SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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Check the appropriate box:
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[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
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[ ] Soliciting Material Pursuant to _240.14a-11(c) or
_240.14a-12
DATARAM CORP.
(Name of Registrant as Specified In Its Charter)
--
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14a-6(i)(4) and 0-11
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computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
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DATARAM CORPORATION
A New Jersey Corporation
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on September 12, 2001
TO THE SHAREHOLDERS OF DATARAM CORPORATION:
The Annual Meeting of the Shareholders of DATARAM
CORPORATION (the "Company") will be held at the Company's
corporate headquarters at 186 Princeton Road (Route 571), West
Windsor, New Jersey, on Wednesday, September 12, 2001 at 2:00
p.m., for the following purposes:
(1) To elect five (5) directors of the Company to serve
until the next succeeding Annual Meeting of
Shareholders and until their successors have been
elected and have been qualified.
(2) To approve the 2001 Stock Option Plan.
(3) To ratify the selection of KPMG LLP as the
independent certified public accountants of the
Company for the fiscal year ending April 30, 2002.
(4) To transact such other business as may properly come
before the meeting or any adjournments.
Only shareholders of record at the close of business on the
27th day of July 2001 are entitled to notice of and to vote at
this meeting.
By order of the Board of Directors
Thomas J. Bitar,
Secretary
August 3, 2001
The Company's 2001 Annual Report is enclosed.
PLEASE COMPLETE, DATE, SIGN AND RETURN THE ACCOMPANYING PROXY
IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
[LOGO]
DATARAM CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 12, 2001
This Proxy Statement is furnished by DATARAM CORPORATION
(the "Company"), which has a mailing address for its principal
executive offices at P.O. Box 7528, Princeton, New Jersey 08543-
7528, in connection with the solicitation by the Board of
Directors of proxies to be voted at the Annual Meeting of
Shareholders of the Company to be held at the Company's
corporate headquarters at 186 Princeton Road (Route 571), West
Windsor, New Jersey on Wednesday, September 12, 2001 at 2:00
p.m. The close of business on July 27, 2001 has been fixed as
the record date for the determination of shareholders entitled
to notice of and to vote at the Annual Meeting and any
adjournments thereof. This Proxy Statement was mailed to
shareholders on or about August 3, 2001.
VOTING RIGHTS
On July 27, 2001, there were outstanding and entitled to
vote 8,538,119 shares of the Company's common stock, par value
$1.00 per share (the "Common Stock"). Holders of the Common
Stock are entitled to one vote, exercisable in person or by
proxy, for each share of Common Stock owned on the record date.
Shareholders may revoke executed proxies at any time before they
are voted by filing a written notice of revocation with the
secretary of the Company. Where a choice has been specified in
the proxy, the shares will be voted as directed.
With respect to each matter to be voted upon, a vote of a
majority of the number of shares voting is required for
approval. Abstentions and proxies submitted by brokers with a
"not voted" direction will not be counted as votes cast with
respect to each matter to be voted upon. With respect to the
election of directors; they are elected by a plurality of the
number of votes cast.
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth information concerning each
of the Company's executive officers:
Name Age Positions with the Company
____ ___ __________________________
Robert V. Tarantino 58 Chairman of the Board of
Directors, President and Chief
Executive Officer
Jeffrey H. Duncan 51 Vice President - Manufacturing
and Engineering
Mark E. Maddocks 49 Vice President - Finance and
Chief Financial Officer
Hugh F. Tucker 48 Vice President - Sales
Mark R. Bresky 53 Vice President - Information
Technology
Robert V. Tarantino has been employed by the Company since
1970. He has served as President and Chief Executive Officer
since 1986. In 1998, he was elected Chairman of the Board of
Directors.
1
Jeffrey H. Duncan has been employed by the Company since
1974. In 1990, he became Vice President - Engineering. Since
1995, he served as Vice President - Manufacturing and
Engineering.
Mark E. Maddocks has been employed by the Company since
1978. In 1986 he became Controller. Since 1996 he has served as
Vice President - Finance and Chief Financial Officer.
Hugh F. Tucker has been employed by the Company since 1983,
initially as Western Regional Sales Manager. In 1995 he became
Director of Sales and Marketing. Since 1996 he has served as
Vice President - Sales.
Mark R. Bresky has been employed by the Company since 1992,
initially as Manager of Information Technology. In 1995 he
became Director of Information Technology. Since June of 2000 he
has served as Vice President - Information Technology.
ELECTION OF DIRECTORS
Five (5) directors will be elected at the Annual Meeting of
Shareholders by the vote of a plurality of the shares of Common
Stock represented at such meeting. Unless otherwise indicated by
the shareholder, the accompanying proxy will be voted for the
election of the five (5) persons named under the heading
"Nominees for Directors." Although the Company knows of no
reason why any nominee could not serve as a director, if any
nominee shall be unable to serve, the accompanying proxy will be
voted for a substitute nominee.
NOMINEES FOR DIRECTORS
The term of office for each director will expire at the
next Annual Meeting of Shareholders and when the director's
successor shall have been elected and duly qualified. Each
nominee is a member of the present Board of Directors and has
been elected by shareholders at prior meetings.
Name of Nominee Age
_______________ ___
Robert V. Tarantino 58
Richard Holzman 67
Thomas A. Majewski 49
Bernard L. Riley 71
Roger C. Cady 63
Mr. Tarantino is an executive officer of the Company. Mr.
Tarantino has been a Director since 1981 and Chairman of the
Board of Directors since 1998.
Richard Holzman has been retired since August of 1995. From
January of 1994 until August of 1995, he had been Vice-President
of Optika Imaging Systems. Prior to that, and for more than five
years, he had served as President of Teamworks Technologies,
Inc., a software development company. Mr. Holzman has been a
Director since 1978.
