0001001746-11-000012.txt : 20110816
0001001746-11-000012.hdr.sgml : 20110816
20110816114447
ACCESSION NUMBER: 0001001746-11-000012
CONFORMED SUBMISSION TYPE: DEF 14A
PUBLIC DOCUMENT COUNT: 2
CONFORMED PERIOD OF REPORT: 20110816
FILED AS OF DATE: 20110816
DATE AS OF CHANGE: 20110816
EFFECTIVENESS DATE: 20110816
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: DATARAM CORP
CENTRAL INDEX KEY: 0000027093
STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER STORAGE DEVICES [3572]
IRS NUMBER: 221831409
STATE OF INCORPORATION: NJ
FISCAL YEAR END: 0430
FILING VALUES:
FORM TYPE: DEF 14A
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-08266
FILM NUMBER: 111039191
BUSINESS ADDRESS:
STREET 1: P O BOX 7528
CITY: PRINCETON
STATE: NJ
ZIP: 08543
BUSINESS PHONE: 6097990071
MAIL ADDRESS:
STREET 1: PO BOX 7528
CITY: PRINCETON
STATE: NJ
ZIP: 08543-7528
DEF 14A
1
pxy2011.txt
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
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 Section 240.14a-12
DATARAM CORPORATION
(Name of Registrant as Specified In Its Charter)
--
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) 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:
__________________________________________________________
DATARAM CORPORATION
A New Jersey Corporation
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on September 22, 2011 at 2:00 P.M.
Important Notice Regarding the Availability of Proxy Materials for the
Shareholder Meeting to Be Held on September 22, 2011
The Proxy Statement and 2011 Annual Report are available at
www.dataram.com
TO THE SHAREHOLDERS OF DATARAM CORPORATION:
The Annual Meeting of the Shareholders of DATARAM CORPORATION (the
"Company") will be held at the Company's corporate headquarters at 777
Alexander Park, Suite 100, Princeton, New Jersey, on Thursday,
September 22, 2011 at 2:00 p.m., for the following purposes:
(1) To elect four (4) directors of the Company to serve
until the next succeeding Annual Meeting of
Shareholders and until their successors have been
elected and have been qualified.
(2) To ratify the selection of J.H. Cohn LLP as the
independent certified public accountants of the
Company for the fiscal year ending April 30, 2012.
(3) To approve the Dataram Corporation 2011 Stock Option Plan for
employees and consultants but not executive officers or directors
of the Company.
(4) To transact such other business as may properly come
before the meeting or any adjournments.
Only shareholders of record at the close of business on the 12th day of
August 2011 are entitled to notice of and to vote at this meeting.
By order of the Board of Directors
Thomas J. Bitar,
Secretary
August 19, 2011
The Company's 2011 Annual Report is enclosed.
PLEASE COMPLETE, DATE, SIGN AND RETURN THE ACCOMPANYING PROXY
IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
[LOGO]
DATARAM CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 22, 2011
This Proxy Statement is furnished by DATARAM CORPORATION
(the "Company"), which has a mailing address for its principal executive
offices at P.O. Box 7528, Princeton, New Jersey 08543-7528, in connection
with the solicitation by the Board of Directors of proxies to be voted at
the Annual Meeting of Shareholders of the Company to be held at the
Company's corporate headquarters at 777 Alexander Park, Suite 100,
Princeton, New Jersey on Thursday, September 22, 2011 at 2:00 p.m.
You may obtain directions to the Company's corporate headquarters by
contacting investor relations by telephone at (609) 799-0071 extension 2430
or at http://corporate.dataram.com/contact-us-form/directions. The close of
business on August 12, 2011 has been fixed as the record date for the
determination of shareholders entitled to notice of and to vote at the
Annual Meeting and any adjournments thereof. This Proxy Statement was mailed
to shareholders on or about August 19, 2011.
You may own common shares in one or both of the following ways - either
directly in your name as the shareholder of record, or indirectly through a
broker, bank or other holder of record in "street name." If your shares are
registered directly in your name, you are the holder of record of these
shares and we are sending these proxy materials directly to you. As the
holder of record, you have the right to give your proxy directly to us. If
you hold your shares in street name, your broker, bank or other holder of
record is sending these proxy materials to you. As a holder in street name,
you have the right to direct your broker, bank or other holder of record how
to vote by completing the voting instruction form that accompanies your
proxy materials. Regardless of how you hold your shares, we invite you to
attend the Meeting.
VOTING RIGHTS
On August 12, 2011 there were outstanding and entitled to vote
10,703,309 shares of the Company's common stock, par value $1.00 per share
(the "Common Stock"). Holders of the Common Stock are entitled to one vote
for each share of Common Stock owned on the record date, exercisable in
person or by proxy. Shareholders may revoke executed proxies at any time
before they are voted by filing a written notice of revocation with the
Secretary of the Company. Where a choice has been specified by the holder
on the proxy, the shares will be voted as directed. Where no choice has
been specified by the holder, the shares will be voted for the nominees
described below and for the ratification of the selection of accountants
and for the approval of the Dataram Corporation 2011 Stock Option Plan for
employees and consultants.
Directors are elected by a plurality of the number of votes cast. With
respect to each other matter to be voted upon, a vote of a majority of the
number of shares voting is required for approval. Abstentions and proxies
submitted by brokers with a "not voted" direction will not be counted as
votes cast with respect to each matter.
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth information concerning each of the
Company's executive officers:
Name Age Positions with the Company
____ ___ __________________________
John H. Freeman 62 President and Chief Executive Officer
Mark E. Maddocks 59 Vice President - Finance and
Chief Financial Officer
Jeffrey H. Duncan 61 Vice President - Manufacturing
and Engineering
Anthony M. Lougee 50 Controller
David S. Sheerr 51 General Manager, Micro Memory Bank ("MMB")
John H. Freeman has been employed by the Company since May 7, 2008 when
he was named President and Chief Executive Officer. Mr. Freeman has been a
Director since 2005. Additional information regarding Mr. Freeman is set
forth under "Nominees for Director" below.
Mark E. Maddocks has been employed by the Company since 1978. In 1986
he became Controller. Since 1996 he has served as Vice President-Finance and
Chief Financial Officer.
Jeffrey H. Duncan has been employed by the Company since 1974. In 1990,
he became Vice President-Engineering. Since 1995, he served as Vice
President-Manufacturing and Engineering.
Anthony M. Lougee has been employed by the Company since 1991,
initially as Accounting Manager. In 2002 he was named an executive officer
and currently serves as Controller, a position he has held since 1999.
David S. Sheerr has been employed by the Company since its acquisition
of certain assets of Micro Memory Bank, Inc. from him on March 31, 2009. He
previously served as President of Micro Memory Bank, Inc. from October 7,
1994 until the acquisition.
ELECTION OF DIRECTORS
Four (4) directors will be elected at the Annual Meeting of
Shareholders by the vote of a plurality of the shares of Common Stock
represented at such meeting. Unless otherwise indicated by the shareholder,
the accompanying proxy will be voted for the election of the four (4)
persons named under the heading "Nominees for Directors." Although the
Company knows of no reason why any nominee could not serve as a director,
if any nominee shall be unable to serve, the accompanying proxy will be
voted for a substitute nominee.
NOMINEES FOR DIRECTORS
The term of office for each director will expire at the next Annual
Meeting of Shareholders and when the director's successor shall have been
elected and duly qualified. Each nominee is a member of the present Board of
Directors and has been elected by shareholders at prior meetings.
Name of Nominee Age
_______________ ___
Thomas A. Majewski 59
John H. Freeman 62
Roger C. Cady 73
Rose Ann Giordano 72
Thomas A. Majewski is a real estate developer. He is also a principal
in Walden, Inc., a computer consulting and technologies venture capital
firm, which he joined in 1990. Prior to 1990, he had been Chief Financial
Officer of Custom Living Homes & Communities, Inc., a developer of
residential housing. Mr. Majewski has been a Director since 1990, and
Chairman of the Board of Directors since July 2011. Mr. Majewski brings
to the Board his business and financial expertise and extensive knowledge of
Dataram's history and operations.
John H. Freeman is an executive officer of the Company. Mr. Freeman has
been an independent consultant specializing in corporate sales, marketing
and operations consulting since December, 2006. Prior to that and since
September, 2004 he served as the Chief Operating Officer at Taratec
Development Corporation, a life sciences consulting company. Prior to that,
and for more than five years, he was responsible for leading IBM's worldwide
sales, marketing, and business planning for Pharmaceutical, Medical Device,
and Life Sciences clients. This included IBM product sales of hardware,
software, services and financing. Mr. Freeman has 30 years of executive
sales and operations management experience with IBM. Mr. Freeman is a
graduate of Pennsylvania State University with an M.S. in Computer Science
and holds a B.A. in Mathematics from Syracuse University. Mr. Freeman has
been a Director since 2005. Mr. Freeman brings to the Board extensive
executive, marketing and technical experience, with a decades-long track
record in the computer technology industry.
