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DATARAM CORPORATION
(Name of Registrant as Specified In Its Charter)
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DATARAM CORPORATION
A New Jersey Corporation
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on September 23, 2010 at 11:00 A.M.
Important Notice Regarding the Availability of Proxy Materials for the
Shareholder Meeting to Be Held on September 23, 2010
The Proxy Statement and 2010 Annual Report are available at
www.dataram.com
TO THE SHAREHOLDERS OF DATARAM CORPORATION:
The Annual Meeting of the Shareholders of DATARAM CORPORATION (the
"Company") will be held at the Company's corporate headquarters at 186
Princeton Road (Route 571), West Windsor, New Jersey, on Thursday,
September 23, 2010 at 11:00 a.m., for the following purposes:
(1) To elect four (4) directors of the Company to serve
until the next succeeding Annual Meeting of
Shareholders and until their successors have been
elected and have been qualified.
(2) To ratify the selection of J.H. Cohn LLP as the
independent certified public accountants of the
Company for the fiscal year ending April 30, 2011.
(3) To approve the Dataram Corporation 2010 Stock Option Plan.
(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 13th day
of August 2010 are entitled to notice of and to vote at this meeting.
By order of the Board of Directors
Thomas J. Bitar,
Secretary
August 20, 2010
The Company's 2010 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 23, 2010
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 Thursday, September 23, 2010 at 11:00 a.m. You may
obtain directions to the Company's corporate headquarters by contacting
investor relations by telephone at (609) 799-0071 extension 2430 or by
e-mail at info@dataram.com. The close of business on August 13, 2010 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 20, 2010.
You may own common shares in one or both of the following ways - either
directly in your name as the shareholder of record, or indirectly through a
broker, bank or other holder of record in "street name." If your shares are
registered directly in your name, you are the holder of record of these
shares and we are sending these proxy materials directly to you. As the
holder of record, you have the right to give your proxy directly to us. If
you hold your shares in street name, your broker, bank or other holder of
record is sending these proxy materials to you. As a holder in street name,
you have the right to direct your broker, bank or other holder of record how
to vote by completing the voting instruction form that accompanies your
proxy materials. Regardless of how you hold your shares, we invite you to
attend the Meeting.
VOTING RIGHTS
On August 13, 2010 there were outstanding and entitled to vote
8,918,309 shares of the Company's common stock, par value $1.00 per share
(the "Common Stock"). Holders of the Common Stock are entitled to one vote
for each share of Common Stock owned on the record date, exercisable in
person or by proxy. Shareholders may revoke executed proxies at any time
before they are voted by filing a written notice of revocation with the
Secretary of the Company. Where a choice has been specified by the holder
on the proxy, the shares will be voted as directed. Where no choice has
been specified by the holder, the shares will be voted for the nominees
described below and for the ratification of the selection of accountants
and for the approval of the Dataram Corporation 2010 Stock Option Plan.
Directors are elected by a plurality of the number of votes cast.
With respect to each other matter to be voted upon, a vote of a majority of
the number of shares voting is required for approval. Abstentions and
proxies submitted by brokers with a "not voted" direction will not be
counted as votes cast with respect to each matter.
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth information concerning each of the
Company's executive officers:
Name Age Positions with the Company
____ ___ __________________________
John H. Freeman 61 President and Chief Executive Officer
Mark E. Maddocks 58 Vice President - Finance and
Chief Financial Officer
Jeffrey H. Duncan 60 Vice President - Manufacturing
and Engineering
Anthony M. Lougee 49 Controller
David S. Sheerr 50 General Manager, Micro Memory Bank ("MMB")
John H. Freeman has been employed by the Company since May 7, 2008 when
he was named President and Chief Executive Officer. Mr. Freeman has been a
Director since 2005. Additional information regarding Mr. Freeman is set
forth under "Nominees for Director" below.
Mark E. Maddocks has been employed by the Company since 1978. In 1986
he became Controller. Since 1996 he has served as Vice President-Finance and
Chief Financial Officer.
Jeffrey H. Duncan has been employed by the Company since 1974. In 1990,
he became Vice President-Engineering. Since 1995, he served as Vice
President-Manufacturing and Engineering.
Anthony M. Lougee has been employed by the Company since 1991,
initially as Accounting Manager. In 2002 he was named an executive officer
and currently serves as Controller, a position he has held since 1999.
David S. Sheerr has been employed by the Company since its acquisition
of certain assets of Micro Memory Bank, Inc. from him on March 31, 2009. He
previously served as President of Micro Memory Bank, Inc. from October 7,
1994 until the acquisition.
ELECTION OF DIRECTORS
Four (4) directors will be elected at the Annual Meeting of
Shareholders by the vote of a plurality of the shares of Common Stock
represented at such meeting. Unless otherwise indicated by the shareholder,
the accompanying proxy will be voted for the election of the four (4)
persons named under the heading "Nominees for Directors." Although the
Company knows of no reason why any nominee could not serve as a director,
if any nominee shall be unable to serve, the accompanying proxy will be
voted for a substitute nominee.
NOMINEES FOR DIRECTORS
The term of office for each director will expire at the next Annual
Meeting of Shareholders and when the director's successor shall have been
elected and duly qualified. Each nominee is a member of the present Board
of Directors and has been elected by shareholders at prior meetings.
Name of Nominee Age
_______________ ___
Roger C. Cady 72
Chairman of the Board
John H. Freeman 61
Thomas A. Majewski 58
Rose Ann Giordano 71
Roger C. Cady is a founder and principal of Arcadia Associates, a
strategic consulting and mergers and acquisitions advisory firm. He was
employed as Vice President of Business Development for Dynatech Corporation,
a diversified communications equipment manufacturer, from 1993 to 1996.
Before joining Dynatech he was a strategic management consultant for eight
years. His business career has included 16 years in various engineering,
marketing and management responsibilities as a Vice President of Digital
Equipment Corporation, and President of two early stage startup companies.
Mr. Cady has been a Director since 1996 and Chairman of the Board of
Directors since September 25, 2008. Mr. Cady brings to the Board extensive
business and management experience focusing on the engineering and
technology fields, and extensive knowledge of Dataram's history and
operations.
John H. Freeman is an executive officer of the Company. Mr. Freeman has
been an independent consultant specializing in corporate sales, marketing
and operations consulting since December, 2006. Prior to that and since
September, 2004 he served as the Chief Operating Officer at Taratec
Development Corporation, a life sciences consulting company. Prior to that,
and for more than five years, he was responsible for leading IBM's worldwide
sales, marketing, and business planning for Pharmaceutical, Medical Device,
and Life Sciences clients. This included IBM product sales of hardware,
software, services and financing. Mr. Freeman has 30 years of executive
sales and operations management experience with IBM. Mr. Freeman is a
graduate of Pennsylvania State University with an M.S. in Computer Science
and holds a B.A. in Mathematics from Syracuse University. Mr. Freeman has
been a Director since 2005. Mr. Freeman brings to the Board extensive
executive, marketing and technical experience, with a decades-long track
record in the computer technology industry.