Thomas A. Majewski has been a principal in Walden, Inc., a
computer consulting and technologies venture capital firm, since
1990. Prior to 1990, he had been Chief Financial Officer of
Custom Living Homes & Communities, Inc., a developer of
residential housing. Mr. Majewski has been a Director since
1990.
Bernard L. Riley retired as Executive Vice President and
Chief Financial Officer of the Company in December of 1995. He
had been employed by the Company since 1992. His business career
included thirty years with
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International Paper with senior responsibilities in both finance
and general management before taking early retirement in 1985.
At that time, he was Vice President - Logistics. Thereafter, he
served for four years as Vice President, Finance and as a
director of Emcore Corporation, a semiconductor equipment
manufacturer. During the two years immediately prior to joining
Dataram, he was a management consultant. Mr. Riley has been a
Director since 1995.
Roger C. Cady is a founder and principal of Arcadia
Associates, a strategic consulting and mergers and acquisitions
advisory firm. Prior to that he was employed as Vice President
of Business Development for Dynatech Corporation, a diversified
communications equipment manufacturer. Before joining Dynatech
he was a strategic management consultant for eight years. His
business career has included 16 years in various engineering,
marketing and management responsibilities as a Vice President of
Digital Equipment Corporation, and President of two early stage
startup companies. Mr. Cady has been a Director since 1996.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of
Common Stock beneficially owned by certain owners known by the
Company to beneficially own in excess of 5% of the Common Stock,
each director of the Company, each named executive officer and
all directors and executive officers collectively, as of July
27, 2001. Unless otherwise indicated, stock ownership includes
sole voting power and sole investment power. No other person or
group is known to beneficially own in excess of five percent
(5%) of the Common Stock.
Name of Amount and Percent
Beneficial Nature of of
Owner Beneficial Ownership Class(1)
___________________ ____________________ ________
Robert V. Tarantino 1,018,568(2) 11.7%
Richard Holzman 32,880(3) *
Thomas A. Majewski 83,000(4) *
Bernard L. Riley 32,500(3) *
Roger C. Cady 64,700 *
Jeffrey H. Duncan 318,624(5) 3.6%
Mark E. Maddocks 168,798(6) 2.0%
Hugh F. Tucker 198,655(7) 2.3%
Mark Bresky 15,712(8) *
Directors and 1,933,437(9) 20.9%
executive officers
as a group (9 persons)
______________
(1) On July 27, 2001, 8,538,119 shares were outstanding.
(2) Of this amount, 17,100 shares are held by Mr. Tarantino's
wife and 180,000 shares may be acquired by the exercise of
options held. Mr. Tarantino's address is 186 Princeton Road
(Route 571), West Windsor, New Jersey 08550.
(3) Of this amount, 22,500 shares may be acquired by the
exercise of options held.
(4) Of this amount, 67,500 shares may be acquired by the
exercise of options held.
(5) Of this amount, 315,000 shares may be acquired by the
exercise of options held.
(6) Of this amount, 6,000 shares are held by Mr. Maddocks' wife
and 51,000 shares may be acquired by the exercise of options
held.
3
(7) Of this amount, 54,000 shares may be acquired by the
exercise of options held.
(8) Of this amount, 15,000 shares may be acquired by the
exercise of options held.
(9) Of this amount, 609,000 shares may be acquired by the
exercise of options held by executive officers, and 112,500
shares may be acquired by exercise of options held by outside
directors.
* Less than 1%.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid for the fiscal years ended
April 30, 1999, 2000 and 2001 to the Company's Chief Executive Officer and the next four
most highly compensated executive officers.
Summary Compensation Table
Annual Compensation Long Term Compensation
___________________________ ______________________
Other
Name and Annual Stock Other
Principal Fiscal Compen- Options Compen-
Position Year Salary Bonus sation Awarded sation(1)
___________ _____ _______ ______ ______ _______ _________
Robert V. Tarantino 2001 310,050 160,000 -- -- 17,510
Chairman of the Board, 2000 284,850 206,250 -- -- 16,500
President and Chief 1999 274,800 198,750 -- -- 15,885
Executive Officer
Jeffrey H. Duncan 2001 189,138 70,000 -- -- 10,578
Vice President - Manu- 2000 180,410 85,280 -- -- 10,234
facturing and Engineering 1999 173,800 82,000 -- -- 9,810
Mark E. Maddocks 2001 191,426 70,000 -- -- 10,598
Vice President - Finance, 2000 176,250 83,200 -- -- 9,984
Chief Financial Officer 1999 169,800 80,000 -- -- 5,539
Hugh F. Tucker 2001 206,610 70,000 -- -- 11,600
Vice President - Sales 2000 197,050 93,600 -- -- 11,232
1999 189,800 90,000 -- -- 7,677
Mark Bresky 2001 135,050 27,000 -- -- 5,207
Vice President - 2000 106,050 30,000 -- -- 4,680
Information Technology 1999 102,000 17,570 -- -- 4,492
________
(1) Payments by the Company to a plan trustee under the Company's Savings
and Investment Retirement Plan, a 401(k) plan. The Company does not have a
pension plan.
