, New York 10004
Gentlemen:
We have been advised that RMS Titanic, Inc. ("Titanic") has selected
Guinness Import Company ("GIC") to be an official sponsor of an expedition to
salvage certain items from the wreck of the RMS Titanic (the "Expedition"). In
connection therewith, Titanic and GIC have entered into an agreement dated
March __, 1996 (the "Promotion Agreement") that requires GIC to deposit
into escrow the sum of One Hundred Thousand Dollars ($100,000) (the "Escrowed
Amount") within fourteen calendar days of the date of execution by Titanic and
GIC of the Promotion Agreement, which sum is to be held by this firm, as escrow
agent, on the terms and conditions hereinafter set forth:
1. We shall hold $50,000 of the Escrowed Amount at Citibank, N.A. (the
"Bank") in an interest-bearing account until such time as Titanic notifies us in
writing that it has obtained from IFREMER an executed charter agreement to
conduct the Expedition, in which event we shall advise GIC of our receipt of
such notification from Titanic and if we do not receive from GIC an objection in
writing, within five business days of such advice to GIC, disputing Titanic's
advice to us that it has obtained from IFREMER an executed charter agreement to
conduct the Expedition, said $50,000, including all accrued interest thereon,
shall be delivered by us to Titanic.
2. We shall hold the remaining $50,000 of the Escrowed Amount at the
Bank in an interest-bearing account separate from the account referenced in
paragraph 1 hereof until such time as Titanic notifies us in writing that
IFREMER has successfully completed the three (3) day portion of the Expedition
during which GIC joins the Expedition (the "Dive"), of which one day was devoted
to recovering bottles of 1912 Bass(R) Ale believed to be in the wreck of the RMS
Titanic, in which event we shall advise GIC of our receipt of such notification
from Titanic and if we do not receive from GIC an objection in writing, within
five business days of such advice to GIC, disputing Titanic advice to us that it
has completed the Dive, said $50,000, including all accrued interest thereon,
shall be delivered by us to Titanic.
<PAGE> 17
3. The escrow established hereunder shall commence upon delivery of the
Escrowed Amount and shall terminate in accordance with the instructions and
conditions contained in sections 1 and 2 hereof (provided, however, that we may
be relieved of our obligations hereunder as provided in section 4).
4. In the event that prior to the termination of the escrow, we receive
or become aware of conflicting demands or claims with respect to the Escrowed
Amount or any portion thereof, or the rights of any person relating thereto, we
shall have the right to take no further action with respect to the Escrowed
Amount and not disperse any portion thereof until we receive:
(a) instructions signed jointly by Titanic and GIC;
(b) separate instructions of like tenor from each of Titanic and
GIC;
(c) a certified copy of an arbitrator's award issued under the
rules of the American Arbitration Association as to which we
shall have received an opinion of counsel (which may include
this Firm) satisfactory to us in our sole and absolute
discretion that such award is final beyond appeal; or
(d) a certified copy of a judgment of a court of competent
jurisdiction as to which we shall have received an opinion of
counsel (which may include this Firm) satisfactory to us in
our sole and absolute discretion that such judgment is final
beyond appeal.
In our sole discretion, we may at any time deposit the Escrowed Amount
with a court selected by us, and, in such event, all of our liability and
responsibility will terminate upon such deposit having been made.
5. We shall not be entitled to any fees or compensation for our
services as escrow agent hereunder.
6. Titanic and GIC will be jointly and severally liable for all costs,
damages, judgments and expenses, including reasonable attorneys' fees, suffered
or incurred by us in connection with or arising out of this escrow agreement,
provided, however, that as between Titanic and GIC, all such costs, damages,
judgments and expenses shall ultimately be borne by that party which does not
prevail in any dispute related to the escrow established hereunder. In the event
we file a suit in
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<PAGE> 18
interpleader, we shall thereupon be fully released from all further obligations
to perform any and all duties or obligations imposed upon us hereunder.
7. We may resign and be discharged from our duties and obligations
hereunder by giving ten days' written notice to Titanic and GIC. Titanic and
GIC, together, shall have the right to terminate our appointment as escrow agent
hereunder by giving us written notice of such termination specifying the date
upon which such termination shall take place. Upon such resignation or
termination, Titanic and GIC agree to designate a mutually agreeable successor
escrow agent.
8. We shall have a lien on all right, title and interest of Titanic and
GIC in the Escrowed Amount, to protect, indemnify and reimburse ourselves for
all costs, expenses and liabilities arising out of this escrow agreement,
provided, however, that as between Titanic and GIC, all such cost, expenses and
liabilities shall ultimately be borne by that party which does not prevail in
any dispute related to the escrow established hereunder.
9. We shall not be liable for any error in judgment or for any act done
or omitted by us in good faith, or for anything that we may in good faith do or
refrain from doing in connection herewith; nor for any negligence other than
our gross negligence; nor shall we be answerable for the default or misconduct
of our agents, attorneys or employees, if they be selected with reasonable care;
nor will any liability be incurred by us if, in the event of any dispute or
question as to our duties or obligations hereunder, we act in accordance with
our discretion exercised in good faith. We may act upon any document believed by
us to be genuine and to be signed by the proper party or parties, and will
incur no liability in so acting. We will not be liable for any failure to invest
the Escrowed Amount or for any diminution in the value of the Escrowed Amount
for any cause. We shall not be under any duty to give the Escrowed Amount any
greater duty of care than we give to our own similar property.
10. This Agreement is the exclusive statement of our responsibilities
as escrowee and shall not be construed to contain any implied duties or
obligations. We will not be bound in any way by any other agreement or contract,
including without limitation the Promotion Agreement, whether or not we have
knowledge thereof, and our only duties and responsibilities will be to hold the
Escrowed Amount as escrow agent and to dispose of the same in accordance with
the terms of this agreement.
