<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT / / 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
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
WANG LABORATORIES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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) or
Item 22(a)(2) of Schedule 14A.
/ / $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 (Set forth the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / 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:
- --------------------------------------------------------------------------------
<PAGE> 2
WANG LABORATORIES, INC.
600 TECHNOLOGY PARK DRIVE
BILLERICA, MASSACHUSETTS 01821
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
ON TUESDAY, NOVEMBER 21, 1995
The Annual Meeting of Stockholders of Wang Laboratories, Inc. (the
"Company") will be held at The Sheraton Boston Hotel & Towers, 39 Dalton Street,
Boston, Massachusetts on Tuesday, November 21, 1995 at 10:00 a.m., local time,
to consider and act upon the following matters:
1. To elect three Class II Directors, each to serve for a three-year term.
2. To approve an amendment to the Employees' Stock Incentive Plan of the
Company to increase the number of authorized shares available under the
plan.
3. To ratify the selection of Ernst & Young LLP as the Company's
independent auditors for the current fiscal year.
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Stockholders of record at the close of business on October 10, 1995 will be
entitled to notice of and to vote at the meeting or any adjournment thereof.
By Order of the Board of Directors,
ALBERT A. NOTINI, Secretary
Billerica, Massachusetts
October 30, 1995
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO
ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF THE PROXY IS
MAILED IN THE UNITED STATES.
<PAGE> 3
WANG LABORATORIES, INC.
600 TECHNOLOGY PARK DRIVE
BILLERICA, MASSACHUSETTS 01821
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON NOVEMBER 21, 1995
INTRODUCTION
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Wang Laboratories, Inc. (the "Company") for
use at the Annual Meeting of Stockholders to be held on November 21, 1995, and
at any adjournment of that meeting. All proxies will be voted in accordance with
the stockholders' instructions, and if no choice is specified, the proxies will
be voted in favor of the matters set forth in the accompanying Notice of
Meeting. Any proxy may be revoked by a stockholder at any time before its
exercise by delivery of written revocation or a subsequently dated proxy to the
Secretary of the Company or by voting in person at the Annual Meeting.
The Company's Annual Report for the fiscal year ended June 30, 1995
("Fiscal 1995") was mailed to stockholders, along with these proxy materials, on
or about October 30, 1995.
QUORUM REQUIREMENT
At the close of business on October 10, 1995, the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting, there were outstanding and entitled to vote an aggregate of 31,154,365
shares of Common Stock of the Company, 2,914,325 shares of 11% Exchangeable
Preferred Stock of the Company ("11% Preferred Stock") and 90,000 shares of
4 1/2% Series A Cumulative Convertible Preferred Stock ("4 1/2% Preferred
Stock"), constituting all of the outstanding voting stock of the Company. This
total excludes approximately 2,873,870 shares of Common Stock held for
distribution to creditors by the distribution agent under the Company's
reorganization plan dated September 20, 1993 (the "Reorganization Plan") under
Chapter 11 of the U.S. Bankruptcy Code, as the Reorganization Plan provides that
these shares may not be voted by any party and shall not be considered
outstanding for voting purposes until distributed pursuant to the Reorganization
Plan. Holders of Common Stock and the 4 1/2% Preferred Stock are entitled to one
vote per share and holders of 11% Preferred Stock are entitled to one half of
one vote per share.
The holders of a majority of the votes represented by the shares of Common
Stock, 11% Preferred Stock and 4 1/2% Preferred Stock outstanding and entitled
to vote at the Annual Meeting shall constitute a quorum for the transaction of
business at the Annual Meeting. Shares of Common Stock, 11% Preferred Stock and
4 1/2% Preferred Stock represented in person or by proxy (including shares which
abstain or otherwise do not vote with respect to one or more of the matters
presented for stockholder approval) will be counted for purposes of determining
whether a quorum is present at the Annual Meeting.
VOTES REQUIRED
The affirmative vote of the holders of shares representing a plurality of
the votes cast by the holders of the Common Stock, 11% Preferred Stock and
4 1/2% Preferred Stock is required for the election of Directors. The
affirmative vote of the holders of shares representing a majority of votes
represented by shares of the Common Stock, 11% Preferred Stock and 4 1/2%
Preferred Stock present and entitled to vote at the meeting on the
<PAGE> 4
matter is required for the approval of the amendment to the Company's Employees'
Stock Incentive Plan and the ratification of the selection of Ernst & Young LLP
as the Company's independent auditors for the current fiscal year.
Shares which abstain from voting as to a particular matter will be
considered as shares that are present and entitled to vote with respect to such
matter. Accordingly, abstentions with respect to a matter that requires a
majority of the votes represented by the shares present and entitled to vote on
the matter will have the same effect as a vote against such matter. Shares held
in "street name" by a broker or nominee who indicates on a proxy that it does
not have discretionary authority to vote as to a particular matter will not be
considered as present and entitled to vote with respect to such matter.
Accordingly, "broker non-votes" will have no effect on the voting on a matter
that requires a majority of the votes represented by the shares present and
entitled to vote on the matter.
BENEFICIAL OWNERSHIP OF VOTING STOCK
The following table sets forth the beneficial ownership of the Company's
Common Stock and 11% Preferred Stock as of August 31, 1995 (i) by each person
who is known by the Company to beneficially own more than 5% of the outstanding
shares of either such class of the stock, (ii) by each Director and nominee for
Director, (iii) by each of the executive officers named in the Summary
Compensation Table set forth under the caption "Executive Compensation" below
(the "Named Executives"), and (iv) by all current Directors and executive
officers as a group. All 90,000 outstanding shares of the 4 1/2% Preferred Stock
are held by Microsoft Corporation.
<TABLE>
<CAPTION>
COMMON STOCK 11% PREFERRED STOCK
------------------------------ ------------------------------
NUMBER OF PERCENTAGE OF NUMBER OF PERCENTAGE OF
SHARES OUTSTANDING SHARES OUTSTANDING
BENEFICIALLY COMMON BENEFICIALLY 11% PREFERRED
BENEFICIAL OWNER OWNED(1) STOCK(2) OWNED(1) STOCK(3)
- ---------------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
5% STOCKHOLDERS
FMR Corp.(4)............................... 4,426,128 13.0% -- --
Fidelity Investments
82 Devonshire Street
Boston, MA 02109
Steinhardt Partners........................ -- -- 753,044 26.6%
605 Third Avenue
New York, NY 10158
Institutional Partners..................... 351,750 1.0 665,118 23.4
605 Third Ave.
New York, NY 10158
Launch & Co................................ -- -- 460,069 16.2
State Street Bank & Trust Co.
Boston, MA 02206
Goldman Sachs & Co......................... 125,000 * 416,670 14.7
1 New York Plaza
New York, NY 10004
Leon G. Cooperman(5)....................... 2,899,516 8.5 56,075 2.0
Omega Advisors, Inc.
88 Pine Street
Wall Street Plaza
New York, NY 10005
George Karfunkel........................... -- -- 283,632 10.0
American Stock Transfer & Trust Company
40 Wall Street
New York, NY 10005
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
COMMON STOCK 11% PREFERRED STOCK
------------------------------ ------------------------------
NUMBER OF PERCENTAGE OF NUMBER OF PERCENTAGE OF
SHARES OUTSTANDING SHARES OUTSTANDING
BENEFICIALLY COMMON BENEFICIALLY 11% PREFERRED
BENEFICIAL OWNER OWNED(1) STOCK(2) OWNED(1) STOCK(3)
- ---------------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
DIRECTORS/NOMINEES
David A. Boucher(6)........................ 3,400 * --
Marcia J. Hooper........................... -- -- --
Stephen G. Jerritts(7)..................... 20,400 * --
Joseph J. Kroger........................... 1,500 * --
Raymond C. Kurzweil........................ -- -- --
Axel J. Leblois(8)......................... 1,650,000 4.8 --
Paul E. Tsongas(9)......................... 3,404 * --
Joseph M. Tucci(10)........................ 238,862 * --
Frederick A. Wang(11)...................... 45,766 * --
Karl G. Wassmann, III (12)................. 1,400 * --
OTHER NAMED EXECUTIVE OFFICERS --
Donald P. Casey (13)....................... 220,021 * --
Franklyn A. Caine (14)..................... 161,483 * --
William P. Ferry (15)...................... 62,015 * --
Jeremiah J.J. van Vuuren(16)............... 46,900 * --
All Directors, nominees for Director and
executive officers as a group
(21 persons)(17)......................... 2,632,882 7.5 --
<FN>
- ---------------
* Less than 1%
(1) Each person has sole investment and voting power with respect to the shares
indicated as beneficially owned, except as otherwise noted. The inclusion
herein of any shares as beneficially owned does not constitute an admission
of beneficial ownership. In accordance with Securities and Exchange
Commission rules, each person listed is deemed to beneficially own any
shares issuable upon the exercise of stock options or warrants held by him
or her that are currently exercisable or exercisable within 60 days after
August 31, 1995; and any reference in these footnotes to options refers
only to such options or warrants.
(2) Number of shares deemed outstanding includes 34,028,235 shares outstanding
as of August 31, 1995, plus any shares subject to outstanding stock options
or warrants held by the person or entity in question.
(3) Number of shares outstanding as of August 31, 1995 was 2,836,326.
(4) Includes 4,341,666 shares beneficially owned by Fidelity Management and
Research Company as result of its serving as investment advisor to various
investment companies; and 84,462 shares beneficially owned by Fidelity
Management Trust Company as a result of its serving as trustee or managing
agent for various private investment accounts. Based upon information set
forth on a Schedule 13G filed with the Securities and Exchange Commission
on June 9, 1995.
(5) Shares of Common Stock include 1,083,528 shares held by Omega Capital
Partners, L.P.; 840,754 shares held by Omega Institutional Partners, L.P.;
399,026 shares held by Overseas Partners Ltd.; 51,779 shares held by
Overseas Partners II, Ltd.; and 524,429 shares held by the Managed Account.
Shares of 11% Preferred Stock owned include 56,075 shares held by Omega
Institutional Partners, Ltd. Mr. Cooperman is managing partner of Omega
Capital Partners, L.P. and Omega Institutional Partners, L.P. and President
of Omega Advisors, Inc. Based upon information set forth on a Schedule 13D
filed with the Securities and Exchange Commission on August 10, 1995.
</TABLE>
3
<PAGE> 6
(6) Consists of 3,400 shares subject to outstanding stock options.
(7) Consists of 20,400 shares subject to outstanding stock options.
(8) Consists of 1,650,000 shares held by Bull HN Information Systems Inc. of
which Mr. Leblois is President and Chief Executive Officer and as to which
shares Mr. Leblois disclaims beneficial ownership.
(9) Consists of 3,400 shares subject to outstanding stock options and 4 shares
subject to outstanding stock warrants.
(10) Includes 198,600 shares subject to outstanding stock options and 2,500
shares subject to outstanding stock warrants.
(11) Consists of 3,400 shares subject to outstanding stock options and 42,366
shares subject to outstanding stock warrants.
(12) Consists of 1,400 shares subject to outstanding stock options.
(13) Includes 176,500 shares subject to outstanding stock options and 6,833
shares subject to outstanding stock warrants.
(14) Consists of 161,400 shares subject to outstanding stock options and 83
shares subject to outstanding stock warrants.
(15) Includes 57,200 shares subject to outstanding stock options and 1,250
shares subject to outstanding stock warrants.
(16) Includes 46,850 shares subject to outstanding stock options.
(17) Includes 849,400 shares subject to outstanding stock options and 53,667
shares subject to outstanding stock warrants.
