PROXY COVER PAGE
________________
THIS SUBMISSION WILL CONTAIN THE MATERIAL FOR A DEFINITIVE PROXY
FILING FOR DATA SWITCH CORPORATION. THE CHANGED AREAS HAVE BEEN REDLINED.
THE $125.00 FILING FEE HAS BEEN WIRED TO DATA
SWITCH'S LOCKBOX ON MARCH 31, 1995 WHEN THE PRELIMINARY WAS FILED.
THIS TRANSMISSION IS MODIFYING THE SUSPENDED FILING OF
ACCESSION NUMBER: 0000701376-000007
THE DOCUMENT COUNT HAS BEEN CHANGED TO 2
DATA SWITCH CORPORATION
One Waterview Drive
Shelton, Connecticut 06484
(203) 926-1801
________________________________________________________________
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD
MAY 18, 1995
The 1995 Annual Meeting of the Shareholders of Data Switch
Corporation (herein the "Company") will be held on Thursday, May
18, 1995 commencing at 10:00 a.m. at the Ramada Inn, 780 Bridgeport
Avenue, Shelton, CT 06484 to consider the following matters:
(1) the election of six directors;
(2) the approval of an amendment of the Company's Certificate
of Incorporation to increase the number of authorized
shares of Common Stock;
(3) the adoption of the Company's 1995 Stock Bonus Plan;
(4) the approval of an amendment to the Company's 1989
Incentive Stock Option Plan;
(5) the approval of an amendment to the Company's 1988
Non-Qualified Stock Option Plan;
(6) the approval of an amendment to the Company's 1991
Employee Stock Purchase Plan;
(7) the ratification of the appointment of Coopers &
Lybrand L.L.P. as the Company's independent auditors; and
(8) such other matters as may be properly brought before the
Shareholders.
Pursuant to the Bylaws of the Company, the Board of Directors
has fixed the close of business on April 3, 1995 as the date for
determination of shareholders of record entitled to notice of, and
to vote at, the meeting.
By order of the Board of Directors
SHAWN A. SMITH
Secretary
April 17, 1995
You are invited to attend the meeting.
If you do not expect to be present at the meeting,
please date and sign the enclosed form of
proxy and mail it promptly in the enclosed
return envelope.
One Waterview Drive
Shelton, Connecticut 06484
(203) 926-1801
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
General
Your proxy is hereby solicited on behalf of the Board of
Directors of Data Switch Corporation (herein the "Company") for use
at the 1995 Annual Meeting of the Shareholders. The 1995 Annual
Meeting is to be held on Thursday, May 18, 1995, commencing at
10:00 a.m., at the Ramada Inn, 780 Bridgeport Avenue, Shelton,
Connecticut 06484. The purposes of the meeting are set forth
herein and in the accompanying Notice of Annual Meeting.
It is anticipated that these materials will be mailed on or
after April 17, 1995 to all shareholders entitled to vote at the
meeting. Any person giving a proxy has the right to revoke it by
executing and delivering a later proxy, by attending the meeting
and voting his or her shares in person or by giving written notice
of revocation to the Company prior to the Annual Meeting.
The cost of the solicitation of these proxies is being borne
by the Company. In addition, the company may reimburse brokerage
firms and other persons representing beneficial owners. Proxies
may also be solicited by certain of the Company's directors,
officers and employees, acting without additional compensation for
such services.
VOTING SECURITIES AND
PRINCIPAL HOLDERS THEREOF
All holders of the Company's Common Stock, par value $.01
(herein the "Common Shares") of record as of the close of business
on April 3, 1995 are entitled to vote at the Annual Meeting. Each
holder is entitled to one vote per Common Share. As of the record
date, there were 12,549,761 Common Shares issued and outstanding.
There is no cumulative voting.
Security Ownership of Directors, Management and Certain Beneficial
Owners
As of the close of business on December 31, 1994, 12,376,891
Common Shares were issued and outstanding. The following table
sets forth, as of such date, information relating to the beneficial
ownership of the Company's Common Shares by each person known to
the Company to be beneficial owner of more than 5% of the Common
Shares, by each director, by each of the named executive officers
and by all directors and executive officers as a group:
<TABLE>
<CAPTION>
Approximate
Percentage of
Name and Address Number of Shares Outstanding Shares
<S> <C> <C>
Richard E. Greene* 2,152,079(a) 17.4%
4255 Gulf Drive #125
Holmes Beach, FL 34217
Beall Technologies, Inc. 1,489,300 12.0%
and Purnendu Chatterjee
100 Lighting Way
Secaucus, NJ 07094
William J. Lifka* 100,000(b) 0.8%
610 N. Flagship Drive
Salem, SC 29676
Frederick Dietz 124,504(c) 1.0%
31 Doe Hollow Road
Trumbull, CT 06611
Anthony J. Fusarelli 34,833(d) 0.3%
6 Crescent Lane
Trumbull, CT 06611
W. James Whittle 26,539(e) 0.2%
568 Stratfield Road
Fairfield, CT 06430
Michael A. Ruggieri 6,206(f) 0.1%
273 Chestnut Hill Road
Wilton, CT 06897
Michael D. Stashower* 71,588(g) 0.6%
14 Cardinal Lane
Westport, CT 06880
Brandt R. Allen* 20,000(h) 0.2%
1208 Blueridge Road
Charlottesville, VA 22903
D. David Cohen* 33,502(i) 0.3%
82 Tara Drive
Roslyn, NY 11576
Norman L. Rasmussen* 10,000(j) 0.1%
59 Commercial Wharf
Boston, MA 92110
Irwin J. Sitkin* 33,867(k) 0.3%
3500 Mystic Pointe Drive
Aventura, FL 33180
All directors and officers as a group2,640,836(l) 20.9%
(15 persons)
<FN>
*Director
_______________
(a) Includes 131,249 shares owned of record by a trust for the
benefit of Mr. Greene's children. Also includes 48,000 shares
owned of record by Mr. Greene's wife. Mr. Greene disclaims
beneficial ownership as to such shares. Also includes vested
options to purchase a total of 20,000 shares.
