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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, 1998
[ ] 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 No X
--- ---
The number of shares outstanding of the registrant's common stock on July
17, 1998 was 16,187,119.
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PAGE
NUMBER
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PART I
FINANCIAL INFORMATION
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II
OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The financial statements of RMS Titanic, Inc. (the "Company"), included
herein were prepared, without audit, pursuant to rules and regulations of the
Securities and Exchange Commission. 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 for the year ended February 28, 1998 as included in
the Company's Form 8-K dated June 15, 1998.
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RMS TITANIC, INC.
BALANCE SHEET
================================================================================
<TABLE>
<CAPTION>
MAY 31, FEBRUARY 28,
1998 1998
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 1,643,861 $ 1,000,269
Accounts receivable 1,515,591 640,760
Refundable withholding tax 176,418 45,848
------------ ------------
TOTAL CURRENT ASSETS 3,335,870 1,686,877
Artifacts Recovered, at cost 7,697,710 7,700,340
Deferred Income Tax Asset, net of valuation allowance of
$486,000 and $503,000, respectively -- --
Property and Equipment, net of accumulated depreciation
of $103,432 and $73,207, respectively 764,944 652,599
Other Assets 91,510 38,880
------------ ------------
TOTAL ASSETS $ 11,890,034 $ 10,078,696
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 2,285,852 $ 2,483,200
Income taxes payable 826,344 143,960
Deferred revenue -- 14,943
------------ ------------
TOTAL CURRENT LIABILITIES 3,112,196 2,642,103
------------ ------------
Stockholders' Equity:
Common stock - $.0001 par value; authorized 30,000,000 shares,
issued and outstanding 16,187,128 shares 1,619 1,619
Additional paid-in capital 13,915,748 13,915,748
Accumulated deficit (5,139,529) (6,480,774)
------------ ------------
STOCKHOLDERS' EQUITY 8,777,838 7,436,593
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 11,890,034 $ 10,078,696
============ ============
</TABLE>
See Notes to Financial Statements
4
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RMS TITANIC, INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
THREE-MONTH PERIOD ENDED MAY 31, 1998 1997
----------- -----------
<S> <C> <C>
Revenue:
Exhibitions and related merchandise sales $ 2,097,019 $ 377,320
Licensing fees 115,941 --
Merchandise, books and other 272,020 28,354
Sale of coal 77,339 --
----------- -----------
Total revenue 2,562,319 405,674
----------- -----------
Expenses:
Cost of coal sold 2,630 --
General and administrative 387,395 345,916
Depreciation and amortization 30,225 2,192
----------- -----------
Total expenses 420,250 348,108
----------- -----------
Income from operations 2,142,069 57,566
Interest income 10,440 --
----------- -----------
Income before provision for income taxes 2,152,509 57,566
Provision for income taxes 811,264 --
----------- -----------
Net income $ 1,341,245 $ 57,566
=========== ===========
Basic income per common share $ .08 $ .00
=========== ===========
Weighted-average number of common shares outstanding 16,187,128 16,177,128
=========== ===========
</TABLE>
See Notes to Financial Statements
5
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RMS TITANIC, INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
THREE-MONTH PERIOD ENDED MAY 31, 1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,341,245 $ 57,566
----------- -----------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 30,225 2,192
Noncash financing costs -- --
Other (76,500) --
Reduction in artifacts recovered 2,630 --
Changes in operating assets and liabilities, net of
effect from acquisition:
Increase in accounts receivable (874,831) (236,723)
(Increase) decrease in refundable withholding tax (130,570) 87,500
Increase in other assets (52,630) --
Decrease in notes payable, accounts payable
and accrued liabilities (197,348) (172,560)
Increase in income taxes payable 682,384 --
Decrease (increase) in deferred revenue (14,943) 288,333
----------- -----------
TOTAL ADJUSTMENTS (631,583) (31,258)
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 709,662 26,308
Cash flows from investing activity - purchases of property and equipment (66,070) --
Cash flows from financing activity - repayment of notes payable -- (25,772)
----------- -----------
Net increase in cash 643,592 536
Cash and cash equivalents at beginning of period 1,000,269 105,854
----------- -----------
Cash and cash equivalents at end of period $ 1,643,861 $ 106,390
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the three months for income taxes $ 128,880 $ --
=========== ===========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITY:
Noncash purchases of property and equipment $ 76,500 $ --
=========== ===========
</TABLE>
See Notes to Financial Statements
6
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RMS TITANIC, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 - The accompanying financial statements contain all adjustments
necessary to present fairly the financial position of the Company as
of May 31, 1998 and its results of operations and its cash flows for
the three months ended May 31, 1998 and 1997. Results of operations
for the three month period ended May 31, 1998 are not necessarily
indicative of the results that may be expected for the year ending
February 28, 1999.
Note 2 - In February 1997, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 128, Earnings per Share. SFAS No. 128
requires dual presentation of basic earnings (loss) per share
("EPS") and diluted EPS on the face of all statements of earnings
issued after December 15, 1997 for all entities with complex
capital structures. Basic EPS is computed as net earnings divided
by the weighted-average number of common shares outstanding
for the period. Diluted EPS reflects the potential dilution that
could occur from common shares issuable through stock-based
compensation including stock options, restricted stock awards,
warrants and other convertible securities. The adoption of SFAS No.
128 had no effect on the restatement of the net income per common
share for the three months ended May 31, 1997. Diluted EPS is not
presented for the three months ended May 31, 1998 and 1997 since the
dilutive effect of potential common shares is not material.
Note 3 - In April 1996, the Company entered into an agreement with CRE-CO
Finanz GmbH, a German company, for an exhibition of Titanic
artifacts in Europe from May 8, 1997 to November 8, 1997. The
agreement, as amended, was extended through May 10, 1998 and has
been verbally further extended through September 30, 1998. Pursuant
to the agreement, as amended, the Company received two-thirds of the
net profits, after recoupment of certain project expenses through
February 28, 1998 and $2.00 per visitor until May 1, 1998, as
defined. For the period subsequent to May 1, 1998, the Company
receives two-thirds of net profits, after recoupment of certain
project expenses, plus a percentage of merchandise revenues, as
amended.
In December 1996, the Company entered into an agreement with Florida
International Museum, Inc. for an exhibition of Titanic
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RMS TITANIC, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
artifacts in St. Petersburg, Florida, from November 15, 1997 to May
15, 1998 and further extended the exhibition to May 31, 1998.
Pursuant to the agreement, the Company will receive exhibition
revenue from attendance fees ranging from $0.34 to $3.10 per
attendee, based upon the total number of attendees during the
exhibition term, as defined. In addition, the Company will receive
10% of gross revenue, as defined, from the sale of merchandise at
the exhibition.
In May 1997, the Company entered into an agreement with the RMS
Foundation, Inc. for the exhibition of artifacts, expedition
equipment, photographs and film footage from the 1996 Titanic
expedition aboard the Queen Mary in Long Beach, California (the
"Queen Mary") from June 1, 1997 through January 5, 1998 (the
"Initial Term"). In January 1998, the agreement was amended and the
exhibition was extended through February 5, 1998 and further
extended to September 7, 1998 in April 1998 (the "Extension
Term"). Pursuant to the Queen Mary exhibition agreement, the Company
will receive, from the sale up to 150,000 tickets, $2.00 per ticket
during the Initial Term and $2.50 per ticket during the Extension
Term, and $3.00 per ticket from the sale of more than 150,000
tickets. In addition, the Company will receive fifty (50%) percent
of net profits, as defined, from the sale of merchandise at the
Queen Mary exhibition, and fifty (50%) of any sponsorship revenues.
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, 1998 VERSUS THE QUARTER ENDED MAY 31, 1997
- ------------------------------------------------------------------------
During the first quarter of its 1999 fiscal year (the "1999 fiscal year"),
the Company's
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revenues increased approximately 532%, as compared to the first quarter of its
1998 fiscal year (the "1998 fiscal year"). This increase was principally
attributable to a 456% increase in revenue from exhibitions and related
merchandise sales during the first quarter of the 1999 fiscal year as compared
to the first quarter of the 1998 fiscal year. This increase was primarily
attributable to exhibitions of the Company's Titanic artifacts having been
presented in St. Petersburg, Florida, Hamburg, Germany and Long Beach,
California throughout the first quarter of the 1999 fiscal year, while
exhibitions were presented for portions of the first quarter of the 1998 fiscal
year in Memphis, Tennessee, Hamburg, Germany and Norfolk, Virginia. Revenue from
licensing fees was $115,941 during the first quarter of the 1999 fiscal year, as
compared to zero revenue from licensing fees during the first quarter of the
1988 fiscal year. The Company's revenue from the sale of merchandise, books and
other sources increased approximately 859% during the first quarter of the 1999
fiscal year as compared to the first quarter of the 1998 fiscal year, primarily
as a result of the receipt of revenues during the 1999 quarter from a book
published in conjunction with unrelated third parties and revenues derived from
the sale of merchandise through the Company's web site
(http://wwww.titanic-online.com) and through the Company's 1-800-TITANIC
telephone number. Additionally, the Company recognized, as other revenue during
the first quarter of its 1999 fiscal year, $76,500 from the rental of exhibitry
to the Florida International Museum, Inc. The Company's revenue from the sale
of coal was $77,339 during the first quarter of the 1999 fiscal year as
compared to zero during the first quarter of the 1998 fiscal year, primarily as
a result of sales of coal made through the Company's web site and in the
merchandise shops of the Company's United States exhibitions.
