UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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[ ] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
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[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
RIMAGE CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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RIMAGE CORPORATION
7725 Washington Avenue South
Minneapolis, Minnesota 55439
(952) 944-8144
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 23, 2001
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TO THE SHAREHOLDERS OF
RIMAGE CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Rimage Corporation, a Minnesota corporation, will be held on Wednesday, May 23,
2001, at 4:00 p.m. (Minneapolis time), at the Minneapolis Marriott Southwest,
5801 Opus Parkway, Minnetonka, Minnesota, for the following purposes:
1. To elect seven directors of the Company for the coming year.
2. To approve the amendment of the Restated Articles of
Incorporation of Rimage Corporation to increase the number of
authorized shares of common stock from 10,000,000 shares to
30,000,000 shares.
3. To approve the amendment of the Rimage Corporation 1992 Stock
Option Plan to increase the number of shares reserved for
issuance thereunder by 170,000 shares.
4. To approve the adoption of the Rimage Corporation 2001
Employee Stock Purchase Plan.
5. To approve the adoption of the Rimage Corporation 2001 Stock
Option Plan for Non-Employee Directors.
6. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Only holders of record of Rimage Corporation's Common Stock at the
close of business on April 9, 2001, are entitled to notice of and to vote at the
Annual Meeting or any adjournment thereof.
Each of you is invited to attend the Annual Meeting in person if
possible. Whether or not you plan to attend in person, please mark, date and
sign the enclosed proxy, and mail it promptly. A return envelope is enclosed for
your convenience.
By Order of the Board of Directors
Bernard P. Aldrich
President and Chief Executive Officer
April 20, 2001
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WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING,
PLEASE SIGN THE PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
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RIMAGE CORPORATION
7725 Washington Avenue South
Minneapolis, Minnesota 55439
(952) 944-8144
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PROXY STATEMENT
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SOLICITATION OF PROXIES
The accompanying Proxy is solicited on behalf of the Board of Directors
of Rimage Corporation (the "Company" or "Rimage") for use at the Annual Meeting
of Shareholders to be held on May 23, 2001, at 4:00 p.m. at the Minneapolis
Marriott Southwest, 5801 Opus Parkway, Minnetonka, Minnesota, and at any
adjournments thereof. The cost of solicitation, including the cost of preparing
and mailing the Notice of Annual Shareholders' Meeting and this Proxy Statement,
will be paid by the Company. Representatives of the Company may, without cost to
the Company, solicit proxies for the management of the Company by means of mail,
telephone or personal calls.
Shares of the Company's common stock, $.01 par value (the "Common
Stock"), represented by proxies in the form solicited, will be voted in the
manner directed by a shareholder. If no direction is made, the proxy will be
voted for the election of the nominees for director named in this Proxy
Statement, for approval of the other proposals contained in this Proxy Statement
and for any other matters properly brought before the meeting. Shares voted as a
"withhold vote for" one or more directors will be counted as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum at the meeting and as unvoted, although present and entitled to vote, for
purposes of the election of the directors with respect to which the shareholder
has abstained. If a broker submits a proxy that indicates the broker does not
have discretionary authority to vote certain shares, those shares will be
counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum at the meeting, but will not be considered
as present and entitled to vote with respect to the matters voted on at the
meeting.
Proxies may be revoked at any time before being exercised by delivery
to the Secretary of the Company of a written notice of termination of the
proxies' authority or a duly executed proxy bearing a later date.
Only holders of record of Common Stock at the close of business on
April 9, 2001 will be entitled to receive notice of and to vote at the meeting.
On April 9, 2001, the Company had 8,724,890 shares of Common Stock outstanding.
Each outstanding share is entitled to one vote on all matters presented at the
meeting.
So far as the management of the Company is aware, no matters other than
those described in this Proxy Statement will be acted upon at the Annual
Meeting. In the event that any other matters properly come before the Annual
Meeting calling for a vote of shareholders, the persons named as proxies in the
enclosed form of proxy will vote in accordance with their best judgment on such
other matters.
A copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 2000, is being furnished to each shareholder with this Proxy
Statement. This Proxy Statement is being mailed to shareholders on or about
April 20, 2001.
PROPOSAL 1:
ELECTION OF DIRECTORS
Seven persons have been nominated for election at the annual meeting:
Bernard P. Aldrich, Ronald R. Fletcher, Thomas F. Madison, Richard F. McNamara,
Steven M. Quist, James L. Reissner, and David J. Suden. Except for Mr. Madison,
each nominee is currently a director of the Company. All nominees elected at the
Annual Meeting will serve until the next Annual Meeting or until their earlier
death, resignation, removal, or
disqualification. The persons named in the accompanying Proxy intend to vote the
Proxies held by them in favor of the nominees named below as directors, unless
otherwise directed. The affirmative vote of a majority of the voting shares
represented at the meeting is required for the election of each director. Should
any nominee for director become unavailable for any reason, the Proxies will be
voted in accordance with the best judgment of the persons named therein. The
Board of Directors has no reason to believe that any candidate will be
unavailable.
The following information is furnished with respect to each nominee as
of April 9, 2001:
PRINCIPAL OCCUPATION AND DIRECTOR
NAME AND AGE BUSINESS EXPERIENCE FOR PAST FIVE YEARS SINCE
------------ --------------------------------------- -----
Bernard P. Aldrich Director, Chief Executive Officer and President 1996
Age 51 of Rimage since December 1996. President from
January 1995 to December 1996 of several
manufacturing companies controlled by Activar,
Inc., including Eiler Spring, Comfort Ride and
Bending Technologies. Director of Apogee
Enterprises, Inc.
Ronald R. Fletcher Owner and President of Aurora Service 1987
Age 60 Corporation, a savings and loan holding company,
since 1982; Chairman of the Company from November
1992 to February 1998 and Chief Executive Officer
of the Company from September 1995 to November
1996.
Thomas F. Madison President and Chief Executive Officer of MLM Nominee
Age 65 Partners, a consulting and small business
investment company since January 1993; Chairman
of Communications Holdings, Inc. from December
1996 to March 1999; Chairman of AetherWorks, Inc.
from August 1999 to March 2000; Vice Chairman and
Chief Executive Officer of Minnesota Mutual Life
Insurance Company from February 1994 to September
1994; President of U.S. West Communication
Markets, a division of U.S. West, Inc., from June
1987 to December 1992. Director of Valmont
Industries Inc., ACI Telecentrics, Digital River,
Inc., Lightning Rod Software, Inc. and Delaware
Group of Funds.
Richard F. McNamara Chairman of the Board of the Company since 1987
Age 68 February 1998; Owner of Activar, Inc., a company
that provides management services to corporations
related to Activar, for more than five years;
Owner of or partner in numerous private companies.
Director of Venturian Corporation.
Steven M. Quist President of Cyberoptics Corporation since 2000
Age 55 February 1998, Chief Executive Officer of
Cyberoptics Corporation since March 2000 and a
director of Cyberoptics Corporation since June
1991. President of Rosemount Inc., a subsidiary of
Emerson Electric Co., and an employee of Rosemount
from 1970 until 1998. Director of Data I/O
Corporation.
James L. Reissner President of Activar, Inc., since January 1996 and 1998
Age 61 Chief Financial Officer of Activar from 1992 until
becoming President. Acted in various management
and financial management capacities during the
past twenty years, including Managing Director of
the Minnesota Region of First Bank Systems, Inc.,
until 1990. Director of Intek, Inc.
David J. Suden Chief Technology Officer of Rimage since December 1995
Age 54 1996 and a director since September 1995;
President of Rimage from October 1994 through
November 1996; Vice President-Development and
Operations of Rimage from February 1991 to October
1994.
2
The Company knows of no arrangements or understandings between a
director or nominee and any other person pursuant to which he has been selected
as a director or nominee. There is no family relationship between any of the
nominees, directors or executive officers of the Company.
BOARD COMMITTEES AND ACTIONS
During calendar year 2000, the Board of Directors met five times. The
Board of Directors has a Compensation Committee and an Audit Committee. During
2000, the Compensation Committee met two times and the Audit Committee met four
times. The Compensation Committee reviews and makes recommendations to the Board
of Directors regarding salaries, compensation and benefits of executive officers
and senior management of the Company. The Compensation Committee also
administers the Company's 1992 Stock Option Plan. The current members of the
Compensation Committee are Mr. Quist, Mr. Reissner and Mr. McNamara. The Audit
Committee reviews the internal and external financial reporting of the Company,
and reviews the scope of the independent audit. The members of the Audit
Committee are Mr. Quist and Mr. Reissner. The Board of Directors does not have a
nominating committee. Each nominee for director attended at least 75% of the
meetings of the Board and committees on which he served during 2000.
Directors currently receive a fee of $2,500 for each meeting of the
Board of Directors which they attend. The Company has also granted directors
nonqualified stock options under its 1992 stock option plan to purchase shares
in each of the past few years. These option grants have been discretionary and
have included grants to directors whether or not also serving as an employee or
officer. The following chart shows the options granted to directors during 2000.
Each option vests as to one-third of the shares on the date of grant, one-third
of the shares on October 30, 2001, and one-third of the shares on October 30,
2002 with the exception of Mr. Quist whose option vests as to one-third of the
shares on the date of grant, one-third of the shares on December 31, 2000, and
one-third of the shares on December 31, 2001.
DIRECTOR NUMBER OF SHARES EXERCISE PRICE
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Bernard P. Aldrich 20,000 $10.00
Richard F. McNamara 20,000 10.00
Steven M. Quist 15,000 17.00
James L. Reissner 20,000 10.00
David J. Suden 20,000 10.00
Rather than continuing its current policy of discretionary grants, the Board of
Directors has approved and proposed for adoption by shareholders a 2001 Stock
Option Plan for Non-Employee Directors that would be limited to non-employee
directors and would provide for automatic grants of 5,000 shares on the date of
each annual meeting of shareholders. For a description of the 2001 Stock Option
Plan for Non-Employee Directors, please see Proposal No. 5 of this Proxy
Statement.