11. In the event of a dispute between Titanic and GIC regarding the
disposition of the Escrowed Amount, the interest of GIC in the resolution of
such dispute, by litigation or otherwise, may be represented by this Firm.
3
<PAGE> 19
12. Any notice, demand or instruction required or permitted by this
agreement shall be sufficiently delivered, given or served for all purposes if
delivered by hand or if sent by registered or certified mail, or by telecopier
or by overnight mail delivery by a nationally recognized carrier to the parties
at their addresses set forth above, or at such other address as a party may give
by written notice. The date of actual delivery shall be the date of mailing,
except that no notice, demand or instruction shall be deemed to have been
delivered to us until we actually receive it.
13. This agreement shall be governed by and construed in accordance
with the laws of the State of New York except that no choice of law doctrine
shall be used to apply the laws of any other jurisdiction. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, successors and assigns. This agreement may not be changed or
amended in any manner whatsoever except in writing signed by each of the
parties.
14. This agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts each of which when so executed
and delivered shall be deemed to be an original and all of which counterparts of
this agreement taken together shall constitute but one and the same instrument.
[INTENATIONALLY BLANK)
4
<PAGE> 20
Please sign this letter below to confirm your agreement with respect to
the foregoing.
Very truly yours,
HALL, DICKLER, KENT, FRIEDMAN
& WOOD, LLP, Escrow Agent
By: /s/ Linda A. Goldstein
--------------------------------
Name: Linda A. Goldstein
Title: Partner
AGREED TO AND ACCEPTED:
RMS TITANIC, INC.
By: /s/
-------------------------------
Name:
Title:
GUINESS IMPORT COMPANY
By: /s/ A. John Wheelhouse
-------------------------------
Name:
Title:
5
<PAGE> 1
AGREEMENT
THIS AGREEMENT, entered into this 15th day of April, 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 CRE - CO Finanz GmbH, a company organized
under the laws of Germany and having its principal place of business at Ratinger
Strasse 23, 4000 Dusseldorf 1, Germany ("CRE").
WHEREAS, RMST and CRE wish to work in association with out another to
present one or more European exhibitions 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 CRE wishes to 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 150-200 objects in the ownership of RMST
recovered from the wreck site of the Titanic in RMST's 1987, 1993, 1994 and
future recovery expeditions constituting a good cross-section in object type and
size, similar to the cross-section made available to the National Maritime
Museum Of Greenwich, London, England ("NMM") in connection with a "Prelude
Exhibition" presented at NMM from October 1994 through September 1995.
1.2 "Eaton" shall refer to John Eaton of 7 Railroad Avenue, Cold
Spring, New York, USA;
1-3 "Haas" shall refer to Charles Haas of 320 Dover-Chester Road,
Randolph, New Jersey 07869, USA;
1.4 "IFREMER" shall refer to Institute of France for the Research and
Exploration of the Sea:
1.5 "Pennec" shall refer to Stephane Pennec of LP3 Conservation, 8 Rue
de Tanneries, 21140 Semur-en-Auxious, France;
<PAGE> 2
1.6 "Profits" shall mean the excess of all Revenue derived from the
Exhibition over the aggregate of Project Expenses.
1.7 "Project Expenses" shall include, all costs and expenses of every
kind and description incurred in establishing and presenting the Exhibition up
to a maximum of Eight Hundred Thousand ($800,000) U.S. Dollars (except as may
be hereafter increased upon mutual written agreement of the parties),
including, without limitation, design and fabrication of the Exhibition,
transportation of the Artifacts to and from the Exhibition, operating the
Exhibition and marketing the Exhibition.
1.8 "Revenue" shall mean and include the aggregate of:
1.8.1 "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 1.8.2 through 1.8.4 hereof, other revenues related
to the Exhibition, such as revenues derived from
pre-recorded Exhibition tours that may be made Pursuant to
Section 11 hereof.
1.8.2 "Merchandising Revenue," which shall include all revenues
derived from the sale of merchandise, food and beverage at
the Exhibition, less costs of goods and other mutually
agreed upon deductions.
1.8.3 "Sponsorship Revenue," which shall include all revenues
derived from the granting of sponsorship or promotion rights
to third parties.
1.8.4 "Ticket Revenue," which shall include all sums generated by
ticket sales at the Exhibition and through authorized ticket
sale outlets.
1.9 "Supporting Material" shall mean material relating, specifically to
the recovery of the Artifacts, including but not limited to photographs and
video footage.
1.10 "Term" shall mean the period commencing on the date hereof and
expiring on December 31, 1997, whereupon this Agreement shall automatically
terminate without further notice by either party to the other unless this
Agreement has been extended pursuant to the provisions of Section 12 hereof
1.11 "Venue" shall mean the cities of Weimar, Germany and Hamburg,
Germany unless this Agreement has been extended pursuant to the provisions of
Section
2
<PAGE> 3
12 hereof, CRE reserves the right to substitute the city of Berlin, Germany in
place of Weimar, Germany, Hamburg, Germany or such other city in Europe (outside
of Great Britain) to which RMST has given its prior written consent, which
consent shall not be unreasonably withheld, for purposes of this Section 1-11.
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 following themes [to be inserted).
2.2 Ile name of the Exhibition shall be "Recovery of the Titanic," or
"Titanic," or such other name mutually agreed upon by the parties.