The Company's cost of coal sold amounted to $2,630 during the first
quarter of the 1999 fiscal year as compared to zero during the first quarter of
the 1998 fiscal year, with such cost relating to the volume of sales in the
respective periods. General and administrative expenses of the Company increased
approximately 12% during the first quarter of the 1999 fiscal year as compared
to the first quarter of the 1998 fiscal year, primarily as a result of an
increase in professional fees related to protecting the Company's rights as
salvor-in-possession of the Titanic. The Company's depreciation expense
increased approximately 1,279% during the first quarter of its 1999 fiscal year
as compared to the first quarter of its 1998 fiscal year, primarily as a result
of depreciation of exhibitry and equipment used at the Hamburg, Germany
exhibition.
LIQUIDITY AND CAPITAL RESOURCES
In connection with its 1994 expedition to the wreck site of the Titanic,
the Company entered into an agreement with IFREMER to charter equipment and crew
necessary to conduct research and recovery efforts. Pursuant to the terms of
such charter agreement, the Company has paid IFREMER the sum of $300,000 and was
obligated to pay an additional $700,000 in two installments of $350,000 each
payable on September 30 and 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 from an
unaffiliated entity with which the Company entered into an agreement for the
marketing of coal and the sale of cabins of cruise ships which accompanied
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the Company on its 1996 research and recovery expedition, and this payment was
made as an advance against the Company's share of profits from Titanic coal
sales and sales of such cruise ship cabins. The $280,000 advance was reduced by
approximately $127,000 from the sale of coal during the 1998, 1997 and 1996
fiscal years, resulting in an unpaid balance of $153,168 as of February 28,
1998. Such unpaid balance, which was not further reduced during the first
quarter of the 1999 fiscal year, does not bear interest. There were no profits
from sale of cruise ship cabins for the 1996 expedition.
The Company entered into an agreement with IFREMER to charter equipment
and crew necessary to conduct a research and recovery expedition to the wreck
site of the Titanic in the Summer, 1996. Pursuant to the terms of such charter
agreement, the Company agreed to pay IFREMER 2,000,000 French francs
(approximately $400,000 U.S. Dollars) on or before June 20, 1996; 2,100,000
French francs (approximately $420,000 U.S. Dollars) on or before July 15, 1996;
and the sum of $980,000, payable as follows: (a) remittance of fifty (50%) of
the wholesale price of any products sold by the Company involving the 1996
expedition, up to a maximum of $480,000; and (b) up to a maximum of $500,000
payable from the following sources: (i) $.50 per visitor to any exhibition
organized by the Company; (ii) a lump sum of $250,000 for the Memphis
exhibition, payable prior to March 1, 1997; and (iii) one-third of the Company's
revenues received from any exhibition of artifacts organized by a third party,
as described. 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. The Company has satisfied its obligations to pay
$500,000 of its exhibition revenue to IFREMER, as described above, and has not
received any income from the sale of products involving the 1996 expedition.
Accordingly, as of May 31, 1998, the unpaid balance owed to IFREMER under the
1996 charter agreement is $480,000. The Company and IFREMER have been pursuing
negotiations for the re-structuring of the Company's obligations under the 1996
charter agreement so as to provide for the payment of a percentage of revenues
in installments that correspond to the Company's future receipt of revenues from
exhibitions. All objects recovered during the 1996 expedition are 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's capital commitments during its 1999 fiscal year also include
lease payments for principal offices in the base amount of $61,000 per annum
(which lease expires in September 1998), and compensation to its executive
officer. Additionally, the Company is planning its 1998 expedition to the
Titanic wreck site, and has entered into a preliminary agreement for the
charter of vessels from IFREMER for an expedition of approximately one (1)
month for $1,460,000, of which $200,000 has been paid to date as a downpayment.
The Company is in the final stages of negotiations of an agreement for the
license of audio-visual rights relative to the 1998 expedition to an unrelated
third party, and expects that substantially all of the costs for chartering the
IFREMER vessels and any other vessels or equipment required for the 1998
expedition will be paid by such third-party. In the event that these
negotiations are not successfully consummated or if the Company is unable to
license such rights to another third-party on terms satisfactory to the
Company, the Company intends to pay the costs of chartering vessels and
equipment for the 1998 expedition
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from available cash resources or payments made from future exhibition revenues,
or a combination of both. The Company may also reduce the length of the
expedition and correspondingly the cost of chartering vessels and equipment if
audio-visual rights relative to the 1998 are not successfully licensed on
adequate terms.
The Company's near term operating needs will be financed principally from
the distribution of revenues to the Company under its agreements for exhibitions
in St. Petersburg, Florida; Hamburg, Germany; Boston, Massachusetts; its touring
exhibition in Japan; and at the Queen Mary in Long Beach, California. The
Company is actively negotiating for the presentation of an exhibition of its
Titanic artifacts in venues after its exhibitions in Hamburg, Germany and
Boston, Massachusetts. While management expects these negotiations to be
successfully consummated, no assurances can be given that the Company will be
successful in effectuating such arrangements on terms that are acceptable or
satisfactory to the Company. In the event that cash flows are not adequate to
satisfy the Company's future operating needs, inclusive of payment of
outstanding liabilities, additional debt and/or equity financing will be
required.
Substantially all of the Company's cash flow derives from the Company's
operating activities. None of the Company's cash flow during the first quarter
of the 1999 fiscal year derived from financing activities and only a nominal
amount of cash flow derived from investing activities.
Except for historical information contained herein, this Periodic report
on Form 10-Q contains forward-looking statements within the meaning of the
Private Securities Reform Act of 1995 which involve certain risks and
uncertainties including, without limitation, the Company's needs, as discussed
above, to obtain additional financing in order to achieve its objectives and
plans. The Company's actual results or outcomes may differ materially from those
anticipated. Important facts that the Company believes might cause such
differences are discussed in the cautionary statements accompanying the
forward-looking statements as well as in the risk factors discussed below.
Although the Company believes that the assumptions underlying the
forward-looking statements contained herein are reasonable, any of the
assumptions could be inaccurate, and therefore, there can be no assurance that
the forward-looking statements contained in this Report will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation of the Company or any other such
person that the objectives and plans of the Company will be achieved. In
addition to uncertainties of ordinary business operations and the factors
discussed in the Company's Form 8-K dated June 15, 1998, the forward-looking
statements of the Company contained in this report are also subject to the
following risks and uncertainties:
In order for the Company to design, construct and embark on the Waterborne
Exhibition, additional debt and/or equity financing will be required. While
management believes that such financing will be available, no assurances can be
given that the Company will be successful in its efforts to obtain additional
financing, or that such financing will be available on a satisfactory
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timetable. If the Company is unable to arrange income producing exhibitions
similar to its land-based exhibitions in Memphis, St. Petersburg, Boston, Japan
and Hamburg, or funding for the planned worldwide touring exhibition is not
obtained, there could be a curtailment of the Company's long-term business
activities and material delays in the implementation of its business plans.
Until such time as the Company, if ever, presents the exhibition of its
artifacts on the Waterborne Exhibition, the Company could experience
difficulties or delays in making arrangements with third parties for the
presentation of exhibitions at land-based venues on terms that are acceptable
and satisfactory to the Company. The Company's ability to present such
exhibitions in association with third parties will be dependent upon the
agreement of such third parties to construct, market and operate the
exhibitions, or the Company having adequate financial resources to construct
and/or operate the exhibitions. Delays or difficulties in making arrangements
for the presentation of exhibitions at land-based venues could have a materially
adverse affect upon the Company's operations.
The Company could experience difficulties or delays in obtaining financing
for the Waterborne Exhibition, and if financing is obtained on terms acceptable
to the Company, could also experience difficulties or delays in the construction
of the Waterborne Exhibition. The Waterborne Exhibition is subject to all the
delays and uncertainties associated with construction projects generally.
Additionally, the Company has not made arrangements for the presentation of the
Waterborne Exhibition in specific ports and will need to obtain permits and
approvals from local governmental authorities. While management of the Company
believes that such arrangements will be available on terms and conditions
acceptable to the Company, and that the Company will satisfy requirements for
such permits and approvals, difficulties and delays could be encountered in
securing prospective sites and/or the requisite permits and approvals, which, in
turn, could delay or otherwise adversely impact the Company's revenue producing
activities.