Roger C. Cady is a founder and principal of Arcadia Associates, a
strategic consulting and mergers and acquisitions advisory firm. He was
employed as Vice President of Business Development for Dynatech Corporation,
a diversified communications equipment manufacturer, from 1993 to 1996.
Before joining Dynatech he was a strategic management consultant for eight
years. His business career has included 16 years in various engineering,
marketing and management responsibilities as a Vice President of Digital
Equipment Corporation, and President of two early stage startup companies.
Mr. Cady has been a Director since 1996, and served as Chairman of the Board
of Directors from September 2008 to July 2011. Mr. Cady brings to the Board
extensive business and management experience focusing on the engineering and
technology fields, and extensive knowledge of Dataram's history and
operations.
Rose Ann Giordano has been President of Thomis Partners, an investing
and advisory services firm, since 2002. Prior to that, and for more than
five years, Ms. Giordano served as Vice President of Worldwide Sales &
Marketing for the Customer Services Division of Compaq Computer Corporation.
Prior to that, Ms. Giordano held a number of executive positions with
Digital Equipment Corporation. Ms. Giordano was the first woman Vice
President and Corporate Officer of Digital Equipment Corporation. Ms.
Giordano serves on the Board of Directors of TimeTrade Inc., the National
Association of Corporate Directors/New England and Emerson Hospital. Ms.
Giordano holds a B.A. in Mathematics from Marywood College and is a graduate
of the Stanford University Business School Executive Program. Ms. Giordano
has been a Director since 2005. Ms. Giordano brings to the Board extensive
business, marketing and executive experience in the computer technology
industry.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
ELECTION OF EACH OF THE NOMINEES PROPOSED BY THE BOARD OF DIRECTORS, AND,
UNLESS A SHAREHOLDER GIVES INSTRUCTIONS ON THE PROXY CARD TO THE CONTRARY,
THE PROXY AGENTS NAMED THEREON INTEND SO TO VOTE.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of Common Stock
beneficially owned by certain owners known by the Company to beneficially
own in excess of 5% of the Common Stock, each director of the Company, each
named executive officer and seven directors and executive officers
collectively, as of July 31, 2011. Unless otherwise indicated, stock
ownership includes sole voting power and sole investment power. No other
person or group is known to beneficially own in excess of five percent (5%)
of the Common Stock.
Name of Amount and Percent
Beneficial Nature of of
Owner Beneficial Ownership Class(1)
___________________ ____________________ ________
Roger C. Cady 196,700 (2) 1.8%
John H. Freeman 346,000 (3) 3.1%
Rose Ann Giordano 77,361 (4) *
Thomas A. Majewski 145,250 (5) 1.3%
Mark E. Maddocks 190,301 (6) 1.8%
Jeffrey H. Duncan 122,480 (7) 1.1%
Anthony M. Lougee 26,370 (8) *
David S. Sheerr 170,000 (9) 1.6%
Directors and 1,274,462 (10) 10.9%
executive officers
as a group (8 persons)
(1) On August 19, 2011, 10,703,309 shares were outstanding.
(2) Of this amount, 76,000 shares may be acquired by the exercise of
options held.
(3) Of this amount, 346,000 shares may be acquired by the exercise of
options held.
(4) Of this amount, 72,000 shares may be acquired by the exercise of
options held.
(5) Of this amount, 96,000 shares may be acquired by the exercise of
options held.
(6) Of this amount, 6,000 shares are held by Mr. Maddocks' spouse, 26,207
shares are held by the Company's 401(k) Plan and 120,600 shares may be
acquired upon the exercise of options held.
(7) Of this amount, 118,800 shares may be acquired by the exercise of
options held and 3,680 shares are held by the Company's 401(k) Plan.
(8) Of this amount, 23,375 shares may be acquired upon the exercise of
options held and 2,995 shares are held by the Company's 401(k) Plan.
(9) Of this amount, 170,000 shares may be acquired by the exercise of
options held.
(10) Of this amount, 778,775 shares may be acquired by the exercise of
options held by executive officers, and 244,000 shares may be acquired by
exercise of options held by outside directors.
* Less than 1%.
CORPORATE GOVERNANCE
Board Leadership Structure
The Company presently separates the roles of Chief Executive Officer
and Chairman of the Board. This serves to align the Chairman's role with
the Company's independent directors and to further enhance the independence
of the Board from management. The Chairman works closely with the Chief
Executive Officer to set the agenda for meetings and to facilitate
information flow between the Board and management.
Board Role in Risk Oversight
The Company's Board plays an active role in risk oversight of the
Company. The Board does not have a formal risk management committee, but
administers this oversight function through various standing committees of
the Board, which are described below. The Audit Committee periodically
reviews overall enterprise risk management, in addition to maintaining
responsibility for oversight of financial reporting-related risks, including
those related to the Company's accounting, auditing and financial reporting
practices. The Audit Committee also reviews reports and considers any
material allegations regarding potential violations of the Company's Code of
Ethics. The Compensation Committee oversees risks arising from the Company's
compensation policies and programs. This Committee has responsibility for
evaluating and approving the executive compensation and benefit plans,
policies and programs of the Company. The Nominating Committee oversees
corporate governance risks and oversees and advises the Board with respect
to the Company's policies and practices regarding significant issues of
corporate responsibility.
RELATED PARTY TRANSACTIONS
All transactions by the Company with a director or executive officer
must be approved by the Board of Directors if they exceed $120,000 in any
fiscal year. Apart from any transactions disclosed herein, no such
transaction was entered into with any director or executive officer during
the last fiscal year. Such transactions will be entered into only if found
to be in the best interest of the Company and approved in accordance with
the Company's Codes of Ethics, which are available on the Company's web
site.
During fiscal 2011 and 2010, the Company purchased inventories for
resale totaling approximately $2,623,000 and $4,976,000 respectively from
Sheerr Memory, LLC (Sheerr Memory). Sheerr Memory's owner is employed by the
Company as the general manager of the acquired MMB business unit and is an
executive officer of the Company. When the Company acquired certain assets
of MMB, it did not acquire any of its inventory. However, the Company
informally agreed to purchase such inventory on an as needed basis, provided
that the offering price was a fair market value price. The inventory
acquired was purchased subsequent to the acquisition of MMB at varying times
and consisted primarily of raw materials and finished goods used to produce
products sold by the Company. Sheerr Memory offers the Company trade terms
of net 30 days and all invoices are settled in the normal course of
business. No interest is paid. The Company has made further purchases from
Sheerr Memory subsequent to April 30, 2011 and management anticipates that
the Company will continue to do so, although the Company has no obligation
to do so.
On February 24, 2010, the Company entered into a Note and Security
Agreement ("Agreement") with Sheerr Memory's owner. Under the Agreement,
the Company borrowed the principal sum of $1,000,000 for a period of six
months, which the Company could extend for an additional three months
without penalty. The loan bore interest at the rate of 5.25%, payable
monthly. The entire principal amount was payable in the event of the
employee's termination of employment by the Company. The loan was secured
by a security interest in all machinery, equipment and inventory of Dataram
at its Montgomeryville, PA location. The loan was repaid in full on
August 13, 2010.
On July 27, 2010, the Company entered into an agreement with Sheerr
Memory to consign a formula-based amount of up to $3,000,000 of certain
inventory into the Company's manufacturing facilities. The agreement has a
two-year term and the Company is obligated to pay monthly a fee equal to
0.833% of the average daily balance of the purchase cost of the consigned
products held by Sheerr Memory under the agreement. The Company is obligated
to purchase any consigned products acquired by Sheerr Memory under the
agreement within ninety days of the acquisition date of the product. The
Company and Sheerr Memory must jointly agree to the products to be held in
consignment under the agreement. As of August 12, 2011, the Company has
received financing totaling $1,500,000 under the agreement.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The Compensation Committee of our Board of Directors is comprised of
all members of our Board of Directors, except the Chief Executive Officer.
The compensation committee's basic responsibility is to review the
performance of our management in achieving corporate goals and objectives
and to ensure that our executive officers are compensated effectively in a
manner consistent with our strategy and compensation practices. Toward that
end, the compensation committee oversaw, reviewed and administered all of
our compensation, equity and employee benefit plans and programs applicable
to executive officers.
Compensation Philosophy and Objectives
We operate in an extremely competitive and rapidly changing industry.
We believe that the skill, talent, judgment and dedication of our executive
officers are critical factors affecting the long-term value of our company.
Therefore, our goal is to maintain an executive compensation program that
will fairly compensate our executives, attract and retain qualified
executives who are able to contribute to our long-term success, induce
performance consistent with clearly defined corporate goals and align our
executives' long-term interests with those of our shareholders. We did not
identify specific metrics against which we measured the performance of our
executive officers. Our decisions on compensation for our executive
officers were based primarily upon our assessment of each individual's
performance. We relied upon judgment and not upon rigid guidelines or
formulas in determining the amount and mix of compensation elements for
each executive officer. Factors affecting our judgment include the nature
and scope of the executive's responsibilities and effectiveness in leading
our initiatives to achieve corporate goals.
