Data Storage (DTST) Proxy Filing summary

Executive summary

• Shareholders are asked to approve the divestiture of the cloud solutions business, representing the sale of substantially all assets, including subsidiaries CloudFirst Delaware and CloudFirst Europe, to Total Server Solutions Holdings, LLC for $40 million, subject to adjustments and escrow provisions.

• The Board unanimously recommends the divestiture, citing a premium to market value, strategic flexibility, and a fairness opinion from Cassel Salpeter & Co. confirming the financial fairness of the transaction.

• Proceeds will fund a tender offer to repurchase up to 85% of outstanding shares, with remaining cash targeted for acquisitions in high-growth tech sectors or other strategic alternatives.

• Following the divestiture, the company will focus on its Nexxis business and pursue new technology opportunities, while being subject to a five-year non-compete in the divested business areas.

Voting matters and shareholder proposals

• Proposals include: (1) approval of the divestiture, (2) election of ten directors, (3) ratification of the independent auditor, (4) advisory approval of executive compensation, (5) advisory approval of divestiture-related executive compensation, and (6) adjournment of the meeting if needed.

• The divestiture requires approval by a majority of outstanding shares; abstentions and broker non-votes count as votes against.

• Certain directors and executives holding about 40% of shares have entered into support agreements to vote in favor.

Board of directors and corporate governance

• The board consists of ten members, with a majority being independent under Nasdaq rules.

• Committees include Audit, Compensation, Nominating & Corporate Governance, Merger & Acquisition, and Cyber Security and Risk.

• The board is actively involved in risk oversight, with a dedicated Cyber Security and Risk Committee.