Thomas A. Majewski is a real estate developer. He is also a principal
in Walden, Inc., a computer consulting and technologies venture capital
firm, which he joined in 1990. Prior to 1990, he had been Chief Financial
Officer of Custom Living Homes & Communities, Inc., a developer of
residential housing. Mr. Majewski has been a Director since 1990. Mr.
Majewski brings to the Board his business and financial expertise and
extensive knowledge of Dataram's history and operations.
Rose Ann Giordano has been President of Thomis Partners, an investing
and advisory services firm, since 2002. Prior to that, and for more than
five years, Ms. Giordano served as Vice President of Worldwide Sales &
Marketing for the Customer Services Division of Compaq Computer Corporation.
Prior to that, Ms. Giordano held a number of executive positions with
Digital Equipment Corporation. Ms. Giordano was the first woman Vice
President and Corporate Officer of Digital Equipment Corporation. Ms.
Giordano serves on the Board of Directors of TimeTrade Inc., the National
Association of Corporate Directors/New England and Emerson Hospital.
Ms. Giordano holds a B.A. in Mathematics from Marywood College and is a
graduate of the Stanford University Business School Executive
Program. Ms. Giordano has been a Director since 2005. Ms. Giordano brings
to the Board extensive business, marketing and executive experience in the
computer technology industry.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
ELECTION OF EACH OF THE NOMINEES PROPOSED BY THE BOARD OF DIRECTORS, AND,
UNLESS A SHAREHOLDER GIVES INSTRUCTIONS ON THE PROXY CARD TO THE CONTRARY,
THE PROXY AGENTS NAMED THEREON INTEND SO TO VOTE.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of Common Stock
beneficially owned by certain owners known by the Company to beneficially
own in excess of 5% of the Common Stock, each director of the Company, each
named executive officer and seven directors and executive officers
collectively, as of July 31, 2010. Unless otherwise indicated, stock
ownership includes sole voting power and sole investment power. No other
person or group is known to beneficially own in excess of five percent (5%)
of the Common Stock.
Name of Amount and Percent
Beneficial Nature of of
Owner Beneficial Ownership Class(1)
___________________ ____________________ ________
Roger C. Cady 174,700 (2) 1.9%
John H. Freeman 262,000 (3) 2.9%
Rose Ann Giordano 58,000 (4) *
Thomas A. Majewski 133,250 (5) 1.5%
Mark E. Maddocks 168,501 (6) 1.9%
Jeffrey H. Duncan 100,680 (7) 1.1%
Anthony M. Lougee 29,870 (8) *
David S. Sheerr 70,000 (9) *
Directors and 997,001 (10) 10.4%
executive officers
as a group (8 persons)
Kenneth Paul Olsen 492,727 (11) 5.5%
Dimensional Fund Advisors 480,576 (12) 5.4%
(1) On July 30, 2010, 8,918,309 shares were outstanding.
(2) Of this amount, 54,000 shares may be acquired by the exercise of
options held.
(3) Of this amount, 262,000 shares may be acquired by the exercise of
options held.
(4) Of this amount, 58,000 shares may be acquired by the exercise of
options held.
(5) Of this amount, 84,000 shares may be acquired by the exercise of
options held.
(6) Of this amount, 6,000 shares are held by Mr. Maddocks' spouse,
26,207 shares are held by the Company's 401(k) Plan and 98,800 shares
may be acquired upon the exercise of options held.
(7) Of this amount, 97,000 shares may be acquired by the exercise of
options held and 3,680 shares are held by the Company's 401(k) Plan.
(8) Of this amount, 26,875 shares may be acquired upon the exercise of
options held and 2,995 shares are held by the Company's 401(k) Plan.
(9) Of this amount, 70,000 shares may be acquired by the exercise of
options held.
(10) Of this amount, 500,675 shares may be acquired by the exercise of
options held by executive officers, and 196,000 shares may be acquired by
exercise of options held by outside directors.
(11) As reported in a Schedule 13G filed May 12, 2009, this investor holds
the sole power to vote 492,727 shares and sole power to dispose of
492,727 shares. His address is 22580 Ravenbury Avenue, Los Altos, CA 94024.
(12) As reported in a Schedule 13G filed February 8, 2010, this investment
advisor holds the sole power to vote 478,172 shares and sole power to
dispose of 480,576 shares. Its address is Palisades West, Building One,
6300 Bee Cave Road, Austin, TX 78746.
* Less than 1%.
CORPORATE GOVERNANCE
Board Leadership Structure
The Company presently separates the roles of Chief Executive Officer
and Chairman of the Board. This serves to align the Chairman's role with
the Company's independent directors and to further enhance the independence
of the Board from management. The Chairman works closely with the Chief
Executive Officer to set the agenda for meetings and to facilitate
information flow between the Board and management.
Board Role in Risk Oversight
The Company's Board plays an active role in risk oversight of the
Company. The Board does not have a formal risk management committee, but
administers this oversight function through various standing committees of
the Board, which are described below. The Audit Committee periodically
reviews overall enterprise risk management, in addition to maintaining
responsibility for oversight of financial reporting-related risks, including
those related to the Company's accounting, auditing and financial reporting
practices. The Audit Committee also reviews reports and considers any
material allegations regarding potential violations of the Company's Code
of Ethics. The Compensation Committee oversees risks arising from the
Company's compensation policies and programs. This Committee has
responsibility for evaluating and approving the executive compensation and
benefit plans, policies and programs of the Company. The Nominating
Committee oversees corporate governance risks and oversees and advises the
Board with respect to the Company's policies and practices regarding
significant issues of corporate responsibility.
RELATED PARTY TRANSACTIONS
All transactions by the Company with a director or executive officer
must be approved by the Board of Directors if they exceed $120,000 in any
fiscal year. Apart from any transactions disclosed herein, no such
transaction was entered into with any director or executive officer during
the last fiscal year. Such transactions will be entered into only if found
to be in the best interest of the Company and approved in accordance with
the Company's Codes of Ethics, which are available on the Company's web site.
During fiscal 2010 and 2009, the Company purchased inventories for
resale totaling approximately $4,976,000 and $727,000 respectively from
Sheerr Memory, LLC (Sheerr Memory). Sheerr Memory's owner is employed by
the Company as the general manager of the acquired MMB business unit and
is an executive officer of the Company. When the Company acquired certain
assets of MMB, it did not acquire any of its inventory. However, the Company
informally agreed to purchase such inventory on an as needed basis,
provided that the offering price was a fair market value price. The
inventory acquired was purchased subsequent to the acquisition of MMB at
varying times and consisted primarily of raw materials and finished goods
used to produce products sold by the Company. Sheerr Memory offers the
Company trade terms of net 30 days and all invoices are settled in the
normal course of business. No interest is paid. The Company has made
further purchases from Sheerr Memory subsequent to April 30, 2010 and
management anticipates that the Company will continue to do so, although the
Company has no obligation to do so.