Mr. Freeman, our Chief Executive Officer, as the manager of the members
of the executive team, assessed the individual contribution of each member
of the executive team, other than himself, and, where applicable, made a
recommendation to the compensation committee with respect to any merit
increase in salary, cash bonus, and option awards. The compensation
committee evaluated, discussed and modified or approved these
recommendations and conducted a similar evaluation of Mr. Freeman's
contributions to the Company.
During 2011 and beyond, our objective will be to provide overall
compensation that is appropriate given our business model and other criteria
to be established by the compensation committee. Some of the elements of
the overall compensation program are expected to include competitive base
salaries, short-term cash incentives and long-term incentives in the form
of options to purchase shares.
We expect that our Chief Executive Officer, as the manager of the
members of the executive team, will continue to assess the individual
contributions of the executive team and make a recommendation to the
compensation committee with respect to any merit increase in salary, cash
bonus pool allocations and the award of options to purchase shares. The
compensation committee will then evaluate, discuss and modify or approve
these recommendations and conduct a similar evaluation of the Chief
Executive Officer's contributions to corporate goals and achievement of
individual goals.
Compensation Policies and Risk Management
The Compensation Committee and management periodically undertake a
risk assessment of the Company's compensation policies and practices,
including a review of trends and developments in executive pay. The
Compensation Committee does not believe that the Company's compensation
policies and practices motivate imprudent risk taking or are reasonably
likely to cause a material adverse effect upon Dataram's business and
operations. In this regard, the Company notes, among other things, that
the Company does not offer significant short-term incentives that might
drive high-risk behavior at the expense of long-term Company value and that
stock option awards to directors and management seek to align the interests
of these individuals with the Company's long-term growth goals.
Role of Executive Officers and Compensation Consultants
Our Chief Executive Officer supports the compensation committee in its
work by providing information relating to our financial plans, performance
assessments and recommendation for compensation of our executive officers.
Mr. Freeman, while not a member of the compensation committee, is a member
of the Board of Directors. The compensation committee has not in recent
years engaged any third-party consultant to assist it in performing its
duties, though it may elect to do so in the future.
Principal Elements of Executive Compensation
Our executive compensation program currently consists of the three
components discussed below. There is no pre-established policy or target
for the allocation between either cash and non-cash or short-term and
long-term incentive compensation. Rather, the relevant factors associated
with each executive are reviewed on a case-by-case basis to determine the
appropriate level and mix of compensation.
Base Salaries. The salaries of our Chief Executive Officer and our
other executive officers are established based on the scope of their
responsibilities, taking into account competitive market compensation for
similar positions based on information available to the compensation
committee. We believe that our base salary levels are consistent with
levels necessary to achieve our compensation objective, which is to maintain
base salaries competitive with the market. We believe that below-market
compensation could, in the long run, jeopardize our ability to retain our
executive officers. Any base salary adjustments are expected to be based on
competitive conditions, market increases in salaries, individual
performance, our overall financial results and changes in job duties and
responsibilities.
Annual Bonus Compensation. We maintain an annual bonus program. The
award of bonuses to our executive officers is the responsibility of the
compensation committee and is determined on the basis of individual
performance. The annual bonus program is designed to reward performance in
a way that furthers key corporate goals and aligns the interests of
management with our annual financial performance.
Long-Term Incentive Compensation. The Company has established the 2001
Stock Option Plan to provide employees of the Company long-term equity
incentive compensation, which we believe is in accordance with our objective
of aligning the interests of management with our long-term performance.
This plan is administered by the compensation committee. In recent years
the committee has granted five year options, with an option price equal to
the closing market price of the common stock on the date of grant. These
options generally become exercisable one year from the date of grant,
although the Board has also granted options a percentage of which become
exercisable one year from the date of grant with remaining percentages
becoming exercisable on future anniversaries of the date of grant.
Generally the committee does not consider the actual profits from the
exercise of options awarded in the past in determining the amount of awards
to be made in the future. Rather the committee focuses upon expected amounts
that may be received by the executive pursuant to those options in the
future.
Share Ownership Guidelines
We currently do not require our directors or executive officers to own
a particular amount of our shares, although we do have a policy against
directors or officers taking a short position in the Company's stock. The
compensation committee is satisfied that the equity holdings among our
directors and executive officers are sufficient at this time to provide
motivation and to align this group's interests with our long-term
performance.
Perquisites
Our executive officers participate in the same 401(k) plan and the same
life and health group insurance plans, and are entitled to the same employee
benefits, as our other salaried employees. In addition, some of our
executive officers receive an automobile allowance as described in the
Summary Compensation Table.
Post-Termination Protection and Change in Control
We have employment agreements with Messrs. Freeman, Maddocks, Duncan
and Sheerr. The agreements with Messrs. Freeman, Maddocks and Duncan each
provide for the payment of one year's salary upon early termination in lieu
of payments under the Company general severance policy; Mr. Sheerr's
agreement provides for the payment of six months' salary.
Financial Restatements
The compensation committee has not adopted a policy with respect to
whether we will make retroactive adjustments to any cash or equity-based
incentive compensation paid to executive officers (or others) where the
payment was predicated upon the achievement of financial results that were
subsequently the subject of a restatement. Our compensation committee
believes that this issue is best addressed when the need actually arises,
when all of facts regarding the restatement are known.
Tax and Accounting Treatment of Compensation
Section 162(m) of the Internal Revenue Code places a limit, subject to
certain exceptions, of $1 million on the amount of compensation that we may
deduct from the U.S. source income in any one year with respect to our Chief
Executive Officer, our Chief Financial Officer and each of our next three
most highly paid executive officers.
We account for equity compensation paid to our employees, i.e. stock
option awards, under the rules of FASB ASC, which requires us to estimate
and record an expense for each award. Accounting rules also require us to
record cash compensation as an expense at the time the obligation is
accrued.
Summary
The compensation committee believes that our compensation philosophy
and programs are designed to foster a performance-oriented culture that
aligns our executive officers' interests with those of our shareholders.
The compensation committee also believes that the compensation of our
executives is both appropriate and responsive to the goal of improving
shareholder value.
Compensation Committee Report
The following report is not deemed to be "soliciting material" or to be
"filed" with the SEC or subject to the SEC's proxy rules or the liabilities
of Section 18 of the Exchange Act, and the report shall not be deemed to be
incorporated by reference into any prior or subsequent filing by the Company
under the Securities Act of 1933, as amended (the "Securities Act"), or the
Exchange Act.
The compensation committee has reviewed and discussed the Compensation
Discussion and Analysis set forth above with our management. Based on its
review and discussions, the committee recommended to our Board of Directors
that the Compensation Discussion and Analysis be included in this proxy
statement and incorporated by reference into any Annual Report in Form 10-K
filed with the SEC for the fiscal year ended April 30, 2011.
Roger C. Cady, Chairman
Thomas A. Majewski
Rose Ann Giordano
Summary Compensation
The following table sets forth the compensation paid for the fiscal
years ended April 30, 2011, 2010 and 2009 to the Company's Chief Executive
Officer, the Chief Financial Officer and the Company's other executive
officers.
SUMMARY COMPENSATION TABLE
(In Dollars)
Name and Other
Principal Fiscal Option Compen-
Position Year Salary Bonus Other(2) Awards(3) sation(4) Total
___________ _____ _______ ______ ______ _______ _________ _______
John H.
Freeman 2011 275,000 10,000 0 0 12,375 297,375
2010 275,000 68,640 0 247,500 12,375 603,515
President
and Chief 2009 269,596 69,563 0 447,750 10,233 797,142
Executive
Officer
Mark E.
Maddocks 2011 201,424 12,000 7,800 0 9,064 230,288
2010 201,424 25,000 7,800 140,100 9,064 383,388
Vice President-
Finance, 2009 201,424 37,500 7,800 14,848 9,060 270,632
Chief Financial
Officer
Jeffrey H.
Duncan 2011 199,032 23,000 7,800 0 8,956 238,788
2010 199,032 27,000 7,800 140,100 8,956 382,888
Vice
President- 2009 199,032 10,000 7,800 14,848 8,952 240,632
Manufacturing
and
Engineering
Anthony M.
Lougee 2011 125,000 11,000 0 0 5,624 141,624
2010 125,000 15,600 0 5,928 5,624 152,152
Controller
2009 125,000 0 0 5,586 5,622 136,208
David S.
Sheerr 2011 200,000 68,105 0 90,000 9,000 367,105
2010 200,000 100,000 0 49,400 9,000 358,400
General
Manager- 2009 (1) 11,538 0 0 20,540 519 32,597
Micro Memory
Bank
(1) Mr. Sheerr's employment with the Company was effective April 1, 2009.
(2) Automobile allowances.