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes, with
members of each class holding office for staggered three-year terms. There are
currently three Class I Directors, whose terms expire at the Annual Meeting of
Stockholders for Fiscal 1997, two Class II Directors, whose terms expire at this
Annual Meeting of Stockholders, and two Class III Directors, whose terms expire
at the Annual Meeting of Stockholders for Fiscal 1996 (in all cases subject to
the election and qualification of their successors or to their earlier death,
resignation or removal).
The persons named in the enclosed proxy will vote to elect Marcia J.
Hooper, Joseph J. Kroger and Paul E. Tsongas as Class II Directors, unless
authority to vote for the election of any or all of the nominees is withheld by
marking the proxy to that effect. Messrs. Kroger and Tsongas are currently Class
III Directors of the Company. All of the nominees have indicated their
willingness to serve, if elected, but if any should be unable or unwilling to
stand for election, proxies may be voted for a substitute nominee designated by
the Board of Directors.
4
<PAGE> 7
DIRECTORS OF THE COMPANY
Set forth below are the names and certain information with respect to each
Director of the Company, including the three nominees for Class II Directors.
Nominees for Class II Directors (nominated for term expiring at the Annual
Meeting for Fiscal 1998):
MARCIA J. HOOPER New Nominee; age 41
Ms. Hooper has served since 1994 as General Partner of Viking Capital
Limited Partnership, a venture capital firm. From January through July 1994 she
served as a President of Claybrook Capital. From 1985 to 1993 Ms. Hooper served
as a General Partner of three venture capital funds of Ampersand Ventures. She
is a director of PolyMedica Industries.
JOSEPH J. KROGER Director since 1995; age 61
Mr. Kroger is a private business consultant. From 1990 until 1993, he
served as President and Chief Executive Officer of Decision Data Corporation, a
computer service company. Mr. Kroger was elected by the Board of Directors in
June 1995 to replace John P. White who resigned from the Board in order to
become Deputy Secretary of the US Department of Defense.
PAUL E. TSONGAS Director since 1985; age 54
Mr. Tsongas is a partner in the Boston law firm of Foley, Hoag & Eliot. He
was of counsel with that firm from 1989 through 1991, and previously had been a
partner until 1989. He is a director of The Shawmut Bank, N.A., Thermo Fibertek
Corporation, Boston Edison Company and Thermo Power, Inc.
Stephen G. Jerritts and Karl G. Wassermann, III, currently serving as Class
II Directors, are not standing for reelection at this Annual Meeting.
Class I Directors (holding office for term expiring at the Annual Meeting for
Fiscal 1997):
JOSEPH M. TUCCI Director since October 1993; age 48
Mr. Tucci joined the Company in August 1990 as Executive Vice President,
Operations, was elected President and Chief Executive Officer in January 1993,
and Chairman of the Board and Chief Executive Officer in October 1993.
Previously, he had served as an executive with Unisys Corporation, a computer
company, from 1983 to August 1990, most recently as President, U.S. Information
Systems.
RAYMOND C. KURZWEIL Director since October 1993; age 47
Mr. Kurzweil is founder, Chief Technology Officer and Director of Kurzweil
Applied Intelligence, Inc., a speech recognition technology company. He was the
principal developer of the first omni-font optical character recognition
technology in 1976, the first print-to-speech reading machine for the blind in
1976, and the first commercially-marketed large vocabulary speech recognition
technology in 1987.
FREDERICK A. WANG Director since 1981; age 45
Mr. Wang is a private business consultant. Mr. Wang served as President of
the Company from 1986 to 1989, and Chief Operating Officer from 1987 to 1989. He
was employed by the Company from 1972 to 1989, and had also served as Treasurer,
Chief Development Officer and Executive Vice President-Manufacturing.
Class III Directors (holding office for term expiring at the Annual Meeting
for Fiscal 1996):
DAVID A. BOUCHER Director since October 1993; age 45
Mr. Boucher is Managing Director and General Partner of Applied Technology,
a venture capital firm specializing in early-stage information industry
companies. From September 1992 to June 1994, he was President and Chief
Executive Officer of Ticker Research, Inc., a development stage medical
technology company engaged in research in nuclear magnetic resonance imaging.
From 1981 to 1992, Mr. Boucher was
5
<PAGE> 8
President and Chief Executive Officer of Interleaf, Inc., a software company. He
is currently Chairman of the Board of Directors of Interleaf, Inc., and a
director of Reflection Technology, Inc., BTRIEVE Technology, Inc. and Human
Code, Inc.
AXEL J. LEBLOIS Director since January 1995; age 47
Mr. Leblois since 1991 has been President and Chief Executive Officer of
Bull HN Information Systems, Inc., a worldwide information technology company
providing integrated computer services and solutions. From 1983 until 1991, Mr.
Leblois held various positions with International Data Group, a worldwide
supplier of information technology, including Vice Chairman of the Executive
Committee, and Chairman and Chief Executive Officer of its affiliate,
International Data Corporation. Mr. Leblois serves as a director of the European
American Chamber of Commerce in Washington, D.C. He was elected by the Board of
Directors pursuant to an agreement between Wang and Bull HN Information Systems
Inc. to replace Peter Brooke who resigned from the Board in January 1995.
BOARD AND COMMITTEE MEETINGS
The Company has a standing Finance and Audit Committee of the Board of
Directors, which reviews the finances and cash position, financing arrangements
and financing strategies of the Company, recommends the engagement of the
Company's independent auditors, reviews the arrangements for the scope of the
annual audit, reviews the activities and recommendations of the Company's
internal audit group, reviews comments made by the independent auditors with
respect to internal controls and the consideration given or the corrective
action taken by management, and reviews internal accounting procedures and
controls with the Company's finance and accounting staff. The members of the
Finance and Audit Committee are David A. Boucher (Chairman), Joseph J. Kroger,
and Frederick A. Wang and, with respect to financial but not audit matters,
Joseph M. Tucci. Mr. Kroger replaced John P. White on the Committee and Mr.
Boucher became Chairman of the Committee, replacing Peter Brooke. The Finance
and Audit Committee met seven times during Fiscal 1995.
The Company has a standing Organization, Compensation and Nominating
Committee of the Board of Directors, which reviews proposals by management and
makes recommendations to the Board concerning compensation, bonuses, benefits,
stock options and grants under plans for Directors, corporate officers and
certain other officers. This Committee also oversees administration of the
Company's incentive plans as they affect officers, Directors and certain key
employees, and advises the Board on management resources and organization,
executive selection and development and succession planning. This Committee also
recommends to the Board of Directors nominees to be acted upon at stockholder
meetings, and reviews the qualifications of, and makes recommendations to the
Board concerning, candidates to fill Board vacancies that may occur during the
year. The Committee is also responsible for overseeing Company policies on
issues of public significance, including environmental matters and health and
safety matters. The members of the Organization, Compensation and Nominating
Committee are Paul E. Tsongas (Chairman), Frederick A. Wang and Raymond C.
Kurzweil, who replaced Stephen G. Jerritts in May 1995 when Mr. Jerritts was
hired by the Company as Senior Vice President. The Organization, Compensation
and Nominating Committee met nine times during Fiscal 1995.
The Company has a standing Strategy and Technology Committee of the Board
of Directors, which addresses the Company's patent and intellectual property
strategy, as well as technology acquisitions and long-term plans. The members of
the Strategy and Technology Committee are Raymond C. Kurzweil (Chairman), David
A. Boucher, Joseph J. Kroger, Axel J. Leblois and Joseph M. Tucci. Stephen G.
Jerritts and Karl G. Wassmann, III, who are not standing for reelection as
Directors, are currently on the Strategy and Technology Committee. The Strategy
and Technology Committee met twice during Fiscal 1995.
6
<PAGE> 9
The Board of Directors met twelve times during Fiscal 1995. Each incumbent
Director attended at least 75% of the meetings of the Board and the committees
on which he then served.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In May 1995, Stephen G. Jerritts, a Director of the Company, was hired as
Senior Vice President of the Company and President of the Company's Latin
America business unit. Mr. Jerritts resigned from the Organization, Compensation
and Nominating Committee at that time. The Company entered into an employment
agreement with Mr. Jerritts under which the Company agreed to pay Mr. Jerritts
an annual salary of $240,000. Mr. Jerritts is also eligible to participate in a
yearly bonus plan targeted at 50% of his base salary depending on his
performance against goals specified in the plan. Pursuant to the employment
agreement, Mr. Jerritts was granted an option to purchase 50,000 shares of
Common Stock under the Company's Employees' Stock Incentive Plan. The agreement
provides that Mr. Jerritts will receive severance compensation equal to his base
salary plus bonus, over a 12-month period if his employment is involuntarily
terminated other than for cause, death or disability, or if he resigns following
a requirement by the Company to move his residence without his consent. Any
severance payments would be offset by the compensation he received from a new
employer during such 12-month period. The Company also entered into a contingent
severance compensation agreement with Mr. Jerritts that would become operative
following a "change in control" of the Company. See "Employment Contracts and
Change in Control Arrangements" below.
COMPENSATION OF DIRECTORS
Directors who are employed by the Company are paid no Director fees.
Directors who are not employed by the Company receive an annual fee of $20,000
plus a fee of $1,000 for each meeting attended. The members of each Committee
receive an annual fee of $1,500, plus a fee of $1,000 for each Committee meeting
attended.
Under the Company's 1995 Director Stock Option Plan, each Director of the
Company, other than Messrs. Tucci, Kroger and Leblois, received an option to
purchase 6,500 shares of Common Stock upon the plan's adoption by the
stockholders in January 1995. These options have an exercise price of $10.154
per share and become exercisable as to 34%, 33% and 33% of the shares covered
thereby on January 25, 1996, January 25, 1997 and January 25, 1998 provided the
optionee continues to serve as a director of the Company. Mr. Leblois received
an option to purchase 6,500 shares, upon his election to the Board on January
31, 1995. This option has an exercise price of $10.225 per share and becomes
exercisable as to 34%, 33% and 33% of the shares covered thereby on January 31,
1996, January 31, 1997 and January 31, 1998 provided that Mr. Leblois continues
to serve as a director of the Company. Mr. Kroger received an option to purchase
6,500 shares, upon his election to the Board on June 28, 1995. This option has
an exercise price of $15.01 per share and becomes exercisable as to 34%, 33% and
33% of the shares covered thereby on June 28, 1996, June 28, 1997 and June 28,
1998 provided that Mr. Kroger continues to serve as a director of the Company.
Raymond C. Kurzweil had been retained as a technical advisor by the
Official Committee of Unsecured Creditors in the Company's Chapter 11 proceeding
and, in that capacity, had reviewed the technology and intellectual property of
the Company. Through this review the Company's patent portfolio was identified
as one of the Company's important assets. After joining the Company's Board of
Directors in October 1993, Mr. Kurzweil agreed to continue his work with the
Company's patent portfolio and entered into a technical consulting agreement
with the Company effective October 1993. This agreement provides for
compensation at the rate of $375.00 per hour, not to exceed an average of
$20,000 per month, plus the reimbursement of expenses. The agreement was
approved by the Board of Directors and is subject to the Board's periodic
review. The agreement is terminable upon 30 days notice by either party.
Upon his departure from the Board of Directors, John P. White received an
honorarium from the Company for his past service to the Company in the amount of
approximately $44,000.