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.
The Company's strategy for presenting exhibitions of Titanic artifacts is
dependent upon making acceptable arrangements with third parties or hiring
personnel who are experienced and possess expertise in operation and marketing
exhibitions. Management of the Company believes that acceptable arrangements
with such personnel or third-parties can be made within time frames required to
implement the Company's exhibition strategies. However, no assurance can be made
that such personnel or third-parties will be available on satisfactory terms or
when needed by the Company. Delays or difficulties in engaging personnel or
third parties for the operations and marketing of exhibitions, including without
limitation the Waterborne Exhibition, could have a materially adverse affect
upon the Company's operations.
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The Company's future business and operating results depend in significant
part upon the continued contributions of George Tulloch, the Company's
President. The Company does not maintain a key person life insurance policy on
Mr. Tulloch. The Company's future business and operating results also depends in
significant part upon its ability to attract and retain qualified additional
management, marketing and support personnel for its operations.
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. Additionally, the Company, in
order to maintain its salvor-in-possession status, needs to, among other things,
maintain a reasonable presence at the wreck through periodic expeditions. In
addition to the payment of the balance due to IFREMER for the Summer of 1996
Expedition, the Company will be required to incur the costs for future
expeditions so as to maintain its salvor-in-possession status. The Company's
ability to undertake future expeditions may be dependent upon the availability
of financing from the grant of licenses to produce television programming and/or
the grant of expedition sponsorship rights. No assurances can be given that such
financing will be available on satisfactory terms.
The amount spent by consumers on discretionary items, such as
entertainment activities and the purchase of merchandise, is dependent upon
consumers' levels of discretionary income, which may be adversely affected by
general or local economic conditions. A decrease in consumer spending on such
activities could have a material adverse effect on the Company's revenues from
exhibition activities and merchandising efforts.
The Company's sales of coal recovered from the Titanic wreck site and
other merchandise through its web site increased significantly during the period
of the initial theatre release of the motion picture "Titanic" in December 1997
without the Company incurring any significant marketing expenses. This coal is
the only object recovered from the Titanic that the Company is offering or will
offer for sale to the general public. Through the date of this report,
approximately 100,000 units of the Company's Titanic coal have been sold since
the commencement of such sales in the fall 1996, which represents approximately
one-half of the total units of coal available for sale. The Company intends to
recover additional coal during its 1998 expedition. A substantial portion of the
remaining Titanic coal supply is different in size than that which the Company
has marketed to date, and the Company's pricing and commercial presentation of
the coal is likely to change. No assurances can be given that different price
points or different presentations of the coal will be attractive to consumers.
Additionally, in the event that the Company does not recover any additional
Titanic coal, and the existing supply of coal is exhausted in the future, the
volume of the Company's merchandise sales may be materially adversely affected
in the absence of the introduction and marketing of additional products, such as
replicas of artifacts.
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
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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 and Japan.
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 the 1999 fiscal
year, there were no significant fluctuations in the exchange rates with respect
to foreign currencies in which the Company transacts business. Although the
Company's financial arrangements with IFREMER, its exhibition organizer in
Germany 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.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is a named defendant in a lawsuit commenced in the United
States District Court for the Eastern District of Virginia) on or about May 4,
1998 (Haver v. RMS Titanic, Inc., Civil Action No.: 2:98cv507). The plaintiff
therein seeks a declaratory judgment permitting him to participate in a
photographic expedition to the wreck of the Titanic known as Operation Titanic.
This action does not challenge the Company's salvor-in-possession status. On or
about May 4, 1998, the Company instituted a motion for a preliminary injunction
in the United States District Court for the Eastern District of Virginia against
Deep Ocean Expeditions, Mike McDowell, Bakers World Travel, Quark Expedition,
Ralph White, Don Walsh, Alfred S. McLaren, WildWings, and Mr. Haver, all of whom
are involved in Operation Titanic, seeking an order enjoining such parties from
conducting their proposed photographic expedition. (R.M.S. Titanic, Inc. v. The
Wrecked and Abandoned Vessel, etc. believed to be the RMS Titanic, in rem, Civil
Action No. 2:93cv902). The United States District Court for the Eastern District
of Virginia has previously held, in August 1996, that RMS Titanic, Inc. had the
right to exclude others from taking photographs of the wreck and to control
entry in to the wreck site. The Court's ruling to that effect also states that
the Company has the right to exclude others from the wreck site regardless of
whether the Company is at the wreck site while other groups attempt to visit the
site. Pursuant to stipulation, the action commenced by Mr. Haver and the
Company's motion for a preliminary injunction have been consolidated. By Order
dated June 23, 1998, the Court granted the Company's motion for a preliminary
injunction enjoining certain parties from visiting the wreck site to view and
photograph the wreck. Certain of the enjoined parties have appealed the Order to
the U.S. Court of Appeals for the Fourth Circuit. By order entered on July 17,
1998, a motion to stay the Order pending determination of the appeal was
denied by the U.S. Court of Appeals.
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There has been no material change in the status of the lawsuit commenced
in the United States District Court for the Southern District of New York on or
about December 16, 1997 (Lindsay v. The Wrecked and Abandoned Vessel RMS
Titanic, et al., in rem, and RMS Titanic, Inc. et al., No. 97Civ9248) subsequent
to the filing of the report on Form 8-K dated June 15, 1998.
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 Agreement between the registrant and Resource Plus and Event
Management International None dated April 24, 1998.
10.2 Agreement between the registrant and Titanic Exhibition Japan
Inc. dated May 17, 1998.
10.3 Agreement between the registrant and CRE-CO Finanz dated April
15, 1998.
(b) REPORTS ON FORM 8-K
None.
15
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
RMS TITANIC, INC.
(Registrant)
Dated: July 20, 1998 By: /s/ GEORGE TULLOCH
---------------------------------------
George Tulloch, Principal Executive
Officer and Acting Principal
Accounting Officer
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<PAGE> 1
EXHIBIT 10.1
E X H I B I T I O N
A G R E E M E N T
THIS EXHIBITION AGREEMENT, entered into this 24th day of
April, 1998 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 Resource Plus and Event
Management International ("EMI"), a corporation organized under the laws of the
Commonwealth of Massachusetts and having its principal place of business at 164
Northern Avenue, Boston, MA 02210 ("EMI").
WHEREAS, RMST and EMI wish to work in association with one
another to present an exhibition in the city of Boston, Massachusetts of
artifacts recovered by RMST from the wreck site of the Titanic (the
"Exhibition"), together with supporting material, subject to the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions contained in this Agreement, the parties hereto agree as follows:
1. DEFINITIONS.
Except as otherwise indicated elsewhere in this Agreement, the
following words and expressions shall have the following meanings:
1.1 "Artifacts" shall mean approximately 300 of the objects in
the ownership of RMST recovered from the wreck site of the Titanic in RMST's
1987, 1993 and 1994 recovery expeditions, as are presently included in the
exhibition of Titanic artifacts presented at the Florida International Museum in
St. Petersburg, Florida ("FIM") and as are reflected on Schedules A and B
annexed hereto (the "Collection"), together with objects, if any, that RMST, in
its sole and discretion, agrees to make available from its 1996 research and
recovery expedition or its planned August 1998 research and recovery expedition,
which is expected to conclude during the last week of August 1998; provided,
however, RMST reserves the right to modify the composition of the Collection
based upon the state of conservation of particular artifacts and to substitute
similar objects in place of those that may be withdrawn from the Collection;
and, provided further, in the event that RMST recovers a section of the hull of
the Titanic during its planned 1998 research and recovery expedition, with
respect to which recovery efforts were unsuccessful during its 1996 expedition
(the "Big Piece"), RMST agrees, subject to needs to conserve the Big Piece, to
use its best efforts for make the Big Piece available for inclusion in the
Exhibition.
1.2 "Exhibition Term" shall mean the period commencing June
27, 1998 and expiring on or about November 15, 1998.
1.3 "Exhibitry" shall include, display cases, mountings,
props, theatrical pieces, didactic and other panels, artwork, models, lighting
instruments and equipment, floor covering, transportable walls and wall
covering, electronic, audiovisual and computer equipment
<PAGE> 2
and software programs, and any and all other display items or elements contained
in the Exhibition that can be removed from the Venue for re-installation in any
succeeding exhibition venue, together with all drawings, plans, specifications
and other documentation relating thereto; provided, however, to the extent that
EMI may make lighting or other equipment or fixtures available for utilization
in the Exhibition, such equipment and/or fixtures shall not be included in
Exhibitry and shall be owned exclusively by EMI, without any claim thereto by
RMST.
1.4 "Profits" shall mean the excess of Revenues over the
lesser of: (a) the costs of Operations, as defined by the Budget referenced in
Section 1.5 hereof; or (b) the actual costs of Operations. For purposes of the
foregoing, Costs of Operations shall consist of all expenses set forth in the
Budget, except for the "Production Budget" identified in the Budget in Item F-4.