The Company paid consulting fees to James Reissner, a director of the
Company, for financial consulting services he provided to the Company. During
the year ended December 31, 2000, the Company paid Mr. Reissner $50,000 under
such arrangement.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OF THE
COMMON STOCK REPRESENTED AT THE ANNUAL MEETING AND ENTITLED TO VOTE IS NECESSARY
FOR ELECTION OF THE NOMINEES TO THE BOARD OF DIRECTORS DESCRIBED ABOVE. PROXIES
WILL BE VOTED IN FAVOR OF SUCH PROPOSAL UNLESS OTHERWISE INDICATED. THE BOARD OF
DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE ELECTION OF THE NOMINEES
FOR THE BOARD OF DIRECTORS AS SET FORTH IN PROPOSAL 1.
3
EXECUTIVE COMPENSATION
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Current executive officers of the Company who are not also directors
include the following:
Kenneth J. Klinck, 54, started with the Company in June 1997 and has
been Vice President, Sales and Marketing of the Company since September 1997.
For the thirty-one years prior to joining the Company, Mr. Klinck was with
Advance Machine Company, as Vice President of International Operations since
October 1992, and prior to that time as President of Advance Machine's European
Operations.
Robert M. Wolf, 32, started with the Company in September 1997 and has
been Treasurer of the Company since January 2000. From March 1995 until joining
the Company, Mr. Wolf was a CPA and audit manager with Deloitte & Touche LLP.
From December 1991 until March 1995, Mr. Wolf was a CPA with House, Nezerka &
Froelich PA.
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for
each of the past three fiscal years earned by the Chief Executive Officer and by
the other executive officers of the Company whose salary and bonus earned for
2000 exceeded $100,000.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
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ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------------- -------------------- ----------------------
OTHER
ANNUAL RESTRICTED ALL OTHER
NAME AND COMPEN- STOCK LTIP COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS SATION(1) AWARDS OPTIONS PAYOUTS SATION(2)
- ------------------------- -------- ---------- ---------- ----------- ---------- --------- ----------- ----------
Bernard P. Aldrich 2000 $206,000 $140,620 $12,500 -- 20,000 -- $5,250
Chief Executive Officer 1999 206,000 100,700 12,500 -- 15,000 -- 5,000
and President 1998 182,478 75,613 6,000 -- 28,125 -- 5,000
David J. Suden 2000 186,000 140,558 12,500 -- 20,000 -- 5,250
Chief Technology 1999 186,000 100,630 12,500 -- 15,000 -- 4,750
Officer 1998 166,375 70,578 6,000 -- 28,125 -- 4,298
Kenneth J. Klinck 2000 189,533 45,592 -- -- 10,000 -- 5,250
Vice President--Sales 1999 165,020 35,574 -- -- 7,500 -- 3,773
and Marketing 1998 152,458 25,525 -- -- 22,500 -- 2,312
Robert M. Wolf 2000 70,942 30,221 -- -- 10,000 -- 2,128
Treasurer 1999 65,885 20,000 -- -- 3,750 -- 1,977
1998 61,538 10,000 -- -- 4,500 -- 433
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(1) Represents directors' fees.
(2) Represents the Company's matching contributions under its 401(k) retirement
savings plan.
STOCK OPTIONS
The Company maintains a 1992 Stock Option Plan (the "Plan"). The
Company may grant incentive stock options or nonqualified stock options to
executive officers, directors and other employees and consultants of the Company
under the Plan. The following table sets forth information with respect to
options granted to the named executive officers in 2000:
4
OPTION GRANTS IN 2000
POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE APPRECIATION
FOR OPTION TERM (1)
------------------------------------------
OPTIONS % OF TOTAL OPTIONS EXERCISE
GRANTED GRANTED TO PRICE PER EXPIRATION
NAME (#) EMPLOYEES IN 2000 ($/SH) DATE 5%($) 10%($)
- -------------------- ---------- --------------------- ---------- ------------ ----------- -------------
Bernard P. Aldrich 20,000 8.0% 10.00 5/10/10 125,779 318,748
David J. Suden 20,000 8.0 10.00 5/10/10 125,779 318,748
Kenneth J. Klinck 10,000 4.0 10.00 5/10/10 62,890 159,374
Robert M. Wolf 10,000 4.0 10.00 5/10/10 62,890 159,374
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(1) These amounts represent the realizable value of the subject options ten
years from the date of grant (the term of each option), without discounting
to present value, assuming appreciation in the market value of the
Company's common stock from the market price on the date of grant at the
rates indicated. Actual gains, if any, on stock option exercises are
dependent on the future performance of the Common Stock, and overall stock
market conditions. The amounts reflected in this table may not necessarily
be achieved.
The following table provides information with respect to stock options
held at December 31, 2000, by the named executive officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND YEAR-END OPTION VALUES
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE OPTIONS AT YEAR-END (#) YEAR-END ($) (2)
NAME EXERCISE REALIZED(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---------------------- ------------- ------------- --------------------------- ---------------------------
Bernard P. Aldrich 22,500 $288,750 229,792 13,333 $1,480,078 $0
David J. Suden 75,000 843,750 64,792 13,333 276,953 0
Kenneth J. Klinck 15,000 171,250 74,584 6,666 438,281 0
Robert M. Wolf 2,880 40,320 18,034 6,666 70,725 0
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(1) Represents the difference between the option exercise price and the closing
price of the Company's Common Stock as reported by Nasdaq on the date of
exercise.
(2) Based on the difference between the December 29, 2000 closing price of
$8.625 per share as reported on The Nasdaq Stock Market and the exercise
price of the options.
RETIREMENT SAVINGS PLAN
Rimage adopted a profit sharing and savings plan in 1991 under Section
401(k) of the Internal Revenue Code, which allows employees to contribute the
lesser of (i) up to 16% of their pre-tax income to the plan or (ii) $10,500. The
401(k) Plan includes a discretionary matching contribution by the Company. These
discretionary contributions totaled $168,314, $142,957, and $123,621 in 2000,
1999, and 1998, respectively.
CERTAIN TRANSACTIONS
Rimage leases approximately 43,000 square feet of office, manufacturing
and warehouse space from a corporation owned by Messrs. Fletcher and McNamara,
pursuant to a lease dated September 1998. The lease expires on September 30,
2003. Rent is approximately $436,000 per year, including a pro rata share of
operating costs.
5
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee is currently comprised of Mr. Quist, Mr.
Reissner and Mr. McNamara. The Compensation Committee reviews and makes
recommendations to the Board of Directors regarding the salaries, compensation
and benefits of executive officers and senior management of the Company.
The Company's policy with respect to the compensation of executive
officers is based upon the following principals: (1) executive base compensation
levels should be established by comparison of job responsibility to similar
positions in comparable companies and be adequate to retain highly-qualified
personnel and (2) variable compensation should be established to provide
incentive to improve performance and shareholder value. In determining executive
officers' annual compensation, the Compensation Committee considers the overall
performance of the Company, as well as the particular executive officer's
position at the Company and the executive officer's performance on behalf of the
Company. Rather than applying a formulaic approach to determining annual
compensation, the Compensation Committee uses various surveys of executive
compensation for companies of a similar size in comparable industries as a basis
for determining competitive levels of cash compensation.
During 2000, salaries of executive officers, including the Company's
Chief Executive Officer, were set at levels that recognized increased salary
rates in the industry. The Company believes that such salaries approximate the
salaries of similarly situated individuals at comparable companies. Mr.
Aldrich's base salary remained $206,000 in 2000, which represents no change from
his 1999 base salary.
Executive officers are also eligible for discretionary bonuses, which
the Board of Directors awards based upon the Company's overall performance and
the contribution to such performance made by the executive officers' areas of
responsibility. For 2000, the Compensation Committee established performance
goals upon which cash bonuses would be established. Based upon realization of
such goals, the Compensation Committee and the Board granted Mr. Aldrich a
$140,620 bonus for 2000. The Compensation Committee is establishing specific
performance goals for 2001 upon which cash bonuses will be established.
The Company provides long-term incentive to its executives, and ties a
portion of executive compensation to Company performance, through grants of
stock options under the Company's 1992 Stock Option Plan. During 2000, the
Company granted Mr. Aldrich an option to purchase 20,000 shares for his services
as a director. Although the grant provides Mr. Aldrich an additional incentive
to improve the performance of the Company and the performance of its common
stock in the market, because of his substantial option holdings, the Committee
did not believe that additional large grants were warranted in 2000.
The Compensation Committee believes that the objectives of the
Company's compensation policy in providing fixed compensation to management
adequate to avoid attrition and providing variable compensation in amounts and
forms that encourage generation of value for shareholders were achieved during
2000.
By: The Compensation Committee
Richard F. McNamara
Steven M. Quist
James L. Reissner
6
PERFORMANCE GRAPH
The Company's common stock is quoted on The Nasdaq National Market. The
following graph shows changes during the period from December 31, 1996, to
December 29, 2000, in the value of $100 invested in: (1) the Nasdaq National
Market Index (US); (2) Nasdaq Non-Financial Stocks Index and (3) the Company's
common stock. The values of each investment as of the dates indicated are based
on share prices plus any dividends paid in cash, with the dividends reinvested
on the date they were paid. The calculations exclude trading commissions and
taxes.
[PERFORMANCE GRAPH]
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12/31/96 12/31/97 12/31/98 12/31/99 12/29/00
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Nasdaq National Market Index $100.00 $150.69 $212.51 $394.94 $237.68
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Nasdaq Non-Financial Stocks $100.00 $142.20 $208.73 $408.73 $238.52
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Rimage Corporation $100.00 $88.11 $245.88 $314.75 $254.50
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7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 30, 2001, the number of
shares of Common Stock beneficially owned by (i) each person who is the
beneficial owner of more than five percent of the outstanding shares of the
Company's common stock, (ii) each executive officer of the Company named in the
Summary Compensation Table herein, (iii) each director, and (iv) all executive
officers and directors as a group.
