Edgar Filing: RIMAGE CORP

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PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
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RIMAGE CORPORATION
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(Name of Registrant as Specified in Its Charter)

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RIMAGE CORPORATION
7725 Washington Avenue South
Minneapolis, Minnesota 55439
(952) 944-8144
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 21, 2003
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TO THE SHAREHOLDERS OF
RIMAGE CORPORATION:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Rimage Corporation, a Minnesota corporation, will be held on Wednesday, May 21,
2003, at 3:30 p.m. (Minneapolis time), at the Minneapolis Marriott Southwest,
5801 Opus Parkway, Minnetonka, Minnesota, for the following purposes:

1. To elect six (6) directors of the Company for the coming year.

2. To approve the Rimage Corporation Amended and Restated 1992
Stock Option Plan.

3. To transact such other business as may properly come before
the meeting or any adjournment thereof.

Only holders of record of Rimage Corporation's common stock at the
close of business on April 8, 2003 are entitled to notice of and to vote at the
Annual Meeting or any adjournment thereof.

Each of you is invited to attend the Annual Meeting in person if
possible. Whether or not you plan to attend in person, please mark, date and
sign the enclosed proxy, and mail it promptly. A return envelope is enclosed for
your convenience.

By Order of the Board of Directors

Bernard P. Aldrich
President and Chief Executive Officer

April 18, 2003

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WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING,
PLEASE SIGN THE PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
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RIMAGE CORPORATION
7725 Washington Avenue South
Minneapolis, Minnesota 55439
(952) 944-8144

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PROXY STATEMENT
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SOLICITATION OF PROXIES

The accompanying Proxy is solicited on behalf of the Board of Directors
of Rimage Corporation (the "Company" or "Rimage") for use at the Annual Meeting
of Shareholders to be held on May 21, 2003, at 3:30 p.m. at the Minneapolis
Marriott Southwest, 5801 Opus Parkway, Minnetonka, Minnesota, and at any
adjournments thereof. The cost of solicitation, including the cost of preparing
and mailing the Notice of Annual Shareholders' Meeting and this Proxy Statement,
will be paid by the Company. Representatives of the Company may, without cost to
the Company, solicit proxies for the management of the Company by means of mail,
telephone or personal calls.

Shares of the Company's common stock, $.01 par value, represented by
proxies in the form solicited, will be voted in the manner directed by a
shareholder. If no direction is made, the proxy will be voted for the election
of the nominees for director named in this Proxy Statement, for approval of the
other proposals contained in this Proxy Statement and for any other matters
properly brought before the meeting. Shares voted as a "withhold vote for" one
or more directors will be counted as shares that are present and entitled to
vote for purposes of determining the presence of a quorum at the meeting and as
unvoted, although present and entitled to vote, for purposes of the election of
the directors with respect to which the shareholder has abstained. If a broker
submits a proxy that indicates the broker does not have discretionary authority
to vote certain shares, those shares will be counted as shares that are present
and entitled to vote for purposes of determining the presence of a quorum at the
meeting, but will not be considered as present and entitled to vote with respect
to the matters voted on at the meeting. Each proposal presented at this Annual
Meeting will be approved by the affirmative vote of the holders of a majority of
shares of common stock present at the Annual Meeting, either in person or by
proxy, and entitled to vote.

Proxies may be revoked at any time before being exercised by delivery
to the Secretary of the Company of a written notice of termination of the
proxies' authority or a duly executed proxy bearing a later date.

Only holders of record of common stock at the close of business on
April 8, 2003 will be entitled to receive notice of and to vote at the meeting.
On April 8, 2003, the Company had 8,740,190 shares of common stock outstanding.
Each outstanding share is entitled to one vote on all matters presented at the
meeting.

So far as the management of the Company is aware, no matters other than
those described in this Proxy Statement will be acted upon at the Annual
Meeting. In the event that any other matters properly come before the Annual
Meeting calling for a vote of shareholders, the persons named as proxies in the
enclosed form of proxy will vote in accordance with their best judgment on such
other matters.

A copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 2002, is being furnished to each shareholder with this Proxy
Statement. This Proxy Statement is being mailed to shareholders on or about
April 18, 2003.

OWNERSHIP OF VOTING SECURITIES BY PRINCIPAL HOLDERS AND MANAGEMENT

The following table sets forth certain information as of April 8, 2003
with respect to the Company's common stock beneficially owned by (i) each
director and each nominee for director, (ii) each person known to the Company to
beneficially own more than five percent of the Company's common stock, (iii)
each executive officer named in the Summary Compensation Table (the "Named
Executive Officers"), and (iv) all executive officers and directors as a group.

Number of Shares Percent of
Name and Address of Beneficial Owner Beneficially Owned(1) Outstanding
------------------------------------ ---------------------- -----------

Kern Capital Management LLC(2).......... 1,300,000 14.9%
114 West 46th Street, Suite 1926
New York, NY 10036

Richard F. McNamara(3)(4)............... 1,026,625 11.5%
7808 Creekridge Circle
Minneapolis, MN 55439

Ronald R. Fletcher(4)(5)................ 360,812 4.0%

Bernard P. Aldrich(4)(6)(7)(8).......... 276,866 3.1%

James L. Reissner(4)(6)................. 184,849 2.1%

David J. Suden(4)(6)(8)(9).............. 179,428 2.0%

Steven M. Quist(4)(6)................... 25,000 *

Thomas F. Madison(4)(6)................. 10,000 *

Larry M. Benveniste(6).................. 0 *

Kenneth J. Klinck(8).................... 94,789 1.1%

Robert M. Wolf(8)....................... 34,701 *

All executive officers and directors as
a group (9 persons)..................... 2,193,070 22.4%

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* Less than one percent

(1) Includes shares which could be purchased within 60 days upon the exercise
of the following stock options: Mr. Fletcher, 250,750 shares; Mr. McNamara,
168,750 shares; Mr. Aldrich, 243,126 shares; Mr. Suden, 98,126 shares; Mr.
Reissner, 150,000; Mr. Quist, 25,000 shares; Mr. Madison, 10,000; Mr.
Klinck, 91,251; Mr. Wolf, 31,821 shares and all directors and executive
officers as a group, 1,068,824 shares.

(2) Based on Amendment No. 3 to Schedule 13G filed February 14, 2003.

(3) Includes 294,250 shares held by a charitable foundation for which Mr.
McNamara serves as a trustee and for which he disclaims beneficial
ownership; also includes 1,000 shares owned jointly with spouse.

(4) Serves as a director of the Company.

(5) Includes 2,500 shares held by a minor child.

(6) Nominated for election as a director.

(7) Includes 450 shares held as custodian for minor children.

(8) Serves as an executive officer of the Company.

(9) Includes 81,302 shares owned jointly with spouse.

PROPOSAL 1:
ELECTION OF DIRECTORS

Pursuant to its bylaws, the Company has set the number of Directors at
seven. Although the Company will continue to seek qualified individuals to fill
the additional director position, only six directors will be elected at the
Annual Meeting to serve until the next Annual Meeting of Shareholders or until
their successors are elected. Messrs. McNamara and Fletcher, directors of the
Company since 1987, are retiring from the Board of Directors and will not stand
for re-election at this Annual Meeting. Proxies cannot be voted for a greater
number of persons than the number of nominees named. The Board of Directors has
nominated for election the six persons named below. Each nominee, other than Mr.
Larry M. Beveniste, is currently a director of the Company.

All nominees elected at the Annual Meeting will serve until the next
Annual Meeting or until their earlier death, resignation, removal, or
disqualification. The persons named in the accompanying Proxy intend to vote the
proxies held by them in favor of the nominees named below as directors, unless
otherwise directed. The affirmative vote of a majority of the voting shares
represented at the meeting, either in person or by proxy, is required for the
election of each director. Should any nominee for director become unable to
serve as a director for any reason, the proxies will be voted in accordance with
the best judgment of the persons named therein. The Board of Directors has no
reason to believe that any candidate will be unable to serve if elected.

The following information is furnished with respect to each nominee as
of April 8, 2003:

PRINCIPAL OCCUPATION AND DIRECTOR
NAME AND AGE BUSINESS EXPERIENCE FOR PAST FIVE YEARS SINCE
------------ --------------------------------------- -----

Bernard P. Aldrich Chief Executive Officer, President and a director of Rimage since 1996
Age 53 December 1996. President from January 1995 to December 1996 of
several manufacturing companies controlled by Activar, Inc.,
including Eiler Spring, Comfort Ride and Bending Technologies.
Director of Apogee Enterprises, Inc.

