UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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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 ANNUALSPECIAL MEETING OF SHAREHOLDERS
to be held on September 27, 2012March 13, 2013 at 2:00 P.M.
Important Notice Regarding the Availability of Proxy Materials for the Shareholder
Special Meeting of
Shareholders to Be Held on September 27, 2012March 13, 2013
The Proxy Statement and 2012 Annual Report are available atwww.dataram.com
TO THE SHAREHOLDERS OF DATARAM CORPORATION:
The AnnualA Special Meeting of the Shareholders (“Special Meeting”) of DATARAM CORPORATION (the “Company”"Company") will be held at the Company’sCompany's corporate headquarters at 777 Alexander Road, Suite 100, Princeton, New Jersey, on Thursday, September 27, 2012March 13, 2013 at 2:00 p.m., for the following purposes:
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Only shareholders of record at the close of business on the 17th28th day of August 2012January 2013 are entitled to notice of and to vote at this meeting. We hope you will be able to attend the Special Meeting. Whether you plan to attend the Special Meeting or not, it is important that you cast your vote either in person or by proxy. When you have finished reading the proxy statement, you are urged to vote in accordance with the instructions set forth in this Proxy Statement. We encourage you to vote by proxy so that your shares will be represented and voted at the Special Meeting, whether or not you can attend.
By order of the Board of Directors
Thomas J. Bitar,SecretaryJohn H. Freeman,
President
August 24, 2012February 4, 2013
The Company’s 2012 Annual Report is enclosed.
PLEASE COMPLETE, DATE, SIGN AND RETURN THE ACCOMPANYING PROXY
IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
DATARAM CORPORATION
PROXY STATEMENTANNUAL
SPECIAL MEETING OF SHAREHOLDERSSEPTEMBER 27, 2012MARCH 13, 2013
This Proxy Statement is furnished by DATARAM CORPORATION (the “Company”"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 AnnualSpecial Meeting of Shareholders of the Company to be held at the Company’sCompany's corporate headquarters at 777 Alexander Road, Suite 100, Princeton, New Jersey on Thursday, September 27, 2012March 13, 2013 at 2:00 p.m. You may obtain directions to the Company’sCompany's corporate headquarters by contacting investor relations by telephone at (609) 799-0071 extension 2431 or athttp://corporate.dataram.com/contact-us-form/directions.The close of business on August 17, 2012January 28, 2013 has been fixed as the record date for the determination of shareholders entitled to notice of and to vote at the AnnualSpecial Meeting and any adjournments thereof.thereof (the “Record Date”). This Proxy Statement was mailed to shareholders on or about August 24, 2012.February 4, 2013.
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"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 Special Meeting.
VOTING RIGHTS
On August 17, 2012January 28, 2013 there were outstanding and entitled to vote 10,521,755 shares of the Company’sCompany's common stock, par value $1.00 per share (the “Common Stock”"Common Stock"). Holders of the Common Stock are entitled to one vote for each share of Common Stock owned on the record date,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 SecretaryPresident of the Company. Where a choice has been specified by the holder
QUORUM; DISCRETIONARY AUTHORITY
In order to carry 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 ratificationbusiness of the selection of accountants.
Directors are electedSpecial Meeting, a quorum must be present. A quorum requires the presence, in person or by a pluralityproxy, of the number of votes cast. With respect to each other matter to be voted upon, a voteholders of a majority of the numbervotes entitled to be cast at the Special Meeting. Consequently, holders of at least 5,260,878 shares votingof our common stock must be present either in person or by proxy to establish a quorum for the Special Meeting. If less than a quorum is required for approval. Abstentionsrepresented at the Special Meeting, a majority of the shares so present or represented may adjourn the Special Meeting from time to time without further notice, and the persons named as proxies submittedwill vote the proxies that they have been authorized at the Annual Meeting in favor of such an adjournment.
In the event a quorum is present at the Special Meeting but sufficient votes to approve any of the items proposed by brokers withour Board of Directors have not been received, the persons named as proxies may propose one or more adjournments of the Special Meeting to permit further solicitation of proxies. A shareholder vote may be taken on one or more of the proposals in this proxy statement prior to such adjournment if sufficient proxies have been received and it is otherwise appropriate. Any adjournment will require the affirmative vote of the holders of a “not voted” directionmajority of those shares of Common Stock represented at the Special Meeting in person or by proxy. If a quorum is present, the persons named as proxies will not be counted as votes cast with respectvote the proxies they have been authorized to each matter.vote on any other business properly before the Special Meeting in favor of such an adjournment.
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Our Board of Directors does not know of any other matters that are to be presented for action at the Special Meeting. However, if other matters properly come before the Special Meeting, it is intended that the proxy will be voted in accordance with the judgment of the persons voting the proxy.
EXECUTIVE OFFICERS OF THE COMPANYABSTENTIONS AND BROKER NON-VOTES; VOTE REQUIRED
The following table sets forth information concerning eachAbstentions and broker non-votes are counted for purposes of determining the presence or absence of a quorum for the transaction of business. Abstentions occur when shareholders are present at the Special Meeting but choose to withhold their vote for any of the Company’s executive officers:
John H. Freeman has been employedmatters upon which the shareholders are voting. If you are a beneficial owner whose shares are held of record by a broker, you will receive instructions from your broker or other nominee describing how to vote your shares. If you do not instruct your broker or nominee how to vote your shares, they may vote your shares as they decide as to each matter for which they have discretionary authority. A "broker non-vote" occurs when a broker or other nominee does not have discretion to vote on a particular matter, you have not given timely instructions on how 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.
Marc P. Palker has served as the Company’s Interim Chief Financial Officer since January of 2012. He has been a director of CFO Consulting Partners, LLC since March 2010. During the performance of his duties as Interim Chief Financial Officer, Mr. Palker has continued as a director of CFO Consulting Partnersbroker or other nominee should vote your shares and the Company compensates Mr. Palker as a consultant through CFO Consulting Partners. Mr. Palker is a Certified Management Accountant. Additional information regarding Mr. Palker’s compensation is set forth under “Related Party Transactions” and “Executive Compensation” below.
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 sincebroker or other nominee indicates it does not have authority to vote such shares on 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) directorsproxy. Although broker non-votes will be electedcounted as present at the Annualmeeting for purposes of determining a quorum, they will be treated as not entitled to vote with respect to non-discretionary matters.