(3) We measure the fair value of stock options using the Black-Scholes
option pricing model based upon the market price of the underlying common
stock as of the date of grant, reduced by the present value of estimated
future dividends, using an expected quarterly dividend rate of nil in fiscal
years 2011, 2010 and 2009. Risk-free interest rates ranging from 1.6% to
5.0% were used. For fiscal year 2011 option values were $0.90 Mr. Sheerr's
option grant. For fiscal year 2010 option values were $1.375 for Mr.
Freeman's option grant, $1.401 for Messrs. Maddocks' and Duncan's option
grant, and $0.988 for Messrs. Lougee's and Sheerr's option grant. For fiscal
year 2009 option values were $2.985 for Mr. Freeman's option grant, $1.856
for Messrs. Maddocks' and Duncan's option grant, $1.596 for Mr. Lougee's,
and $1.027 for Mr. Sheerr's option grant.
(4) Payments by the Company to a plan trustee under the Company's Savings
and Investment Retirement Plan, a 401(k) plan. The Company does not have a
pension plan.
GRANTS OF PLAN-BASED AWARDS (1)
There were no grants of plan-based awards to named executive officers of the
Company in the Company's fiscal year ended April 30, 2011.
The Company does not presently have any Equity Incentive Plan other than its
2001 Stock Option Plan and does not have a Non Equity Incentive Plan other
than the bonus pool. The size of grants under the 2001 Stock Option Plan and
the bonus pool are not predetermined in accordance with an incentive award.
(1) The following grant was made to Mr. David S. Sheerr pursuant to an
employment agreement the Company entered into with him concurrent with the
Company's acquisition of certain assets of Micro Memory Bank, Inc. from Mr.
Sheerr on March 31, 2009.
Grant Option Exercise Grant
Date Awards Price(2) Date
Value(3)
________ _______ _______ ________
9/23/2010 100,000 $1.76 $90,000
(2) Closing market price on the date of grant.
(3) Computed in accordance with the compensation-stock compensation of FASB
ASC (see assumptions set forth under the Summary Compensation table).
Narrative Description of Summary Compensation
Salary and bonus constituted 88% of total compensation for the named
executive officers in fiscal 2011. Options granted to Mr. Sheerr are five
year options exercisable one year after the grant date. All options granted
are at an exercise price equal to the closing market price of the Company's
common stock on the date of grant. No dividends are paid or accrued with
respect to options for the benefit of employees prior to the date of option
exercise.
Outstanding Options
The following table sets forth information concerning outstanding stock
options at the fiscal year-end, April 30, 2011.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Number of Number of
Securities Securities
Underlying Underlying
Unexercised Unexercised Option Option
Options Options Exercise Expiration
Name Exercisable Unexercisable Price($) Date
John H. Freeman
2007(1) 8,000 0 4.70 09/13/2011
2008(1) 8,000 0 3.33 09/27/2012
2009 150,000 0 3.20 05/07/2018
2010(2) 90,000 90,000 2.57 09/24/2019
Mark E. Maddocks
2002 10,000 0 7.98 11/26/2011
2003 8,200 0 2.99 09/18/2012
2004 8,200 0 4.09 09/17/2013
2007 8,200 0 4.70 09/13/2011
2008 8,000 0 3.33 09/27/2012
2009 8,000 0 1.99 09/25/2018
2010(2) 40,000 60,000 2.57 09/24/2019
Jeffrey H. Duncan
2002 8,200 0 7.98 11/26/2011
2003 8,200 0 2.99 09/18/2012
2004 8,200 0 4.09 09/17/2013
2007 8,200 0 4.70 09/13/2011
2008 8,000 0 3.33 09/27/2012
2009 8,000 0 1.99 09/25/2018
2010(2) 40,000 60,000 2.57 09/24/2019
Anthony M. Lougee
2002 2,500 0 7.98 11/26/2011
2003 1,875 0 2.99 09/18/2012
2004 2,500 0 4.09 09/17/2013
2007 3,500 0 4.70 09/13/2011
2008 3,500 0 3.33 09/27/2012
2009 3,500 0 1.99 09/25/2013
2010 6,000 0 2.57 09/24/2014
David Sheerr
2009 20,000 0 1.28 04/15/2014
2010 50,000 0 2.57 09/24/2014
2011(3) 0 100,000 1.76 09/23/2015
(1) Option awards granted to Mr. Freeman when he was a non-employee director
of the Company.
(2) Options granted in fiscal 2010 to Mr. Freeman were ten year options.
The first 90,000 shares become exercisable on September 24, 2010 and options
to purchase an additional 90,000 shares become exercisable on September 24,
2011. Options granted in fiscal 2010 to Messrs. Maddocks and Duncan are ten
year options; for each of Messrs. Maddocks and Duncan, options to purchase
40,000 shares become exercisable one year after the date of grant, with
options to purchase an additional 30,000 shares becoming exercisable on the
second and third anniversaries of the date of grant.
(3) Options granted to Mr. Sheerr are five year options exercisable one year
after the grant date. All options granted are at an exercise price equal to
the closing market price of the Company's common stock on the date of grant.
Option Exercises
There were no stock option exercises by named executive officers during
the fiscal year ended April 30, 2011.
EQUITY COMPENSATION PLAN INFORMATION AT APRIL 30, 2011
Plan Category Number of Securities Weighted-average Number of securities
to be issued upon exercise price of remaining available
exercise of outstanding options, for future issuance
outstanding options warrants and rights under equity compen-
sation plans (exclud-
ing securities re-
flected in column (a))
(a) (b) (c)
______________________ _______________________ ____________________ _____________________
Equity compensation
plans approved by
security holders 1,749,200 $2.94 188,527
Equity compensation
plans not approved by
security holders 0 - 0
Total 1,749,200 $2.94 188,527
EMPLOYMENT AGREEMENTS
On May 7, 2008, the Company's Board of Directors appointed John H.
Freeman to the position of President and Chief Executive Officer of the
Company. The Board of Directors agreed to hire Mr. Freeman as President and
Chief Executive Officer for a term of one year, with automatic renewal terms
of one year each. Mr. Freeman's base salary is $275,000 annually. He is
eligible biannually for a bonus of up to 50% of his base salary, as
determined by a review of the Company's Compensation Committee, and also for
a year-end bonus at the conclusion of the fiscal year if his performance
exceeds expectations. Mr. Freeman receives three weeks paid vacation and is
entitled to participate in any of the Company's present and future life
insurance, disability insurance, health insurance, pension retirement and
similar plans as well.
The Board of Directors hired Mr. Freeman based on the agreement that he
accepts certain non-solicitation, non-competition and non-disparagement
restrictions.
Mark E. Maddocks and Jeffrey H. Duncan entered into similar Employment
Agreements with the Company as of February 1, 2005. Each agreement
continues on a year to year basis until terminated by the Company on thirty
(30) days notice before April 30th of each year. The current base
compensation under these agreements for Mr. Maddocks is $201,424, and for
Mr. Duncan is $199,032, which are subject to annual review by the Board of
Directors. In addition, executives will receive a bonus based upon a formula
which shall be reviewed and approved annually by the Board of Directors.
The Employment Agreements may be terminated by the Company for cause and
expire upon the death or six months after the onset of the disability of
the executive. In the event of termination or non-renewal, the executive is
entitled to one year's base salary at the current rate plus a pro rata bonus
for the current year. The Employment Agreements contain terms concerning
confidentiality, post-employment restrictions on competition and non-
solicitation of Company employees.
David Sheerr entered into an Employment Agreement with the Company as
of March 31, 2009. The agreement has an initial term of four years and
continues on a year to year basis thereafter until terminated by the Company
on thirty (30) days notice before April 30th of each year. The current base
compensation under the agreements for Mr. Sheerr is $200,000, which is
subject to annual review by the Board of Directors. In addition the
executive will receive a bonus based upon a formula based upon the operating
performance of the Company's Micro Memory Bank business unit. The Employment
Agreement may be terminated by the Company for cause and expires upon the
death or six months after the onset of the disability of the executive. In
the event of termination or non-renewal, the executive is entitled to six
months' base salary at the current rate plus a pro rata bonus for the
current year. The Employment Agreement contains terms concerning
confidentiality, post-employment restrictions on competition and non-
solicitation of Company employees.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Securities and Exchange Commission rules regarding disclosure of
executive compensation require proxy statement disclosure of specified
information regarding certain relationships of members of the Company's
Board of Directors with the Company or certain other entities. None of the
members of the Corporation's Board of Directors has a relationship requiring
such disclosure.
RATIFICATION OF THE SELECTION OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has selected
J.H. Cohn LLP as the independent certified public accountants to the Company
for the fiscal year ending April 30, 2012. The holders of Common Stock are
asked to ratify this selection. J.H. Cohn LLP has served the Company in this
capacity since October of 2005. If the shareholders fail to ratify this
selection of J.H. Cohn LLP, the Audit Committee will reconsider its action
in light of the shareholder vote.
