SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 30, 2004
DATA SYSTEMS & SOFTWARE INC.
(Exact name of Registrants as Specified in their Charters)
Delaware 0-19771 22-2786081
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(States or Other Jurisdiction (Commission file Numbers) (IRS Employer
of Incorporation) Identification Nos.)
200 Route 17, Mahwah, New Jersey 07430
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(Address of Principal Executive Offices) (Zip Code)
Registrants' telephone number, including area code (201) 529-2026
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-2 under the Exchange Act (17 CFR
240.14a-2)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Section 1 - Registrant's Business and Operations
Item 1.01 Entry into a Material Definitive Agreement
1. On December 30, 2004, the Registrant's Board of Directors approved
certain changes to its Employment Agreement with George Morgenstern dated as of
January 1, 1997 as amended by a First Amendedment dated as of December 31, 2001
and a Second Amendment dated as of March 13, 2002 (the "Employment Agreement").
Under the Employment Agreement, in consideration for a consulting fee, Mr.
Morgenstern was to serve as a consultant to the Registrant on a part-time basis
for a period of seven years, which period began on January 1, 2004 and was to
end on December 31, 2010. At the request of the Board, Mr. Morgenstern has
continued to serve as on a substantialy full-time basis as Chairman, President
and CEO of the Regstrant.
In recognition of that continued service, and to provide additional incentive
for such continued service at the pleasure of the Board, the Board of Directors
agreed to extend the consulting period by one year. Under the Employment
Agreement as so amended, Mr. Morgenstern would continue to serve as a consultant
until the end of 2011, and would receive a consulting fee (plus certain other
benefits) through the end of 2008 at a rate equal to 50% of that which he
received during 2003 (his last year of employment) and at 25% of such base rate
for the last three years of the consulting period. The Board also approved the
grant to Mr. Morgenstern of options to purchase 180,000 shares of the
Registrant's Common Stock at an exercise price of $0.91 per share, vesting over
the next 18 months, provided Mr. Morgenstern continues to serve as CEO at the
pleasure of the Board. The options will become immediately exercisable upon an
involuntary termination of Mr. Morgenstern as CEO or a change in control of the
Registrant.
2. On December 30, 2004, the Registrant's Board of Directors approved
the grant of options to Yacov Kaufman, the Registrant's Vice President and CFO,
to purchase 75,000 shares of the Registrant's Common Stock at an exercise price
of $0.91 per share, vesting over the next two years. The options will become
immediately exercisable upon an involuntary termination of Mr. Kaufman or a
change in control of the Registrant.
3. On December 30, 2004, the Registrant's Board of Directors approved
the grant of options to Sheldon Krause, the Registrant's Secretary and General
Counsel, to purchase 10,000 shares of the Registrant's Common
Stock, at an exercise price of $0.91 per share, vesting over the next 30 months.
The options will become immediately exercisable upon an involuntary termination
of Mr. Krause or a change in control of the Registrant.
All the option grants were made pursuant to the Registrant's 1994 Stock
Incentive Plan.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized on this ___ day of January, 2005.
DATA SYSTEMS & SOFTWARE, INC.
By: /s/ GEORGE MORGENSTERN
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Name: George Morgenstern
Title: President and Chief Executive Officer