7
<PAGE> 10
In July 1994, the Board of Directors adopted a policy prohibiting
non-employee Directors from receiving compensation from the Company other than
in their capacity as Directors, absent extraordinary circumstances. The Board
has determined that extraordinary circumstances warrant the continuation of the
arrangement with Mr. Kurzweil upon the terms described above.
<TABLE>
EXECUTIVE COMPENSATION
Summary Compensation
The following Summary Compensation Table sets forth certain information
concerning the compensation for each of the last three fiscal years of the
Company's Chief Executive Officer and the Company's four other most highly
compensated executive officers during Fiscal 1995 (the "Named Executives").
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL NUMBER OF
COMPENSATION(1) SHARES
FISCAL --------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS STOCK OPTIONS COMPENSATION
--------------------------- ------ -------- -------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Joseph M. Tucci...................... 1995 $510,000 $360,000(2) 190,000 $ 83,421(3)
Chairman of the Board and 1994 350,000 298,000 200,000 511,174
Chief Executive Officer 1993 350,000 133,000 18,936
Donald P. Casey...................... 1995 350,000 160,000(4) 125,000 94,838(5)
President and Chief Development 1994 350,000 277,000 200,000 485,940
Officer 1993 350,000 133,000 13,226
Franklyn A. Caine.................... 1995 285,625(6) 185,000(7) 300,000 14,177(8)
Executive Vice President and Chief
Financial Officer
William P. Ferry..................... 1995 275,625 162,000(9) 50,000 32,962(10)
Senior Vice President, and 1994 250,000 176,600 60,000 49,685
President, Customer Service 1993 250,000 53,402 5,689
Business
Jeremiah J.J. van Vuuren(11)......... 1995 273,105 172,000(12) 65,000 30,429(13)
Senior Vice President, and 1994 214,063(14) 128,438 75,000 19,086
President, Wang International
<FN>
- ---------------
(1) Other compensation in the form of perquisites and other personal benefits
has been omitted, in accordance with the rules of the Securities and
Exchange Commission, as the aggregate amount of such perquisites and other
personal benefits constituted less than the lesser of $50,000 or 10% of the
total annual salary and bonus for each executive officer in each fiscal
year covered.
(2) Fiscal 1995 bonus consists of $360,000 paid under the Company's executive
bonus program. Fiscal 1994 bonus consists of $231,000 paid under the
Company's executive bonus program and $67,000 paid in accordance with the
requirements of Mr. Tucci's employment agreement. Fiscal 1993 bonus
consists of a payment made in accordance with the requirements of Mr.
Tucci's employment agreement.
(3) All other compensation for Fiscal 1995 consists of (i) $21,373 in
contributions by the Company under its Retirement Savings Plan, (ii) $5,226
in premiums paid by the Company on a group term life insurance policy for
the benefit of Mr. Tucci, (iii) $17,122 consisting of imputed income as a
result of the 3% promissory note from Mr. Tucci to the Company, and (iv)
$39,700, which represents the fair market value, as of the date of
confirmation of the Reorganization Plan (the date on which he became
contractually entitled to receive the shares), of the shares of Common
Stock and warrants issued to Mr. Tucci in December 1994. All other
compensation for Fiscal 1994 consists of (i) $15,479 in contributions by
the Company under its Retirement Savings Plan, (ii) $3,048 in premiums paid
by the Company on a group term life insurance policy for the benefit of Mr.
Tucci, (iii) $400,000, which
</TABLE>
8
<PAGE> 11
represents the fair market value, as of the date of confirmation of the
Reorganization Plan (the date on which he became contractually entitled to
receive the shares), of the 54,422 shares of Common Stock issued to Mr.
Tucci in December 1993 in accordance with the requirements of his
employment agreement, and (iv) $90,647 in Common Stock and a $2,000 cash
payment received as a creditor of the Company (as a result of the Company's
rejection in its Chapter 11 proceeding of his pre-Chapter 11 employment
agreement) under the terms of the Reorganization Plan. All other
compensation for Fiscal 1993 consists of $16,374 in contributions by the
Company under its Retirement Savings Plan and $2,562 in premiums paid by
the Company on a group term life insurance policy for the benefit of Mr.
Tucci.
(4) Fiscal 1995 bonus consists of $160,000 paid under the Company's executive
bonus program. Fiscal 1994 bonus consists of $210,000 paid under the
Company's executive bonus program and $67,000 paid in accordance with the
requirements of Mr. Casey's employment agreement. Fiscal 1993 bonus
consists of a payment made in accordance with the requirements of Mr.
Casey's employment agreement.
(5) All other compensation for Fiscal 1995 consists of (i) $19,355 in
contributions by the Company under its Retirement Savings Plan, (ii) $5,722
in premiums paid by the Company on a group term life insurance policy for
the benefit of Mr. Casey, (iii) $16,674 consisting of imputed income as a
result of the 3% promissory note from Mr. Casey to the Company and (iv)
$53,087, which represents the fair market value, as of the date of
confirmation of the Reorganization Plan (the date on which he became
contractually entitled to receive the shares), of the shares of Common
Stock and warrants issued to Mr. Casey in December 1994. All other
compensation for Fiscal 1994 consists of (i) $10,012 in contributions by
the Company under its Retirement Savings Plan, (ii) $3,594 in premiums paid
by the Company on a group term life insurance policy for the benefit of Mr.
Casey, (iii) $400,000, which represents the fair market value, as of the
date of confirmation of the Reorganization Plan (the date on which he
became contractually entitled to receive the shares), of the 54,422 shares
of Common Stock issued to Mr. Casey in December 1993 in accordance with the
requirements of his employment agreement, and (iv) $70,334 in Common Stock
and a $2,000 cash payment received as a creditor of the Company (as a
result of the Company's rejection in its Chapter 11 proceeding of his
pre-Chapter 11 employment agreement) under the terms of the Reorganization
Plan. All other compensation for Fiscal 1993 consists of $9,965 in
contributions by the Company under its Retirement Savings Plan and $3,261
in premiums paid by the Company on a group term life insurance policy for
the benefit of Mr. Casey.
(6) Mr. Caine joined the Company on August 15, 1994 and, therefore, did not
receive compensation for all of Fiscal 1995.
(7) Fiscal 1995 bonus consists of $102,500 paid under the Company's executive
bonus program and $82,500 paid in accordance with the requirements of Mr.
Caine s employment agreement.
(8) All other compensation for Fiscal 1995 consists of (i) $11,283 in
contributions by the Company under its Retirement Savings Plan and (ii)
$2,894 in premiums paid by the Company to Mr. Caine in lieu of payments on
a group term life insurance policy for the benefit of Mr. Caine.
(9) Fiscal 1995 bonus consists of $162,000 paid under the Company's executive
bonus program. Fiscal 1994 bonus consists of $110,000 paid under the
Company's executive bonus program and $66,600 paid under the Company's
Employee Retention Program. Fiscal 1993 bonus includes $33,400 paid under
the Employee Retention Program and $20,002 paid under Mr. Ferry's then
existing employment agreement.
(10) All other compensation for Fiscal 1995 consists of (i) $14,593 in
contributions by the Company under its Retirement Savings Plan, (ii) $2,099
in premiums paid by the Company on a group term life insurance policy for
the benefit of Mr. Ferry and (iii) $16,270, which represents the fair
market value, as of the date of confirmation of the Reorganization Plan
(the date on which he became contractually entitled to receive the shares),
of the shares of Common Stock and warrants issued to Mr. Ferry in December
1994. All other compensation for Fiscal 1994 consists of (i) $7,614 in
contributions by the
9
<PAGE> 12
Company under its Retirement Savings Plan, (ii) $1,022 in premiums paid by
the Company on a group term life insurance policy for the benefit of Mr.
Ferry and (iii) $41,049 in Common Stock received as a creditor of the
Company (as a result of the Company's rejection in its Chapter 11
proceeding of his pre-Chapter 11 employment agreement) under the terms of
the Reorganization Plan. All other compensation for Fiscal 1993 consists of
$5,689 in contributions by the Company under its Retirement Savings Plan.
(11) All compensation paid to Mr. van Vuuren is reported in USDollars although
it is paid in UKL. The currency conversion rate used was $1.6065 per UKL
and $1.51103 per UKL for Fiscal 1995 and 1994, respectively.
(12) Fiscal 1995 bonus consists of $172,000 paid under the Company's executive
bonus program. Fiscal 1994 bonus consists of $128,438 paid under the
Company's executive bonus program.
(13) All other compensation for Fiscal 1995 consists of (i) $18,343 in
contributions by the Company under its Retirement Savings Plan and (ii)
$12,086 in premiums paid by the Company on a group term life insurance
policy for the benefit of Mr. van Vuuren. All other compensation for Fiscal
1994 consists of (i) $10,703 in contributions by the Company under its
Retirement Savings Plan, and (ii) $8,383 in premiums paid by the Company on
a group term life insurance policy for the benefit of Mr. van Vuuren.
(14) Mr. van Vuuren joined the Company on September 1, 1993 and, therefore, did
not receive compensation for all of Fiscal 1994.
Option Grants
The following table sets forth certain information concerning grants of
stock options during Fiscal 1995 to each of the Named Executives.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS(1) VALUE
----------------------------------------------------------------- AT ASSUMED ANNUAL RATES
PERCENT OF OF STOCK PRICE
TOTAL APPRECIATION FOR OPTION
NUMBER OF OPTIONS GRANTED TERM(3)
SHARES UNDERLYING TO EMPLOYEES EXERCISE PRICE EXPIRATION -----------------------
NAME OPTIONS GRANTED IN FISCAL YEAR PER SHARE(2) DATE 5% 10%
- ---- ----------------- --------------- -------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Joseph M. Tucci..... 190,000 10.6% $ 12.125 11/30/04 $1,448,816 $3,671,584
Donald P. Casey..... 125,000 6.9 12.125 11/30/04 953,168 2,415,516
Franklyn A. Caine... 180,000 10.0 7.350(4) 06/22/04 832,028 2,108,521
120,000 6.7 12.125 11/30/04 915,042 2,318,895
William P. Ferry.... 50,000 2.8 12.125 11/30/04 381,267 966,206
Jeremiah J.J. van
Vuuren............ 65,000 3.6 12.125 11/30/04 495,648 1,256,068
<FN>
- ---------------
(1) Each option (i) becomes exercisable as to 34% of the underlying shares on
October 1, 1995, exercisable as to 33% of the underlying shares on October
1, 1996 and October 1, 1997 and (ii) generally terminates 30 days after the
termination of the optionee's employment with the Company (but in no event
after the expiration date).
(2) The exercise price per share of each option is equal to the fair market
value per share of Common Stock on the date of grant, except as noted.
(3) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock appreciation of 5% and 10% compounded
annually from the date the respective options were granted to their
expiration date. The gains shown are net of the option exercise price, but
do not include deductions for taxes or other expenses associated with the
exercise of the option or the sale of the underlying shares. The actual
gains, if any, on the stock option exercises will depend on the future
performance of the Common Stock, the op-
</TABLE>
10
<PAGE> 13
tionholder's continued employment through the option period, and the date on
which the options are exercised and the underlying shares are sold.
(4) The option was granted to Mr. Caine at less than fair market value which was
$12.375 as an inducement to his employment with the Company.
Option Exercises and Holdings
The following table sets forth certain information concerning the number
and value of unexercised options held by each of the Named Executives on June
30, 1995. No stock options were exercised by any Named Executive during Fiscal
1995.