Thomas F. Madison President and Chief Executive Officer of MLM Partners, a consulting 2001
Age 67 and small business investment company since January 1993; Chairman of
Communications Holdings, Inc. from December 1996 to March 1999;
Chairman of AetherWorks, Inc. since August 1999; Vice Chairman and
Chief Executive Officer of Minnesota Mutual Life Insurance Company
from February 1994 to September 1994. Director of Valmont Industries
Inc., Reliant Energy Minnegasco, ACI Telecentrics, Digital River,
Inc., Span Link Communications, Lightning Rod Software, Inc. and
Delaware Group of Funds.

Steven M. Quist General Manager of CyberOptics Semiconductor, Inc. subsidiary of 2000
Age 57 Cyberoptics Corporation. Until January 2003, President and Chief
Executive Officer of CyberOptics Corporation since February 1998.
Director of CyberOptics Corporation since June 1991. President of
Rosemount Inc., a subsidiary of Emerson Electric Co., 1992 until
1998. Director of Data I/O Corporation.

James L. Reissner President of Activar, Inc., since January 1996 and Chief Financial 1998
Age 63 Officer of Activar from 1992 until becoming President. Acted in
various management and financial management capacities during the
past twenty years, including Managing Director of the Minnesota
Region of First Bank Systems, Inc., until 1990. Director of Intek,
Inc., Winland, Inc. and Magstar Technologies, Inc.

David J. Suden Chief Technology Officer of Rimage since December 1996 and a director 1995
Age 56 since September 1995; President of Rimage from October 1994 through
November 1996; Vice President-Development and Operations of Rimage from
February 1991 to October 1994.

Larry M. Benveniste Dean of Carlson School of Management at the University of Minnesota Nominee
Age 52 since December 2001. Carlson School of Management Associate Dean for
Faculty and Research from 2000 to 2001, Chair of Finance Department of
Carlson School of Management from 1999 to 2000. US Bancorp Professor of
Finance from 1996 to 1999.

The Company knows of no arrangements or understandings between a
director or nominee and any other person pursuant to which he has been selected
as a director or nominee. There is no family relationship between any of the
nominees, directors or executive officers of the Company.

COMMITTEES OF THE BOARD OF DIRECTORS

During calendar year 2002, the Board of Directors met five times. The
Board of Directors has established a Compensation Committee and an Audit
Committee. On February 12, 2003, the Board of Directors also established a
Governance Committee. During 2002, the Compensation Committee met one time and
the Audit Committee met five times. Each nominee for director attended at least
75% of the meetings of the Board and committees on which he served during 2002.

The Compensation Committee reviews and makes recommendations to the
Board of Directors regarding salaries, compensation and benefits of executive
officers and senior management of the Company. The Compensation Committee also
administers the Company's 1992 Stock Option Plan. The current members of the
Compensation Committee are Messrs. Quist (Chair), Reissner and Madison.

The Governance Committee is charged with the responsibility of
establishing an appropriate structure for the governance of the Board, including
the processes of director selection and tenure, setting and monitoring Board
performance and management succession. The current members of the Governance
Committee are Thomas F. Madison (Chair) and Steven M. Quist.

The Governance Committee will consider nominees recommended by the
Company's shareholders, provided such shareholder is eligible to make such
nomination under, and follows the procedures set forth in, Section 3.14 of the
Company's Amended and Restated Bylaws. The Company's Amended and Restated Bylaws
provide that for a nomination to be properly made, a shareholder must provide
written notice to the Company's Secretary on or before December 20, 2003 setting
forth: (A) the name and record address of the shareholder and of the beneficial
owner, if any, on whose behalf the nomination will be made, and (B) the class
and number of shares of the corporation owned by the shareholder and
beneficially owned by the beneficial owner, if any, on whose behalf the
nomination will be made. As to each person the shareholder proposes to nominate,
the written notice must also state: (A) the name, age, business address and
residence address of the person, (B) the principal occupation or employment of
the person and (C) the class and number of shares of the corporation's capital
stock beneficially owned by the person.

Among its other functions, the Audit Committee selects the Company's
independent auditors, reviews the internal and external financial reporting of
the Company, reviews the scope of the independent audit, reviews all non-audit
services provided by the auditors, approves auditor fees and determines auditor
independence. The Audit Committee operates under a written charter adopted by
the Board of Directors on May 10, 2000 and amended on February 12, 2003. A copy
of the Charter of the Audit Committee of the Board of Directors of Rimage
Corporation currently in effect is attached to this Proxy Statement as Appendix
A. The Company's Audit Committee presently consists of three directors: James L.
Reissner (Chair), Steven M. Quist and Thomas F. Madison. The Board of Directors
has determined that all members of the Audit Committee are "independent"
directors under the Nasdaq Marketplace Rules.

DIRECTORS' FEES

Directors currently receive a fee of $3,000 for each meeting of the
Board of Directors which they attend. Additionally, under the Company's 2001
Stock Option Plan for Non-Employee Directors (the "Director Plan"), each
non-employee director of the Company receives a non-qualified option to purchase
5,000 shares of common stock at each annual meeting of shareholders at which
such director is elected or re-elected beginning with the 2001 Annual Meeting.
At the 2002 Annual Meeting of Shareholders held on May 21, 2002, Messrs.
Fletcher, McNamara, Quist, Reissner and Madison each received an option to
purchase 5,000 shares of the Company's common stock.

The exercise price of all options under the Director Plan is equal to
the fair market value (the closing sale price on the Nasdaq if so traded) of the
common stock on the date of such annual meeting. All options granted under the
Director Plan are fully exercisable from the date of grant. Options under the
Director Plan are not transferable. An option granted under the Director Plan
expires at the earlier of ten years from the date of grant or, if the optionee
ceases to be a director, (a) within twelve months, in the case of death or
disability (b) as of the date of misconduct, in the case of willful misconduct
or (c) within 90 days, if for any other reason. In the event Proposal 2 is
approved by the Company's shareholders, options to non-employee directors will
no longer be granted under the Director Plan, but will be granted under the
Amended and Restated 1992 Stock Option Plan.

THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OF THE COMMON
STOCK REPRESENTED AT THE ANNUAL MEETING AND ENTITLED TO VOTE IS NECESSARY FOR
ELECTION OF THE NOMINEES TO THE BOARD OF DIRECTORS DESCRIBED ABOVE. PROXIES WILL
BE VOTED IN FAVOR OF EACH NOMINEE UNLESS OTHERWISE INDICATED.

THE BOARD OF DIRECTORS RECOMMENDS
THAT THE SHAREHOLDERS VOTE FOR
THE ELECTION OF EACH NOMINEE
---------------------------------

PROPOSAL 2:
APPROVAL OF RIMAGE CORPORATION
AMENDED AND RESTATED 1992 STOCK OPTION PLAN

On April 4, 2003, the Company's Board of Directors approved, subject to
shareholder approval, the Amended and Restated 1992 Stock Option Plan (the
"Plan"), including amendments that will:

- allow for the issuance of restricted stock

- provide for annual grants of non-qualified stock options to
non-employee directors, in lieu of annual stock option grants under
the Company's 2001 Non-Employee Director Plan

- reserve for issuance under the Plan an additional 400,000 shares of
common stock

- extend the Plan to May 21, 2013.

The Plan is intended to promote the growth and profitability of the
Company by providing its employees, consultants and directors with an incentive
to achieve long-term corporate objectives, to attract and retain employees,
consultants and directors of outstanding competence, and to provide such
employees, consultants and directors with an equity interest in the Company.

DISCUSSION OF AMENDMENTS

RESTRICTED STOCK. The Plan does not currently provide for the grant of
restricted stock. However, the Company believes that the grant of restricted
stock is one additional method which may be used to attract and retain
employees, consultants and directors. Accordingly, the Board of Directors has
amended the Plan to allow the grant of restricted stock.

ANNUAL OPTION GRANT TO NON-EMPLOYEE DIRECTORS. The Plan has also been
amended to allow for annual grants of non-qualified stock options to the
Company's non-employee directors in lieu of grants under the Company's 2001
Non-Employee Director Plan (the "Director Plan"). The Director Plan was adopted
to standardize the time, date, amount and terms of annual grants to directors.
If Proposal 2 is adopted, no further option grants will be made under the
Director Plan and grants of stock options to non-employee directors will be made
exclusively under the Plan, including the stock option grants to non-employee
directors elected or re-elected at this Annual Meeting. The Board of Directors
believes that providing for these types of grants to non-employee directors
under the Plan will allow for greater ease in administering the Company's plans.