2.3 Subject to the provisions of Section 1-11 hereof, the parties
acknowledge that it is intended that the Exhibition will be presented in the
cities of Weimar, Germany and Hamburg, Germany, with Hamburg's exhibition
expected to be larger than Weimar's exhibition. Both of such exhibitions shall
be deemed to constitute a single exhibition for purposes of this Agreement and
shall constitute the Exhibition under this Agreement. It is agreed that the
Exhibition will not be presented until 1997. The Exhibition is to be presented
by CRE 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 CRE and RMST acknowledge that work on the design and construction
of the Exhibition will commence following the execution of this Agreement, and
that while CRE will have the primary responsibility for the design and
construction of the Exhibition, RMST shall assist CRE in all phases of the
establishment and presentation of the Exhibition, including the development of
budgets for the Exhibition, and shall make available to CRE its expertise and
experience in having previously presented or participated in the presentation of
Titanic exhibitions. In connection with these matters, CRE 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. CRE 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, CRE agrees:
2.4.1 Tbe design and content of the Exhibition shall be subject to
RMST's approval, which approval shall not be unreasonably
withheld.
2.4.2 Upon reasonable request from RMST, CRE will arrange for key
design and other specialist personnel to meet with
3
<PAGE> 4
representatives of RMST to review the progress of
preparation of the Exhibition.
2.4.3 Upon reasonable request, CRE will Provide reasonable access
for RMST representatives to observe the construction of the
Exhibition.
2.4.5 A reasonable number of artifacts selected by RMST will be,
made available to CRE in advance of the opening of the
Exhibition for the purpose of promoting the Exhibition.
3. CRE OBLIGATIONS.
CRE 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 a suitable location within the Venue to present the
Exhibition;
3.2 Commission, provide and supervise all design work relating to the
Exhibition, including, but not limited to, graphics, lighting, and Artifact
display.
3.3 Commission, provide and supervise all construction work relating to
the Exhibition, including, but not limited to, the mounting, installation and
display of the Artifacts.
3.4 Procure the packing and transportation of Artifacts and Supporting
Material from France and the United States to the Exhibition site and, unless
the term) of this Agreement has been extended pursuant to Section 12 hereof, to
procure the packing and transportation of Artifacts and Supporting Material
within thirty (30) days of the expiration of the Term to a place designated by
RMST.
3.5 Be responsible to the care of the Artifacts and Supporting Material
at the Exhibition, including the establishment of all necessary environmental
controls and 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 ticketing, security and visitor services at the Exhibition
site.
3.7 Provide all marketing, promotion, press and public relations
services relating to the Exhibition in consultation with RMST.
3.8 Procure adequate insurance coverage for the Artifacts and
Supporting Materials of no less than S5,000,000.
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<PAGE> 5
3.9 Produce an Exhibition catalogue.
4. RMST'S OBLIGATIONS.
RMST agrees to:
4.1 Make the Artifacts available to CRE for the term of the Exhibition
and obtain all necessary authorizations and licenses with regard to the export
of the Artifacts from France or the United States.
4.2 Make available such Supporting Material as CRE shall reasonably
require following consultation with RMST.
4.3 Use its due diligence in an effort to procure the loan by IFREMER
of Supporting Material and documentation relating to the 1987, 1993 and 1994
Titanic expeditions; and
4.4 Use its due diligence in an effort to procure the cooperation of
Pennec, Haas, Eaton and NMM with regard to the content of the Exhibition.
4.5 Provide to CRE such photographs from the Supporting Material as CRE
may reasonably select for inclusion in the Exhibition catalogue.
4.6 During the Term, RMST shall not grant to any third parties any
rights to exhibit Artifacts in Europe or to obtain sponsors for an exhibition of
Artifacts in Europe.
5. DIVISION AND PAYMENT OR PROFITS.
5.1 Profits (as defined in Section 1.6 hereof) shall be divided between
RMST and CRE as follows: two-thirds (2/3) thereof to RMST and one-third (1/3)
thereof to CRE.
5.2 Simultaneously herewith, CRE has paid to RMST the sum of Three
Hundred Fifty Thousand ($350,000) U.S. Dollars as an advance against RMST's
share of the Profits (the "Advance"). In consideration of payment of the
Advance, RMST has granted CRE a security interest in paper currency recovered
from the wreck site of the Titanic until the delivery of the Artifacts to CRE on
prior notice of not less than thirty (30) days from RMST to CRE, and in no event
not later than May 1, 1997. The Artifacts shall be delivered to CRE's principal
place of business as set forth in the preamble to this Agreement unless RMST
has received notice of a different place at least fifteen (15) business days
prior to the date of delivery of the Artifacts. The granting of such security
interest is subject to the terms, and conditions of a Pledge Agreement and
Bailment Agreement executed simultaneously herewith. Except as provided in the
Pledge Agreement, no portion of the Advance shall be subject to refund or
reimbursement to CRE, but shall
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<PAGE> 6
be subject only to recoupment from RMST's share of the Profits, if any, as
provided in Section 5.4 below. No security interest is hereby granted or
intended to be granted hereby with respect to any Advance paid by CRE in
connection with its exercise of its options pursuant to Section 12 hereof.
5.3 In the event that Profits are not generated by the Exhibition, CRE
shall bear the loss of Project Expenses.
5.4 After recoupment from Revenues of Project Expenses, CRE shall
recoup the Advance from RMST's share of the Profits, and after recoupment of the
Advance, CRE shall distribute RMST's share of the profits to RMST in arrears on
a monthly basis.
5.5 CRE shall furnish to RMST monthly accounting regarding Project
Expenses and Revenues no later than twenty (20) days after the close of the
month covered by such accounting.
5.6 CRE shall maintain all books of accounts and all documents,
including contracts, third party accounting statements, remittance advices and
all other appropriate documentation necessary to audit, review and verify
Project Expenses and Revenues. CRE 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 CRE to RMST pursuant to Section 5.5 hereof then CRE
shall be responsible for payment of the costs of such audit.