On February 24, 2010, the Company entered into a Note and Security
Agreement ("Agreement") with Sheerr Memory's owner. Under the Agreement,
the Company borrowed the principal sum of $1,000,000 for a period of six
months, which the Company can extend for an additional three months without
penalty. The loan bears interest at the rate of 5.25%. Interest is payable
monthly, and the entire principal amount is payable in the event of the
employee's termination of employment by the Company. The loan is secured
by a security interest in all machinery, equipment and inventory of Dataram
at its Montgomeryville, PA location.
On July 27, 2010, the Company entered into an agreement with Sheerr
Memory to consign a formula-based amount of up to $3,000,000 of certain
inventory into the Company's manufacturing facilities.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The Compensation Committee of our Board of Directors is comprised of
all members of our Board of Directors, except the Chief Executive Officer.
The compensation committee's basic responsibility is to review the
performance of our management in achieving corporate goals and objectives
and to ensure that our executive officers are compensated effectively in a
manner consistent with our strategy and compensation practices. Toward
that end, the compensation committee oversaw, reviewed and administered
all of our compensation, equity and employee benefit plans and programs
applicable to executive officers.
Compensation Philosophy and Objectives
We operate in an extremely competitive and rapidly changing industry.
We believe that the skill, talent, judgment and dedication of our executive
officers are critical factors affecting the long-term value of our company.
Therefore, our goal is to maintain an executive compensation program that
will fairly compensate our executives, attract and retain qualified
executives who are able to contribute to our long-term success, induce
performance consistent with clearly defined corporate goals and align our
executives' long-term interests with those of our shareholders. We did not
identify specific metrics against which we measured the performance of our
executive officers. Our decisions on compensation for our executive
officers were based primarily upon our assessment of each individual's
performance. We relied upon judgment and not upon rigid guidelines or
formulas in determining the amount and mix of compensation elements for
each executive officer. Factors affecting our judgment include the nature
and scope of the executive's responsibilities and effectiveness in leading
our initiatives to achieve corporate goals.
Mr. Freeman, our Chief Executive Officer, as the manager of the members
of the executive team, assessed the individual contribution of each member
of the executive team, other than himself, and, where applicable, made a
recommendation to the compensation committee with respect to any merit
increase in salary, cash bonus, and option awards. The compensation
committee evaluated, discussed and modified or approved these
recommendations and conducted a similar evaluation of Mr. Freeman's
contributions to the Company.
During 2010 and beyond, our objective will be to provide overall
compensation that is appropriate given our business model and other criteria
to be established by the compensation committee. Some of the elements of
the overall compensation program are expected to include competitive base
salaries, short-term cash incentives and long-term incentives in the form of
options to purchase shares.
We expect that our Chief Executive Officer, as the manager of the
members of the executive team, will continue to assess the individual
contributions of the executive team and make a recommendation to the
compensation committee with respect to any merit increase in salary, cash
bonus pool allocations and the award of options to purchase shares. The
compensation committee will then evaluate, discuss and modify or approve
these recommendations and conduct a similar evaluation of the Chief
Executive Officer's contributions to corporate goals and achievement of
individual goals.
Compensation Policies and Risk Management
The Compensation Committee and management periodically undertake a risk
assessment of the Company's compensation policies and practices, including a
review of trends and developments in executive pay. The Compensation
Committee does not believe that the Company's compensation policies and
practices motivate imprudent risk taking or are reasonably likely to cause a
material adverse effect upon Dataram's business and operations. In this
regard, the Company notes, among other things, that the Company does not
offer significant short-term incentives that might drive high-risk behavior
at the expense of long-term Company value and that stock option awards to
directors and management seek to align the interests of these individuals
with the Company's long-term growth goals.
Role of Executive Officers and Compensation Consultants
Our Chief Executive Officer supports the compensation committee in
its work by providing information relating to our financial plans,
performance assessments and recommendation for compensation of our executive
officers. Mr. Freeman, while not a member of the compensation committee, is
a member of the Board of Directors. The compensation committee has not in
recent years engaged any third-party consultant to assist it in performing
its duties, though it may elect to do so in the future.
Principal Elements of Executive Compensation
Our executive compensation program currently consists of the three
components discussed below. There is no pre-established policy or target
for the allocation between either cash and non-cash or short-term and
long-term incentive compensation. Rather, the relevant factors associated
with each executive are reviewed on a case-by-case basis to determine the
appropriate level and mix of compensation.
Base Salaries. The salaries of our Chief Executive Officer and our
other executive officers are established based on the scope of their
responsibilities, taking into account competitive market compensation for
similar positions based on information available to the compensation
committee. We believe that our base salary levels are consistent with
levels necessary to achieve our compensation objective, which is to
maintain base salaries competitive with the market. We believe that
below-market compensation could, in the long run, jeopardize our ability to
retain our executive officers. Any base salary adjustments are expected to
be based on competitive conditions, market increases in salaries, individual
performance, our overall financial results and changes in job duties and
responsibilities.
Annual Bonus Compensation. We maintain an annual bonus program. The
award of bonuses to our executive officers is the responsibility of the
compensation committee and is determined on the basis of individual
performance. The annual bonus program is designed to reward performance
in a way that furthers key corporate goals and aligns the interests of
management with our annual financial performance.
Long-Term Incentive Compensation. The Company has established the
2001 Stock Option Plan to provide employees of the Company
long-term equity incentive compensation, which we believe is in accordance
with our objective of aligning the interests of management with our
long-term performance. This plan is administered by the compensation
committee. In recent years the committee has granted five year options,
with an option price equal to the closing market price of the common stock
on the date of grant. These options generally become exercisable one year
from the date of grant, although the Board has also granted options a
percentage of which become exercisable one year from the date of grant with
remaining percentages becoming exercisable on future anniversaries of the
date of grant. Generally the committee does not consider the actual profits
from the exercise of options awarded in the past in determining the amount
of awards to be made in the future. Rather the committee focuses upon
expected amounts that may be received by the executive pursuant to those
options in the future.
Share Ownership Guidelines
We currently do not require our directors or executive officers to own
a particular amount of our shares, although we do have a policy against
directors or officers taking a short position in the Company's stock. The
compensation committee is satisfied that the equity holdings among our
directors and executive officers are sufficient at this time to provide
motivation and to align this group's interests with our long-term
performance.
Perquisites
Our executive officers participate in the same 401(k) plan and the same
life and health group insurance plans, and are entitled to the same employee
benefits, as our other salaried employees. In addition, some of our
executive officers receive an automobile allowance as described in the
Summary Compensation Table.