Number of Shares Percent of
Name and Address of Beneficial Owner Beneficially Owned (1) Outstanding
------------------------------------ ---------------------- -----------
Richard F. McNamara (2)................. 1,148,542 13.0%
7808 Creekridge Circle
Minneapolis, MN 55439
Kern Capital Management LLC (3)......... 846,900 9.7%
114 West 46th Street, Suite 1926
New York, NY 10036
George E. Kline (4)..................... 657,125 7.5%
4750 IDS Center
Minneapolis, MN 55402
Ronald R. Fletcher (5).................. 390,507 4.4%
Bernard P. Aldrich (6).................. 256,992 2.9%
David J. Suden ......................... 154,292 1.8%
James L. Reissner....................... 192,487 2.2%
Steven M. Quist......................... 10,000 *
Thomas F. Madison....................... -- *
Kenneth J. Klinck....................... 90,434 1.0%
Robert M. Wolf ......................... 22,834 *
All executive officers and
directors as a group (8 persons)........ 2,266,088 23.5%
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* Less than one percent
(1) Includes shares which could be purchased within 60 days upon the exercise
of the following stock options: Mr. Fletcher, 240,750 shares; Mr. McNamara,
145,417 shares; Mr. Kline, 82,500 shares; Mr. Aldrich, 209,792 shares; Mr.
Suden, 64,792 shares; Mr. Reissner, 145,417; Mr. Quist, 10,000 shares; Mr.
Klinck, 74,584; Mr. Wolf, 15,154 shares and all directors and executive
officers as a group, 905,906 shares.
(2) Includes 131,750 shares held by a charitable foundation for which Mr.
McNamara serves as trustee and for which he disclaims beneficial ownership.
(3) Based on Schedule 13G filed February 9, 2001.
(4) Based on Form 4 filed September 7, 2000. Includes 247,500 shares which are
owned by limited partnerships that are managed by a limited liability
company for which Mr. Kline is a Managing Partner. Mr. Kline has no voting
or investment power with respect to such shares and disclaims beneficial
ownership. Includes 285,750 shares which are held by Venture Management,
Inc., Profit Sharing Plan and Trust of which Mr. Kline is trustee and sole
beneficiary.
(5) Includes 1,875 shares held as custodian for a minor child.
(6) Includes 450 shares held as custodian for minor children.
8
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under federal securities laws, the Company's directors and officers,
and any beneficial owner of more than 10% of a class of equity securities of the
Company, are required to report their ownership of the Company's equity
securities and any changes in such ownership to the Securities and Exchange
Commission (the "Commission") and the securities exchange on which the equity
securities are registered. Specific due dates for these reports have been
established by the Commission, and the Company is required to disclose in this
Proxy Statement any delinquent filing of such reports and any failure to file
such reports during the fiscal year ended December 31, 2000.
Based upon information provided by officers and directors of the
Company, the Company believes that all officers, directors and 10% shareholders
filed all reports on a timely basis in the 2000 fiscal year, except that George
E. Kline, a director who resigned in September 2000, did not respond to an
inquiry regarding the timely filing of all reports. Mr. Kline is subject to an
indictment that alleges, among other things, that an entity or entities that he
controlled traded in the Company's securities and that such trades were not
properly reported.
PROPOSAL 2:
APPROVAL OF AMENDMENT TO RESTATED ARTICLES OF INCORPORATION
INTRODUCTION
On February 14, 2001, the Company's Board of Directors approved,
subject to shareholder approval, an amendment to Article Four of the Company's
Restated Articles of Incorporation to increase the number of authorized shares
of common stock of the Company from 10,000,000 to 30,000,000. If the amendment
is approved, Article Four, Section (01) will read as follows:
"(01) The corporation is authorized to issue thirty million
(30,000,000) shares of capital stock, $.01 par value."
The additional shares of Common Stock for which authorization is sought
would be a part of the existing class of Common Stock and, if and when issued,
would have the same rights and privileges as the shares of Common Stock
presently outstanding. Such additional shares would not (and the shares of
Common Stock presently outstanding do not) entitle the holders thereof to
preemptive or cumulative voting rights.
PURPOSES AND EFFECTS OF THE AMENDMENT
At March 30, 2001 there were 8,724,790 shares of common stock
outstanding, 1,457,057 shares reserved for issuance under outstanding options
granted under the Company's 1992 Stock Option Plan, and 152,708 shares reserved
for issuance upon exercise of options and warrants held by former optionholders
and warrantholders of Cedar Technologies, Inc. (a company acquired by the
Company in March 2000). Accordingly, the amendment is required to satisfy
obligations under existing stock purchase rights and is necessary to accommodate
the additional shares that would be authorized under stock benefit programs if
the items set forth in Proposal 3, Proposal 4 or Proposal 5 of this Proxy
Statement are approved.
The following table illustrates the number of shares of common stock
outstanding, and reserved for issuance under outstanding share purchase rights
as of March 31, 2001, both before the adoption of this proposal, and on a pro
forma basis after the increase in authorized shares through this proposal and
Proposal 3, Proposal 4 and Proposal 5:
CURRENTLY AFTER PROPOSAL 2 AFTER PROPOSALS 3,4 AND 5
--------- ---------------- -------------------------
Authorized Shares 10,000,000 30,000,000 30,000,000
Outstanding Shares 8,724,790 8,724,790 8,724,790
Shares reserved under 1,457,057 1,457,057 1,457,057
outstanding options
Shares reserved under 152,708 152,708 152,708
outstanding warrants
9
Shares available under 1992 184,508 184,508 884,508
Option Plan for future grant
Shares available under -- -- 300,000
Employee Stock Purchase Plan
for future grant
Shares available under -- -- 75,000
Non-Employee Director Plan
for future grant
Shares authorized but not (365,755) 19,634,245 18,559,245
committed
As illustrated above, because the number of shares outstanding,
reserved for issuance under outstanding options, and reserved for issuance under
outstanding warrants exceeds the shares currently authorized, a vote for
Proposal 1 will also have the affect of providing adequate shares to meet
outstanding commitments under options. If Proposal 1 is not approved, and all of
such options remained outstanding, the holders of such options would not be able
to receive the benefit of their options. A vote for Proposal 1 will therefore
have the affect of ratifying the ability to honor such options.
Further, the Board of Directors believes that additional authorized
shares of Common Stock will allow the Company to take timely advantage of market
conditions and the availability of favorable financing and acquisition
opportunities without the delay and expense associated with convening a special
shareholders' meeting (unless otherwise required by the rules of any stock
exchange on which Company's Common Stock may then be listed). The additional
shares of Common Stock would also permit the Company increased flexibility with
respect to stock dividends, future stock benefit plans and for other general
corporate purposes.
The issuance by the Company of shares of Common Stock may dilute the
present equity ownership position of current holders of Common Stock. Unless
required by law or by the rules of any stock exchange on which Company's Common
Stock may in the future be listed, no further authorized vote by the
shareholders will be necessary for any issuance of shares of Common Stock. Under
existing NASD regulations, approval by a majority of the holders of Common Stock
would nevertheless be required in connection with any transaction that would
result in the original issuance of additional shares of Common Stock, other than
in a public offering, (i) if the sale, issuance or potential issuance by the
Company of Common Stock (or securities convertible into or exercisable for
Common stock) at a price less than the greater of book or market value which
together with sales by officers, directors or substantial shareholders of the
Company equals 20% or more of common stock or 20% or more of the voting power
outstanding before the issuance; or (ii) if the sale, issuance or potential
issuance by the Company of Common Stock (or securities convertible into or
exercisable common stock) is equal to 20% or more of the Common Stock or 20% or
more of the voting power outstanding before the issuance for less than the
greater of book or market value of the stock.
Although the increase in authorized but unissued shares of Common Stock
is not designed for such purposes, the increase in the authorized but unissued
shares of Common Stock could make a change in control of Company more difficult
to achieve. Under certain circumstances, such shares of Common Stock could be
used to create voting impediments to frustrate persons seeking to effect a
takeover or otherwise gain control of Company. Such shares could be sold
privately to purchasers who might side with the Board of Directors in opposing a
takeover bid that the Board determines is not in the best interests of Company
and its shareholders.
The amendment also may have the effect of discouraging an attempt by
another person or entity, through acquisition of a substantial number of shares
of Common Stock, to acquire control of the Company with a view to effecting a
merger, sale of assets or a similar transaction, since the issuance of new
shares could be used to dilute the stock ownership of such person or entity.
Although the Board of Directors presently has no intention of doing so,
shares of authorized but unissued Common Stock could be issued to a holder who
would thereby have sufficient voting power to assure that any such business
combination or amendment to the Restated Articles of Incorporation would not
receive the majority shareholder vote required for approval of a business
combination transaction. See "Security Ownership of Certain Beneficial Owners
and Management."
10
Although the Board of Directors has concluded that the potential
benefits of the proposed amendment outweighs its possible disadvantages, the
Board asks shareholders to consider, as the Board has done, those possible
disadvantages. Shareholders may find the issuance of shares of Common Stock
disadvantageous to the extent that it may be used to discourage takeovers which
are not approved by the Board but in which shareholders may receive for some or
all of their shares a substantial premium above market value at the time a
tender offer is made. The issuance of additional shares of Common Stock may be
used to discourage takeovers that are not approved by the Board but in which
shareholders may receive a substantial premium above market value for some or
all of their shares at the time a tender offer is made. Thus, shareholders who
may wish to participate in such a tender offer may be restricted in their
opportunity to do so. In addition, because the proposed amendment may enable the
Company to discourage tender offers, the amendment may make removal of directors
or other management personnel more difficult. To the extent that the adoption of
the proposed amendment renders less likely a merger or other transaction opposed
by the Company's incumbent Board of Directors, the effect of such adoption may
be to assist the Board of Directors and management in retaining their current
positions.