At the Special Meeting, of Shareholders bybrokers will not have discretionary authority to vote on Proposal 1 (“Reverse Stock Split”). This means, for Proposal 1 to be approved, the affirmative vote of the holders of a pluralitymajority of thethose shares of Common Stock represented at such meeting. Unless otherwise indicatedthe Special Meeting in person or by the shareholder, the accompanying proxy is required. Abstentions and broker non-votes will be votedcounted in determining the total number of shares “entitled to vote” on this proposal, and will have no effect on the vote total for this proposal.
EXPENSES OF SOLICITATION
We will bear the electionentire cost of soliciting proxies, including the cost of the four (4)preparation, assembly, printing and mailing of this proxy statement and any additional information furnished to our shareholders in connection with the Special Meeting. In addition to this solicitation, our directors, officers and other employees may solicit proxies by use of mail, telephone, facsimile, electronic means, in person or otherwise. These persons named underwill not receive any additional compensation for assisting in the heading “Nomineessolicitation but may be reimbursed for Directors.” Althoughreasonable out-of-pocket expenses in connection with the Company knowssolicitation. In addition, we will reimburse brokerage firms, nominees, fiduciaries, custodians and other agents for their expenses in distributing proxy materials to the beneficial owners 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.our common stock.
NOMINEES FORPROPOSAL 1
APPROVAL OF A POSSIBLE REVERSE STOCK SPLIT IN THE
RANGE FROM 1-FOR-3 TO 1-FOR-6 IN THE DISCRETION
OF OUR BOARD OF DIRECTORS
The term of office for each director will expire atGeneral
Under the next Annual Meeting of Shareholders and whenNew Jersey Business Corporation Law, the director’s successor shall have been elected and duly qualified. Each nominee is a memberReverse Stock Split may be effected by action of the presentBoard alone. Although the Board has unanimously approved the Reverse Stock Split it believes that it is in the best interests of the Company that our shareholders approve, a Reverse Stock Split at a ratio within a range from 1-for-3 to 1-for-6, with the final ratio to be determined by the Board, in its sole discretion, following shareholder approval. The Board of Directors has adopted a resolution (i) declaring the advisability of a possible Reverse Stock Split in the range of 1-for-3 to 1-for-6, subject to shareholder approval, (ii) in connection therewith, approving a form of amendment to our Restated Certificate of Incorporation to effect such a Reverse Stock Split, subject to shareholder approval, and has been elected by shareholders at prior meetings.
Thomas A. Majewski is a real estate developer. He is also a principal in Walden, Inc., a computer consulting and technologies venture capital firm, which he joined in 1990. Prior to 1990, he had been Chief Financial Officer of Custom Living Homes & Communities, Inc., a developer of residential housing. Mr. Majewski has been a Director since 1990, and Chairman of(ii) authorizing any other action the Board of Directors since July 2011. Mr. Majewski bringsdeems necessary to effect such a Reverse Stock Split, without further approval or authorization of the Company’s shareholders. The Board may elect not to implement the approved Reverse Stock Split at its sole discretion. The Board believes that approval of a proposal granting this discretion to the Board his businessof Directors provides the Board of Directors with appropriate flexibility to achieve the purposes of the Reverse Stock Split, if implemented, and financial expertiseto act in the best interests of the Company and extensive knowledgeits shareholders. The amendment to the Restated Certificate of Dataram’s history and operations.Incorporation is attached as Exhibit A to this Proxy Statement.
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John H. FreemanThe Reverse Stock Split will be realized simultaneously for all outstanding Common Stock and the ratio determined by the Board will be the same for all outstanding Common Stock. The Reverse Stock Split will affect all holders of Common Stock uniformly and each shareholder will hold the same percentage of Common Stock outstanding immediately following the Reverse Stock Split as that shareholder held immediately prior to the Reverse Stock Split, except for adjustments that may result from the treatment of fractional shares as described below. The number of authorized shares of Common Stock (which will remain at 54,000,000) and will not change the par value of the Common Stock (which will remain at $1.00 per share).
Reasons for the Reverse Stock Split
The primary reason for proposing the Reverse Stock Split is Presidentto increase the per share market price of the Common Stock. The Common Stock is currently listed on the NASDAQ Capital Market under the symbol “DRAM,” which we believe helps support and Chief Executive Officermaintain stock liquidity and Company recognition for our shareholders. The Board believes that the Reverse Stock Split will result in a higher per share trading price, which is intended to enable the Company to maintain the listing of the Common Stock on the NASDAQ Capital Market and generate greater investor interest in the Company. As previously disclosed, on January 31, 2012, the Company received a letter from NASDAQ indicating that, for 30 consecutive trading days, the closing bid price per share of the Common Stock had been below the $1.00 minimum per share requirement for continued listing under NASDAQ Marketplace Rule 5550(a)(2). In order for the Common Stock to continue to be listed on the NASDAQ Capital Market, the Company must regain compliance with NASDAQ’s $1.00 minimum bid price requirement for a minimum of 10 consecutive business days.
The Board believes that maintaining the listing of the Common Stock on the NASDAQ Capital Market is in the best interests of the Company since May 2008. Priorand its shareholders. If the Common Stock were delisted from the NASDAQ Capital Market, the Board believes that the liquidity in the trading market for the Common Stock could be significantly decreased, which could reduce the trading price. If the Reverse Stock Split is approved by our shareholders and implemented by the Board, we expect to this Mr. Freeman wassatisfy the $1.00 per share minimum bid price requirement for continued listing. However, despite the approval of the Reverse Stock Split by our shareholders and the implementation by the Board, there is no assurance that the Reverse Stock Split will result in our meeting the $1.00 minimum bid price requirement and the Common Stock could be delisted from the NASDAQ Capital Market due to our failure to comply with the minimum bid price requirement or other NASDAQ Listing Rules.
