<PAGE> 1
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ---- to ----
Commission file number 1-5677
WANG LABORATORIES, INC.
-----------------------
(Exact name of registrant as specified in its charter)
DELAWARE 04-2192707
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
600 Technology Park Drive
Billerica, Massachusetts 01821-4130
------------------------ ----------
(Address of principal executive offices) (Zip Code)
(508) 967-5000
--------------
(Registrant's telephone number, including area code)
Not Applicable
--------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of l934 during
the preceding twelve months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
---
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X No
---
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practical date (December 31, 1995):
Common stock, par value $.01 per share 36,005,204 shares
<PAGE> 2
2
WANG LABORATORIES, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Part I. FINANCIAL INFORMATION PAGE NO.
<S> <C>
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheet - 3
December 31, 1995 and June 30, 1995
Condensed Consolidated Statement of Operations - 5
Three and six months ended December 31, 1995 and 1994
Condensed Consolidated Statement of Cash Flows - 6
Six months ended December 31, 1995 and 1994
Notes to Condensed Consolidated Financial Statements - 7
December 31, 1995
Item 2. Management's Discussion and Analysis of Financial 13
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 6. Exhibits and Reports on Form 8-K 20
SIGNATURE 24
</TABLE>
<PAGE> 3
3
WANG LABORATORIES, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
December 31, June 30,
1995 1995
------------ --------
<S> <C> <C>
ASSETS (Dollars in millions)
CURRENT ASSETS
Cash and equivalents $130.0 $182.4
Accounts receivable, net of allowances of
$13.5 million at December 31, 1995 and
$10.8 million at June 30, 1995 230.4 182.5
Inventories 26.0 24.4
Other current assets 38.0 37.2
------ ------
Total current assets 424.4 426.5
Depreciable assets, net of accumulated
depreciation of $89.3 million at
December 31, 1995 and $61.3 million
at June 30, 1995 122.2 134.4
Intangible assets, net 268.4 274.0
Other 26.8 25.8
------ ------
Total assets $841.8 $860.7
====== ======
</TABLE>
See notes to the condensed consolidated financial statements.
<PAGE> 4
4
WANG LABORATORIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET - (Continued)
(UNAUDITED)
<TABLE>
<CAPTION>
December 31, June 30,
1995 1995
------------ --------
(Dollars in millions)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Borrowings due within one year $ 2.9 $ 3.0
Accounts payable, accrued expenses and other 279.4 276.4
Income taxes 10.2 10.1
Deferred service revenue 82.2 93.3
------ ------
Total current liabilities 374.7 382.8
LONG-TERM LIABILITIES
Debt 24.1 23.0
Restructuring 7.9 9.0
Other liabilities 86.2 80.8
------ ------
Total long-term liabilities 118.2 112.8
4 1/2% Series A cumulative convertible
preferred stock, $.01 par value, 90,000
shares issued at December 31, 1995 and
June 30, 1995; redemption and liquidation
preference of $90.0 million 84.4 84.1
11% Exchangeable preferred stock, $.01 par value,
3,660,000 shares authorized, 2,914,325 issued
at December 31, 1995 and 2,836,326 at
June 30, 1995; redemption and liquidation
preference of $72.9 million 63.9 61.5
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 100,000,000
shares authorized; outstanding shares:
36,005,204 at December 31, 1995 and
33,907,759 at June 30, 1995 0.3 0.3
Capital in excess of par value 277.3 281.1
Cumulative translation adjustment (1.8) (0.5)
Accumulated deficit (75.2) (61.4)
------ ------
Total stockholders' equity 200.6 219.5
------ ------
Total liabilities and stockholders' equity $841.8 $860.7
====== ======
</TABLE>
See notes to the condensed consolidated financial statements.
<PAGE> 5
5
WANG LABORATORIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1995 1994 1995 1994
------ ------ ------ ------
(Dollars in millions, except per share data)
<S> <C> <C> <C> <C>
REVENUES
Product sales $109.7 $ 99.2 $192.6 $178.0
Service and other 182.8 117.3 364.1 230.9
------ ------ ------ ------
292.5 216.5 556.7 408.9
COSTS AND EXPENSES
Cost of product sales 72.6 70.5 127.3 125.3
Cost of service and other 122.2 76.1 246.3 147.5
Research and development 9.3 7.3 18.3 15.0
Selling, general and
administrative 67.0 49.1 126.5 99.4
Amortization of intangibles -
acquisition and fresh-start 11.0 6.6 21.4 13.2
Acquisition-related charges -- -- 27.2 --
------ ------ ------ ------
Total costs and expenses 282.1 209.6 567.0 400.4
------ ------ ------ ------
OPERATING INCOME (LOSS) 10.4 6.9 (10.3) 8.5
OTHER (INCOME) EXPENSE
Interest expense 1.2 0.8 2.2 1.6
Other income - net (2.9) (2.7) (5.9) (6.6)
------ ------ ------ ------
Total other income (1.7) (1.9) (3.7) (5.0)
------ ------ ------ ------
INCOME (LOSS) BEFORE INCOME TAXES 12.1 8.8 (6.6) 13.5
Provision for income taxes 5.2 4.5 7.2 7.2
------ ------ ------ ------
NET INCOME (LOSS) 6.9 4.3 (13.8) 6.3
Dividends and accretion on
preferred stock (3.4) (2.1) (6.8) (4.1)
------ ------ ------ ------
NET INCOME (LOSS) APPLICABLE TO
COMMON STOCKHOLDERS $ 3.5 $ 2.2 $(20.6) $ 2.2
====== ====== ====== ======
Weighted average shares and common
share equivalents outstanding
(in millions) 37.6 34.3 35.8 34.3
NET INCOME (LOSS) PER SHARE $ 0.09 $ 0.06 $(0.58) $ 0.06
====== ====== ====== ======
</TABLE>
See notes to the condensed consolidated financial statements.
<PAGE> 6
6
WANG LABORATORIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended December 31,
1995 1994
------ ------
(Dollars in millions)
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $(13.8) $ 6.3
Depreciation 28.0 13.7
Amortization 24.2 15.4
Non-cash provision for income taxes 6.8 6.9
Provision for acquisition-related charges 27.2 --
Payments of acquisition-related costs
and other charges (17.6) --
CHANGES IN OTHER ACCOUNTS AFFECTING OPERATIONS
Accounts receivable (40.7) (17.0)
Inventories 2.3 3.8
Other current assets (1.2) 5.4
Accounts payable and other current liabilities (13.5) (4.9)
Other (0.6) (2.0)
------ ------
Net changes in other accounts affecting
operations (53.7) (14.7)
------ ------
Net cash provided by operations before
restructuring payments and reorganization-
related items 1.1 27.6
Restructuring payments and reorganization-
related items (8.1) (32.2)
------ ------
Net cash used in operations (7.0) (4.6)
------ ------
INVESTING ACTIVITIES
Investment in depreciable assets (23.8) (9.4)
Investment in capitalized software (1.4) (3.0)
Business acquisitions, net of cash acquired (15.8) (3.7)
Other (3.6) (2.5)
------ ------
Net cash used in investing activities (44.6) (18.6)
------ ------
FINANCING ACTIVITIES
Payments of long-term debt (0.4) (0.6)
Increase (decrease) in short-term borrowings (0.7) 3.1
Dividends paid (2.0) --
Other 2.2 4.6
------ ------
Net cash provided by (used in)
financing activities (0.9) 7.1
------ ------
Effect of changes in foreign exchange rates
on cash 0.1 2.7
------ ------
DECREASE IN CASH AND EQUIVALENTS (52.4) (13.4)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 182.4 189.6
------ ------
CASH AND EQUIVALENTS AT END OF PERIOD $130.0 $176.2
====== ======
</TABLE>
See notes to the condensed consolidated financial statements.