The Company has been advised by J.H. Cohn LLP that representatives of
that firm are expected to be present at the Annual Meeting of Shareholders.
These representatives will have the opportunity to make a statement, if they
so desire, and will also be available to respond to appropriate questions
from shareholders.
PRINCIPAL ACCOUNTANTS FEES AND SERVICES
The following table sets forth the aggregate fees billed to the Company
for the last two fiscal years by the Company's independent accounting firm
J.H. Cohn LLP for professional services:
2011 2010
_________ ________
Audit fees $ 136,620 $ 140,000
Audit related fees (1) 15,000 13,500
Tax fees (2) 12,900 17,500
All other fees (3) 9,400 3,450
Total fees $ 173,920 $ 174,450
__________________
(1) Consists principally of the audit of the financial statements of the
Company's employee benefit plan.
(2) Consists principally of fees for tax consultation and tax compliance
services, including foreign jurisdictions.
(3) In fiscal 2011 and fiscal 2010, consists principally of Securities
and Exchange Commission reporting related consultations.
All non-audit fees of an auditor must be pre-approved by the Audit
Committee of the Board of Directors unless the amount is less than 5% of the
amount of revenues to the auditor in the previous fiscal year or was not
regarded as a non-audit fee at the time it was contracted for. In either
event, the fee must be submitted to the Audit Committee for its approval
before the completion of the audit. In the previous fiscal year, all Audit
Related Fees, all Tax Fees and all Other Fees were pre-approved by the Audit
Committee pursuant to this policy.
REPORT OF THE AUDIT COMMITTEE
Pre-approval by the Audit Committee of all non-audit services performed
by the Company's independent accountants is now required by law. Where
urgent action is required, the Chairman of the Committee may give this
approval subject to confirmation of this decision by the full Committee at
its next meeting.
The Audit Committee has reviewed and discussed the Company's audited
financial statements for the fiscal year ended April 30, 2011 with
management.
The Audit Committee has discussed with J.H. Cohn LLP the matters
required to be discussed in Statement on Auditing Standards No. 61, as
amended (AICPA, Professional Standards, Vol.1 AU Section 380, as adopted by
the Public Company Accounting Oversight Board in Rule 3200T).
The Audit Committee has received the written disclosures and the letter
from J.H. Cohn LLP required by Independence Standards Board Standard No. 1
("Independence Standards Board Standard No 1., Independence Discussion with
Audit Committee, as adopted by the Public Company Accounting Oversight Board
in Rule 3200T), as amended, and has discussed with J.H. Cohn LLP that firm's
independence from the Company.
Based on the review and discussions referred to above in this report,
the Audit Committee recommended to the Company's Board of Directors that the
audited financial statements be included in the Company's Annual Report on
Form 10-K for the fiscal year ended April 30, 2011 for filing with the
Securities and Exchange Commission.
Thomas A. Majewski, Chairman
Roger C. Cady
Rose Ann Giordano
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS, AND, UNLESS A
SHAREHOLDER GIVES INSTRUCTIONS ON THE PROXY CARD TO THE CONTRARY, THE
APPOINTEES NAMED THEREON INTEND SO TO VOTE.
APPROVAL OF DATARAM CORPORATION 2011 STOCK OPTION PLAN FOR EMPLOYEES AND
CONSULTANTS
GENERAL
In 2001, our Board of Directors adopted the Dataram Corporation 2001
Stock Option Plan (as amended, the "2001 Plan"). The 2001 Plan allowed the
grant of a total of 1,800,000 shares of Common Stock pursuant to stock
options. As of August 8, 2011, options for 188,527 shares that were
authorized for grant under the 2001 Plan remain available for grant. The
2001 Plan expires on September 12, 2011, and no further options can be
granted after that date.
As of August 8, 2011, outstanding options both under the 2001 Plan, the
prior stock option plan adopted in 1992 (the "1992 Plan") and outside of
either the 2001 Plan or the 1992 Plan are held by the following named
individuals and groups.
Name and Position Stock Options (Number of Shares)
----------------- --------------------------------
All current executive officers as a group
John H. Freeman 346,000 (1)
President and Chief Executive Officer
Mark E. Maddocks 150,600
Vice President Finance and
Chief Financial Officer
Jeffrey H. Duncan 148,800
Vice President of Manufacturing
and Engineering
Anthony M. Lougee 23,375
Controller and Chief Accounting Officer
David S. Sheerr 170,000
General Manager Micro Memory Bank -----------
Total current executive officers as a group 838,775
(1) Includes 16,000 option awards granted to Mr. Freeman when he was
a non-employee director of the Company.
All current directors who are Stock Options (Number of Shares)
not executive officers as a group --------------------------------
Roger C. Cady 76,000
Rose Ann Giordano 72,000
Thomas A. Majewski 96,000
_______
Total current directors who are 244,000
not executive officers as a group
Stock Options (Number of Shares)
Total all other employees as a group 766,425
DESCRIPTION OF MATERIAL FEATURES OF THE 2011 PLAN
The Board of Directors, acting on the recommendation of the
Compensation Committee, unanimously adopted the 2011 Dataram Corporation
Stock Option Plan (the 2011 Plan"). This adoption is subject to the
approval of shareholders at the Annual Meeting. The Board of Directors
recommends shareholder approval of the 2011 Plan.
Under the 2011 Plan options to purchase up to 200,000 shares of common
stock may be granted by the Corporation to employees of and consultants to
the Company. No executive officer or director of the Company is eligible
to receive options under the 2011 Plan.
The purpose of the 2011 Plan is to enable us to grant stock options to
eligible employees and consultants at levels we believe will motivate
superior performance and help us attract and retain outstanding personnel.
We believe that providing such personnel with stock option incentives will
enhance our long-term performance. In order to keep the focus of such
efforts on technical-level research, development and sales personnel, no
executive officer or director of the Company is eligible to receive options
under the 2011 Plan. The Board of Directors believes that the proposed
2011 Plan is necessary in order for the Company to continue to compete for
talent and maintain the quality of its personnel, and is in the best
interests of the Company and its shareholders.
This proposal summarizes the essential features of the 2011 Plan. A
copy of the 2011 Plan may be obtained by a shareholder without charge by
writing to Vice President Finance, Dataram Corporation, P.O. Box 7528,
Princeton, New Jersey 08543-7528, or the 2011 Plan may be viewed as an
exhibit to the Proxy Statement filed with the Securities and Exchange
Commission and available at http:\\www.sec.gov.
The 2011 Plan will become effective upon approval by a majority of the
shareholders present and voting. The 2011 Plan provides for the grant of
options to purchase a total of up to 200,000 shares of Common Stock (subject
to adjustment for certain changes in our capital, as described below under
"Changes in Capital").
ADMINISTRATION. The Compensation Committee (the "Committee") has the
exclusive discretionary authority to operate, manage, administer and
interpret the 2011 Plan in accordance with its terms. The Committee's
decisions and actions concerning the 2011 Plan are final and conclusive. In
addition, our Board of Directors is permitted to exercise all of the
Committee's powers under the 2011 Plan.
Currently, the Committee consists of Messrs. Cady and Majewski, and Ms.
Giordano, each of whom is a director, but not an employee, of Dataram.
SHARES SUBJECT TO THE 2011 PLAN. If this proposal is approved by the
shareholders, a total of 200,000 shares of Common Stock would be available
for delivery upon exercise of options granted under the 2011 Plan, subject
to adjustment for certain changes in our capital (described below under
"Changes in Capital"). The shares of Common Stock that may be delivered
under the 2011 Plan consist of either authorized and unissued shares (which
will not be subject to preemptive rights) or previously issued shares that
we have reacquired and hold as treasury shares. In addition, shares of
Common Stock covered by options that terminate or are canceled before being
exercised under the 2011 Plan would be available for future option grants
under the 2011 Plan. If any person exercises an option under the 2011 Plan
by paying the exercise price with shares of Common Stock which such person
already owns, only the number of shares in excess of the shares so paid by
such person will count against the total number of shares that may be
delivered under the 2011 Plan.
PARTICIPATION. The Committee may grant options under the 2011 Plan to
current and prospective employees and consultants recommended by the
President.
All of our employees who are not executive officers, currently
approximately 88 in number, are eligible to receive options under the 2011
Plan. The individuals to whom additional options will be granted under the
2011 Plan, and the amounts of such individual grants, have not been
determined.
TERMS OF OPTIONS
TYPES OF OPTIONS. All additional options to be granted under the 2011
Plan will be "non-qualified options" or options other than "incentive stock
options" as defined pursuant to the Internal Revenue Code of 1986, as
amended (the "Internal Revenue Code").
OPTION PRICE. The Committee determines the option exercise price of
each option granted under the 2011 Plan at the time of grant. However, the
per-share exercise price of options granted under the 2011 Plan must be at
least equal to 100 percent of the fair market value of the common stock of
the Company on the date such incentive stock option is granted. On August 2,
2011, the fair market value of a share of Common Stock was $1.50.
