DEF 14A 1 schedule14a.txt SCHEDULE 14A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14A (Rule 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to ss. 240-14a-12 RMS TITANIC, INC. -------------------------------------------------------------------------------- (Name of Registrant as Specified in Its Charter) -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): (4) Proposed maximum aggregate value of transaction: (5) Total fee paid: [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount previously paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed: RMS TITANIC, INC. 3340 Peachtree Road, Suite 2250 Atlanta, Georgia 30326 November 20, 2003 Dear Fellow Shareholder: You are cordially invited to attend the Annual Meeting of Shareholders of RMS Titanic, Inc. (the "Company"), which will be held at the Marriott Courtyard, 3332 Peachtree Road, NE, Atlanta, Georgia 30326 at 8:30 a.m. on Friday, December 12, 2003. At the Annual Meeting, shareholders will be asked to elect four directors and to vote upon the ratification of the appointment of Kempisty & Company, Certified Public Accountants, P.C., as the Company's independent public accountants and auditors for the fiscal year ending February 29, 2004. More detailed information relating to the election of directors and the ratification of Kempisty & Company, Certified Public Accountants, P.C., as auditors, is set forth in the accompanying Proxy Statement, which you are urged to read thoroughly. For the reasons set forth in the Proxy Statement, your Board of Directors recommends a vote for each of the nominees for director and for the proposal to ratify Kempisty & Company, Certified Public Accountants, P.C. We hope that you will be able to attend the Annual Meeting. However, whether or not you plan to attend in person, please complete, sign, date and return the enclosed proxy card(s) promptly to ensure that your shares will be represented. If you do attend the Annual Meeting and wish to vote your shares personally, you may revoke your proxy and do so. Sincerely, Gerald Couture Secretary 2 RMS TITANIC, INC. 3340 Peachtree Road Suite 2250 Atlanta, Georgia 30326 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD DECEMBER 12, 2003 The Annual Meeting of Shareholders of RMS TITANIC, INC. (the "Company") will be held at the Marriott Courtyard, 3332 Peachtree Road, NE, Atlanta, Georgia 30326 at 8:30 a.m. Eastern Standard Time on Friday, December 12, 2003, for the following purposes: 1. To elect four members of the Board of Directors, each of whom will serve until the 2004 Annual Meeting of Stockholders and until his successor is duly elected and qualified or until his earlier resignation, removal or death; 2. To ratify the appointment of Kempisty and Company, Certified Public Accountants, P. C., as the Company's independent certified public accountants for the fiscal year ending February 29, 2004; 3. To transact such other business as may properly come before the Annual Meeting or any adjournment, postponement or rescheduling thereof. The Board of Directors has fixed the close of business on November 12, 2003 as the record date for the determination of shareholders entitled to vote at the Annual Meeting or any adjournments, postponements or reschedulings thereof. By Resolution of the Board of Directors, Gerald Couture Secretary November 20, 2003 The matters enumerated above are discussed more fully in the accompanying Proxy Statement. If you do not expect to be present at the Annual Meeting and wish your shares of Common Stock to be voted, please sign, date and mail the enclosed proxy card in the enclosed pre-addressed envelope as promptly as possible. No postage is required if mailed in the United States. YOUR VOTE IS IMPORTANT! PLEASE PROMPTLY MARK, DATE, SIGN AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE. IF YOU ARE ABLE TO ATTEND THE ANNUAL MEETING AND WISH TO VOTE YOUR SHARES PERSONALLY, YOU MAY DO SO AT ANY TIME BEFORE THE PROXY IS VOTED. 3 RMS TITANIC, INC. 2003 ANNUAL MEETING OF SHAREHOLDERS December 12, 2003 INFORMATION CONCERNING SOLICITATION AND VOTING The enclosed proxy is solicited by the Board of Directors of RMS Titanic, Inc. (the "Company") for use at the Annual Meeting of Shareholders, which will be held at 8:30 a.m. Eastern Standard Time on Friday, December 12, 2003, at the Marriott Courtyard, 3332 Peachtree Road, NE, Atlanta, Georgia and at any adjournment, postponement or rescheduling thereof (collectively, the "Annual Meeting"). The Board of Directors is aware of two items of business to be considered at the Annual Meeting: (1) the election of four directors to the Board of Directors, and (2) ratification of the appointment of Kempisty & Company, Certified Public Accountants, P.C., as the Company's independent auditors for the fiscal year ending February 29, 2004. The Board of Directors knows of no other matters to be presented for action at the Annual Meeting. However, if