<PAGE> 7
7
WANG LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
DECEMBER 31, 1995
NOTE A - BASIS OF PRESENTATION
During interim periods, the Company follows the accounting policies set forth in
its most recent Annual Report on Form 10-K, filed with the Securities and
Exchange Commission. Users of financial information produced for interim periods
are encouraged to refer to the footnotes contained in the most recent Annual
Report on Form 10-K when reviewing interim financial statements.
The results of operations for the periods reported are not necessarily
indicative of those that may be expected for the full year. However, in the
opinion of management, the accompanying interim financial statements contain all
material adjustments, consisting principally of normal recurring adjustments,
necessary to present fairly the financial condition, the results of operations
and cash flows of Wang Laboratories, Inc. and its consolidated subsidiaries for
the interim periods presented.
Earnings per share is based on the weighted average number of common shares
outstanding, including those yet to be distributed by the Disbursing Agent
appointed under the Company's Reorganization Plan, shares issued and held in
escrow in connection with the Avail Systems Corporation ("Avail") acquisition,
and the effect, when dilutive, of stock options and warrants. Net income(loss),
for purposes of calculating earnings per share, has been reduced by cumulative
dividends and accretion related to the Company's preferred stock.
As discussed in Note B, prior period financial statements have been restated to
include the financial statements of Avail.
Certain amounts in previously issued financial statements have been reclassified
to conform to current presentations.
NOTE B - BUSINESS ACQUISITIONS
On July 21, 1995 ("Closing Date"), the Company acquired Sigma Imaging Systems,
Inc. ("Sigma"), a privately held company that designs and markets workflow and
imaging software for paper-intensive businesses, including insurance, banking,
finance, utilities and government. The purchase price of $20.0 million consists
of $15.0 million in cash and $5.0 million in common stock of the Company. A cash
payment of $9.0 million was made on July 21, 1995 and $6.0 million is due to
former Sigma stockholders in February 1996. The common stock will be distributed
to former Sigma stockholders on January 3, 1997. The 299,176 shares of the
Company's common stock to be issued in connection with the acquisition of Sigma
was determined by dividing $5.0 million by $16.71, which was the average closing
sale price per share of the Company's common stock on the 20 consecutive trading
days ending on the trading day prior to the Closing Date.
The acquisition was accounted for using the purchase method of accounting in
accordance with Accounting Principles Board Opinion No. 16, "Business
Combinations" ("APB 16"). Under APB 16, purchase price allocations were made to
the assets acquired and the liabilities assumed based on their respective fair
values. The excess of costs over the fair value of the net assets acquired
totaled $6.3 million and is included in intangible assets.
<PAGE> 8
8
WANG LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
DECEMBER 31, 1995
NOTE B (Continued)
Acquisition-related charges consist of the following:
<TABLE>
<S> <C>
Sigma in-process research and
development $16.0
Capitalized software 6.6
Workforce-related and other 4.6
-----
Total $27.2
=====
</TABLE>
The in-process research and development charge consists of that portion of the
purchase price allocated to Sigma which was charged to operations because, in
management's opinion, technological feasibility for this purchased research and
development had not been established. Capitalized software write-offs pertain to
overlapping workflow software development efforts. Workforce-related charges,
consisting principally of Wang severance costs, were established based on
specific identification of employees to be terminated, along with their job
classifications or functions and their locations. Other charges relate to
customer transition commitments for discontinued Wang product offerings.
Cash outlays to complete the acquisition-related initiatives are estimated at
$3.9 million, and are anticipated to be generally completed during fiscal 1996.
On October 18, 1995, the Company acquired BISS Limited ("BISS"), a privately
held company operating in the United Kingdom that designs, installs, integrates
and supports network and client/server computing solutions. Of the $16.1 million
cash purchase price, $12.6 million was paid at closing, with the remainder of
$3.5 million due in March 1997.
The acquisition was accounted for using the purchase method of accounting in
accordance with APB 16. The excess of costs over the fair value of the net
assets acquired totaled $11.9 million and is included in intangible assets.
Pro forma results of operations are not presented for the Sigma and BISS
acquisitions as the amounts do not differ significantly from the Company's
historical results.
On December 18, 1995, the Company acquired Avail Systems Corporation ("Avail"),
a privately held company that develops software which automates the storage,
relocation, archiving and retrieval of information on a client/server PC
network. The Company exchanged approximately 1.8 million shares of its common
stock, to which a value of $18.00 per share was ascribed, in exchange for all of
the outstanding capital stock of Avail for a total purchase price of $32.2
million.
<PAGE> 9
9
WANG LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
DECEMBER 31, 1995
NOTE B (Continued)
The Avail acquisition was accounted for using the pooling of interests method of
accounting in accordance with APB 16. Prior period financial statements have
been restated from July 1, 1994 to reflect the combined results of the pooled
businesses. Summarized financial information of Avail and the resulting effect
on the prior period financial statements is as follows (in millions, except per
share data):
<TABLE>
<CAPTION>
Three months ended Six months ended
December 31, December 31,
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenues $ 0.2 $ 0.4 $ 0.3 $ 0.6
Operating loss $ (0.8) $ (0.8) $ (1.6) $ (1.6)
Net loss $ (1.3) $ (0.8) $ (2.1) $ (1.6)
Net loss per share $(0.03) $(0.03) $(0.06) $(0.05)
</TABLE>
<PAGE> 10
10
WANG LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
DECEMBER 31, 1995
NOTE C - OTHER BALANCE SHEET INFORMATION
Components of selected captions in the Condensed Consolidated Balance Sheet
follow (in millions):
<TABLE>
<CAPTION>
December 31, June 30,
1995 1995
------------ --------
<S> <C> <C>
Inventories
Finished products $ 14.5 $ 14.5
Raw materials and work-in-process 7.6 8.7
Service parts and supplies 3.9 1.2
------ ------
$ 26.0 $ 24.4
====== ======
Intangible assets
Trademarks and patents $ 23.0 $ 21.3
Computer software 35.0 42.2
Installed base - service 126.2 123.5
License agreements 29.9 29.9
Assembled workforce 16.1 11.7
Goodwill 38.0 18.9
Reorganization value in excess of amounts
allocated to identifiable assets 80.4 86.6
------ ------
348.6 334.1
Less accumulated amortization 80.2 60.1
------ ------
$268.4 $274.0
====== ======
Accounts payable, accrued expenses and other
Accounts payable $ 60.4 $ 62.3
Accrued expenses 109.9 93.1
Compensation and benefits 51.1 50.1
Restructuring and acquisition-
related accruals 37.9 56.6
Other 20.1 14.3
------ ------
$279.4 $276.4
====== ======
Other long-term liabilities
Postretirement benefits accrual $ 17.9 $ 18.5
Pension liability 7.2 8.2
Bull facilities accrual 15.4 16.5
Reorganization-related accruals 6.7 8.4
Insurance accruals 6.7 6.5
Acquisitions 8.5 --
Other 23.8 22.7
------ ------
$ 86.2 $ 80.8
====== ======
</TABLE>
<PAGE> 11
11
WANG LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
DECEMBER 31, 1995
NOTE D - CONTINGENCIES
On October 27, 1994, Wang filed suit against FileNet Corporation alleging the
infringement of five Wang patents covering a wide range of imaging and workflow
technologies. A sixth imaging patent was subsequently added. Wang is seeking
damages and injunctive relief. The parties are currently engaged in the
discovery process. The trial is currently scheduled for calendar 1996.