4
No options were granted to executive officers in the fiscal
year ended April 30, 2001. The following table provides
information concerning option exercises by named executive
officers during the fiscal year ended April 30, 2001 and the
number and value of the named executive officers' unexercised
options at fiscal year end:
Option Exercises and Values at April 30, 2001
Value of
Unexercised
Number of In-the-Money
Options at Options at
April 30, 2001 April 30, 2001
______________ ______________
Shares acquired Value Exercisable/ Exercisable/
Name on exercise Received Unexercisable Unexercisable ($)
____ ___________ _________ _____________ _________________
Robert V. Tarantino 90,000 1,729,333 180,000 1,164,150
120,000 776,100
Jeffrey H. Duncan -- 300,000 2,035,375
75,000 492,563
Mark E. Maddocks 15,000 381,150 30,000 207,525
27,000 182,123
Hugh F. Tucker 18,000 531,188 27,000 188,123
27,000 188,123
Mark R. Bresky 15,000 366,078 12,600 89,603
2,400 16,722
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PERFORMANCE GRAPH
COMPARISON OF THE FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG DATARAM CORPORATION, THE S&P 500 INDEX AND A PEER GROUP
[The chart is a three-line graph of dollars versus dates having the following
data points:
4/96 4/97 4/98 4/99 4/00 4/01
____ ____ ____ ____ ____ ____
Dataram 100 147 201 248 1045 469
Peer Group** 100 103 81 49 53 26
S&P 500 100 125 177 215 237 206 ]
*$100 invested on 4/30/96 in stock or index including reinvestment of
dividends, fiscal year ending April 30.
**Standard Industrial Code Peer Group includes the following companies:
Ciprico, Inc.; Constellation 3D inc.: Dot Hill Systems Corp; Dataram Corp.;
Drexler Technology Corp.; Exabyte Corp.; Iomega Corp.; Komag Inc.: M Sys
Flash Disk Pioneers Ltd.: MTI Technology Corp.; Network Engines, Inc.;
Overland Data, Inc.; Procom Technology, Inc.; Storage Computer Corp.; and
Western Digital Corp.
6
Employment Agreement. As of May 1, 1997, Robert V. Tarantino entered into an
Employment Agreement with the Company. The Employment Agreement is scheduled
to expire on April 30, 2002. If not terminated at that time it continues on a
year to year basis until terminated by one of the parties. It provides for a
current base compensation of $300,000 subject to annual review by the Board
of Directors. In addition Mr. Tarantino will receive a bonus based upon a
formula which shall be reviewed and approved annually by the Board of
Directors (See "Report of the Compensation and Stock Option Committee of the
Board of Directors on Executive Compensation-Bonuses). The Employment
Agreement may be terminated by the Company for cause and expires upon the
death, or six months after the onset of the disability, of the executive. In
the event of termination within a year of a change of control, Mr. Tarantino
is entitled to damages for the breach of the Employment Agreement or, if
greater, one year's base salary plus three months additional salary at the
then current rate for each year of the Agreement in which the pre-tax
operating profits shall have exceeded 110% of the greater of the prior year's
actual pre-tax operating profit or a minimum base pre-tax operating profit.
The Employment Agreement contains terms concerning confidentiality,
assignment and disclosure of inventions and post-employment restrictions on
competition.
Compensation Committee Interlocks and Insider Participation. The Securities
and Exchange Commission rules regarding disclosure of executive compensation
require proxy statement disclosure of specified information regarding certain
relationships of members of the Company's Board of Directors with the Company
or certain other entities. None of the members of the Corporation's Board of
Directors has a relationship requiring such disclosure.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Company's compensation policies applicable to its executive officers
are administered by the Compensation and Stock Option Committee (the
"Committee") of the Board of Directors. All members of the Committee are non-
employee directors. These policies are designed to enhance the overall
strength and financial performance of the Company by aligning the financial
interests of the Company's executive officers with those of its stockholders.
The three primary components of executive compensation are base
salaries, bonuses and stock option grants. The Committee determines the base
salary, bonus amount and stock option grants for the President and Chief
Executive Officer. The Committee reviews and gives final approval to the
President and Chief Executive Officer's recommendations for base salaries,
bonus and stock option grants for all other executives.
Base Salary
The Committee considered the financial performance of the Company,
reviewed a survey of executive salaries for computer and computer products
companies (compiled by the American Electronics Association) and determined
the base salary for the President and Chief Executive Officer, Robert V.
Tarantino.
Base salaries for other executive officers for the fiscal year ended
April 30, 2001 were determined by the President and Chief Executive Officer.
Bonuses
The Committee reviewed and gave final approval for a bonus plan for the
President and Chief Executive Officer and for other executive officers. This
bonus plan, similar to plans adopted in prior years, is based on a
distribution of a percentage (approximately 3% this year) of pre-tax
operating profits based on meeting or exceeding stated objectives.
Stock Option Plan
The value to each executive officer of stock option grants is tied
directly to stock price performance. The Committee grants options under the
stockholder approved option plan at an exercise price equal to the market
price of the Common Stock at the date of grant. If at an option's expiration
date there has been no appreciation in the market price for the Company's
Common Stock, the option will not then have any value.
7
Grants are made to executive officers based on salary, responsibility
and performance of the individual officer. The Committee believes that
options are important to better align the financial interests of executive
officers with those of shareholders in general. Each option granted was a
ten-year option with a deferred vesting provision of five years.
Compensation and Stock Option Committee
Richard Holzman
Thomas A. Majewski
Roger C. Cady
Bernard L. Riley
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
ELECTION OF EACH OF THE NOMINEES PROPOSED BY THE BOARD OF DIRECTORS, AND,
UNLESS A SHAREHOLDER GIVES INSTRUCTIONS ON THE PROXY CARD TO THE CONTRARY,
THE PROXY AGENTS NAMED THEREON INTEND SO TO VOTE.
APPROVAL OF 2001 STOCK OPTION PLAN
GENERAL
In 1992, our Board of Directors adopted the Dataram Corporation 1992
Incentive and Non-Statutory Stock Option Plan (as amended, the "1992 Plan").