Post-Termination Protection and Change in Control
We have employment agreements with Messrs. Freeman, Maddocks, Duncan
and Sheerr. The agreements with Messrs. Freeman, Maddocks and Duncan each
provide for the payment of one year's salary upon early termination in lieu
of payments under the Company general severance policy; Mr. Sheerr's
agreement provides for the payment of six months' salary.
Financial Restatements
The compensation committee has not adopted a policy with respect to
whether we will make retroactive adjustments to any cash or equity-based
incentive compensation paid to executive officers (or others) where the
payment was predicated upon the achievement of financial results that were
subsequently the subject of a restatement. Our compensation committee
believes that this issue is best addressed when the need actually arises,
when all of facts regarding the restatement are known.
Tax and Accounting Treatment of Compensation
Section 162(m) of the Internal Revenue Code places a limit, subject to
certain exceptions, of $1 million on the amount of compensation that we may
deduct from the U.S. source income in any one year with respect to our Chief
Executive Officer, our Chief Financial Officer and each of our next three
most highly paid executive officers.
We account for equity compensation paid to our employees, i.e. stock
option awards, under the rules of FASB ASC, which requires us to estimate
and record an expense for each award. Accounting rules also require us to
record cash compensation as an expense at the time the obligation is accrued.
Summary
The compensation committee believes that our compensation philosophy
and programs are designed to foster a performance-oriented culture that
aligns our executive officers' interests with those of our shareholders.
The compensation committee also believes that the compensation of our
executives is both appropriate and responsive to the goal of improving
shareholder value.
Compensation Committee Report
The following report is not deemed to be "soliciting material" or to
be "filed" with the SEC or subject to the SEC's proxy rules or the
liabilities of Section 18 of the Exchange Act, and the report shall not be
deemed to be incorporated by reference into any prior or subsequent filing
by the Company under the Securities Act of 1933, as amended (the "Securities
Act"), or the Exchange Act.
The compensation committee has reviewed and discussed the Compensation
Discussion and Analysis set forth above with our management. Based on its
review and discussions, the committee recommended to our Board of Directors
that the Compensation Discussion and Analysis be included in this proxy
statement and incorporated by reference into any Annual Report in
Form 10-K filed with the SEC for the fiscal year ended April 30, 2010.
Roger C. Cady, Chairman
Thomas A. Majewski
Rose Ann Giordano
Summary Compensation
The following table sets forth the compensation paid for the fiscal
years ended April 30, 2008, 2009 and 2010 to the Company's Chief Executive
Officer, the Chief Financial Officer and the Company's other executive
officers.
SUMMARY COMPENSATION TABLE
(In Dollars)
Name and Other
Principal Fiscal Option Compen-
Position Year Salary Bonus Other(2) Awards(3) sation(4) Total
___________ _____ _______ ______ ______ _______ _________ _______
John H.
Freeman 2010 275,000 68,640 0 247,500 12,375 603,515
President
and Chief 2009 269,596 69,563 0 447,750 10,233 797,142
Executive
Officer 2008 0 0 0 0 0 0
Mark E.
Maddocks 2010 201,424 25,000 7,800 140,100 9,064 383,388
Vice President-
Finance, 2009 201,424 37,500 7,800 14,848 9,060 270,632
Chief Financial
Officer 2008 196,424 5,000 7,800 14,480 10,747 234,451
Jeffrey H.
Duncan 2010 199,032 27,000 7,800 140,100 8,956 382,888
Vice
President- 2009 199,032 10,000 7,800 14,848 8,952 240,632
Manufacturing
and 2008 194,032 5,000 7,800 14,480 10,614 231,926
Engineering
Anthony M.
Lougee 2010 125,000 15,600 0 5,928 5,624 152,152
Controller 2009 125,000 0 0 5,586 5,622 136,208
2008 120,000 2,500 0 6,335 6,571 135,406
David S.
Sheerr 2010 200,000 100,000 0 49,400 9,000 358,400
General
Manager- 2009 (1) 11,538 0 0 20,540 519 32,597
Micro Memory
Bank 2008 0 0 0 0 0 0
(1) Mr. Sheerr's employment with the Company was effective April 1, 2009
(2) Automobile allowances.
(3) We measure the fair value of stock options using the Black-Scholes
option pricing model based upon the market price of the underlying common
stock as of the date of grant, reduced by the present value of estimated
future dividends, using an expected quarterly dividend rate of nil in fiscal
years 2010 and 2009. In fiscal 2008 a $0.06 expected quarterly dividend rate
was used. Risk-free interest rates ranging from 1.6% to 5.0% were used.
For fiscal year 2010 option values were $1.375 for Mr. Freeman's option
grant, $1.401 for Messrs. Maddocks' and Duncan's option grant, and $0.988
for Messrs. Lougee's and Sheerr's option grant. For fiscal year 2009 option
values were $2.985 for Mr. Freeman's option grant, $1.856 for Messrs.
Maddocks' and Duncan's option grant, $1.596 for Mr. Lougee's, and $1.027
for Mr. Sheerr's option grant. The 2008 option value calculated using this
model is $1.81 per share.
(4) Payments by the Company to a plan trustee under the Company's Savings
and Investment Retirement Plan, a 401(k) plan. The Company does not have a
pension plan.
GRANTS OF PLAN-BASED AWARDS (1)
Grant Option Exercise Grant
Name Date Awards(2) Price(3) Date
Value(4)
____________________ ________ _______ _______ ________
John H. Freeman 9/24/2009 180,000 $2.57 $247,500
Mark E. Maddocks 9/24/2009 100,000 $2.57 $140,100
Jeffrey H. Duncan 9/24/2009 100,000 $2.57 $140,100
Anthony M. Lougee 9/24/2009 6,000 $2.57 $ 5,928
David S. Sheerr 9/24/2009 50,000 $2.57 $ 49,400
(1) The Company does not presently have any Equity Incentive Plan other
than its 2001 Stock Option Plan and does not have a Non Equity Incentive
Plan other than the bonus pool. The size of grants under the 2001 Stock
Option Plan and the bonus pool are not predetermined in accordance with an
incentive award.
(2) Granted under the 2001 Stock Plan.
(3) Closing market price on the date of grant.
(4) Computed in accordance with the compensation-stock compensation of FASB
ASC (see assumptions set forth under the Summary Compensation table).
Narrative Description of Summary Compensation
Salary and bonus constituted 66% of total compensation for the named
executive officers in fiscal 2010. Options granted to Mr. Freeman were ten
year options. Options to purchase the first 90,000 shares become exercisable
on September 24, 2010, and options to purchase an additional 90,000 shares
become exercisable on September 24, 2011. Options granted to Messrs.