The Company is a defendant in several "repetitive stress injury" ("RSI") cases.
Such cases, which have been filed against a large number of computer
manufacturers, allege that the various defendants' keyboards caused the
plaintiffs' injuries. The Company believes that all RSI claims brought against
the Company arising before the confirmation of the Reorganization Plan will be
discharged pursuant to the Reorganization Plan. In addition, the Company has
maintained comprehensive general liability insurance policies with several
insurers. These policies indemnify the Company for bodily injury damages arising
out of its operations and products. Nevertheless, high deductibles,
retrospective premium adjustments, and other issues relating to insurance
coverage of RSI claims may significantly limit the amount of insurance coverage
available to the Company for such claims. Given the lack of legal precedent with
respect to RSI claims, the Company can predict neither the number of cases nor
the associated claims for damages that may be filed against the Company. To
date, approximately 60 claims have been made against the Company alleging
damages for RSI injuries. Claims for all but four of these have been filed as
part of the Company's Chapter 11 proceeding (the Company filed for Chapter 11
protection in August 1992 and effectively emerged from Chapter 11 on September
30, 1993). The Company intends to defend itself vigorously against any liability
asserted.
Prior to its filing for Chapter 11 protection, the Company was also a defendant
in a number of other lawsuits arising from the conduct of its business.
Substantially all such suits were stayed while the Company operated under
Chapter 11. Claims in such suits relating to periods prior to the Company's
filing under Chapter 11 are being extinguished and, to the extent allowed, have
been provided for under the Reorganization Plan. Although the Company is not in
a position to predict accurately the results of specific matters, the Company
does not currently believe that its liability, if any, for all litigation will
be material to the Company's consolidated financial position or its results of
operations.
On September 5, 1995, the Company filed suit in the United States District Court
for the Eastern District of Virginia against Decision One (formerly known as
Decision Servcom, Inc.) ("DSI"), alleging infringement by DSI of copyrights held
by the Company on the operating system software for the Company's VS line of
minicomputers. On February 3, 1996 the Company and DSI reached an agreement to
settle the lawsuit on terms acceptable to the Company.
<PAGE> 12
12
WANG LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
DECEMBER 31, 1995
NOTE E - SUBSEQUENT EVENT
On January 23, 1996, the Company announced that it has reached an agreement to
repurchase and retire all of the outstanding shares of its 11% Exchangeable
Preferred Stock, at the liquidation preference of $25.00 per share, for a total
of $72.9 million in cash. The retirement will result in a one-time dividend
reflecting the difference between the repurchase value and the carrying value of
the securities in the period in which the transaction is consummated. The
Company intends to fund the repurchase with proceeds from a new convertible
preferred stock offering to be sold to investors under Rule 144A.
<PAGE> 13
13
WANG LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The Company reported revenues of $292.5 million for the three months ended
December 31, 1995, a 35.1% increase compared to revenues of $216.5 million for
the same period of the prior year. Revenues for the six months ended December
31, 1995 increased by 36.2% to $556.7 million. The three and six months ended
December 31, 1995 include the results of the Bull businesses acquired in the
third quarter of fiscal 1995. The Company reported operating income of $10.4
million after amortization of fresh-start and acquired intangible assets of
$11.0 million for the three months ended December 31, 1995. This compares to
$6.9 million after amortization of fresh-start and acquired intangible assets of
$6.6 million for the three months ended December 31, 1994. For the six month
period ended December 31, 1995, the Company reported an operating loss of $10.3
million after acquisition-related charges of $27.2 million relating to the
acquisition of Sigma and $21.4 million of amortization of fresh-start and
acquired intangible assets. This compares to operating income of $8.5 million
for the six months ended December 31, 1994, which included $13.2 million of
amortization of fresh-start intangible assets.
The Company expects the decline in revenues from traditional sources (i.e.,
sales and service of proprietary VS products) to continue. The acquired Bull
proprietary product and service revenue streams are also expected to decrease,
but at a slower rate than the proprietary VS products and services. The addition
of the Bull service business adds a significant portion of multi-vendor service
("MVS") contracts to the Company's existing MVS revenues. The Company intends to
direct additional resources to the MVS business with the goal of continuing to
increase this revenue stream in the future. In addition to increasing service
revenue as a result of the Bull acquisition, the Company's plan is to increase
its revenue, over time, by increasing sales of software and related products and
services, along with other newer service offerings. This growth may also be
supplemented by business acquisitions. The Company is now focusing on providing
software and services to the office productivity segment of the information
processing industry, a market where the Company has name recognition and
established technological, professional and marketing expertise. The changes in
business mix are expected to result in increased volatility of quarterly
revenues.
Earnings before interest, income taxes, depreciation and amortization ("EBITDA")
amounted to $37.1 million for the second quarter, compared to $22.4 million for
the quarter ended December 30, 1994, an increase of 66.0%. EBITDA for the six
months ended December 31, 1995 was $70.2 million, compared to $40.2 million for
the comparable year-ago period. EBITDA was determined by excluding from the net
income(loss): acquisition-related charges; income taxes; interest expense;
interest income; depreciation and amortization.
On July 21, 1995, the Company completed the acquisition of Sigma for a purchase
price of $20.0 million, consisting of $15.0 million in cash and $5.0 million in
stock of the Company. Sigma designs and markets workflow and imaging software
for paper-intensive businesses. These products provide customers the scaleable,
enterprise-wide processing power required for high-volume, image-enabled
transaction processing applications. Sigma's products
<PAGE> 14
14
WANG LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
are used in some of the largest multi-site imaging and workflow systems in
operation today. Management believes Sigma products running on Microsoft
Corporation's Windows NT operating systems will allow Wang to benefit from
revenue growth opportunities made possible by its alliance with Microsoft
Corporation.
On October 18, 1995, the Company acquired BISS for a purchase price of $16.1
million in cash. BISS operates in the United Kingdom and designs, installs,
integrates and supports network and client/server computing solutions. This
acquisition advances the Company's objective to be a major worldwide provider of
network integration services.
On December 18, 1995, the Company acquired Avail in a pooling of interests
transaction valued at $32.2 million. Avail develops software which automates the
storage, relocation, archiving and retrieval of information on client/server
PC networks. This acquisition adds the next generation of storage management
technology to the Company's workflow and imaging systems. Additionally, the
Company's alliance with Microsoft Corporation has been expanded to include
co-development of storage management products using the Avail technology for
future Microsoft products.