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
FISCAL YEAR END AT FISCAL YEAR END(1)
------------------------- -------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------------------- -------------------------
<S> <C> <C>
Joseph M. Tucci.................................... 68,000/322,000 $613,700/$1,998,800
Donald P. Casey.................................... 68,000/257,000 613,700/ 1,722,550
Franklyn A. Caine.................................. 61,200/238,800 552,330/ 1,582,170
William P. Ferry................................... 20,400/ 89,600 184,110/ 569,890
Jeremiah J.J. van Vuuren........................... 25,500/114,500 230,137/ 722,987
<FN>
- ---------------
(1) Based on the fair market value of the Common Stock on June 30, 1995
($16.375), less the option exercise price.
</TABLE>
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
In March 1993, the Company entered into an employment agreement with Mr.
Tucci. Mr. Tucci's agreement, as amended in April 1995, extends through June
1997 and provides for a base salary of $350,000 for Fiscal 1994 and $510,000 for
Fiscal 1995 and thereafter. The agreement provides for performance-based bonuses
to be determined by the Board of Directors and targeted at 60% of annual base
salary. The agreement also provides for the payment of a severance benefit of up
to three times Mr. Tucci's anticipated base salary and bonus, which would be
payable under certain enumerated circumstances (including employment termination
by the Company, an adverse change in job responsibilities, an adverse change in
compensation, or the resignation of the executive following a significant
relocation).
In March 1993, the Company entered into an employment agreement with Mr.
Casey. Mr. Casey's agreement, as amended in April 1995, extends through June
1997 and provides for an annual base salary of $350,000. The agreement provides
for performance-based bonuses to be determined by the Board of Directors and
targeted at 60% of annual base salary. The agreement also provides for the
payment of a severance benefit of up to one and one-half Mr. Casey's anticipated
base salary and bonus, which would be payable under certain enumerated
circumstances.
In June 1994, the Company entered into an employment agreement with Mr.
Caine pursuant to which the Company agreed to employ him as Executive Vice
President and Chief Financial Officer of the Company. Under the agreement, the
Company agreed to pay Mr. Caine an annual base salary of $325,000. Mr. Caine is
also eligible to participate in a yearly bonus plan targeted at $165,000
depending on his performance against goals specified in the bonus plan. Under
his employment agreement Mr. Caine will receive severance compensation in an
amount equal to 18 months of base salary plus bonus, with an amount equal to 6
months salary and target bonus payable in a lump sum and the balance payable
over a 12-month period, if Mr. Caine's employment is involuntarily terminated
other than for cause or if Mr. Caine resigns under certain specified
circumstances. Severance payments would be offset by the compensation Mr. Caine
received from a new employer during such 12-month period.
11
<PAGE> 14
The Company entered into an employment agreement with Mr. Ferry in December
1993 pursuant to which the Company agreed to employ Mr. Ferry initially as a
Senior Vice President and Officer of the Company, for a three-year term ending
on December 15, 1996. Under the terms of the agreement, Mr. Ferry's base salary
for Fiscal 1995 was $275,625 and he was eligible to receive a target annual
bonus of approximately 40% of his base salary upon satisfaction of performance
goals with the opportunity to earn an additional percentage for overachievement.
Under his employment agreement Mr. Ferry will receive severance compensation
equal to his base salary plus target bonus, payable over a 12-month period, if
his employment is involuntarily terminated other than for cause, death or
disability, or if he resigns under certain specified circumstances. Severance
payments would be offset by the compensation he received from a new employer
during such 12-month period.
The Company entered into an employment agreement with Mr. van Vuuren in May
1993 pursuant to which the Company agreed to employ him as a Senior Vice
President of the Company and General Manager of the Company's European
Operations. Under the terms of the agreement, Mr. van Vuuren's base salary for
Fiscal year 1995 was $273,105. Mr. van Vuuren is also eligible to participate in
a yearly bonus plan targeted at a percentage of his base salary depending on his
performance against goals specified in the bonus plan. The agreement provides
that, if he is dismissed for any reason, other than for a gross misconduct or
violation of the Company's Employee Code of Conduct, Mr. van Vuuren will receive
severance compensation in an amount equal to 15 months of base salary to be paid
over a 15-month period.
The Company is a party to contingent severance compensation agreements
("Severance Agreements") with twelve executive officers (including Messrs.
Tucci, Casey, Caine, Ferry and van Vuuren) which would become operative
following a "change in control" of the Company, as defined in the Severance
Agreements. The Company believes that these agreements will better ensure the
retention of those officers and enable them to devote their full attention and
energies to the Company's business without the distractions that might arise in
the circumstances addressed in the agreements. The Severance Agreements continue
in effect while the executive is employed by the Company for a period of three
years, automatically renew for additional one year terms and remain in effect
for 36 months after the month in which a change in control occurs. If the
executive's employment is terminated following a change in control, the
executive would become entitled to various benefits under the Severance
Agreement, including (in lieu of a payment under any other severance plan or
agreement) a lump sum severance payment equal to 2.99 times the average annual
compensation received by the executive for the two previous years, unless the
executive's employment were terminated (i) because of death or disability, (ii)
by the Company for cause, or (iii) by the executive without "good reason," as
defined in the Severance Agreements.
The Severance Agreement for Mr. Tucci provides that in the event the total
payments to Mr. Tucci under the agreement are subject in whole or in part to the
excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Excise Tax"), the Company will pay Mr. Tucci an additional amount in the
form of a gross-up payment such that the net amount retained by Mr. Tucci after
payment of the Excise Tax on the total payments and federal, state and local
taxes on the gross-up payment equals the total payments Mr. Tucci would have
received absent the Excise Tax. The other executives' Severance Agreements
provide that the lump sum payment would be subject to reduction to the extent
that any payment (whether under the Severance Agreement or otherwise) to the
executive were subject to the Excise Tax imposed under Section 4999 of the
Internal Revenue Code if such reduction would result in a greater after-tax
payment to the executive.
CERTAIN TRANSACTIONS
On June 20, 1994, Messrs. Tucci and Casey recognized income, for tax
purposes, in the amount of $777,624 and $757,112, respectively, as a result of
their receipt of (i) 54,422 shares of Common Stock pursuant to the terms of the
Reorganization Plan and their employment agreements and (ii) additional shares
12
<PAGE> 15
of Common Stock as part of the distribution to creditors under the
Reorganization Plan. Messrs. Tucci and Casey incurred an estimated tax liability
of $355,071 and $345,807, respectively, most of which was payable on June 21,
1994 under federal and Massachusetts income tax withholding rules. All of this
income recognized by Messrs. Tucci and Casey was received by them in the form of
Common Stock (rather than cash) and, due to federal securities law restrictions,
Messrs. Tucci and Casey were unable to sell any of such Common Stock in order to
satisfy their tax liability. Accordingly, on June 21, 1994 the Company made a
loan to Mr. Tucci in the amount of $355,071 and a loan to Mr. Casey in the
amount of $345,807. Each of these loans (i) was scheduled to be paid in two
equal principal installments (together with accrued interest) on June 21, 1995
and June 21, 1996, (ii) bears interest at an annual rate of 3.0% from and after
December 1, 1994 (which date was chosen on the assumption that Messrs. Tucci and
Casey would have an opportunity to sell some of their Common Stock by such
date), (iii) was initially secured by a pledge of Common Stock of the Company
(37,500 shares in the case of Mr. Tucci and 36,520 in the case of Mr. Casey)
having a value as of the date of the loan of 133% of the loan amount, (iv) was
originally scheduled to be repaid with the proceeds of any sale by Messrs. Tucci
or Casey of the pledged shares and (v) is a non-recourse obligation of Messrs.
Tucci and Casey. At the meeting of the Organization, Compensation and Nominating
Committee on September 27, 1995, the Committee (i) reduced the number of shares
of Common Stock subject to the pledge to 33,592 shares in the case of Mr. Tucci
and 32,307 shares in the case of Mr. Casey which shares had a value as of
September 27, 1995 of at least 133% of the loan amount, and (ii) modified the
schedule for payments to be made by Messrs. Tucci and Casey under each of their
respective promissory notes to four equal principal installments (together with
accrued interest) on February 28, 1996, August 31, 1996, February 28, 1997 and
June 30, 1997.
In addition to the foregoing, advances in the amount of approximately
$116,000 remain outstanding with respect to an executive officer as a result of
an international expatriate assignment.
NBI, Inc. filed for protection under Chapter 11 of the U.S. Bankruptcy Code
in December 1990. NBI, Inc. reorganized and emerged from Chapter 11 in January
1992. Mr. Jerritts was President and Chief Executive Officer of NBI, Inc. during
this period.
In June 1995, Axel J. Leblois, with permission of the Chairman of the Board
of Directors and Secretary of the Corporation, took a leave of absence from the
Board. Such leave of absence may extend up to but no later than November 15,
1995. The purpose of the leave of absence was to permit Mr. Leblois to direct
Bull HN Information Systems Inc. ("Bull HN") in its dispute with the Company
regarding the adjustments sought by the Company to the closing balance sheet
acquired by the Company from Bull HN. During the time of Mr. Leblois leave of
absence, Mr. Leblois will be excused from participating in all meetings of the
Board and all meetings of sub-committees of the Board and shall not be provided
materials with respect to the Board.
As part of the Reorganization Plan, the previous obligations of the Company
to indemnify its former Directors, officers and employees pursuant to its
corporate charter, by-laws and policy of providing employee indemnification, and
applicable state law and agreements in respect of claims based on acts or
omissions related to such persons' service with, for or on behalf of the Company
have been retained and remain unaffected by the Chapter 11 case. Consequently,
the Company is obliged to indemnify each current or former Director or executive
officer in the various legal proceedings relating to the Company's predecessor
Massachusetts corporation.
REPORT OF ORGANIZATION, COMPENSATION AND NOMINATING COMMITTEE ON EXECUTIVE
COMPENSATION
The Company's executive compensation program is administered by the
Organization, Compensation and Nominating Committee of the Board of Directors
(the "Committee"), which was established in October 1993. The Committee is
comprised entirely of non-employee Directors.
13
<PAGE> 16
The Committee seeks to achieve two broad goals in determining executive
compensation and establishing executive compensation programs. First, the
Committee seeks to compensate executives in a manner that enables the Company to
attract and retain executives whose services are critical to the success of the
Company. Second, the Committee seeks to provide incentive for, and reward, the
attainment of objectives that inure to the benefit of the Company and its
stockholders. The Company's Fiscal 1995 executive compensation consisted of
three principal elements: salary, bonuses and stock option grants.
In establishing base salaries for executive officers, the Committee
considers the salaries of executives at other companies whose business and/or
financial situation is similar to that of the Company, as well as the particular
executive's level of achievement and responsibility and the historic salary
levels of the executive. Many of the executive officers (including some of the
Named Executives) of the Company are parties to employment agreements that fix
the executive's annual base salary during the term of the agreement. The
employment agreements with Mr. Tucci and Mr. Casey were entered into in March
1993, prior to the filing by the Company of a reorganization plan in its Chapter
11 proceeding; most of the other executive employment agreements (including with
Mr. Ferry, and Mr. van Vuuren) were entered into prior to the consummation of
the Company's Reorganization Plan. The agreement with Mr. Caine was entered into
in June 1994. The Committee believes that the execution of these employment
agreements was necessary to help retain and motivate and, Mr. Caine's case,
attract those key executives whose continued services are critical to the
Company's future success. The Committee believes that the salary levels
established for the executives are appropriate, based on the factors described
above.