The Board further believes that an independent consultant specializingincreased stock price may encourage investor interest and improve the marketability of the Common Stock to a broader range of investors. Because of the trading volatility often associated with low-priced stocks, many brokerage firms and institutional investors have internal policies and practices that either prohibit them from investing in corporate sales, marketinglow-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. Some of those policies and operations consulting since December, 2006. Priorpractices pertain to the payment of brokers’ commissions and to time-consuming procedures that function to make the handling of lower-priced stocks unattractive to brokers from an economic standpoint. Additionally, because brokers’ commissions on lower-priced stocks generally represent a higher percentage of the stock price than commissions on higher-priced stocks, the current share price of the Common Stock can result in an individual shareholder paying transaction costs that represent a higher percentage of total share value than would be the case if our share price were substantially higher. This factor may also limit the willingness of institutions to purchase our stock. The Board believes that the anticipated higher market price resulting from a Reverse Stock Split could enable institutional investors and since September, 2004 he served asbrokerage firms with such policies and practices to invest in the Chief Operating Officer at Taratec Development Corporation,Common Stock.
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Determination of Ratio
The ratio of the Reverse Stock Split, if approved and implemented, will be a life sciences consulting company. Prior to that,ratio of not less than 1-for-3 and fornot 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 to1-for-6, as determined by the Board extensive executive, marketing and technical experience, within its sole discretion. The Board believes that shareholder approval of a decades-long track recordrange of potential exchange ratios (rather than a single exchange ratio, is in the computer technology industry.
Roger C. Cady is a founder and principalbest interests of Arcadia Associates, a strategic consulting and mergers and acquisitions advisory firm. He was employed as Vice President of Business Development for Dynatech Corporation, a diversified communications equipment manufacturer, from 1993 to 1996. Before joining Dynatech he was a strategic management consultant for eight years. His business career has included 16 years in various engineering, marketing and management responsibilities as a Vice President of Digital Equipment Corporation, and President of two early stage startup companies. Mr. Cady has been a Director since 1996, and served as Chairman ofour shareholders because it provides the Board of Directors from September 2008with the flexibility to July 2011. Mr. Cady bringsachieve the desired results of the Reverse Stock Split and because it is not possible to predict market conditions at the Board extensive business and management experience focusing ontime the engineering and technology fields, and extensive knowledge of Dataram’s history and operations.
Rose Ann Giordano has been President of Thomis Partners, an investing and advisory services firm, since 2002. Prior to that, and for more than five years, Ms. Giordano served as Vice President of Worldwide Sales & Marketing forReverse Stock Split would be implemented. If 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 serves onshareholders approve this proposal, the Board of Directors would carry out a Reverse Stock Split only upon the Board of Emerson Hospital. She formerly served onDirectors’ determination that a Reverse Stock Split would be in the best interests of the shareholders at that time. The Board of Directors would then set the ratio for the Reverse Stock Split in an amount it determines is advisable and in the best interests of the shareholders considering relevant market conditions at the time the Reverse Stock Split is to be implemented. In determining the ratio, following receipt of shareholder approval, the Board of Directors may consider, among other things:
| · | the historical and projected performance of the Common Stock; |
| · | prevailing market conditions; |
| · | general economic and other related conditions prevailing in our industry and in the marketplace; |
| · | the projected impact of the selected Reverse Stock Split ratio on trading liquidity in the Common Stock and our ability to continue the Common Stock’s listing on the NASDAQ Capital Market; |
| · | our capitalization (including the number of shares of Common Stock issued and outstanding); |
| · | the prevailing trading price for Common Stock and the volume level thereof; and |
| · | potential devaluation of our market capitalization as a result of a Reverse Stock Split. |
The purpose of TimeTrade Inc.,asking for authorization to implement the Reverse Stock Split at a ratio to be determined by the Board, as opposed to a ratio fixed in advance, is to give the Board the flexibility to take into account then-current market conditions and The National Associationchanges in price of Corporate Director/New England. Ms. Giordano holds a B.A. in Mathematics from Marywood CollegeCommon Stock and is a graduateto respond to other developments that may be deemed relevant when considering the appropriate ratio.
Principal Effects 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.Reverse Stock Split
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTEA Reverse Stock Split refers to a reduction in the number of outstanding shares of a class of a corporation’s capital stock, which may be accomplished, as in this case, by reclassifying and combining all of our outstanding shares of Common Stock into a proportionately smaller number of shares. For example, if the Board decides to implement a 1-for-4 Reverse Stock Split of Common Stock, then a shareholder holding 10,000 shares of Common Stock before the Reverse Stock Split would instead hold 2,500 shares of Common Stock immediately after the Reverse Stock Split. Each shareholder’s proportionate ownership of outstanding shares of Common Stock would remain the same, except that shareholders that would otherwise receive fractional shares as a result of the Reverse Stock Split will receive the number of shares rounded up to the next whole number. All shares of Common Stock will remain validly issued, fully paid and non-assessable.
The Board does not intend to use the Reverse Stock Split as a part of or a first step in a “going private” transaction within the meaning of Rule 13e-3 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). There is no plan or contemplated plan by the Company to take itself private at the date of this proxy statement. We believe that a Reverse Stock Split, even if approved and implemented at a ratio of 1-for-6, would have no significant effect on the number of record holders of Common Stock.
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Certain Risks Associated with the Reverse Stock Split
• Although we expect that the Reverse Stock Split will result in an increase in the market price of the Common Stock, we cannot assure you that the Reverse Stock Split, if implemented, will increase the market price of the Common Stock in proportion to the reduction in the number of shares of the Common Stock outstanding or result in a permanent increase in the market price. Accordingly, the total market capitalization of the Common Stock after the proposed Reverse Stock Split may be lower than the total market capitalization before the proposed Reverse Stock Split and, in the future, the market price of the Common Stock following the Reverse Stock Split may not exceed or remain higher than the market price prior to the proposed Reverse Stock Split.
• The effect the Reverse Stock Split may have upon the market price of the Common Stock cannot be predicted with any certainty, and the history of similar Reverse Stock Splits for companies in similar circumstances to ours is varied. The market price of the Common Stock is dependent on many factors, including our business and financial performance, general market conditions, prospects for future success and other factors detailed from time to time in the reports we file with the Securities and Exchange Commission (the “SEC”). If the Reverse Stock Split is implemented and the market price of the Common Stock declines, the percentage decline as an absolute number and as a percentage of our overall market capitalization may be greater than would occur in the absence of the Reverse Stock Split.
• The Reverse Stock Split may result in some shareholders owning “odd lots” of less than 100 shares of Common Stock on a post-split basis. These odd lots may be more difficult to sell, or require greater transaction costs per share to sell, than shares in “round lots” of even multiples of 100 shares.