The Company has begun shipment of its workflow and imaging software designed to
run on Microsoft Corporation's Windows NT server and BackOffice software. As
part of the Company's alliance with Microsoft, the Company was designated as the
preferred vendor of imaging and workflow systems, and is working closely with
Microsoft in the definition of the standards which would enable interoperability
between production workflow systems and electronic messaging systems.
Product revenues for the second quarter increased by 19.2% to $59.1 million in
the United States, while international product revenues increased by 2.0% to
$50.5 million from the comparable prior year period. Product revenues for the
six months ended December 31, 1995 increased by 16.9% to $101.6 million in the
United States, while international product revenues remained unchanged at $91.0
million, compared to the six months ended December 31, 1994. Proprietary product
sales totaled $19.0 million and $17.7 million for the three months ended
December 31, 1995 and 1994, respectively. For the six months ended December 31,
1995 and 1994, proprietary product sales were $37.3 million and $36.5 million,
respectively. Bull proprietary product sales of $7.3 million and $14.2 million
were included in the three and six month periods ended December 31, 1995.
Network product and other product sales totaled $79.6 million and $76.5 million
for the three months ended December 31, 1995 and 1994, respectively. Network
product and other product sales were $135.6 million and $133.1 million for the
six months ended December 31, 1995 and 1994, respectively. Open software product
revenues more than doubled for the three and six month periods to $11.1 million
and $19.7 million, respectively, from $5.0 million and $8.4 million during the
comparable periods ended December 31, 1994.
Service and other revenues for the three and six months ended December 31, 1995
in the United States increased two-fold to $102.0 million and $202.9 million,
respectively, while international service and other revenues increased by 20.3%
and 22.2% to $80.8 million and $161.2 million, compared to
<PAGE> 15
15
WANG LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
the same periods of the prior year. Increased service and other revenues are
mainly due to the acquisition of the Bull businesses in the third quarter of
fiscal 1995. Proprietary services increased $11.6 million and $31.4 million for
the three and six months ended December 31, 1995, respectively, as a result of a
$31.0 million and $69.0 million increase in Bull proprietary product services
revenue. These increases were partially offset by $19.4 million and $37.6
million decreases in Wang proprietary product services revenue over the
comparable periods of the prior year. Proprietary maintenance revenues continue
to decline at an annualized rate which is at the high end of the range of recent
historical experience and management expectations. Network services increased
$52.7 million and $100.0 million for the three and six months ended December 31,
1995, compared to the same period of the prior year. This increase was mainly
due to increased third party maintenance contracts acquired from Bull. Open
software services totaled $1.3 million and $2.0 million for the three and six
months ended December 31, 1995.
Product gross margin for the three months ended December 31, 1995 increased to
33.8% from 28.9% in the comparable period of the prior year. For the six months
ended December 31, 1995, product gross margin increased to 33.9% from 29.6% in
the comparable period of the prior year. This increase was due to changes in
product mix, particularly the increased volume of open software and the addition
of high-margin Bull products.
Gross margin for service and other revenues for the three months ended December
31, 1995 decreased to 33.2% from 35.1% in the comparable period of the prior
year. Gross margin for the three months ended December 31, 1995 benefitted from
agency fee revenues which are expected to be minimal going forward. For the six
months ended December 31, 1995, gross margin for service and other revenues
decreased to 32.3% from 36.1% in the comparable period of the prior year.
Margins continue to be negatively affected by the increase in lower-margin
maintenance on multi-vendor service products and the decline in revenues on the
Company's proprietary maintenance contracts along with competitive and
technological pressures. The Company expects these factors to continue to exert
pressure on margins. The Bull acquisition has reduced the gross margin because
the gross margin on its maintenance contracts is historically lower than the
margins on the Company's maintenance contracts.
Research and development costs in the three months ended December 31, 1995
increased by $2.0 million, or 27.4%, over the prior year period, representing
3.2% and 3.4% of revenues for the three months ended December 31, 1995 and 1994,
respectively. For the six months ended December 31, 1995, research and
development costs increased $3.3 million, or 22.0%, over the prior year period,
representing 3.3% and 3.7% of revenues for the six months ended December 31,
1995 and 1994, respectively. The increase is due to the business acquisitions.
The Company's development efforts are largely focused on developing software for
open systems platforms, with some modest level of spending directed to
continuing support of its proprietary VS products.
Selling, general and administrative expenses in the three months ended December
31, 1995 increased $17.9 million, or 36.5%, from the prior year comparable
quarter. Selling, general and administrative expenses increased
<PAGE> 16
16
WANG LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
$27.1 million, or 27.3%, for the six months ended December 31, 1995. Selling,
general and administrative expenses represented 22.9% and 22.7% of revenues for
the three months ended December 31, 1995 and 1994, respectively, and 22.7% and
24.3% for the six months ended December 31, 1995 and 1994, respectively. The
increased expenses are mainly due to the Bull, Sigma, BISS, and Avail
acquisitions. Offsetting these increases were acquisition-related initiatives
and restructuring programs which continued to contribute significantly to the
elimination of unnecessary or redundant programs, personnel, support costs and
other related expenses.
Amortization of fresh-start and acquired intangible assets totaled $11.0 million
and $21.4 million for the three and six months ended December 31, 1995,
respectively. Amortization for the three months ended December 31, 1995 includes
$6.3 million related to the implementation of fresh-start reporting as of
September 30, 1993 and $4.7 million for intangible assets established in
connection with business acquisitions. For the six months ended December 31,
1995, amortization of $12.8 million was recorded relating to fresh-start
reporting and $8.6 million was recorded for business acquisitions, mainly Bull.
Amortization of $6.6 million and $13.2 million for the three and six months
ended December 31, 1994, respectively, relates to the implementation of
fresh-start reporting.
Interest expense increased to $1.2 million and $2.2 million for the three and
six months ended December 31, 1995, respectively, from $0.8 million and $1.6
million for the comparable periods of the prior year. This increase is
principally a result of interest on the acquisition note payable to Bull. Other
income was primarily comprised of interest income, which totaled $2.1 million
and $1.9 million for the three months ended December 31, 1995 and 1994,
respectively, and $4.8 million and $4.0 million for the six months ended
December 31, 1995 and 1994, respectively.
The provision for income taxes totaled $5.2 million and $4.5 million for the
three months ended December 31, 1995 and 1994, respectively, and $7.2 million
for each of the six month periods ended December 31, 1995 and 1994. Included in
the tax provision was $5.0 million and $4.5 million of non-cash expense for the
three months ended December 31, 1995 and 1994, respectively, relating to the
utilization of the Company's net operating loss carryforwards. For the six
months ended December 31, 1995 and 1994, the non-cash expense totaled $6.8
million and $6.9 million, respectively. Under fresh-start reporting, realization
of these net operating loss carryforwards is recognized as a reduction of
Reorganization value in excess of amounts allocated to identifiable intangible
assets.
At December 31, 1995, the Company employed approximately 7,000 people in
continuing operations, compared to 4,800 at December 31, 1994. Acquisitions were
the primary reason for increased personnel levels.