The Committee's philosophy is to tie a significant portion of the
compensation of executive officers to the attainment of corporate and individual
goals, thus aligning the objectives and rewards of Company executives with those
of the stockholders of the Company. For Fiscal 1995, bonuses paid to executives
consisted of payments made under the Company's executive bonus program, which
provided for the payment of bonuses to executives based on a combination of
individual, business unit and corporate performance. Under this program, each
executive was assigned a target bonus and a set of corporate, business unit and
individual objectives. Each executive was paid a percentage of his target bonus
based upon the degree to which established objectives were attained. The target
bonus for the Company's executive officers ranged from 34% to 60% of the
executive's base salary, and in some cases was established by the terms of the
executive's employment agreement. In the case of each of Mr. Tucci and Mr.
Caine, 33% of his bonus was based upon the attainment by the Company of its net
income objective, 33% was based upon the achievement by the Company of certain
other financial performance objectives, and 34% was based upon the achievement
of certain goals relating to individual performance and responsibility. In the
case of Mr. Casey, 33% of his bonus was based upon the attainment by the Company
of its net income objective, 47% was based upon the achievement by his business
unit of certain financial performance objectives, and 20% was based upon the
achievement of certain goals relating to individual performance and
responsibility. In the case of each of Mr. Ferry and Mr. van Vuuren, 33% of his
bonus was based upon the attainment by the Company of its net income objective,
57% was based upon the achievement by his business unit of certain other
financial performance objectives, and 10% was based upon the attainment of
certain goals relating to individual performance and responsibility. The actual
bonuses paid to the executive officers ranged from 76% to 149% of their target
bonus. The $360,000 bonus paid to Mr. Tucci represented 118% of his target
bonus.
The Committee uses stock options as a significant element of the
compensation package of the executive officers because they provide an incentive
to executives to maximize stockholder value. Stock options reward the executives
only to the extent that stockholders also benefit, and the vesting of the
options (the options become exercisable in installments over a three-year
period) serves as a means of retaining these executives. The timing of stock
option grants to executive officers depends upon a number of factors, including
new hires of executives, the executive's contribution to the Company, the
executives' current stock and option holdings and such other factors as the
Committee deems relevant.
14
<PAGE> 17
Under recently-enacted Section 162(m) of the Internal Revenue Code of 1986,
as amended (the "Code") beginning in 1994 certain executive compensation in
excess of $1 million paid to the five most highly-paid executives of the Company
will not be deductible by the Company for federal income tax purposes unless the
compensation is awarded under a performance-based plan approved by the
stockholders of the Company. The Committee intends to structure the award of
stock options to executive officers so that they comply with the
performance-based requirements of Section 162(m), and may in the future decide
to submit other executive compensation plans for stockholder approval.
COMPENSATION COMMITTEE
Paul E. Tsongas, Chairman
Raymond C. Kurzweil
Frederick A. Wang
15
<PAGE> 18
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Common Stock of the Company from December 16, 1993 (the date the Common Stock of
the reorganized Company commenced public trading) through June 30, 1995 with the
cumulative total return during this period of (i) Standard & Poor's 500
Composite Index and (ii) the High Technology Composite Index. This graph assumes
the investment of $100 on December 16, 1993 in the Company's Common Stock, the
Standard & Poor's 500 Composite Index and the High Technology Composite Index,
and assumes dividends are reinvested.
[INSERT CHART]
12/16/93 06/30/95
-------- --------
Wang Laboratories, Inc. $100 $108.26
S&P 500 Composite Index $100 $121.31
HiTech Composite Index $100 $159.99
16
<PAGE> 19
PROPOSAL TO AMEND THE EMPLOYEES' STOCK INCENTIVE PLAN
The Board of Directors believes that the continued growth and profitability
of the Company depends, in large part, upon the ability of the Company to
maintain a competitive position in attracting, retaining, compensating and
motivating key personnel. In addition, the Board of Directors believes it would
be desirable to permit the Company greater flexibility with respect to the
granting of additional stock options in connection with possible acquisitions.
In light of these considerations, on September 27, 1995, the Board of Directors
of the Company adopted, subject to stockholder approval, an amendment to the
Employees' Stock Incentive Plan (the "1994 Employees' Stock Incentive Plan" or
the "Plan") of the Company that increased the number of shares of Common Stock
available for issuance under the plan by adding to the number of shares
available under the 1994 Employees' Stock Incentive Plan (i) those shares that
were covered by option grants under the Company's 1993 Stock Incentive Plan
which have expired, been forfeited, or terminated unexercised since October 26,
1994 (the date on which the Committee adopted the 1994 Employees' Stock
Incentive Plan) or which may expire or terminate unexercised in the future (up
to a maximum of 1,908,284 shares); and (ii) 3,030,000 additional shares.
The Board of Directors believes that the amendment to the 1994 Employees'
Stock Incentive Plan is in the best interests of the Company and its
stockholders and recommends a vote in favor of this proposal.
SUMMARY OF THE PLAN
The 1994 Employees' Stock Incentive Plan authorizes the Company to grant
stock options for the purchase of, or make restricted stock awards (i.e., grants
of shares of Common Stock subject to certain restrictions) covering, up to an
aggregate of 1,787,153 shares of Common Stock, plus such number of shares (if
any) remaining of the 350,000 shares reserved for issuance under the Company's
1993 Employees' Stock Grant Plan (as of August 31, 1995, 33,500 shares remained
under the 1993 Employees' Stock Grant Plan). Any shares subject to options
granted pursuant to the 1994 Employees' Stock Incentive Plan which terminate or
expire unexercised are available for future grants under such Plan. In addition,
any restricted stock awarded under the Plan which is repurchased by the Company
will be available for subsequent option grants or restricted stock awards under
the Plan. The maximum number of shares for which options or restricted stock
awards may be granted to any one employee during any year is 1,000,000 shares.
All employees of the Company or a subsidiary of the Company are eligible to
receive stock options or restricted stock awards under the Plan, but options and
awards are granted only to those employees selected or approved by the
Organization, Compensation and Nominating Committee of the Board of Directors
(the "Committee"), which has been charged with administration of the Plan. The
number and identity of individuals receiving stock options varies from year to
year depending on various factors such as the Company's hiring needs during the
year, significant promotions and individual and Company performance. Because of
the uncertainty of these factors, and because of the discretionary nature of the
grant of stock options and restricted stock awards, the Company cannot now
determine the number of options or restricted stock awards to be granted to any
particular executive officer, executive officers as a group, or non-executive
officer employees as a group. As of August 31, 1995, the Company and its
subsidiaries had approximately 6,900 employees.
The 1994 Employees' Stock Incentive Plan is administered by the Committee,
which is authorized to implement and interpret the Plan and to determine or
recommend to the Board of Directors, subject to the provisions of the Plan and
the Committee's charter, the employees of the Company or its subsidiaries to
whom, and the time or times at which, options and restricted stock awards are
granted; the number of shares subject to each option or restricted stock award
granted; the designation of a stock option as either an incentive stock option
or a non-statutory stock option; the exercise price of a stock option (which may
be less than,
17
<PAGE> 20
equal to or greater than the fair market value of the Common Stock on the date
of grant); the time period over which a stock option becomes exercisable
(options granted to date generally vest ratably over a three-year period); the
purchase price (if any) to be paid for the shares subject to a restricted stock
award (which may be less than, equal to or greater than the fair market value of
the Common Stock on the date of grant); the restrictions imposed on a restricted
stock award (which would generally include a repurchase right in favor of the
Company in the event of the termination of the recipient's employment and
restrictions on transfer); and the period of time over which such restrictions
lapse.
The Committee or the Board of Directors may amend the 1994 Employees' Stock
Incentive Plan from time to time, except that amendments to the Plan must be
approved by stockholders of the Company to the extent required by Section 16(b)
of the Securities Exchange Act of 1934 (or the rules promulgated thereunder).
This summary of the 1994 Employees' Stock Incentive Plan is qualified in
all respects by reference to the full text of the 1994 Employees' Stock
Incentive Plan, copies of which are available upon request to the Secretary of
the Company.
As of August 31 1995, options to purchase a total of 1,704,600 shares of
Common Stock had been granted under the 1994 Employees' Stock Incentive Plan.
Included among such options are stock options granted to Messrs. Tucci, Casey,
Caine, Ferry and van Vuuren for 190,000, 125,000, 120,000, 50,000, and 65,000
shares of Common Stock, respectively, each at an exercise price of $12.125 per
share; and stock options for a total of 880,500 shares of Common Stock, at a
weighted average exercise price of $12.119 per share, which had been granted to
all current executive officers as a group. To date, no restricted stock awards
have been made under the 1994 Employees' Stock Incentive Plan.
On October 24, 1995 the last reported sale price of the Company's Common
Stock on the Nasdaq Stock Market was $17.375 per share.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the federal income tax treatment of
non-statutory options, incentive stock options and restricted stock awards under
the 1994 Employees' Stock Incentive Plan.
Non-Statutory Stock Options. No taxable income will be recognized by the
optionee upon the grant of a non-statutory option. The optionee must recognize
as ordinary income in the year in which the option is exercised the amount by
which the fair market value of the purchased shares on the date of exercise
exceeds the option exercise price. However, in the event of an exercise of an
option by a person required to file reports under Section 16(a) of the Exchange
Act (a "Reporting Person") within six months of the date of grant, no income
will be recognized by the optionee until six months have expired from the date
the option was granted, and the income then recognized will include any
appreciation in the value of the shares during the period between the date of
exercise and the date six months after the date of grant; provided that the
optionee may make an election under Section 83(b) of the Code to have the
difference between the exercise price and fair market value at the time of
exercise recognized as ordinary income as of the time of exercise.
The Company will be entitled to a business expense deduction equal to the
amount of ordinary income recognized by the optionee, subject to the limitations
of Section 162(m) of the Code. Any additional gain or any loss recognized upon
the subsequent disposition of the purchased shares will be a capital gain or
loss, and will be a long-term capital gain or loss if the shares are held more
than one year.
For purposes of the "alternative minimum tax" applicable to individuals, in
the year of option exercise an optionee must generally include in his
alternative minimum taxable income the difference between the exercise price and
the fair market value of the shares on the date of exercise (or the fair market
value on the
18
<PAGE> 21
date six months after the date of grant, in the case of a Reporting Person who
exercised the option within six months of the date of grant). The alternative
minimum tax is imposed upon an individual's alternative minimum taxable income
at rates of 26-28%, but only to the extent that such tax exceeds the taxpayer's
regular income tax liability for the taxable year.
Incentive Stock Options. No taxable income will be recognized by the
optionee upon the grant or exercise of an incentive stock option granted under
the Plan, and no corresponding expense deduction will be available to the
Company. Generally, if an optionee holds shares acquired upon the exercise of an
incentive stock option for at least two years from the grant of the option and
for at least one year from the exercise of the option (the "Statutory Holding
Period"), any gain recognized by the optionee on a subsequent sale of such
shares will be treated as capital gain. The gain recognized upon the sale of the
shares will be the difference between the option price and the sale price of the
shares. The net federal income tax effect to the holder of an incentive stock
option is to defer, until the stock is sold, taxation on any increase in the
value of the shares between the time of option grant and the time of exercise.
If an optionee sells shares acquired upon exercise of an incentive stock
option prior to the expiration of the Statutory Holding Period (a "disqualifying
disposition"), he or she will realize ordinary income in an amount equal to the
lesser of (i) the fair market value of the shares on the date of exercise less
the option exercise price, or (ii) the amount realized on the disposition of the
shares less the option exercise price; and the Company will receive a
corresponding business expense deduction. In the case of an option held by a
Reporting Person, however, if the option was exercised within six months of the
date of grant, the amount of taxable income realized at ordinary income tax
rates (and the amount of the Company's business expense deduction) will be equal
to the lesser of (i) the fair market value of the shares on the date that is six
months after the date of grant less the option exercise price, or (ii) the
amount realized on the sale less the option exercise price.
With respect to shares sold prior to the expiration of the Statutory
Holding Period, the amount by which the proceeds of sale exceed the fair market
value of the shares on the date of exercise (or the fair market value on the
date six months after the date of grant, in the case of a Reporting Person who
exercised the option within six months of the date of grant) will be treated as
long-term capital gain if the shares are held for more than one year prior to
the sale and as short-term capital gain if the shares are held for a shorter
period. If the optionee sells the shares for less than the option exercise
price, the optionee will recognize a capital loss equal to the difference
between the sale price and the option exercise price. The loss will be a
long-term capital loss if the shares are held for more than one year prior to
the sale and a short-term capital loss if the shares are held for a shorter
period.
The "alternative minimum tax" treatment of incentive stock options is the
same as that of non-statutory stock options.
Restricted Stock Awards. If a restricted stock award is subject to
forfeiture provisions and restrictions on transfer, neither the Company nor the
recipient of an award will realize any federal tax consequences at the time such
award is granted under the 1994 Employees' Stock Incentive Plan unless the
recipient makes an election under Section 83(b) of the Code. If the recipient of
an award makes a Section 83(b) election within 30 days of the date of grant, or
if the recipient is granted an award that is not subject to forfeiture
provisions and restrictions on transfer, then he or she will recognize ordinary
income, for the year in which the award is received, in an amount equal to the
difference between the fair market value of the Common Stock at the time the
award is made and the purchase price paid for the Common Stock. If such election
is made and the recipient subsequently forfeits some or all of the Common Stock,
he or she will not be entitled to any tax refund. If the Section 83(b) election
is not made with respect to an award, the recipient will recognize ordinary
income, at the time that the forfeiture provisions and restrictions on transfer
lapse, in an amount
19
<PAGE> 22
equal to the difference between the fair market value of the Common Stock at
that time and the original purchase price per share, if any. The Company will be
entitled to deduct as compensation expense, subject to the limitations of
Section 162(m) of the Code, the same amount as the recipient must recognize as
ordinary income and such deduction will take place in the Company's tax year
which includes the last day (generally December 31) of the recipient's tax year
in which the income is recognized for federal tax purposes. When the recipient
sells the stock, he or she will recognize capital gain at the time of sale in an
amount equal to the difference between his or her basis (the price paid, if any,
plus any amount taxed as ordinary income) and the sale price.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected the firm of Ernst & Young LLP as the
Company's independent auditors for the current fiscal year. Ernst & Young LLP
has served as the independent auditors for the Company (or its predecessor
Massachusetts corporation) since 1980. Although stockholder approval of the
Board of Directors' selection of Ernst & Young LLP is not required by law, the
Board of Directors believes that it is advisable to give stockholders an
opportunity to ratify this selection. If this proposal is not approved at the
Annual Meeting, the Board of Directors may reconsider its selection.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting and will have the opportunity to make a statement if they desire
to do so and will also be available to respond to appropriate questions from
stockholders.
OTHER MATTERS
MATTERS TO BE CONSIDERED AT THE MEETING
The Board of Directors does not know of any other matters which may come
before the Annual Meeting. However, if any other matters are properly presented
to the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote, or otherwise act, in accordance with their judgment
on such matters. Stockholders should be aware that the Company's By-laws (a copy
of which is available upon request to the Secretary of the Company) contain
provisions requiring certain advance notice from a stockholder who wishes to
bring business before the Annual Meeting.
SOLICITATION OF PROXIES
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's Directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone,
telegraph and personal interviews. Kissel-Blake Inc. has been engaged by the
Company to solicit proxies on behalf of the Company. For these services, the
Company will pay Kissel-Blake a fee of $5,000 plus reimbursement of
out-of-pocket expenses. Brokers, custodians and fiduciaries will be requested to
forward proxy soliciting material to the owners of stock held in their names,
and the Company will reimburse them for their out-of-pocket expenses in this
connection.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Annual Meeting of
Stockholders for Fiscal 1996 must be received by the Company at its principal
office not later than July 2, 1996 for inclusion in the proxy statement for that
meeting.
20
<PAGE> 23
MISCELLANEOUS
Based solely on its review of reports filed by Reporting Persons of the
Company pursuant to Section 16(a) of the Exchange Act, the Company believes that
during Fiscal 1995 all filings required to be made by Reporting Persons were
timely made in accordance with the requirements of the Exchange Act.
By Order of the Board of Directors,
ALBERT A. NOTINI,
Secretary
October 30, 1995
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE
APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK PERSONALLY
EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES. PROXY
21
<PAGE> 24
WANG LABORATORIES, INC.
ANNUAL MEETING OF STOCKHOLDERS -- NOVEMBER 21, 1995
The undersigned, having received notice of the meeting and management's
proxy statement therefor, and revoking all prior proxies, hereby appoint(s)
Albert A. Notini and John A. Burgess, and each of them (with full power of
substitution), as proxies of the undersigned to attend the Annual Meeting of
Stockholders of Wang Laboratories, Inc. (the "Company") to be held on Tuesday,
November 21, 1995 and any adjourned sessions thereof, and there to vote and act
upon the following matters in respect of all shares of capital stock of the
Company which the undersigned would be entitled to vote or act upon, with all
powers the undersigned would possess if personally present.
Attendance of the undersigned at the meeting or at any adjourned session
thereof will not be deemed to revoke this proxy unless the undersigned shall
affirmatively indicate thereat the intention of the undersigned to vote said
shares in person. If the undersigned hold(s) any of the shares of the Company in
a fiduciary, custodial or joint capacity or capacities, this proxy is signed by
the undersigned in every such capacity as well as individually.
IN THEIR DISCRETION, THE NAMED PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING, OR ANY ADJOURNMENT
THEREOF.
1. To elect the following individuals as Class II Directors:
Marcia J. Hooper FOR / / WITHHOLD AUTHORITY / /
Joseph J. Kroger FOR / / WITHHOLD AUTHORITY / /
Paul E. Tsongas FOR / / WITHHOLD AUTHORITY / /
(Continued on other side)
<PAGE> 25
(Continued from other side)
2. To approve an amendment to the Employees' Stock Incentive Plan of the
Company.
FOR / / AGAINST / / ABSTAIN / /
3. To ratify the selection of Ernst & Young LLP as the Company's independent
auditors for the fiscal year ending June 30, 1996.
FOR / / AGAINST / / ABSTAIN / /
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. IF NO DIRECTION IS GIVEN WITH RESPECT TO ANY ELECTION TO OFFICE OR
PROPOSAL SPECIFIED ABOVE, THIS PROXY WILL BE VOTED FOR SUCH ELECTION TO OFFICE
OR PROPOSAL.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
-----------------------------
Signature(s)
Dated:
-----------------------
Please sign name(s) exactly as appearing hereon. When signing as attorney,
executor, administrator or other fiduciary, please give your full title as such.
Joint owners should each sign personally. If a corporation, sign in full
corporate name, by authorized officer. If a partnership, please sign in
partnership name, by authorized person.
<PAGE> 26
Addendum A
WANG LABORATORIES, INC.
(A DELAWARE CORPORATION)
EMPLOYEES' STOCK INCENTIVE PLAN
ARTICLE I
PURPOSE
1.1 PURPOSE. The purpose of this Employees' Stock Incentive Plan
(the "Plan") is to further the growth, development and financial success of
Wang Laboratories, Inc. (the "Company") and its Subsidiaries by aligning the
personal interests of employees, through the ownership of shares of the
Company's Common Stock and related incentives, to those of the Company's
shareholders. The Plan is further intended to provide flexibility to the
Company in its ability to compensate employees and to motivate, attract and
retain the services of such employees who have the ability to enhance the value
of the Company and its Subsidiaries. The Plan permits the granting of
so-called Incentive Stock Options (granted on terms designed to gain certain
advantages under U.S. Federal income tax law), Non-Qualified Stock Options and
Restricted Stock awards on the terms specified herein.
ARTICLE II
DEFINITIONS
2.1 "Award" means an Option or Restricted Stock grant hereunder.
2.2 "Board" means the Board of Directors of the Company.
2.3 "Change in Control" shall mean (i) a merger or consolidation
to which the Company is a party and following which the stockholders of the
Company prior to such merger or consolidation do not have the voting power to
elect a majority of the members of the Board of Directors of the resulting
entity; (ii) any 'person' (as such term is used in Sections 13(d) and 14(d)(2)
of the Exchange Act of 1934, as amended), becoming the beneficial owner,
directly or indirectly, of more than 50% of any class of common stock of the
Company, or of shares having more than 50% of the aggregate voting power of the
Company's capital stock; (iii) a sale or transfer of substantially all of the
assets of the Company; (iv) a liquidation or reorganization of the Company or
(v) during any period of two consecutive years or less beginning after adoption
of this Plan, individuals who at the beginning of such period are members of
the Board and any new director(s) (other than directors designated by a person
who has entered into an agreement with the Company to effect a transaction of
the type described in clauses (i) through (iv) above) whose election by the
Board or nomination for election by the stockholders was approved by a vote of
at least two-thirds of the directors still in office who satisfy this test,
cease for any reason to constitute a majority of the Board.
2.4 "Code" means the Internal Revenue Code of 1986 as amended from
time to time.
2.5 "Committee" means the committee of the Board having
responsibility for compensation matters, or such other committee as the Board
shall designate. If there is no committee, then "Committee" means the Board,
excluding any members thereof eligible for Awards hereunder, and further
excluding any other members determined by the Board.
2.6 "Company" means Wang Laboratories, Inc., a Delaware corporation,
or its successor.
2.7 "Employee" means any person who is a regular full time
employee of the Company or a Subsidiary, and such other employees thereof as
may be selected by the Committee from time to time.
2.8 "Incentive Option" means an option granted hereunder which is
designated by the Committee as an "Incentive Stock Option" as defined in the
Code.
2.9 "Non-Qualified Option" means an option granted hereunder which
is designated by the Committee as a Non-Qualified Option, and is not intended
to be an Incentive Option.
2.10 "Option" means any option, whether "Incentive" or
"Non-Qualified", and means an Award granted hereunder by the Committee to an
Employee in the form of a right to purchase Stock evidenced by an option
contract containing such provisions as the Committee may establish.
2.11 "Permanent Disability" shall mean a physical or mental
condition of an Employee that, (i) in the judgment of the Committee,
permanently prevents such Employee from being able to continue to serve as an
active Employee in a capacity comparable to that in which the Employee served
prior to the disability, or (ii) causes the Employee to become eligible for
long-term disability benefits under any long-term disability insurance plan
then in effect with the Company or its subsidiary that at such time is his or
her employer.
<PAGE> 27
2.12 "Plan" means this Stock Incentive Plan.
2.13 "Restricted Period" means that period of time, if any, which
begins on the date of an Award of Restricted Stock to an Employee, and which
terminates on the date upon which all restrictions with respect to such
Restricted Stock shall lapse or otherwise be terminated.
2.14 "Restricted Stock Agreement" means a written agreement, signed
by the Employee and the Company, which sets forth the number of shares of
Restricted Stock awarded to the Employee, the restrictions, if any, applicable
thereto, the price, if any, to be paid by the Employee therefor, and such other
terms and conditions as shall be deemed to be necessary or desirable by the
Committee.
2.15 "Restricted Stock" means such Stock as may be granted to an
Employee subject to such restrictions, if any, as may be determined by the
Committee.
2.16 "Retirement" shall mean an Employee's cessation of employment
by reason of retirement, provided that the Employee has reached the age of 65
years, or the Employee has reached age 55 and his or her age plus years of
service to the Company (including service to Wang Laboratories, Inc., a
Massachusetts corporation, which merged into the Company) total 75, or the
Committee, in its sole and absolute discretion, deems the Employee to have
retired.
2.17 "Stock" means the Common Stock of the Company or any
successor, including any adjustments in the event of changes in capital
structure of the type described herein.
2.18 "Subsidiary" means any corporate entity, of which a majority
of the voting common or capital stock is owned directly or indirectly by the
Company.
ARTICLE III
ADMINISTRATION OF THE PLAN
3.1 ADMINISTRATION BY THE COMMITTEE. This Plan shall be
administered by the Committee. Members of the Committee are not eligible for
Awards hereunder. Unless otherwise required by law or rules it may establish,
the Committee may act through written consent of all its members, or vote of a
majority comprised of at least two of its members, and may hold telephonic
meetings where all participating members can hear each other. A majority
comprised of at least two members shall constitute a quorum of the Committee.
3.2 POWERS. The Committee shall have full and final authority in
its discretion to operate, interpret, manage, administer, and make
determinations under or relevant to the Plan on behalf of the Company. This
authority includes, but is not limited to:
(a) the power to select Employees to receive Awards from time to
time and determine the type and terms and conditions of Awards;
(b) the power to grant Awards conditionally or unconditionally, on
such terms, conditions and restrictions not inconsistent with the
provisions of this Plan as it prescribes from time to time, including the
power to determine the option exercise or purchase price of the shares of
Stock subject to each Award and the time or times when the benefits of
each Award shall become vested, exercisable, or free of restrictions, as
the case may be, and the duration of any exercise, vesting or restricted
period;
(c) the power to determine the number of shares of Stock subject
to each Award, and the time or times when Awards are made;
(d) the power to prescribe the form or forms of the instruments
evidencing Awards granted under this Plan, to construe and interpret the
Plan and the provisions of said instruments, and to make determinations
of facts relevant to administration of the Plan and benefits hereunder;
<PAGE> 28
(e) the power to adopt, amend and rescind regulations consistent
with the provisions hereof for the operation, interpretation, management
and administration of the Plan;
(f) the power to delegate responsibility for Plan operation,
management and administration, subject to the Committee's oversight and
control, on such terms, consistent with the Plan, as the Committee may
establish;
(g) the power to delegate to other persons the responsibility for
performing appropriate functions in furtherance of the Plan's purpose;
(h) the power to engage or authorize the engagement of the
services of persons, companies or organizations in furtherance of the
Plan's purpose, including but not limited to, banks, insurance companies,
brokerage firms, and consultants; and
(i) the power to waive or modify terms, conditions, restrictions
and forfeitures of Awards, in whole or in part, for such periods and for
such Employees, and on such terms as it shall determine.
ARTICLE IV
ELIGIBILITY AND SHARES SUBJECT TO THE PLAN
4.1 ELIGIBLE EMPLOYEES. Awards may be granted only to Employees,
or groups or classes thereof, selected or approved by the Committee in its sole
and absolute discretion. Employees who serve on the Board of Directors will be
eligible for Awards, but they will not be eligible to participate in the
administration of this Plan. No Employee may be granted Awards for more than
one million shares of Stock of the Company in any one year.
4.2 RELEVANT FACTORS. In selecting Employees to whom Awards shall
be granted, the Committee shall weigh such factors as are relevant to
accomplish the purposes hereof. An Employee who has been granted an Award may
be granted one or more additional Awards, if the Committee so determines. No
Employee shall be eligible for the grant of any Incentive Option under the Plan
if at the time of grant the Employee, directly or indirectly, owns Stock
possessing more than 10% of the combined voting power of all classes of stock
of the Company, or is otherwise disqualified from receiving an Incentive Option
under the Code.
4.3 NUMBER OF SHARES SUBJECT TO THE PLAN. Subject to the
provisions of Article X of this Plan and any authorization of additional shares
for the purposes hereof, the aggregate number of shares of Stock for which
Awards may be granted under this Plan shall not exceed 1,787,153 shares, plus
such number of shares (if any) remaining of the 350,000 shares reserved for
issuance under the 1993 Employees' Stock Grant Plan of the Company after all
grants have been made thereunder. The Committee has the authority to grant all
shares of Stock under this Plan as Incentive Options, as Non-Qualified Options
or as Restricted Stock, or in any combination thereof. The shares to be
delivered upon exercise of Options or the grant of Restricted Stock under this
Plan shall be made available, at the discretion of the Company, either from the
authorized but unissued shares or from previously issued and reacquired shares
of Stock held by the Company as treasury shares, including shares purchased in
the open market. Shares issued as Restricted Stock under the Plan that are
later forfeited may again be subject to Awards under the Plan, or may be
cancelled and the reserve for issuance hereunder shall then be increased by an
equal number. If an Option under this Plan shall expire or terminate
unexercised as to any shares covered thereby, such shares shall thereafter be
available for the granting of other Awards under this Plan.
4.4 NON-TRANSFERABILITY OF AWARDS. No Award granted under this
Plan shall be transferable by the Employee otherwise than by will or the laws
of descent and distribution, or pursuant to a qualified domestic relations
order, and such Award may be exercised during the Employee's lifetime only by
the Employee.
ARTICLE V
STOCK OPTION AWARDS
5.1 TERM AND OTHER PROVISIONS OF INCENTIVE OPTION AWARDS. The
term of each Incentive Option granted hereunder shall be for such period as the
Committee shall determine, but not for any longer period than the limit for
Incentive Options provided from time to time under the Code. Each Incentive
Option shall be subject to earlier termination as provided herein. Provisions
relating to waiting period, vesting and such other terms and conditions not
inconsistent with this Plan shall also be set from time to time by the
Committee so as to achieve the tax advantages provided for Incentive Options
under the Code.
5.2 INCENTIVE OPTION PRICE AND VALUE LIMIT. The exercise price
for an Incentive Option shall be determined by the Committee at the time such
Option is granted, and shall be not less than the fair market value of the
shares covered thereby at the time the Incentive Option is granted (but in no
event less than par value).
5.3 NON-QUALIFIED STOCK OPTION AWARDS. The Committee shall
establish from time to time the provisions relating to the exercise price per
share, expiration date, waiting period, cumulative rights, vesting and such
other terms and conditions of Non- Qualified Options granted under this Plan.
The purchase price of the shares that may be purchased under each Non-Qualified
Option shall not be less than par value.
ARTICLE VI
MATTERS RELATIVE TO ALL OPTIONS
6.1 EXERCISE. Each Option granted under this Plan shall be
exercisable on such date or dates, during such period, for such number of
shares, and upon such terms as shall be provided in the instrument evidencing
such Option, which shall be prescribed by the Committee. If the last day of
the exercise term is a Saturday, Sunday or legal holiday, exercisability may be
extended to the next following business day.
6.2 NOTICE OF EXERCISE. A person electing to exercise an Option
shall give written notice of exercise to the person or persons at the Company
designated by it to receive such notice. The exercise notice shall specify
the number of shares the optionee has elected to purchase, and the optionee
shall at the time of exercise tender the full purchase price of the shares he
or she has elected to purchase. Until an optionee has been issued a
certificate or certificates for the shares so purchased, he or she shall
possess no rights of a record holder with respect to any of such shares.
6.3 PARTICULAR CIRCUMSTANCES' EFFECT ON OPTIONS. No Option shall
be affected by any change of duties or position of the optionee (including
transfer to or from a Subsidiary), so long as he or she continues to be an
Employee. Except in cases of death, Permanent Disability, Retirement or other
circumstances specified by the Committee in its discretion (including, but not
limited to, a 30-day extension for exercise following termination of
employment), if an optionee shall cease to be an Employee, all Options held by
such person will terminate on the date of termination of the person's
employment, and up to such date shall be exercisable only to the extent of the
purchase rights, if any, which have accrued as of such date. Nevertheless, the
Committee, in its sole and absolute discretion, upon any such cessation of
employment, may determine (but be under no obligation to determine) that such
accrued purchase rights shall be deemed to include additional shares covered by
such Option and/or may be extended for an additional period of time. In case
of dismissal for cause, the Company may revoke all rights of the Employee to
purchase shares that have not previously been issued to the Employee. In the
event of any Change in Control, all Options outstanding shall become
immediately exercisable for the full number of shares subject thereto
regardless of any vesting or exercise schedule otherwise specified in such
Options, and optionees shall be entitled to at least 20 days' prior notice, and
the opportunity to exercise such rights before any transaction in connection
with the Change in Control may defeat or nullify the economic benefit thereof.
6.4 RETIREMENT OF OPTIONEE. Should an optionee begin Retirement
while in possession of an Option under this Plan, vesting and exercisability of
such Option shall continue as if the optionee were still an Employee.
6.5 DISABILITY OF OPTIONEE. Should an optionee be determined by
the Committee to have suffered a Permanent Disability while in possession of an
Option under this Plan, vesting will forthwith accelerate, such that the Option
immediately becomes 100% vested, and the optionee or his or her legal
representative will have one year from the date of determination of the
Permanent Disability to exercise such Option, at which time the Option will
expire and no longer be exercisable, provided that in any case the Option shall
expire no later than the last day of the original term thereof.
6.6 DEATH OF OPTIONEE. Should an optionee (including one
determined to have suffered a Permanent Disability under Section 6.5 above) die
while in possession of the right to exercise an Option under this Plan, vesting
will forthwith accelerate, such that the Option immediately becomes 100%
vested. Thereafter, such person(s) who shall have been designated as
beneficiary by the optionee, or in the absence thereof, such person as shall be
responsible for the administration of the optionee's will or estate or, in the
absence of the appointment of such person within six months of the date the
optionee died, the person(s) who shall be entitled to acquire the property of
the optionee, by will or by the laws of descent and distribution, (the
"beneficiary") may exercise such Option. This exercise may occur at any time
within one year from the date of death if such Option is a Non-Qualified
Option, or at any time within three years from the date of death if such Option
is an Incentive Option. Nevertheless, any such Option shall expire no later
than the last day of the original term of such Option.
6.7 MINIMUM SIX MONTH HOLDING PERIOD. Subject to Article 6.3
herein, if an Option is exercised within the six month period commencing on the
date of grant, no shares purchased upon such exercise may be sold until such
period has elapsed. The Company may establish such rules and procedures as it
deems appropriate to enforce this restriction.
ARTICLE VII
PROVISIONS APPLICABLE TO RESTRICTED STOCK AWARDS
<PAGE> 29
7.1 STOCK AWARDS. No more than one-third of the shares of Stock
subject to a Restricted Stock Award to any Employee shall be granted without
restrictions and, with respect to the balance of such Stock, no restrictions
shall lapse prior to the expiration of one year from the date of the Award. If
any shares are granted without restrictions, none of them may be sold by the
grantee until six months after the date they were granted. Each award to an
Employee shall be evidenced by an appropriate Restricted Stock Agreement in a
form and with terms, conditions and restrictions prescribed by the Committee.
7.2 STOCK CERTIFICATES. At the time Restricted Stock is granted to
an Employee, shares representing the Restricted Stock shall be registered in
the name of such Employee or a third party who will hold the shares on behalf
of the Employee, but for the duration of any Restricted Period applicable
thereto, shall be held by the Company for the account of such Employee in
certificated or uncertificated form. Any certificates for such shares that are
issued shall be held by the Company and shall bear the following legend: "The
sale or other transfer of the Stock represented by this certificate, whether
voluntary, involuntary, or by operation of law, is subject to certain
restrictions on transfer set forth in the Wang Laboratories, Inc. Employees'
Stock Incentive Plan. The rules of such Plan may be obtained from the
Secretary of Wang Laboratories, Inc." If and to the extent that the Restricted
Stock is released from the applicable restrictions, the legend shall be removed
from such certificate and the certificate shall be promptly delivered to the
Employee.
7.3 DIVIDENDS, VOTING AND TRANSFERS. During the Restricted
Period, the Employee (or any third party who will hold the shares on behalf of
the Employee) shall have the right to receive any dividends payable with
respect to Restricted Stock and to exercise the voting rights attaching
thereto. The Restricted Stock shall, however, be subject to the following
restrictions during any applicable Restricted Period, together with such other
restrictions as the Committee shall deem appropriate:
(i) none of the Restricted Stock may be sold,
exchanged, transferred, assigned, pledged, or otherwise
encumbered or disposed of by the Employee during the
applicable Restricted Period; and
(ii) subject to the other provisions of this
Article, if such grantee ceases to be an Employee prior to
the expiration or other termination of the applicable
restriction, any Restricted Stock granted to such grantee
which is still subject to restriction shall be forfeited and
all rights of the grantee to such Restricted Stock shall
terminate without further obligation on the part of the
Company.
7.4 FORFEITURE TERMS. Except as otherwise provided in a
Restricted Stock Agreement or determined by the Committee, upon the forfeiture
of any Restricted Stock with respect to which applicable restrictions have not
lapsed, such Restricted Stock shall, at the option of the Committee, (i) if a
purchase price had been paid for such Restricted Stock, be deemed to be offered
for sale by the grantee to the Company for a period of 30 days after the date
of such forfeiture at a price equal to the lesser of (y) the fair market value
of the Stock at such time or (z) the same price paid initially for such
Restricted Stock, or (ii) if no purchase price had been paid for such
Restricted Stock, be forfeited by the grantee and shall revert to the Company
without further action on anyone's part.
7.5 FINANCIAL HARDSHIP. With respect to any grantee, the
Committee may, in its sole and absolute discretion, accelerate the lapse of any
restrictions with respect to Restricted Stock granted to such grantee if, at
the time of such acceleration, the Committee determines that as the result of
an unanticipated emergency, such grantee will suffer severe financial hardship
if such lapse of restrictions is not accelerated. The extent to which any such
lapse of restrictions shall be accelerated shall be limited to the acceleration
necessary to satisfy the grantee's needs arising from the financial hardship.
7.6 MODIFICATION OF AWARDS. The Committee may, in its sole
discretion, prescribe that any restrictions on any Restricted Stock and under
any applicable Restricted Stock Agreement shall lapse in accordance with such
schedule and/or in accordance with such terms and conditions, other than the
schedule or terms and conditions for which provision was originally made, as
provided by the Committee; provided, however, that such modified schedule
and/or terms and conditions shall be more favorable to the grantee or grantees
affected than the original schedule or terms and conditions.
7.7 PARTICULAR CIRCUMSTANCES. With respect to any grantee, if (i)
such grantee ceases to be an Employee of the Company or any Subsidiary prior to
the expiration of the applicable Restricted period by reason of death,
Permanent Disability or Retirement or (ii) a Change in Control occurs, all
restrictions set forth in the applicable Restricted Stock Agreement shall
terminate as to the related Restricted Stock, and certificates for the
appropriate number of shares of Stock free of the restrictions of the Plan and
such Restricted Stock Agreement shall be delivered to the grantee or his or her
beneficiary or estate, as the case may be. Unless otherwise determined by the
Committee or provided in a Restricted Stock Agreement, if a grantee ceases to
be an Employee prior to the end of the applicable Restricted Period for any
other reason, such grantee shall immediately forfeit all shares of Restricted
Stock granted to such grantee which then remain subject to restriction.
7.8 LAPSE OF RESTRICTIONS. At the end of the applicable
Restricted Period or at such earlier time as provided for herein, all
restrictions contained in the Plan and the applicable Restricted Stock
Agreement shall terminate as to the related Restricted Stock, and certificates
for the appropriate number of shares of Stock free of the restrictions of the
Plan and the Restricted Stock Agreement, registered in the name of the grantee,
shall be delivered to the grantee or his or her beneficiary or estate, as the
case may be.
7.9 AWARDS HELD BY THIRD PARTIES. Notwithstanding any provision
to the contrary herein, the Committee may, in lieu of Awards of Restricted
Stock made directly to Employees, grant Restricted Stock to one or more
nominees or trustees for the benefit of such Employees of the Company and its
Subsidiaries as the Committee may designate. In such event, the rights of such
Employees in the Restricted Stock so granted are to be governed exclusively by
such terms of trust, or otherwise as are approved by the Committee. The
Committee shall administer the Plan, and make provisions relative to any such
Awards, in a manner designed to provide the Employees with rights and
entitlements which shall approximate as closely as possible those rights and
entitlements specified in this Article.
<PAGE> 30
ARTICLE VIII
RIGHTS AS AN EMPLOYEE
8.1 NO IMPLIED RIGHTS. Awards under the Plan are discretionary
and are not a part of regular salary. Awards may not be used in determining
the amount of compensation for any purpose under any benefit plan of the
Company or any Subsidiary, except as the Committee may from time to time
expressly provide. Neither the Plan nor any action taken hereunder shall be
construed as giving any Employee the right to any Award, and an Award under the
Plan shall not be construed as giving any Employee any right to be retained in
the employ or service of the Company or any of its Subsidiaries for any period
of time, regardless of the terms or conditions of the Award or the manner in
which such terms or conditions are described in the applicable Award
instrument.
8.2 BENEFICIARY DESIGNATION. If allowed by the Committee from
time to time, a grantee may designate a person or persons to receive, in the
event of his or her death, any rights to which he or she would be entitled
under the Plan. Such a designation shall be made in writing and filed with the
Committee or such person as it may designate. A beneficiary designation may be
changed or revoked by a grantee at any time by filing a written statement of
such change or revocation with the Board. If a grantee dies having failed to
designate a beneficiary or if a grantee's beneficiary does not survive the
grantee, then the grantee's estate shall be deemed to be his or her
beneficiary.
ARTICLE IX
AMENDMENT OF THE PLAN
9.1 AMENDMENT OF PLAN. The Committee or the Board (excluding any
members thereof entitled to an Award under the Plan) may amend the Plan from
time to time, except that amendments must be approved by stockholders of the
Company to the extent required under Section 16(b) of the Securities Exchange
Act of 1934.
9.2 EFFECT ON AWARDS. Awards granted prior to suspension or
termination of the Plan may not be amended or cancelled except with the consent
of the grantee of the Award. Any dispute or disagreement that may arise under
or as a result of, relating to or pursuant to, any Award or contract evidencing
the same shall be determined by the Committee, which determination shall be
conclusive, binding and final for all purposes with respect to all persons.
ARTICLE X
CHANGES IN CAPITAL STRUCTURE
10.1 ADJUSTMENTS DUE TO CAPITAL CHANGES. The instruments
evidencing Awards granted hereunder shall be subject to adjustment in the event
of changes in the outstanding Stock of the Company by reason of Stock
dividends, Stock splits, recapitalizations, reorganizations, mergers,
consolidations, combinations, exchanges or other relevant changes in
capitalization occurring after the date of an Award to the same extent as would
affect an actual share of Stock issued and outstanding on the effective date of
such change. In the event of any such change, the aggregate number and classes
of shares for which Awards may thereafter be granted under this Plan shall be
appropriately adjusted as determined by the Committee so as to reflect such
change.
ARTICLE XI
WITHHOLDING OF TAXES
11.1 COLLECTION OF TAXES DUE. The Company and its Subsidiaries
shall have the right, before any certificate for any Stock is delivered, to
deduct or withhold from any payment owed to a grantee, any amount that is
necessary in order to satisfy any withholding requirement that the Company in
good faith believes is imposed upon it in connection with Federal, state, or
local taxes, including transfer taxes, as a result of the issuance of, or lapse
of restrictions on, such Stock, or otherwise require such grantee to make
provision for payment of any such withholding amount. Subject to such
conditions as may be established by the Company, the Company may extend to
grantees the choice to (i) have Stock otherwise issuable under an Award
withheld, (ii) tender back to the Company Stock received pursuant to an Award,
(iii) deliver to the Company previously acquired Stock, (iv) have funds
withheld from payments of wages, salary or other cash compensation due the
grantee or (v) pay the Company in cash, in order to satisfy part or all of the
obligations for any taxes required to be withheld or otherwise deducted and
paid by the Company or any such Subsidiary in respect of the Stock subject to
an Award. In the absence of other satisfactory arrangements, the Company may
act pursuant to clause (i) and/or, to the extent permitted by law, clause (iv)
above to the extent of an unsatisfied tax obligation and shall collect such
obligation accordingly. The grantee, by his or her acceptance of the grant,
will be deemed to have consented to such action(s).
11.2 PAYMENT; DELIVERY OF SHARES. Unless otherwise provided by the
Committee, the Company, in the discretion of its management and subject to such
rules and restrictions as it may establish from time to time, may:
(a) accept payment for the shares related to an Award by any
manner of lawful consideration permitted by applicable statute, including
stock of the same class as said shares;
(b) issue shares registered in the name of a grantee to the
custody of his or her broker when requested in writing by the Employee
with his or her exercise notice, and when preceded by full payment or the
broker's irrevocable commitment on behalf of the grantee to pay the
Company any balance due on the purchase price for such shares following
their issuance, whereupon such issuance and payment will be viewed as
contemporaneous; and
(c) allow grantees to start with one or more shares of Stock and
exercise an Option in full (no matter how many shares are covered by the
Option) by means of successions of partial exercise transactions in which
the grantee uses shares obtained on each exercise to purchase a larger
number of shares on the next exercise, and to represent the series of
transactions by a single purchase of the net amount of shares that
results from such series of transactions.
ARTICLE XII
GOVERNMENTAL AND OTHER REGULATIONS
12.1 EFFECT OF APPLICABLE LAWS. The Plan and any Award hereunder
shall be subject to all applicable Federal and state laws, rules, and
regulations and to such approvals by any regulatory or governmental agency as
may be required. The issuance or delivery of any Award or of any Stock under
an Award, may be postponed by the Company for such period as may be required to
comply with any applicable requirements under securities laws, any applicable
listing requirements of any national securities exchange or automated quotation
system where the Stock is listed, and requirements under any other law or
regulation applicable to the issuance or delivery of such Stock. The Company
shall not be obligated to issue or deliver any Stock if the issuance or
delivery thereof shall constitute a violation of any provision of any law or of
any regulation of any governmental authority or any national securities
exchange or automated quotation system where the Stock is listed. Other than
as expressly provided in subsection 7.9 herein, neither the Plan nor any Award
made hereunder shall create or be construed to create a trust or separate fund
of any kind or a fiduciary relationship between the Company or any of its
Subsidiaries and an Employee or any other person.
ARTICLE XIII
EFFECTIVE DATE AND TERM OF THE PLAN
13.1 EFFECTIVE DATE AND TERM. The Plan shall become effective upon
its adoption by the Board and its approval by the stockholder of the Company,
and shall continue until such time as it may be terminated by action of the
Board, the Committee or the stockholders of the Company.