The 1992 Plan allowed the grant of a total of 2,850,000 shares of Common
Stock (on a post-split basis) pursuant to stock options. As of July 16,
2001, options for 115,400 shares that were authorized for grant under the
1992 Plan remain available for grant.
The Board of Directors, acting on the recommendation of the Compensation
and Stock Option Committee, unanimously adopted the 2001 Dataram Corporation
Stock Option Plan (the 2001 Plan). This adoption is subject to the approval
of shareholder at the Annual Meeting. The Board of Directors recommends
shareholder approval of the 2001 Plan.
Under the 2001 Plan options to purchase up to 1,800,000 shares of common
stock may be granted by the Corporation to officers, employees, outside
directors and consultants to the Company.
The Board of Directors believes that, to attract and retain officers and
employees of the highest caliber, provide increased incentive for such
persons to strive to attain the Dataram's long-term goal of increasing
shareholder value, and to continue to promote the well-being of the Company,
it is in the best interests of the Company and its shareholders to provide
officers and employees of the Company, as well as outside directors and
consultants, through the granting of stock options, the opportunity to
participate in the appreciation in value of the Company's Common Stock. The
1992 Plan has been effective in retaining and motivating key employees and
attracting and retaining experienced and qualified individuals to work for
Dataram. Accordingly, the Board of Directors believes that the proposed
increase in the number of shares available for grant under the 2001 Plan is
in the best interests of the Company and the shareholders.
This proposal summarizes the essential features of the 2001 Plan. A
copy of the 2001 Plan may be obtained by a shareholder without charge by
writing to Vice President Finance, Dataram Corporation, P.O. Box 7528,
Princeton, New Jersey 08543-7528, or the 2001 Plan may be viewed as an
exhibit to the Proxy Statement filed with the Securities and Exchange
Commission and available at http:\\www.sec.gov.
8
DESCRIPTION OF MATERIAL FEATURES OF THE 2001 PLAN
The purpose of the 2001 Plan is to enable us to grant stock options to
eligible officers, employees, non-employee directors and consultants at
levels we believe will motivate superior performance and help us attract and
retain outstanding personnel. We believe that providing our key personnel
with stock option incentives will enhance our long-term performance.
The 2001 Plan will become effective upon approval by a majority of the
shareholders present and voting. The 2001 Plan provides for the grant of
options to purchase a total of up to 1,800,000 shares of Common Stock
(subject to adjustment for certain changes in our capital, as described below
under "Changes in Capital").
ADMINISTRATION. The Compensation and Stock Option Committee (the
"Committee") has the exclusive discretionary authority to operate, manage and
administer the 2001 Plan in accordance with its terms. The Committee's
decisions and actions concerning the 2001 Plan are final and conclusive.
Within the limitations of the 2001 Plan and applicable laws and rules, the
Committee may allocate or delegate its administrative responsibilities and
powers under the 2001 Plan, and our Board of Directors is permitted to
exercise all of the Committee's powers under the 2001 Plan.
In addition to its other powers under the 2001 Plan described in this
summary, the Committee has the following authorities and powers under the
2001 Plan in accordance with its terms:
o to determine which eligible employees, officers,
directors and/or consultants will receive options under
the 2001 Plan and the number of shares of Common Stock
covered by each such option;
o to establish, amend, waive and rescind rules,
regulations and guidelines for carrying out the 2001
Plan;
o to establish, administer and waive terms, conditions,
performance criteria, restrictions, or forfeiture
provisions, or additional terms, under the 2001 Plan, or
applicable to options granted under the 2001 Plan;
o to accelerate the vesting or exercisability of options
granted under the 2001 Plan;
o to offer to buy out outstanding options granted under
the 2001 Plan;
o to determine the form and content of the option
agreements which represent options granted under the
2001 Plan;
o to interpret the 2001 Plan and option agreements;
o to correct any errors, supply any omissions and
reconcile any inconsistencies in the 2001 Plan and/or
any option agreements; and
o to take any actions necessary or advisable to operate
and administer the 2001 Plan.
Currently, the Committee consists of Messrs. Holzman, Majewski, Riley
and Cady, each of whom is a director, but not an employee, of Dataram.
SHARES SUBJECT TO THE 2001 PLAN; LIMITATIONS ON GRANTS OF OPTIONS. If
this proposal is approved by the shareholders, a total of 1,800,000 shares of
Common Stock would be available for delivery upon exercise of options granted
under the 2001 Plan, subject to adjustment for certain changes in our capital
(described below under "Changes in Capital"). The shares of Common Stock that
may be delivered under the 2001 Plan consist of either authorized and
unissued shares (which will not be subject to preemptive rights) or
previously issued shares that we have reacquired and hold as treasury shares.
In addition, shares of Common Stock covered by options that terminate or are
canceled before being exercised under the 2001 Plan would be available for
future options grants under the 2001 Plan. If any person exercises an option
under the 2001 Plan by paying the exercise price with shares of Common Stock
which such person already owns, only the number of shares in excess of the
shares so paid by such person will count against the total number of shares
that may be delivered under the 2001
9
Plan. "Incentive Stock Options" (as described below under "Terms of Options--
Types of Options") covering no more than a total of 1,800,000 shares of
Common Stock may be granted under the 2001 Plan.
PARTICIPATION. The Committee may grant options under the 2001 Plan to
our officers, employees, non-employee directors and consultants, as well as
those of our affiliates. Our affiliates, for purposes of the 2001 Plan, are
generally entities in which we have, directly or indirectly, greater than 50
percent ownership interest, or which have a more than 50 percent direct or
indirect ownership interest in us, or any other entity in which we have a
material equity interest that the Committee designates as an affiliate for
purposes of the 2001 Plan. Only employees of Dataram and its subsidiaries (as
defined in the 2001 Plan) are eligible to receive "incentive stock options"
under the 2001 Plan, however.