• While the Board believes that a higher stock price may help generate investor interest, there can be no assurance that the Reverse Stock Split will result in a per share price that will attract institutional investors or investment funds or that such share price will satisfy the investing guidelines of institutional investors or investment funds. As a result, the trading liquidity of the Common Stock may not necessarily improve.
• Although the Board believes that the decrease in the number of shares of Common Stock outstanding as a consequence of the Reverse Stock Split and the anticipated increase in the market price of Common Stock could encourage interest in the Common Stock and possibly promote greater liquidity for our shareholders, such liquidity could also be adversely affected by the reduced number of shares outstanding after the Reverse Stock Split. In addition, even if the Reverse Stock Split is implemented and we meet the minimum bid price requirement, the Common Stock may still be delisted if we are unable to satisfy the other requirements for continued listing of the Common Stock on the NASDAQ Capital Market.
Effect on Authorized but Unissued Shares
The Reverse Stock Split will have the effect of significantly increasing the number of authorized but unissued shares of Common Stock. The number of authorized shares of Common Stock will not be decreased and will remain at 54,000,000. Because the number of outstanding shares will be reduced as a result of the Reverse Stock Split, the number of shares available for issuance will be increased.
Anti-Takeover and Dilutive Effects
The purpose of maintaining our authorized Common Stock at 54,000,000 after the Reverse Stock Split is to facilitate our ability to raise additional capital to support our operations, not to establish any barriers to a change of control or acquisition of the Company. Shares of Common Stock that are authorized but unissued provide the Board with flexibility to effect, among other transactions, public or private financings, subscription rights offerings, mergers, acquisitions, stock dividends, stock splits and the granting of equity incentive awards. However, these authorized but unissued shares may also be used by the Board, consistent with and subject to its fiduciary duties, to deter future attempts to gain control of us or make such actions more expensive and less desirable. The Reverse Stock Split would give the Board authority to issue additional shares from time to time without delay or further action by the shareholders except as may be required by applicable law or the NASDAQ rules. The Board does not have any present intent to use the authorized but unissued Common Stock to impede a takeover attempt. There are no plans or proposals to adopt other provisions or enter into any arrangements that have material anti-takeover effects.
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In addition, the issuance of additional shares of Common Stock for any of the corporate purposes listed above could have a dilutive effect on earnings per share and the book or market value of the outstanding Common Stock, depending on the circumstances, and would likely dilute a shareholder’s percentage voting power in the Company. The Board intends to take these factors into account before authorizing any new issuance of shares.
Effect on Fractional Shareholders
No fractional shares of Common Stock will be issued in connection with the Reverse Stock Split. Therefore, we will not issue certificates representing fractional shares. The Board of Directors will have the discretionary authority to determine whether to arrange for the disposition of fractional interests by shareholders entitled thereto by allowing such shareholders to receive from the Corporation's transfer agent, in lieu of any fractional share, the number of shares rounded up to the next whole number.
Effect on Beneficial Shareholders
If you hold shares of Common Stock in “street name” through an Intermediary, we will treat your Common Stock in the same manner as shareholders whose shares are registered in their own names. Intermediaries will be instructed to effect the Reverse Stock Split for their customers holding Common Stock in street name. However, these Intermediaries may have different procedures for processing a Reverse Stock Split. If you hold shares of Common Stock in street name, we encourage you to contact your Intermediaries.
Registered “Book-Entry” Holders of Common Stock
If you hold shares of Common Stock electronically in book-entry form with our transfer agent, you do not currently have and will not be issued stock certificates evidencing your ownership after the Reverse Stock Split, and you do not need to take action to receive post-Reverse Stock Split shares. If you are entitled to post-Reverse Stock Split shares, a transaction statement will automatically be sent to you indicating the number of shares of Common Stock held following the Reverse Stock Split.
Effect on Registered Shareholders Holding Certificates
As soon as practicable after the Reverse Stock Split, our transfer agent will mail transmittal letters to each shareholder holding shares of Common Stock in certificated form. The letter of transmittal will contain instructions on how a shareholder should surrender his or her certificate(s) representing shares of Common Stock (the “Old Certificates”) to the transfer agent in exchange for certificates representing the appropriate number of whole shares of post-Reverse Stock Split Common Stock (the “New Certificates”). No New Certificates will be issued to a shareholder until such shareholder has surrendered all Old Certificates, together with a properly completed and executed letter of transmittal, to the transfer agent. No shareholder will be required to pay a transfer or other fee to exchange his or her Old Certificates. Shareholders will then receive a New Certificate(s) representing the number of whole shares of Common Stock that they are entitled as a result of the Reverse Stock Split. Until surrendered, we will deem outstanding Old Certificates held by shareholders to be cancelled and only to represent the number of whole shares of post-Reverse Stock Split Common Stock to which these shareholders are entitled. Any Old Certificates submitted for exchange, whether because of a sale, transfer or other disposition of stock, will automatically be exchanged for New Certificates.
Effect on Outstanding Options and Warrants
Upon a Reverse Stock Split, all outstanding options, warrants and future or contingent rights to acquire Common Stock will be adjusted to reflect the Reverse Stock Split. With respect to all outstanding options and warrants to purchase Common Stock, the number of shares of Common Stock that such holders may purchase upon exercise of such options or warrants will decrease, and the exercise prices of such options or warrants will increase, in proportion to the fraction by which the number of shares of Common Stock underlying such options and warrants are reduced as a result of the Reverse Stock Split. Also, the number of shares reserved for issuance under our existing stock option and equity incentive plans would be reduced proportionally based on the ratio of the Reverse Stock Split.
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Procedure for Effecting the Reverse Stock Split
To accomplish the Reverse Stock Split, we would file an amendment to the Restated Certificate of Incorporation with the New Jersey Secretary of State. The form of amendment to the Restated Certificate of Incorporation to accomplish the proposed Reverse Stock Split is attached as Exhibit A to this Proxy Statement. The text of the amendment to the Restated Certificate of Incorporation is subject to modification to include such changes as the Board deems necessary and advisable to effect the Reverse Stock Split, including the applicable ratio for the Reverse Stock Split. If the Board elects to implement the Reverse Stock Split, the number of issued and outstanding shares of our Common Stock would be reduced in accordance with the selected exchange ratio for the Reverse Stock Split. The number of authorized shares of Preferred Stock would remain unchanged. The Reverse Stock Split would become effective upon filing the amendment to the Restated Certificate of Incorporation with the New Jersey Secretary of State. No further action on the part of shareholders would be required to either effect or abandon the Reverse Stock Split. If the Board of Directors does not implement the Reverse Stock Split prior to December 31, 2013, the authority granted in this proposal to implement the Reverse Stock Split will terminate. The Board reserves its right to elect not to proceed and abandon the Reverse Stock Split if it determines, in its sole discretion, that this proposal is no longer in the best interests of our shareholders.