The Board of Directors does not have any current intention of
implementing any contractual provisions or other amendments to its articles,
bylaws, employment agreements or credit agreements that would have material
antitakeover consequences, knows of no current effort or plans to accumulate the
Company's securities or acquire control of the Company, and has no current plans
or proposals to use the additional authorized shares for acquisitions. Because
the amendment is necessary to accommodate existing share purchase rights and
other benefit plans the Board is recommending, and because the Board believes it
is advisable to have the shares available if favorable acquisition proposals
present themselves, the Board recommends approval of the amendment. If the
amendment is not approved, the Company will not have the ability to honor
existing option agreements with respect to 365,755 shares and will not have the
ability to issue any shares or additional share purchase rights.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OF THE
COMMON STOCK REPRESENTED AT THE ANNUAL MEETING AND ENTITLED TO VOTE IS NECESSARY
FOR APPROVAL OF THE AMENDMENT TO THE RESTATED ARTICLES OF INCORPORATION
DESCRIBED ABOVE. PROXIES WILL BE VOTED IN FAVOR OF SUCH PROPOSAL UNLESS
OTHERWISE INDICATED. THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
PROPOSAL TO AMEND THE RESTATED ARTICLES OF INCORPORATION AS SET FORTH IN
PROPOSAL 2.
PROPOSAL 3:
APPROVAL OF AMENDMENT TO THE 1992 STOCK OPTION PLAN
INTRODUCTION
On February 14, 2001, the Company's Board of Directors approved,
subject to shareholder approval and subject to approval of Proposal 2 above, an
amendment to the Company's 1992 Stock Option Plan (the "Plan") that will
increase the number of shares reserved for issuance under the plan by 170,000
shares. The Plan is intended to promote the growth and profitability of the
Company by providing its employees and directors with an incentive to achieve
long-term corporate objectives, to attract and retain employees and directors of
outstanding competence, and to provide such employees and directors with an
equity interest in the Company.
Although 1,641,565 shares were reserved under the Plan for issuance
under options at March 31, 2001, there were outstanding options to purchase
1,457,057 shares at that date and remained only 184,508 shares available for
future grant. Stock options are a primary ingredient in the compensation
packages for both executive and technical personnel. Without the ability to
grant additional options, the Board of Directors of the Company does not believe
that it would have the appropriate tools to attract and retain these personnel.
The Board of Directors is recommending the amendment to the Plan to provide
enough authorization to cover anticipated option grants for the next several
years. Although the additional reservation under the Plan will be used to grant
options consistent with past practice, including additional grants during 2001,
the Company does not have any current plans, proposals or understandings
regarding additional grants or regarding grants at lower prices to existing
option holders.
11
The amendment to the Plan cannot be implemented, however, unless the
number of authorized shares of common stock of the Company is increased in
accordance with Proposal 2. Accordingly, Proposal 3 will not be adopted if
Proposal 2 is not approved.
SUMMARY OF THE PLAN
The Plan is administered by the Compensation Committee of the Board
(the "Committee"). The Committee has the authority to select the individuals to
whom awards are granted, to determine the types of awards to be granted and the
number of shares of Common Stock covered by such awards, to set the terms and
conditions of such awards, to determine whether the payment of any amounts
received under any award shall or may be deferred, and to establish rules for
the administration of the Plan.
The Plan permits the granting of incentive stock options meeting the
requirements of Section 422 of the Code, and stock options that do not meet such
requirements (non-qualified stock options). No option under the plan may have a
term of more than ten years. The exercise price per share under any incentive
stock option may not be less than 100% of the fair market value of the Common
Stock on the date of the grant of such option or other award. Any person who
holds more than 10% of the Company's Common Stock may not receive an incentive
option that has a term longer than five years or an exercise price of less than
110% of the fair market value on the date of grant. Determinations of fair
market value under the Plan are made in accordance with methods and procedures
established by the Committee.
Any employee, officer, director, consultant or independent contractor
of the Company and its affiliates selected by the Committee is eligible to
receive an option under the Plan. No option granted under the Plan may be
assigned, transferred, pledged or otherwise encumbered by the individual to whom
it is granted, otherwise than by will or the laws of descent and distribution,
except that the Committee may permit the designation of a beneficiary. Each
option is exercisable, during such individual's lifetime, only by such
individual or, if permissible under applicable law, by such individual's
guardian or legal representative.
The Board of Directors may amend, alter or discontinue the Plan at any
time, provided that shareholder approval must be obtained for any such action
that would (a) increase the number of shares available for issuance or sale
pursuant to the plan, (b) change the classification of persons eligible to
participate in the Plan, or (c) materially increase the benefits accruing to
participants under the Plan. The Committee may correct any defect, supply any
omission, or reconcile any inconsistency in the Plan or any option agreement in
the manner and to the extent it shall deem desirable to carry the Plan into
effect. The Committee may waive any condition of, or rights of the Company under
any outstanding award, prospectively or retroactively, but the Committee may not
amend or terminate any outstanding award, prospectively or retroactively,
without the consent of the holder or beneficiary of the award.
The grant of an option is not expected to result in any taxable income
to the recipient. The holder of an incentive stock option generally will have no
taxable income upon exercising the incentive stock option (except that a
liability may arise pursuant to the alternative minimum tax), and the Company
will not be entitled to a tax deduction when an incentive stock option is
exercised. Upon exercising a non-qualified stock option, the optionee must
recognize ordinary income equal to the excess of the fair market value of the
shares of Common Stock acquired on the date of exercise over the exercise price,
and the Company will be entitled at that time to a tax deduction in the same
amount. Generally, there will be no tax consequence to the Company in connection
with disposition of shares acquired under an option, except that the Company may
be entitled to a tax deduction in the case of a disposition of shares acquired
under an incentive stock option before the applicable incentive stock option
holding periods set forth in the Code have been satisfied.
The affirmative vote of the holders of a majority of the shares of the
Common Stock represented at the Annual Meeting and entitled to vote is necessary
for approval of the amendment to the Option Plan described above. Proxies will
be voted in favor of such proposal unless otherwise indicated. THE BOARD
RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS VOTE FOR THE PROPOSAL TO AMEND THE
OPTION PLAN AS SET FORTH IN PROPOSAL 3.
12
PROPOSAL 4:
ADOPTION OF THE 2001 EMPLOYEE STOCK PURCHASE PLAN
On February 14, 2001, the Company's Board of Directors approved,
subject to shareholder approval and subject to approval of Proposal 2 above, the
adoption of the Company's 2001 Employee Stock Purchase Plan (the "Purchase
Plan"). The Purchase Plan is being proposed to provide employees a convenient
and economical method of purchasing shares of the Common Stock of the Company
and therefore aligning the interests of those employees with shareholders.
The Purchase Plan cannot be implemented, however, unless the number of
authorized shares of common stock of the Company is increased in accordance with
Proposal 2. Accordingly, Proposal 4 will not be adopted if Proposal 2 is not
approved.
The following summary is qualified in its entirety by reference to the
full text of the 2001 Employee Stock Purchase Plan attached hereto as Exhibit A.
SUMMARY OF THE PURCHASE PLAN
As proposed, the Purchase Plan will reserve 300,000 shares of the
Company's Common Stock for sale to participating employees at the lower of 85%
of the fair market value of the Company's Common Stock on the first business
day, or the last business day, of the applicable purchase period. Under the
terms of the Purchase Plan, purchase periods begin on the first business day of
July of each year and end on the last business day of June of the following
year.
The Purchase Plan will allow participating employees to direct the
Company to make after-tax payroll deductions of from 1% to 10% of their
compensation during the purchase period and apply those deductions at the end of
the purchase period to the purchase of shares of Common Stock. Participating
employees will be allowed to withdraw from the Purchase Plan at any time,
although no employee may enroll again after a withdrawal until commencement of
the next purchase period. No participant may purchase more than 5,000 shares or
shares having a market value exceeding $25,000 under the Purchase Plan (and any
other plan qualifying under Section 423(b)(8) of the Internal Revenue Code of
1986, as amended) during any purchase period. In addition, if the purchases by
all participants in any purchase period would result in the sale of more than
100,000 shares of Common Stock under the Purchase Plan for the Purchase Period,
each participant will be allocated a pro rata portion of the 100,000 shares to
be sold for that Purchase Period.
Any employee of the Company or any of its subsidiaries (other than
employees who have been employed by the Company or any of its subsidiaries less
than six months or whose customary employment by the Company or any of its
subsidiaries is less than 20 hours per week or five months per calendar year) is
eligible to participate in the Purchase Plan, provided that no employee who
holds more than 5% percent of the outstanding Common Stock may participate.
Upon a participant's termination of employment with the Company for any
reason other than approved retirement or death, participation in the Purchase
Plan will cease and the balance of the participant's share purchase account will
be paid, in cash, to the participant within 30 days. Upon the death or approved
retirement of a participant, no further contributions will be made to the
participant's share purchase account and the balance in the account will either
be used to purchase shares of Common Stock at the end of the current purchase
period or be paid in cash if requested, provided that in the case of approved
retirement, no purchase of Common Stock shall be allowed if the last day of the
purchase period in which such retirement occurs is more than 3 months following
the date of such retirement.
The Purchase Plan will be administered by the Compensation Committee of
the Board of Directors or such other committee as established by the Board of
Directors. The Purchase Plan may be amended by the Board of Directors at any
time, except that the Board of Directors cannot, without shareholder approval,
adopt any amendment that (i) would cause Rule 16b-3 under the Exchange Act to
become unavailable with respect to the Purchase Plan, (ii) requires shareholder
approval under any rules or regulations of the National Association of
13
Securities Dealers, Inc. or any securities exchange applicable to the Company,
or (iii) permits the issuance of Common Stock before payment therefor in full.
Although the Board of Directors believes that the adoption of the
Purchase Plan is in the best interests of the Company and its shareholders
because it is expected to increase the incentive of the Company's employees to
work hard for the Company's success, the Board believes shareholders should also
consider the potential disadvantages of the Purchase Plan. The Purchase Plan
will result in the issuance of shares to employees at less than market value of
the shares on the date of issuance. These share issuances will have the affect
of increasing the number of outstanding shares of common stock without an
increase in capital contributed that corresponds to market price and will
therefore have a dilutive effect. The Board has adopted limitations on the
number of shares issued under the Purchase Plan in any year (100,000 shares) to
limit this dilutive affect.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OF THE
COMMON STOCK REPRESENTED AT THE ANNUAL MEETING AND ENTITLED TO VOTE IS NECESSARY
FOR APPROVAL OF THE ADOPTION OF THE PURCHASE PLAN DESCRIBED ABOVE. PROXIES WILL
BE VOTED IN FAVOR OF SUCH PROPOSAL UNLESS OTHERWISE INDICATED. THE BOARD
RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS VOTE FOR THE PROPOSAL TO ADOPT THE
PURCHASE PLAN AS SET FORTH IN PROPOSAL 4.