any other matters properly come before the Annual Meeting, the persons named in the proxy will vote on such other matters in their discretion. The giving of a proxy does not preclude a shareholder from voting in person at the Annual Meeting. The proxy is revocable before its exercise by delivering either written notice of such revocation or a later dated proxy to the Secretary of the Company at its executive office at any time prior to voting of the shares represented by the earlier proxy. In addition, shareholders attending the Annual Meeting may revoke their proxies by voting at the Annual Meeting. All proxies that are completed and properly signed and dated and are returned to the Company prior to the Annual Meeting will be voted as the shareholder directs. If no direction is given, properly executed proxies will be voted for election of the directors named therein, and for ratification of the appointment of Kempisty & Company, Certified Public Accountants, P.C., as the Company's independent auditors for the fiscal year ending February 29, 2004. Only shareholders of record at the close of business on the Record Date, November 12, 2003, are entitled to notice of and to vote at the Annual Meeting. As of the Record Date, 19,125,047 shares of the Company's common stock, $0.0001 par value per share (the "Common Stock"), were outstanding. Each such share of Common Stock is entitled to one vote on each matter submitted to shareholders. A list of shareholders will be available for inspection for at least ten days prior to the Annual Meeting at the principal executive offices of the Company, 3340 Peachtree Road NE, Suite 2250, Atlanta, Georgia 30326, and at the Annual Meeting. This Proxy Statement, together with a copy of the Company's Form 10-K, which includes financial statements for the period ended February 28, 2003, and its Form 10-Q for the most recent quarter ended August 31, 2003 is being mailed on or about November 20, 2003 to shareholders of record as of the Record Date. Proxies will be voted at the Annual Meeting, if a quorum is present, in accordance with the directions on the proxy card. A majority of the Common Stock outstanding and entitled to vote on the Record Date, present in person or represented by proxy, will constitute a quorum for the Annual Meeting. Directors are elected by a plurality of the votes cast. "Plurality" means that the individuals who receive the largest number of votes cast "for" are elected as directors, up to the maximum number of directors to be chosen at the Annual Meeting. Shares not voted "for" a particular director (whether as a result of a direction to withhold or a broker non-vote) will not be counted in such director's favor, but will not affect the outcome of the voting. Approval of all other matters to be acted on at the Annual Meeting requires the affirmative vote of a majority of the shares present, in person or by proxy, assuming that a quorum is present. If an executed proxy card is returned and the shareholder has voted "abstain" on any matter (or "withhold authority" as to the election of any director), the shares represented by such proxy will be considered present at the Annual Meeting for purposes of determining a quorum and for purposes of calculating the vote, but will not be considered to have been voted in favor of such matter. If an executed proxy is returned by a broker holding shares in street name which indicates that the broker does not have discretionary authority as to certain shares to vote on one or more matters, such shares will be considered present at the meeting for purposes of determining a quorum, but will not be considered to be represented at the meeting for purposes of calculating the vote with respect to such matters. 4 All of the expense of preparing, printing and mailing this Proxy Statement, including the reimbursement of brokerage firms and others for their expenses in forwarding proxies, this Proxy Statement and accompanying materials to the beneficial owners of the Company's Common Stock, will be borne by the Company. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information known to the Company regarding the beneficial ownership of its Common Stock as of November 12, 2003 by: o each person or group known by the Company to own beneficially more than 5% of its outstanding Common Stock; o each of its directors and each executive officer named in the Summary Compensation Table appearing under the heading "Compensation of Executive Officers and Directors"; and o its directors and executive officers, as a group. As of November 12, 2003, a total of 19,125,047 shares of Common Stock were issued and outstanding. The Company has determined beneficial ownership in accordance with the rules of the Securities and Exchange Commission. Unless otherwise indicated, the persons included in the table have sole voting and investment power with respect to all shares beneficially owned thereby.