Shareholders should not destroy any stock certificate(s) and should not submit any certificate(s) until they receive a letter of transmittal from our transfer agent.
Certain Material U.S. Federal Income Tax Consequences of the Reverse Stock Split
The following is a summary of important tax considerations of the Reverse Stock Split. It addresses only shareholders who hold Common Stock as capital assets. It does not purport to be complete and does not address shareholders subject to special rules, such as financial institutions, tax-exempt organizations, insurance companies, dealers in securities, foreign shareholders, shareholders who hold their pre-Reverse Stock Split shares as part of a straddle, hedge or conversion transaction, and shareholders who acquired their pre-Reverse Stock Split shares pursuant to the exercise of employee stock options or otherwise as compensation. This summary is based upon current law, which may change, possibly even retroactively. It does not address tax considerations under state, local, foreign and other laws. The tax treatment of a shareholder may vary depending upon the particular facts and circumstances of such shareholder. Each shareholder is urged to consult with such shareholder’s own tax advisor with respect to the tax consequences of the Reverse Stock Split.
The proposed Reverse Stock Split is intended to be treated as a “reorganization” within the meaning of Section 368 of the Code. Assuming the Reverse Stock Split qualifies as a reorganization, a shareholder generally will not recognize gain or loss on the Reverse Stock Split. The aggregate tax basis of the post-Reverse Stock Split shares received will be equal to the aggregate tax basis of the pre-Reverse Stock Split shares exchanged therefor (excluding any portion of the holder’s basis allocated to fractional shares), and the holding period of the post-Reverse Stock Split shares received will include the holding period of the pre-Reverse Stock Split shares exchanged. The rounding up in respect of fractional shares will not result in a taxable event to a shareholder; however, there will be an adjustment to the shareholder’s basis equal to the fractional share times the market value on the date of issuance. No gain or loss will be recognized by us as a result of the Reverse Stock Split.
Accounting Matters
The par value of the Common Stock will remain unchanged at $1.00 per share after the Reverse Stock Split. As a result, our stated capital, which consists of the par value per share of the Common Stock multiplied by the aggregate number of shares of the Common Stock issued and outstanding, will be reduced proportionately at the effective time of the Reverse Stock Split. Correspondingly, our additional paid-in capital, which consists of the difference between our stated capital and the aggregate amount paid to us upon the issuance of all currently outstanding shares of Common Stock, will be increased by a number equal to the decrease in stated capital. Further, net loss per share, book value per share and other per share amounts will be increased as a result of the Reverse Stock Split because there will be fewer shares of Common Stock outstanding.
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Required Vote
The affirmative vote of the holders of a majority of these shares of Common Stock represented at the Special Meeting in person or by proxy is required to approve this proposal. Accordingly, abstentions and broker non-votes will be counted in determining the total number of shares “entitled to vote” on this proposal, but will have no effect on the vote total for this proposal. Shares represented by valid proxies and not revoked will be voted at the Special Meeting in accordance with the instructions given, if no voting instructions are given, such shares will be voted “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.this proposal.
No Dissenters or Appraisal Rights
Under the New Jersey Business Corporation Act, our Restated Certificate of Incorporation and our bylaws, the holders of Common Stock will not be entitled to dissenter’s rights or appraisal rights in connection with our Reverse Stock Split.
Board Recommendation
The Board unanimously recommends that you vote “FOR” to authorize the Board to effect a Reverse Stock Split of the issued and outstanding shares of our Common Stock by a ratio of no less than 1-for-3 and not more than 1-for 6, in the discretion of our Board.
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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,(i) each director of the Company, (ii) each named executive officer and seven(iii) directors and executive officers collectively, as of July 31, 2012.January 28, 2013. 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 Beneficial | Amount and Nature of | Percent of | |||
| Owner | Beneficial Ownership | Class (1) | |||
| Thomas A. Majewski | 129,250 | (2) | 1.2% | ||
| John H. Freeman | 338,000 | (3) | 3.1% | ||
| Roger C. Cady | 180,700 | (4) | 1.7% | ||
| Rose Ann Giordano | 69,361 | (5) | * | ||
| Marc P. Palker | - | * | |||
| Jeffrey H. Duncan | 106,080 | (6) | 1.0% | ||
| Anthony M. Lougee | 20,370 | (7) | * | ||
| David S. Sheerr | 270,000 | (8) | 2.5% | ||
| Directors and executive officers as a group (8 persons) | 1,113,761 | (9) | 9.8% | ||
___________________________ (1) On January 28, 2013, 10,521,755 shares were outstanding. (2) Of this amount, 72,000 shares may be acquired by the exercise of options held. (3) Of this amount, 330,000 shares may be acquired by the exercise of options held. (4) Of this amount, 60,000 shares may be acquired by the exercise of options held. (5) Of this amount, 56,000 shares may be acquired by the exercise of options held. (6) Of this amount, 124,200 shares may be acquired by the exercise of options held and 3,680 shares are held by the Company’s 401(k) Plan. (7) Of this amount, 12,000 shares may be acquired by the exercise of options held and 2,995 shares are held by the Company’s 401(k) Plan. (8) Of this amount, 270,000 shares may be acquired by the exercise of options held. (9) Of this amount, 736,200 shares may be acquired by the exercise of options held by executive officers, and 188,000 shares may be acquired by exercise of options held by outside directors. * Less than 1% |
CORPORATE GOVERNANCE
Board Leadership Structure
The Company presently separates the roles of Chief Executive Officer and Chairman of the Board. This serves to align the Chairman’s role with the Company’s independent directors and to further enhance the independence of the Board from management. The Chairman works closely with the Chief Executive Officer to set the agenda for meetings and to facilitate information flow between the Board and management.