(b) Includes vested options to purchase 20,000 shares.
(c) Includes vested options to purchase 79,333 shares.
(d) Includes vested options to purchase 18,416 shares.
(e) Includes vested options to purchase 22,750 shares.
(f) Includes vested options to purchase 5,732 shares.
(g) Assumes conversion of Data Switch 8-1/4% Convertible
Subordinated Debentures, representing 7,225 shares. Also includes
vested options to purchase 28,333 shares.
(h) Includes vested options to purchase 10,000 shares.
(i) Includes 505 shares owned of record by trusts for the benefit
of others and 864 shares owned of record by Mr. Cohen's wife. Mr.
Cohen disclaims beneficial ownership as to such shares. Also
includes vested options to purchase 6,667 shares.
(j) Includes vested options to purchase 10,000 shares.
(k) Includes vested options to purchase 16,667 shares.
(l) Includes vested options to purchase 258,852 shares of the
Company's Common Stock, and assumes conversion of Data Switch
8-1/4% Convertible Subordinated Debentures representing 7,225
shares.
</TABLE>
Nominees
The Company's Bylaws currently provide for the election of a
minimum of three and a maximum of nine directors. All of the six
nominees for directorships are currently serving as such, and were
previously elected by the shareholders. The term of the office of
each person elected as a director will continue until the next
Annual Meeting of Shareholders, unless sooner terminated pursuant
to the Company's Articles of Incorporation or Bylaws.
Unless otherwise instructed on the proxy to withhold votes for any
nominee, the proxy holders will vote the proxies received by them
for the nominees named below. In the event that any nominee of the
Company is unable or declines to serve as a director at the time of
the Annual Meeting, the proxies will be voted for any nominee who
shall be designated by the present Board of Directors to fill the
vacancy. The Company is not aware of any nominee who will be
unable, or who intends to decline, to serve as a director.
The names and ages of the nominees as of March 31, 1995, and
certain information about them are set forth
below:
Principal Director
Name of Nominee Age Occupation Since
_______________ __ __________ _________
William J. Lifka 65 Chairman, President 1985
and Chief Executive
Officer of the Company
Brandt R. Allen 54 Associate Dean and 1993
Professor, Darden
Business School
D. David Cohen 54 Attorney in private 1992
practice and Of
Counsel, Parker
Duryee Rosoff & Haft
Norman L. Rasmussen 66 President and Chief 1993
Executive Officer,
SofTech, Inc.
Irwin J. Sitkin 64 Retired Vice President, 1989
Corporate Administra-
tion of Aetna Life and
Casualty Company
Michael D. Stashower 68 Retired Executive Vice 1985
President and Chief
Financial Officer
of the Company
William J. Lifka became, Chairman, President and Chief Executive
Officer of the Company in December 1993, and has been a director of
the Company since 1985. From 1984 to 1993, Mr. Lifka was President
and Chief Executive Officer of Summagraphics Corporation. From
1979 to 1984, Mr. Lifka held various key management positions at
International Telephone and Telegraph Corporation, where his most
recent title was Vice President and Group General Manager,
Communications.
Brandt R. Allen has been a director of the Company since October
1993. Since 1970, he has been on the faculty of the Darden
Business School, University of Virginia, where he is currently
Associate Dean and the James C. Wheat Professor of Business
Administration. Prior to joining the University of Virginia
faculty, Dr. Allen was a professor at the Harvard Business School.
D. David Cohen has been a director of the Company since May 1992.
He previously served as a director of the Company from 1986 to
1988. He is currently engaged in the private practice of law in
New York and is Of Counsel to the New York law firm of Parker
Duryee Rosoff & Haft. From December 1988 to December 1990, while
also engaged in the practice of law as a member of Parker Duryee
Rosoff & Haft, Mr. Cohen served as Vice President and General
Counsel of the Company. From 1983 to 1988 he was a partner in the
law firm of Cooper, Cohen, Singer & Ecker. Mr. Cohen is also a
member of the board of directors of Elephant & Castle Group, Inc.
Norman L. Rasmussen has been a director of the Company since
October 1993. Since 1991, he has been President, Chief Executive
Officer and a director of SofTech, Inc. Prior to his employment
with SofTech, he headed Teleprocessing, Inc., a systems integration
firm which he founded. Mr. Rasmussen was a member of the
Massachusetts Governor's Industry Advisory Committee on Information
Processing from 1986 to 1994. He was employed by IBM in various
marketing and development positions from 1953 to 1974.
Irwin J. Sitkin has been a director of the Company since 1989. Mr.
Sitkin is a retired Vice President, Corporate Administration, of
Aetna Life and Casualty Company. During his 35 years at Aetna, Mr.
Sitkin held executive positions in data processing and information
systems.
Michael D. Stashower has been a director of the Company since 1985.
From 1990 until February 1994, he served as Executive Vice
President, Chief Financial Officer and Treasurer of the Company.
Previously, Mr. Stashower served as Executive Vice President of
Softstrip, Inc. Prior to joining Softstrip, Mr. Stashower held
various key management positions at Perkin-Elmer Corporation, where
his most recent title was Senior Vice President, Finance.
Meetings, Committees and Attendance
The Board of Directors of the Company held nine regular
meetings in 1994. During 1994, the Board maintained two standing
committees: the Compensation and Stock Option Committee and the
Audit Committee. Each incumbent director attended at least 75% of
the aggregate of: (1) the total number of Board meetings held
during the period he was a director; and (2) the total number of
meetings held by all committees of the Board on which he served
during such period.
The Compensation and Stock Option Committee reviews the
Company's remuneration policies and practices, administers certain
of the Company's incentive compensation and stock option plans and
establishes the salaries of the executive officers of the Company.
The Audit Committee reviews the external audit programs of the
Company and its subsidiaries and the adequacy of the Company's
internal controls and systems, and monitors compliance with the
Company's conflicts of interest and business ethics policies. The
committees generally meet separately from, but on the same days as,
regularly scheduled Board meetings. At least once annually, the
Audit Committee meets separately with the Company's independent
outside auditors.
In 1995 the Board established a Nominating and Governance
Committee. This Committee is charged with overseeing the
nomination of future directors of the Company, as well as
establishing general policies in connection with the operations of
the Board.
Compensation of Directors
Directors who are not employees or officers of the Company
(herein the "Outside Directors") receive the following
compensation: (1) $10,000 per year as a retainer; (2) $1,000 per
Board meeting attended; and (3) $500 per committee meeting
attended, when the committee convenes on a day on which no Board
meeting is held.
In addition to the cash compensation, each Outside Director is
granted a non-qualified option upon appointment to the Board to
purchase 10,000 Common Shares, and an additional option to purchase
5,000 Common Shares each year thereafter in which such Outside
Director continues to serve. The options vest in three equal
installments, on each of the first three successive anniversaries
of the date of grant, subject to continued service. The exercise
price of the option is fixed at the fair market value of the Common
Shares as of the date of the first meeting following the Outside
Director's election to serve, and on the annual date of grant
thereafter.
The Company is proposing to modify the Non-Qualified Stock
Option Plan with respect to option grants to outside directors.
See "Amendment to 1988 Non-Qualified Stock Option Plan" below.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
The Compensation and Stock Option Committee (the "Committee")
is composed of four directors, none of whom are employees of the
Company. The Committee acts upon base salary levels and target
incentives for executive officers of the Company recommended by
management at or about the beginning of each fiscal year.
The Company's compensation policies are generally designed to
link executive compensation to the performance of the individual
and the Company; to provide long-term incentives linked to
increased shareholder value; and to provide pay competitive with
that of similarly sized companies in the same or similar
industries. The Company's executive officer compensation consists
of two key elements: (i) an annual component, comprised of base
salary, bonus and stock awards and (ii) a long term component,
comprised of stock options.
In 1994 the Company retained an independent consulting firm to
conduct an executive compensation survey to compare the total
compensation of its executive officers with similar positions in
comparable companies.
Annual Component. Base salaries for executive officers are
determined based upon pay grade levels for each officer. Such pay
grade levels are set by evaluating the responsibilities of the
position and comparing it with other executive officers' positions
and similar positions in comparable companies on an annual basis.
Annual adjustments are determined in accordance with both the
Company's performance and individual contributions to Company
performance.
Executive officers and other key employees of the Company are
eligible for cash bonuses pursuant to the Data Switch Bonus Plan
(the "DSBP"), which was adopted beginning July 1, 1992. Under the
DSBP, up to 10% of the Company's pre-tax, pre-bonus profits are
placed in a pool, and distributed among participants in cash, based
on base salary and pay grade level. Payments under the DSBP are
made annually. The DSBP was adopted in lieu of a prior plan which
provided for potentially greater bonuses, subject to profit levels
meeting pre-determined projections. The Committee has determined
that in 1995, the pool will consist of 9% of the Company's
pre-tax, pre-bonus profits.
In 1994, executive officers also participated in the Company's
1992 Executive Stock Incentive Plan, under which 6% of the pre-tax,
pre-bonus profits of the Company were placed into a bonus pool. On
an annual basis, 83.3% of this bonus pool was distributed to
participants in Common Shares and the balance in cash, based upon
the executive's base salary. This plan was replaced for 1995 by
the Executive Incentive Plan (the "Executive Plan"), under which up
to 5% of the pre-tax, pre-bonus profits of the Company will be
placed in a bonus pool for distribution to participants on an
annual basis, in cash, in a proportion based on the executive's
base salary. The change from the stock to the cash-based plan was
based upon the Committee's assessment that the cash payments more
closely reflect the annual incentive goals of this part of the
compensation scheme. The Committee has determined that in 1995, no
benefits will be awarded under the Executive Plan unless the
Company attains a minimum pre-tax, pre-bonus profit of $1,000,000.
Long-Term Component. Stock Options are granted annually to
executive officers, in numbers based upon pay grade level and
individual contributions to the Company's performance. The
exercise price of stock options is the fair market value of the
Common Shares at the time the options are granted.
CEO Compensation. In December 1993, Mr. William J. Lifka was
hired on an interim basis as President and Chief Executive Officer
for a six (6) month period, which was extended until June 30, 1995.
His base salary over such period was fixed by the Committee.
THE COMPENSATION COMMITTEE
Irwin J. Sitkin, Chairman
Brandt R. Allen
Norman L. Rasmussen
Michael D. Stashower
COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
Messrs. Irwin J. Sitkin (Chairman), Brandt R. Allen, Norman L.
Rasmussen and Michael D. Stashower served as members of the
Compensation and Stock Option Committee ("Committee") during the
last fiscal year. None of these persons were officers or employees
of the Company during this period. Mr. Stashower was formerly an
executive officer of the Company. No current executive officers
may serve as members of the Committee. There are no interlocks as
defined by the Securities and Exchange Commission.
Mr. Cohen was Vice President and General Counsel of the
Company from May 1988 to December 1990, while also engaged in the
outside practice of law as a member of Parker Duryee Rosoff &
Haft. Mr. Cohen is presently outside General Counsel to the
Company.
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of the compensation of the
Chief Executive Officer of the Company and the Company's four other
most highly compensated executive officers whose salary and bonus
exceeded $100,000 in 1994, for services rendered during fiscal
years 1994, 1993 and 1992.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term
Annual Compensation Compensation
Commis- All
sions Restricted Other
and Stock Compen-
Name Year Salary Bonuses Award Options sation
and Title ($) ($) ($) (#) ($)(1)
_________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
William
J. Lifka,
Chairman, 1994 322,500(2) - 106,250 10,000 5,856
President
and Chief
Executive 1993(3) 10,923 - - - -
Officer 1992 - - - - -
W. James
Whittle, 1994 135,771 68,258 - 22,500 3,437
Senior
Vice
President, 1993(4) 122,884 4,027 - 12,500 3,100
Chief
Financial
Officer
and 1992 - - - - -
Treasurer
Anthony J.
Fusarelli,
Senior Vice 1994 125,000 130,173 - 2,500 4,667
President
Worldwide
Sales 1993 120,000 63,802 - 12,500 4,797
and
Service 1992 110,000 64,253 - 16,500 2,537
Michael (5)
Ruggieri, 1994 130,000 65,359 - 20,500 3,294
Vice
President 1993 - - - - -
Strategic
Marketing 1992 - - - - -
Frederick
Dietz,(6) 1994 174,774 98,400 - 2,500 4,723
Deputy
President 1993 175,000 6,077 - 7,500 5,014
1992 158,333 21,894 - 32,500 4,682
<FN>
(1) Includes Company-paid life insurance premiums for the benefit
of each such executive officer and Company contributions for the
account of each such executive officer under the Company's Employee
Retirement Savings Plan.
(2) Includes $50,000 fee for service as Chairman of the Board of
Directors of the Company.
(3) Mr. Lifka joined the Company as Chairman, President and Chief
Executive Officer on December 16, 1993.
(4) Mr. Whittle was elected an executive officer of the Company in
May 1993.
(5) Mr. Ruggieri was elected an executive officer of the Company
in January 1994.
(6) Mr. Dietz ceased to be an executive officer of the Company on
December 31, 1994.
</TABLE>
OPTION GRANTS IN 1994
Set forth below is a summary of stock option grants made during the
year ended December 31, 1994 to the Chief
Executive Officer of the Company and each of the four other most
highly compensated executive officers.
<TABLE>
OPTION GRANTS IN FISCAL YEAR 1994
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation
Individual Grants For Option Term (1)
_________________________________________________________________
% of
Total
Options
Granted
to Exercise
Options Employees or Base Expir-
Granted in Fiscal Price ation 5% 10%
Name (#) Year ($/Sh) Date ($) ($)
____ _______ _________ ________ ______ ___ ___
<S> <C> <C> <C> <C> <C> <C>
William J. 10,000 2.9 2.500 6/30/1995 1,250 2,500
Lifka
W. James 2,500 6.5 2.375 1/21/2004 3,734 9,463
Whittle 20,000 2.375 3/17/2004 29,872 75,703
Anthony J. 2,500 0.7 2.375 1/21/2004 3,734 9,463
Fusarelli
Michael A. 20,500 6.0 2.375 1/21/2004 30,619 77,595
Ruggieri
(2)
Frederick 2,500 0.7 2.375 1/21/2004 371 742
Dietz
<FN>
(1) Potential realizable value is based on an assumption that the
stock price of the common stock appreciates at the annual rate
shown from the date of grant until the end of the option term. The
numbers are calculated based on the requirements of the Securities
and Exchange Commission and do not reflect the Company's estimate
of future stock price growth.
(2) Expiration dates when granted. Mr. Dietz's options will expire
on June 30, 1995, due to the cessation of his employment with the
Company.
</TABLE>
OPTION EXERCISES IN 1994 AND OPTION VALUES AT YEAR-END 1994
There were no options exercised in 1994 by any of the persons
in the table below.
The following table provides information as to the value of
options held by the persons named below, measured
in terms of the closing price of the Common Shares on December 31,
1994.
<TABLE>
<CAPTION>
Number of Shares Value of
Subject to Unexercised Unexercised In-the-
Options at Year-End Money Options at Year-End
($)(1)
Name Exercisable Unexercisable Exercisable Unexercisable
____ ___________ _____________ ___________ _____________
<S> <C> <C> <C> <C>
William J.
Lifka 20,000 - 600 -
W. James
Whittle 22,750 35,500 1,494 4,796
Anthony J.
Fusarelli 18,416 23,001 3,360 6,330
Michael A.
Ruggieri 5,732 22,318 168 3,774
Frederick
Dietz 79,333 26,667 7,466 11,183
<FN>
(1) Value at year-end was $2.56 per share.
</TABLE>
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN
CONTROL AGREEMENTS
Mr. William J. Lifka serves as President and Chief Executive
Officer of the Company pursuant to an Employment Agreement with the
Company, at a monthly salary of $25,000. Pursuant to such
agreement, Mr. Lifka is responsible for recruitment of a successor
President and Chief Executive Officer. In January 1994, Mr. Lifka
was also awarded a restricted stock grant of 50,000 shares, the
vesting of which was subject to certain terms and conditions which
have been fulfilled. Mr. Lifka is also paid an annual stipend of
$50,000 under the Employment Agreement for his services as Chairman
of the Board of Directors.
On April 1, 1994, the Company entered into an Employment
Agreement with Mr. Frederick Dietz in connection with Mr. Dietz's
service as Deputy President of the Company. Such agreement
provided that in the event of a termination of Mr. Dietz's
employment with the Company, Mr. Dietz would be entitled to salary
continuance for a period of twelve (12) months. Effective December
31, 1994, Mr. Dietz ceased to serve as Deputy President of the
Company, and agreed to provide full-time transition services to the
Company through March 31, 1995. The payments made to Mr. Dietz
pursuant to such arrangement run from January 1, 1995 through
December 31, 1995, and will total $175,000.
The Company has entered into Executive Severance Compensation
Agreements with its executive officers pursuant to which such
officers would be entitled to receive payments of six months'
salary, plus up to 50% of such officer's aggregate total
compensation during the five fiscal years preceding a change in
control, based upon length of service with the Company or its
successor, if the individual officer's employment with the Company
is involuntarily terminated (or the individual receives a reduction
in compensation or demotion in title, etc.) for reasons other than
cause following such change in control, or during the six month
period preceding such change in control.
CERTAIN TRANSACTIONS
In April 1989, the Company loaned $75,000 to Mr. Richard E.
Greene, Chairman of the Board of Directors. The loan did not bear
interest, and was payable upon demand by the Company. In 1994, such
amount was combined with certain other amounts owing to the Company
by Mr. Greene, and Mr. Greene executed a new promissory note in the
principal amount of $93,578, bearing interest at the rate charged
to the Company by its principal lender. Such note matures in 1997;
however, under the terms of the transactions with Mr. Greene
described below, the full principal amount of such note will be
forgiven in 1997 if Mr. Greene has fulfilled all of his obligations
under the agreements related to such transactions.
In 1994 and 1995 the Company entered into a series of
arrangements with Mr. Richard E. Greene, founder and, until his
resignation in January 1995, a director of the Company, pursuant to
which Mr. Greene will provide certain advisory services to the
Company through December 31, 1996, in exchange for annual
compensation of $225,000 in 1994, 1995 and $175,000 in 1996. In
addition, in January 1995, the Company made a loan to Mr. Greene in
the amount of $500,000, secured by a pledge of 400,000 Common
Shares, to be repaid in thirty six (36) equal monthly installments,
commencing on January 1, 1997, plus interest at the rate charged to
the Company by its principal lender, plus 1%, which interest
payments began as of the effective date of the agreement. In
consideration of this loan, Mr. Greene granted to the Company an
option to purchase 200,000 pledged Common Shares, at a price of
$3.00 per share, and a right of first refusal to purchase any other
Common Shares which Mr. Greene may desire to sell in a private sale
transaction.
Mr. D. David Cohen, a director of the Company, also serves as
outside General Counsel to the Company. In addition to fees as an
Outside Director, approximately $78,000 in compensation was paid to
Mr. Cohen in 1994 for fees and expenses in this capacity.
FIVE YEAR PERFORMANCE COMPARISON
The graph below provides an indicator of cumulative total
shareholder returns for the Company as compared with (i) the Center
for Research in Security Prices of the University of Chicago
("CRSP") Index for Nasdaq Stock Market (U.S. Companies) and (ii) a
peer group of consisting of the CRSP Index for Nasdaq Computer
Manufacturers' Stocks.
(Performance Graph on Separate Page)
Previously filed on Form SE
Increase of Authorized Common Stock
The Certificate of Incorporation of the Company currently
authorizes 20,000,000 Common Shares. As of December 31, 1994,
there were issued 12,425,320 (including 48,429 Treasury Shares)
and, of the remaining 7,574,680 authorized but unissued Common
Shares, 2,930,198 were reserved for issuance upon conversion of the
Company's various warrants and convertible debentures and 2,462,178
were reserved for issuance under the Company's stock option plans,
stock purchase plan, stock bonus plan and various other plans and
agreements. Therefore, the Company has only approximately
2,182,304 authorized but unissued Common Shares available for
issuance from to time to time as may be necessary in connection
with adoption of the plan amendments set forth in this proxy
statement, as well as future financing, investment opportunities,
acquisitions or other corporate purposes.
Accordingly, the Board recommends the amendment of the
Certificate of Incorporation of the Company to increase the
authorized number of Common Shares from 20,000,000 to 40,000,000.
If the proposed amendment to the Certificate of Incorporation is
adopted, there will be available for issuance by the Company
approximately 22,182,304 authorized and unreserved Common Shares.
If the 1995 Stock Bonus Plan and other plan amendments set forth in
this proxy statement are approved by the Shareholders, there will
be available for issuance approximately 20,532,304 authorized and
unreserved Common Shares.
Except as described above, the Company has no present
understandings or agreements for issuing the additional Common
Shares to be authorized by the proposed amendment, but it is
considered advisable to have authorization for such additional
shares to enable the Company, as the need may arise, to have such
shares available without the delay and expense in connection with
the holding of a special meeting of shareholders of the Company.
The issuance of Common Shares (or securities convertible into
Common Shares), including additional shares that would be
authorized if the proposed amendment to the Certificate of
Incorporation is adopted, may dilute the equity ownership position
of current holders of Common Shares.
The affirmative vote of a majority of the Common Shares
present and voting at the meeting is necessary for the adoption of
this amendment to the Certificate of Incorporation. The Board
recommends a vote FOR the adoption of the amendment.
Adoption of the Data Switch 1995 Stock Bonus Plan
The Company is hereby soliciting shareholder approval for the
adoption of the 1995 Stock Bonus Plan (the "Bonus Plan"), a copy of
which is appended as Exhibit A hereto. This Plan replaces the
Company's 1983 Bonus Plan, under which all available shares have
been issued. The Bonus Plan is intended to reward employees other
than top management for outstanding performance, and to recognize
employees who have provided long-term service to the Company.
Under the Bonus Plan, 150,000 Common Shares will be reserved
for issuance to such employees as are determined by the
Compensation and Stock Option Committee of the Company (the
"Committee"). Executive officers and directors are not eligible to
participate in the Bonus Plan. The value of benefits and number of
shares to be distributed to participants under the plan are not
determinable.
The Bonus Plan will be administered by the Committee, the
Committee shall have the right to amend, modify or terminate the
Plan, except that the Committee may not increase the number of
shares approved for the Plan or change the eligibility requirements
thereunder without the approval of the shareholders.
The approval of a majority of the Common Shares present and
voting at this meeting is necessary for the approval of the 1995
Bonus Plan. The Board recommends a vote FOR the adoption of the
Bonus Plan.
Approval of Amendment to 1989 Incentive Stock Option Plan
The Company is hereby soliciting shareholder approval to amend
its 1989 Incentive Stock Option Plan (the "Incentive Plan") to
reserve an additional 1,000,000 Common Shares. Previously,
1,000,000 Common Shares were reserved for issuance pursuant to the
Incentive Plan. All other terms and conditions of the Incentive
Plan will remain in full force and effect.
The price of the options granted under the Incentive Plan are
not less than 100% of the fair market value of the Common Shares as
of the date of grant. Options must be paid for in cash at the time
of exercise. Options are exercisable as to one-third after 18
months, an additional one-third after 30 months an the remainder
after 42 months. Options granted under the Incentive Plan expire
on the earlier of ten (10) years after the date of grant or 90
days after any termination of employment. As of March 15, 1995,
the market price of the Company's Common Shares was $3.63.
No income is recognized by an optionee when an incentive stock
option (ISO) is exercised. Upon disposition, if the shares are not
disposed of within two years from the date of grant or one year
from the date of exercise, the difference between the option price
and the selling price is treated as a long-term capital gain, and
no deduction is allowed to the Company. If the holding period is
not satisfied, the difference between the option price and the fair
market value of the stock at the time of exercise is taxed as
ordinary income to the optionee and the Company is entitled to a
corresponding deduction, and any gain in excess of the amount
reported as ordinary income is capital gain. If option stock is
sold before the expiration of the required holding period for less
than the price of the stock on the date the option is exercised,
the amount taxed as ordinary income is limited to the difference
between the sale price and the option price. If the stock is sold
for less than the option price, the loss is a capital loss. To the
extent that the aggregate fair market value of stock with respect
to which ISOs are exercisable for the first time by any individual
during any calendar year under all of the Company's stock plans
exceeds $100,000, such options do not receive the tax treatment of
ISOs.
Executive officers and all other employees of the Company are
eligible to participate in the Incentive Plan. Outside directors
are not eligible for grants of options under the Incentive Plan.
(See, "Approval of Amendment to 1988 Non-Qualified Stock Option
Plan.") The benefits or option amounts to be received by any
executive officer or other employees of the Company are not
determinable. For further information with respect to grant and
exercise of options by certain executive officers during 1994, see
"Option Grants in 1994".
The affirmative vote of a majority of the Common Shares
present and voting at the meeting is necessary for the approval of
this amendment to the Incentive Plan. The Board recommends a vote
FOR the adoption of this amendment.
Approval of Amendment to 1988 Non-Qualified Stock Option Plan
The Company is hereby soliciting approval to amend its 1988
Non-Qualified Stock Option Plan (the "Non-Qualified Plan") to
modify the option grant provision for outside directors of the
Company. Under the current plan, outside directors are awarded
options as to 10,000 Common Shares upon election, and receive
further grants of 5,000 Common Shares annually thereafter.
Pursuant to this amendment, the initial grant to outside directors
will remain at 10,000 Common Shares, and the annual portion will be
increased to 9,000; provided, however, that the value of any such
grant at the date of grant shall not exceed $100,000. These awards
are automatic and non-discretionary. The options will vest in equal
installments over a three year period. In addition, the Company is
hereby soliciting approval to amend the Non-Qualified Plan to
provide that in the event of a change in control of the Company,
options granted to outside directors will automatically become
fully vested. In the opinion of management, full vesting of
outside directors' options upon a change in control is consistent
with prevailing practices. All other terms and provisions of the
Non-Qualified Plan will remain in full force and effect.
Options under the Non-Qualified Plan may be granted to
employees, directors, advisors and consultants to the Company.
Under the Non-Qualified Plan, there is no limitation upon options
granted to persons other than outside directors. Options are
granted for a period of five years. Vesting is flexible; however,
no option may vest prior to one year after the date of grant.
Amounts to be granted to such persons are not determinable at this
time. For further information with respect to the grant of and
exercise of options by executive officers and all officers and
directors as a group during 1994, see "Option Grants in 1994".
No income is recognized by an optionee when a non-qualified
stock option is granted. Upon exercise of the option, the optionee
is treated as having received ordinary income at the time of
exercise in an amount equal to the difference between the option
price paid and the fair market value of the Common Shares at the
time acquired. The Company is entitled to a deduction at the same
time in a corresponding amount. The optionee's basis in the Common
Shares acquired upon exercise is equal to the option price plus the
amount of ordinary income recognized. Any gain or loss recognized
upon disposition of the Common Shares is treated as capital gain or
loss.
The affirmative vote of a majority of the Common Shares
present and voting at this meeting is necessary for the approval of
this amendment to the Non-Qualified Plan. The Board recommends a
vote FOR the adoption of this amendment.
Approval of Amendment to 1991 Employee Stock Purchase Plan.
The Company is hereby soliciting shareholder approval to amend
its 1991 Employee Stock Purchase Plan ("ESPP") to reserve an
additional 500,000 Common Shares. Previously, 500,000 Common
Shares were reserved for issuance pursuant to the ESPP.
All employees of the Company, including executive officers,
are eligible to participate in the ESPP, but outside directors are
not eligible. Participants in the ESPP may contribute up to 10% of
such individual's base compensation to purchase Common Shares on a
quarterly basis, at a purchase price equal to the lesser of (a) 85%
of the fair-market value as of the first business day of such
calendar quarter; or (b) 85% of the fair market value as of the
last day of such calendar quarter.
The amount of stock to be purchased by any executive officer
of other employees of the Company are not determinable.
The affirmative vote of a majority of Common Shares present
and voting at the meeting is necessary for the approval of this
amendment to the ESPP. The Board recommends a vote FOR the
adoption of this amendment.
RATIFICATION OF SELECTION OF ACCOUNTANTS
The Board of Directors of the Company, acting upon the
recommendation of its Audit Committee, has selected Coopers &
Lybrand L.L.P. ("Coopers & Lybrand") as the independent accountants
of the Company for the year 1995, subject to ratification by the
shareholders.
Coopers & Lybrand has been the Company's auditor since 1981
and has advised the Company that it has neither any direct or
indirect financial interest in the Company or its subsidiaries nor
any other connection therewith except in the capacity of
independent public accountants.
A representative of Coopers & Lybrand is expected to be
present at the Annual Meeting of the Shareholders. Such
representative will have the right to make a statement if he or she
desires to do so and will be available to respond to appropriate
questions.
The proposal for ratification of the selection of Coopers &
Lybrand requires the approval of a majority of the Common Shares
present and voting at the meeting. If the proposal should not be
approved, the Board of Directors would have to select an
alternative firm of auditors. The Board recommends that
shareholders vote FOR the proposal.
OTHER MATTERS
The Company knows of no other matters to be submitted to the
meeting. If any other matters properly come before the meeting, it
is the intention of the persons named in the enclosed form of proxy
to vote the shares they represent as the Board of Directors may
recommend.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
FOR 1996 ANNUAL MEETING
Proposals of shareholders which are intended to be presented
by such shareholder at the Company's 1996 Annual Meeting must be
received by the Company no later than January 31, 1996 in order to
be included in the Proxy Statement and form of proxy relating to
that meeting.
The Annual Report to the Shareholders for the year 1994 is
also enclosed, but is not part of the proxy soliciting material.
DATA SWITCH CORPORATION
The Board of Directors
April 17, 1995
DATA SWITCH CORPORATION
One Enterprise Drive
Shelton, Connecticut 06484
This Proxy is Solicited on behalf of the Board of Directors
The undersigned shareholder of Data Switch Corporation (herein
the "Company") hereby appoints William J. Lifka, W. James Whittle
and Shawn A. Smith the proxy of the undersigned (with power of
substitution) to vote at the Annual Meeting of the Shareholders of
the Company to be held on June 22, 1994 and at any adjournment
thereof, all the present, or the following proposals more fully
described in the Proxy Statement for the Meeting in the manner
specified and on any other business that may properly come before
the meeting.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
(Continued on reverse side)
THE DIRECTORS RECOMMEND A VOTE FOR THE PROPOSALS SET FORTH BELOW
1. Election of Directors
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the to vote for all Nominees
contrary below) listed below
/ / / /
INSTRUCTION: If you have marked "FOR" above but wish to withhold
authority for any individual nominee, strike a line through the
nominee's name in the list below.
Brandt R. Allen, D. David Cohen, William J. Lifka, Norman L.
Rasmussen, Irwin J. Sitkin and Michael D. Stashower
2. Approval of Amendment to Certificate of Incorporation
FOR AGAINST ABSTAIN
/ / / / / /
3. Approval of the 1995 Stock Bonus Plan
FOR AGAINST ABSTAIN
/ / / / / /
4. Approval of Amendment to the 1989 Incentive Stock Option
Plan
FOR AGAINST ABSTAIN
/ / / / / /
5. Approval of Amendment to the 1988 Non-Qualified Stock Option
Plan
FOR AGAINST ABSTAIN
/ / / / / /
6. Approval of Amendment to the 1991 Employee Stock Purchase
Plan
FOR AGAINST ABSTAIN
/ / / / / /
7.Approval of Selection of Accountants
FOR AGAINST ABSTAIN
/ / / / / /
In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
__________________________________
Signature
__________________________________
Signature if held jointly
Dated: ___________________________
Please sign exactly as name appears to the left. When shares are
held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate
name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
EXHIBIT A
DATA SWITCH CORPORATION
1995 STOCK BONUS PLAN ("Bonus Plan")
The purpose of the Bonus Plan is to provide employees of the
Company other than executive officers with an opportunity to
acquire shares of the Company's Common Stock, par value $.01
("Shares"), and a meaningful equity stake in the Corporation
without any cash outlay on the part of such employees. The
objective of the Bonus Plan is to permit the Company a method of
highlighting and rewarding outstanding job performance or tenure or
service by such persons. An aggregate of 150,000 Shares will be
reserved for issuance pursuant to the Bonus Plan.
1. Administration. The Plan will be administered by
The Compensation and Stock Option Committee (the "Committee") of
the Board of Directors. Members of the Committee will have
authority to make rules and regulations for the administration of
the Bonus Plan; its interpretations and decisions with regard
thereto shall be final and conclusive.
2. Eligibility. All employees of the Company and its
subsidiaries, with the exception of executive officers and
directors of the Company, will be eligible to participate in the
Bonus Plan, in accordance with such rules as may be prescribed from
time to time by the Committee.
Notwithstanding the foregoing, no employee who owns 5% or
more of the total combined voting power or value of the stock of
the Company or any subsidiary will be eligible. In addition, no
employee who has not been such for at least one full calendar
quarter may receive an award under the Bonus Plan.
3. Grants. Awards of Shares under the Bonus Plan may be
made at any time by the Committee. No employee may receive an
award under the Bonus Plan greater than 500 Shares in any one
calendar year.
4. Cash Awards. The Company, at its option, may make
cash awards to participating employees at the time of any Share
grants in order to ameliorate the tax consequences to the employee
of the Share award to him or her. The employee will authorize
additional withholding as may be required by applicable tax
regulations.
5. Issuances. Certificates representing grants of
Shares to be issued to employees will be delivered promptly after
any grant. The Company intends to register the Bonus Plan on Form
S-8; and when so registered, employees will obtain Shares free of
restrictive legend. If any grants of Shares are made under the
Bonus Plan made prior to such registration, the certificates will
bear a legend restricting re-transfer in the absence of
registration or an exemption from registration.
6. Registration of Certificates. Certificates may be
registered only in the name of the employee, or, if the employee so
indicates on the appropriate authorization form, in the employee's
name jointly with a member of the employee's family, with right of
survivorship. An employee who is a resident of a jurisdiction
which does not recognize such a joint tenancy may have certificates
registered in the employee's name as tenant-in-common with a member
of the employee's family, without right of survivorship.
7. Rights as a Stockholder. None of the rights or
privileges of a stockholder of the Company shall exist with respect
to Shares acquired under the Bonus Plan unless and until
certificates representing such full Shares shall have been issued,
and appropriately evidenced on the transfer books of the Company.
8. Rights not Transferable. Rights under the Bonus Plan
are not transferable by a participating employee other than by will
or the laws of descent and distribution.
9. Adjustment in Case of Changes Affecting Shares. In
the event of a subdivision of outstanding Shares, or the payment of
a stock dividend, the number of Shares approved for the Bonus Plan
shall be increased proportionately, and such other adjustment shall
be made as may be deemed equitable by the Board of Directors. In
the event of any other change affecting the capitalization of the
Company, such adjustment shall be made as may be deemed equitable
by the Board of Directors to give proper effect to such event.
10. Amendment of the Bonus Plan. The Board of Directors
may at any time, or from time to time, amend the Bonus Plan in any
respect, except that, without the approval of a majority of the
Shares of stock of the Company then issued and outstanding and
entitled to vote, no amendment shall be made (i) increasing the
number of Shares approved for the Plan (other than as provided in
Section 9); (ii) withdrawing the administration of the Bonus Plan
from the Committee; or (iii) changing the eligibility requirements.
11. Termination of the Bonus Plan. The Bonus Plan and all
rights of employees under any offering hereunder shall terminate on
the sooner of: (i) May 17, 2005 or upon use of the full amount of
Shares eligible to be awarded under the Bonus Plan; or (ii) at any
sooner time, at the discretion of the Board of Directors.
12. Governmental Regulations. The Company's obligation
to sell and deliver Shares under the Bonus Plan is subject to the
approval of any governmental authority which may hereafter be
imposed in connection with the authorization, issuance or sale of
such Shares.