PROPOSAL 5:
ADOPTION OF THE 2001 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
On February 14, 2001, the Company's Board of Directors approved,
subject to shareholder approval and subject to approval of Proposal 2 above, the
adoption of the Company's 2001 Stock Option Plan for Non-Employee Directors (the
"Director Plan"). Until the adoption of the Director Plan, option grants to
directors were made periodically at the discretion of the Board and officers who
are also directors participated in these discretionary grants. The Director Plan
is being proposed to standardize the time, date, amount and terms of annual
grants to directors, to separate the stock based incentives provided officers
(who are not entitled to participate in the Director Plan) from the incentives
provided non-employee directors, and to continue to provide a personal incentive
to directors to maximize the value of the Company's common stock.
The Director Plan cannot be implemented, however, unless the number of
authorized shares of common stock of the Company is increased in accordance with
Proposal 2. Accordingly, Proposal 5 will not be adopted if Proposal 2 is not
approved.
The following summary is qualified in its entirety by reference to the
full text of the 2001 Stock Option Plan for Non-Employee Directors attached
hereto as Exhibit B.
SUMMARY OF THE DIRECTOR PLAN
The Director Plan will reserve a total of 75,000 shares of Common Stock
for issuance to directors of the Company who are not also employees upon
exercise of options granted to them under the Director Plan. Each nonemployee
director of the Company will receive an option to purchase 5,000 shares of
Common Stock at each annual meeting of shareholders at which such director is
elected or reelected beginning with the 2001 Annual Meeting. The exercise price
of all options under the Director Plan will be equal to the fair market value
(the closing sale price on the Nasdaq if so traded) of the Common Stock on the
date of such annual meeting. All options granted under the Director Plan will be
fully exercisable from the date of grant and will expire ten years from the date
of grant.
Options under the Director Plan are not transferable and expire upon
removal of the director for gross or willful misconduct. Options remain
exercisable for the remainder of their initial term if a director otherwise
resigns. All options granted under the Director Plan are nonqualified stock
options.
The following table sets forth the information with respect to options
that will be granted to nominees under the Director Plan upon their reelection
to the Board of Directors and shareholder approval of the Director Plan at the
2001 Annual Meeting:
14
NEW PLAN GRANTS
NAME NUMBER OF SHARES
---- ----------------
Ronald R. Fletcher 5,000
Richard F. McNamara 5,000
Steven M. Quist 5,000
James L. Reissner 5,000
Thomas F. Madison 5,000
All of such options will be fully exercisable on the date of grant. Such options
will expire on May 23, 2011.
The Board of Directors believes that the proposed amendments to the
Director Plan are in the best interests of the Company because they provide a
more disinterested means of establishing stock based incentives for board
members yet continue to align the interests of non-employee directors with those
of the Company and the Company's shareholders.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OF THE
COMPANY'S COMMON STOCK REPRESENTED AT THE ANNUAL MEETING AND ENTITLED TO VOTE IS
NECESSARY FOR APPROVAL OF THE AMENDMENTS TO THE DIRECTOR PLAN DESCRIBED ABOVE.
PROXIES WILL BE VOTED IN FAVOR OF SUCH PROPOSAL UNLESS OTHERWISE INDICATED. THE
BOARD RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS VOTE FOR THE PROPOSAL TO ADOPT
THE DIRECTOR PLAN AS SET FORTH IN PROPOSAL 5.
15
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The following report of the Audit Committee shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act of 1933, as amended, or the 1934
Securities Exchange Act, as amended, except to the extent that the Company
specifically incorporates it by reference in such filing.
The Audit Committee of Rimage Corporation presently consists of two
independent directors: Steven Quist and James Reissner. Although Mr. Reissner
has been paid for consulting with the Company, the Board of Directors does not
believe his consulting interferes with his independence and has concluded that
both members of the Audit Committee are independent directors for Nasdaq listing
purposes. The Company intends to appoint a third member to the Audit Committee
before June 14, 2001.
REVIEW AND DISCUSSIONS WITH INDEPENDENT ACCOUNTANTS
The Audit Committee operates under a written charter adopted by the
Board of Directors, a copy of which is attached to this Proxy Statement as
Exhibit C. In accordance with such Charter, the Audit Committee has reviewed and
discussed the Company's audited financial statements with management. The Audit
Committee has discussed with KPMG LLP, the Company's independent accountants,
the matters required to be discussed by SAS No. 61 (Codification of Statements
on Accounting Standards) which includes, among other items, matters related to
the conduct of the audit of the Company's financial statements. The Audit
Committee has also received written disclosures and the letter from KPMG LLP
required by Independence Standards Board Standard No. 1 (which relates to the
accountant's independence from the Company and its related entities) and has
discussed with KPMG LLP their independence from the Company.
REVIEW WITH MANAGEMENT
Based on the review and discussions referred to above, the Audit
Committee recommended to the Company's Board that the Company's audited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2000.
BY: THE AUDIT COMMITTEE
Mr. Steven M. Quist
Mr. James L. Reissner
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Company has selected KPMG LLP as its independent auditors for its
fiscal year ending December 31, 2001. Representatives of KPMG LLP, which has
served as the Company's independent auditors since 1989, are expected to be
present at the Annual Meeting, will have an opportunity to make a statement if
they desire to do so and will be available to respond to appropriate questions
from shareholders.
AUDIT FEES
Fees billed or expected to be billed to the Company by KPMG LLP for the
audit of the Company's consolidated annual financial statements for the year
ended December 31, 2000 and for reviews of those consolidated financial
statements included in the Company's quarterly reports on Form 10-Q totaled
$103,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
There were no fees billed or expected to be billed to the Company by
KPMG LLP for services provided during the Company's 2000 fiscal year for
Financial Information Systems Design and Implementation.
16
ALL OTHER FEES
Fees billed or expected to be billed to the Company by KPMG LLP for
services provided during the Company's 2000 fiscal year for all other non-audit
services rendered to the Company, including tax related services totaled
$110,000.
SHAREHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Any shareholder wishing to include a proposal in the Company's proxy
solicitation materials for its next annual meeting of shareholders must submit
such proposal for consideration in writing to the Secretary of the Company at
its principal executive offices, Rimage Corporation, 7725 Washington Avenue
South, Minneapolis, MN 55439, no later than December 21, 2001.
Pursuant to the Company's Bylaws, in order for any other proposal to be
properly brought before the next annual meeting by a shareholder, including a
nominee for director to be considered at such annual meeting, the shareholder
must give written notice of such shareholder's intent to bring a matter before
the annual meeting, or nominate the director, no later than December 21, 2001.
Each such notice must set forth certain information with respect to the
shareholder who intends to bring such matter before the meeting and the business
desired to be conducted, as set forth in greater detail in the Company's Bylaws.
Management will use discretionary authority to vote against any
shareholder proposal, or director nominee not made by management, presented at
the next annual meeting if: (i) such proposal or nominee has been properly
omitted from the Company's proxy materials under federal securities laws; (ii)
notice of such proposal or nominee was not submitted to the Secretary of the
Company at the address listed above by December 21, 2001; or (iii) the proponent
has not solicited proxies in compliance with federal securities laws from the
holders of at least the percentage of the Company's voting shares required to
carry the proposal or elect the nominee.
OTHER BUSINESS
At the date of this Proxy Statement, management knows of no other
business that may properly come before the Annual Meeting. However, if any other
matters properly come before the meeting, the persons named in the enclosed form
of proxy will vote the proxies received in response to this solicitation in
accordance with their best judgment on such makers.
By Order of the Board of Directors
Bernard P. Aldrich
President and Chief Executive Officer
Minneapolis, Minnesota
April 20, 2001
17
Exhibit A
RIMAGE CORPORATION
2001 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I. INTRODUCTION
Section 1.01 Purpose. The purpose of the RIMAGE CORPORATION
2001 EMPLOYEE STOCK PURCHASE PLAN (the "Plan") is to provide employees of RIMAGE
CORPORATION, a Minnesota corporation (the "Company"), and certain related
corporations with an opportunity to share in the ownership of the Company by
providing them with a convenient means for regular and systematic purchases of
the Company's Common Shares, without par value, and, thus, to develop a stronger
incentive to work for the continued success of the Company.
Section 1.02 Rules of Interpretation. It is intended that the
Plan be an "employee stock purchase plan" as defined in Section 423(b) of the
Internal Revenue Code of 1986, as amended (the "Code"), and Treasury Regulations
promulgated thereunder. Accordingly, the Plan shall be interpreted and
administered in a manner consistent therewith if so approved. All Participants
in the Plan will have the same rights and privileges consistent with the
provisions of the Plan.
Section 1.03 Definitions. For purposes of the Plan, the
following terms will have the meanings set forth below:
(a) "Acceleration Date" means the earlier of the date of
shareholder approval or approval by the Company's Board of Directors of
(i) any consolidation or merger of the Company in which the Company is
not the continuing or surviving corporation or pursuant to which
Company Common Shares would be converted into cash, securities or other
property, other than a merger of the Company in which shareholders of
the Company immediately prior to the merger have the same proportionate
share ownership in the surviving corporation immediately after the
merger; (ii) any sale, exchange or other transfer (in one transaction
or a series of related transactions) of all or substantially all of the
assets of the Company; or (iii) any plan of liquidation or dissolution
of the Company.
(b) "Affiliate" means any subsidiary corporation of the
Company, as defined in Section 424(f) of the Code, whether now or
hereafter acquired or established.
(c) "Committee" means the committee described in Section
10.01.
(d) "Company" means Rimage Corporation, a Minnesota
corporation, any subsidiary of the Company and any successors to the
Company by merger or consolidation as contemplated by Article XI
herein.