Board Role in Risk Oversight
The Company’s Board plays an active role in risk oversight of the Company. The Board does not have a formal risk management committee, but administers this oversight function through various standing committees of the Board, which are described below. The Audit Committee periodically reviews overall enterprise risk management, in addition to maintaining responsibility for oversight of financial reporting-related risks, including those related to the Company’s accounting, auditing and financial reporting practices. The Audit Committee also reviews reports and considers any material allegations regarding potential violations of the Company’s Code of Ethics. The Compensation Committee oversees risks arising from the Company’s compensation policies and programs. This Committee has responsibility for evaluating and approving the executive compensation and benefit plans, policies and programs of the Company. The Nominating Committee oversees corporate governance risks and oversees and advises the Board with respect to the Company’s policies and practices regarding significant issues of corporate responsibility.
RELATED PARTY TRANSACTIONS
All transactions by the Company with a director or executive officer must be approved by the Board of Directors if they exceed $120,000 in any fiscal year. Apart from any transactions disclosed herein, no such transaction was entered into with any director or executive officer during the last fiscal year. Such transactions will be entered into only if found to be in the best interest of the Company and approved in accordance with the Company’s Code of Ethics, which are available on the Company’s web site.
During fiscal 2012 and 2011, the Company purchased inventories for resale totaling approximately $5,400,000 and $2,600,000 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, 2012 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 with Sheerr Memory’s owner. Under this agreement, the Company borrowed the principal sum of $1,000,000 for a period of six months, which the Company could extend for an additional three months without penalty. The loan bore interest at the rate of 5.25%, payable monthly. The entire principal amount was payable in the event of the employee’s termination of employment by the Company. The loan was secured by a security interest in all machinery, equipment and inventory of Dataram at its Montgomeryville, PA location. The loan was repaid in full on August 13, 2010. No further financing is available to the Company under this agreement.
On July 27, 2010, the Company entered into an agreement with a vendor Sheerr Memory, to consign a formula-based amount of up to $3,000,000 of certain inventory into the Company’s manufacturing facilities. As of April 30, 2011, the Company has received financing totaling $1.5 million under this agreement, of which $1,000,000 was used to repay in full a note payable to the employee arising from an agreement entered into with the employee in February, 2010 and which expired in August 2010. On December 14, 2011, the Company repaid the loan in full. No further financing is available to the Company under this agreement.
On December 14, 2011, the Company entered into a new Note and Security Agreement with Mr. Sheerr. The agreement provides for secured financing of up to $2,000,000. The Company is obligated to pay monthly, interest equal to 10% per annum calculated on a 360 day year of the outstanding loan balance. Principal is payable in sixty equal monthly installments, beginning on July 15, 2012. The Company may prepay any or all sums due under this agreement at any time without penalty. On closing, the Company borrowed $1,500,000 under the agreement and repaid in full the $1,500,000 due under the Consignment Agreement described in the proceeding paragraph. As of January 31, 2012, the Company has borrowed the full $2,000,000 available under this agreement. Principal amounts due under this obligation are $33,000 per month beginning on July 15, 2012. For the next fiscal year following April 30, 2012, the principal amount due under this obligation is $333,000. In each of four fiscal periods from May 1, 2013 thru April 30, 2017, the principal amounts due under this obligation are $400,000. In the fiscal period from May 1, 2017 thru June 30, 2017, the principal amount due on this obligation is $67,000.
The Company compensates its Interim Chief Financial Officer, Marc P. Palker, as a consultant through payment to CFO Consulting Partners, LLC, at the rate of $200 per hour. Mr. Palker has been director of CFO Consulting Partners, LLC since March 2010. Such payments totaled approximately $95,000 as of April 30, 2012. Mr. Palker does not receive any compensation for his services as Interim Chief Financial Officer directly from the Company and does not participate in any of the Company’s employee benefit plans. Additional information regarding Mr. Palker’s compensation is set forth under “Executive Compensation” below.
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 2012 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. In the past, the Company has awarded stock options to executive officers under various stock option plans. Currently the Company’s only option plan allows the award of options to purchase shares of common stock to employees (other than executive officers) of, and consultants to, the Company. The Company therefore does not currently anticipate awarding options to present executive officers in the near 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, Duncan and Sheerr. The agreements with Messrs. Freeman 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, 2012.
Thomas A. Majewski, Chairman
Roger C. Cady
Rose Ann Giordano
Summary Compensation
The following table sets forth the compensation paid for the fiscal years ended April 30, 2012, 2011 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 Principal Position | Fiscal Year | Salary | Bonus | Other(1) | Option Awards(2) | Other Compensation(3) | Total |
| John H. Freeman | 2012 | $275,000 | $0 | $0 | $0 | $12,375 | $287,375 |
| President and Chief | 2011 | 275,000 | 10,000 | 0 | 0 | 12,375 | 297,375 |
| Executive Officer | 2010 | 275,000 | 68,640 | 0 | 247,500 | 12,375 | 603,515 |
| Mark E. Maddocks | 2012 | 143,321 | 4,000 | 5,850 | 0 | 7,431 | 153,171 |
| (Retired Jan. 13, 2012) | 2011 | 201,424 | 12,000 | 7,800 | 0 | 9,064 | 230,288 |
| Vice President-Finance, | 2010 | 201,424 | 25,000 | 7,800 | 140,100 | 9,060 | 383,388 |
| Chief Financial Officer | |||||||
| Marc P. Palker | 2012 | - | - | - | - | - | - |
| Chief Financial Officer(4) | |||||||
| Jeffrey H. Duncan | 2012 | 199,032 | 21,000 | 7,800 | 0 | 8,956 | 236,788 |
| Vice President- | 2011 | 199,032 | 23,000 | 7,800 | 0 | 8,956 | 238,788 |
| Manufacturing and Engineering | 2010 | 199,032 | 27,000 | 7,800 | 140,100 | 8,956 | 382,888 |
| Anthony M. Lougee | 2012 | 128,308 | 15,000 | 0 | 0 | 5,774 | 149,081 |
| Controller | 2011 | 125,000 | 11,000 | 0 | 0 | 5,624 | 141,624 |
| 2010 | 125,000 | 15,600 | 0 | 5,928 | 5,624 | 152,152 | |
| David S. Sheerr | 2012 | 200,000 | 20,000 | 0 | 53,100 | 9,000 | 282,100 |
| General Manager | 2011 | 200,000 | 68,105 | 0 | 90,000 | 9,000 | 367,105 |
| Micro Memory Bank | 2010 | 200,000 | 100,000 | 0 | 49,400 | 9,000 | 358,400 |
Grants of Plan-Based Awards (1)
There were no grants of plan-based awards to named executive officers of the Company in the Company’s fiscal year ended April 30, 2012.