1.5 "Project Expenses" shall include, all costs and expenses
of every kind and description incurred in establishing and presenting the
Exhibition, including, without limitation, design and fabrication of the
Exhibition, operating the Exhibition and marketing the Exhibition, all as set
forth in a Budget dated April 13, 1998; provided, however, the Budget shall be
subject to revision as may be mutually agreed upon to address upward or downward
adjustments for circumstances that could not be reasonably foreseen, including,
but not limited to an increase in the demands of operations increase as a result
of extended hours of operation and/or higher attendance that projected in the
Budget.
1.6 "Revenue" shall mean and include the aggregate of:
1.6.1 "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 1.6.2 through 1.6.4
hereof, other revenues related to the
Exhibition.
1.6.2 "Merchandising Revenue," which shall include
all revenues derived from the sale of
merchandise pursuant to Section 7.1 hereof
and from the sale of food and beverages at
the Exhibition, minus cost of goods (if
applicable), sales tax, credit card fees and
check verification fees.
1.6.3 "Sponsorship Revenue," which shall include
all revenues derived from the granting of
sponsorship or promotion rights to third
parties for the Exhibition, less commissions
paid to third-parties or
bonused/incentivized employees of EMI and
RMST (subject to approval by the parties in
advance, which approval shall not be
unreasonably withheld) in connection with
the generation of the Sponsorship Revenue.
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<PAGE> 3
1.6.4 "Ticket Revenue," which shall include all
sums generated by ticket sales at the
Exhibition and through authorized ticket
sale outlets, minus sales tax, credit card
fees, and check verification fees, potential
outside ticketing services and couponing
programs, plus the Service Charge, as
defined by Section 9.2 hereof.
1.7 "Supporting Material" shall mean material relating
specifically to the recovery of the Artifacts and other objects recovered by
RMST from the wreck site of the Titanic, including but not limited to
photographs and video footage, supplied by RMST.
1.8 "Venue" shall mean a structure consisting of approximately
30,000 square feet to be installed in the area located at 164 Northern Avenue,
Boston, Boston, Massachusetts
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 design and construction of the ship, life on board,
passengers and crew, the tragedy, the aftermath, the discovery of the wreck
site, and the subsequent recovery and conservation of the Titanic artifacts.
2.2 The name of the Exhibition shall be "Titanic - The
Exhibition" or such other name mutually agreed upon by the parties.
2.3 The Exhibition is to be presented RMST in association with
EMI, and will be advertised and promoted in such manner as will reasonably give
recognition to EMI's association with the Exhibition.
2.4 EMI and RMST acknowledge that work on the design and
construction of the Exhibition will commence following the execution of this
Agreement, and that the parties shall jointly be responsible for the design of
the Exhibition, with EMI to have the responsibility of supervising the
construction and installation of the Exhibition. In connection with these
matters, EMI 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. EMI
accordingly agrees that the Exhibition will be designed and constructed in a
manner that is consistent with RMST's desire to preserve and promote the memory
of the Titanic, as described above. In furtherance of the foregoing, the EMI
agrees:
2.4.1 (a) The design and content of the
Exhibition; (b) the content of all
marketing, advertising and public relations
materials; and (c) the content of a
pre-recorded audio tour of the Exhibition,
as provided elsewhere herein, shall all be
subject to review and written approval
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<PAGE> 4
in advance by RMST, which approval shall not be
unreasonably withheld.
2.4.2 Upon reasonable request from RMST, EMI will
arrange for its key design and other specialist
personnel to meet with representatives of RMST to
review the progress of preparation of the Exhibition.
2.4.3 Upon reasonable request of RMST, EMI will
provide reasonable access for RMST representatives to
observe the construction of the Exhibition.
3. THE OBLIGATIONS OF EMI.
EMI agrees to pay all Project Expenses and to:
3.1 Make all arrangements, and obtain all rights, permits and
licenses as may be required, for presentation of the Exhibition in the Venue,
and in connection therewith, EMI represents and warrants that all improvements
of the Venue will be completed sufficiently in advance of the opening of the
Exhibition so as to permit the Exhibition to commence as scheduled;
3.2 Commission and supervise all design and construction work
relating to the Exhibition, including, but not limited to:
3.2.1 All display cases, including alarm systems,
environmental control systems, and any integrated
lighting systems.
3.2.2 All theatrical displays or devices that may be
utilized to enhance the Exhibition.
3.2.3 All didactic panels and Artifact labels.
3.2.4 All lighting systems and equipment for
illumination of the galleries and ancillary
exhibition areas.
3.2.5 All necessary galleries and ancillary areas,
including furniture and equipment for an Artifact
retention area, box office, security, coat check,
cash control, orientation theater, queuing area,
concessions, and all other areas or improvements that
may be required to properly display the Artifacts and
present them in a manner that will allow the public
to safely view them.
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<PAGE> 5
3.3 Develop and implement a comprehensive marketing,
advertising, promotion and public relations plan for the Exhibition in
consultation with RMST.
3.4 Develop and implement a comprehensive admissions and sales
program including ticket sales, toll-free telephone sales, media and sales
blitzes, box office, group sales, and other means to maximize attendance at the
Exhibition.
3.5 Be responsible for the care and storage of the Artifacts
and Supporting Material, including conservation inspections so as to protect the
Artifacts from the elements, extreme lighting, temperature, humidity,
unauthorized photography, filming or videotaping, or handling by unauthorized
personnel in a manner that could damage the Artifacts.
3.6 Provide full insurance coverage for the Artifacts of Ten
Million ($10,000,000) Dollars in assessed valuation from the time the Artifacts
are delivered by RMST to EMI until thirty (30) days after the conclusion of the
Exhibition or the return of the Artifacts to RMST, whichever occurs first, and
full insurance coverage for the Exhibitry in an amount equal to no less than the
actual costs of the Exhibitry.
3.7 Be responsible for the installation and de-installation of
the Exhibition, including the Artifacts.
3.8 Be responsible for all staffing and the daily operations
of the Exhibition.
3.9 Be responsible for the safety and security of the
Artifacts and Exhibitry from the time the Artifacts and Exhibitry are delivered
by RMST to EMI and until returned to RMST.
3.10 Be responsible for all Artifact handling, security,
insurance, export and the transportation thereof from FIM to the Venue.
3.11 Provide secure, pest-free storage for shipping crates.
3.12 Produce an audio-visual presentation of approximately 8
minutes duration for use solely in an orientation theater in the Exhibition, the
content of which shall be subject to RMST's consent, which consent shall not be
unreasonably withheld.
4. RMST'S OBLIGATIONS.
RMST agrees to:
4.1 Make the Artifacts available to EMI for the Exhibition
Term, with the Artifacts to be packed and available for pick-up by EMI at FIM on
or about June 10, 1998.
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<PAGE> 6
4.2 Make available such Supporting Material as EMI shall
reasonably require following consultation with RMST.
4.3 Engage EMI, in consideration of the payment to EMI of the
sum of Three Hundred Thousand Dollars ($300,000), payable in six (6) equal
installments of $50,000 each commencing on December 1, 1998, to prepack, pack,
handle, provide security for, transport, insure, and install the Exhibition
(including the Artifacts) in the next venue for the Exhibition in the United
States (the "Next Venue"), to consult with RMST as may be reasonably necessary
in connection with needs and expectations for preparation of the site for the
installation and operation of the Exhibition at the Next Venue, and to provide
onsite training services at the Next Venue for a period of one week prior to the
opening and ending one week after the opening of the Exhibition in consideration
of the payment to EMI; provided, however, in the event that the actual
out-of-pocket expenses incurred by EMI in connection with the prepacking,
packing, handling, providing security for, transporting, insuring and installing
the Exhibition exceed $200,000, the parties agree to re-negotiate in good faith
the sum payable to EMI pursuant hereto.
5. DIVISION AND PAYMENT OF REVENUES.
5.1 Profits (as defined in Section 1.4 hereof) shall be
divided between RMST and EMI as follows: two-thirds (2/3) thereof shall be paid
to RMST and one-third (1/3) thereof shall be paid to EMI; provided, however,
RMST's share of Profits shall be credited against the costs of the Exhibitry
until such costs have been fully recouped by EMI, to the extent that EMI has
paid the costs thereof. Accordingly, if the design and construction of the
Exhibitry is $750,000, and EMI has paid the costs thereof, the first $750,000 of
RMST's share of the Profits shall be credited to EMI's recoupment of such costs.
5.2. All Revenues shall be collected by EMI and be deposited
into an interest-bearing bank account to be utilized for the receipt and
disbursement of Revenues (the "Bank Account"). Revenues shall be disbursed for
the following purposes and in the following priority: (a) to EMI, in recoupment
of the Project Expenses; and (b) to the respective parties, in proportion to
their respective rights to Profits as set forth in Section 5.1 hereof.