All of our employees (currently approximately 385 in number), including
all of our executive officers (five in number, and four non-employee
directors), are eligible to receive options under the 2001 Plan. As of July
1, 2001 (the last date as of which complete data are available), outstanding
options both under the 1992 Plan and outside of the 1992 Plan are held by the
following named individuals and groups.
Name and Position Stock Options (Number of Shares)
----------------- --------------------------------
Robert V. Tarantino, President and 300,000 shares
Chief Executive Officer
Jeffrey H. Duncan, Vice President - 375,000 shares
Manufacturing and Engineering
Mark E. Maddocks, Vice President - Finance 57,000 shares
and Chief Financial Officer
Hugh F. Tucker, Vice President - Sales 54,000 shares
Mark Bresky, Vice President - Information Technology 54,000 shares
All current executive officers as a group 840,000 shares
All current directors who are not executive
officers as a group 112,500 shares
All other employees as a group 747,150 shares
The individuals to whom additional options will be granted under the 2001
Plan, and the amounts of such individual grants, have not been determined,
but it is anticipated that, among others, all of our present executive
officers, including the individuals named in the Compensation Table, will
receive additional options under the 2001 Plan.
TERMS OF OPTIONS.
TYPES OF OPTIONS. Additional options to be granted under the 2001 Plan
will be either "incentive stock options," which are intended to receive
special tax treatment under the Internal Revenue Code of 1986, as amended
(the "Internal Revenue Code"), or options other than incentive stock options
(referred to as "non-qualified options"), as determined by the Committee and
stated in the applicable option agreement.
OPTION PRICE. The Committee determines the option exercise price of each
option granted under the 2001 Plan at the time of grant. However, the per-
share exercise price of an "incentive stock option" granted under the 2001
Plan must be at least equal to 100 percent of the fair market value of Common
Stock (as defined in the 2001 Plan) on the date such incentive stock option
is granted. On July 16, 2001, the fair market value of a share of Common
Stock was $9.40.
PAYMENT. The option exercise price of any options granted under the 2001
Plan may be paid in any legal manner prescribed by the Committee. The method
of payment includes a "cashless exercise" program if the Committee elects to
establish such a program, or use of shares of Common Stock already owned for
at least six months by the person exercising an option, subject in any case
to whatever conditions or limitations the Committee
10
may prescribe. Any cash proceeds that we receive upon the exercise of options
granted under the 2001 Plan constitute general funds of Dataram.
EXERCISE OF OPTIONS. The Committee determines, as set forth in the
applicable option agreements, the times or conditions upon which options
granted under the 2001 Plan may be exercised, and any events that will cause
such options to terminate. Each option granted under the 2001 Plan will
expire on or before ten years following the date such option was granted. In
general, options granted under the 2001 Plan also terminate when the
recipient's service as a director, employee or consultant of Dataram or its
affiliates terminates; however, the Committee may permit an option that has
not otherwise expired to be exercised after such a termination of service as
to all or part of the shares covered by such option.
TRANSFERABILITY OF OPTIONS. Options granted under the 2001 Plan are, in
general, only exercisable during the lifetime of the recipient by him or her.
A deceased recipient's options are, however, transferable by will or the laws
of descent and distribution or to a designated beneficiary of such recipient.
The Committee may permit the recipient of a non-qualified option under the
2001 Plan to transfer such option during his or her lifetime, subject to such
terms and conditions as the Committee may prescribe.
CHANGES IN CAPITAL. In order to preserve the benefits or potential
benefits intended to be made available under the 2001 Plan or outstanding
options, or as otherwise necessary, the Committee may, in its discretion,
make appropriate adjustments in (a) the number, class and kind of shares
available under the 2001 Plan, (b) the limit on the number of shares of
Common Stock that can be subject to options granted to a single recipient
during a 12-month period, and (c) the number, class, kind and price of shares
under each outstanding option, in the event of changes in our outstanding
common stock resulting from certain changes in our corporate structure or
capitalization, such as the payment of a stock dividend, a stock split, a
recapitalization, reorganization, merger or consolidation (whether or not
Dataram is the surviving corporation), a spin-off, liquidation or other
substantial distribution of assets or the issuance of our stock for less than
full consideration, or rights or convertible securities with respect to our
stock.
In the event of a "change in control" of Dataram (as defined in the 2001
Plan), all options then outstanding under the 2001 Plan will be accelerated
and become immediately exercisable in full. The 2001 Plan gives the Committee
discretion, in the event of such a change in control transaction, to
substitute for shares of Common Stock subject to options outstanding under
the 2001 Plan shares or other securities of the surviving or successor
corporation, or another corporate party to the transaction, with
approximately the same value, or to cash out outstanding options based upon
the highest value of the consideration received for Common Stock in such
transaction, or, if higher, the highest fair market value of Common Stock
during the 30 business days immediately prior to the closing or expiration
date of such transaction, reduced by the option exercise price of the options
cashed out. The Committee may also provide that any options subject to any
such acceleration, adjustment or conversion cannot be exercised after such a
change in control transaction. If such a change in control transaction
disqualifies an employee's incentive stock options from favorable "incentive
stock option" tax treatment under the Internal Revenue Code or results in the
imposition of certain additional taxes on such an employee, we may, in the
Committee's discretion, make a cash payment that would leave such an employee
in the same after-tax position that he or she would have been in had such
disqualification not occurred, or to otherwise equalize such employee for
such taxes.