(e) "Current Compensation" means all regular wage, salary and
commission payments paid by the Company to a Participant in accordance
with the terms of his or her employment, including bonus payments and
all other forms of special compensation.
(f) "Fair Market Value" as of a given date means such value of
the Common Shares as reasonably determined by the Committee in a manner
consistent with Section 423 of the Code.
(g) "Participant" means a Full-Time Employee who is eligible
to participate in the Plan under Section 2.01 and who has elected to
participate in the Plan.
(h) "Participating Affiliate" means an Affiliate which has
been designated by the Committee in advance of the Purchase Period in
question as a corporation whose eligible Full-Time Employees may
participate in the Plan.
(i) "Full-Time Employee" means an employee of the Company or a
Participating Affiliate as of the first day of a Purchase Period,
including an officer or director who is also an employee, but excluding
A-1
employees (i) whose customary employment is less than 20 hours per
week, (ii) who have not yet completed six months of employment, or
(iii) whose customary employment is not more than 5 months in a
calendar year.
(j) "Plan" means the Rimage Corporation 2001 Employee Stock
Purchase Plan, as amended, the provisions of which are set forth
herein.
(k) "Purchase Period" means each of the 12-month periods
beginning on the first business day in July of each year and ending on
the last business day in the following June, respectively.
(l) "Common Shares" means the Company's Common Shares, $.01
par value, as such Shares may be adjusted for changes in the Shares or
the Company as contemplated by Article XI herein.
(m) "Share Purchase Account" means the account maintained on
the books and records of the Company recording the amount received from
each Participant through payroll deductions made under the Plan and
from the Company through matching contributions.
ARTICLE II. ELIGIBILITY AND PARTICIPATION
Section 2.01 Eligible Employees. All Full-Time Employees shall
be eligible to participate in the Plan beginning on the first day of the first
Purchase Period to commence after such person becomes a Full-Time Employee.
Subject to the provisions of Article VI, each such employee will continue to be
eligible to participate in the Plan so long as he or she remains a Full-Time
Employee.
Section 2.02 Election to Participate. An eligible Full-Time
Employee may elect to participate in the Plan for a given Purchase Period by
filing with the Company, in advance of that Purchase Period and in accordance
with such terms and conditions as the Committee in its sole discretion may
impose, a form provided by the Company for such purpose (which authorizes
regular payroll deductions from Current Compensation beginning with the first
payday in that Purchase Period and continuing until the employee withdraws from
the Plan or ceases to be eligible to participate in the Plan).
Section 2.03 Limits on Shares Purchase. No employee shall be
granted any right to purchase Common Shares hereunder if such employee,
immediately after such a right to purchase is granted, would own, directly or
indirectly, within the meaning of Section 423(b)(3) and Section 424(d) of the
Code, Common Shares possessing 5% or more of the total combined voting power or
value of all the classes of the capital shares of the Company or of all
Affiliates.
Section 2.04 Voluntary Participation. Participation in the
Plan on the part of a Participant is voluntary and such participation is not a
condition of employment nor does participation in the Plan entitle a Participant
to be retained as an employee.
ARTICLE III. PAYROLL DEDUCTIONS, COMPANY
CONTRIBUTIONS AND SHARE PURCHASE ACCOUNT
Section 3.01 Deduction from Pay. The form described in Section
2.02 will permit a Participant to elect payroll deductions of not less than 1%
and not more than 10% of such Participant's Current Compensation for each pay
period, subject to such other limitations as the Committee in its sole
discretion may impose.
Section 3.02 Interest and Company Contributions. The Company
may, in the sole discretion of and subject to such limitations as the Committee
may impose, pay interest with respect to each Participant's Share Purchase
Account.
Section 3.03 Credit to Account. Payroll deductions will be
credited to the Participant's Share Purchase Account on each payday.
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Section 3.04 Nature of Account. The Share Purchase Account is
established solely for accounting purposes, and all amounts credited to the
Share Purchase Account will remain part of the general assets of the Company or
the Participating Affiliate (as the case may be).
Section 3.05 No Additional Contributions. A Participant may
not make any payment into the Share Purchase Account other than the payroll
deductions made pursuant to the Plan.
ARTICLE IV. RIGHT TO PURCHASE SHARES
Section 4.01 Number of Shares. Each Participant will have the
right to purchase on the last business day of the Purchase Period all, but not
less than all, of the largest number of whole Common Shares that can be
purchased at the price specified in Section 4.02 with the entire credit balance
in the Participant's Share Purchase Account, subject to the limitations that (a)
no more than 5,000 Common Shares may be purchased under the Plan by any one
Participant for a given Purchase Period, (b) in accordance with Section
423(b)(8) of the Code, no more than $25,000 in Fair Market Value (determined at
the beginning of each Purchase Period) of Common Shares and other shares may be
purchased under the Plan and all other employee share purchase plans (if any) of
the Company and the Affiliates by any one Participant for any calendar year and
(c) if the purchases for all Participants in any Purchase Period would result in
the sale of more than 100,000 Common Shares in the aggregate under the Plan for
such Purchase Period, each Participant shall be allocated a pro rata portion of
the 100,000 Common Shares to be sold for that Purchase Period. If the purchases
for all Participants would otherwise cause the aggregate number of Common Shares
to be sold under the Plan to exceed the number specified in Section 10.03, each
Participant shall be allocated a pro rata portion of the Common Shares to be
sold.
Section 4.02 Purchase Price. The purchase price for any
Purchase Period shall be the lesser of (a) 85% of the Fair Market Value of the
Common Shares on the first business day of that Purchase Period or (b) 85% of
the Fair Market Value of the Common Shares on the last business day of that
Purchase Period, in each case rounded up to the next higher full cent.
ARTICLE V. EXERCISE OF RIGHT
Section 5.01 Purchase of Shares. On the last business day of a
Purchase Period, the entire credit balance in each Participant's Share Purchase
Account will be used to purchase the largest number of whole Common Shares
purchasable with such amount (subject to the limitations of Section 4.01),
unless the Participant has filed with the Company, in advance of that date and
subject to such terms and conditions as the Committee in its sole discretion may
impose, a form provided by the Company which requests the distribution of the
entire credit balance in cash.
Section 5.02 Cash Distributions. Any amount remaining in a
Participant's Share Purchase Account after the last business day of a Purchase
Period will be paid to the Participant in cash in a timely fashion after the end
of that Purchase Period.
Section 5.03 Notice of Acceleration Date. The Company shall
use its best efforts to notify each Participant in writing at least ten days
prior to any Acceleration Date that the then current Purchase Period will end on
such Acceleration Date.
ARTICLE VI. WITHDRAWAL FROM PLAN; SALE OF SHARES
Section 6.01 Voluntary Withdrawal. A Participant may, in
accordance with such terms and conditions as the Committee in its sole
discretion may impose, withdraw from the Plan and cease making payroll
deductions by filing with the Company a form provided for this purpose. In such
event, the entire credit balance in the Participant's Share Purchase Account
will be paid to the Participant in cash within 30 days. A Participant who
withdraws from the Plan will not be eligible to reenter the Plan until the
beginning of the next Purchase Period following the date of such withdrawal.
Section 6.02 Death. Subject to such terms and conditions as
the Committee in its sole discretion may impose, upon the death of a
Participant, no further amounts shall be credited to the Participant's Share
Purchase
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Account. Thereafter, on the last business day of the Purchase Period during
which such Participant's death occurred and in accordance with Section 5.01, the
entire credit balance in such Participant's Share Purchase Account will be used
to purchase Common Shares, unless such Participant's estate has filed with the
Company, in advance of that day and subject to such terms and conditions as the
Committee in its sole discretion may impose, a form provided by the Company
which elects to have the entire credit balance in such Participant's Shares
Account distributed in cash within 30 days after the end of that Purchase Period
or at such earlier time as the Committee in its sole discretion may decide. Each
Participant, however, may designate one or more beneficiaries who, upon death,
are to receive the Common Shares or the amount that otherwise would have been
distributed or paid to the Participant's estate and may change or revoke any
such designation from time to time. No such designation, change or revocation
will be effective unless made by the Participant in writing and filed with the
Company during the Participant's lifetime. Unless the Participant has otherwise
specified the beneficiary designation, the beneficiary or beneficiaries so
designated will become fixed as of the date of the death of the Participant so
that, if a beneficiary survives the Participant but dies before the receipt of
the payment due such beneficiary, the payment will be made to such beneficiary's
estate.
Section 6.03 Termination of Employment. Subject to such terms
and conditions as the Committee in its sole discretion may impose, upon a
Participant's normal or early retirement with the consent of the Company under
any pension or retirement plan of the Company or Participating Affiliate, no
further amounts shall be credited to the Participant's Share Purchase Account.
Thereafter, on the last business day of the Purchase Period during which such
Participant's approved retirement occurred and in accordance with Section 5.01,
the entire credit balance in such Participant's Share Purchase Account will be
used to purchase Common Shares, unless such Participant has filed with the
Company, in advance of that day and subject to such terms and conditions as the
Committee in its sole discretion may impose, a form provided by the Company
which elects to receive the entire credit balance in such Participant's Share
Purchase Account in cash within 30 days after the end of that Purchase Period,
provided that such Participant shall have no right to purchase Common Shares in
the event that the last day of such a Purchase Period occurs more than three
months following the termination of such Participant's employment with the
Company by reason of such an approved retirement. In the event of any other
termination of employment (other than death) with the Company or a Participating
Affiliate, participation in the Plan will cease on the date the Participant
ceases to be a Full-Time Employee for any reason. In such event, the entire
credit balance in such Participant's Share Purchase Account will be paid to the
Participant in cash within 30 days. For purposes of this Section 6.03, a
transfer of employment to any Affiliate, or a leave of absence which has been
approved by the Committee, will not be deemed a termination of employment as a
Full-Time Employee.
ARTICLE VII. NONTRANSFERABILITY
Section 7.01 Nontransferable Right to Purchase. The right to
purchase Common Shares hereunder may not be assigned, transferred, pledged or
hypothecated (whether by operation of law or otherwise), except as provided in
Section 6.02, and will not be subject to execution, attachment or similar
process. Any attempted assignment, transfer, pledge, hypothecation or other
disposition or levy of attachment or similar process upon the right to purchase
will be null and void and without effect.