5.3 EMI shall maintain all books of accounts and all documents
necessary to audit, review and verify Revenue and Project Expenses, and will
agree 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. Without limiting the foregoing, RMST shall be provided
with access to the records of the Bank Account at such times and with such
frequency as RMST may be reasonably request, including all information
pertaining to deposits and withdrawals or disbursements into and from the Bank
Account.
5.4 EMI shall furnish to RMST monthly accountings regarding
Ticket Revenue, Sponsorship Revenues, Merchandise Revenue and Ancillary Revenues
no later than fifteen (15) days after the close of the month covered by such
accounting, and shall be
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<PAGE> 7
accompanied by proof of transfer to RMST's segregated account of RMST's share of
Profits, if any. Profits shall be disbursed to the parties upon Revenues
exceeding Project Expenses. In the event that an audit reflects a five (5%)
percent or greater discrepancy from the accounting furnished by EMI to RMST,
then EMI shall be responsible for payment of the costs of such audit.
5.5 RMST shall not bear any responsibility for any financial
losses that may be incurred in connection with the presentation of the
Exhibition. All rights, title and interest in and to ownership and possession of
the Exhibitry shall vest in RMST as of August 31, 1998, subject to the
utilization of the Exhibitry during the Exhibition Term pursuant to the terms
hereof.
6. MARKETING, ADVERTISING AND PUBLICITY.
6.1 RMST shall be fully consulted about and shall participate
in the scheduling and details of all marketing, advertising and publicity
activities relating to the Exhibition. RMST shall cooperate and not unreasonably
withhold its consent to, or unreasonably refuse to participate in, promotional
activities.
6.2 EMI shall make available to RMST any advertising or
promotional material in advance of the utilization thereof by the EMI for the
marketing or promoting the Exhibition. RMST shall make available to EMI any
advertising or promotional material in advance of the utilization thereof by
RMST for marketing or promoting the Exhibition.
6.3 No advertising, promotional or other marketing materials
may be used by EMI without RMST's prior written consent, which consent shall not
be unreasonably withheld.
7. MERCHANDISING.
7.1 The parties agree to arrange for space of a minimum of
4,000 square feet within the Exhibition for the establishment and operation of a
merchandise shop ("Merchandise Shop"), and further agree to use their best
efforts to engage a third-party to build-out, operate, staff and acquire the
inventory for the Merchandise Shop, in consideration for which the Exhibition
will receive approximately thirty (30%) of gross sales of the Merchandise Shop,
less sales tax, credit card charges, check verification fees and returns. To
this end, RMST has engaged in discussions with individuals who are in the
process of organizing Titanic Merchandise, Inc. under the laws of the State of
California ("TMI") to establish and operate the Merchandise Shop in accordance
with the foregoing, with the understanding that TMI shall furnish to RMST a
weekly report of merchandise sales, on an itemized basis, and shall remit to
EMI, for the account of the parties, the Venue Revenues on Friday of each week
for the period covering the preceding Monday through Sunday during the
Exhibition Term. EMI acknowledges that the terms of such contemplated
transaction are acceptable.
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7.2 It is agreed that the Exhibition Catalogue will be a
customized version of the book "Titanic - Legacy of the World's Greatest Ocean
Liner" by Susan Wels, with a new cover and approximately sixteen pages of
material to be combined with the existing book contents so as to customize such
book as an Exhibition catalogue.
8. SPONSORSHIP.
EMI 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. RMST shall have the
right to approve all sponsors for the Exhibition, which approval shall not be
unreasonably withheld. 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, less commissions paid in connection therewith, shall be considered
Sponsorship Revenue for purposes of this Agreement.
9. AUDIO VISUAL RIGHTS.
9.1 Except for the sole purpose of the orientation theatre
presentation to be made pursuant to Section 3.12 hereof and except for the sole
purpose of promoting the Exhibition through the media (the "Promotional Work"),
no television, video, film, music, photography or other audio visual rights,
including but not limited to, telecommunication mediums such as the Internet,
are granted by RMST to EMI. The parties further agree that the subject of the
Promotional Work shall be limited to the Exhibition, and that subject to RMST's
prior written consent, a reasonable portion of RMST's Supporting Material shall
be made available for utilization in the Promotional Work. All rights and title
to photographs of the Artifacts and RMST's Supporting Material shall be owned
exclusively by RMST, and no rights or interests therein are hereby conferred
upon EMI 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 media, which consent shall not be unreasonably withheld.
Any licensing fees that may be derived from the distribution of the Promotional
Work shall be included in Ancillary Revenues under this Agreement.
9.2 Any Internet site established by EMI to promote or
advertise the Exhibition shall state that the Exhibition is presented by RMST in
association with EMI and shall include, on the initial screen thereof, a
hypertext link to RMST's internet site at the first reference to RMST. Any
Internet site used by RMST shall include a reference, on the initial screen
thereof, that the Exhibition is being presented at the Venue and shall include a
hypertext link to the Internet site used by EMI to promote or advertise the
Exhibition.
9.3 Except as set forth in Section 9.1 hereof, EMI will
prohibit photography, videotaping, filming or other recording of the Exhibition
and will take reasonable measures to inform visitors to the Exhibition of this
prohibition. EMI shall eject any visitor to the Exhibition
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<PAGE> 9
who refuses to comply with such prohibition, and shall use its best efforts to
confiscate and photographic film or other recording of the Exhibition obtained
by such visitor.
10. TICKET SALES.
10.1 All ticket prices for the Exhibition shall be as follows,
unless the parties mutually agree otherwise: Adults - $13.95; Seniors (60+) -
$12.95; Youth (5-11 yrs.) - $6.95; School and camp groups (20 or more) - $5.50;
and $11.95 adult groups of 20 or more.
10.2 Tickets shall be made available for sale in advance on a
time-reserved basis, with a service charge of $1.75 (the "Service Charge") to be
added to each ticket purchased in advance.
10.3 RMST shall be entitled to a copy of all of the data
collected by EMI in connection with the sale of tickets hereunder, and EMI shall
provide RMST with a weekly report of the number of tickets sold within each of
the categories enumerated in Section 9.1, and such other ticket price categories
that may hereafter be established.
11. INDEMNITIES.
11.1 RMST agrees to indemnify, defend and hold harmless EMI,
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 EMI
may incur or be liable for as a result of any claim, suit or proceeding made or
brought against EMI based upon, arising out of, or in connection with RMST's
breach of any of its duties or obligations hereunder.
11.2 EMI 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 EMI based upon, arising out of, or in connection with EMI's
breach of any of its duties or obligations hereunder.
11.3 Each party shall give the other party prompt notice of
any claim or suit coming within the purview of these indemnities. Upon the
written request of any indemnitee, the indemnitor shall assume the defense of
any claim, demand or action against such indemnitee, and shall upon the request
of the indemnitee, allow the indemnitee to participate in the defense thereof,
such participation to be at the expense of the indemnitee. Settlement by the
indemnitee without the indemnitor's prior written consent shall release the
indemnitor from the indemnity as to the claim, demand or action so settled.
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12. TRADEMARK RIGHTS.
Neither party, by virtue of this Agreement, shall obtain or
claim any right, title or interest in or to the other's name, trademark or logo,
except the right to use as specified herein and hereby acknowledges and agrees
that all such use shall inure to the benefit of the respective owner.
13. OBLIGATIONS UPON TERMINATION.
13.1 Within thirty (30) days of termination of the Exhibition
Term, RMST at the request of EMI shall forthwith return to EMI or otherwise
dispose of as EMI may direct all pamphlets, literature, photographs, catalogues,
advertising material, specifications, cost estimates and other materials,
documents and papers whatsoever belonging to EMI and sent to RMST relating to
the Exhibition (other than correspondence between the EMI and RMST) which RMST
may have in its possession or under its control, except that RMST shall have the
right to retain one (1) copy of each of the foregoing for archival purposes.
13.2 Within thirty (30) days of termination of the Exhibition
Term, EMI at the request of RMST shall forthwith return to RMST or otherwise
dispose of as RMST may direct all pamphlets, literature, contractual
documentation, photographs, catalogues, advertising material, specifications,
cost estimates and other materials, documents and papers whatsoever belonging to
RMST and sent to RMST relating to the Exhibition (other than correspondence
between the EMI and RMST) which EMI may have in its possession or under its
control, except that RMST shall have the right to retain one (1) copy of each of
the foregoing for archival purposes.
13.3 If either party brings an action against the other to
enforce any condition or covenant of this Agreement or for breach of its
obligations under this Agreement, the prevailing party shall be entitled to
recover from the other party its court costs and reasonable attorney's fees
incurred in such action.
14. MISCELLANEOUS.
14.1 Other Documents. Each of the parties hereto shall execute
and deliver such other and further documents and instruments, and take such
other and further actions, as may be reasonably requested of them for the
implementation and consummation of this Agreement and the transactions herein
contemplated.