6. SPONSORSHIP.
CRE shall seek corporate sponsors for the Exhibition that are not in
conflict with the image of promoting science and education, and RMST shall
provide its assistance and support for such efforts. No sponsor shall be granted
any rights, other than sponsorship rights with respect to the Exhibition,
without the prior written consent of RMST. Nothing in this Agreement shall be
construed as authorizing the right to grant sponsorship arrangements for any
activity or undertaking of RMST other than the Exhibition. Any and all payments
received from sponsors of the Exhibition shall be considered Sponsorship Revenue
for purposes of this Agreement.
7. MARKETING, ADVERTISING AND PUBLICITY.
7.1 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.
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<PAGE> 7
7.2 CRE shall make available to RMST any advertising or promotional
material in advance of the utilization thereof by CRE for the marketing or
promoting the Exhibition.
7.3 No advertising, promotional or other marketing materials may be
used by CRE without RMST's prior written consent wbich shall not be
unreasonably withheld.
8. MERCHANDISING.
8.1 The parties agree that CRE shall have the sole and exclusive right
to sell merchandise at the Exhibition and through retail outlets within each
country where a Venue is located. For purposes of this Agreement, the term
"merchandise" shall include food and beverages. CRE agrees to arrange for
adequate space within the Exhibition for a merchandise shop (the "Merchandise
Shop"). The parties may mutually select a third party to manufacture, license
and sell products on their behalves at the Exhibition. If the parties do not
select a Merchandising Company, CRE shall take full responsibility of all costs
relating to merchandising activities at the Exhibition, and shall recoup such
costs as part of its Project Expenses. The items of merchandise to be sold at
the Merchandise Shop shall be subject to RMST's consent, which consent shall not
be unreasonably withheld.
8.2 To the extent that CRE 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.
9. AUDIO VISUAL RIGHTS.
9.1 The parties agree that no television, video, film, music,
photography or other audio visual rights, including but not limited to,
telecommunication mediums such as the Internet or online services, shall be
allowed to any third party, except for the sole purpose of promoting the
Exhibition during the Term of this Agreement (the "Promotional Work"). 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 RMST's Supporting
Material shall be owned exclusively by RMST, and no rights or interests therein
are hereby conferred upon CRE 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.
9.2 Except as set forth in Section 9-1 hereof, CRE will refuse
admission
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<PAGE> 8
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.
10. TICKET SALES.
10.1 All ticket prices for the Exhibition shall be comparable to the
admission prices to other attractions within the Venue and shall be jointly
determined by the parties.
10.2 To the extent that CRE 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.
11. PRE-RECORDED TOUR GUIDE.
CRE shall have the right to arrange for the pre-recording and
availability for rental at the Exhibition of a pre-recorded tour guide, subjec,
however, to RMST's written approval thereof which approval shall not be
unreasonably withheld.
12. OPTIONS TO EXTEND.
RMST hereby grants to CRE the following options:
12.1 To extend the term of this Agreement for an additional period of
one (1) year (the "First Extension Period") from the expiration of the initial
Term hereof, upon the same terms and conditions as those contained herein,
except that the Venue (as defined by Section 1.11 hereof) during the First
ExtensionPeriod shall be Paris, France or another European city to which RMST
has givenits prior written consent, which consent shall not be unreasonably
withheld and the Advance (as defined by Section 5.2 shall be the sum of Two
Hundred Fifty Thousand ($250,000) U.S. Dollars.
12.2 To extend the term of this Agreement for an additional period of
one (1) year (the "Second Extension Period") from the expiration of the First
Extension Term hereof, upon the same terms and conditions as those contained
herein, except that the Venue (as defined by Section 1.11 hereof) during the
Second Extension Period shall be Barcelona, Spain or, at the option of CRE,
Amsterdam, Holland, or another European city, to which RMST has given its prior
written consent, which consent shall not be unreasonably withheld and the
Advance (as defined by Section 5.2 shall be the sum of Two Hundred Fifty
Thousand ($250,000) U.S. Dollars.
12.3 To extend the term of this Agreement for an additional period of
one (1) year (the "Third Extension Period") from the expiration of the Second
Extension Term
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<PAGE> 9
hereof, upon the same terms and conditions as those contained herein, except
that the Venue (as defined by Section 1.11 hereof) during the Third Extension
Period shall be Hanover, Germany (or another European city to whicb RMST has
given its prior written consent, which consent shall not be unreasonably
withheld) and the Advance (as defined by Section 5.2 shall be the sum of Two
Hundred Fifty Thousand ($250,000) U.S. Dollars.
12.4 Each option shall be exercisable by CRE not later than December
31st of the then current period (the "Option Expiration Date"), and shall be
exercised by sending written notice thereof to RMST and by payment of the
Advance for the option period on or before the Option Expiration Date.
12.5 No option shall be exercisable unless all preceding options have
been exercised.
12.6 No option shall be exercisable unless CRE has theretofore duly
performed its obligations hereunder.
12.7 Whenever in this Agreement reference is made to the "Term," such
word shall mean and include not only the initial term hereof, but also all
Extension Periods if the options with respect thereof are exercised.
13. INDEMNITIES.
13.1 RMST agrees to indemnify, defend and hold harmless CRE, 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 CRE
may incur or be liable for as a result of any claim, suit or proceeding made or
brought against CRE based upon, arising out of, or in connection with RMST's
breach of any of its duties or obligations hereunder.
13.2 CRE 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 CRE based upon, arising out of, or in connection with CRE's
breach of any of its duties or obligations hereunder.
13.3 Eacb 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 indemnitiee, the indemnitor shall assume tbe 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
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<PAGE> 10
14. 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, expect
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.