Assuming Proposal 2 is approved, the Committee has determined that
non-employee directors elected or re-elected at this 2003 Annual Meeting will
receive an option to purchase 5,000 shares of the Company's common stock. The
following table sets forth the information with respect to options that will be
granted under the Plan to nominees upon their election or reelection to the
Board of Directors and shareholder approval of the Plan at the 2003 Annual
Meeting:

NAME NUMBER OF SHARES
Thomas F. Madison 5,000
Steven M. Quist 5,000
James L. Reissner 5,000
Larry M. Benveniste 5,000
All Non-Employee Directors, 20,000
as a Group

INCREASE OF NUMBER OF SHARES AUTHORIZED. Stock options have
historically been a key component in the compensation packages for both
executive and technical personnel. Without the ability to grant awards of
additional options or restricted stock, the Board of Directors of the Company
does not believe that it would have the appropriate tools to attract and retain
these personnel. At March 31, 2003, there were 2,795,000 shares reserved under
the Plan and 170,908 shares remain available for grant under the Plan. In
addition, there are 25,000 shares remaining available for issuance under the
Director Plan. Because the Plan will allow for automatic annual option grants to
non-employee directors which grants have historically been made under the
Director Plan, the Board of

Directors has determined that the increase in the number of shares available
under the Plan should also reflect the shares which would be available for grant
under the Director Plan. If Proposal 2 is adopted, no further grants will be
made under the Director Plan. The Board of Directors has amended the Plan to
increase the number of shares available for issuance by 400,000, which
represents 25,000 shares currently available for issuance under the Director
Plan and 375,000 additional shares. The Board of Directors believes this
increase will provide enough authorization to cover anticipated option grants or
restricted stock awards for at least the next two years and allow for the annual
option grant to non-employee directors.

EXTENSION OF THE PLAN. The Plan initially became effective with respect
to 250,000 shares on September 24, 1992, upon its adoption by the Board of
Directors of the Company and approval by the shareholders of the Company. The
Plan was amended by shareholders on June 5, 1994, July 11, 1997, May 10, 2000
and May 23, 2001. To provide for the future administration of, and continuing
benefits under, the Plan, the Board of Directors has amended the Plan to expire
ten years after the date of this Annual Meeting, or on May 21, 2013.

SUMMARY OF THE PLAN

The following summary is qualified in its entirety by reference to the
full text of the Rimage Corporation Amended and Restated 1992 Stock Option Plan
attached to this Proxy Statement as Appendix B.

ADMINISTRATION. The Plan is administered by the Compensation Committee
of the Board (the "Committee"). Except with respect to options granted to
non-employee directors, the Committee has the authority to select the
individuals to whom awards are granted, to determine the types of awards to be
granted and the number of shares of common stock covered by such awards, to set
the terms and conditions of such awards, to determine whether the payment of any
amounts received under any award shall or may be deferred, and to establish
rules for the administration of the Plan.

ELIGIBLE EMPLOYEES. All employees are eligible to receive options under
the Plan, including officers and directors of the Company who are also employees
of the Company. Any employee, officer, director or consultant of the Company and
its affiliates selected by the Committee is eligible to receive an option or
restricted stock award under the Plan. The Company has approximately 140
full-time employees, including four executive officers, eligible for grants of
stock options or restricted stock awards. At this 2003 Annual Meeting, there are
four non-employee directors eligible for an automatic option grant as provided
in the Plan. The Committee, in its discretion may also grant other awards under
the Plan to directors, including awards relating to service on committees of the
Board of Directors.

PLAN AWARDS. The Plan permits the granting of incentive stock options
meeting the requirements of Section 422 of the Code, and stock options that do
not meet such requirements (non-qualified stock options) and restricted stock.

No option under the plan may have a term of more than ten years. The
exercise price per share under any incentive stock option may not be less than
100% of the fair market value of the common stock on the date of the grant of
such option or other award. Any person who holds more than 10% of the Company's
common stock may not receive an incentive option that has a term longer than
five years or an exercise price of less than 110% of the fair market value on
the date of grant. Determinations of fair market value under the Plan are made
in accordance with methods and procedures set forth in the Plan. Each option is
exercisable, during such individual's lifetime, only by such individual or, if
permissible under applicable law, by such individual's guardian or legal
representative.

Additionally, at each annual meeting of shareholders at which a
non-employee director of the Company is elected or re-elected, such non-employee
director will receive an option to purchase 5,000 shares of common stock, or
such other number of shares, not to exceed 15,000 shares of common stock, as
determined by the Committee from time to time. The exercise price of the
non-employee director option will be equal to the fair market value (the closing
sale price on the Nasdaq if so traded) of the common stock on the date of such
annual meeting. Options granted to non-employee directors under the Plan will be
fully exercisable six months after the date of grant. If an optionee ceases to
be a director by reason of willful misconduct, the option will expire as of the
date of misconduct. Other than in the case of willful misconduct, options expire
ten years from the date of grant and remain exercisable for the term of the
option if the optionee ceases to be a director for any reason. All options
granted under the Plan to

non-employee directors are non-qualified stock options.

The Committee may also grant restricted stock awards under the Plan
that result in shares of Common stock being issued to a participant subject to
restrictions against disposition during a restricted period established by the
Committee. The Board may condition the grant of restricted stock upon the
attainment of specified performance goals. The provisions of restricted stock
awards need not be the same with respect to each recipient. The shares of
restricted stock awarded under the Plan are to be held in custody by the Company
until the restrictions thereon have lapsed. During the period of the
restrictions, a participant has the right to vote the shares of restricted stock
and to receive dividends and distributions unless the Committee requires such
dividends and distributions to be held by the Company subject to the same
restrictions as the restricted stock. If a participant terminates employment
during the period of the restrictions, all shares still subject to restrictions
will be forfeited and returned to the Company, subject to the right of the
Committee to waive such restrictions in the event of a participant's death,
disability, retirement or under circumstances approved by the Committee.

AMENDMENT AND TERMINATION OF THE PLAN. The Board of Directors may
amend, alter or discontinue the Plan at any time, provided that shareholder
approval must be obtained for any such action that would (a) increase the number
of shares available for issuance or sale pursuant to the plan, (b) change the
classification of persons eligible to participate in the Plan, or (c) materially
increase the benefits accruing to participants under the Plan. The Committee may
correct any defect, supply any omission, or reconcile any inconsistency in the
Plan or any option agreement in the manner and to the extent it shall deem
desirable to carry the Plan into effect. The Committee may waive any condition
of, or rights of the Company under any outstanding award, prospectively or
retroactively, but the Committee may not amend or terminate any outstanding
award, prospectively or retroactively, without the consent of the holder or
beneficiary of the award. Unless earlier terminated by the Board of Directors,
the Plan will terminate on May 21, 2013.

TRANSFER OF AWARDS. No option granted under the Plan may be assigned,
transferred, pledged or otherwise encumbered by the individual to whom it is
granted, otherwise than by will or the laws of descent and distribution, except
that the Committee may permit the designation of a beneficiary.

TAX CONSEQUENCES

STOCK OPTIONS. An optionee will not realize taxable compensation income
upon the grant of an incentive stock option. In addition, an optionee generally
will not realize taxable compensation income upon the exercise of an incentive
stock option if he or she exercises it as an employee or within three months
after termination of employment (or within one year after termination if the
termination results from a permanent and total disability). At the time of
exercise, the amount by which the fair market value of the shares purchased
exceeds the aggregate option price shall be treated as alternative minimum
taxable income for purposes of the alternative minimum tax. If the stock
acquired pursuant to an incentive stock option is not disposed of prior to the
date two years from the option grant date or prior to one year from the option
exercise date (the "applicable holding periods"), any gain or loss realized upon
the sale of such shares will be characterized as a capital gain or loss. If the
applicable holding periods are not satisfied, then any gain realized in
connection with the disposition of such stock will generally be taxable as
compensation income in the year in which the disposition occurred, to the extent
of the difference between the fair market value of such stock on the date of
exercise and the option exercise price. The Company is entitled to a tax
deduction to the extent, and at the time, that the participant realizes
compensation income. The balance of any gain will be characterized as a
long-term or short-term capital gain depending on whether the shares were held
for more than one year.