14.2 Parties in Interest. This agreement shall be binding upon
and inure to the benefit of the parties hereto, and the successors and assigns
of all of them, but shall not confer, expressly or by implication, any rights or
remedies upon any other party.
14.3 Governing Law. This agreement is made and shall be
governed in all respects, including validity, interpretation and effect, by the
laws of the State of New York,
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USA, without recourse to its conflict of laws principles. Any legal action or
proceeding with respect to this Agreement shall be brought exclusively in the
courts of the United States of America for the District where the defendant
maintains its principal place of business, and by execution and delivery of this
Agreement, EMI and RMST hereby accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. EMI and RMST hereby irrevocably waive, in connection with any such
action or proceeding, (i) trial by jury, (ii) any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens, which it may now or hereafter have to the bringing of any
such action or proceeding in such respective jurisdictions.
14.4 Notices. All notices required to be given under the terms
of this Agreement shall be in writing (including telegraphic, telex, and
facsimile transmissions, provided that a copy thereof is also sent by certified
or registered air mail on the same day as such telegraphic, telex or facsimile
transmission) and shall be deemed to have been duly given if delivered to the
addressee in person (and receipted on a copy of such notice), or transmitted, or
mailed by certified or registered air mail, return receipt requested, as
follows:
If to RMST, addressed to:
RMS Titanic, Inc.
17 Battery Place
Suite 203
New York, New York
Attention: George Tulloch, President
Fax No.: (212) 482-1912
If to EMI, addressed to:
Resource and Event Management International
164 Northern Avenue
Boston, MA 02210
Attention: Michael Bloy
Fax No.: (617) 385-5090
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 and fax numbers by giving notice as herein provided.
14.5 Entire Agreement. This Agreement contains the entire
agreement between the parties and supersedes all prior agreements,
understandings and writings between the parties with respect to the subject
matter hereof and thereof. Each party hereto acknowledges that no
representations, inducement, promises, or agreements, oral or otherwise, have
been made by any party, which are not embodied herein or in an exhibit hereto,
and that no other agreement,
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statement or promise may be relied upon or shall be 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.
14.6 Assignability. This agreement shall not be assignable by
either party hereto without the written consent of the other party hereto.
14.7 Severability. If any provision of the Agreement shall be
held invalid or unenforceable, the remainder of this Agreement which can be
given effect without such invalid or unenforceable provision shall remain in
full force and effect. If any provision is held invalid or unenforceable with
respect to particular circumstances, it shall remain in full force and effect in
all other circumstances.
14.8 No Waiver. The waiver by any party hereto of any breach
or violation of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach.
14.9 Force Majeure. If due to acts of God, insurrection, fire,
elements, national emergency, or any other similar cause outside of the
reasonable control of either party to this Agreement ("Force Majeure") the
Exhibition is canceled, delayed or the performance of either party under the
terms of this Agreement is made impossible, the parties agree that such
cancellation, postponement or failure to perform shall not be considered a
breach of this agreement. In such event, however, the parties agree to use their
best efforts to reschedule the Exhibition.
14.11 Publicity. Each of the parties agree that no press
announcement or press release in connection with this Agreement shall be made
unless the other party hereto shall have given its written consent to such
announcement (including the form thereof), which consent shall not be
unreasonably withheld.
14.12 Confidentiality. RMST and EMI agree, as may be permitted
by law, not to divulge or permit or cause their officers, directors,
stockholders, employees or agents to divulge the substance of this Agreement
except to their representatives and attorneys or as may otherwise be required by
law in the opinion of counsel for the party required to make such disclosure.
Additionally, during and after the Term of this Agreement, neither RMST nor the
EMI shall disclose to anyone for any reason, without the prior written consent
of the other, any marketing plans, strategies, results or other confidential
information divulged to or learned by either party about the other from any
source whatsoever, unless and until such information has generally become
available to the public from sources other than the other party.
14.13 Independent Parties. Nothing in this Agreement is
intended to create, nor shall anything herein be construed or interpreted as
creating, an agency, a partnership, a joint venture or any other relationship
between RMST and EMI except as expressly set forth herein,
12
<PAGE> 13
and both parties understand that, except as expressly agreed to herein, each
shall be responsible for its own separate debts, obligations and other
liabilities.
14.14 Remedies. Remedies provided to the parties by this
Agreement are not exhaustive or exclusive, but are cumulative of each other and
in addition to any other remedies the parties may have in law or equity.
14.15 Survival of Representations. The representations,
warranties, indemnification, and confidentiality provisions set forth in this
Agreement shall be continuing and shall survive the expiration of the Exhibition
Term.
14.16 Headings. The captions and headings used herein are for
convenience only and shall not be construed as a part of this agreement.
14.17 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. RESOURCE PLUS AND EVENT MANAGEMENT
INTERNATIONAL
By: /s/George Tulloch By: /s/ Joe Kelly
George Tulloch, President Joe Kelly, CFO
13
<PAGE> 1
EXHIBIT 10.2
May 17, 1998
VIA TELECOPIER (81) 3-3432-0916
Mr. Matt Taylor
5-31-7 Kubo Building
Shinbashi, Minato-Ku
Tokyo, Japan 105
Re: RMS TITANIC, INC. EXHIBITION IN JAPAN
Dear Matt:
In furtherance of our discussions, I am writing this letter to set
forth the proposed terms for the presentation of an exhibition (the
"Exhibition") by Titanic Exhibition Japan Inc. ("TEJI") in association with RMS
Titanic, Inc. ("RMST") of Titanic artifacts in Japan commencing on or about July
20, 1998 and ending approximately July 1, 1999, as follows:
1. The exhibition will be presented at the following venues:
CITY DURATION
Tokyo 32 days
Yokohama 48 days
Kyoto 60 days
Kobe 30 days
Hiroshima 30 days
Sapporo 30 days
The exhibition will include approximately 200 artifacts recovered by
RMST from the Titanic (the "Artifacts"), the selection of which shall be jointly
agreed upon by TEJI and RMST in consultation with Stephane Pennec of LP3
Laboratories in Semur en Auxois, France. TEJI agrees to pay $321,000 U.S. for
the conservation and restoration of such objects on terms and conditions to be
agreed upon with Mr. Pennec.
<PAGE> 2
3. TEJI will be responsible for payment of and liability for all
"Project Expenses," which shall be defined as all costs and expenses of every
kind and description incurred in establishing, presenting, transporting,
breaking-down, setting-up and operating the Exhibition up to a maximum budget of
$3,466,776 U.S. (based upon a currency conversion rate of 125 yen per U.S.
Dollar) as set forth in a certain document entitled "Titanic Exhibition: Detail
in Japan" dated April 14, 1998, including, without limitation, design and
fabrication of the Exhibition, packing, insuring, and transporting the Artifacts
to and from the Exhibition venues, and marketing the Exhibition.
4. RMST shall receive a minimum of $3.00 U.S. per person who attends
the Exhibition, with such $3.00 U.S. per person to be deposited directly into a
segregated bank account for the benefit of RMST on a daily basis, as such ticket
revenues are received by TEJI. It is the understanding of the parties that
ticket sales will be made through authorized ticket agents who collect payments
from the sale of tickets and who then remit such revenues, less commissions, to
TEJI. TEJI shall furnish to RMST copies of all reports of ticket sales received
from ticket agents within forty-eight (48) hours of the receipt thereof by TEJI.
Neither party shall have any rights or authority to borrow against, lien,
pledge, hypothecate or otherwise encumber any proceeds from the sale of tickets
while such proceeds are in the possession of or under the control of any ticket
agent or any other time prior to the distribution to RMST of its share of such
proceeds in accordance with the terms of this Agreement.
5. In the event that Profits (as defined below) from the Exhibition
exceeds the amount paid to RMST pursuant to paragraph 4 above, RMST shall
receive fifty (50%) percent of the Profits, less the amount paid to RMST
pursuant to paragraph 4 above. For purposes of this paragraph, "Profits" shall
mean the excess of all Revenue (as defined below) over Project Expenses. For
purposes of this paragraph, "Revenue" shall mean and include the aggregate of:
(a) Ticket Revenue, which shall include all sums generated by ticket sales at
the Exhibition and through authorized ticket sale outlets, minus sales tax,
credit card fees, and check verification fees; (b) Merchandising Revenue, which
shall include all revenues derived from the sale of merchandise, food and
beverage at the Exhibition, less costs of goods sold, sales tax (if any) and
credit card fees; (c) Sponsorship Revenue, which shall include all revenues
derived from the granting of sponsorship, endorsement or promotion rights to
third parties for the Exhibition; and (d) Ancillary Revenues, which shall
include all other revenues related directly or indirectly to the Exhibition,
including, but not limited to, revenues derived from pre-recorded Exhibition
tours, parking, and coat checking services.