Maddocks and Duncan are ten year options; for each of Messrs. Maddocks and
Duncan, options to purchase 40,000 shares become exercisable one year after
the date of grant, with options to purchase an additional 30,000 shares
becoming exercisable on the second and third anniversaries of the date of
grant. Options granted to Messrs. Lougee and Sheerr are five year options
exercisable one year after the grant date. All options granted are at an
exercise price equal to the closing market price of the Company's common
stock on the date of grant. No dividends are paid or accrued with respect to
options for the benefit of employees prior to the date of option exercise.
Outstanding Options
The following table sets forth information concerning outstanding stock
options at the fiscal year-end, April 30, 2010.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Number of Number of
Securities Securities
Underlying Underlying
Unexercised Unexercised Option Option
Options Options Exercise Expiration
Name Exercisable Unexercisable Price($) Date
John H. Freeman
2006(1) 6,000 0 6.42 09/14/2010
2007(1) 8,000 0 4.70 09/13/2011
2008(1) 8,000 0 3.33 09/27/2012
2009 112,500 37,500 3.20 05/07/2018
2010(2) 0 180,000 2.57 09/24/2019
Mark E. Maddocks
2002 10,000 0 7.98 11/26/2011
2003 8,200 0 2.99 09/18/2012
2004 8,200 0 4.09 09/17/2013
2005 8,200 0 6.75 09/15/2009
2006 8,200 0 6.63 09/14/2010
2007 8,200 0 4.70 09/13/2011
2008 8,000 0 3.33 09/27/2012
2009 8,000 0 1.99 09/25/2018
2010(2) 0 100,000 2.57 09/24/2019
Jeffrey H. Duncan
2002 8,200 0 7.98 11/26/2011
2003 8,200 0 2.99 09/18/2012
2004 8,200 0 4.09 09/17/2013
2005 8,200 0 6.75 09/15/2009
2006 8,200 0 6.63 09/14/2010
2007 8,200 0 4.70 09/13/2011
2008 8,000 0 3.33 09/27/2012
2009 8,000 0 1.99 09/25/2018
2010(2) 0 100,000 2.57 09/24/2019
Anthony M. Lougee
2002 2,500 0 7.98 11/26/2011
2003 1,875 0 2.99 09/18/2012
2004 2,500 0 4.09 09/17/2013
2005 2,500 0 6.75 09/15/2009
2006 3,500 0 6.63 09/14/2010
2007 3,500 0 4.70 09/13/2011
2008 3,500 0 3.33 09/27/2012
2009 3,500 0 1.99 09/25/2013
2010(2) 0 6,000 2.57 09/24/2014
David Sheerr
2009 20,000 0 1.28 4/15/2014
2010(2) 0 50,000 2.57 9/24/2014
(1) Option awards granted to Mr. Freeman when he was a non-employee director
of the Company.
(2) Options granted in fiscal 2010 to Mr. Freeman were ten year options.
The first 90,000 shares become exercisable on September 24, 2010 and options
to purchase an additional 90,000 shares become exercisable on September 24,
2011. Options granted in fiscal 2010 to Messrs. Maddocks and Duncan are ten
year options; for each of Messrs. Maddocks and Duncan, options to purchase
40,000 shares become exercisable one year after the date of grant, with
options to purchase an additional 30,000 shares becoming exercisable on the
second and third anniversaries of the date of grant. Options granted to
Messrs. Lougee and Sheerr are five year options exercisable one year after
the grant date. All options granted are at an exercise price equal to
the closing market price of the Company's common stock on the date of grant.
Option Exercises
On December 2, 2009 an option granted on September 27, 2007 to purchase
8,000 shares at the exercise price of $3.33 per share, was exercised. On
December 22, 2009 an option granted on September 25, 2008 to purchase 24,000
shares at the exercise price of $1.99 per share, was exercised. There were
no stock option exercises by named executive officers during the fiscal year
ended April 30, 2010.
EQUITY COMPENSATION PLAN INFORMATION AT APRIL 30, 2010
Plan Category Number of Securities Weighted-average Number of securities
to be issued upon exercise price of remaining available
exercise of outstanding options, for future issuance
outstanding options warrants and rights under equity compen-
sation plans (exclud-
ing securities re-
flected in column (a))
(a) (b) (c)
______________________ _______________________ ____________________ _____________________
Equity compensation
plans approved by
security holders 1,946,800 $3.25 12,927
Equity compensation
plans not approved by
security holders 0 - 0
Total 1,946,800 $3.25 12,927
EMPLOYMENT AGREEMENTS
On May 7, 2008, the Company's Board of Directors appointed John H.
Freeman to the position of President and Chief Executive Officer of the
Company. The Board of Directors agreed to hire Mr. Freeman as President
and Chief Executive Officer for a term of one year, with automatic renewal
terms of one year each. Mr. Freeman's base salary is $275,000 annually.
He is eligible biannually for a bonus of up to 50% of his base salary, as
determined by a review of the Company's Compensation Committee, and also for
a year-end bonus at the conclusion of the fiscal year if his performance
exceeds expectations. Mr. Freeman receives three weeks paid vacation and
is entitled to participate in any of the Company's present and future life
insurance, disability insurance, health insurance, pension retirement and
similar plans as well.
The Board of Directors hired Mr. Freeman based on the agreement that
he accepts certain non-solicitation, non-competition and non-disparagement
restrictions.
Mark E. Maddocks and Jeffrey H. Duncan entered into similar Employment
Agreements with the Company as of February 1, 2005. Each agreement
continues on a year to year basis until terminated by the Company on thirty
(30) days notice before April 30th of each year. The current base
compensation under these agreements for Mr. Maddocks is $201,424, and for
Mr. Duncan is $199,032, which are subject to annual review by the Board of
Directors. In addition, executives will receive a bonus based upon a
formula which shall be reviewed and approved annually by the Board of
Directors. The Employment Agreements may be terminated by the Company for
cause and expire upon the death or six months after the onset of the
disability of the executive. In the event of termination or non-renewal,
the executive is entitled to one year's base salary at the current rate plus
a pro rata bonus for the current year. The Employment Agreements contain
terms concerning confidentiality, post-employment restrictions on
competition and non-solicitation of Company employees.
David Sheerr entered into an Employment Agreement with the Company as
of March 31, 2009. The agreement has an initial term of four years and
continues on a year to year basis thereafter until terminated by the Company
on thirty (30) days notice before April 30th of each year. The current base
compensation under the agreements for Mr. Sheerr is $200,000, which is
subject to annual review by the Board of Directors. In addition the
executive will receive a bonus based upon a formula based upon the operating
performance of the Company's Micro Memory Bank business unit. The Employment
Agreement may be terminated by the Company for cause and expires upon the
death or six months after the onset of the disability of the executive. In
the event of termination or non-renewal, the executive is entitled to one
year's base salary at the current rate plus a pro rata bonus for the current
year. The Employment Agreement contains terms concerning confidentiality,
post-employment restrictions on competition and non-solicitation of Company
employees.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Securities and Exchange Commission rules regarding disclosure of
executive compensation require proxy statement disclosure of specified
information regarding certain relationships of members of the Company's
Board of Directors with the Company or certain other entities. None of the
members of the Corporation's Board of Directors has a relationship requiring
such disclosure.
RATIFICATION OF THE SELECTION OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has selected
J.H. Cohn LLP as the independent certified public accountants to the
Company for the fiscal year ending April 30, 2011. The holders of Common
Stock are asked to ratify this selection. J.H. Cohn LLP has served the
Company in this capacity since October of 2005. If the shareholders fail to
ratify this selection of J.H. Cohn LLP, the Audit Committee will reconsider
its action in light of the shareholder vote.
The Company has been advised by J.H. Cohn LLP that representatives of
that firm are expected to be present at the Annual Meeting of Shareholders.
These representatives will have the opportunity to make a statement, if they
so desire, and will also be available to respond to appropriate questions
from shareholders.
PRINCIPAL ACCOUNTANTS FEES AND SERVICES
The following table sets forth the aggregate fees billed to the
Company for the last two fiscal years by the Company's independent
accounting firm J.H. Cohn LLP for professional services:
2010 2009
_________ ________
Audit fees $ 140,000 $ 116,200
Audit related fees (1) 13,500 16,000
Tax fees (2) 17,500 14,300
All other fees (3) 3,450 4,600
Total fees $ 174,450 $151,100
_________________
(1) Consists principally of the audit of the financial statements of the
Company's employee benefit plan.
(2) Consists principally of fees for tax consultation and tax compliance
services, including foreign jurisdictions.
(3) In fiscal 2010 consists principally of Securities and Exchange
Commission reporting related consultations. In fiscal 2009 consists
principally of acquisition related consultations.
All non-audit fees of an auditor must be pre-approved by the Audit
Committee of the Board of Directors unless the amount is less than 5% of
the amount of revenues to the auditor in the previous fiscal year or was
not regarded as a non-audit fee at the time it was contracted for. In
either event, the fee must be submitted to the Audit Committee for its
approval before the completion of the audit. In the previous fiscal year,
all Audit Related Fees, all Tax Fees and all Other Fees were pre-approved by
the Audit Committee pursuant to this policy.
REPORT OF THE AUDIT COMMITTEE
Pre-approval by the Audit Committee of all non-audit services performed
by the Company's independent accountants is now required by law. Where
urgent action is required, the Chairman of the Committee may give this
approval subject to confirmation of this decision by the full Committee at
its next meeting.
The Audit Committee has reviewed and discussed the Company's audited
financial statements for the fiscal year ended April 30, 2010 with
management.
The Audit Committee has discussed with J.H. Cohn LLP the matters
required to be discussed in Statement on Auditing Standards No. 61, as
amended (AICPA, Professional Standards, Vol.1 AU Section 380, as adopted by
the Public Company Accounting Oversight Board in Rule 3200T).
The Audit Committee has received the written disclosures and the letter
from J.H. Cohn LLP required by Independence Standards Board Standard No. 1
("Independence Standards Board Standard No 1., Independence Discussion with
Audit Committee, as adopted by the Public Company Accounting Oversight Board
in Rule 3200T), as amended, and has discussed with J.H. Cohn LLP that firm's
independence from the Company.
Based on the review and discussions referred to above in this report,
the Audit Committee recommended to the Company's Board of Directors that the
audited financial statements be included in the Company's Annual Report on
Form 10-K for the fiscal year ended April 30, 2010 for filing with the
Securities and Exchange Commission.
Thomas A. Majewski, Chairman
Roger C. Cady
Rose Ann Giordano
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS, AND, UNLESS A
SHAREHOLDER GIVES INSTRUCTIONS ON THE PROXY CARD TO THE CONTRARY, THE
APPOINTEES NAMED THEREON INTEND SO TO VOTE.
APPROVAL OF DATARAM CORPORATION 2010 STOCK OPTION PLAN
GENERAL
In 2001, our Board of Directors adopted the Dataram Corporation 2001
Stock Option Plan (as amended, the "2001 Plan"). The 2001 Plan allowed the
grant of a total of 1,800,000 shares of Common Stock pursuant to stock
options. As of July 31, 2010, options for 12,927 shares that were
authorized for grant under the 2001 Plan remain available for grant.
The Board of Directors, acting on the recommendation of the
Compensation Committee, unanimously adopted the 2010 Dataram Corporation
Stock Option Plan (the 2010 Plan"). This adoption is subject to the
approval of shareholders at the Annual Meeting. The Board of Directors
recommends shareholder approval of the 2010 Plan.
Under the 2010 Plan options to purchase up to 900,000 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 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
2001 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 2010 Plan
is in the best interests of the Company and the shareholders.
This proposal summarizes the essential features of the 2010 Plan. A
copy of the 2010 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 2010 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.
DESCRIPTION OF MATERIAL FEATURES OF THE 2010 PLAN
The purpose of the 2010 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 2010 Plan will become effective upon approval by a majority of the
shareholders present and voting. The 2010 Plan provides for the grant of
options to purchase a total of up to 900,000 shares of Common Stock (subject
to adjustment for certain changes in our capital, as described below under
"Changes in Capital").
ADMINISTRATION. The Compensation Committee (the "Committee") has the
exclusive discretionary authority to operate, manage and administer the
2010 Plan in accordance with its terms. The Committee's decisions and
actions concerning the 2010 Plan are final and conclusive. Within the
limitations of the 2010 Plan and applicable laws and rules, the Committee
may allocate or delegate its administrative responsibilities and powers
under the 2010 Plan, and our Board of Directors is permitted to exercise
all of the Committee's powers under the 2010 Plan.
In addition to its other powers under the 2010 Plan described in this
summary, the Committee has the following authorities and powers under the
2010 Plan in accordance with its terms:
o to determine which eligible employees, officers,
directors and/or consultants will receive options under
the 2010 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 2010
Plan;
o to establish, administer and waive terms, conditions,
performance criteria, restrictions, or forfeiture
provisions, or additional terms, under the 2010 Plan, or
applicable to options granted under the 2010 Plan;
o to accelerate the vesting or exercisability of options
granted under the 2010 Plan;
o to offer to buy out outstanding options granted under
the 2010 Plan;
o to determine the form and content of the option
agreements which represent options granted under the
2010 Plan;
o to interpret the 2010 Plan and option agreements;
o to correct any errors, supply any omissions and
reconcile any inconsistencies in the 2010 Plan and/or
any option agreements; and
o to take any actions necessary or advisable to operate
and administer the 2010 Plan.
Currently, the Committee consists of Messrs. Cady and Majewski, and
Ms. Giordano, each of whom is a director, but not an employee, of Dataram.
SHARES SUBJECT TO THE 2010 PLAN; LIMITATIONS ON GRANTS OF OPTIONS. If
this proposal is approved by the shareholders, a total of 900,000 shares of
Common Stock would be available for delivery upon exercise of options
granted under the 2010 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 2010 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 2010 Plan would
be available for future option grants under the 2010 Plan. If any person
exercises an option under the 2010 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 2010 Plan. "Incentive
Stock Options" (as described below under "Terms of Options--Types of
Options") covering no more than a total of 900,000 shares of Common Stock
may be granted under the 2010 Plan.
PARTICIPATION. The Committee may grant options under the 2010 Plan to
our officers, employees, non-employee directors and consultants, as well as
those of our affiliates. Our affiliates, for purposes of the 2010 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 2010 Plan. Only employees of Dataram and its subsidiaries
(as defined in the 2010 Plan) are eligible to receive "incentive stock
options" under the 2010 Plan, however.
All of our employees (currently approximately one hundred thirteen in
number), including all of our executive officers (five in number, and three
non-employee directors), are eligible to receive options under the 2010
Plan. As of July 30, 2010 (the last date as of which complete data are
available), outstanding options both under the 2001 Plan, the prior stock
option plan adopted in 1992 (the "1992 Plan") and outside of either the
2001 Plan or the 1992 Plan are held by the following named individuals and
groups.
Name and Position Stock Options (Number of Shares)
----------------- --------------------------------
All current executive officers as a group
John H. Freeman 352,000 (1)
President and Chief Executive Officer
Mark E. Maddocks 158,800
Vice President Finance and
Chief Financial Officer
Jeffrey H. Duncan 157,000
Vice President of Manufacturing
and Engineering
Anthony M. Lougee 26,875
Controller and Chief Accounting Officer
David S. Sheerr 70,000
General Manager Micro Memory Bank -----------
Total current executive officers as a group 764,675
(1) Includes 22,000 option awards granted to Mr. Freeman when he was
a non-employee director of the Company.
All current directors who are Stock Options (Number of Shares)
not executive officers as a group --------------------------------
Roger C. Cady 84,000
Rose Ann Giordano 78,000
Thomas A. Majewski 104,000
Total current directors who are 266,000
not executive officers as a group
Stock Options (Number of Shares)
--------------------------------
Total all other employees as a group 906,125
The individuals to whom additional options will be granted under the
2010 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 2010 Plan.
TERMS OF OPTIONS.
TYPES OF OPTIONS. Additional options to be granted under the 2010 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 2010 Plan at the time of grant. However, the
per-share exercise price of an "incentive stock option" granted under the
2010 Plan must be at least equal to 100 percent of the fair market value of
Common Stock (as defined in the 2010 Plan) on the date such incentive stock
option is granted. On August 10, 2010, the fair market value of a share of
Common Stock was $1.80.
PAYMENT. The option exercise price of any options granted under the
2010 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 may prescribe.
Any cash proceeds that we receive upon the exercise of options granted under
the 2010 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 2010 Plan may be exercised, and any events that will cause
such options to terminate. Each option granted under the 2010 Plan will
expire on or before ten years following the date such option was granted. In
general, options granted under the 2010 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 2010 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 2010 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 2010 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 2010 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
2010 Plan), all options then outstanding under the 2010 Plan will be
accelerated and become immediately exercisable in full. The 2010 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 2010 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 2010 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 2010 PLAN. Our Board of Directors may
amend, alter, suspend or terminate the 2010 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 2010 Plan that
would:
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 2010 Plan, or that may be
subject to options granted to a single recipient in a
12-month period;
o except to adjust for any stock dividend, stock split, share
combination, extraordinary cash dividend, recapitalization,
reorganization, or similar event, reduce the exercise price of
any outstanding Option or grant any new Option in substitution
for or upon the cancellation of Options previously granted;
o decrease the minimum option exercise price required by
the 2010 Plan;
o change the class of persons eligible to receive options
under the 2010 Plan; or
o extend the duration of the 2010 Plan or the exercise
period of any options granted under the 2010 Plan.
The Committee may amend outstanding options. However, no such amendment
or termination of the 2010 Plan or amendment of outstanding options may
materially impair the previously accrued rights of any recipient of an
option under the 2010 Plan without his or her written consent.
The 2010 Plan will terminate on September 22, 2020, unless the 2010
Plan is terminated earlier by our Board of Directors or due to delivery of
all shares of Common Stock available under the 2010 Plan; however, any
options outstanding when the 2010 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
2010 Plan (who are referred to in this summary as "optionees") in connection
with the grant and exercise of options under the 2010 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 2010 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 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 2010 Plan with the intention that
compensation resulting from options granted under the 2010 Plan will be
qualified performance-based compensation and, assuming shareholder approval
of the 2010 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 2010 Plan in connection with a "change in control" of Dataram
might be deemed an "excess parachute payment" for purposes of the golden
parachute payment provisions of Section 280G of the Internal Revenue Code.
To the extent it is so considered, the optionee would be subject to an
excise tax equal to 20 percent of the amount of the excess parachute
payment, and we would be denied a tax deduction for the excess parachute
payment.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
FOREGOING PROPOSAL, AND, UNLESS A SHAREHOLDER GIVES INSTRUCTIONS ON THE
PROXY CARD TO THE CONTRARY, THE APPOINTEES NAMED THEREON INTEND SO TO VOTE.
OTHER MATTERS
Should any other matter or business be brought before the meeting, a
vote may be cast pursuant to the accompanying proxy in accordance with the
judgment of the proxy holder. The Company does not know of any such other
matter or business.
PROPOSALS OF SECURITY HOLDERS AT 2011 ANNUAL MEETING
Any shareholder wishing to present a proposal which is intended to be
presented at the 2011 Annual Meeting of Shareholders should submit such
proposal to the Company at its principal executive offices no later than
April 15, 2011. It is suggested that any proposals be sent by certified
mail, return receipt requested.
BOARD OF DIRECTORS
The Board of Directors has a process for shareholders to communicate
with directors. Shareholders should write to the President at the Company's
mailing address and specifically request that a copy of the letter be
distributed to a particular board member or to all board members. Where no
such specific request is made, the letter will be distributed to board
members if material, in the judgment of the President, to matters on the
Board's agenda.
The Board of Directors of the Company met six times during the last
fiscal year. It is the policy of the board that all members will attend the
Annual Meeting of Shareholders and all members of the board attended last
year's meeting.