PAYMENT. The option exercise price of any options granted under the
2011 Plan may be paid in any legal manner prescribed by the Committee. The
method of payment may include a "cashless exercise" program if the Committee
elects to establish such a program, or use of shares of Common Stock already
owned for at least six months by the person exercising an option, subject in
any case to whatever conditions or limitations the Committee may prescribe.
Any cash proceeds that we receive upon the exercise of options granted under
the 2011 Plan constitute general funds of Dataram.
EXERCISE OF OPTIONS. The Committee determines, as set forth in the
applicable option agreements, the times or conditions upon which options
granted under the 2011 Plan may be exercised, and any events that will cause
such options to terminate. Each option granted under the 2011 Plan will
expire on or before ten years following the date such option was granted. In
general, options granted under the 2011 Plan also terminate when the
recipient's service as an employee of or consultant to Dataram terminates;
however, a leave of absence approved in writing by the Company shall not be
deemed a termination for purposes of the 2011 Plan.
TRANSFERABILITY OF OPTIONS. Options granted under the 2011 Plan are, in
general, only exercisable during the lifetime of the recipient by him or
her. A deceased recipient's options are, however, transferable by will or
the laws of descent and distribution or to a designated beneficiary of such
recipient.
CHANGES IN CAPITAL. In order to preserve the benefits or potential
benefits intended to be made available under the 2011 Plan or outstanding
options, or as otherwise necessary, the Committee may, in its discretion,
make appropriate adjustments in (a) the number, class and kind of shares
available under the 2011 Plan, (b) the limit on the number of shares of
Common Stock that can be subject to options granted to a single recipient
during a 12-month period, and (c) the number, class, kind and price of
shares under each outstanding option, in the event of changes in our
outstanding common stock resulting from certain changes in our corporate
structure or capitalization.
TAX WITHHOLDING OBLIGATIONS. Recipients who exercise their options
under the 2011 Plan are required to pay, or make other satisfactory
arrangements to pay, tax withholding obligations arising under applicable
law with respect to such options. Such taxes must be paid in cash by a
recipient, or, if the Committee permits, a recipient may elect to satisfy
all or a part of such tax obligations by requesting that we withhold shares
otherwise deliverable upon the exercise of his or her option and/or by
tendering shares of Common Stock already owned by such recipient for at
least six months. We may also, in accordance with applicable law, deduct any
such taxes from amounts that are otherwise due to such a recipient.
AMENDMENT AND TERMINATION OF THE 2011 PLAN. Our Board of Directors may
amend, alter, suspend or terminate the 2011 Plan. However, the Board of
Directors will be required to obtain approval of the shareholders, if such
approval is required by any applicable law (including requirements relating
to incentive stock options) or rule, of any amendment of the 2011 Plan that
would:
- except in the event of certain changes in our capital (as described
above under "Changes in Capital"), increase the number of shares of
Common Stock that may be sold or awarded under the 2011 Plan;
- except in the event of certain changes in our capital (as described
above under "Changes in Capital"), decrease the minimum option
exercise price required by the 2011 Plan;
- change the class of persons eligible to receive options under the
2011 Plan; or
- extend the duration of the 2011 Plan or the exercise period of any
options granted under the 2011 Plan.
The Committee may amend outstanding options. However, no such amendment
or termination of the 2011 Plan or amendment of outstanding options may
materially impair the previously accrued rights of any recipient of an
option under the 2011 Plan without his or her written consent.
The 2011 Plan will terminate on September 22, 2021, unless the 2011
Plan is terminated earlier by our Board of Directors or due to delivery of
all shares of Common Stock available under the 2011 Plan; however, any
options outstanding when the 2011 Plan terminates will remain outstanding
until such option terminates or expires.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following is a brief
summary of certain significant United States Federal income tax
consequences, under the Internal Revenue Code, as in effect on the date
of this summary, applicable to Dataram and recipients of options under the
2011 Plan (who are referred to in this summary as "optionees") in connection
with the grant and exercise of options under the 2011 Plan. This summary is
not intended to be exhaustive, and, among other things, does not describe
state, local or foreign tax consequences, or the effect of gift, estate or
inheritance taxes. References to "Dataram" and "us" in this summary of tax
consequences mean Dataram Corporation or any affiliate of Dataram
Corporation that employs an optionee, as the case may be.
The grant of stock options under the 2011 Plan will not result in
taxable income to optionees or an income tax deduction for us. However, the
exercise of a non-qualified option such as are issuable under the Plan
generally results in immediate recognition of ordinary income by the
optionee and a corresponding tax deduction for us in the amount by which the
fair market value of the shares of Common Stock purchased, on the date of
such exercise, exceeds the aggregate option price. Any appreciation or
depreciation in the fair market value of such shares after the date of such
exercise will generally result in a capital gain or loss to the optionee at
the time he or she disposes of such shares.
Under certain circumstances, accelerated vesting or exercise of options
under the 2011 Plan in connection with a "change in control" of Dataram
might be deemed an "excess parachute payment" for purposes of the golden
parachute payment provisions of Section 280G of the Internal Revenue Code.
To the extent it is so considered, the optionee would be subject to an
excise tax equal to 20 percent of the amount of the excess parachute
payment, and we would be denied a tax deduction for the excess parachute
payment.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
FOREGOING PROPOSAL, AND, UNLESS A SHAREHOLDER GIVES INSTRUCTIONS ON THE
PROXY CARD TO THE CONTRARY, THE APPOINTEES NAMED THEREON INTEND SO TO VOTE.
OTHER MATTERS
Should any other matter or business be brought before the meeting, a
vote may be cast pursuant to the accompanying proxy in accordance with the
judgment of the proxy holder. The Company does not know of any such other
matter or business.
PROPOSALS OF SECURITY HOLDERS AT 2012 ANNUAL MEETING
Any shareholder wishing to present a proposal which is intended to be
presented at the 2012 Annual Meeting of Shareholders should submit such
proposal to the Company at its principal executive offices no later than
April 13, 2012. It is suggested that any proposals be sent by certified mail,
return receipt requested.
BOARD OF DIRECTORS
The Board of Directors has a process for shareholders to communicate
with directors. Shareholders should write to the President at the Company's
mailing address and specifically request that a copy of the letter be
distributed to a particular board member or to all board members. Where no
such specific request is made, the letter will be distributed to board
members if material, in the judgment of the President, to matters on the
Board's agenda.
The Board of Directors of the Company met 10 times during the last
fiscal year. It is the policy of the board that all members will attend
the Annual Meeting of Shareholders and all members of the board attended
last year's meeting.
The Board of Directors has a standing Audit Committee established in
accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934,
as amended, whose members are Roger C. Cady, Thomas A. Majewski and Rose Ann
Giordano. This Committee met 4 times during the last fiscal year. The
principal functions of the Audit Committee are evaluation of work of the
auditors, review of the accounting principles used in preparing the annual
financial statements, review of internal controls and procedures and
approval of all audit and non-audit services of the auditor. The Company's
Board of Directors has adopted a written charter for the Audit Committee
which may be viewed at the Company's website, www.dataram.com. Each member
of the Audit Committee is "independent" within the meaning of the NASDAQ
listing standards. The Board of Directors has determined that Mr. Majewski
is a "financial expert" within the meaning of those standards and an "audit
committee financial expert" within the meaning of Item 401(h) of SEC
Regulation S-K and is "independent" as that term is used in Item 7(d)(3)(iv)
of Schedule 14A of the Proxy Rules.
The Board of Directors has a standing Compensation Committee whose
members are Roger C. Cady, Thomas A. Majewski and Rose Ann Giordano, all of
whom are "independent" within the meaning of the NASDAQ listing standards.
This committee relies upon the advice of the Company's chief executive
officer who makes recommendations both concerning director compensation and
the compensation of other executive officers. This Committee met once
during the past fiscal year. The principal functions of the Compensation
Committee are to recommend to the Board of Directors the compensation of
directors and the executive officers and to establish and administer various
compensation plans, including the stock option plan. The Compensation
Committee does not have a written charter.
The Board of Directors has a standing Nominating Committee whose
members are Roger C. Cady, Thomas A. Majewski and Rose Ann Giordano, all of
whom are "independent" within the meaning of the NASDAQ listing standards.
This Committee met once during the past fiscal year. The principal function
of this Committee is the recommendation to the Board of Directors of new
members of the Board of Directors. The members of the Nominating Committee
are "independent" within the meaning of the NASDAQ listing standards. The
Board of Directors has adopted a charter for the Nominating Committee, which
may be viewed at the Company's website, www.dataram.com. In addition, the
Nominating Committee also considers diversity with respect to viewpoint,
skills and experience in determining the appropriate composition of the
Board and identifying Director nominees. The Board is committed to following
the Company's policy of non-discrimination based on gender, race, age,
religion or national origin. The Board believes that its policies are
effective in identifying and enlisting candidates that will best fulfill the
Board's and the Company's needs at the time of the search. In years in which
the Board considers that the selection of a new director would be desirable,
the Nominating Committee solicits recommendations from the directors and the
executive officers. The Nominating Committee will also consider
recommendations made by shareholders. From these recommendations, the
committee selects a small group to be interviewed. The Nominating Committee
then makes a recommendation to the full board. Shareholders desiring to make
such recommendations should write directly to the Committee at the Company's
executive offices at P.O. Box 7528, Princeton, New Jersey 08543-7528.