<PAGE> 17
17
WANG LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Liquidity and Sources of Capital
Cash and equivalents decreased $52.4 million to $130.0 million, primarily due to
working capital needs, payments for restructuring, reorganization and
acquisition-related items and cash used for the Sigma and BISS acquisitions.
This compares to a $13.4 million decrease in the same period of the prior year.
Cash provided by operations before restructuring and reorganization-related
items of $1.1 million and used for restructuring and reorganization-related
items of $8.1 million, resulted in net cash used in operations of $7.0 million
for the six months ended December 31, 1995. This compares to cash provided by
operations before restructuring and reorganization-related items of $27.6
million, offset by payments of restructuring and reorganization-related items of
$32.2 million, resulting in $4.6 million net cash used in operations for the six
months ended December 31, 1994. Cash provided by operations before restructuring
payments and reorganization-related items for the six months ended December 31,
1995 includes $17.6 million for payments of acquisition-related costs and other
charges. Higher levels of receivables utilized $40.7 million of cash in the six
months ended December 31, 1995, compared to cash utilized of $17.0 million in
the comparable period of the prior year. Lower accounts payable and other
current liabilities resulted in reductions of $13.5 million and $4.9 million for
the six months ended December 31, 1995 and 1994, respectively. Receivable days
sales outstanding increased to 68 days at December 31, 1995 compared to 54 days
at December 31, 1994, and relates primarily to the inclusion of the acquired
Bull businesses, billing and collection delays caused by the implementation of
new financial systems, the inability to collect accounts receivable from the
U.S. government due to federal budgeting issues and shut-down constraints and
the reduction in deferred revenue resulting from the changing business mix. The
inventory turnover rate was 10.2 times at both December 31, 1995 and 1994.
Net cash used in investing activities totaled $44.6 million for the six months
ended December 31, 1995 compared to $18.6 million for the same period of the
prior year. Investment in depreciable assets increased by $14.4 million,
primarily due to the acquisition of the Bull businesses. Cash paid for business
acquisitions, net of cash acquired, of $15.8 million is comprised of $7.9
million each for Sigma and BISS.
Net cash used in financing activities totaled $0.9 million for the six months
ended December 31, 1995 compared to net cash provided by financing activities of
$7.1 million in the same period of the prior year. Short-term borrowings
resulted in cash used of $0.7 million for the six months ended December 31, 1995
compared to cash provided of $3.1 million for the same period of the prior year.
Cash dividends of $2.0 million were paid on the 11% Exchangeable Preferred
Stock for the three months ended December 31, 1995.
At December 31, 1995, in addition to the cash balance on hand, the parent
company had available to it the unused portions of the BT Commercial Corporation
("BTCC") financing arrangement, providing for borrowings and/or the issuance of
additional letters of credit of up to $88.3 million.
In addition to normal operating activities, expected cash requirements over the
next twelve months include approximately $39 million for acquisition-related
costs and other charges and previously recorded restructuring and
reorganization-related items.
<PAGE> 18
18
WANG LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Liquidity and Sources of Capital (Continued)
Dividend requirements of the Company's outstanding 11% Exchangeable Preferred
Stock can be satisfied in either cash or payment-in-kind, at the option of the
Company, through September 30, 1996. Cash dividends of $2.0 million were paid on
the 11% Exchangeable Preferred Stock for the three months ended December 31,
1995. Dividends after September 30, 1996 must be paid in cash. Payment of cash
dividends on 4 1/2% Series A Cumulative Convertible Preferred Stock is currently
prohibited by the terms of the 11% Exchangeable Preferred Stock and the BTCC
financing agreement. Accrued and unpaid dividends amounted to $2.2 million at
December 31, 1995.
The Company believes that existing cash balances, cash generated from
operations, and borrowing availability under the BTCC facility will be
sufficient to meet the parent company's and subsidiaries' cash requirements for
operations for the next twelve months, and to complete the planned
acquisition-related and restructuring efforts. As part of furthering its
business strategy, the Company explores the acquisition of or the opportunity
for strategic relationships with other businesses on an on-going basis. One or
more of these opportunities could have an impact on the Company's liquidity
through the use of cash or the issuance of debt, or result in the issuance of
additional equity securities of the Company.
On January 23, 1996, the Company announced that it had reached an agreement to
repurchase and retire all of the outstanding shares of its 11% Exchangeable
Preferred Stock, at the liquidation preference of $25.00 per share, for a total
of $72.9 million in cash. The Company intends to fund the repurchase with
proceeds from a new convertible preferred stock offering to be sold to investors
under Rule 144A.
<PAGE> 19
19
PART II - OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Stockholders was held on November
21, 1995. The following three Class II directors were elected to serve for a
three year term: Marcia J. Hooper, Joseph J. Kroger and Paul E. Tsongas.
The term of office of the following Class I and Class III
directors continued after the meeting: Joseph M. Tucci, Raymond C. Kurzweil,
Frederick A. Wang, David A. Boucher, Axel J. Leblois.
The stockholders approved the following matters at the meeting:
<TABLE>
<CAPTION>
VOTES VOTES BROKER
FOR AGAINST ABSTENTIONS NON-VOTES
---------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Marcia J. Hooper,
nominee as Class II
director 29,514,899
Joseph J. Kroger,
nominee as Class II
director 29,517,662
Paul E. Tsongas,
nominee as Class II
director 29,517,034
An amendment to the
Company's Employees'
Stock Incentive Plan
increasing the number
of shares of Common
Stock available
under the Plan 19,121,061 5,910,661 106,655 4,482,839
Ratification of Ernst &
Young LLP as independent
auditors for the
current fiscal year 29,565,230 19,278 36,708
</TABLE>
<PAGE> 20
20
ITEM 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are included herein:
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------------------------------------
<S> <C>
2.1(1) The Amended and Restated Reorganization Plan of Wang
Laboratories, Inc. and Official Committee of Unsecured
Creditors dated September 30, 1993
3.1(2) Certificate of Incorporation
3.2(12) Amended and Restated Certificate of Stock Designation with
respect to the 11% Preferred Stock
3.3(1) By-laws of the Registrant
3.4(9) Certificate of Incorporation, as amended
3.5(13) Certificate of Stock Designation with respect to the 4 1/2%
Series A Cumulative Convertible Preferred Stock
3.6 ByLaws of the Registrant, As Amended
10.1(3) Stock Incentive Plan
10.2(3) 1993 Directors' Stock Option Plan
10.3(4) Form of Contingent Severance Compensation Agreements with
Donald P. Casey, J.J. Van Vuuren, Albert A. Notini, William
P. Ferry, David I. Goulden, Bruce A. Ryan, James J. Hogan
and Franklyn A. Caine, each an executive officer of the
Company
10.4(5) Contingent Severance Compensation Agreement with Joseph M.