15. OBLIGATIONS UPON TERMINATION.
15.1 Upon termination of this Agreement, RMST at the request of CRE
shall forthwith return to CRE or otherwise dispose of as CRE may direct all
pamphlets, literature, contractual documentation, photographs, catalogues,
advertising material, specifications, cost estimates and other materials,
documents and papers whatsoever belonging to CRE and sent to RMST relating to
the Exhibition (other than correspondence between CRE and RMST) which RMST may
have in its possession or under its control.
15.2 Upon termination of this Agreement, CRE 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 CRE and RMST) which CRE may
have in its possession or under its control.
15.3 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.
16. MISCELLANEOUS.
16.1 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.
16.2 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.
16.3 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, USA, without recourse to its conflict of laws principles. Any
legal action proceeding with respect to this Agreement may be brought in the
courts of the State of New York or of the
10
<PAGE> 11
United States of America for the Southern District of New York, and, by
execution and delivery of this Agreement, CRE and RMST hereby accepts for itself
and in respect of its property, generally and unconditionally, the jurisdiction
of the aforesaid courts. CRE 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, and
(iii) the right to interpose any set off, non-compulsory counterclaim or
cross-claim.
16.4 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 CRE, addressed to:
CRE Factory Gmbh
Ratinger Strasse 23
4000 Dusseldorf I
Germany
Attention: Reinhard Esser, President
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.
16.5 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 maybe relied upon or shall be
11
<PAGE> 12
valid or binding. Neither this agreement 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.
16.6 Assignability. This agreement shall not be assignable by either
party hereto without the written consent of the other party hereto, except that
CRE may assign this Agreement to another entity principally owned by CRE and/or
Reinhard Esser. For purposes of the foregoing, the term "principally owned"
shall mean ownership of a majority of the equity and voting rights in such
entity.
16.7 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.
16.8 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.
16.9 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.
16.11 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.
16.12 Confidentiality. RMST and CRE agree 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 CRE 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.
12
<PAGE> 13
16.13 Independent Parties. Nothing in this Agreement is intended to
create, nor shall anything herein be construed or as creating a joint venture or
any other relationship between RMST and CRE except as expressly set forth
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.
16.9 Other Activities. Should RMST engage in any other exhibition
activities during the Term of this Agreement, RMST shall, subject to rights that
may be granted to third parties in connection with such exhibition activities,
provide CRE, on a confidential basis, with information concerning the design,
fabrication and operational phases of such exhibition activities so as to
maximize the prospects of success for the Exhibition.
16.10 Headings. The captions and headings used herein are for
convenience only and shall not be construed as a part of this agreement.
16.11 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.
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.
By: /s/ George Tulloch
--------------------------------------------
George Tulloch, President
CRE-CO FINANZ GMBH
By: /s/ Reinhard Esser
---------------------------------------------
Reinhard Esser, President
13
<PAGE> 1
PLEDGE AGREEMENT
This Pledge Agreement is entered into as of the 15th day of April, 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 (the "Pledgor"), and Cre - Co Finanz, a company
organized under the laws of Germany and having its principal place of business
at Ratinger Strasse 23, 4000 Dusseldorf 1, Germany (the "Pledgee").
1. COLLATERAL. Currency recovered by the Pledgeor from the wreck site
of the vessel known as RMS Titanic (the "Titanic"), constituting all pieces of
currency recovered by the Pledgor therefrom to date (the "Currency"), and all
of which are owned by the Pledgor and have been delivered by the Pledgor to
Allan H. Carlin, Esq., as escrow agent in accordance with the terms and
provisions of a certain bailment agreement of even date herewith. The Currency
is identified on Exhibit A attached hereto.
2. SECURITY INTEREST. To secure the payment and performance of the
Pledgor's obligations under Section 5.2 of a certain agreement of even date
between the Pledgor and the Pledgee with regard to the exhibition by the Pledgee
of artifacts recovered by the Pledgor from the Titanic (the "Exhibition
Agreement"), the Pledgor hereby grants to the Pledgee a security interest in the
Currency until the Artifacts, as defined by the Exhibition Agreement, are
delivered to the Pledgee at its principal place of business or to such other
location in Germany as the Pledgee designates in accordance with Section 5.2 of
the Exhibition Agreement.
3. WARRANTY REPRESENTATIONS. The Pledgor warrants and represents to the
Pledgee that it has title to the Currency free and clear of all liens and
security interests, and that the Pledgor shall not cause, permit or create any
security interest or restriction to accrue or attach to the Currency except with
the prior written consent of the Pledgee. The Pledgor warrants and represent
that it has the authority to pledge the Currency to the Pledgee in accordance
with the terms set forth herein.
4. COVENANTS OF THE PLEDGOR. In the event that the Pledgor fails to
cure any default under this Pledge Agreement on a timely basis, the Currency
shall be held and disposed of in accordance with the terms of Section 7 below.
5. RIGHTS OF THE PLEDGEE. The Pledgee shall be deemed to have exercised
reasonable care in the custody and preservation of the Currency if it takes such
action for that purpose as the Pledgor shall request, but the failure to honor
any such requests shall not of itself be deemed a failure to exercise reasonable
care. The Pledgee shall be under no duty to exercise or to withhold the
exercise of any of the rights, powers, privileges and options expressly or
implicitly granted to the Pledgee in the Pledge Agreement and shall not be
responsible for any failure or delay to do so.
6. EVENTS OF DEFAULT. The Pledgor shall be in default under this Pledge
Agreement in the event that the Pledgor fails to deliver the Artifacts (as
defined by the Exhibition Agreement) to the Pledgee on or before May 1, 1997
(the "Event of Default").