DIRECTORS COMPENSATION
The following table sets forth information concerning non-employee
director compensation during the fiscal year ended April 30, 2011:
Fees Option All
Name Earned(1) Awards Other Total
__________________ ______________ ___________ ______ ________
Roger C. Cady $ 24,000 0 0 $ 24,000
Thomas A. Majewski $ 24,000 0 0 $ 24,000
Rose Ann Giordano $ 24,000 0 0 $ 24,000
_______________
(1) All directors' fees, except for option awards, are paid in cash in the
year earned. Directors who are not employees of the Company received a
quarterly payment of $6,000. During fiscal 2011, no options were issued to
directors of the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Securities and Exchange Commission requires that the Company report
to shareholders the compliance of directors, executive officers and 10%
beneficial owners with Section 16(a) of the Securities Exchange Act of 1934,
as amended. This provision requires that such persons report on a current
basis most acquisitions or dispositions of the Company's securities. Based
upon information submitted to the Company, all directors, executive officers
and 10% beneficial owners have fully complied with such requirements during
the past fiscal year.
MISCELLANEOUS
The accompanying proxy is being solicited on behalf of the Board of
Directors of the Company. The expense of preparing, printing and mailing the
form of proxy, including broker solicitation fees and accountants' and
attorneys' fees in connection therewith, will be borne by the Company. The
amount is expected to be the amount normally expended for a solicitation for
an election of directors in the absence of a contest and costs represented
by salaries and wages of regular employees and officers. Solicitation of
proxies will be made by mail, but regular employees may solicit proxies by
telephone or otherwise.
Please date, sign and return the accompanying proxy at your earliest
convenience. No postage is required for mailing in the United States.
Financial information concerning the Company is set forth in the
Company's 2011 Annual Report to Security Holders, which is enclosed.
By Order of the Board of Directors
THOMAS J. BITAR,
Secretary
ANNUAL REPORT ON FORM 10-K
Upon the written request of a shareholder, the Company will provide,
without charge, a copy of its Annual Report on Form 10-K for the year ended
April 30, 2011, including the financial statements and schedules and
documents incorporated by reference therein but without exhibits thereto,
as filed with the Securities and Exchange Commission. The Company will
furnish any exhibit to the Annual Report on Form 10-K to any shareholder
upon request and upon payment of a fee equal to the Company's reasonable
expenses in furnishing such exhibit. All requests for the Annual Report on
Form 10-K or its exhibits should be addressed to Vice President - Finance,
Dataram Corporation, P.O. Box 7528, Princeton, New Jersey 08543-7528.
DATARAM CORPORATION
P.O. Box 7528, Princeton, New Jersey 08543-7528
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Notice of Meeting,
proxy statement and annual report are available at www.dataram.com
PROXY SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
The undersigned hereby appoints and constitutes John H. Freeman and
Thomas J. Bitar, and each of them, attorneys and proxies for the
undersigned, with full power of substitution to vote as if the undersigned
were personally present at the Annual Meeting of the Shareholders of Dataram
Corporation (the "Company") to be held at the Company's corporate
headquarters at 777 Alexander Park, Princeton, New Jersey, on Thursday,
September 22, 2011 at 2 o'clock in the afternoon and at all adjournments
thereof, the shares of stock of said Company registered in the name of the
undersigned. The undersigned instructs all such proxies to vote such shares
as follows upon the following matters, which are described more fully in the
accompanying proxy statement:
I authorize and instruct my Proxy to:
1. VOTE FOR____ all nominees for the Company's Board of Directors listed
below; except that I WITHHOLD AUTHORITY for the following nominees (if any)
Thomas A. Majewski__ John H. Freeman__ Roger C. Cady__ Rose Ann Giordano__
VOTE WITHHELD____ from all nominees.
2. VOTE FOR____ AGAINST____ ABSTAIN____ ratification of the selection
of J.H. Cohn, LLP to be the independent auditors of the Company for the
fiscal year ending April 30, 2012.
3. VOTE FOR____ AGAINST____ ABSTAIN____ approval of the Dataram
Corporation 2011 Stock Option Plan for employees and consultants.
4. In their discretion, to vote upon such other business as may properly
come before the meeting and all adjournments thereof. This proxy when
properly executed will be voted in the manner directed herein by the
undersigned stockholder. If no direction is made, this proxy will be voted
for Proposals 1, 2 and 3.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as 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.
Signature
Signature if held jointly
Dated 2011
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
EX-10
2
sop2011.txt
DATARAM CORPORATION 2011 STOCK OPTION PLAN
DATARAM CORPORATION
2011 STOCK OPTION PLAN
1. PURPOSES; DEFINITIONS. The purposes of the Dataram Corporation
2011 Stock Option Plan (the "Plan") are to give certain employees of and
consultants to Dataram Corporation (the "Company") designated by the
President of the Company an opportunity to acquire shares of Common Stock
of the Company ("Stock"), to provide an incentive for such employees and
consultants to continue to promote the best interests of the Company and
enhance its long-term performance and to provide an incentive for such
employees and consultants to join or remain with the Company. Toward these
objectives, the Committee may grant Options to such employees and
consultants, all pursuant to the terms and conditions of the Plan.
Capitalized terms used herein are defined as set forth in this Plan. In
addition; (i) the term "Option" shall mean a right to purchase Stock granted
to an Optionee under the Plan; and (ii) "Optionee" shall mean an individual
who is eligible and who has been selected to participate in the Plan, and
who holds an outstanding Option granted to such individual under the Plan.
The shares of stock subject to Options granted under the Plan shall be
a maximum of 200,000 shares of Stock. No executive officer of the Company or
member of the Board of Directors of the Company shall be eligible to become
Optionees or to receive Options under this Plan.
2. ADMINISTRATION OF THE PLAN. (a) The Compensation Committee of
the Board of Directors of the Company ("the Committee") shall have exclusive
authority to operate, manage, administer and interpret the Plan in
accordance with its terms and conditions. If and to the extent that no
Committee exists which has the authority to administer the Plan, the
functions of the Committee shall be exercised by the Board.
(b) Each Option shall be evidenced by a written stock option
award agreement evidencing an Option (an "Agreement"), which shall be
executed by the Company. The Committee shall prescribe the form of all
Agreements, and, subject to the terms and conditions of the Plan, shall
determine the content of all Agreements.
(c) The Committee may consult with counsel who may be counsel
to the Company. The Committee may, with the approval of the Board, employ
such other attorneys and/or consultants, accountants and other persons as it
deems necessary or appropriate. In accordance with Section 10, the Committee
shall not incur any liability for any action taken in good faith in reliance
upon the advice of such counsel or other persons.
(d) To the maximum extent provided by law and by the Company's
Certificate of Incorporation and/or By-Laws, each person who is or shall
have been a member of the Committee or of the Board, or the President of the
Company, shall be indemnified and held harmless by the Company against and
from any loss, cost, liability or expense that may be imposed upon or
reasonably incurred by him or her in connection with or resulting from any
claim, action, suit or proceeding to which he or she may be made a party or
in which he or she may be involved by reason of any action taken or failure
to act under the Plan and against and from any and all amounts paid by him
or her in settlement thereof, with the Company's approval, or paid by him or
her in satisfaction of any judgment in any such action, suit or proceeding
against him or her; provided he or she shall give the Company an
opportunity, at its own expense, to handle and defend the same before he or
she undertakes to handle and defend it on his or her own behalf. The
foregoing right of indemnification shall not be exclusive and shall be
independent of any other rights of indemnification to which such persons may
be entitled under the Company's Certificate of Incorporation or By-Laws, by
contract, as a matter of law, or otherwise.
3. SHARES OF STOCK SUBJECT TO THE PLAN. The shares of stock subject
to Options granted under the Plan shall be a maximum of 200,000 shares of
Stock. Such shares of Stock subject to the Plan may be either authorized and
unissued shares or previously issued shares acquired by the Company. The
numbers of shares of Stock specified in this Section 3 shall be adjusted as
provided in Section 8. Any shares of Stock subject to an Option which for
any reason expires or is terminated or canceled without having been fully
exercised by delivery of shares of Stock may again be granted pursuant to an
Option under the Plan, subject to the limitations of this Section 3.
4. PROHIBITION AGAINST REPRICING. Except as a result of any
transaction referred to in Section 8 hereof (and subject to all applicable
laws), the Committee shall not have the power or authority to reduce,
whether through amendment or otherwise, the exercise price of any
outstanding Option or to grant any new Option with a reduced exercise price
in substitution for or upon the cancellation of Options previously granted.