TAX WITHHOLDING OBLIGATIONS. Recipients who exercise their options under
the 2001 Plan are required to pay, or make other satisfactory arrangements to
pay, tax withholding obligations arising under applicable law with respect to
such options. Such taxes must be paid in cash by a recipient, or, if the
Committee permits, a recipient may elect to satisfy all or a part of such tax
obligations by requesting that we withhold shares otherwise deliverable upon
the exercise of his or her option and/or by tendering shares of Common Stock
already owned by such recipient for at least six months. We may also, in
accordance with applicable law, deduct any such taxes from amounts that are
otherwise due to such a recipient.
AMENDMENT AND TERMINATION OF THE 2001 PLAN. Our Board of Directors may
amend, alter, suspend or terminate the 2001 Plan. However, the Board of
Directors will be required to obtain approval of the shareholders, if such
approval is required by any applicable law (including requirements relating
to incentive stock options) or rule, of any amendment of the 2001 Plan that
would:
11
o except in the event of certain changes in our capital
(as described above under "Changes in Capital"),
increase the number of shares of Common Stock that may
be delivered under the 2001 Plan, or that may be
subject to options granted to a single recipient in a
12-month period;
o decrease the minimum option exercise price required by
the 2001 Plan;
o change the class of persons eligible to receive options
under the 2001 Plan; or
o extend the duration of the 2001 Plan or the exercise
period of any options granted under the 2001 Plan.
The Committee may amend outstanding options. However, no such amendment
or termination of the 2001 Plan or amendment of outstanding options may
materially impair the previously accrued rights of any recipient of an option
under the 2001 Plan without his or her written consent.
The 2001 Plan will terminate on September 11, 2011, unless the 2001 Plan
is terminated earlier by our Board of Directors or due to delivery of all
shares of Common Stock available under the 2001 Plan; however, any options
outstanding when the 2001 Plan terminates will remain outstanding until such
option terminates or expires.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following is a brief
summary of certain significant United States Federal income tax consequences,
under the Internal Revenue Code, as in effect on the date of this summary,
applicable to Dataram and recipients of options under the 2001 Plan (who are
referred to in this summary as "optionees") in connection with the grant and
exercise of options under the 2001 Plan. This summary is not intended to be
exhaustive, and, among other things, does not describe state, local or
foreign tax consequences, or the effect of gift, estate or inheritance taxes.
References to "Dataram" and "us" in this summary of tax consequences mean
Dataram Corporation or any affiliate of Dataram Corporation that employs an
optionee, as the case may be.
The grant of stock options under the 2001 Plan will not result in
taxable income to optionees or an income tax deduction for us. However, the
transfer of Common Stock to optionees upon exercise of their options may or
may not give rise to taxable income to the optionees and tax deductions for
us, depending upon whether the options are "incentive stock options" or non-
qualified options.
The exercise of a non-qualified option generally results in immediate
recognition of ordinary income by the optionee and a corresponding tax
deduction for us in the amount by which the fair market value of the shares
of Common Stock purchased, on the date of such exercise, exceeds the
aggregate option price. Any appreciation or depreciation in the fair market
value of such shares after the date of such exercise will generally result in
a capital gain or loss to the optionee at the time he or she disposes of such
shares.
In general, the exercise of an incentive stock option is exempt from
income tax (although not from the alternative minimum tax) and does not
result in a tax deduction for us at any time unless the optionee disposes of
the common stock purchased thereby within two years of the date such
incentive stock option was granted or one year of the date of such exercise
(known as a "disqualifying disposition"). If these holding period
requirements under the Internal Revenue Code are satisfied, and if the
optionee has been an employee of us at all times from the date of grant of
the incentive stock option to the day three months before such exercise (or
twelve months in the case of termination of employment due to disability),
then such optionee will recognize any gain or loss upon disposition of such
shares as capital gain or loss. However, if the optionee makes a
disqualifying disposition of any such shares, he or she will generally be
obligated to report as ordinary income for the year in which such disposition
occurs the excess, with certain adjustments, of the fair market value of the
shares disposed of, on the date the incentive stock option was exercised,
over the option price paid for such shares. We would be entitled to a tax
deduction in the same amount so reported by such optionee. Any additional
gain realized by such optionee on such a disqualifying disposition of such
shares would be capital gain. If the total amount realized in a disqualifying
disposition is less than the exercise price of the incentive stock option,
the difference would be a capital loss for the optionee.
Under Section 162(m) of the Internal Revenue Code, we may be limited as
to Federal income tax deductions to the extent that total annual compensation
in excess of $1 million is paid to our Chief Executive Officer or any
12
one of our other four highest paid executive officers who are employed by us
on the last day of our taxable year. However, certain "performance-based
compensation" the material terms of which are disclosed to and approved by
our shareholders is not subject to this deduction limitation. We have
structured the 2001 Plan with the intention that compensation resulting from
options granted under the 2001 Plan will be qualified performance-based
compensation and, assuming shareholder approval of the 2001 Plan, deductible
without regard to the limitations otherwise imposed by Section 162(m) of the
Internal Revenue Code.
Under certain circumstances, accelerated vesting or exercise of options
under the 2001 Plan in connection with a "change in control" of Dataram might
be deemed an "excess parachute payment" for purposes of the golden parachute
payment provisions of Section 280G of the Internal Revenue Code. To the
extent it is so considered, the optionee would be subject to an excise tax
equal to 20 percent of the amount of the excess parachute payment, and we
would be denied a tax deduction for the excess parachute payment.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
FOREGOING PROPOSAL, AND, UNLESS A SHAREHOLDER GIVES INSTRUCTIONS ON THE PROXY
CARD TO THE CONTRARY, THE APPOINTEES NAMED THEREON INTEND SO TO VOTE.