Tucci
10.5(7) Employment Agreement with Joseph M. Tucci, as amended
10.6(6) Employment Agreement with Donald P. Casey
10.7(7) Employment Agreement with William P. Ferry
10.8(7) Employment Agreement with James J. Hogan
10.9(3) Loan and Security Agreement with Congress Financial
Corporation, dated December 15, 1993
10.10(5) Termination Agreement between the Registrant and Michael Mee
10.11(5) Form of Stock and Warrant Subscription Agreement, dated
September 20, 1993
</TABLE>
<PAGE> 21
21
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------------------------------------
<S> <C>
10.12(3) Form of Registration Rights Agreement for Securities, dated
December 17, 1993
10.13(5) Consulting Employment Agreement of Stephen G. Jerritts
10.14(3) Consulting Agreement of Raymond C. Kurzweil
10.15(5) Employee Retention Agreement with William P. Ferry
10.16(5) Employee Retention Agreement with James J. Hogan
10.17(5) Employment Agreement with Bruce A. Ryan
10.18(7) Form of Non-Negotiable Security Promissory Note from Joseph
M. Tucci to the Registrant
10.19(7) Form of Pledge Agreement with Joseph M. Tucci
10.20(7) Form of Non-Negotiable Secured Promissory Note from Donald
P. Casey to the Registrant
10.21(7) Form of Pledge Agreement with Donald P. Casey
10.22(8) Stock Incentive Plan, as Amended
10.23(9) Contingent Severance Compensation, as Amended with Franklyn
A. Caine
10.24(9) Employees' Stock Incentive Plan
10.25(9) 1995 Director Stock Option Plan
10.26(10) The Asset and Stock Purchase Agreement among Wang
Laboratories, Inc., Bull HN Information Systems, Inc., Bull
S.A. and, for certain purposes, Compagnie de Machines Bull
dated as of December 30, 1994 and a Credit Agreement among
Wang Laboratories, Inc., HFS, Inc. and certain lenders and
agents named therein and Banker's Trust Company dated
January 30, 1995
10.27(11) Employment Agreement with Ronald A. Cuneo
10.28(13) Employment Agreement with Joseph M. Tucci, as Amended
10.29(13) Employment Agreement with Donald P. Casey, as Amended
10.30(13) Employment Agreement with Stephen G. Jerritts
</TABLE>
<PAGE> 22
22
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------------------------------------
<S> <C>
10.31(14) Form of Contingent Severance Compensation Agreements with
Stephen G. Jerritts and Ronald E. Cuneo
10.32(14) Form of Amendment to Contingent Severance Compensation
Agreements with Joseph M. Tucci, Donald P. Casey, Albert A.
Notini, William P. Ferry, David I. Goulden, James J. Hogan,
Stephen G. Jerritts and Franklyn A. Caine, each an executive
officer of the Company
10.33 Non-Negotiable Secured Promissory Note, as Amended from
Joseph M. Tucci to the Registrant
10.34 Non-Negotiable Promissory Note, as Amended from Donald P.
Casey to the Registrant
10.35 Pledge Agreement, as Amended, from Joseph M. Tucci to the
Registrant
10.36 Pledge Agreement, as Amended, from Donald P. Casey to the
Registrant
10.37 1994 Employee's Stock Incentive Plan, as Amended
10.38 Employment Agreement with Robert K. Weiler
10.39 Contingent Severance Compensation Agreement with Robert K.
Weiler
10.40 Non Qualified Option Agreement for Robert K. Weiler
10.41 Form of Amendment to Employment Letter Agreement for David
I. Goulden, William P. Ferry, Albert A. Notini and Franklyn
A. Caine
10.42 Employment Agreement of Joseph M. Tucci, as amended
10.43 Form of Long Term Incentive Option Agreement for Messrs.
Tucci, Caine, Casey, Cuneo, Ferry, Goulden, Hogan, Jerritts,
Notini, and Van Vuuren
11.1 Statement of Computation of Earnings per Share
12.1 Statement of Computation of Earnings to Fixed Charges
</TABLE>
(b) During the quarter ended December 31, 1995, the Registrant filed
a current report on Form 8-K dated December 7, 1995 relating to the
acquisition by the Registrant of all the issued and outstanding stock of
Avail Systems Corporation.
(1) Filed as an Exhibit to the Registrant's Registration Statement on Form 8-A
(File No. 0-22470), filed on September 27, 1993.
<PAGE> 23
23
(2) Filed as an Exhibit to the Registrant's Registration Statement on Form S-8
(File No. 33-73210), filed on December 21, 1993.
(3) Filed as an Exhibit to the Registrant's quarterly report on Form 10-Q for
the quarter ended December 31, 1993.
(4) Filed as an Exhibit to the Registrant's quarterly report on Form 10-Q for
the quarter ended March 31, 1994.
(5) Filed as an Exhibit to the Registrant's Registration Statement on Form S-1,
as amended (File No. 33-81526) filed September 13, 1994.
(6) Filed as an Exhibit to the Registrant's annual report on Form 10-K for the
fiscal year ended June 30, 1993.
(7) Filed as an Exhibit to the Registrant's annual report on Form 10-K for the
fiscal year ended June 30, 1994.
(8) Filed as an Exhibit to the Registrant's quarterly report on Form 10-Q for
the quarter ended September 30, 1994.
(9) Filed as an Exhibit to the Registrant's quarterly report on Form 10-Q for
the quarter ended December 31, 1995.
(10) Filed as an Exhibit to the Registrant's Current Report of Form 8-K dated
January 31, 1995.
(11) Filed as an Exhibit to the Registrant's quarterly report on Form 10-Q for
the quarter ended March 31, 1995.
(12) Filed as an Exhibit to the Registration Statement on Form S-3 (File No.
33-58717), filed April 19, 1995.
(13) Filed as an Exhibit to the Registrant's annual report on Form 10-K for the
fiscal year ending June 30, 1995.
(14) Filed as an Exhibit to the Registrant's report on Form 10-Q/A for the
quarter ended September 30, 1995.
<PAGE> 24
24
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DATE: February 14, 1996
WANG LABORATORIES, INC.
/s/ FRANKLYN A. CAINE
-----------------------------
Franklyn A. Caine,
Executive Vice President and
Chief Financial Officer
<PAGE> 1
Exhibit 3.6
AMENDMENT TO BY-LAWS
ADOPTED 12/20/95
BY-LAW FOR ADVANCE NOTICE OF
STOCKHOLDER NOMINATIONS OF DIRECTORS
Article II, Section 4. Only persons who are nominated in accordance with
the following procedures shall be eligible for election as directors of the
Corporation, except as may be otherwise provided in the Certificate of
Incorporation of the Corporation with respect to the right of holders of
preferred stock of the Corporation to nominate and elect a specified number of
directors in certain circumstances. Nominations of persons for election to the
Board of Directors may be made at any annual meeting of stockholders, or at any
special meeting of stockholders called for the purpose of electing directors,
(a) by or at the discretion of the Board of Directors (or any duly authorized
committee thereof) or (b) by any stockholder of the Corporation (i) who is a
stockholder of record on the date of the giving of the notice provided for in
this Section 4 and on the record date for the determination of stockholders
entitled to vote at such meeting and (ii) who complies with the notice
procedures set forth in this Section 4.
In addition to any other applicable requirements, for a nomination to be
made by a stockholder, such stockholder
<PAGE> 2
must have given timely notice thereof in proper written form to the Secretary of
the Corporation.