An optionee will not realize taxable compensation income upon the grant
of a non-qualified stock option. When an optionee exercises a non-qualified
stock option, he or she will realize taxable compensation income at the time of
exercise equal to the amount by which the fair market value of the shares
purchased exceeds the aggregate option price. The Company is entitled to a tax
deduction to the extent, and at the time, that the participant realizes
compensation income.

RESTRICTED STOCK. The grant of restricted stock should not result in
immediate income for the participant or in a deduction for the Company for
federal income tax purposes, assuming the shares are nontransferable and

subject to restrictions or to a deferral period which would result in a
"substantial risk of forfeiture" as intended by the Company and as defined in
applicable Treasury regulations. If the shares are transferable or there are no
such restrictions or significant deferral periods, the participant will realize
compensation income upon receipt of the award. Otherwise, a participant
generally will realize taxable compensation when any such restrictions or
deferral period lapses. The amount of such income will be the value of the
common stock on that date less any amount paid for the shares. Dividends paid on
the common stock and received by the participant during the restricted period
also will be taxable compensation income to the participant. In any event, the
Company will be entitled to a tax deduction to the extent, and at the time, that
the participant realizes compensation income. A participant may elect, under
Section 83(b) of the Code, to be taxed on the value of the restricted stock at
the time of award. If the election is made, the fair market value of the stock
at the time of the award is taxable to the participant as compensation income
and the Company is entitled to a corresponding deduction.

REGISTRATION WITH SECURITIES AND EXCHANGE COMMISSION. Upon approval of
the Plan by the stockholders, the Company intends to file a registration
statement covering the additional shares issuable under the Plan with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1933, as amended.

THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OF THE COMMON
STOCK REPRESENTED AT THE ANNUAL MEETING AND ENTITLED TO VOTE IS NECESSARY FOR
THE APPROVAL OF PROPOSAL 2. PROXIES WILL BE VOTED IN FAVOR OF SUCH PROPOSAL
UNLESS OTHERWISE INDICATED.

THE BOARD OF DIRECTORS RECOMMENDS
THAT THE SHAREHOLDERS VOTE FOR
THE APPROVAL OF PROPOSAL 2
---------------------------------

OTHER INFORMATION REGARDING EQUITY COMPENSATION PLANS

The following table sets forth information regarding our equity
compensation plans in effect as of December 31, 2002. Each of our equity
compensation plans is an "employee benefit plan" as defined by Rule 405 of
Regulation C of the Securities Act of 1933.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

Number of shares of common
stock to be issued upon Number of shares of common
exercise of outstanding Weighted-average exercise stock remaining available
options, warrants and price of outstanding options, for future issuance under
Plan category rights(1) warrants and rights(1) equity compensation plans(2)
-------------------------- ------------------------------- ------------------------------- ------------------------------

Equity compensation 1,501,923 $4.66 555,749
plans approved by
stockholders:

Equity compensation - - -
plans not approved by
stockholders:

Total 1,501,923 - 555,749

(1) Does not include shares to be issued on June 30, 2003 under the Company's
Employee Stock Purchase Plan which has as its purchase period July 1 to June 30
of each year. The purchase price for shares under the Employee Stock Purchase
Plan is the lesser of (a) 85% of the fair market value of the common shares on
the first business day of the purchase period or (b) 85% of the fair market
value of the common shares on the last business day of the purchase period.
(2) Excludes shares of common stock listed in the first column.

EXECUTIVE COMPENSATION

Set forth below is biographical and other information on our executive
officers. Information about Mr. Bernard P. Aldrich, the Company's President and
Chief Executive Officer and Mr. David J. Suden, the Company's Chief Technology
Officer, may be found under the heading "Election of Directors."

Kenneth J. Klinck, 55, started with the Company in June 1997 and has been Vice
President, Sales and Marketing of the Company since September 1997 until
becoming Executive Vice President, Sales on January 1, 2002. For the thirty-one
years prior to joining the Company, Mr. Klinck was with Advance Machine Company,
as Vice President of International Operations since October 1992, and prior to
that time as President of Advance Machine's European Operations.

Robert M. Wolf, 34, started with the Company in September 1997 and has been
Treasurer of the Company since January 2000 and Chief Financial Officer since
February 2003. From March 1995 until joining the Company, Mr. Wolf was a CPA and
audit manager with Deloitte & Touche LLP. From December 1991 until March 1995,
Mr. Wolf was a CPA with House, Nezerka & Froelich PA.

SUMMARY COMPENSATION TABLE

The following table sets forth the cash and noncash compensation for
each of the past three fiscal years earned by the Chief Executive Officer and by
the other executive officers of the Company whose salary and bonus earned for
fiscal year 2002 exceeded $100,000 (the "Named Executive Officers").

LONG-TERM COMPENSATION
------------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------------------- ------------------------ ----------------------
OTHER
ANNUAL RESTRICTED ALL OTHER
NAME AND COMPEN- STOCK LTIP COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS SATION(1) AWARDS OPTIONS PAYOUTS SATION(2)
----------------------------------------------------------------------------------------------------------------------------

Bernard P. Aldrich 2002 $221,000 $125,655 $14,500 -- -- -- $6,000
------------------
Chief Executive Officer 2001 220,712 $110,620 $17,500 -- 20,000 -- 5,250
and President 2000 206,000 140,620 12,500 -- 20,000 -- 5,250

David J. Suden 2002 201,000 125,639 14,500 -- -- -- 6,000
--------------
Chief Technology Officer 2001 200,712 110,604 15,000 -- 20,000 -- 5,250
2000 186,000 140,558 12,500 -- 20,000 -- 5,250

Kenneth J. Klinck 2002 188,231 60,000 -- -- -- -- 5,500
-----------------
Executive Vice President, 2001 177,825 35,573 -- -- 10,000 -- 5,250
Sales 2000 189,533 45,592 -- -- 10,000 -- 5,250

Robert M. Wolf 2002 84,846 40,278 -- -- -- -- 2,337
--------------
Chief Financial Officer 2001 78,461 30,244 -- -- 10,000 -- 2,361
2000 70,942 30,221 -- -- 10,000 -- 2,128

-------------------------
(1) Represents directors' fees.
(2) Represents the Company's matching contributions under its 401(k) retirement
savings plan.

STOCK OPTIONS

There were no options granted to the Named Executive Officers in fiscal
year 2002.

The following table provides information with respect to stock options
held at December 31, 2002, by the Named Executive Officers.

AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND YEAR-END OPTION VALUES

SHARES VALUE OF UNEXERCISED
ACQUIRED NUMBER OF UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
EXERCISE VALUE YEAR-END (#) YEAR-END ($)(2)
NAME ON EXERCISE REALIZED(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
--------------------------- ----------- ----------- --------------------------------- ---------------------------

Bernard P. Aldrich -- -- 236,459 6,666 $1,254,161 $8,399
David J. Suden -- -- 91,459 6,666 271,545 8,399
Kenneth J. Klinck -- -- 87,917 3,333 410,413 4,200
Robert M. Wolf -- -- 28,487 3,333 54,411 4,200

--------------------------
(1) Represents the difference between the option exercise price and the closing
price of the Company's common stock as reported by Nasdaq on the date of
exercise.
(2) Based on the difference between the December 31, 2002 closing price of
$8.11 per share as reported on The Nasdaq Stock Market and the exercise
price of the options.

RETIREMENT SAVINGS PLAN

Rimage adopted a profit sharing and savings plan in 1991 under Section
401(k) of the Internal Revenue Code, which allows employees to contribute the
lesser of (i) up to 16% of their pre-tax income to the plan or (ii) $11,000
($12,000 if age 50 years or older). The 401(k) Plan includes a discretionary
matching contribution by the Company. These discretionary contributions totaled
$171,290, $167,715 and $168,314 in 2002, 2001 and 2000, respectively.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Rimage leases approximately 43,000 square feet of office, manufacturing
and warehouse space from 7725 Washington Avenue Corporation, pursuant to a lease
dated September 1998. Two of the Company's directors, Messrs. Fletcher and
McNamara, are the only two shareholders in this corporation. The lease expires
on September 30, 2003. Rent is approximately $444,000 per year, including a pro
rata share of operating costs. Management believes that the terms of this lease
is no less favorable to Rimage than would have been obtained from a
nonaffiliated third party for similar space.