The Company does not presently have any Equity Incentive Plan other than its 2011 Stock Option Plan and does not have a Non Equity Incentive Plan other than the bonus pool. The size of grants under the 2011 Stock Option Plan and the bonus pool are not predetermined in accordance with an incentive award.
| Grant | Option | Exercise | Grant Date |
| Date | Awards | Price (2) | Value (3) |
| 9/22/2011 | 100,000 | $1.06 | $90,000 |
Narrative Description of Summary Compensation
Salary and bonus constituted approximately 91% of total compensation for the named executive officers in fiscal 2012. Options granted to Mr. Sheerr are five year options exercisable one year after the grant date. All options granted are at an exercise price equal to the closing market price of the Company’s common stock on the date of grant. No dividends are paid or accrued with respect to options for the benefit of employees prior to the date of option exercise.
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Outstanding Options
The following table sets forth information concerning outstanding stock options at the fiscal year-end, April 30, 2012.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| Name | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Option Exercise Price($) | Option Expiration Date |
| John H. Freeman | ||||
| 2008(1) | 8,000 | 0 | 3.33 | 09/27/2012 |
| 2009 | 150,000 | 0 | 3.20 | 05/07/2018 |
| 2010 | 180,000 | 0 | 2.57 | 09/24/2019 |
| Jeffrey H. Duncan | ||||
| 2003 | 8,200 | 0 | 2.99 | 09/18/2012 |
| 2004 | 8,200 | 0 | 4.09 | 09/17/2013 |
| 2008 | 8,000 | 0 | 3.33 | 09/27/2012 |
| 2009 | 8,000 | 0 | 1.99 | 09/25/2018 |
| 2010(2) | 70,000 | 30,000 | 2.57 | 09/24/2019 |
| Anthony M. Lougee | ||||
| 2003 | 1,875 | 0 | 2.99 | 09/18/2012 |
| 2004 | 2,500 | 0 | 4.09 | 09/17/2013 |
| 2008 | 3,500 | 0 | 3.33 | 09/27/2012 |
| 2009 | 3,500 | 0 | 1.99 | 09/25/2013 |
| 2010 | 6,000 | 0 | 2.57 | 09/24/2014 |
| David Sheerr | ||||
| 2009 | 20,000 | 0 | 1.28 | 04/15/2014 |
| 2010 | 50,000 | 0 | 2.57 | 09/24/2014 |
| 2011 | 100,000 | 0 | 1.76 | 09/23/2015 |
| 2012(3) | 100,000 | 0 | 1.06 | 09/22/2016 |
All options granted are at an exercise price equal to the closing market price of the Company’s common stock on the date of grant.
Option Exercises
There were no stock option exercises by named executive officers during the fiscal year ended April 30, 2012.
EQUITY COMPENSATION PLAN INFORMATION AT APRIL 30, 2012
| Plan Category | Number of Securities to be issued upon exercise of outstanding options | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||
| (a) | (b) | (c) | ||||
| Equity compensation plans approved by security holders | 1,545,900 | $2.46 | 200,000 | |||
| Equity compensation plans not approved by security holders | 0 | - | 0 | |||
| Total | 1,545,900 | $2.46 | 200,000 |
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.
Jeffrey H. Duncan entered into an Employment Agreement with the Company as of February 1, 2005. The 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 annual base compensation under the agreement is $199,032, which is subject to annual review by the Board of Directors. In addition, Mr. Duncan will receive a bonus based upon a formula which shall be reviewed and approved annually by the Board of Directors. The agreement may be terminated by the Company for cause and expire upon the death or six months after the onset of the disability of Mr. Duncan. In the event of termination or non-renewal, Mr. Duncan is entitled to one year’s base salary at the current rate plus a pro rata bonus for the current year. The agreement contains terms concerning confidentiality, post-employment restrictions on competition and non-solicitation of Company employees.
David Sheerr entered into an Employment Agreement with the Company as of March 31, 2009. The agreement has an initial term of four years and continues on a year to year basis thereafter until terminated by the Company on thirty (30) days notice before April 30th of each year. The current base compensation under the agreements for Mr. Sheerr is $200,000, which is subject to annual review by the Board of Directors. In addition the executive will receive a bonus based upon a formula based upon the operating performance of the Company’s Micro Memory Bank business unit. The Employment Agreement may be terminated by the Company for cause and expires upon the death or six months after the onset of the disability of the executive. In the event of termination or non-renewal, the executive is entitled to six months’ base salary at the current rate plus a pro rata bonus for the current year. The Employment Agreement contains terms concerning confidentiality, post-employment restrictions on competition and non-solicitation of Company employees.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Securities and Exchange Commission rules regarding disclosure of executive compensation require proxy statement disclosure of specified information regarding certain relationships of members of the Company’s Board of Directors with the Company or certain other entities. None of the members of the Corporation’s Board of Directors has a relationship requiring such disclosure.
RATIFICATION OF THE SELECTION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has selected J.H. Cohn LLP as the independent certified public accountants to the Company for the fiscal year ending April 30, 2013. 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:
| 2012 | 2011 | |||||||
| Audit fees | $ | 154,190 | $ | 146,020 | ||||
| Audit related fees (1) | 15,500 | 15,000 | ||||||
| Tax fees (2) | 2,570 | 12,900 | ||||||
| Total fees | $ | 172,260 | $ | 173,920 | ||||
______________
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, 2012 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, 2012 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.
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 2013 ANNUAL MEETING
Any shareholder wishing to present a proposal which is intended to be presented at the 2013 Annual Meeting of Shareholders should submit such proposal to the Company at its principal executive offices no later than April 12, 2013. It is suggested that any proposals be sent by certified mail, return receipt requested.
BOARD OF DIRECTORS
The Board of Directors has a process for shareholders to communicate with directors. Shareholders should write to the President at the Company’s mailing address and specifically request that a copy of the letter be distributed to a particular board member or to all board members. Where no such specific request is made, the letter will be distributed to board members if material, in the judgment of the President, to matters on the Board’s agenda.