To be timely, a stockholder's notice to the Secretary must be delivered
to or mailed and received at the principal executive offices of the Corporation
(a) in the case of an annual meeting, not less than sixty (60) days nor more
than ninety (90) days prior to the anniversary date of the immediately preceding
annual meeting of stockholders; provided, however, that in the event that the
annual meeting is called for a date that is not within thirty (30) days before
or after such anniversary date, notice by the stockholder in order to be timely
must be so received not later than the close of business on the tenth (10th) day
following the day on which such notice of the date of the annual meeting was
mailed or such public disclosure of the date of the annual meeting was made,
whichever first occurs; and (b) in the case of a special meeting of stockholders
called for the purpose of electing directors, not later than the close of
business on the tenth (10th) day following the day on which notice of the date
of the special meeting was mailed or public disclosure of the date of the
special meeting was made, whichever first occurs.
To be in proper written form, a stockholder's notice to the Secretary
must set forth (a) as to each person whom the stockholder proposes to nominate
for election as a director (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or employment of the
person, (iii) the class or series and number of shares of capital stock of the
Corporation which are owned beneficially or of record by the person and (iv) any
other information relating to
<PAGE> 3
the person that would be required to be disclosed in a proxy statement or other
filings required to be made in connection with solicitations of proxies for
election of directors pursuant to Section 14 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations promulgated
thereunder; and (b) as to the stockholder giving the notice (i) the name and
record address of such stockholder, (ii) the class or series and number of
shares of capital stock of the Corporation which are owned beneficially or of
record by such stockholder, (iii) a description of all arrangements or
understandings between such stockholder and each proposed nominee and any other
person or persons (including their names) pursuant to which the nomination(s)
are to be made by such stockholder, (iv) a representation that such stockholder
intends to appear in person or by proxy at the meeting to nominate the persons
named in its notice and (v) any other information relating to such stockholder
that would be required to be disclosed in a proxy statement or other filings
required to be made in connection with solicitations of proxies for election of
directors pursuant to Section 14 of the Exchange Act and the rules and
regulations promulgated thereunder. Such notice must be accompanied by a written
consent of each proposed nominee to be named as a nominee and to serve as a
director if elected.
No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set forth in this
Section 4. If the Chairman of the meeting determines that a nomination was not
made in accordance with the foregoing procedures, the Chairman shall declare to
the
<PAGE> 4
meeting that the nomination was defective and such defective nomination shall be
disregarded.
<PAGE> 5
BY-LAW FOR ADVANCE NOTICE OF
PROPOSED BUSINESS AT ANNUAL MEETING
Article III, Section 2. No business may be transacted at an annual
meeting of stockholders, other than business that is either (a) specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the Board of Directors (or any duly authorized committee thereof), (b) otherwise
properly brought before the annual meeting by or at the direction of the Board
of Directors (or any duly authorized committee thereof) or (c) otherwise
properly brought before the annual meeting by any stockholder of the Corporation
(i) who is a stockholder of record on the date of the giving of the notice
provided for in this Section 2 and on the record date for the determination of
stockholders entitled to vote at such annual meeting and (ii) who complies with
the notice procedures set forth in this Section 2.
In addition to any other applicable requirements, for business to be
properly brought before an annual meeting by a stockholder, such stockholder
must have given timely notice thereof in proper written form to the Secretary of
the Corporation.
To be timely, a stockholder's notice to the Secretary must be delivered
to or mailed and received at the principal executive offices of the Corporation
not less than sixty (60) days nor more than ninety (90) days prior to the
anniversary date of the immediately preceding annual meeting of stockholders;
provided, however, that in the event that the annual meeting is called for
<PAGE> 6
a date that is not within thirty (30) days before or after such anniversary
date, notice by the stockholder in order to be timely must be so received not
later than the close of business on the tenth (10th) day following the day on
which such notice of the date of the annual meeting was mailed or such public
disclosure of the date of the annual meeting was made, whichever first occurs.
To be in proper written form, a stockholder's notice to the Secretary
must set forth as to each matter such stockholder proposes to bring before the
annual meeting (i) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting, (ii) the name and record address of such stockholder, (iii) the
class or series and number of shares of capital stock of the Corporation which
are owned beneficially or of record by such stockholder, (iv) a description of
all arrangements or understandings between such stockholder and any other person
or persons (including their names) in connection with the proposal of such
business by such stockholder and any material interest of such stockholder in
such business and (v) a representation that such stockholder intends to appear
in person or by proxy at the annual meeting to bring such business before the
meeting.
No business shall be conducted at the annual meeting of stockholders
except business brought before the annual meeting in accordance with the
procedures set forth in this Section 2, provided, however, that, once business
has been properly brought
<PAGE> 7
before the annual meeting in accordance with such procedures, nothing in this
Section 2 shall be deemed to preclude discussion by any stockholder of any such
business. If the Chairman of an annual meeting determines that business was not
properly brought before the annual meeting in accordance with the foregoing
procedures, the Chairman shall declare to the meeting that the business was not
properly brought before the meeting and such business shall not be transacted.
<PAGE> 1
Exhibit 6.2
Example of Gross-Up Payment Calculation
If the Executive, absent the Gross-Up Payment, were entitled to
Severance Payments in the amount of $300,000, had other Excess Parachute
Payments as the result of option vesting acceleration in the amount of $100,000,
had a Base Amount for purposes of ss.280G in the amount of $100,000, and were
subject to excise tax at the rate of 20% and income tax at the rate of 50%, the
Executive's Total Payments before the Gross-Up Payment would equal $400,000. The
excise tax payable on the Total Payments (not including the Gross-Up Payment)
would be $60,000 [(400,000 - 100,000 {the Base Amount}) x 20%] and the Gross-Up
Payment would be $200,000 [$60,000 / {1 - (.2 + .5)}]. Accordingly, the
Executive's Total Payments including the Gross-Up Payment would be $600,000
[400,000 + 200,000]. The Excise Tax on the Total Payments would be $100,000
[600,000 - 100,000 {the Base Amount}) x 20%], and the income taxes on the
Gross-Up Payment would be $100,000 [200,000 x 50%]. Accordingly, the net amount
retained by the Executive after payment of Excise Tax on the Total Payments and
income taxes on the Gross-Up Payments equals $400,000 [600,000 - 200,000], which
equals the Executive's Total Payments before calculation of the Gross-Up
Payment.
1
<PAGE> 1
Exhibit 10.33
AMENDMENT NO. 1 TO
NON-NEGOTIABLE SECURED PROMISSORY NOTE
Amendment No. 1 to Non-Negotiable Secured Promissory Note made as of
this 27th day of September, 1995 between Joseph M. Tucci (the "Maker") and Wang
Laboratories, Inc., a Delaware corporation (the "Company");
WHEREAS, the Maker issued a promissory note dated June 21, 1994 (the
"Note") to the Company;
WHEREAS, the note provides for payment of one-half of the principal
amount of the Note, together with all accrued interest to such date, on June 21,
1995 and payment of the balance of the principal amount of the Note, together
with all accrued and unpaid interest to such date, on June 21, 1996; and
WHEREAS, the Company and the Maker desire to modify the payment schedule
under the Note;
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, the Maker and the Company agree, with the intent to be
bound hereby, as follows:
1. The fifth paragraph of the Note is amended and restated in its entirety
as follows:
NOW, THEREFORE, FOR VALUE RECEIVED, the Maker promises to pay to the
Company, at the offices of the Company, the principal sum of
$355,071.01, plus interest, accruing from and after December 1, 1994, on
the unpaid principal balance of this Note from time to time outstanding
on and after such date at the rate of 3.0% per year. One-fourth of the
principal amount of this Note, together with all accrued and unpaid
interest to such date, shall be due and payable on each of February 28,
1996, August 31, 1996, February 28, 1997 and June 30, 1997.