6. TEJI shall maintain all books of accounts and all documents
necessary to audit, review and verify Revenue, and will agree to allow
authorized representatives of RMST to have reasonable access to such books and
records during normal business hours from time-to-time as RMST may reasonably
request, and to make such copies thereof as such representatives shall
reasonably require. TEJI shall furnish to RMST weekly accountings, expressed in
English, regarding Ticket Revenue, Sponsorship Revenues, Merchandise Revenue and
Ancillary Revenues no later than fifteen (15) days after the close of the week
covered by such accounting, and shall be accompanied by proof of transfer to
RMST's segregated account of RMST's share of Profits, if any. In the event that
an audit reflects a five (5%) percent or greater discrepancy from the accounting
furnished by TEJI to RMST, then TEJI shall be responsible for payment of the
costs of such audit.
<PAGE> 3
7. TEJI agrees to pay all Project Expenses and to:
7.1 Make all arrangements, and obtain all rights, permits and
licenses as may be required, for presentation of the Exhibition in each venue,
and in connection therewith, TEJI represents and warrants that all improvements
of each venue will be completed sufficiently in advance of the opening of the
Exhibition so as to permit the Exhibition to commence on the scheduled opening
date;
7.2 Commission, provide and supervise all design and
construction work relating to the Exhibition, including, but not limited to:
7.2.1 All display cases, including alarm systems,
environmental control systems, and any integrated
lighting systems.
7.2.2 All theatrical displays or devices that may be
utilized to enhance the Exhibition.
7.2.3 All didactic panels and Artifact labels.
7.2.4 All lighting systems and equipment for
illumination of the galleries and ancillary
exhibition areas.
7.2.5 All necessary galleries and ancillary areas,
including furniture and equipment for an Artifact
retention area, box office, security, coat check,
cash control, orientation theater, queuing area,
concessions, and all other areas or improvements that
may be required to properly display the Artifacts and
present them in a manner that will allow the public
to safely view them.
7.3 Develop and implement a comprehensive marketing,
advertising, promotion and public relations plan for the Exhibition in
consultation with RMST.
7.4 Develop and implement a comprehensive admissions and sales
program, including ticket sales recorded by a computerized system, toll-free
telephone sales, media and sales blitzes, box office, group sales, and other
means to maximize attendance at the Exhibition.
7.5 Be responsible for the care and storage of the Artifacts,
including conservation inspections so as to protect the Artifacts from the
elements, extreme lighting, temperature, humidity, unauthorized photography,
filming or videotaping, or handling by unauthorized personnel in a manner that
could damage the Artifacts.
7.6 Provide full insurance coverage for the Artifacts as
indicated on Schedule A, but not to exceed Ten Million ($10,000,000) Dollars in
assessed valuation, from the time the Artifacts are shipped by RMST to TEJI
until they are returned to RMST.
7.7 Be responsible for the installation and de-installation of
the Artifacts in the Exhibition at each venue.
<PAGE> 4
7.8 Be responsible for all staffing and the daily operations
of the Exhibition.
7.9 Be responsible for the safety and security of the
Artifacts from the time the Artifacts are delivered by RMST to TEJI and until
returned to RMST.
7.10 Be responsible for all Artifact prepacking, packing,
handling, security, insurance, export and import customs charges and duties, and
the international transportation thereof from Semur en Auxois to TEJI and for
their subsequent return to RMST in Tokyo, Japan within thirty (30) days of the
end of the Exhibition Term.
7.11 Provide secure, pest-free storage for shipping crates.
7.12 Produce an Exhibition catalogue, which shall be sold at
the Exhibition's Merchandise Shop to be established at each Exhibition venue, it
being understood that the Exhibition Catalogue will be a customized version of
the book "Titanic - Legacy of the World's Greatest Ocean Liner" by Susan Wels,
with TEJI to provide approximately sixteen pages of material to be combined with
the existing book contents so as to customize the Book as an Exhibition
catalogue.
7.13 Produce a pre-recorded audio guide for the Exhibition.
7.14 Produce an audio-visual presentation for use solely in an
orientation theater in the Exhibition.
7.15 Grant RMST a right of first refusal for RMST to select
and obtain legal title to, at no cost, of fifty (50%) of all display cases,
theatrical pieces, didactic panels, models, lighting instruments, and other
display items that may be developed for the Exhibition, with such right of first
refusal to be exercised no later than the close of the Exhibition and with TEJI
to furnish RMST with an itemized list of the foregoing items, including the cost
thereof, within thirty (30) days of the opening of the Exhibition.
7.16 Produce color transparencies (the "Transparencies") of
each Artifact for use in connection with the marketing and promotion of the
Exhibition. TEJI shall provide one (1) original set of transparencies upon the
production thereof. RMST shall have the solely own the copyright to the
Transparencies.
7.17 All expenses incurred by TEJI in connection with the
foregoing shall be deemed to be a "Project Expense."
8. The Exhibition will to be presented by TEJI 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.
9. Both parties acknowledge that TEJI will have the responsibility for
the design and construction of the Exhibition. In connection with these matters,
TEJI 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.
<PAGE> 5
TEJI 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, and in a manner that will not
otherwise adversely reflect upon RMST. In furtherance of the foregoing, TEJI
will agree:
9.1 (a) The design and content of the Exhibition; (b)
the content of all marketing, advertising and public relations
materials; and (c) the content of the customized portions of the
Exhibition catalogue and a pre-recorded audio tour of the Exhibition to
be produced by TEJI, as provided elsewhere herein, shall all be subject
to review and written approval in advance by RMST, which approval shall
not be unreasonably withheld.
9.2 Upon reasonable request from RMST, TEJI will
arrange for its key design and other specialist personnel to be
available for meetings or discussions with representatives of RMST to
review the progress of preparation of the Exhibition.
9.3 Upon reasonable request of RMST, TEJI will
provide reasonable access for RMST representatives to observe the
construction of the Exhibition.
10. TEJI 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. RMST shall have the right
to approve all sponsors for the Exhibition, which approval shall not be
unreasonably withheld. 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.
11. 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. All expenses incurred by RMST in travelling to and from Japan in
connection with promotional appearances shall be a Project Expense. The parties
agree that a representative of RMST shall be present at the opening of each
Exhibition venue for promotional purposes.
12. TEJI will agree to arrange for adequate space within the Exhibition
for a merchandise shop (the "Merchandise Shop"). The items of merchandise to be
sold at the Merchandise Shop relating to or depicting the Titanic shall be
subject to RMST's consent, which consent shall not be unreasonably withheld,
based upon RMST's desires to preserve and promote the memory of the Titanic with
dignity and respect, and with due regard to Titanic's historical and maritime
significance.
<PAGE> 6
13. No merchandise derived from, related to or depicting the Artifacts
or underwater photography owned by RMST shall be offered for sale or sold
without the express written consent of RMST, and shall be subject to any
licenses or rights that RMST may grant to third parties. No merchandise related
to the Titanic shall be offered for sale or sold directly or indirectly by TEJI
through any outlet other than the Merchandise Shop during the Exhibition Term,
including, but not limited to, other retail outlets, direct marketing programs
conducted by mail, telemarketing, any public or proprietary on-line computerized
interactive information retrieval network or system (the "Internet"), or
otherwise, without the express written consent of RMST.
14. Any Internet site used by TEJI to promote or advertise the
Exhibition shall include a reference, on the initial screen thereof, that the
Exhibition is presented in association with RMST, and shall contain a hypertext
link to RMST's internet site at the first reference to RMST. Any Internet site
used by RMST shall include a reference, on its "Events" page, that the
Exhibition is being presented, and shall contain a hypertext link to the
Internet site used by TEJI to promote or advertise the Exhibition.
15. TEJI will refuse admission to the Exhibition to anyone carrying, or
who has within their control, sight or sound devices which enable them to film
or record the Exhibition, and will eject any person who refuses to relinquish
such sight and sound equipment prior to entering the Exhibition.
16. All ticket prices for the Exhibition shall be mutually agreed upon
by the parties.
17. Subject to licenses or rights that have been granted or may be
granted by RMST, and further subject to RMST's consent, which consent shall not
be unreasonably withheld, RMST shall give TEJI access to photographs and video
footage relating to the recovery of Artifacts (the "Supporting Material") for
use in the Exhibition. Except for the sole purposes of producing an orientation
theatre presentation to be made pursuant to paragraph 7.14 hereof producing a
promotional reel of no greater than two (2) minutes to promote the Exhibition
(the "Promotional Work"), no television, video, film, music, photography or
other audio visual rights, including but not limited to, telecommunication
mediums such as the Internet, are granted by RMST to TEJI. The parties further
agree that the subject of the Promotional Work shall be limited to the
Exhibition, and that subject to RMST's prior written consent, a reasonable
portion of RMST's Supporting Material shall be made available for utilization in
the Promotional Work. All rights and title to photographs of the Artifacts and
RMST's Supporting Material shall be owned exclusively by RMST, and no rights or
interests therein are hereby conferred upon the TEJI except as expressly set
forth in this Agreement. The rights of TEJI to release or distribute the
Promotional Work to any third party shall be subject to RMST's written consent,
which consent shall not be unreasonably withheld.