REPORT OF THE COMPENSATION COMMITTEE

This is a report of the Compensation Committee of the Board of
Directors of the Company, which is comprised of Mr. Quist (Chair), Mr. Reissner
and Mr. Madison, each of whom is a non-employee director. This report shall not
be deemed incorporated by reference into any filing under the Securities Act of
1933 or the Securities Exchange Act of 1934 and shall not otherwise be deemed to
be filed under either such Act.

The Compensation Committee reviews and makes recommendations to the
Board of Directors regarding the salaries, compensation and benefits of
executive officers and senior management of the Company.

The Company's policy with respect to the compensation of executive
officers is based upon the following principles: (1) executive base compensation
levels should be established by comparison of job responsibility to similar
positions in comparable companies and be adequate to retain highly-qualified
personnel and (2) variable compensation should be established to provide
incentive to improve performance and shareholder value. In determining executive
officers' annual compensation, the Compensation Committee considers the overall

performance of the Company, as well as the particular executive officer's
position at the Company and the executive officer's performance on behalf of the
Company. Rather than applying a formulaic approach to determining annual
compensation, the Compensation Committee uses various surveys of executive
compensation for companies of a similar size in comparable industries as a basis
for determining competitive levels of cash compensation.

During 2002, salaries of executive officers, including the Company's
Chief Executive Officer, were set at levels that the Committee believes
approximate the salaries of similarly situated individuals at comparable
companies. Mr. Aldrich's base salary was $221,000 in 2002 and 2001.

Executive officers are also eligible for discretionary bonuses, which
the Board of Directors awards based upon the Company's overall performance and
the contribution to such performance made by the executive officers' areas of
responsibility. For 2002, the Compensation Committee established performance
goals upon which cash bonuses would be established. Based upon realization of
such goals, the Compensation Committee and the Board granted Mr. Aldrich a
$125,655 bonus for 2002. The Compensation Committee is establishing specific
performance goals for 2003 upon which cash bonuses will be established.

The Company provides long-term incentive to its executives, and ties a
portion of executive compensation to Company performance, through grants of
stock options under the Company's 1992 Stock Option Plan. During 2002, the
Company did not grant Mr. Aldrich or any other executive any stock options.

The Compensation Committee believes that the objectives of the
Company's compensation policy in providing fixed compensation to management
adequate to avoid attrition and providing variable compensation in amounts and
forms that encourage generation of value for shareholders were achieved during
2002.

By: The Compensation Committee
Steven M. Quist (Chair)
Thomas F. Madison
James L. Reissner

PERFORMANCE GRAPH

The Company's common stock is quoted on The Nasdaq National Market. The
following graph shows changes during the period from December 31, 1998, to
December 31, 2002, in the value of $100 invested in: (1) the Nasdaq National
Market Index (US); (2) Nasdaq Non-Financial Stocks Index and (3) the Company's
common stock. The values of each investment as of the dates indicated are based
on share prices plus any dividends paid in cash, with the dividends reinvested
on the date they were paid. The calculations exclude trading commissions and
taxes.

[PLOT POINTS GRAPH]

--------------------------------------- -------------- --------------- -------------- -------------- ---------------
12/31/98 12/31/99 12/29/00 12/31/01 12/31/02
--------------------------------------- -------------- --------------- -------------- -------------- ---------------

Nasdaq National Market Index $100.00 $185.46 $111.90 $88.77 $61.38
--------------------------------------- -------------- --------------- -------------- -------------- ---------------
Nasdaq Non-Financial Stocks $100.00 $196.05 $114.51 $87.57 $57.25
--------------------------------------- -------------- --------------- -------------- -------------- ---------------
Rimage Corporation $100.00 $128.00 $103.44 $97.44 $97.32
--------------------------------------- -------------- --------------- -------------- -------------- ---------------

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Under federal securities laws, the Company's directors and officers,
and any beneficial owner of more than 10% of a class of equity securities of the
Company, are required to report their ownership of the Company's equity
securities and any changes in such ownership to the Securities and Exchange
Commission (the "Commission") and the securities exchange on which the equity
securities are registered. Specific due dates for these reports have been
established by the Commission, and the Company is required to disclose in this
Proxy Statement any delinquent filing of such reports and any failure to file
such reports during the fiscal year ended December 31, 2002.

Based upon information provided by officers and directors of the
Company, the Company believes that all officers, directors and 10% shareholders
filed all reports on a timely basis in the 2002 fiscal year, except options
granted to non-employee directors were not timely filed on Form 5.

REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

The following report of the Audit Committee shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act of 1933, as amended, or the 1934
Securities Exchange Act, as amended, except to the extent that the Company
specifically incorporates it by reference in such filing.

The Audit Committee acts on behalf of the Board of Directors and the
Company's shareholders by providing (1) oversight of the integrity of the
Company's financial reporting process and systems of internal controls regarding
finance, accounting and legal compliance; (2) oversight of the independence and
performance of the Company's independent accountants; and (3) an avenue of
communication among the independent auditors, management and the Board of
Directors.

In accordance with its Charter, the Audit Committee has reviewed and
discussed the Company's audited financial statements with management. The Audit
Committee has discussed with KPMG LLP, the Company's independent accountants,
the matters required to be discussed by SAS No. 61 (Codification of Statements
on Accounting Standards) which includes, among other items, matters related to
the conduct of the audit of the Company's financial statements. The Audit
Committee has also received written disclosures and the letter from KPMG LLP
required by Independence Standards Board Standard No. 1 (which relates to the
accountant's independence from the Company and its related entities) and has
discussed with KPMG LLP their independence from the Company.

Based on the review and discussions referred to above, the Audit
Committee recommended to the Company's Board that the Company's audited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2002.

BY: THE AUDIT COMMITTEE

Mr. Steven M. Quist
Mr. Thomas F. Madison
Mr. James L. Reissner (Chair)

RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS

The Company has selected KPMG LLP as its independent auditors for its
fiscal year ending December 31, 2002. Representatives of KPMG LLP, which has
served as the Company's independent auditors since 1989, are expected to be
present at the Annual Meeting, will have an opportunity to make a statement if
they desire to do so and will be available to respond to appropriate questions
from shareholders.

AUDIT FEES

Fees billed or expected to be billed to the Company by KPMG LLP for the
audit of the Company's consolidated annual financial statements for the year
ended December 31, 2002 and for reviews of those consolidated financial
statements included in the Company's quarterly reports on Form 10-Q totaled
$118,741.

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES

There were no fees billed or expected to be billed to the Company by
KPMG LLP for services provided during the Company's 2002 fiscal year for
Financial Information Systems Design and Implementation.

ALL OTHER FEES

Fees billed or expected to be billed to the Company by KPMG LLP for
services provided during the Company's 2002 fiscal year for all other non-audit
services rendered to the Company totaled $66,050 which consisted solely of tax
related services.

SHAREHOLDER PROPOSALS FOR 2004 ANNUAL MEETING

The proxy rules of the Securities and Exchange Commission permit
shareholders of the Company, after timely notice to the Company, to present
proposals for shareholder action in the Company's Proxy Statement where such
proposals are consistent with applicable law, pertain to matters appropriate for
stockholder action and are not properly omitted by action of the Company in
accordance with the proxy rules. In order for a shareholder proposal to be
considered for inclusion in the Proxy Statement for the 2004 Annual Meeting of
Shareholders, the proposal must be received by the Secretary of the Company in
writing at its corporate offices, 7725 Washington Avenue South, Minneapolis, MN
55439 no later than December 20, 2003.

Pursuant to the Company's Bylaws, in order for any other proposal to be
properly brought before the next annual meeting by a shareholder, including a
nominee for director to be considered at such annual meeting, the shareholder
must give written notice of such shareholder's intent to bring a matter before
the annual meeting, or nominate the director, no later than December 20, 2003.
Each such notice must set forth certain information with respect to the
shareholder who intends to bring such matter before the meeting and the business
desired to be conducted, as set forth in greater detail in the Company's Bylaws.
If the Company receives notice of a shareholder proposal after December 20,
2003, such proposal also will be considered untimely pursuant to Rules 14a-4 and
14a-5(e) and the persons named in proxies solicited by the Board of Directors
for the Company's 2004 Annual Meeting of Shareholders may exercise discretionary
voting power with respect to such proposal.

OTHER BUSINESS

At the date of this Proxy Statement, management knows of no other
business that may properly come before the Annual Meeting. However, if any other
matters properly come before the meeting, the persons named in the enclosed form
of proxy will vote the proxies received in response to this solicitation in
accordance with their best judgment on such matters.