<PAGE> 2
7. REMEDIES. Upon the occurrence of the Event of Default, the Pledgee
may, upon notice of ninety (90) days given to the Pledgor, declare this Pledge
Agreement in default. In the event that such default is not cured within such
ninety (90) day period, the Pledgee shall have the remedies of a secured party
under the Uniform Commercial Code as then in effect in the State of New York to
obtain repayment from the Pledgor of the Advance, as defined by the Exhibition
Agreement, and such other sums as may be due and payable to the Pledgee under
the terms of the Exhibition Agreement. Any persons affiliated with the Pledgor
and/or Pledgee shall have a reasonable oportunity to attend any sale of the
Currency and bid on and purchase tbe Currency.
8. NO WAIVER. No Event of Default shall be waived by the Pledgee except
in writing, and no waiver of any payment or other right under this Pledge
Agreement shall operate as a waiver of any other payment or right . The failure
of the Pledgee to assert any Event of Default upon the occurrence of such Event
of Default shall not be deemed to be a waiver thereof, and the Pledgee may
assert any Event of Default and claim its remedies thereunder at any time from
and after the Pledgor fails to cure such default within ninety (90) days after
notice thereof is given in accordance with Section 7 hereof. Such default shall
not be deemed to have been waived until the Pledgee has received delivery of the
Artifacts (as defined by the Exhibition Agreement) as provided in Section 2 of
this Agreement.
9. NOTICES. Any consent, notice, or other communication required or
contemplated by this Bailment Agreement shall be in writing (including
telegraphic, telex, and facsimile transmissions) and shall be deemed 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:
(a) If to the Pledgor:
RMS Titanic, IDC.
17 Battery Place
Suite 203
New York, New York 10004
Attention: George Tulloch, President
(b) If to the Pledgee:
Cre - Co Finanz GmbH
Ratinger Strasse 23
4000 Dusseldorf 1
Germany
Attention: Reinhard Esser, President
All such notices and communications shall be effective upon the delivery thereof
or via telegraph, telex or facsimile, or if mailed, five (5) business days after
the deposit thereof in
2
<PAGE> 3
the mails. Any party may change their respective addresses by giving notice as
herein provided.
10. Entire Agreement Governing Law; Benefit. This Pledge Agreement sets
forth the entire understanding between the parties concerning the subject matter
hereof, and supersedes all prior negotiations and understandings with respect
thereto. This Pledge Agreement shall be construed under and governed in
accordance with the laws of the State of New York, without recourse to its
conflict of laws principles. Unless the context otherwise requires, all terms
used herein which are defined in the Uniform Commercial Code as in effect in the
State of New York shall have the meaning therein stated. All the rights of the
Pledgee under this Pledge Agreement shall inure to the benefit of its successor
and assigns. All obligations of the Pledgor hereunder shall be binding upon
their legal representatives, successors and assigns. 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, Pledgor and
Pledgee hereby accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Voyager 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, and (iii) the right to interpose any set off,
non-compulsory counterclaim or cross-claim.
11. SEVERABILITY. If any provision of this 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.
12. ADDITIONAL DOCUMENTS. The Pledgor agrees to execute any additional
documents, and take such further action as the Pledgee may reasonably request,
in order to effectuate the intent and purposes of this Agreement.
13. CAPTIONS. The captions and section numbers appearing in this
Agreement are inserted only as a matter of convenience, and shall not be used to
construe, define, limit or describe the scope or intent of the provisions of
this Agreement.
14. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which when executed by the parties hereto shall be deemed in original and all
of which together shall be deemed the same Agreement.
3
<PAGE> 4
IN WITNESS WHEREOF, this Pledge Agreement is effective as of the 11th
day of April, 1996,
RMS TITANIC, INC.
By:_____________________________________
Pledgor
CRE - CO FINANZ GMBH
By:_____________________________________
Pledgee
4
<PAGE> 5
PLEDGE AGREEMENT
This Pledge Agreement is entered into as of the 15th day of April, 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 (the "Pledgor"), and Cre - Co Finanz, a company
organized under the laws of Germany and having its principal place of business
at Ratinger Strasse 23, 4000 Dusseldorf 1, Germany (the "Pledgee").
1. Collateral. Currency recovered by the Pledgeor from the wreck site
of the vessel known as RMS Titanic (the "Titanic"), constituting all pieces of
currency recovered by the Pledgor therefrom to date (the "Currency"), and all of
which are owned by the Pledgor and have been delivered by the Pledgor to Allan
H. Carlin, Esq., as escrow agent in accordance with the terms and provisions of
a certain bailment agreement of even date herewith. The Currency is identified
on Exhibit A attached hereto.
2. Security Interest. To secure the payment and performance of the
Pledgor's obligations under Section 5.2 of a certain agreement of even date
between the Pledgor and the Pledgee with regard to the exhibition by the Pledgee
of artifacts recovered by the Pledgor from the Titanic (the "Exhibition
Agreement"), the Pledgor hereby grants to the Pledgee a security interest in the
Currency until the Artifacts, as defined by the Exhibition Agreement, are
delivered to the Pledgee at its principal place of business or to such other
location in Germany as the Pledgee designates in accordance with Section 5.2 of
the Exhibition Agreement.
3. Warranty Representations. The Pledgor warrants and represents to the
Pledgee that it has title to the Currency free and clear of all liens and
security interests, and that the Pledgor shall not cause, permit or create any
security interest or restriction to accrue or attach to the Currency except with
the prior written consent of the Pledgee. The Pledgor warrants and represent
that it has the authority to pledge the Currency to the Pledgee in accordance
with the terms set forth herein.
4. Covenants of the Pledgor. In the event that the Pledgor fails to
cure any default under this Pledge Agreement on a timely basis, the Currency
shall be held and disposed of in accordance with the terms of Section 7 below.
5. Rights of the Pledgee. The Pledgee shall be deemed to have exercised
reasonable care in the custody and preservation of the Currency if it takes such
action for that purpose as the Pledgor shall request, but the failure to honor
any such requests shall not of itself be deemed a failure to exercise reasonable
care. The Pledgee shall be under no duty to exercise or to withhold the
exercise of any of the rights, powers, privileges and options expressly or
implicitly granted to the Pledgee in the Pledge Agreement and shall not be
responsible for any failure or delay to do so.
6. Events of Default. The Pledgor shall be in default under this Pledge
Agreement in the event that the Pledgor falls to deliver the Artifacts (as
defined by the Exhibition Agreement) to the Pledgee on or before May 1,
1997 (the "Event of Default").
<PAGE> 6
7. Remedies. Upon the occurrence of the Event of Default, the Pledgee
may, upon notice of ninety (90) days given to the Pledgor, declare this Pledge
Agreement in default. In the event that such default is not cured within such
ninety (90) day period, the Pledgee shall leave the remedies of a secured party
under the Uniform Commercial Code as then in effect in the State of New York to
obtain repayment from the Pledgor of the Advance, as defined by the Exhibition
Agreement, and such other sums as may be due and payable to the Pledgee under
the terms of the Exhibition Agreement. Any persons affiliated with the Pledgor
and/or Pledgee shall have a reasonable opportunity to attend any sale of the
Currency and bid on and purchase the Currency.
8. No Waiver. No Event of Default shall be waived by the Pledgee except
in writing, and no waiver of any payment or other right under this Pledge
Agreement shall operate as a waiver of any other payment or right. The failure
of the Pledgee to assert any Event of Default upon the occurrence of such Event
of Default shall not be deemed to be a waiver thereof, and the Pledgee may
assert any Event of Default and claim its remedies thereunder at any time from
and after the Pledgor fails to cure such default within ninety (90) days after
notice thereof is given in accordance with Section 7 hereof. Such default shall
not be deemed to have been waived until the Pledgee has received delivery of
the, Artifacts (as defined by the Exhibition Agreement) as provided in Section 2
of this Agreement.
9. Notices. Any consent, notice, or other communication required or
contemplated by this Bailment Agreement shall be in writing (including
telegraphic, telex, and facsimile transmissions) and shall be deemed 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:
(a) If to the Pledgor:
RMS Titanic, Inc.
17 Battery Place
Suite 203
New York, New York 10004
Attention: George Tulloch, President
(b) If to the Pledgee:
Cre - Co Finanz GmbH
Ratinger Strasse 23
4000 Dusseldorf 1
Germany
Attention: Reinhard Esser, President
All such notices and communications, shall be effective upon the delivery
thereof or via telegraph, telex or facsimile, or if mailed, five (5) business
days after the deposit thereof in
2
<PAGE> 7
the mails. Any party may change their respective addresses by giving notice as
herein provided.
10. Entire Agreement; Governing Law; Benefit. This Pledge Agreement
sets forth the entire understanding between the parties concerning the subject
matter hereof, and supersedes all prior negotiations and understandings with
respect thereto. This Pledge Agreement shall be construed under and governed in
accordance with the laws of the State of New York, without recourse to its
conflict of laws principles. Unless the context otherwise requires, all terms
used herein which are defined in the Uniform Commercial Code as in effect in the
State of New York shall have the meaning therein stated. All the rights of the
Pledgee under this Pledge Agreement shall inure to the benefit of its successor
and assigns. All obligations of the Pledgor hereunder shall be binding upon
their legal representatives, successors and assigns. 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, Pledgor and
Pledgee hereby accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Voyager 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, and (iii) the right to interpose any set off,
non-compulsory counterclaim or cross-claim.
11. Severability. If any provision of this 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
others circumstances.
12. Additional Documents. The Pledgor agrees to execute any additional
documents, and take such further action as the Pledgee may reasonably request,
in order to effectuate the intent and purposes of this Agreement.
13. Captions. The captions and section numbers appearing in this
Agreement are inserted only as a matter of convenience, and shall not be used to
construe, define, limit or describe the scope or intent of the Provisions of
this Agreement.
14. Counterparts. This Agreement may be executed in counterparts, each
of which when executed by the parties hereto shall be deemed an original and all
of which together shall be deemed the same Agreement.
3
<PAGE> 8
IN WITNESS WHEREOF, this Pledge Agreement is effective as of the 11th
day of April, 1996.
RMS TITANIC, INC.
By:/s/
------------------------------------
Pledgor
CRE - CO FINANZ GMBH
By:/s/
------------------------------------
Pledgee
4
<PAGE> 1
BAILMENT AGREEMENT
This Bailment Agreement is entered into by RMS TITANIC, INC., A Florida
corporation (the "Pledgor"), CRE-CO FINANZ GMBH, a German company (the
"Pledgee"), and Allan H. Carlin, Esq. (the "Bailee")
W I T N E S S E T H:
WHEREAS, the Pledgor and the Pledgee have entered into a certain a
Pledge Agreement of even date herewith for the purpose of granting a security
interest to the Pledgee in connection with a certain agreement of even date
between the Pledgor and the Pledgee regarding the exhibition by the Pledgee of
artifacts recovered by the Pledgor from the wreck site of the vessel known as
the RMS Titanic.
WHEREAS, the Pledgor and the Pledgee desire to deposit the Collateral,
as defined in the Pledge Agreement (the "Collateral"), with the Bailee for
safekeeping and delivery in accordance with the terms of the Pledge Agreement;
and
WHEREAS, pursuant to paragraph "1" of the Pledge Agreement, the Pledgor
has simultaneously herewith delivered to the Bailee the Collateral, receipt of
which is hereby acknowledged by the Bailee.
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the parties agree as follows:
1. Bailee shall hold the Collateral in escrow upon the terms and
conditions set forth in this Escrow Agreement and the Pledge Agreement.