Section 7.02 Nontransferable Account. Except as provided in
Section 6.02, the amounts credited to a Share Purchase Account may not be
assigned, transferred, pledged or hypothecated in any way, and any attempted
assignment, transfer, pledge, hypothecation or other disposition of such amounts
will be null and void and without effect.
ARTICLE VIII. SHARE CERTIFICATES
Section 8.01 Delivery. Promptly after the last day of each
Purchase Period and subject to such terms and conditions as the Committee in its
sole discretion may impose, the Company will cause to be delivered to or for the
benefit of the Participant a certificate representing the Common Shares
purchased on the last business day of such Purchase Period.
Section 8.02 Securities Laws. The Company shall not be
required to issue or deliver any certificate representing Common Shares prior to
registration under the Securities Act of 1933, as amended, or
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registration or qualification under any state law if such registration is
required. The Company shall use its best efforts to accomplish such registration
(if and to the extent required) not later than a reasonable time following the
Purchase Period, and delivery of certificates may be deferred until such
registration is accomplished.
Section 8.03 Completion of Purchase. A Participant shall have
no interest in the Common Shares purchased until a certificate representing the
same is issued to or for the benefit of the Participant.
Section 8.04 Form of Ownership. The certificates representing
Common Shares issued under the Plan will be registered in the name of the
Participant.
ARTICLE IX. EFFECTIVE DATE, AMENDMENT AND
TERMINATION OF PLAN
Section 9.01 Effective Date. The Plan was approved by the
Board of Directors on February 14, 2001 and shall be approved by the
shareholders of the Company within twelve (12) months thereof. In the event that
the Plan is not so approved by the shareholders of the Company, for any reason,
it shall then be of no force or effect whatsoever, and no Common Shares shall be
purchased hereunder. The Plan will terminate upon completion of the Purchase
Period which ends on the first business day occurring on or after February 14,
2011.
Section 9.02 Plan Commencement. The initial Purchase Period
under the Plan will commence on June 1, 2001. Thereafter, each succeeding
Purchase Period will commence and terminate in accordance with Section 1.03(k).
Section 9.03 Powers of Board. The Board of Directors may amend
or discontinue the Plan at any time. No amendment or discontinuation of the
Plan, however, shall without shareholder approval be made that: (i) absent such
shareholder approval, would cause Rule 16b-3 under the Securities Exchange Act
of 1934, as amended (the "Act") to become unavailable with respect to the Plan,
(ii) requires shareholder approval under any rules or regulations of the
National Association of Securities Dealers, Inc. or any securities exchange that
are applicable to the Company, or (iii) permit the issuance of Common Shares
before payment therefor in full
Section 9.04 Automatic Termination. The Plan shall
automatically terminate when all of the Common Shares provided for in Section
10.03 have been sold.
ARTICLE X. ADMINISTRATION
Section 10.01 The Committee. The Plan shall be administered by
a committee (the "Committee") of two or more directors of the Company, none of
whom shall be officers or employees of the Company and all of whom shall be
"disinterested persons" with respect to the Plan within the meaning of Rule
16b-3 under the Act. The members of the Committee shall be appointed by and
serve at the pleasure of the Board of Directors.
Section 10.02 Powers of Committee. Subject to the provisions
of the Plan, the Committee shall have full authority to administer the Plan,
including authority to interpret and construe any provision of the Plan, to
establish deadlines by which the various administrative forms must be received
in order to be effective, and to adopt such other rules and regulations for
administering the Plan as it may deem appropriate. The Committee shall have full
and complete authority to determine whether all or any part of the Common Shares
acquired pursuant to the Plan shall be subject to restrictions on the
transferability thereof or any other restrictions affecting in any manner a
Participant's rights with respect thereto but any such restrictions shall be
contained in the form by which a Participant elects to participate in the Plan
pursuant to Section 2.02. Decisions of the Committee will be final and binding
on all parties who have an interest in the Plan.
Section 10.03 Shares to be Sold. The Common Shares to be
issued and sold under the Plan may be treasury shares or authorized but unissued
shares, or the Company may purchase Common Shares in the market for sale under
the Plan. Except as provided in Section 11.01, the aggregate number of Common
Shares to be sold under the Plan will not exceed 300,000 shares.
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Section 10.04 Notices. Notices to the Committee should be
addressed as follows:
Employee Stock Purchase Plan Committee
Rimage Corporation
7725 Washington Avenue South
Minneapolis, MN 55439
ARTICLE XI. ADJUSTMENT FOR CHANGES
IN SHARES OR COMPANY
Section 11.01 Share Dividend or Reclassification. If the
outstanding Common Shares are increased, decreased, changed into or exchanged
for a different number or kind of securities of the Company, or shares of a
different par value or without par value, through reorganization,
recapitalization, reclassification, share dividend, share split, amendment to
the Company's Articles of Incorporation, reverse share split or otherwise, an
appropriate adjustment shall be made in the maximum numbers and kind of
securities to be purchased under the Plan with a corresponding adjustment in the
purchase price to be paid therefor.
Section 11.02 Merger or Consolidation. If the Company is
merged into or consolidated with one or more corporations during the term of the
Plan, appropriate adjustments will be made to give effect thereto on an
equitable basis in terms of issuance of shares of the corporation surviving the
merger or of the consolidated corporation, as the case may be.
ARTICLE XII. APPLICABLE LAW
Rights to purchase Common Shares granted under the Plan shall
be construed and shall take effect in accordance with the laws of the State of
Minnesota.
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EXHIBIT B
RIMAGE CORPORATION
2001 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
1. Purpose of Plan
This plan shall be known as the "2001 Rimage Corporation Stock
Option Plan For Non-Employee Directors" and is hereinafter referred to as the
"Plan." The purpose of the Plan is to promote the interests of Rimage
Corporation, a Minnesota corporation (the "Company"), by enhancing its ability
to attract and retain the services of experienced and knowledgeable non-employee
directors and by providing additional incentive for such directors to increase
their interest in the Company's long-term success and progress. Options granted
under this Plan shall be nonqualified stock options which do not qualify as
incentive stock options within the meaning of Section 422A of the Internal
Revenue Code of 1986, as amended (the "Code").
2. Stock Subject to Plan
Subject to the provisions of Section 10 hereof, the stock to
be subject to options under the Plan shall be authorized but unissued shares of
the Company's common stock, $.01 par value per share (the "Common Stock").
Subject to adjustment as provided in Section 10 hereof, the maximum number of
shares on which options may be exercised under this Plan shall be 75,000 shares.
If an option under the Plan expires, or for any reason is terminated or
unexercised with respect to any shares, such shares shall again be available for
options thereafter granted during the term of the Plan.
3. Administration of Plan
The Plan shall be administered by the Compensation Committee
of the Board of Directors of the Company or such other committee of directors as
may be designated by such Board to administer the Plan (the "Committee"). The
Committee shall have plenary authority in its discretion, subject to the express
provisions of this Plan, to interpret the Plan, to prescribe, amend, and rescind
rules and regulations relating to the Plan, and to make all other determinations
necessary or advisable for the administration of the Plan. The Committee's
determinations on the foregoing matters shall be final and conclusive.
4. Eligibility.
Each director who is not otherwise an employee of the Company
or any subsidiary of the Company (an "Eligible Director") shall be eligible to
receive options under this Plan upon election to serve on the Board of Directors
of the Company at the annual meeting of shareholders of the Company.
B-1
5. Price
The option price for all options granted under the Plan shall
be the fair market value of the shares covered by the option on the date the
option is granted. For purposes of this Plan, the fair market value of the
Common Stock on a given date shall be (i) the average of the closing
representative bid and asked prices of the Common Stock as reported on the
National Association of Securities Dealers Automated Quotation System ("Nasdaq")
on such date, if the Common Stock is then quoted on Nasdaq; (ii) the last sale
price of the Common Stock as reported on the Nasdaq National Market System on
such date, if the Common Stock is then quoted on the Nasdaq National Market
System; or (iii) the closing price of the Common Stock on such date on a
national securities exchange, if the Common Stock is then being traded on a
national securities exchange. If on the date as of which the fair market value
is being determined the Common Stock is not publicly traded, the Committee shall
make a good faith attempt to determine such fair market value and, in connection
therewith, shall take such actions and consider such factors as it deems
necessary or advisable.
6. Term
Each option and all rights and obligations thereunder shall,
subject to the provisions of Section 8 herein, expire ten years from the date of
grant of the option.
7. Grant and Exercise of Option
(a) Each Eligible Directors shall receive, automatically upon
election or reelection, an option to purchase up to 5000 shares of Common Stock
on the date of each annual meeting of shareholders of the Company at which such
person is elected or reelected to serve on the Board of Directors of the
Company.
(b) Options granted under the Plan shall be exercisable in
full on the date of grant of the option.
(c) The exercise of any option granted hereunder shall only be
effective at such time as counsel to the Company shall have determined that the
issuance and delivery of Common Stock pursuant to such exercise will not violate
any state or federal securities or other laws. An optionee desiring to exercise
an option may be required by the Company, as a condition of the effectiveness of
any exercise of an option granted hereunder, to agree in writing that all Common
Stock to be acquired pursuant to such exercise shall be held for his or her own
account without a view to any further distribution thereof, that the
certificates for such shares shall bear an appropriate legend to that effect and
that such shares will not be transferred or disposed of except in compliance
with applicable federal and state securities laws.
B-2
(d) An optionee electing to exercise an option shall give
written notice to the Company of such election and of the number of shares
subject to such exercise. The full purchase price of such shares shall be
tendered with such notice of exercise. Payment shall be made to the Company
either (i) in cash (including check, bank draft or money order), or (ii) by
delivering the Company's Common Stock already owned by the optionee having a
fair market value on the date of exercise equal to the full purchase price of
the shares, or (iii) by any combination of cash and the method specified in (ii)
of this sentence; provided, however, that an optionee shall not be entitled to
tender shares of Common Stock pursuant to successive, substantially simultaneous
exercises of options granted hereunder or in any manner tantamount to the
technique commonly referred to as "pyramiding." For purposes of the preceding
sentence, the fair market value of Common Stock tendered shall be determined as
provided in Section 5 hereof as of the date of exercise. Until such person has
been issued a certificate or certificates for the shares subject to such
exercise, he or she shall possess no rights as a shareholder with respect to
such shares.