By Order of the Board of Directors

Bernard P. Aldrich
President and Chief Executive Officer

Minneapolis, Minnesota
April 18, 2003

Appendix A: Charter of the Audit Committee
of the Board of Directors of Rimage Corporation

Appendix B: Rimage Corporation Amended and Restated
1992 Stock Option Plan

APPENDIX A

CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS OF
RIMAGE CORPORATION

I. Audit Committee Purpose

The Audit Committee is appointed by the Board of Directors to assist
the Board in fulfilling its oversight responsibilities. The Audit
Committee's primary duties and responsibilities are to:

* Monitor the integrity of the Company's financial reporting
process and systems of internal controls regarding finance,
accounting, and legal compliance.

* Monitor the independence and performance of the Company's
independent auditors.

* Provide an avenue of communication among the independent
auditors, management, and the Board of Directors.

The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct
access to the independent auditors as well as anyone in the
organization. The Audit Committee has the ability to retain, at the
Company's expense, special legal, accounting, or other consultants or
experts it deems necessary in the performance of its duties.

II. Audit Committee Composition and Meetings

Audit Committee members shall meet the requirements of The Nasdaq Stock
Market. The Audit Committee shall be comprised of three or more
directors as determined by the Board, each of whom shall be independent
non-executive directors, free from any relationship that would
interfere with the exercise of his or her independent judgment. All
members of the Committee shall have a basic understanding of finance
and accounting and be able to read and understand fundamental financial
statements, and at least one member of the Committee shall have
accounting or related financial management expertise.

Audit Committee members shall be appointed by the Board of Directors.
If an audit committee Chair is not designated or present, the members
of the Committee may designate a Chair by majority vote of the
Committee membership.

The Committee shall meet at least three times annually, or more
frequently as circumstances dictate. The Audit Committee Chair shall
prepare and/or approve an agenda in advance of each meeting. The
Committee should meet privately in executive session at least annually
with management, the independent auditors, and as a committee to
discuss any matters that the Committee or each of these groups believe
should be discussed. In addition, the Committee should communicate with
management and the independent auditors quarterly to review the
Company's financial statements and significant findings based upon the
auditors' review procedures.

A-1

III. Audit Committee Responsibilities and Duties; Review Procedures

1. In consultation with management and the independent auditors,
consider the integrity of the Company's financial reporting
processes and controls and receive reports from management
regarding the Company's system of internal controls and
disclosure controls and procedures.

2. Discuss with management and the independent auditors any
issues regarding significant risks or exposures and assess the
steps management has taken to minimize such risk.

3. Consult with management and the independent auditors on new
developments in accounting and financial standards.

4. With management and independent auditors, review the Company's
significant financial (accounting and reporting) principles
and participate in the selection and development of
significant accounting estimates.

5. Review quarterly and annual financial results with the
independent auditors and management and discuss the earnings
press release prior to release to the public.

6. Recommend to the Company's Board of Directors the inclusion of
the audited financial statements in the Company's annual
report. Review and comment on the Company's annual report to
shareholders, annual report on Form 10-K, and quarterly
reports on Form 10-Q.

IV. Independent Auditors

7. The independent auditors are ultimately accountable to the
Audit Committee. On an annual basis, the Committee should
review and discuss with the auditors all significant
relationships the auditors have with the Company to determine
the auditors' independence.

8. Approve all auditing services and permitted non-audit
services, except DE MINIMUS services, provided by the
independent auditors, and the fees and other significant
compensation to be paid to the independent auditors.

9. Provide oversight of the independent auditors and have sole
authority and responsibility for the engagement, removal and
compensation of the independent auditors.

10. Review the independent auditors' audit plan -- discuss scope,
staffing, locations, reliance upon management and internal
audit and general audit approach.

11. Prior to releasing the year-end earnings, discuss the results
of the audit with the independent auditors. Discuss certain
matters required to be communicated to audit committees in
accordance with AICPA SAS 61.

12. Consider the independent auditors' judgments about the quality
and appropriateness of the Company's accounting principles as
applied in its financial reporting.

13. Receive reports directly from independent auditors and resolve
any disagreements between management and the independent
auditors regarding financial reporting.

A-2

V. Ethical and Legal Compliance

14. Review with the Company's counsel any legal matters that could
have a significant impact on the organization's financial
statements, the Company's compliance with applicable laws and
regulations, and inquiries received from regulators or
governmental agencies. Receive reports from the Company's
legal counsel regarding any dispute, litigation, regulatory
matter or proceeding or any material violation of securities
laws or breach of fiduciary duty or similar violation by the
Company or any agent of the Company.

15. Review management's monitoring of the Company's compliance
with the organization's Code of Conduct and ensure that
management has the proper review system in place to ensure
that the Company's financial statements, reports and other
financial information disseminated to governmental
organizations and the public satisfy legal requirements. Grant
waivers to senior officers and directors from such Code of
Conduct, or provide any consent required under the Code of
Conduct, when appropriate and in the best interest of the
Company.

16. Review and approve all transactions to which the Company is a
party and in which any of the Company's officers, directors or
5% or greater shareholders or any "affiliate" of any of these
persons has a direct or indirect material interest; except
that the Audit Committee shall not be responsible for matters
relating to the employment of the Company's officers or the
compensation of the Company's officers or directors.

17. Establish procedures for (a) the receipt, retention and
treatment of complaints received by the Company regarding
accounting, internal controls or auditing matters; and (b) the
submission by employees of concerns on a confidential and
anonymous basis regarding accounting and auditing matters.

VI. Other Audit Committee Responsibilities

18. Review and reassess the adequacy of this Charter at least
annually. Submit the charter to the Board of Directors for
approval and have the document published at least every three
years in accordance with regulations of the Securities and
Exchange Commission.

19. Annually prepare a report to shareholders as required by the
Securities and Exchange Commission. The report should be
included in the Company's annual proxy statement.

20. Perform any other activities consistent with this Charter, the
Company's Bylaws and governing law, as the Committee or the
Board deems necessary or appropriate.

21. Maintain minutes of meetings and periodically report to the
Board of Directors on significant results of the foregoing
activities.

22. Review the independence of each member of the Audit Committee
at least annually and communicate with the Board of Directors
regarding the qualifications of each Audit Committee member.

A-3

APPENDIX B

RIMAGE CORPORATION
AMENDED AND RESTATED 1992 STOCK OPTION PLAN

April 4, 2003

The purpose of the Amended and Restated Rimage Corporation 1992 Stock
Option Plan (the "Plan") is to promote the growth and profitability of Rimage
Corporation (the "Company") and its Affiliates by providing its employees,
directors and consultants with an incentive to achieve long-term corporate
objectives, to attract and retain employees and directors of outstanding
competence, and to provide such employees and directors with an equity interest
in the Company.

1. STOCK SUBJECT TO PLAN. An aggregate of 3,195,000 shares (the
"Shares") of the Common Stock, $.01 par value, of the Company ("Common Stock")
may be subject to options or restricted stock granted under the Plan. Such
Shares may be authorized but unissued Common Stock or authorized and issued
Common Stock that has been or may be acquired by the Company. Shares that are
subject to an option which expires or is terminated unexercised and shares of
restricted stock which are forfeited shall again be available for issuance under
the Plan.

2. ADMINISTRATION.

a. COMMITTEE. The Plan shall be administered by a Committee
(the "Committee") of the Board of Directors of the Company (the
"Board"). The Committee shall be comprised of two or more members of
the Board, each of whom shall be a "disinterested person" within the
meaning of Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended.

b. POWERS AND DUTIES. The Committee shall have the authority
to grant Incentive Stock Options and Nonqualified Options, as defined
in Section 4, and grant Restricted Stock, as defined in Section 6.
Incentive Stock Options, Nonqualified Options and Restricted Stock are
referred to collectively herein as "Awards." The Committee shall have
the authority to make rules and regulations governing the
administration of the Plan; to select the eligible employees to whom
Awards shall be granted; to determine the type, amount, size, and terms
of any Award; to determine the time when an Award shall be granted; the
conditions, including the attainment of specified performance goals,
required for the grant of an Award; to determine whether any
restrictions shall be placed on Shares purchased pursuant to any
option; to determine the time or times within which awards of
restricted stock may be subject to forfeiture and to make all other
determinations necessary or advisable for the administration of the
Plan. The Committee's determinations need not be uniform, and may be
made by it selectively among persons who are eligible to receive Awards
under the Plan, whether or not such persons are similarly situated. All
interpretations, decisions, or determinations made by the Committee
pursuant to the Plan shall be final and conclusive.

c. FAIR MARKET VALUE. For the purposes of this Plan, "Fair
Market Value" on a given date shall be (i) the average of the closing
representative bid and asked prices of the Common Stock as reported on
the National Association of Securities Dealers Automated Quotation
System ("Nasdaq") on such date, if the Common Stock is then quoted on
Nasdaq; (ii) the last sale price of the Common Stock as reported on the
Nasdaq National Market System on such date, if the Common Stock is then
quoted on the Nasdaq National Market System; or (iii) the

B-1

closing price of the Common Stock on such date on a national securities
exchange, if the Common Stock is then being traded on a national
securities exchange. If on the date as of which the Fair Market Value
is being determined the Common Stock is not publicly traded, the
Committee shall make a good faith attempt to determine such Fair Market
Value and, in connection therewith, shall take such actions and
consider such factors as it deems necessary or advisable.

3. ELIGIBILITY. Any employee, director or consultant of the Company or
of any of its Affiliates shall be eligible to receive Awards under the Plan;
except that only a director who is not otherwise an employee of the Company or
any subsidiary of the Company (an "Eligible Director") shall be eligible to
receive options under Section 5 of this Plan. A persons who has been granted an
Award under this Plan, or under any predecessor plan, may be granted additional
Awards if the Committee shall so determine. Except to the extent otherwise
provided in the agreement evidencing an Award, the granting of an Award under
this Plan shall not affect any outstanding Award previously granted under this
Plan or under any other plan of the Company or any Affiliate. For purposes of
the Plan, the term "Affiliate" shall mean any "parent corporation" or
"subsidiary corporation" of the Company, as those terms are defined in Sections
425(e) and 425(f) of the Internal Revenue Code of 1986, as amended.
Notwithstanding the foregoing, no person shall receive grants of Stock Options
under this Plan that exceed 100,000 shares during any fiscal year of the
Company.

4. STOCK OPTIONS. The Committee may grant to eligible employees stock
options which are intended to qualify as "Incentive Stock Options" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended, and may
grant to employees, directors or consultants stock options which are not
intended to so qualify ("Nonqualified Options"), or any combination thereof. A
stock option granted pursuant to the Plan shall entitle the optionee, upon
exercise, to purchase Shares at a specified price during a specified period.
Options shall be subject to such terms and conditions as the Committee shall
from time to time approve; provided, that each option shall be subject to the
following requirements:

a. TYPE OF OPTION. Each option shall be identified in the
agreement pursuant to which it is granted as an Incentive Stock Option
or as a Nonqualified Option, as the case may be.

b. TERM. No option shall be exercisable more than ten years
after the date on which it is granted.

c. PAYMENT. The purchase price of Shares subject to an option
shall be payable in full at the time the option is exercised. Payment
may be made in cash, in shares of Common Stock having an aggregate Fair
Market Value on the date of exercise which is not less than the option
price, or by a combination of cash and such shares, as the Committee
may determine, and subject to such terms and conditions as the
Committee deems appropriate.

d. OPTIONS NOT TRANSFERABLE. Options shall not be transferable
except to the extent permitted by the agreement evidencing such option;
provided, that in no event shall any option be transferable by the
optionee, other than by will or the laws of descent and distribution.
Options shall be exercisable during an optionee's lifetime only by such
optionee. If, pursuant to the agreement evidencing any option, such
option remains exercisable after the optionee's death, it may be
exercised, to the extent permitted by such agreement, by the personal
representative of the optionee's estate or by any person who acquired
the right to exercise such option by bequest, inheritance, or otherwise
by reason of the optionee's death.

B-2

e. INCENTIVE STOCK OPTIONS. If an option is an Incentive Stock
Option, it shall be subject to the following additional requirements:

i. The purchase price of Shares that are subject to
an Incentive Stock Option shall not be less than 100% of the
Fair Market Value of such Shares at the time the option is
granted.

ii. The aggregate Fair Market Value (determined at
the time the option is granted) of the Shares with respect to
which Incentive Stock Options are exercisable by the optionee
for the first time during any calendar year, under this Plan
or any other plan of the Company or any Affiliate, shall not
exceed $100,000.

iii. An Incentive Stock Option shall not be
exercisable more than ten years after the date on which it is
granted.

iv. The purchase price of Shares that are subject to
an Incentive Stock Option granted to an employee who, at the
time such option is granted, owns 10% or more of the total
combined voting power of all classes of stock of the Company
or of any Affiliate shall not be less than 110% of the Fair
Market Value of such Shares on the date such option is
granted, and such option may not be exercisable more than five
years after the date on which it is granted. For the purposes
of this subparagraph, the rules of Section 425(d) of the Code
shall apply in determining the stock ownership of any
employee.

Subject to the foregoing, options may be made exercisable in one or
more installments, upon the happening of certain events, upon the
fulfillment of certain conditions, or upon such other terms and
conditions as the Committee shall determine.

5. NON-EMPLOYEE DIRECTOR OPTIONS.

a. AUTOMATIC GRANT. In addition to any other Award which may
be granted under this Plan, each Eligible Director shall receive
automatically a Nonqualified Option to purchase 5,000 Shares or such
other number of Shares, not to exceed 15,000 Shares, as determined from
time to time by the Committee on the date of each annual meeting of
shareholders of the Company at which such person is elected to serve on
the Board of Directors of the Company.

b. VESTING; TERM. Options granted under this Section shall be
exercisable in full six months after the date of grant of the option.
Each option granted under this Section and all rights and obligations
thereunder shall, subject to the provisions of Section 5(d) herein,
expire ten years from the date of grant of the option.

c. EXERCISE PRICE. The option price for all options granted
under this Section shall be the Fair Market Value of the Shares covered
by the option on the date the option is granted.

d. TERMINATION.

B-3

i. In the event that an optionee of an option granted
under this Section shall cease to be a director of the Company
for any reason other than his or her gross and willful
misconduct, such optionee, or in the case of death or
disability, such optionee's guardians, administrators or
personal representatives, shall have the right to exercise the
option granted under this Section at any time for the
remainder of the term of the option to the extent of the full
number of shares the optionee was entitled to purchase under
the option on the date of such termination, subject to the
condition that no option shall be exercisable after the
expiration of the term of the option.

ii. In the event that an optionee of an option
granted under this Section shall cease to be a director of the
Company by reason of his or her gross and willful misconduct
during the course of his or her service as a director of the
Company, including but not limited to wrongful appropriation
of funds of the Company, or the commission of a gross
misdemeanor or felony, the option granted under this Section
shall be terminated as of the date of the misconduct.

6. RESTRICTED STOCK AWARDS.

(a) GRANT OF RESTRICTED STOCK. The Committee may grant to any
eligible person Shares subject to restrictions of this Section
("Restricted Stock"). Subject to the provision of this Plan and the
award Agreement, at the time of the grant of Restricted Stock, the
Committee shall determine the period during which the Shares awarded as
Restricted Stock shall be subject to the risk of forfeiture and other
terms and conditions (the "Restriction Period") as the Committee may
specify. The Committee may, at any time, accelerate the date of lapse
of restrictions with respect to all or any part of the shares awarded
to a recipient. Recipients of Restricted Stock shall not be required to
make any payment or provide consideration other than: (a) the rendering
of services; (b) as provided in the agreement evidencing the Restricted
Stock or (c) any Federal, state, or local taxes of any kind required by
law to be withheld with respect to the Restricted Stock.

(b) RESTRICTED STOCK HELD BY COMPANY. The Restricted Stock
shall be held by the Company during the Restriction Period and no
rights therein may be transferred, gifted, or otherwise alienated or
hypothecated during the Restriction Period. If the Restricted Stock is
maintained in uncertificated form, the Company shall denote such shares
as being subject to restrictions as set forth in the agreement
evidencing the Restricted Stock as part of the book entry of the
Restricted Stock on the Company's Common Stock records.

(c) RIGHTS AS SHAREHOLDER. Except as provided in this Section
or as otherwise provided in the Agreement, the recipient of Restricted
Stock shall have, with respect to the Restricted Stock, all of the
rights of a shareholder of the Company, including the right to vote the
shares and the right to receive any cash or stock dividends. The
Committee, in its sole discretion, may permit or require the payment of
cash dividends to be deferred and, if the Committee so determines,
reinvested in additional Shares (to the extent Shares are available
under Section 1), subject to the same restrictions as the shares of
Common Stock on which such dividends were issued. The Company shall
mark its Common Stock records that the recipient of Restricted Stock is
the owner of unrestricted Common Stock promptly after, and only after,
the Restriction Period shall have expired without forfeiture in respect
of such shares of Restricted Stock.

B-4

7. AGREEMENTS. Each Award granted pursuant to the Plan shall be
evidenced by an agreement setting forth the terms and conditions upon which it
is granted. Multiple Awards may be evidenced by a single agreement. Subject to
the limitations set forth in the Plan, the Committee may, with the consent of
the person to whom an Award has been granted, amend any such agreement to modify
the terms or conditions governing the Award evidenced thereby.

8. ADJUSTMENTS. In the event of any change in the outstanding shares of
Common Stock by reason of any stock dividend or split, recapitalization,
reclassification, combination, or exchange of shares or other similar corporate
change, then if the Committee shall determine, in its sole discretion, that such
change necessarily or equitably requires an adjustment in the number of Shares
subject to Awards, in the option price or value of an option, or in the maximum
number of Shares subject to this Plan, such adjustments shall be made by the
Committee and shall be conclusive and binding for all purposes of this Plan. No
adjustment shall be made in connection with the issuance by the Company of any
Common Stock, warrants, rights, or options to acquire additional Common Stock or
of securities convertible into Common Stock.

9. MERGER, CONSOLIDATION, REORGANIZATION, LIQUIDATION, ETC. Subject to
the provisions of the agreement evidencing any Award, if the Company shall
become a party to any corporate merger, consolidation, major acquisition of
property for stock, reorganization, or liquidation, the Board of Directors of
the Company shall have the power to make any arrangement it deems advisable with
respect to outstanding Awards and in the number of Shares subject to this Plan,
which shall be binding for all purposes of this Plan, including, but not limited
to, the substitution of new Awards for any Awards then outstanding, the
assumption of any such Awards, and the termination of such Awards.

10. EXPENSES OF PLAN. The expenses of administering this Plan shall be
borne by the Company and its Affiliates.

11. RELIANCE ON REPORTS. Each member of the Committee and each member
of the Board of Directors shall be fully justified in relying or acting in good
faith upon any report made by the independent public accountants of the Company
and its Affiliates and upon any other information furnished in connection with
this Plan by any person or persons other than himself. In no event shall any
person who is or shall have been a member of the Committee or of the Board of
Directors be liable for any determination made or other action taken or omitted
in reliance upon any such report or information, or for any action taken or
omitted, including the furnishing of information, in good faith.

12. RIGHTS AS STOCKHOLDER. Except to the extent otherwise specifically
provided herein, no recipient of any Award shall have any rights as a
stockholder with respect to Shares sold or issued pursuant to the Plan until
certificates for such Shares have been issued to such person.

13. GENERAL RESTRICTIONS. Each Award granted pursuant to the Plan shall
be subject to the requirement that if, in the opinion of the Committee:

a. the listing, registration, or qualification of any Shares
related thereto upon any securities exchange or under any state or
federal law;

b. the consent or approval of any regulatory body; or

c. an agreement by the recipient with respect to the
disposition of any such Shares;

B-5

is necessary or desirable as a condition of the issuance or sale of such Shares,
such Award shall not be consummated unless and until such listing, registration,
qualification, consent, approval, or agreement is effected or obtained in form
satisfactory to the Committee.

14. EMPLOYMENT RIGHTS. Nothing in this Plan, or in any agreement
entered into hereunder, shall confer upon any employee or director the right to
continue to serve as an employee or director of the Company or an Affiliate, or
affect the right of the Company or an Affiliate to terminate such employee's or
director's services at any time, with or without cause.

15. WITHHOLDING. If the Company proposes or is required to issue Shares
pursuant to the Plan, it may require the recipient to remit to it, or may
withhold from such option or from the recipient's other compensation, an amount,
in the form of cash or Shares, sufficient to satisfy any applicable federal,
state, or local tax withholding requirements prior to the delivery of any
certificates for such Shares.

16. AMENDMENTS. The Board of Directors of the Company may at any time,
and from time to time, amend the Plan in any respect, except that no amendment:

a. increasing the number of Shares available for issuance or
sale pursuant to the Plan (other than as permitted by Sections 8 and 9);

b. changing the classification of persons eligible to
participate in the Plan or the definition of an "Affiliate"; or

c. materially increasing the benefits accruing to participants
under the Plan;

shall be made without the affirmative vote of stockholders holding at least a
majority of the voting stock of the Company represented in person or by proxy at
a duly held stockholders' meeting.

17. EFFECTIVE DATE; DURATION. The Plan shall become effective upon
adoption by the Board of Directors, subject to the approval of the Company's
shareholders within twelve months from the date of such adoption.

No Awards shall be granted under the Plan after the earlier of: (a) the
date on which the Plan is terminated by the Board of Directors of the Company;
or (b) May 21, 2013. Awards outstanding at the termination or expiration of the
Plan may continue in accordance with their terms after such termination or
expiration.

B-6

PROXY
[LOGO]
RIMAGE CORPORATION
2003 ANNUAL MEETING OF SHAREHOLDERS - MAY 21, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Bernard P. Alrich and David J. Suden,
or any of them, with power of substitution to each, as attorneys and proxies,
and hereby authorizes them to represent the undersigned at the Annual Meeting of
Shareholders of Rimage Corporation to be held at the Minneapolis Marriott
Southwest, 5801 Opus Parkway, Minnetonka, Minnesota, on Wednesday, May 21, 2003
at 3:30 p.m. Minneapolis, Minnesota time, and at any adjournment(s) or
postponement(s) thereof, and to vote, as designated on the reverse side, all
shares of Common Stock of Rimage Corporation held of record by the undersigned
on April 8, 2003 and which the undersigned would be entitled to vote at such
Annual Meeting, hereby revoking all former proxies.

THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
FOR EACH NOMINEE NAMED IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3. PLEASE SIGN,
DATE AND RETURN THIS PROXY FORM USING THE ENCLOSED ENVELOPE.

DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED

--------------------------------------------------------------------------------

-------------------
|COMPANY # |
|CONTROL # |
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THERE ARE TWO WAYS TO VOTE YOUR PROXY

YOUR TELEPHONE VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES IN THE SAME
MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.

VOTE BY PHONE - TOLL FREE - 1-800-240-6326 - QUICK *** EAST *** IMMEDIATE

* Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week, until 11:00 a.m. (CT) on May 20, 2003.
* You will be prompted to enter your 3-digit Company Number, your 7-digit
Control Number (these numbers are located on the proxy card) and the last 4
digits of the U.S. Social Security Number or Tax Identification Number for
this account. If you do not have a U.S. SSN or TIN please enter 4 zeroes.
* Follow the simple instructions the voice provides you.

VOTE BY MAIL

Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to Rimage Corporation, c/o Shareowner Services(SM),
P.O. Box 64873, St. Paul, MN 55164-0873.

IF YOU VOTE BY PHONE, PLEASE DO NOT MAIL YOUR PROXY CARD
\ PLEASE DETACH HERE /

RIMAGE CORPORATION 2003 ANNUAL MEETING OF SHAREHOLDERS

1. ELECTION OF 01 Bernard P. Aldrich 03 Thomas F. Madison 05 Steven M. Quist [ ] Vote FOR all nominees [ ] Vote WITHHELD
DIRECTORS: 02 James L. Reissner 04 David J. Suden 06 Larry M. Benveniste (except as marked) from all nominees
__________________________________________________
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE, | |
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) |__________________________________________________|

2. APPROVAL OF THE RIMAGE CORPORATION AMENDED AND RESTATED 1992 STOCK
OPTION PLAN. [ ] For [ ] Against [ ] Abstain

3. TO ACT UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT(S) OR POSTPONEMENT(S) THEREOF. [ ] For [ ] Against [ ] Abstain

THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS GIVEN, THIS
PROXY WILL BE VOTED FOR EACH NOMINEE NAMED IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3. pLEASE SIGN, DATE AND RETURN THIS PROXY FORM
USING THE ENCLOSED ENVELOPE.

Check appropriate box:

Address Change? [ ] I plan to attend the meeting. [ ] Date: __________________________________, 2003

Indicate changes below:
__________________________________________________
| |
| |
|__________________________________________________|

Signature(s) in Box
Please sign exactly as your name appears hereon.
Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such. If a
corporation, please sign in full corporate name
by authorized officer. If a partnership, please
sign in partnership name by an authorized person.