NUMBER OF COMMON SHARES PERCENT OF BENEFICIALLY COMMON SHARES NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) OUTSTANDING ------------------------------------------------------- -------- ----------- Joe Marsh 3,291,768 (2) 16.8% 605 Surfside Drive Akron, Ohio 44319 William S. Gasparrini 23 Oak Street 2,328,937 12.2% Greenwich, CT 06831 Argosy International Ltd. 1,704,545 8.9% PO Box 260 Turks & Caicos, B.V.I. Arnie Geller, President, Chief Executive Officer and a 1,475,000 7.7% Director (3) c/o RMS Titanic, Inc. 3340 Peachtree Road, N.E, Suite 2250 Atlanta, GA 30326 Gerald Couture, Vice President, Secretary, Chief Financial 358,764 1.9% Officer and a Director (4) 901 Chestnut Street, Suite A Clearwater, FL 33756 N. Nick Cretan, a Director (5) 125,000 * Suite 913 17 Battery Place New York, NY 10004 Douglas Banker, a Director (5) 125,000 * 6508 Crane Road Ypsilanti, MI 48197 Directors and Executive Officers, as a group (4 persons) 2,083,764 10.9%
----------- * Less than 1%. 5 (1) Except as noted above, this share ownership information does not give effect to outstanding options and warrants. (2) As reported on a SEC filing dated October 14, 2003 by Mr. Marsh. (3) Shares are held by tenancy by the entirety with Mr. Geller's wife, with whom he shares voting and dispositive power. Excludes options to purchase 1,375,000 shares of Common Stock. (4) Excludes options to purchase 975,000 shares of Common Stock. (5) In each case, excludes options to purchase 75,000 shares of Common Stock. PROPOSAL 1: ELECTION OF DIRECTORS GENERAL Four directors are to be elected to serve until the next annual meeting of shareholders and until their respective successors are elected and shall have been qualified or until their earlier resignation, removal or death. The Board of Directors has nominated Arnie Geller, Gerald Couture, N. Nick Cretan and Douglas Banker (the "Nominees") to serve as directors. Directors shall be elected by shareholders holding a plurality of the shares of Common Stock present or represented at the Annual Meeting. In the event that any one of the Nominees is unable or declines to stand for election or to serve as a director, the Board of Directors intends to substitute another person of its choice as nominee, in his place and stead, or to present a lesser number of nominees for director, in accordance with the Company's By-Laws. The Board of Directors has no reason to believe that any Nominee will be unable or will decline to stand for election or to serve as a director. Any vacancy occurring between shareholders' meetings, including vacancies resulting from an increase in the number of directors, may be filled by the Board of Directors. A director elected to fill a vacancy shall hold office until the next annual shareholders' meeting. THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE ELECTION OF ALL NOMINEES NAMED ABOVE TO THE BOARD OF DIRECTORS. MANAGEMENT Officers and Directors Information regarding the Company's current directors, all of whom are Nominees, and executive officers appears below. Name Age Position(s) ------------------------------------ --------- ----------------------------------------------------------------- Arnie Geller 62 President, Chief Executive Officer, Director Gerald Couture 58 Vice President, Secretary, Chief Financial Officer, Director N. Nick Cretan 68 Director Douglas Banker 51 Director
Arnie Geller serves as President, Chief Executive Officer and a director of the Company. In November 1999, he was reappointed as President of the Company. He also served as President from May 1993 to May 1995, and has served as a director of the Company since May 1999. Prior to 1993, Mr. Geller had principally been engaged in various executive capacities in the record industry for approximately 27 years. Mr. Geller was a self-employed corporate consultant prior to his reappointment as President of the Company in 1999. 6 Gerald Couture has served as Vice President, Secretary and Chief Financial Officer, and a director of the Company since April 2000. Mr. Couture is a partner and principal, in Couture & Company, Inc., a private corporate financial consulting firm formed in 1973. Over the last 30 years, Mr. Couture has, through his consulting firm, been involved in public offerings, mergers and acquisitions, venture capital investing, crisis management, reorganizations and the financial management of a number of growth enterprises. Mr. Couture is a director and officer of Alpha Resources, Inc. Mr. Couture has an M.B.A. from Temple University, Philadelphia, and a B.S. in Chemical Engineering from the University of Massachusetts. N. Nick Cretan has served as a director of the Company since April 2000. Mr. Cretan has more than 30 years of management experience, including his present position as Chief Operating Officer of the non-profit Maritime Association of the Port of New York and New Jersey. He also serves as President of Friends of the Statue of Liberty, Ellis Island Foundation, President of Friends of Gateway National Parks Foundation and as Executive Director of the American Merchant Marine Memorial Foundation. Previously he served as Deputy Director of the San Francisco Marine Exchange and as staff assistant at the National Federation of Independent Business. Douglas Banker has served as a director of the Company since August 2000. Mr. Banker has more than 25 years of experience in the entertainment industry that includes providing management services to musicians and recording artists; marketing, merchandising, licensing, and sales of music media products; and the development and management of concerts and similar events. Mr. Banker is the manager and principal stockholder in Skillet Records, LLC, an independent record label business that provides national distribution for music artists. Mr. Banker also has authored several significant software programs that have achieved commercial success and has been involved with the management of the enterprises created for their commercialization. Mr. Banker was President of the Board of the Motor City Music Foundation in Detroit, Michigan from 1996 to 2000. Meetings of the Board of Directors The Board of Directors held six meetings during the fiscal year ended February 28, 2003. All Directors attended all the meetings of the Board. Committees of the Board of Directors At present, the Company has no audit, nominating or compensation committees or committees performing similar functions. The full board of directors presently functions as these committees. REPORT OF THE BOARD IN LIEU OF A REPORT OF THE AUDIT COMMITTEE The following Report of the Board in Lieu of a Report of the Audit Committee does not constitute soliciting material and should not be deemed to be filed or incorporated by reference into any other Company filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates this Report by reference therein. The Board of Directors does not have a standing Audit Committee and, therefore, the Board of Directors as a whole is responsible for overseeing management's implementation of the Company's financial reporting process. In discharging its oversight role, the Board of Directors reviewed and discussed the audited financial statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 2003 with the Company's management and independent auditor. Management is responsible for the financial statements and the reporting process, including the system of internal controls. The independent auditor is responsible for expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States. 7 There were no issues that arose that the independent auditor required discussing with the non-management Board members. The independent auditor has been instructed by management to discuss any issue that he may determine is relevant with any or all Board members including any issues deemed significant by the auditor, including those required by Statements on Auditing Standards No. 61 and No. 90 (Communications with Audit Committees), as amended. In addition, the Board discussed with the independent auditor its independence from the Company and its management, including the matters in the written disclosures required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), and considered whether the provision of non-audit services by the auditor was compatible with maintaining the auditor's independence. In reliance on the reviews and discussions outlined above, the Board of Directors concluded that the audited financial statements should be included in the Company's Annual Report on Form 10-K for the year ended February 28, 2003 for filing with the Securities and Exchange Commission. Members of the Board of Directors Douglas Banker Gerald Couture N. Nick Cretan Arnie Geller COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS Summary The following table sets forth the aggregate cash compensation paid, during each year in the three-year period ended February 28, 2003, to the Company's Chief Executive Officer and its other executive officer whose annual salary and bonus for the fiscal year ended February 28, 2003 exceeded $100,000 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE LONG-TERM ANNUAL COMPENSATION COMPENSATION AWARDS ------------------------------------------------ ------------------- NAME AND FISCAL OTHER ANNUAL RESTRICTED STOCK All Other PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION ($) STOCK AWARDS OPTIONS Compensation ------------------ ---- ------ ------------- ------------- ------- ------------ ($) ($) ($) (#) ($) Arnie Geller(1)........ 2003 331,659 37,961(2) -0- President and Chief 2002 358,463 48,101(2) 500,000 Executive Officer 2001 292,220 22,759(2) 875,000 Gerald Couture(3)...... 2003 272,467 51,849(4) -0- Vice President 2002 225,687 113,059(4) 600,000 Finance and Chief 2001 100,769 5,905(4) 375,000 Financial Officer
(1) Mr. Geller and the Company are parties to an employment agreement entered into on February 2, 2002 that provides for an annual base salary of $330,000 with 5% per year increases over the five year term. At Mr. Geller's option, he may elect to receive his compensation in shares of the Company's Common Stock. For this purpose, the Common Stock would be valued at 50% of its closing bid price as of the date of the election. Should an election be made, the Company will incur an expense equal to the market price of a share of Common Stock at the date of election multiplied by the number of shares issued. Mr. Geller has been granted stock options as an officer and director to purchase 1.375 million shares of the Company's Common Stock at prices ranging from $.40 to $1.75 that were closing prices of the stock at the respective times of issuance. All of these options expire in ten years from the respective grant dates, or between 2010 and 2011. (2) Included in other compensation are medical payments, including medical insurance, and a car allowance of $1,000 per month for each fiscal year. 8 (3) On April 25, 2000, the Company engaged Mr. Couture as Vice President and Chief Financial Officer pursuant to a one-year employment agreement. After that employment agreement expired, Mr. Couture continued to serve as an officer of the Company, with his compensation dependent upon the services he performed. On February 2, 2002, Mr. Couture and the Company executed a new employment agreement for a term of four years at an annual base salary of $270,000 with 5% per year increases. At Mr. Couture's option, he may elect to receive his compensation in shares of the Company's Common Stock. For this purpose, the Common Stock would be valued at 50% of its closing bid price as of the date of the election. Should an election be made, the Company will incur an expense equal to the market price of a share of Common Stock at the date of election multiplied by the number of shares issued. Mr. Couture had previously been granted a stock option to purchase 300,000 shares of the Company's Common Stock at a price of $1.625 per share, which was the closing price of the stock on April 24, 2000. Mr. Couture received an option to purchase 600,000 shares at a price of $.40 per share, which was the closing price of the Company's Common Stock on February 1, 2002 as part of his current employment agreement. In addition, on February 2, 2002, Mr. Couture's option to acquire 75,000 shares of Common Stock was reset to an exercise price of $0.40, which was the closing price of the Common Stock on February 1, 2002. All of these options expire in ten years from the respective grant dates, or between 2010 and 2011. (4) Includes in other compensation, medical payments including medical insurance, car allowances of $750 per month, an office allowance of $1,000 per month since May 1, 2001, and the issuance of Common Stock for services in fiscal year 2001 at the ten market price and valued at $77,362 in fiscal year 2002, together with payments to his consulting firm for the professional services of others of $10,750, $7,415, and $5,905 for fiscal years 2003,2002, and 2001, respectively. STOCK OPTIONS OPTION GRANTS IN FISCAL YEAR 2003 There were no stock options granted to any member of management or the Board of Directors in fiscal year 2003. YEAR-END OPTION VALUES IN FISCAL YEAR 2003 The following table summarizes, for each of the Named Executive Officers, the number of stock options held at February 28, 2003 and the aggregate dollar value of in-the-money unexercised options, if any. The value of unexercised, in-the-money options at February 28, 2003 is the difference between (a) the exercise price and (b) the fair market value of the underlying Common Stock as of February 28, 2003, which was $0.07 per share, based on the closing price of the Company's Common Stock on that date. The options described have not been and may never be exercised and actual gains, if any, on exercise would depend on the value of the Common Stock on the actual date of exercise.
Number of Unexercised Value of Unexercised Options In-the-Money Options Shares Value at February 28, 2003 at February 28, 2003 Acquired on Realized -------------------- -------------------- Name Exercise ($) Exercisable Unexercisable Exercisable Unexercisable ---- ---------------- ---------- ---------- ------------- ----------- ------------- Arnie Geller........ -- -- 1,375,000 -- -0- -- Gerald Couture.... -- -- 975,000 -- -0- --
9
Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term -------------------------- Number of Percent of Total Exercise Securities Options/SARs Granted Price Expiration Name Underlying Options to Employees in Fiscal ($/Share) Date 5% ($) 10%($) Granted Year --------------- ------------------ ---------------------- --------- ---------- ------ ------ Arnie Geller 1,375,000 -0- $.40 to 2010- 2011 -0- -0- $1.75 Gerald Couture 975,000 -0- $.40 to 2010 - 2011 -0- -0- $1.63
TEN-YEAR OPTION/SAR REPRICINGS The following table sets forth the option cancellations and awards for the Company's executive officers during the last ten completed fiscal years:
Weighted- Number of Average Shares and Exercise Options Price Exercisable per Share Balance at March 1, 1999 -0- -- Canceled -0- -- Granted 1,000,000 $1.63 ------------------------------------------------------------------------------------------------------------------------------------ Balance at March 1, 2000 1,000,000 $1.63 Canceled (500,000) $1.15 Granted 2,150,000 $1.79 ------------------------------------------------------------------------------------------------------------------------------------ Balance at February 28, 2001 2,650,000 $1.60 Canceled -0- -0- Granted 1,350,000 $0.48 ------------------------------------------------------------------------------------------------------------------------------------ Balance at February 28, 2002 4,000,000 $1.22 Canceled 250,000 $0.88 Granted -0- -0- ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ Balance at February 28, 2003 3,750,000 $1.24 ====================================================================================================================================
10 Re-pricing Option Schedule is shown below. Options granted to the Board of Directors in January 2001, that included two executive officers who serve as Directors, were re-priced so as to maintain an incentive for the continuing services of the all Directors while not increasing the number of options outstanding. As a result of the litigative history of the Company, it is extremely difficult to attract other qualified and competent directors to serve and at the same time providing motivation for continual service.
Number of Securities Length of Original Underlying Market Price of Option Term Options/SARs Stock at Time of Exercise New Remaining at Date of Repriced or Repricing or Price at Time Exercise Repricing or Name Date Amended (#) Amendment ($) of Repricing($) Price ($) Amendment (years) ---- ---- ----------- ------------- --------------- --------- ----------------- Arnie Geller 2/2/02 75,000 .40 1.05 .40 8 years Gerald Couture 2/2/02 75,000 .40 1.05 .40 8 years Douglas Banker 2/2/02 75,000 .40 1.05 .40 8 years N. Nick Cretan 2/2/02 75,000 .40 1.05 .40 8 years
Compensation of Directors The Company has compensated all directors by issuing 25,000 shares of Common Stock upon appointment as a Director and, subsequently, options to purchase Common Stock for each year of service. On January 27, 2000, each director was granted an option to purchase 75,000 shares of the Common Stock at an exercise price of $1.15 per share, which was the closing price of the Company's Common Stock on January 26, 2001. The purpose of this grant of options and shares of Common Stock was to align the interests of the directors with that of the Company's shareholders. On February 2, 2002, the strike price for these options was reset to $0.40, the closing price of the Company's Common Stock as of February 1, 2002. During fiscal year 2003, Messrs. Cretan and Banker, the Company's two independent directors, were granted 100,000 shares of Common Stock each, having a fair market value of $24,000 based upon the closing price of the Common Stock on August 23, 2002,[the day prior to the date of grant], for their continued services on behalf of the Company, with the issuance of this Common Stock deferred until the second quarter of fiscal year 2004. During fiscal year 2003, each of the two independent directors received cash compensation for meeting attendance of $2,100. Each director is paid $ 750 for attendance at meeting or $300 for each telephonic meeting. Employees of the Company do not receive any additional cash compensation for serving on the Board of Directors. COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers, and persons who own more than ten percent of the Company's outstanding shares of Common Stock, to file with the Securities and Exchange Commission (the "SEC") initial reports of ownership and reports of changes in ownership of Common Stock. Such persons are required by SEC regulation to furnish the Company with copies of all such reports that they file. Based solely on a review of the copies of such reports and certain representations which may have been furnished to the Company during or with respect to the Company's fiscal year ended February 28, 2003, the Company believes that, during such fiscal year, all applicable Section 16(a) filing requirements were made except for one individual. 11 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS On August 15, 2003, the Company executed a fifth amendment to the exhibition tour agreement with Clear Channel Entertainment Exhibits, Inc., a Delaware corporation formerly known as SFX Family Entertainment, Inc. pursuant to which, among other things, the Company licensed the worldwide rights to exhibit the Company's TITANIC artifacts. The original license period commenced on January 6, 2003 and was to expire on December 31, 2003, but the fifth amendment provided a "2004 Extension Period" that expires April 25, 2004. This agreement also permits the Company to acquire all exhibitry from the present Clear Channel exhibits for $600,000. A consulting firm in which the Company's Chief Financial Officer is a principal, has rendered services to the Company for the time of other professionals. Payment for these services amounted to $10,750, $7,415, and $5,905 for fiscal years 2003, 2002, and 2001, respectively. On April 2, 2002, the Company entered into a Purchase Agreement for the sale of the Common Stock, representing 100% ownership, of its Danepath Ltd. subsidiary to Argosy International Ltd., which owns 1,704,545 shares, or approximately 8.9%, of the Company's Common Stock. The purchase price, as amended on June 1, 2002, was $1.5 million. Danepath's principal asset was the research and recovery vessel "SV EXPLORER". Under the terms of the amended Purchase Agreement the Company received $100,000 upon execution and a note in the principal amount of $1.4 million, bearing interest at 8% per annum, payable on October 2, 2002. This obligation was collateralized with a first mortgage on the vessel "SV EXPLORER" and all the Common Stock of the Company owned by Argosy International, Ltd. The note receivable was not paid at its maturity on October 2, 2002. In order to avoid a costly international foreclosure process, the Company entered in a Settlement Agreement pursuant to which the Company received a cancellation fee in the amount of $250,000 from Argosy in the form of a note with a one-year maturity and cancellation of a $240,000 vendor payable, and acquired by deed in lieu of foreclosure the marine vessel, "SV EXPLORER" and related marine equipment for consideration of $750,000 in the Company's new wholly owned United Kingdom subsidiary - Seatron Limited. The Company has retained a mortgage on the vessel to secure all monies advanced by the Company to this subsidiary. With this Settlement Agreement, the Company released Argosy of the original purchase debt obligation for $1.4 million. PERFORMANCE GRAPH The following graph is a comparison of the cumulative total returns for the Company's Common Stock as compared with the cumulative total return for the Standard & Poor's 600 Small Cap Stock Index and the average performance of five corporations within a Peer Group. The companies selected for a peer group consist of five corporations with similar market capitalization- one of which engages in marine salvage (Odyssey Marine), and four (TBA Entertainment, Littlefield Corporation, Virtra Systems, Entertainment Technology and Programs Inc.) within the same SIC 7900 group--entertainment and amusement. There is not a publicly traded company that has an identical business to RMS Titanic. The cumulative returns of the Company and its Peer Group were computed by dividing the difference between the price of Company's Common Stock and those of the Peer Group at the end and the beginning of the measurement period (February 28, 1998 to February 28, 2003) by the price of the Company's and the Peer Group Common Stock at the beginning of the measurement period. The total return calculations are based upon an assumed $100 investment on February 28, 1998. 12 [GRAPHIC OMITTED]
2/28/98 2/28/99 2/29/00 2/28/01 2/28/02 2/28/03 ------- ------- ------- ------- ------- -------- RMS Titanic, Inc. 100 86 114 41 19 4 S & P Small Cap Index 100 82 108 110 118 94 Peer Group 100 157 98 90 83 29
Compensation Committee Interlocks and Insider Participation The Board of Directors does not have a Compensation Committee or a committee performing equivalent functions. Executive compensation is determined by the Board of Directors. During the fiscal year ended February 28, 2003, Arnie Geller, the Company's Chief Executive Officer, and Gerald Couture, its Chief Financial Officer, both served on the Board of Directors. No interlocking relationships exist between the Board of Directors of the Company and the board of directors or compensation committee of any other company. 13 Board Report on Executive Compensation The Board of Directors, which acts as the compensation committee for the Company, believes strongly that performance and, in turn, the maximization of shareholder value, depends to a significant extent on the establishment of a close alignment between the financial interest of stockholders and those of the Company's employees, including senior management. Compensation programs are designed to encourage and balance the attainment of short-term operational goals and long-term strategic initiatives. The Board of Directors believes that employee's ownership of a significant equity interest in the Company is a major incentive in building shareholder value and aligning the long-term interests of management and stockholders. The Board of Directors believes the Company has evolved to a point that establishment of a integrated plan that allows all employees to participate in the future growth of the Company is essential to retain and attract qualified personnel. The Company compensates Mr. Geller, the Chief Executive Officer, in accordance with his Employment Agreement. See "Executive Compensation". During the fiscal year ended February 28, 2003, Mr. Geller received a salary of $331,659 pursuant to his Employment Agreement. Mr. Geller did not receive any bonus during the fiscal year ended February 28, 2003. The Company compensates Mr. Couture, the Chief Financial Officer, in accordance with his Employment Agreement. See "Executive Compensation". During the fiscal year ended February 28, 2003, Mr. Couture received a salary of $272,467 pursuant to his Employment Agreement. Mr. Couture did not receive any bonus during the fiscal year ended February 28, 2003. The Securities and Exchange Commission requires compensation committees of public companies to state their compensation policies with respect to enacted federal income tax laws that limit to $1 million the deductibility of compensation for the Company's named executive officers, the Board acting as a compensation committee has not adopted a policy with respect to the deductibility limit, but will adopt such a policy should it become relevant. Board of Directors Douglas Banker Gerald Couture N. Nick Cretan Arnie Geller PROPOSAL 2: RATIFICATION OF THE APPOINTMENT OF KEMPISTY & COMPANY, CERTIFIED PUBLIC ACCOUNTANTS, P.C., AS INDEPENDENT ACCOUNTANTS GENERAL The Board of Directors has appointed Kempisty & Company, Certified Public Accountants, P.C., as independent accountants for the fiscal year ending February 29, 2004, and has further directed that the selection of such independent accountants be submitted to and ratified by the shareholders at the Annual Meeting. Kempisty & Company, Certified Public Accountants, P.C. will have one or more representatives at the Annual Meeting. Such representatives will have the opportunity to make a statement, if he or she so desires, and will be available to respond to appropriate questions from shareholders. 14 THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF KEMPISTY & COMPANY, CERTIFIED PUBLIC ACCOUNTANTS, P.C., AS INDEPENDENT ACCOUNTANTS FOR THE COMPANY. AUDIT AND NON-AUDIT FEES For the fiscal year ended February 28, 2003, fees for services provided by Kempisty & Company, Certified Public Accountants, P.C. were as follows: A. Audit Fees $70,000 B. Financial Information Systems Design and Implementation -- C. All Other Fees -- Total Fees $70,000 ========== Compatibility of Fees The Board of Directors has concluded that as there are no other fees paid to the auditor for other services there is no issue as to interference with the principal accountant's independence. During the Company's two most recent years, and any subsequent period prior to engaging Kempisty & Company, Certified Public Accountants, P.C., neither the Company nor, to the best of the Company's knowledge, anyone acting on the Company's behalf, consulted Kempisty & Company, Certified Public Accountants, P.C. regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company's financial statements, and either a written report was provided to the Company or oral advice was provided that the new auditors concluded there was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was subject to a disagreement (as defined in Section 304(a)(1)(iv) of Regulation S-K) with the former auditors or a reportable event (as described in Section 304(a)(1)(v) of Regulation S-K). Changes in and Disagreements with Accountants On January 15, 2002 the Company dismissed Goldstein Golub Kessler LLP as the Company's principal accountant and engaged Kempisty & Company, Certified Public Accountants, P.C., as its principal independent accountants to audit the financial statements of the Company for the year ended February 28, 2002. The reports of Goldstein Golub Kessler LLP on the Company's financial statements for the years ended February 28, 2001 and February 29, 2000 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. The decision to change accountants was approved by the Company's Board of Directors. The Board of Directors determined that the Company's auditing needs could be handled by Kempisty & Company, Certified Public Accountants, P. C., as efficiently and more economically compared to the former accounting firm. During the years ended February 28, 2001 and February 29, 2000 and through January 14, 2002, there were no disagreements with Goldstein Golub Kessler LLP on any matter of accounting principles or practices, financial statement disclosures or audit scope or procedure, which disagreements if not resolved to the satisfaction of Goldstein Golub Kessler LLP would have caused them to make reference thereto in their reports on the financial statements for such periods. 15 MISCELLANEOUS Other Matters If any other matters properly come before the Annual Meeting, it is the intention of the proxy holders, identified in the proxy card, to vote in their discretion on such matters pursuant to the authority granted in the proxy and permitted under applicable law. The Company does not have notice of any such matters. Cost and Manner of Soliciting Proxies The expenses of preparing and mailing the Notice of Annual Meeting, the Proxy Statement and the proxy card(s) will be paid by the Company. In addition to the solicitation of proxies by mail, proxies may be solicited by directors, officers and employees of the Company (who will receive no additional compensation) by personal interviews, telephone, telegraph and facsimile. It is anticipated that banks, custodians, nominees and fiduciaries will forward proxy soliciting material to beneficial owners of the Company's Common Stock and that such persons will be reimbursed by the Company for their expenses incurred in so doing. Proposals of Stockholders for the next meeting The next annual meeting of shareholders is expected to be held during December 2004. To be considered for inclusion in the Company's proxy statement and proxy card for the 2004 annual meeting under the Securities and Exchange Commission's Rule 14a-8, proposals of shareholders intended to be presented at the annual meeting must be received by the Corporate Secretary of the Company at 3340 Peachtree Road NE, Suite 2250, Atlanta, Georgia 30326, a reasonable time before the Company begins to print and mail its proxy materials for that annual meeting. Proposals of shareholders intended to be presented at the 2004 annual meeting, but not to be included in the Company's proxy statement and proxy card under the Securities and Exchange Commission's Rule 14a-8, also must be received by the Corporate Secretary at 3340 Peachtree Road NE, Suite 2250, Atlanta, Georgia 30326, a reasonable time before the Company begins to print and mail its proxy materials for that annual meeting. If the Company is not provided with written notice of a shareholder proposal within such reasonable time, proxies solicited by the Board of Directors for the Annual Meeting of Shareholders will confer discretionary authority to vote on the shareholder proposal if presented at the Annual Meeting. FORM 10-K Additional copies of the Company's Form 10-K for the fiscal year ended February 28, 2003 may be obtained without charge by writing or calling the Corporate Secretary at 3340 Peachtree Road NE, Suite 2250, Atlanta, Georgia 30326 or (404) 842-2600. By Resolution of the Board of Directors, November 20, 2003 16 RMS TITANIC, INC. PROXY ANNUAL MEETING OF THE SHAREHOLDERS, DECEMBER 12, 2003 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints each of Arnie Geller and Gerald Couture, each with full power to act without the other, and with full power of substitution, as the attorneys and proxies of the undersigned and hereby authorizes them to represent and to vote, all the shares of Common Stock of RMS Titanic, Inc. that the undersigned would be entitled to vote, if personally present, at the Annual Meeting of Shareholders to be held on December 12, 2003 or any adjournment, postponement or rescheduling thereof, upon such business as may properly come before the meeting, including the items set forth below. The undersigned hereby revokes any and all previous proxies with respect to the matters covered by this proxy and the voting of such shares at the Annual Meeting. 1. ELECTION OF DIRECTORS (check one box only) [ ] FOR all nominees listed below (except as marked to the contrary below) [ ] WITHHOLD AUTHORITY to vote for all nominees listed below NOMINEES: Arnie Geller, Gerald Couture, N. Nick Cretan and Douglas Banker. (INSTRUCTION: To withhold authority to vote for any individual nominee, check the "FOR" box above and write that nominee's name in the space provided below.) 2. TO RATIFY SELECTION OF KEMPISTY & COMPANY, CERTIFIED PUBLIC ACCOUNTANTS, P.C., AS CERTIFIED INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING FEBRUARY 29, 2004. [ ] FOR [ ] AGAINST [ ] ABSTAIN (To be Completed and Signed on the Other Side) THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2 AS RECOMMENDED BY THE BOARD OF DIRECTORS. To vote in accordance with the recommendations of the Board of Directors, just sign, date and return this proxy--no boxes need be checked. 17 Please sign exactly as name appears below. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. Dated: _________________________, 2003 Signature Signature if held jointly (PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.) 18