(e) Each option granted under this Plan shall be evidenced by
an option agreement in such form as the Committee shall from time to time
approve.
8. Effect of Termination of Directorship or Death or Disability
(a) In the event that an optionee shall cease to be a director
of the Company for any reason other than his or her gross and willful misconduct
or death or disability, such optionee shall have the right to exercise the
option at any time within 90 days after such termination of directorship to the
extent of the full number of shares he or she was entitled to purchase under the
option on the date of termination, subject to the condition that no option shall
be exercisable after the expiration of the term of the option.
(b) In the event that an optionee shall cease to be a director
of the Company by reason of his or her gross and willful misconduct during the
course of his or her service as a director of the Company, including but not
limited to wrongful appropriation of funds of the Company, or the commission of
a gross misdemeanor or felony, the option shall be terminated as of the date of
the misconduct.
(c) In the event that an optionee shall cease to be a director
of the Company by reason of his or her death or disability, or if the optionee
shall die within 90 days after termination of directorship for any reason other
than his or her gross and willful misconduct, such optionee's guardians,
administrators or personal representatives shall have the right to exercise the
option at any time within twelve months after such optionee's death or date of
termination of directorship by reason of disability to the extent of the full
number of shares the optionee was entitled to purchase under the option on the
date of termination, subject to the condition that no option shall be
exercisable after the expiration of the term of the option.
B-3
(d) Nothing in this Plan or in any agreement hereunder shall
confer on any optionee any right to continue as a director of the Company or
affect in any way any legal rights with respect to termination of such
directorship or removal of such optionee as a director.
9. Non-Transferability
No option granted under the Plan shall be transferable by
optionee, otherwise than by will or the laws of descent or distribution. Except
as provided in Section 8 herein with respect to disability of the optionee,
during the lifetime of an optionee, the option shall be exercisable only by such
optionee.
10. Dilution or Other Adjustments
If there shall be any change in the Common Stock through
merger, consolidation, reorganization, recapitalization, stock dividend (of
whatever amount), stock split or other change in the corporate structure,
appropriate adjustments in the Plan and outstanding options shall be made. In
the event of any such changes, adjustments shall include, where appropriate,
changes in the aggregate number of shares subject to the Plan, the number of
shares subject to outstanding options and the exercise prices thereof in order
to prevent dilution or enlargement of option rights.
11. Amendment or Discontinuance of Plan
The Committee may amend or discontinue the Plan at any time;
provided that, notwithstanding any other provision in this Plan to the contrary,
in no event shall this plan be amended more than once during any six month
period, except to comport with changes in the Internal Revenue Code or the rules
thereunder. Subject to the provisions of Section 10, no amendment of the Plan
shall, without shareholder approval: (a) increase the maximum number of shares
with respect to which options may be granted under the Plan as provided in
Section 2 hereof, (b) modify the eligibility requirements for participation in
the Plan as provided in Section 4 hereof, or (c) change the date of grant or
exercise price of, or the number of shares subject to, options granted or to be
granted to Eligible Directors, as provided in Section 4 and 5 hereof. The
Committee shall not alter or impair any option theretofore granted under the
Plan.
12. Time of Granting
Nothing contained in the Plan or in any resolution adopted or
to be adopted by the Committee, the Board of Directors or the shareholders of
the Company, and no action taken by the Committee (other than the execution and
delivery of an option), shall constitute the granting of an option hereunder.
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13. Effective Date and Termination of Plan
(a) The Plan shall be effective as of the date of its approval
by the shareholders of the Company.
(b) Unless the Plan shall have been discontinued as provided
in Section 11 hereof, the Plan shall terminate on the tenth anniversary of the
effective date of the Plan. No option may be granted after such termination, but
termination of the Plan shall not, without the consent of the optionee, alter or
impair any rights or obligations under any option theretofore granted.
B-5
EXHIBIT C
Charter of the Audit Committee
of the Board of Directors of Rimage Corporation
I. Audit Committee Purpose
The Audit Committee is appointed by the Board of Directors to assist
the Board in fulfilling its oversight responsibilities. The Audit
Committee's primary duties and responsibilities are to:
* Monitor the integrity of the Company's financial reporting process
and systems of internal controls regarding finance, accounting, and
legal compliance.
* Monitor the independence and performance of the Company's
independent auditors.
* Provide an avenue of communication among the independent auditors,
management, and the Board of Directors.
The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct
access to the independent auditors as well as anyone in the
organization. The Audit Committee has the ability to retain, at the
Company's expense, special legal, accounting, or other consultants or
experts it deems necessary in the performance of its duties.
II. Audit Committee Composition and Meetings
Audit Committee members shall meet the requirements of The Nasdaq Stock
Market. The Audit Committee shall be comprised of three or more
directors as determined by the Board, each of whom shall be independent
nonexecutive directors, free from any relationship that would interfere
with the exercise of his or her independent judgment. All members of
the Committee shall have a basic understanding of finance and
accounting and be able to read and understand fundamental financial
statements, and at least one member of the Committee shall have
accounting or related financial management expertise.
Audit Committee members shall be appointed by the Board of Directors.
If an audit committee Chair is not designated or present, the members
of the Committee may designate a Chair by majority vote of the
Committee membership.
The Committee shall meet at least three times annually, or more
frequently as circumstances dictate. The Audit Committee Chair shall
prepare and/or approve an agenda in advance of each meeting. The
Committee should meet privately in executive session at least annually
with management, the independent auditors, and as a committee to
discuss any matters that the Committee or each of these groups believe
should be discussed. In addition, the Committee, or at least its Chair,
should communicate with management and the independent auditors
quarterly to review the Company's financial statements and significant
findings based upon the auditors limited review procedures.
C-1
III. Audit Committee Responsibilities and Duties
Review Procedures
1. Review and reassess the adequacy of this Charter at least annually.
Submit the charter to the Board of Directors for approval and have
the document published at least every three years in accordance
with regulations of the Securities and Exchange Commission.
2. Review the Company's annual audited financial statements prior to
filing or distribution. Review should include discussion with
management and independent auditors of significant issues regarding
accounting principles, practices, and judgments.
3. In consultation with the management and the independent auditors
consider the integrity of the Company's financial reporting
processes and controls. Discuss significant financial risk
exposures and the steps management has taken to monitor, control,
and report such exposures. Review significant findings prepared by
the independent auditors together with management's responses.
4. Review with financial management and the independent auditors the
company's quarterly financial results prior to the release of
earnings and/or the company's quarterly financial statements prior
to filing or distribution. Discuss any significant changes to the
Company's accounting principles and any items required to be
communicated by the independent auditors in accordance with SAS 61
(see item 9). The Chair of the Committee may represent the entire
Audit Committee for purposes of this review.
Independent Auditors
5. The independent auditors are ultimately accountable to the Audit
Committee and the Board of Directors. The Audit Committee shall
review the independence and performance of the auditors and
annually recommend to the Board of Directors the appointment of the
independent auditors or approve any discharge of auditors when
circumstances warrant.
6. Approve the fees and other significant compensation to be paid to
the independent auditors.
7. On an annual basis, the Committee should review and discuss with
the independent auditors all significant relationships they have
with the Company that could impair the auditors' independence.
8. Review the independent auditors audit plan - discuss scope,
staffing, locations, reliance upon management, and internal audit
and general audit approach.
9. Prior to releasing the year-end earnings, discuss the results of
the audit with the independent auditors. Discuss certain matters
required to be communicated to audit committees in accordance with
AICPA SAS 61.
10. Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied
in its financial reporting.
C-2
III. Audit Committee Responsibilities and Duties (continued)
Legal Compliance
11. On at least an annual basis, review with the Company's counsel, any
legal matters that could have a significant impact on the
organization's financial statements, the Company's compliance with
applicable laws and regulations, and inquiries received from
regulators or governmental agencies.
Other Audit Committee Responsibilities
12. Annually prepare a report to shareholders as required by the
Securities and Exchange Commission. The report should be included
in the Company's annual proxy statement.
13. Perform any other activities consistent with this Charter, the
Company's by-laws, and governing law, as the Committee or the Board
deems necessary or appropriate.
14. Maintain minutes of meetings and periodically report to the Board
of Directors on significant results of the foregoing activities.
C-3
RIMAGE CORPORATION
Proxy for the 2001 Annual Shareholders Meeting
to be held on May 23, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Bernard P. Aldrich and David J. Suden and
each of them, with power to appoint a substitute, to vote all shares the
undersigned is entitled to vote at the Annual Meeting of Shareholders of Rimage
Corporation, to be held on May 23, 2001, and at all adjournments thereof, as
specified below on the matters referred to, and, in their discretion, upon any
other matters which may be brought before the meeting:
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
(EXCEPT AS MARKED TO THE CONTRARY BELOW) TO VOTE FOR ALL NOMINEES
TO WITHHOLD AUTHORITY FOR A SPECIFIC NOMINEE, PLACE A LINE THROUGH
HIS NAME BELOW:
Bernard P. Aldrich, Ronald R. Fletcher, Thomas F. Madison, Richard F. McNamara,
Steven M. Quist, James L. Reissner and David J. Suden
2. APPROVAL OF AMENDMENT TO RESTATED ARTICLES OF INCORPORATION
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. APPROVAL OF AMENDMENT TO THE 1992 STOCK OPTION PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. ADOPTION OF THE 2001 EMPLOYEE STOCK PURCHASE PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. ADOPTION OF THE 2001 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. TO VOTE WITH DISCRETIONARY AUTHORITY ON ANY OTHER MATTER THAT MAY PROPERLY
COME BEFORE THE MEETING
(Continued on reverse 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 all of the directors named in proposal 1 and for proposals 2
through 6.
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: ____________________________, 2001
_________________________________________
Signature
_________________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY.