SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
CSP INC.
(Name of Registrant as Specified In Its Charter)
NOT APPLICABLE
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
4) Proposed maximum aggregate value of transaction:
* Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
CSP INC.
(A MASSACHUSETTS CORPORATION)
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 12, 1995
Notice is hereby given that the Annual Meeting of Stockholders of CSP Inc.
(the "Company") will be held at the offices of Foley, Hoag & Eliot, Sixteenth
Floor, One Post Office Square, Boston, Massachusetts on Tuesday, December 12,
1995, beginning at 10:00 a.m. local time, for the following purposes:
A. To elect three Class III Directors, each for a three-year term.
B. To transact such further business as may properly come before the
Meeting, or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on November 2, 1995
as the record date for determining the stockholders of the Company entitled to
notice of, and to vote at, said Meeting and any adjournment thereof. Only
stockholders of record on such date are entitled to notice of, and to vote at,
said Meeting or any adjournment thereof.
By Order of the Board of Directors
DEAN F. HANLEY,
Clerk
November 8, 1995
YOUR VOTE IS IMPORTANT
PLEASE SIGN AND RETURN THE ENCLOSED PROXY, WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING.
CSP INC.
(A MASSACHUSETTS CORPORATION)
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 12, 1995
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of CSP Inc. ("CSPI" or the "Company") of proxies for use at
the Annual Meeting of Stockholders to be held on December 12, 1995 (the
"Meeting") and at any adjournment thereof. A form of proxy is enclosed. Any
stockholder executing such a proxy may revoke it at any time insofar as it has
not been exercised. All properly executed proxies that are received by the
Company before the Meeting and that are not revoked will be voted in accordance
with the stockholder's direction at the Meeting. The principal executive offices
of the Company are located at 40 Linnell Circle, Billerica, Massachusetts 01821.
The approximate date on which this Proxy Statement and the form of proxy will be
sent to stockholders is November 9, 1995.
ANNUAL REPORT TO STOCKHOLDERS
The Company's Annual Report for the fiscal year ended August 25, 1995
accompanies this Proxy Statement, but is not incorporated herein and is not to
be deemed a part hereof.
ELECTION OF DIRECTORS
The Company, as a Massachusetts corporation with a class of voting stock
registered under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), has a Board of Directors divided into three classes, as nearly equal in
size as practicable, referred to as Class I, Class II and Class III. The
Directors in each class serve for a term of three years and until their
successors are duly elected and qualified. As the term of one class expires, a
successor class is elected at the annual meeting of stockholders for that year.
There are currently two Class I Directors, who were elected to serve until the
annual meeting to be held with respect to the end of the 1996 fiscal year; two
Class II Directors, who were elected to serve until the annual meeting to be
held with respect to the end of the 1997 fiscal year; and three Class III
Directors, whose terms will expire at the Annual Meeting to be held on December
12, 1995.
Pursuant to the by-laws of the Company, the Board of Directors has fixed the
number of Directors that will constitute the entire Board of Directors at seven,
and has nominated three Class III Directors for election at the Annual Meeting
to be held December 12, 1995.
Unless authority is withheld, proxies in the accompanying form will be voted
in favor of electing as Class III Directors, to hold office until the annual
meeting to be held with respect to the end of the 1998 fiscal year and until
their respective successors are elected and qualified, the three Class III
nominees identified in the table below. If the proxy is executed in such a
manner as to withhold authority to vote for one or more nominees for Director,
such instructions will be followed by the persons named in the proxy.
Under the by-laws of the Company, a majority of the shares of the Company's
common stock, par value $.01 per share ("Common Stock"), issued and outstanding
and entitled to vote will constitute a quorum for the Meeting. If a quorum is
present, the vote of the holders of a plurality of the shares of Common Stock
present or represented at the Meeting and entitled to vote is required to elect
Directors. If a quorum is not present at the scheduled time for the Meeting, the
persons named in the proxy will vote to adjourn the Meeting until a later date
when a quorum can be obtained. Pursuant to the Company's by-laws, if it is
necessary to adjourn the Meeting for that purpose, no notice of the time and
place of the adjourned meeting is required to be given to stockholders.
In general, votes withheld from any nominee for election as Director,
abstentions, and broker "non-votes" are counted as present or represented for
purposes of determining the presence or absence of a quorum for the meeting. A
"non-vote" occurs when a broker or nominee holding shares for a beneficial owner
votes on one proposal, but does not vote on another proposal because, in respect
of such other proposal, the broker or nominee does not have discretionary voting
power and has not received instructions from the beneficial owner. The vote on
each matter submitted to stockholders is tabulated separately. Abstentions are
included in the number of shares present or represented and voting on each
matter. Broker "non-votes" are not so included.
Each of the nominees for Director is currently a member of the Board of
Directors. Although the Company expects each nominee to accept nomination and to
serve if elected, if a nominee is unable to serve at the time of election, then
proxies will be voted for some other person or the Board of Directors will fix
the number of Directors at a lesser number.
NOMINEES
Listed below are the nominees for Class III Director with information
showing the age of each, the year each was first elected a Director of the
Company, and the business affiliations of each.
NAME, AGE AND CLASS BUSINESS AFFILIATION
David S. Botten (51) Director and President of CSPI since October 1991;
Class III Chief Executive Officer of CSPI from December 1991
to present; Chief Operating
Officer of CSPI from October 1991
to December 1991; Business
Development Manger of EG&G
Instruments Group from October
1988 to September 1991; General
Manager of EG&G, Princeton Applied
Research from September 1986 to
October 1988.
Stanford A. Fingerhood (69) Director of CSPI since 1977; Senior Vice President
Class III of Laidlaw Holdings, Inc., a stock brokerage firm;
founder in 1978 and President of York Capital
Company, a financial consulting firm.
C. Shelton James (56) Director of CSPI since 1994; President of Fundamental
Class III Management Corporation, which is engaged in the
management of investment partnerships, since
1993, Executive Vice President from 1990 to 1993;
Executive Vice President and Group Vice President
of Gould Inc. from 1985 to 1989; Director of Elcotel,
Inc., NAI Technologies, Harris Computer Corp. and
S.K. Technologies; Trustee of Clarkson
University.
DIRECTORS
Listed below are the continuing Directors of the Company, with information
showing the age of each, the year each was first elected a Director of the
Company, and the business affiliations of each. Messrs. Frusztajer and Smith are
Class I Directors, whose terms expire in 1996. Mr. Ochlis and Dr. Ingram are
Class II Directors, whose terms expire in 1997.
NAME, AGE AND CLASS BUSINESS AFFILIATION
Boruch B. Frusztajer (65) Director of CSPI since 1977; since July 1984,
Class I president of BBF Corp., an industrial management
company; founder in 1976 and until
July 1984 President of BBF Inc., a
manufacturer of components,
materials and systems for
measurement and control; Director
of Repligen Corporation and PRI
Automation Inc.
Sandford D. Smith (48) Director of CSPI since 1993; President and Chief
Class I Executive Officer of Repligen Corporation, a
biopharmaceutical company, since 1987; Director
of Ariad Pharmaceuticals, Inc. and Chemex
Pharmaceuticals, Inc.
Samuel Ochlis (72) Director of CSPI since 1972; Chairman of the Board
Class II from December 1991 to the present; Chief Executive
Officer from October 1991 to
December 1991; President and Chief
Executive Officer from June 1990
to October 1991; President and
Chief Operating Officer from 1978
to June 1990; Executive Vice
President from 1974 to 1978.
John D. Ingram (59) Director of CSPI since 1994; Research Fellow at
Class II Schlumberger Limited from 1991 to the Present;
Vice President-Chief Technical
Officer of Schlumberger Limited
from 1987 to 1991. Dr. Ingram
serves on the External Advisory
Board of the School of Earth and
Planetary Sciences, California
Institute of Technology; the
Advisory Board of the School of
Computer Science of Carnegie
Mellon University; and the
External Advisory Board-NSF-Center
for Research in Parallel
Computation -- Rice University/CAL
Tech/Oak Ridge/Los Alamos.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE NOMINEES FOR DIRECTOR
LISTED IN THIS PROXY STATEMENT.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Company's Board of Directors met six times during the fiscal year ended
August 25, 1995 ("fiscal 1995") and acted once by written consent. Three
incumbent Directors, Mr. Fingerhood, Dr. Ingram and Mr. Smith, attended fewer
than 75% of the total number of meetings held by the Board and Committees of the
Board on which each such Director served.
The Board of Directors has an Audit Committee and a Compensation Committee,
but does not have a nominating committee or other committee performing similar
function. The Audit Committee consists of Messrs. Frusztajer, Fingerhood and
James and is responsible for recommending the selection of the Company's
independent accountants, reviewing the scope of the annual examination of the
Company's financial statements, reviewing the report of the independent
accountants, reviewing the independent accountants' recommendations to
management concerning auditing, accounting and tax issues, aiding the Board in
discharging its responsibility in financial reporting and related matters and
reviewing the fees of the independent accountants. The Audit Committee met twice
during fiscal 1995. The Compensation Committee consists of Messrs. Smith and
Frusztajer and Dr. Ingram and is responsible for determining the compensation of
the executive officers and management of the Company and administering the
Company's stock option plans and granting stock options to employees and other
persons eligible thereunder. The Compensation Committee acted twice by written
consent during fiscal 1995.
COMPENSATION OF DIRECTORS
Each Director, other than the Chairman of the Board, who is not an employee
of the Company receives a quarterly fee of $440 to serve as a Director, a
quarterly fee of $138 for each committee of the Board of which he is a member
and a fee of $550, plus expenses, for each meeting of the Board which he
attends. The Chairman receives a quarterly fee of $660 to serve as Chairman, a
quarterly fee of $206 for each committee of the Board of which he is a member
and a fee of $825, plus expenses, for each meeting of the Board which he
attends. The Chairman of the Board does not currently serve on any committee of
the Board.
Each non-employee Director also receives an annual non-discretionary grant
of a non-statutory option to purchase 1,000 shares of Common Stock on the last
business day of January in each year. The aggregate number of shares that may be
issued pursuant to this arrangement is 20,000. These non-discretionary options
have an exercise price per share equal to the fair market value of the Common
Stock on the date of grant, are not exercisable until after six months following
such date, have a term of three years and are fully vested after six months.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following Summary Compensation Table sets
forth certain information regarding compensation paid or accrued by the Company
with respect to the Chief Executive Officer and the Company's most highly
compensated officers other than the Chief Executive Officer who served as
officers in fiscal 1995 and whose annual compensation exceeded $100,000 for
fiscal 1995:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
NAME AND PRINCIPAL POSITION FISCAL OPTIONS ALL OTHER
(AT AUGUST 25,1995) YEAR SALARY BONUS GRANTS COMPENSATION
David S. Botten 1995 $166,500 $ 0 0 $ 5,249(1)
President and Chief 1994 $166,522 $14,319 0 $ 0
Executive Officer 1993 $158,441 $40,000 0 $ 0
Samuel Ochlis 1995 $120,323 $ 0 0 $ 0
Chairman of the Board 1994 $121,023 $ 0 0 $ 0
1993 $123,874 $ 0 0 $ 0
Michael M. Stern 1995 $112,998 $ 0 2,000 $25,232(2)
Vice President of Operations 1994 $111,016 $ 9,632 0 $25,641(3)
and Treasurer 1993 $103,669 $26,750 2,000 $25,728(4)
(1) This amount is comprised of a $4,505 matching contribution by the Company to
Mr. Botten's 401(k) plan and a $744 profit-sharing contribution by the
Company to the plan.
(2) This amount is comprised of a $3,270 matching contribution by the Company to
Mr. Stern's 401(k) plan, a $500 profit-sharing contribution by the Company
to the plan, and the accrual of $21,462 under the Company's supplemental
retirement income plan.
(3) This amount is comprised of a $3,232 matching contribution by the Company to
Mr. Stern's 401(k) plan, a $947 profit-sharing contribution by the Company
to the plan, and the accrual of $21,462 under the Company's supplemental
retirement income plan.
(4) This amount is comprised of a $3,128 matching contribution by the Company to
Mr. Stern's 401(k) plan, a $1,138 profit-sharing contribution by the Company
to the plan, and the accrual of $21,462 under the Company's supplemental
retirement income plan.
Option Grants Table. The following Option Grants Table sets forth certain
information regarding stock options granted during the fiscal year ended August
25, 1995 by the Company to the executive officers named in the Summary
Compensation Table:
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
OPTION TERM(2)
PERCENT OF
TOTAL OF OPTIONS EXERCISE
GRANTED TO PRICE PER
OPTIONS EMPLOYEES IN SHARE EXPIRATION
NAME GRANTED FISCAL YEAR ($/SH)(1) DATE 5% 10%
David S. Botten 0 0.0% -- -- -- --
Samuel Ochlis 0 0.0% -- -- -- --
Michael M. Stern 2,000 4.55% $7.625 6/21/05 $24,841 $39,555
(1) Stock Options were granted under the Company's 1991 Stock Option Plan at an
exercise price equal to the fair market value of the Company's Common Stock
on the date of the grant. The stock options expire ten years from the date
of grant.
(2) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compounded rates of appreciation of the
Company's Common Stock over the term of the options. These numbers are
calculated based on rules promulgated by the Securities and Exchange
Commission and do not reflect the Company's estimates of future stock price
growth. Actual gains, if any, on stock option exercises and Common Stock
holdings are dependent on the timing of such exercise and sale of the shares
and the future performance of the Company's Common Stock. There can be no
assurances that the rates of appreciation assumed in this table can be
achieved or that the amounts shown will be received by the individuals.
Fiscal Year-End Option Table. The following Fiscal Year-End Option Table
sets forth certain information regarding stock options exercised during the
fiscal year ended August 25, 1995 and stock options held as of August 25, 1995
by the executive officers named in the Summary Compensation Table:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
SHARES
ACQUIRED VALUE
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
David S. Botten 0 n/a 37,500 12,500 $65,625 $21,875
Samuel Ochlis 0 n/a 30,800 0 $68,596 n/a
Michael M. Stern 0 n/a 12,500 3,500 $31,578 $ 2,250
(1) Value is based on the last sales price of Common Stock ($8.75) on Thursday,
August 24, 1995, the last day prior to the end of the fiscal 1995 for which
a trade in the Common Stock was reported by the Nasdaq National Market, less
the applicable option exercise price. These values have not been and may
never be realized. Actual gains, if any, on exercise will depend on the
value of the Common Stock on the date of the sale of the shares.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board is composed of three Directors,
Messrs. Smith and Frusztajer and Dr. Ingram. The Compensation Committee also
administers the Company's stock option plan. This Committee is charged with the
responsibility of reviewing and approving executive officers' compensation and
approving all discretionary grants of stock options under the Company's stock
option plan. The following describes the compensation programs in effect during
fiscal 1995.
COMPENSATION POLICY
The Company's compensation policies are designed to pay executives an annual
salary that is industry competitive and an annual bonus that is based both on
the performance of the Company and on individual goals established for each of
the executives for the fiscal year. The Company also has longer term incentives
based on stock options. All three components of compensation are reviewed
annually by the Committee to ensure salaries remain competitive, bonuses reward
performance and stock options provide continued incentives.
Salaries for the executive officers are based on the duties and
responsibilities of the position held by the executive compared with executive
officers of other companies in the industry. Salaries are reviewed and
established annually. Various industry salary surveys are reviewed and provided
to the Committee to review in establishing the new compensation. Each executive
has a performance review prepared by the Chief Executive Officer. During this
review the officer's performance over the prior year is assessed and goals are
established for the next year. This information is communicated to the
Compensation Committee and, based on this review and salary surveys, the annual
salary for the executive is established for next year.
Executive officers and key management employees participate in the bonus plan.
Payments under the plan are contingent on the Company meeting its sales and
operating profit objectives for the fiscal year. Based on the extent to which
the Company achieves those objectives, each participant receives up to 50% of
the maximum bonus. If, in addition, the officer or employee achieves his
individual goals established by the Company, the balance of the bonus will be
paid. The Committee reviews both the individual and Company goals annually.
Approximately 0.3% of the Company's compensation to executives in fiscal 1995
was in the form of bonuses.
The Company periodically grants stock options to some or all of its
executives and key employees as a means of creating a long-term incentive and
benefit. All stock options granted in fiscal 1995 were at the fair market value
of shares of Common Stock on the date of grant. Thus, no benefit will accrue to
the executive or key employee from the stock option grant until the Common Stock
appreciates. This creates a long-term goal for appreciation of the Common Stock
which coincides with the interests of the stockholders.
CHIEF EXECUTIVE OFFICER COMPENSATION
David S. Botten joined the Company in October 1991 and has served as Chief
Executive Officer of the Company for almost four years. Mr. Botten's salary was
increased from $160,000 in fiscal 1993 to $166,500 in fiscal 1994 and was not
increased during fiscal 1995. Mr. Botten was granted 50,000 stock options as
part of his original employment contract, but has not received additional stock
options since the original grant. These options were granted at an exercise
price per share of $7.00, which was the then current market value of the
Company's Common Stock. Mr. Botten also participates in the executive bonus plan
under which he received bonuses of $40,000 in fiscal 1993 and $14,319 in fiscal
1994. Neither Mr. Botten nor any other officer named in the summary compensation
table received a bonus in fiscal 1995, primarily due to the fact that the
Company did not reach the financial objectives set by the Board for fiscal 1995.
COMPENSATION COMMITTEE
Sandford D. Smith
Boruch B. Frusztajer
John D. Ingram
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Sandford Smith, Boruch Frusztajer and John Ingram served on the Compensation
Committee during fiscal 1995. Persons serving on the Compensation Committee had
no relationships with the Company other than their relationship to the Company
as Directors entitled to the receipt of standard compensation as Directors and
members of certain committees of the Board and their relationship to the Company
as stockholders. No person serving on the Compensation Committee or on the Board
of Directors is an executive officer of another entity for which an executive
officer of the Company serves on the board of directors or on that entity's
compensation committee.
PERFORMANCE GRAPH
The following Performance Graph compares the performance of the Company's
cumulative stockholder return with that of a broad market index (the Nasdaq
Stock Market Index) and a published industry index (the Nasdaq Computer
Manufacturers' Index) for each of the most recent five fiscal years. The
cumulative stockholder return for shares of Common Stock and each of the indices
is calculated assuming that $100 was invested on August 31, 1990. The Company
paid no cash dividends during the periods shown. The performance of the indices
is shown on a total return (dividends reinvested) basis. The graph lines merely
connect year-end dates and do not reflect fluctuations between those dates.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
AMONG CSP INC., THE NASDAQ STOCK MARKET -- U.S. INDEX
AND THE NASDAQ COMPUTER MANUFACTURER INDEX
8/31/90 8/31/91 8/28/92 8/27/93 8/26/94 8/25/95
CSP, Inc. $100 $118 $145 $168 $161 $159
NASDAQ Stock Market--
US Index $100 $142 $154 $200 $211 $284
NASDAQ Computer
Manufacturer Index $100 $140 $137 $160 $167 $291
*$100 invested on 8/31/90 in stock or index --
including reinvestment of dividends.
401(K) PLAN
The Company has a defined contribution profit-sharing plan pursuant to
Section 401(k) of the Internal Revenue Code for the benefit of its employees,
including officers. Subject to certain eligibility requirements, the 40l(k) Plan
permits each participant to defer up to 17% of such participant's annual salary
up to a maximum annual amount ($9,240 in each of calendar year 1994 and calendar
year 1995). The Board of Directors of the Company determines from year to year
whether and to what extent the Company will contribute to the 40l(k) plan by
making matching contributions to the plan or by making profit-sharing
contributions to the plan, allocated in proportion to each eligible employee's
compensation, as a percentage of the compensation of all eligible employees.
During fiscal year 1995, the matching contribution by the Company was set at 50%
of contributions by eligible employees up to a maximum of 6% of salary. Federal
income taxes on amounts allocated to a participating employee are deferred until
such amounts are distributed to the participant.
SUPPLEMENTAL RETIREMENT INCOME PLAN
In addition to the foregoing, the Company has a nonqualified supplemental
retirement income plan pursuant to which the Company provides additional
retirement benefits to 12 present or former employees, all of whom are or were
highly compensated or supervisory employees long employed by the Company,
including four of the Company's current executive officers and the Chairman of
the Board. The plan is administered and interpreted by an Administrative
Committee consisting of three or more members of management appointed by the
Board of Directors. Interpretations of the plan by the Administrative Committee
are final and binding. Under the plan, the Company will pay to each participant,
generally over a 10 or 15 year period commencing upon termination of employment
with the Company for any reason after a specified normal retirement date, a
series of monthly payments based on, among other things, a factor based on such
participant's salary as of January 1, 1985 and years of service with the Company
(the "Normal Retirement Benefit"). For participants who had attained the age of
60 on January 1, 1986, the date of inception of the plan, the normal retirement
date is age 70. For all other participants, the normal retirement date is the
first day of the month following the month in which the participant reaches age
65. In the event of termination of employment prior to the normal retirement
date, the Company will pay, in a series of monthly payments, the actuarial
equivalent of the Normal Retirement Benefit (based on the participant's age at
the time of termination of employment) to a participant (i) whose employment
with the Company is terminated after a specified early retirement date as
defined in the plan, (ii) whose employment is otherwise terminated with the
consent of the Administrative Committee, or (iii) in the sole discretion of the
Administrative Committee, whose employment is terminated prior to the normal
retirement date by reason of disability. In the case of disability where the
Administrative Committee determines that payments should be made, the payment of
benefits continues until the disability ceases or a specified number of payments
has been made, and such payments reduce the retirement benefit payable under the
plan to the participant. Reduced benefits are paid to any participant whose
employment with the Company is terminated for any reason other than retirement,
disability or death. A participant in the plan who retires earlier than the
normal retirement date may elect to defer receipt of benefits to a date not
later than the normal retirement date. In the event that a participant in the
plan dies before receiving all of the benefits under the plan, the remaining
benefits are paid to such participant's designated beneficiary. If the
participant dies before the normal or early retirement date, the beneficiary
receives adjusted payments under the plan. The annual benefits payable under the
plan upon retirement at the normal retirement date of Messrs. Ochlis and Stern
are $33,357, and $57,155, respectively.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has an agreement with Samuel Ochlis dated January 5, 1987, as
amended in November 1988 and August 1995 that provides for, among other things,
the payment of deferred compensation to Mr. Ochlis or, if he is not living, to a
trust for the benefit of his children, upon the termination of Mr. Ochlis'
employment with the Company by reason of retirement, disability or death. Under
the agreement, as amended, Mr. Ochlis or his children's trust, as the case may
be, will receive for a period of up to ten years yearly payments in an amount
equal to $84,036, less the amount payable to him or his designated beneficiary
in each of such years under the Company's retirement plans other than its
defined contribution profit-sharing plan. The Company will be relieved of its
obligation to pay deferred compensation if at any time prior to the expiration
of the payout period Mr. Ochlis accepts employment with, or renders any
assistance for compensation to, any competitor of the Company without the prior
written consent of the Company.
In connection with his employment agreement, in September 1989, the Company
established a so-called "rabbi" trust for the benefit of Mr. Ochlis. Subject to
claims of the Company's general creditors in the event of the Company's
insolvency or bankruptcy, the trust assets are to be held for the exclusive
purpose of providing deferred compensation to Mr. Ochlis in accordance with the
terms of his employment agreement. The trust agreement provides that Mr. Ochlis
shall have no preferred claims on, or any beneficial interest in, any of the
trust assets until such time as the assets are paid to him. Under current
federal income tax law, Mr. Ochlis will not be taxed until he actually receives
payment from the trust. Instead, the Company is taxable on the trust income and
is not allowed a tax deduction for contributions to the trust or offsetting
deductions for trust income until Mr. Ochlis is actually paid. The trust, which
is irrevocable, was initially funded with a payment of $500,000.
The Company has an employment agreement with David Botten dated August 14,
1991, pursuant to which Mr. Botten became Director, President and Chief
Operating Officer of the Company effective October 1, 1991. If Mr. Botten's
employment is subsequently terminated by the Company, he will be entitled to
severance compensation to be paid at the current rate of compensation for a
period of one year. The employment agreement may be terminated at any time by
either party for any reason and without prior notice.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
The Company's only issued and outstanding class of voting securities is its
Common Stock. Holders of the Common Stock are entitled to one vote per share of
such stock held by them of record at the close of business on November 2, 1995
upon each matter which may come before the Meeting. At the close of business on
November 2, 1995, there were 2,635,220 shares of Common Stock issued and
outstanding.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information as of November 2, 1995
regarding each person known by the Company to own beneficially more than 5% of
the Company's Common Stock, each Director and nominee for Director of the
Company, each executive officer named in the Summary Compensation Table and all
Directors and executive officers of the Company as a group.
SHARES
BENEFICIALLY PERCENT
NAME OWNED(1) OF CLASS(2)
Heartland Value Fund 452,500(3) 17.2%
790 N. Milwaukee Street
Milwaukee, WI 53202
Fundamental Management Corporation 262,000(4) 9.9%
4000 Hollywood Blvd., Suite 610 N.
Hollywood, FL 33021
Quest Advisory Corp. 255,205(5) 9.7%
Quest Advisory Co.
1414 Avenue of the Americas
New York, NY 10019
Dimensional Fund Advisors Inc. 195,400(6) 7.4%
1299 Ocean Avenue
Santa Monica, CA 90401
C. Shelton James (*) 263,000(7) 10.0%
Samuel Ochlis 85,427(8) 3.2%
David S. Botten(*) 37,500(9) 1.4%
Boruch B. Frusztajer 16,500(10) **
Stanford A. Fingerhood(*) 3,000(9) **
John D. Ingram 1,000(9) **
Sandford D. Smith 2,000(9) **
Michael M. Stern 119,000(11) 4.5%
All Directors and executive officers as a group (12 persons) 630,877(12) 22.8%
* Nominee for Director.
** Owns less than one percent.
(1) Except as otherwise noted, all persons and entities have sole voting and
investment power over their shares. All amounts shown in this column
include shares obtainable upon exercise of stock options exercisable within
60 days of the date of this table.
(2) Computed pursuant to Rule 13d-3 under the Exchange Act.
(3) Heartland Advisors, Inc. ("Heartland") has furnished the Company with a
report on Schedule 13G dated July 7, 1995, in which it is stated that
Heartland is a registered investment advisor, that Heartland has sole
investment power with respect to 452,500 shares of the Company's Common
Stock, and that Heartland does not have voting power with respect to such
shares.
(4) Based on information provided to the Company by Mr. James on November 1,
1995 and on a report on Schedule 13D and two amendments thereto dated,
respectively, April 18, 1994, April 26, 1994 and July 7, 1994, Fundamental
Management Corporation ("FMC") solely controls the voting and investment of
securities owned of record by several limited partnerships of which FMC is
the sole managing general partner. C. Shelton James, a Director and nominee
for Director of the Company, is President of Fundamental Management
Corporation. See footnote 9.
(5) Quest Advisory Corp. ("Quest"), Quest Management Company ("QMC") and
Charles M. Royce have furnished the Company with a joint report on Schedule
13G dated February 8, 1994, in which it is stated that both Quest and QMC
are registered investment advisors, that Quest has sole voting and
investment power with respect to 220,805 of these shares, and that QMC has
sole voting and investment power with respect to 34,400 of these shares.
The report also states that Mr. Charles M. Royce may be deemed to be a
controlling person of Quest and QMC, and as such may be deemed to own
beneficially all of the shares covered by the report. Mr. Royce disclaims
beneficial ownership of all such shares.
(6) Dimensional Fund Advisors Inc. ("Dimensional"), DFA Investment Dimensions
Group Inc. (the "Fund") and The DFA Investment Trust Company (the "Trust")
have furnished the Company with a joint report on Schedule 13G dated
January 30, 1995, in which Dimensional has advised the Company that it is a
registered investment advisor and that Dimensional has sole investment
power with respect to 195,400 shares of the Company's Common Stock and sole
voting power with respect to 124,000 of those shares, and that persons who
are officers of Dimensional are also officers of the Fund and the Trust
(each an open-end investment company registered under The Investment
Company Act of 1940) and in their capacities as officers of the Fund and
the Trust, these persons exercise the voting power with respect to 59,300
and 12,100 shares of the Company's Common Stock, respectively.
(7) Includes 262,000 shares directly owned by Fundamental Management
Corporation, as described in footnote 5. Mr. James is President of Fundamental
Management Corporation. Also includes 1,000 shares obtainable upon exercise
of stock options.
(8) Includes 30,800 shares obtainable upon exercise of stock options.
(9) These shares are obtainable upon exercise of stock options.
(10) Includes 3,000 shares obtainable upon exercise of stock options.
(11) Includes 7,000 shares owned by Mr. Stern's wife and 2,500 shares owned
by Mr. Stern's son. Mr. Stern disclaims beneficial ownership of these shares.
Also includes 12,500 shares obtainable upon exercise of stock options.
(12) Includes 127,300 shares obtainable upon exercise of stock options.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities Exchange Commission. Officers, directors and
greater-than-10% shareholders are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to
the Company during fiscal 1995 and Forms 5 and amendments thereto furnished to
the Company with respect to fiscal 1995, or written representations that Form 5
was not required, the Company believes that all Section 16(a) filing
requirements applicable to its officers, directors and greater-than-10%
shareholders were fulfilled in a timely manner.