The Board of Directors has a standing Audit Committee established in
accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934,
as amended, whose members are Roger C. Cady, Thomas A. Majewski and Rose Ann
Giordano. This Committee met five times during the last fiscal year. The
principal functions of the Audit Committee are evaluation of work of the
auditors, review of the accounting principles used in preparing the annual
financial statements, review of internal controls and procedures and
approval of all audit and non-audit services of the auditor. The Company's
Board of Directors has adopted a written charter for the Audit Committee
which may be viewed at the Company's website, www.dataram.com. Each member
of the Audit Committee is "independent" within the meaning of the NASDAQ
listing standards. The Board of Directors has determined that Mr. Majewski
is a "financial expert" within the meaning of those standards and an "audit
committee financial expert" within the meaning of Item 401(h) of SEC
Regulation S-K and is "independent" as that term is used in Item 7(d)(3)(iv)
of Schedule 14A of the Proxy Rules.
The Board of Directors has a standing Compensation Committee whose
members are Roger C. Cady, Thomas A. Majewski and Rose Ann Giordano, all of
whom are "independent" within the meaning of the NASDAQ listing standards.
This committee relies upon the advice of the Company's chief executive
officer who makes recommendations both concerning director compensation and
the compensation of other executive officers. This Committee met five times
during the past fiscal year. The principal functions of the Compensation
Committee are to recommend to the Board of Directors the compensation of
directors and the executive officers and to establish and administer various
compensation plans, including the stock option plan. The Compensation
Committee does not have a written charter.
The Board of Directors has a standing Nominating Committee whose
members are Roger C. Cady, Thomas A. Majewski and Rose Ann Giordano, all
of whom are "independent" within the meaning of the NASDAQ listing standards.
This Committee met once during the past fiscal year. The principal function
of this Committee is the recommendation to the Board of Directors of new
members of the Board of Directors. The members of the Nominating Committee
are "independent" within the meaning of the NASDAQ listing standards. The
Board of Directors has adopted a charter for the Nominating Committee, which
may be viewed at the Company's website, www.dataram.com. In addition, the
Nominating Committee also considers diversity with respect to viewpoint,
skills and experience in determining the appropriate composition of the
Board and identifying Director nominees. The Board is committed to following
the Company's policy of non-discrimination based on gender, race, age,
religion or national origin. The Board believes that its policies are
effective in identifying and enlisting candidates that will best fulfill the
Board's and the Company's needs at the time of the search. In years in which
the Board considers that the selection of a new director would be desirable,
the Nominating Committee solicits recommendations from the directors and the
executive officers. The Nominating Committee will also consider
recommendations made by shareholders. From these recommendations, the
committee selects a small group to be interviewed. The Nominating Committee
then makes a recommendation to the full board. Shareholders desiring to make
such recommendations should write directly to the Committee at the Company's
executive offices at P.O. Box 7528, Princeton, New Jersey 08543-7528.
DIRECTORS COMPENSATION
The following table sets forth information concerning non-employee
director compensation during the fiscal year ended April 30, 2010:
Fees Option All
Name Earned(1) Awards(2) Other Total
__________________ ______________ ___________ ______ ________
Roger C. Cady $24,000 $82,500 0 $106,500
Thomas A. Majewski $24,000 $33,000 0 $ 57,000
Rose Ann Giordano $24,000 $33,000 0 $ 57,000
_______________
(1) All directors' fees, except for option awards, are paid in cash in the
year earned.
(2) As determined in accordance with FASB ASC Topic 718 (see assumptions in
Summary Compensation Table).
Directors who are not employees of the Company received a quarterly
payment of $6,000. During fiscal 2010, Roger Cady received ten year options
to purchase 60,000 shares of the Common Stock of the Company at $2.57, the
closing market value of the Common Stock at the date of grant. Options to
purchase 30,000 shares become exercisable on September 24, 2010, one year
from the date of grant, with options to purchase the remaining 30,000 shares
becoming exercisable on September 24, 2011, the second anniversary of the
date of grant. During fiscal 2010, Thomas Majewski and Rose Ann Giordano
each received ten year options to purchase 40,000 shares of the Common Stock
of the Company at $2.57, the closing market value of the Common Stock at the
date of grant. For each of Mr. Majewski and Ms. Giordano, options to
purchase 20,000 shares become exercisable on September 24, 2010, one year
from the date of grant, with options to purchase the remaining 20,000 shares
becoming exercisable on September 24, 2011, the second anniversary of the
date of grant.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Securities and Exchange Commission requires that the Company report
to shareholders the compliance of directors, executive officers and 10%
beneficial owners with Section 16(a) of the Securities Exchange Act of 1934,
as amended. This provision requires that such persons report on a current
basis most acquisitions or dispositions of the Company's securities. Based
upon information submitted to the Company, all directors, executive officers
and 10% beneficial owners have fully complied with such requirements during
the past fiscal year, except that David Sheerr was hired by the Company as
General Manager of the Micro Memory Bank unit of the Company on March 31,
2010 and filed a Form 3 on December 11, 2009, nine days after being formally
designated as an executive officer of the Company by the Board of Directors.
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 2010 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, 2010, including the financial statements and schedules and
documents incorporated by reference therein but without exhibits thereto, as
filed with the Securities and Exchange Commission. The Company will furnish
any exhibit to the Annual Report on Form 10-K to any shareholder upon
request and upon payment of a fee equal to the Company's reasonable expenses
in furnishing such exhibit. All requests for the Annual Report on Form 10-K
or its exhibits should be addressed to Vice President - Finance, Dataram
Corporation, P.O. Box 7528, Princeton, New Jersey 08543-7528.
DATARAM CORPORATION
P.O. Box 7528, Princeton, New Jersey 08543-7528
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Notice of Meeting,
proxy statement and annual report are available at www.dataram.com
PROXY SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
The undersigned hereby appoints and constitutes John H. Freeman and
Thomas J. Bitar, and each of them, attorneys and proxies for the
undersigned, with full power of substitution to vote as if the undersigned
were personally present at the Annual Meeting of the Shareholders of
Dataram Corporation (the "Company") to be held at the Company's corporate
headquarters at 186 Princeton Road (Route 571), West Windsor, New Jersey,
on Thursday, September 23, 2010 at 11 o'clock in the morning 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)
Roger C. Cady__ John H. Freeman__ Rose Ann Giordano__ Thomas A. Majewski__
VOTE WITHHELD____ from all nominees.
2. VOTE FOR____ AGAINST____ ABSTAIN____ ratification of the selection
of J.H. Cohn, LLP to be the independent auditors of the Company for the
fiscal year ending April 30, 2011.
3. VOTE FOR____ AGAINST____ ABSTAIN____ approval of the Dataram
Corporation 2010 Stock Option Plan.
4. In their discretion, to vote upon such other business as may properly
come before the meeting and all adjournments thereof. This proxy when
properly executed will be voted in the manner directed herein by the
undersigned stockholder. If no direction is made, this proxy will be voted
for Proposals 1, 2 and 3.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Signature
Signature if held jointly
Dated 2010
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.