RATIFICATION OF THE SELECTION OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has selected KPMG LLP as the independent
certified public accountants to the Company for the fiscal year ending April
30, 2002. The holders of Common Stock are asked to ratify this selection.
KPMG LLP has served the Company in this capacity since the Company's
incorporation. If the shareholders fail to ratify the Board's selection of
KPMG LLP, the Board will reconsider its action in light of the shareholder
vote.
The Company has been advised by KPMG LLP that representatives of that
firm are expected to be present at the Annual Meeting of Shareholders. These
representatives will have the opportunity to make a statement, if they so
desire, and will also be available to respond to appropriate questions from
shareholders.
The following table sets forth the aggregate fees billed to the Company
for the fiscal year ended April 30, 2001 by the Company's independent
accounting firm, KPMG LLP:
Audit Fees $160,000
Financial Information Systems
Design and Implementation Fees 0
All Other Fees(a) 194,000
Total Fees $354,000
____________________________
(a) Includes professional fees in connection with the acquisition of certain
assets of Memory Card Technology A/S, statutory audits, tax preparation and
tax consulting services.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee has reviewed and discussed the Company's audited
financial statements for the fiscal year ended April 30, 2001, with
management and the Company's independent public accountants, KPMG, LLP.
The Audit Committee has discussed with KPMG, LLP the matters required to
be discussed by Statement of Auditing Standards No. 61 (Certification of
Statements on Auditing Standards, AU 380).
13
The Audit Committee has received the written disclosures and letter from
KPMG, LLP required by Independence Standards Board Standard No. 1
("Independence Discussions with Audit Committees"), as amended, and has
discussed with KPMG, LLP that firm's independence from the Company.
Based on the review and discussions referred to above in this report,
the Audit Committee recommended to the Company's Board of Directors that the
audited financial statements be included in the Company's Annual Report on
Form 10-K for the fiscal year ended April 30, 2001 for filing with the
Securities and Exchange Commission.
Audit Committee
Richard Holzman, Chairman
Thomas A. Majewski
Bernard L. Riley
Roger Cady
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS, AND, UNLESS A
SHAREHOLDER GIVES INSTRUCTIONS ON THE PROXY CARD TO THE CONTRARY, THE
APPOINTEES NAMED THEREON INTEND SO TO VOTE.
OTHER MATTERS
Should any other matter or business be brought before the meeting, a
vote may be cast pursuant to the accompanying proxy in accordance with the
judgment of the proxy holder. The Company does not know of any such other
matter or business.
PROPOSALS OF SECURITY HOLDERS AT 2002 ANNUAL MEETING
Any shareholder wishing to present a proposal which is intended to be
presented at the 2002 Annual Meeting of Shareholders should submit such
proposal to the Company at its principal executive offices no later than
March 31, 2002. It is suggested that any proposals be sent by certified mail,
return receipt requested.
BOARD OF DIRECTORS
The Board of Directors of the Company met seven times during the last
fiscal year.
The Board of Directors has a standing Audit Committee whose members are
Richard Holzman, Thomas A. Majewski, Bernard L. Riley and Roger C. Cady. This
Committee met once during the last fiscal year.
The Company's Board of Directors has adopted a written charter for the
Audit Committee which is attached as an exhibit to this Proxy Statement.
Each member of the Audit Committee is independent under the meaning of Rule
4200(a)(15) of the National Association of Securities Dealers Listing
Standards. The principal functions of the Audit Committee are evaluation of
work of the auditors, review of the accounting principles used in preparing
the annual financial statements and review of internal control procedures.
The Board of Directors has a standing Compensation and Stock Option
Committee whose members are Richard Holzman, Thomas A. Majewski, Roger C.
Cady and Bernard L. Riley. This Committee met four times during the past
fiscal year. The principal functions of the Compensation and Stock Option
Committee are to recommend to the Board of Directors the compensation of
directors and the Chief Executive Officer and to establish and administer
various compensation plans, including stock option plans.
The Board of Directors has a standing Nominating Committee whose members
are Richard Holzman, Thomas A. Majewski, Roger C. Cady and Bernard L. Riley.
This Committee met once during the past fiscal year. The
14
principal function of this Committee is the recommendation to the Board of
Directors of new members of the Board of Directors. This Committee will
consider nominees for the Board of Directors recommended by shareholders.
Shareholders desiring to make such recommendations should write directly to
the Committee at the Company's executive offices at P.O. Box.7528, Princeton,
New Jersey 08543-7528.
Directors who are not employees of the Company receive a quarterly
payment of $5,000. During fiscal 1998 Mr. Holzman, Mr. Riley and Mr. Majewski
each received five year options to purchase 90,000 shares (adjusted for
Common Stock splits) of the Common Stock of the Company at $2.81, the fair
market value of the Common Stock at the date of grant. Upon his election to
the Board in 1996, Mr. Cady received options to purchase 90,000 shares
(adjusted for Common Stock splits) of the Common stock of the Company at
$2.31 per share, the fair market price at the date of grant. Of all of these
options, 25% were first exercisable on the date of grant and 25% more are
first exercisable on each succeeding anniversary date until the option is
fully exercisable.
SECTION 16(a) COMPLIANCE
The Securities and Exchange Commission requires that the Company report
to shareholders the compliance of directors, executive officers and 10%
beneficial owners with Section 16(a) of the Securities Exchange Act of 1934,
as amended. This provision requires that such persons report on a monthly
basis most acquisitions or dispositions of the Company's securities. Based
upon information submitted to the Company, all directors, executive officers
and 10% beneficial owners have fully complied with such requirements during
the past fiscal year except for one executive officer, Mr. Tucker, who sold
5,000 shares and made a filing which was eleven days late and one director,
Mr. Cady, who exercised an option for 22,500 shares and made a filing which
was eleven days late.