18. To the extent that TEJI obtains the names and/or addresses of the
purchasers of tickets or merchandise at the Exhibition, a list of such names and
addresses on a computerized format to be agreed upon 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.
<PAGE> 7
19. The parties agree:
19.1 TEJI will 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 TEJI based upon, arising out of, or in connection with TEJI's
breach of any of its duties or obligations hereunder, or arising from any claims
that RMS Foundation/Queen Mary, a California not-for-profit corporation, or any
of its officers, directors or agents may have, directly or indirectly against
RMST with regard to the presentation and/or production of an exhibition of the
Artifacts in Japan.
19.2 RMST will indemnify, defend and hold harmless TEJI, its
subsidiaries, parent companies, affiliates, agents, and assigns and their
respective agents, officers, employees, and directors, from and against any and
all losses, damages, liabilities, claims, demands, suits and expenses that the
TEJI may incur or be liable for as a result of any claim, suit or proceeding
made or brought against the TEJI based upon, arising out of, or in connection
with RMST's breach of any of its duties or obligations hereunder.
19.3 Each party will to give the other party prompt notice of any claim
or suit coming within the purview of these indemnities. Upon the written request
of any indemnitee, the indemnitor shall assume the defense of any claim, demand
or action against such indemnitee, and shall upon the request of the indemnitee,
allow the indemnitee to participate in the defense thereof, such participation
to be at the expense of the indemnitee. Settlement by the indemnitee without the
indemnitor's prior written consent shall release the indemnitor from the
indemnity as to the claim, demand or action so settled.
20. This agreement and, unless otherwise agreed to in writing, any
definitive agreement executed hereafter in accordance with paragraph 23 hereof,
will be 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 or proceeding with
respect to this Agreement shall 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, TEJI and RMST hereby accepts
for itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. TEJI 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. If either party brings an action against the other to enforce any
condition or covenant of the Exhibition Agreement or for breach of its
obligations under the Exhibition 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.
21. Each of the parties will agree that no press announcement or press
release in connection with the Exhibition Agreement shall be made unless the
other party hereto shall have
<PAGE> 8
given its written consent to such announcement (including the form thereof),
which consent shall not be unreasonably withheld.
22. TEJI expressly acknowledges it does not claim and represents and
warrants that it shall not claim to have any rights, title or interest in the
ownership of the Artifacts or any rights to possess the Artifacts during the
Exhibition Term in accordance with the provisions of this Agreement. TEJI agrees
to execute any documents as RMST shall request to reflect and protect RMST's
ownership interests in the Artifacts.
23. This Agreement is preliminary to and shall be subject to the
execution of one or more definitive agreements, incorporating the terms and
provisions hereof and other and customary provisions consistent herewith, which
shall include, as may be reasonably requested by RMST, a structure for this
transaction that will minimize or eliminate the tax liabilities payable by RMST
in Japan or jurisdictions other than the United States with respect to the
activities, operations and division of revenues contemplated by this preliminary
agreement, and will further ensure that the Artifacts or other assets of RMST
will not be subject in Japan to claims of third parties. Without limiting the
generality of the foregoing, TEJI expressly acknowledges and agrees that this
structure may include the formation of a new corporation in Japan which will be
owned jointly, on a 50-50 basis, by RMST and TEJI, and TEJI agrees to make its
pro-rata share of any minimum capital contribution that is required under
Japanese law for the formation of such corporation.and will further ensure that
the Artifacts or other assets of RMST will not be subject in Japan to claims of
third parties.
24. 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
Fax No.: (212) 482-1912
If to TEJI:
Titanic Exhibition Japan Inc.
5-31-7 Kubo Building
Shinbashi, Minato-Ku
Tokyo, Japan 105
Fax No.: (03) 3432-0916
<PAGE> 9
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 and fax numbers by giving notice as herein provided.
25. The parties hereto agree to execute any additional documents, and
take such further action required to effectuate the intent and purposes of this
Agreement.
26. 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, inducements, promises, or agreements, oral
or otherwise, have been made by any party which are not embodied herein, and
that no other agreement, statement or promise may be relied upon or shall be
valid or binding. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally. This Agreement may be amended or any
term hereof may be changed, waived, discharged or terminated by an agreement in
writing signed by all parties hereto.
If the foregoing is acceptable, please signify your agreement thereto
by countersigning this letter in the space provided below. Many thanks.
Very truly yours,
Allan H. Carlin
AGREED TO AND ACCEPTED BY:
TITANIC EXHIBITION JAPAN INC.
By:
Matt Taylor, President
AHC:cs
<PAGE> 1
Exhibit 10.3
April 15, 1998
VIA TELECOPIER
Mr. Reinhard Esser
CRE - CO FINANZ GMBH
Ratinger Strasse 23
4000 Dusseldorf 1
Germany
Re: EXHIBITION AGREEMENT WITH RMS TITANIC, INC.
Dear Rainer:
As discussed, I am sending this letter to confirm the understandings
reached during my visit to your office on April 2, 1998. It was agreed that in
resolution of the issues regarding the sums due to RMST through February 28,
1998, CRE CO would pay the balance due to RMST for the month of January 1998
($183,189 minus $137,541 = $45,848 due) and the sum of $250,000 for the month of
February 1998. In addition, in resolution of issues regarding the period ended
February 28, 1998, it was agreed that CRE CO acknowledges that RMST is the
beneficial and equitable owner of the exhibitry itemized in an invoice (the
"Exhibitry") in the amount of $1,015,638.52 DM dated June 20, 1997 from Bel-Tec
Ausstattungen GMBH, that RMST agrees that such exhibitry will be made available
and incorporated into any Titanic exhibition undertaken with CRE CO between the
present and December 31, 2000, and that legal title to such exhibitry would be
transferred from CRE CO to RMST on the earlier of December 31, 2000 or CRE CO
and RMST ceasing to present Titanic exhibitions in Europe. Pending the transfer
of legal title of the Exhibitry to RMST, CRE CO agrees that no lien, pledge or
other encumbrance shall be placed on the Exhibitry, and agrees to execute any
documents that RMST may reasonably request to evidence RMST's rights to
equitable and beneficial ownership of the Exhibitry pending transfer of legal
title to RMST. RMST acknowledges that it has no further claim on an assets of
the Hamburg exhibition, except for rights to two-thirds (2/3) of the proceeds
from the sale of the catering equipment at the conclusion of the Hamburg
exhibition. It was further agreed that the Titanic exhibition would continue to
be presented in Hamburg until May 10, 1998, and that for the period from March
1st through and including May 10th, RMST would be paid, on a monthly basis,
$2.00 per visitor to the exhibition, 15% of gross merchandise sales at the
exhibition, and 50% of the gross catalogue sales at the exhibition. RMST will
not have any rights to other revenues derived from the exhibition during the
period
<PAGE> 2
Mr. Reinhard Esser
April 15, 1998
Page 2
from March 1st through May 10, 1998. Based upon 106,584 visitors to the
exhibition and $26,502 derived from 50% of catalogue sales (at conversion rate
of $1.83) during the month of March 1998, together with your estimate that 15%
of gross merchandise sales during the month of March 1998 will be approximately
$32,800, it is estimated that RMST is owed approximately $272,300 for the month
of March 1998. It has been further agreed that we will meet in the next week or
two to discuss the terms for the extension of the exhibition in Hamburg from May
10, 1998 through September 30, 1998.
Please arrange for the prompt payment of the amounts payable to RMST and
signify your agreement with the above by initialling the bottom of this page and
returning it to me via fax. I hope to memorialize the above understandings in a
formal amendment to the Exhibition Agreement in the next couple of weeks.
Thank you, and I look forward to seeing you within the next two weeks to
discuss the further Hamburg extension and additional European venues.
Best regards.
Very truly yours,
/s/ Allan H. Carlin
-------------------
Allan H. Carlin
AHC:cs
Approved:
s/
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1999
<PERIOD-START> MAR-01-1998
<PERIOD-END> MAY-31-1998
<CASH> 1,643,861
<SECURITIES> 0
<RECEIVABLES> 1,515,591
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,335,870
<PP&E> 868,376
<DEPRECIATION> 103,432
<TOTAL-ASSETS> 11,890,034
<CURRENT-LIABILITIES> 3,112,196
<BONDS> 0
0
0
<COMMON> 1,619
<OTHER-SE> 8,776,219
<TOTAL-LIABILITY-AND-EQUITY> 11,890,034
<SALES> 272,859
<TOTAL-REVENUES> 2,562,319
<CGS> 2,630
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,152,509
<INCOME-TAX> 811,264
<INCOME-CONTINUING> 2,142,069
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,341,245
<EPS-PRIMARY> .08<F1>
<EPS-DILUTED> .08
<FN>
<F1>FIGURE REPRESENTS BASIC TOTAL.
</FN>
</TABLE>