2. Bailee shall deliver all of the Collateral to the Pledgee in the
following circumstances:
(a) if the Pledgor and Pledgee shall jointly instruct the Bailee
in writing;
(b) upon demand of the Pledgee, the Collateral shall be released
to the Pledgee promptly upon delivery to the Bailee of an
affidavit executed by the Pledgee or the Pledgee's counsel
attesting to the fact that the Pledgor is in default under the
terms of the Pledge Agreement, and such default has not been cured
in a timely manner, unless, within ten (10) days of delivery to
the Pledgor of notice of such demand, together with a copy of such
affidavit, the Pledgor delivers to the Bailee an affidavit
objecting to the release of the Collateral to the Pledgee,
attesting to the fact that the Pledgor is not in default under the
terms of the Pledge Agreement or that any such default has been
cured on a timely basis. The Pledgee shall be
<PAGE> 2
obligated to provide notice, as described above, to the Pledgor
and to furnish the Bailee with proof of delivery thereof. Should
the Pledgor object to the delivery of the Collateral to the
Pledgee, the Pledgor shall furnish the Pledgee with notice of such
objection, together with a copy of the affidavit so attesting,
simultaneously with providing the Bailee with notice thereof;
3. In the event that either party objects to the delivery of the
Collateral by the Bailee through the assertion of an objection in accordance
with subparagraph (b) of paragraph "2" hereof, the Bailee, in its sole and
absolute discretion, may elect:
(a) to continue to hold the Collateral indefinitely until Bailee
receives (i) a written agreement of the Pledgor and the Pledgee or
(ii) a final non-appealable court order directing the delivery of
the Collateral, in which event Bailee shall release the
Collateral in accordance with such agreement or order; and/or
(b) to take any and all such actions as Bailee deems necessary or
desirable, in its sole and absolute discretion, to discharge and
terminate its duties under this Agreement, including (but not
limited to) bringing of any action of interpleader or any other
proceeding
In the event of any dispute whatsoever among the parties (whether or not
litigation is commenced, or Bailee is named as, or becomes a party to any
litigation) with respect to disposition of the Collateral or arising out of this
Escrow Agreement, Bailee shall have the right to engage counsel.
4. Upon delivery of the Collateral pursuant to paragraphs 2 or 3
hereof, the Bailee shall be relieved of all liability, responsibility or
obligation with respect to or arising out of this Agreement.
5. All fees of the Bailee for his services hereunder shall be the sole
responsibility of the Pledgor. Notwithstanding the foregoing, the Pledgor and
the Pledgee jointly and severally agree to indemnify Bailee and to hold Bailee
harmless from any loss, liability and expense incurred without willful
malfeasance or bad faith on the part of Bailee arising out of or in connection
with the acceptance or administration by Bailee of its duties under this
Agreement, including any fees, costs and expenses of defending itself against
any claims of liability hereunder.
6. Bailee shall not have duties or responsibilities except those set
forth herein, which the parties agree are ministerial in nature. Except for
Bailee's acts of bad faith: (a) Bailee shall have no liability of any kind
whatsoever for the performance of any duties
2
<PAGE> 3
imposed upon Bailee under this Bailment; (b) Bailee may rely and/or act upon any
instrument or document believed by Bailee to be genuine and to be executed
and/or delivered by the proper person. Any acts or omission by the Bailee in
reliance upon the advice of outside counsel shall be deemed not in bad faith.
7. Any consent, notice, or other communication required or contemplated
by this Bailment Agreement shall be in writing (including telegraphic, telex,
and facsimile transmissions) and shall be deemed 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:
(a) If to the Pledgor:
RMS Titanic, Inc.
17 Battery Place
Suite 203
New York, New York 10004
Attention: George Tulloch, President
(b) If to the Pledgee:
Cre - Co Finanz GmbH
Ratinger Strasse 23
4000 Dusseldorf 1
Germany
Attention: Reinhard Esser, President
(c) If to the Bailee:
Allan H. Carlin
110 East 59th Street
New York, New York 10022
All such notices and communications shall be effective upon the delivery thereof
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.
8. This Agreement may be executed in several counterparts, each of
which shall be an original and all of which shall constitute but one and the
same Agreement. All prior or contemporaneous understandings and agreements
concerning the subject matter of this Agreement shall be deemed merged into this
Agreement which alone expresses the entire Agreement of the parties. No
amendment of this Agreement shall be valid unless made by an instrument executed
by the party to be charged. This Agreement shall bind and inure to the benefit
of the parties, their heirs, legal representatives and permitted assigns.
3
<PAGE> 4
9. This Agreement shall be construed in accordance with and governed by
the internal laws of the State of New York, 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, Pledgor, Pledgee and Bailee hereby accept for
themselves respectively and in respect of their respective property, generally
and unconditionally, the jurisdiction of the aforesaid courts. Pledgor, Pledgee,
and Bailee 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, and (iii) the
right to interpose any set off, non-compulsory counterclaim or cross-claim.
10. If any provision of this 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.
11. 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 waive of any
subsequent breach.
12. 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 the Pledgor and the Pledgee,
except as expressly set forth 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.
13. 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.
4
<PAGE> 5
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its representatives thereunto duly authorized on the
day and year set forth across from its representative's signature.
RMS TITANIC, INC.
Dated: April 15, 1996 By:/s/
-------------------------------------
Pledgor
CRE - CO FINANZ GmbH
Dated: April 15, 1996 By:/s/
-------------------------------------
Pledgee
Dated: April 15, 1996 /s/ Allan H. Carlin
----------------------------------------
Allan H. Carlin, Bailee
5
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<PERIOD-START> MAR-01-1996
<PERIOD-END> MAY-31-1996
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0
0
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