MISCELLANEOUS
The accompanying proxy is being solicited on behalf of the Board of
Directors of the Company. The expense of preparing, printing and mailing the
form of proxy, including broker solicitation fees and accountants' and
attorneys' fees in connection therewith, will be borne by the Company. The
amount is expected to be the amount normally expended for a solicitation for
an election of directors in the absence of a contest and costs represented by
salaries and wages of regular employees and officers. Solicitation of proxies
will be made by mail, but regular employees may solicit proxies by telephone
or otherwise.
Please date, sign and return the accompanying proxy at your earliest
convenience. No postage is required for mailing in the United States.
Financial information concerning the Company is set forth in the
Company's 2001 Annual Report to Security Holders, which is enclosed.
By Order of the Board of Directors
THOMAS J. BITAR,
Secretary
ANNUAL REPORT ON FORM 10-K
Upon the written request of a shareholder, the Company will provide,
without charge, a copy of its Annual Report on Form 10-K for the year ended
April 30, 2001, including the financial statements and schedules and
documents incorporated by reference therein but without exhibits thereto, as
filed with the Securities and Exchange Commission. The Company will furnish
any exhibit to the Annual Report on Form 10-K to any shareholder upon request
and upon payment of a fee equal to the Company's reasonable expenses in
furnishing such exhibit. All requests for the Annual Report on Form 10-K or
its exhibits should be addressed to Vice President - Finance, Dataram
Corporation, P.O. Box 7528, Princeton, New Jersey 08543-7528.
15
EXHIBIT A
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS CHARTER
I. PURPOSE
The function of the Audit Committee is to assist the Board of Directors
in fulfilling its oversight responsibilities by reviewing: the financial
reports and other financial information provided by the Corporation to the
Securities and Exchange Commission and the public; the Corporation's systems
of internal controls regarding finance and accounting; and the Corporation's
auditing, accounting and financial reporting processes generally. Consistent
with this function, the Audit Committee should encourage continuous
improvement of, and should foster adherence to, the Corporation's policies,
procedures and practices at all levels. The Audit Committee's primary duties
and responsibilities are to:
Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control
system.
Review and appraise the audit efforts of the Corporation's
independent accountants and internal auditing department.
Provide an open avenue of communication among the independent
accountants, financial and senior management, the internal
auditing department, and the Board of Directors.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent directors, and
free from any relationship that, in the opinion of the Board, would interfere
with the exercise of his or her independent judgment as a member of the
Committee. A member of the Board of Directors shall be independent if (1)
neither the member nor any member of his or her immediate family is now nor
has been an employee of the Company in the last three years, (2) the member
has not received in excess of $60,000 from the company as compensation for
services except for services as a director, (3) no company with which such
member is associated as an officer or director has a business relationship
with the Company that must be disclosed pursuant to Item 404(b) of Regulation
S-K and (4) no executive employee of the company serves as a member of the
compensation committee of any company for which the member is employed. All
members of the Committee shall have a working familiarity with basic finance
and accounting practices, and at least one member of the Committee shall have
accounting or related financial management expertise.
The Members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board or until their successors shall be duly
elected and qualified. Unless a Chair is elected by the full Board, the
members of the Committee may designate a Chair by majority vote of the full
Committee membership.
III. MEETINGS
The Committee shall meet at least once annually, or more frequently as
circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with management, and the independent
accountants in separate executive sessions to discuss any matters that the
Committee or each of these groups believe should be discussed privately. In
addition, the Committee or at least its Chair should meet in person or by
telephone with the independent accountants and management quarterly to review
the Corporation's proposed quarterly financial reports.
16
DATARAM CORPORATION
P.O. Box 7528, Princeton, New Jersey 08543-7528
PROXY SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
The undersigned hereby appoints and constitutes Robert V. Tarantino and
Thomas J. Bitar, and each of them, attorneys and proxies for the undersigned,
with full power of substitution to vote as if the undersigned were personally
present at the Annual Meeting of the Shareholders of Dataram Corporation (the
"Company") to be held at the Company's corporate headquarters at 186
Princeton Road (Route 571), West Windsor, New Jersey, on Wednesday, September
12, 2001 at 2 o'clock in the afternoon and at all adjournments thereof, the
shares of stock of said Company registered in the name of the undersigned.
The undersigned instructs all such proxies to vote such shares as follows
upon the following matters, which are described more fully in the
accompanying proxy statement:
I authorize and instruct my Proxy to:
1. VOTE FOR____ all nominees for the Company's Board of Directors listed
below; except that I WITHHOLD AUTHORITY for the following nominees (if any)
Richard Holzman____ Robert V. Tarantino____
Thomas A. Majewski____ Bernard L. Riley____ Roger C. Cady____
VOTE WITHHELD____ from all nominees.
2. VOTE FOR____ AGAINST____ ABSTAIN____ approval of the 2001 Stock
Option Plan.
3. VOTE FOR____ AGAINST____ ABSTAIN____ ratification of the selection
of KPMG LLP to be the independent auditors of the Company for the fiscal year
ending April 30, 2002.
(Continued, and to be signed, on the other side)
(See other side)
4. In their discretion, to vote upon such other business as may properly
come before the meeting and all adjournments thereof. This proxy when
properly executed will be voted in the manner directed herein by the
undersigned stockholder. If no direction is made, this proxy will be voted
for Proposals 1 and 2.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by
President or other authorized officer.
If a partnership, please sign in
partnership name by authorized person.
Signature
Signature if held jointly
Dated 2001
PLEASE MARK, SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.