INFORMATION CONCERNING AUDITORS
The Board of Directors selected the firm KPMG Peat Marwick LLP ("Peat
Marwick") to audit the Company's financial statements for the past fiscal year.
The Company's Board of Directors has not yet selected the Company's independent
public accountant for the current fiscal year. A representative of Peat Marwick
is expected to be present at the Annual Meeting, will have the opportunity to
make a statement if such representative desires to do so and will be available
to respond to appropriate questions.
SOLICITATION
No compensation will be paid by any person in connection with the
solicitation of proxies. Brokers, banks and other nominees will be reimbursed
for their out-of-pocket expenses and other reasonable clerical expenses incurred
in obtaining instructions from beneficial owners of the Common Stock. In
addition to the solicitation by mail, special solicitation of proxies may, in
certain instances, be made personally or by telephone by Directors, officers and
certain employees of the Company, or by American Stock Transfer & Trust Company,
the Company's transfer agent. It is expected that the expense of such special
solicitation will be nominal. All expenses incurred in connection with this
solicitation will be borne by the Company.
DATE WHEN STOCKHOLDER PROPOSALS ARE REQUIRED TO BE FURNISHED
TO THE COMPANY FOR THE NEXT ANNUAL MEETING
In order to be eligible for inclusion in the Company's proxy materials,
stockholder proposals to be submitted for vote at the 1996 annual meeting of
stockholders or special meeting in lieu thereof must comply with SEC regulations
and must be delivered to the Company on or before Tuesday, July 9, 1996.
In addition, Article III of the Company's by-laws sets forth certain
procedural requirements, including a notice requirement, that apply to
stockholders wishing to nominate a Director or propose an item of business for
consideration at the scheduled annual meeting or special meeting in lieu
thereof.
MISCELLANEOUS
The Board does not intend to present to the Meeting any business other than
the proposals listed herein, and the Board was not aware, a reasonable time
before mailing this Proxy Statement to stockholders, of any other business which
may be properly presented for action at the Meeting. If any other business
should come before the Meeting, the persons present will have discretionary
authority to vote the shares they own or represent by proxy in accordance with
their judgment.
PROXY CSP INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of CSP Inc. hereby appoints David Botten and
Samuel Ochlis, and each or either of them, proxies (with power of substitution
to each and to each substitute appointed pursuant to such power) of the
undersigned to vote all shares of stock of the Corporation held by the
undersigned or which the undersigned may be entitled to vote at the Annual
Meeting of Stockholders of the Corporation to be held on Tuesday, December 12,
1995, and at any and all adjournments thereof, with all powers the undersigned
would possess if personally present, as indicated below and on the reverse side
hereon upon the matters set forth herein and more fully described in the Notice
and Proxy Statement for said Meeting. The Undersigned hereby revokes all
proxies, if any, hitherto given by him to others for said Meeting.
IF THIS PROXY IS PROPERLY EXECUTED AND RETURNED, THE SHARES REPRESENTED
HEREBY WILL BE VOTED. IF A CHOICE IS SPECIFIED ON THE REVERSE SIDE HEREOF BY THE
STOCKHOLDER WITH RESPECT TO THE MATTER TO BE ACTED UPON, THE SHARES WILL BE
VOTED UPON SUCH MATTER IN ACCORDANCE WITH THE SPECIFICATION SO MADE. IN THE
ABSENCE OF ANY SPECIFICATION, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
FOR ALL LISTED NOMINEES FOR DIRECTOR.
(Continued and to be signed on the other side)
X Please mark your votes as in this example
-----
FOR ALL WITHHOLD
nominees AUTHORITY
except as marked for all
to the contrary below nominees Nominees: D. Botten
S. Fingerhood
C.S. James
1. Election of
directors ______ ______
INSTRUCTIONS: To withhold authority to vote for any
individual nominee(s), print such nominee's(s')
name(s) in the space provided below. To vote for or
to withhold authority for all nominees see above.
___________________________________________________
Check here if you plan to attend the Annual Meeting ______
SIGNATURE________________________ DATE___________ 1995
_________________________________ DATE___________ 1995
IF HELD JOINTLY
NOTE:Please date, sign exactly as name appears hereon and return promptly. If
the shares are registered in the names of two or more persons, both should
sign. Executors, administrators, trustees, guardians, custodians, attorneys
and corporate officers should add their titles.