The Board of Directors of the Company met 10 times during the last fiscal year. It is the policy of the board that all members will attend the Annual Meeting of Shareholders and all members of the board attended last year’s meeting.
The Board of Directors has a standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended, whose members are Roger C. Cady, Thomas A. Majewski and Rose Ann Giordano. This Committee met 4 times during the last fiscal year. The principal functions of the Audit Committee are evaluation of work of the auditors, review of the accounting principles used in preparing the annual financial statements, review of internal controls and procedures and approval of all audit and non-audit services of the auditor. The Company’s Board of Directors has adopted a written charter for the Audit Committee which may be viewed at the Company’s website,www.dataram.com.Each member of the Audit Committee is “independent” within the meaning of the NASDAQ listing standards. The Board of Directors has determined that Mr. Majewski is a “financial expert” within the meaning of those standards and an “audit committee financial expert” within the meaning of Item 401(h) of SEC Regulation S-K and is “independent” as that term is used in Item 7(d)(3)(iv) of Schedule 14A of the Proxy Rules.
The Board of Directors has a standing Compensation Committee whose members are Roger C. Cady, Thomas A. Majewski and Rose Ann Giordano, all of whom are “independent” within the meaning of the NASDAQ listing standards. This committee relies upon the advice of the Company’s chief executive officer who makes recommendations both concerning director compensation and the compensation of other executive officers. This Committee meets as required. 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 meets as required. 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, 2012:
| Fees | Option | All | |||
| Name | Earned(1) | Awards | Other | Total | |
| Thomas A. Majewski | $ 24,000 | 0 | 0 | $ 24,000 | |
| Roger C. Cady | $ 24,000 | 0 | 0 | $ 24,000 | |
| Rose Ann Giordano | $ 24,000 | 0 | 0 | $ 24,000 | |
(1) All directors’ fees, except for option awards, are paid in cash in the year earned. Directors who are not employees of the Company received a quarterly payment of $6,000. During fiscal 2012, no options were issued to directors of the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Securities and Exchange Commission requires that the Company report to shareholders the compliance of directors, executive officers and 10% beneficial owners with Section 16(a) of the Securities Exchange Act of 1934, as amended. This provision requires that such persons report on a current basis most acquisitions or dispositions of the Company’s securities. Based upon information submitted to the Company, all directors, executive officers and 10% beneficial owners have fully complied with such requirements during the past fiscal year, except that Form 3 for Marc P. Palker, Chief Financial Officer of the Company, was filed two 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 2012 Annual Report to Security Holders, which is enclosed.
By Order of the Board of Directors,
THOMAS J. BITAR,SecretaryJohn H. Freeman, President
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, 2012, 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 Chief Financial Officer, Dataram Corporation, P.O. Box 7528, Princeton, New Jersey 08543-7528.
EXHIBIT A
Certificate of Amendment
of
Restated Certificate of Incorporation
of
Dataram Corporation
Pursuant to the provisions of Section 14-A:9-2(4) and Section 14.A:9-4(3), Corporations, General, of the New Jersey Statutes, the undersigned corporation executes the following Certificate of Amendment to its Restated Certificate of Incorporation:
1. The name of the corporation is “Dataram Corporation.”
2. The following amendment to the Certificate of Incorporation was approved by the directors and thereafter duly adopted by the shareholders of the corporation on the _____ day of _________________, 2013.
3. The number of shares outstanding at the time of the adoption of the amendment was: [______________________]. The total number of shares entitled to vote thereon was: [________________] shares of Common Stock.
4. The number of shares voting for and against such amendment is as follows:
Number of Shares Voting for Amendment: [_________________________].
Number of Shares Voting Against Amendment: [__________________________].
Resolved, that Restated Articles of the Certificate of Incorporation be amended to read as follows:
5. Upon this Certificate of Amendment of the Restated Certificate of Incorporation of the Company becoming effective pursuant to the New Jersey Business Corporation Act (the “Effective Time”), each share of common stock of the Corporation, no par value per share (the “Old Common Stock”), issued and outstanding immediately prior to the Effective Time, shall without further action on the part of the Corporation or any holder of Old Common Stock automatically be reclassified as ________________ of a share of Common Stock. Any stock certificate that, immediately prior to the Effective Time, represented shares of the Old Common Stock will, from and after the Effective Time, automatically and without the necessity of presenting the same for exchange, represent the number of shares of Common Stock as equals the quotient obtained by dividing the number of shares of Old Common Stock represented by such certificate immediately prior to the Effective Time by _________________________; provided, however, that each holder of record of a certificate that represented shares of Old Common Stock shall receive upon surrender of such certificate a new certificate representing the number of shares of Common Stock into which the shares of Old Common Stock represented by such certificate have been reclassified pursuant hereto. In all cases, fractional shares resulting from the reclassification will be rounded up to the nearest whole share.
6. This Certificate of Amendment shall become effective immediately upon filing with the State of New Jersey.
By:____________________________________
Dated this ____ day of ________________, 2013
May be executed by the President or the Chief Financial Officer
| A-1 |
DATARAM CORPORATION
P.O. Box 7528
Princeton, New Jersey 08543-7528
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints and constitutes John H. Freeman and Marc P. Palker, 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 Special Meeting of the Shareholders of Dataram Corporation (the "Company") to be held at the Company's corporate headquarters at 777 Alexander Road, Princeton, New Jersey, on March 13, 2013 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:
(Continued and to be signed on the reverse side.)
14475
SPECIAL MEETING OF SHAREHOLDERS OF
DATARAM CORPORATION
March 13, 2013
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:
The Notice of Meeting, proxy statement and annual report
are available at www.dataram.com
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
↓ Please detach along perforated line and mail in the envelope provided. ↓
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL 1 AND “FOR” PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HEREý
1. Authorize the Board of Directors to effectuate a reverse split in a ratio of not less than 1-for-3 and not more than 1-for-6, such ratio to be determined by our Board of Directors: FOR AGAINST ABSTAIN ¨ ¨ ¨ l | ||
| To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. | ¨ | |
| Signature of Shareholder _________________________ Date ________________ Signature of Shareholder________________________________ Date________________ | ||
| Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. | ||
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