5. ELIGIBILITY. Certain employees of the Company and consultants to
the Company designated by the President of the Company shall be eligible to
become Optionees and receive Options in accordance with the terms and
conditions of the Plan; provided, however, that notwithstanding any
provision of this Plan to the contrary, no executive officer of the Company
or member of the Board of Directors of the Company shall be eligible to
become Optionees or to receive Options under this Plan.
6. TERMS AND CONDITIONS OF STOCK OPTIONS. No Options to purchase
Stock granted under the Plan shall be Incentive Stock Options as defined
pursuant to Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"). Each Option to purchase Stock granted under the Plan shall be
subject to all the applicable provisions of the Plan, including the
following terms and conditions, and to such other terms and conditions not
inconsistent therewith as the Committee shall determine and which are set
forth in the applicable Agreement. Options need not be uniform as to all
grants and recipients thereof.
(a) The option exercise price per share of shares of Stock
subject to each Option shall be determined by the Committee and stated in
the Agreement; provided, however, that, such price applicable to any Option
shall not be less than one hundred percent (100%) of the Fair Market Value
of a share of Stock at the time that the Option is granted, which shall be
the closing sale price for a share of Stock in NASDAQ National Market
trading for such date.
(b) Each Option shall be exercisable as may be determined by
the Committee and stated in the Agreement, and, in any event, over a period
of time ending not later than ten (10) years from the date such Option was
granted.
(c) Each Option may be exercised by giving written notice to
the Company's Chief Financial Officer specifying the number of shares of
Stock to be purchased, which shall be accompanied by payment in full
including applicable taxes, if any, in accordance with this subsection.
Payment shall be in any manner permitted by applicable law and prescribed by
the Committee and set forth in the Agreement, including, in the Committee's
discretion, payment in accordance with a "cashless exercise" arrangement
established by the Committee and/or in Stock owned by the Optionee. The
Company is authorized to take whatever actions it deems necessary and proper
to satisfy all obligations of Optionees for the payment of all federal,
state, local and foreign taxes in connection with any Options (including,
but not limited to, any deductions or withholding as is deemed appropriate
by the Company). Notwithstanding any provisions of the Plan to the contrary,
and to the extent permitted by applicable law, the Company may offset any
Stock to be transferred to an Optionee (or, in the event of an Optionee's
death, to his or her beneficiary or estate) under the Plan against any
amounts that such Optionee may owe to the Company.
(d) No Optionee or other person shall become the beneficial
owner of any shares of Stock subject to an Option, or have any rights to
dividends or other rights of a shareholder with respect to any such shares,
until he or she has exercised his or her Option in accordance with the
provisions of the Plan and the applicable Agreement.
(e) An Option may be exercised only if at all times during the
period beginning with the date of the granting of the Option and ending on
the date of such exercise, the Optionee was an employee or consultant of the
Company. A leave of absence of an employee, duly authorized in writing by
the Company, shall not be deemed a termination of employment of the employee
for purposes of the Plan or with respect to any Option. Notwithstanding the
foregoing, the Committee may determine in its discretion that an Option may
be exercised prior to expiration of such Option following termination of
such employment or consultancy, whether or not exercisable at the time of
such termination, to the extent provided in the applicable Agreement.
7. RIGHTS OF EMPLOYEES AND OTHER PERSONS. No person shall have any
rights or claims under the Plan except in accordance with the provisions of
the Plan and the applicable Agreement. Nothing contained in the Plan or in
any Agreement shall be deemed to (i) give any employee or consultant the
right to be retained in the service of the Company or restrict in any way
the right of the Company to terminate any employee's employment at any time
with or without cause or (ii) confer on any consultant any right of
continued relationship with the Company, or alter any relationship between
them, including any right of the Company to terminate its relationship with
such consultant.
8. CHANGES IN CAPITAL. The existence of the Plan and any Options
granted hereunder shall not affect in any way the right or power of the
Board or the stockholders of the Company to make or authorize any
adjustment, recapitalization, reorganization or other change in the
Company's capital structure or its business, any merger or consolidation of
the Company or an affiliate, any issue of debt, preferred or prior
preference stock ahead of or affecting Stock, the authorization or issuance
of additional shares of Stock, the dissolution or liquidation of the
Company, any sale or transfer of all or part of its assets or business, any
stock dividend, stock split, share combination, extraordinary cash dividend
or similar event, or any other corporate act or proceeding. In the event of
any such occurrence, the Company shall make such adjustments in any
outstanding Options consistent with all applicable law to preserve the
relative value represented by the Options granted hereunder before such
event occurred.
9. MISCELLANEOUS PROVISIONS. (a) The Company shall not be required
to establish any special or separate fund or to make any other segregation
of assets to assure the issuance of shares of Stock or the payment of cash
upon exercise or payment of any Option. Proceeds from the sale of shares of
Stock pursuant to Options granted under the Plan shall constitute general
funds of the Company.
(b) An Option by its terms shall be personal and may not be
sold, transferred, pledged, assigned, encumbered or otherwise alienated or
hypothecated otherwise than by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of an Optionee
only by him or her.
(c) The Committee may suspend the right to exercise any Option
if it determines that such exercise is or may be in the circumstances
unlawful or result in the imposition of excise taxes on the Company under
the statutes, rules or regulations of any applicable jurisdiction The
Company has no obligation to register or qualify the resale of any Stock
issued upon exercise of any Option under any applicable securities laws.
The Committee may require each person receiving Stock in connection with any
Option under the Plan to represent and agree with the Company in writing
that such person is acquiring the shares of Stock for investment without a
view to the distribution thereof. The Committee, in its absolute discretion,
may impose such restrictions on the ownership and transferability of the
shares of Stock purchasable or otherwise receivable by any person under any
Option as it deems appropriate. The certificates evidencing such shares may
include any legend that the Committee deems appropriate to reflect any such
restrictions.
(d) By accepting any benefit under the Plan, each Optionee and
each person claiming under or through such Optionee shall be conclusively
deemed to have indicated their acceptance and ratification of, and consent
to, all of the terms and conditions of the Plan and any action taken under
the Plan by the Committee, the Company or the Board, in any case in
accordance with the terms and conditions of the Plan.
(e) The Plan shall be governed by and construed in accordance
with the laws of the State of New Jersey, without regard to such state's
conflict of law provisions, and, in any event, except as superseded by
applicable Federal law.
10. LIMITS OF LIABILITY. Any liability of the Company to any
Optionee with respect to any Option shall be based solely upon contractual
obligations created by the Plan and the Agreement. None of the Company, any
member of the Committee or the Board, the President of the Company or any
other person participating in any determination of any question under the
Plan, or in the interpretation, administration or application of the Plan,
shall have any liability, in the absence of bad faith, to any party for any
action taken or not taken in connection with the Plan, except as may
expressly be provided by statute.
11. SECTION 83(b) ELECTIONS. The Company and the Committee have
no responsibility for any Optionee's election, attempt to elect or failure
to elect to include the value of any Option subject to Section 83 of the
Code in the Optionee's gross income for the year of payment pursuant to
Section 83(b) of the Code. Any Optionee who makes an election pursuant to
Section 83(b) of the Code will promptly provide the Committee with a copy of
the election form.
12. AMENDMENTS AND TERMINATION. The Board may, at any time and with
or without prior notice, amend, alter, suspend or terminate the Plan,
retroactively or otherwise; provided, however, unless otherwise required by
law or specifically provided herein, no such amendment, alteration,
suspension or termination shall be made which would impair the previously
accrued rights of any holder of an Option theretofore granted without his or
her written consent, or which, without first obtaining approval of the
stockholders of the Company, would: (a) except as is provided in Section 8,
increase the maximum number of shares of Stock which may be sold or awarded
under the Plan; (b) except as is provided in Section 8, decrease the minimum
option exercise price requirements; (c) change the class of persons eligible
to receive Options under the Plan; or (d) extend the duration of the Plan or
the period during which Options may be exercised.
13. DURATION. Following the adoption of the Plan by the Board, the
Plan shall become effective as of the date on which it is approved by the
holders of a majority of the Company's outstanding Stock which is present
and voted at a meeting, or by written consent in lieu of a meeting (the
"Effective Date"). The Plan shall terminate upon the earliest to occur of:
(a) the effective date of a resolution adopted by the Board terminating the
Plan; (b) the date all shares of Stock subject to the Plan are delivered
pursuant to the Plan's provisions; or (c) three (3) years from the Effective
Date. No Option may be granted under the Plan after the earliest to occur of
the events or dates described in the foregoing paragraphs (a) through (c) of
this Section 13; provided, however, that Options theretofore granted may
extend beyond such date. No such termination of the Plan shall affect the
previously accrued rights of any Optionee hereunder and all Options
previously granted hereunder shall continue in force and in operation after
the termination of the Plan, except as they may be otherwise terminated in
accordance with the terms of the Plan or the Agreement.