2. The sixth paragraph of the Note is amended and restated in its entirety
as follows:
Payment of this Note is secured pursuant to a Pledge Agreement, dated as
of June 21, 1994, as amended as of date hereof, between the Maker and
the Company (the "Pledge Agreement").
<PAGE> 2
3. The thirteenth paragraph of the Note is deleted in its entirety.
In all other respects the Note hereby is ratified and confirmed and
shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1
to the Note to be duly executed as of the day and year first above written.
/s/ Joseph M. Tucci
---------------------------
Joseph M. Tucci
WANG LABORATORIES, INC.
By: /s/ Paul E. Tsongas
----------------------
Paul E. Tsongas
----------------------
(print name and title)
<PAGE> 1
Exhibit 10.34
AMENDMENT NO. 1 TO
NON-NEGOTIABLE SECURED PROMISSORY NOTE
Amendment No. 1 to Non-Negotiable Secured Promissory Note made as of
this 27th day of September, 1995 between Donald P. Casey (the "Maker") and Wang
Laboratories, Inc., a Delaware corporation (the "Company");
WHEREAS, the Maker issued a promissory note dated June 21, 1994 (the
"Note") to the Company;
WHEREAS, the note provides for payment of one-half of the principal
amount of the Note, together with all accrued interest to such date, on June 21,
1995 and payment of the balance of the principal amount of the Note, together
with all accrued and unpaid interest to such date, on June 21, 1996; and
WHEREAS, the Company and the Maker desire to modify the payment schedule
under the Note;
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, the Maker and the Company agree, with the intent to be
bound hereby, as follows:
1. The fifth paragraph of the Note is amended and restated in its entirety
as follows:
NOW, THEREFORE, FOR VALUE RECEIVED, the Maker promises to pay to the
Company, at the offices of the Company, the principal sum of
$345,807.20, plus interest, accruing from and after December 1, 1994, on
the unpaid principal balance of this Note from time to time outstanding
on and after such date at the rate of 3.0% per year. One-fourth of the
principal amount of this Note, together with all accrued and unpaid
interest to such date, shall be due and payable on each of February 28,
1996, August 31, 1996, February 28, 1997 and June 30, 1997.
2. The sixth paragraph of the Note is amended and restated in its entirety
as follows:
Payment of this Note is secured pursuant to a Pledge Agreement, dated as
of June 21, 1994, as amended as of date hereof, between the Maker and
the Company (the "Pledge Agreement").
<PAGE> 2
3. The thirteenth paragraph of the Note is deleted in its entirety.
In all other respects the Note hereby is ratified and confirmed and
shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1
to the Note to be duly executed as of the day and year first above written.
/s/ Donald P. Casey
-------------------------
Donald P. Casey
WANG LABORATORIES, INC.
By: /s/ Franklyn A. Caine
----------------------------
Executive Vice President and
Chief Financial Officer
----------------------------
(print name and title)
<PAGE> 1
Exhibit 10.35
AMENDMENT NO. 1 TO PLEDGE AGREEMENT
Amendment No. 1 to Pledge Agreement made as of this 27th day of
September, 1995 between Joseph M. Tucci ("Pledgor") and Wang Laboratories, Inc.,
a Delaware corporation ("Pledgee").
WHEREAS, Pledgor and Pledgee are parties to a Pledge Agreement dated as
of June 21, 1994 (the "Pledge Agreement"), which secures Pledgor's obligations
under a promissory note to Pledgee in the principal amount of $355,071.01, dated
June 21, 1994, and amended on the date hereof;
WHEREAS, Pledgor and Pledgee desire to amend the Pledge Agreement to
change the number of shares of Common Stock of Pledgee pledged to secure such
obligations;
NOW, THEREFORE, for good and valuable consideration, receipt of which is
acknowledged, the Pledgor and Pledgee agree, with the intent to be bound hereby,
as follows:
1. Section 1 of the Pledge Agreement is amended to reduce the number
of shares of common stock of Pledgee pledged to Pledgee to 33,592.
In all other respects, the Pledge Agreement hereby is ratified and
confirmed and shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 to Pledge Agreement as of the date first written above.
WANG LABORATORIES, INC.
By: /s/ Paul E. Tsongas
--------------------------
(print name and title)
Paul E. Tsongas
/s/ Joseph M. Tucci
-------------------------------
JOSEPH M. TUCCI
<PAGE> 2
Exhibit 10.36
AMENDMENT NO. 1 TO PLEDGE AGREEMENT
Amendment No. 1 to Pledge Agreement made as of this 27th day of
September, 1995 between Donald P. Casey ("Pledgor") and Wang Laboratories, Inc.,
a Delaware corporation ("Pledgee").
WHEREAS, Pledgor and Pledgee are parties to a Pledge Agreement dated as
of June 21, 1994 (the "Pledge Agreement"), which secures Pledgor's obligations
under a promissory note to Pledgee in the principal amount of $345,807.20, dated
June 21, 1994, and amended on the date hereof;
WHEREAS, Pledgor and Pledgee desire to amend the Pledge Agreement to
change the number of shares of Common Stock of Pledgee pledged to secure such
obligations;
NOW, THEREFORE, for good and valuable consideration, receipt of which is
acknowledged, the Pledgor and Pledgee agree, with the intent to be bound hereby,
as follows:
1. Section 1 of the Pledge Agreement is amended to reduce the number
of shares of common stock of Pledgee pledged to Pledgee to 32,307.
In all other respects, the Pledge Agreement hereby is ratified and
confirmed and shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 to Pledge Agreement as of the date first written above.
WANG LABORATORIES, INC.
By: /s/ Franklyn A. Caine
----------------------------
Executive Vice President and
Chief Financial Officer
----------------------------
(print name and title)
/s/ Donald P. Casey
--------------------------
DONALD P. CASEY
<PAGE> 1
Exhibit 10.36
AMENDMENT NO. 1 TO PLEDGE AGREEMENT
Amendment No. 1 to Pledge Agreement made as of this 27th day of
September, 1995 between Donald P. Casey ("Pledgor") and Wang Laboratories, Inc.,
a Delaware corporation ("Pledgee").
WHEREAS, Pledgor and Pledgee are parties to a Pledge Agreement dated as
of June 21, 1994 (the "Pledge Agreement"), which secures Pledgor's obligations
under a promissory note to Pledgee in the principal amount of $345,807.20, dated
June 21, 1994, and amended on the date hereof;
WHEREAS, Pledgor and Pledgee desire to amend the Pledge Agreement to
change the number of shares of Common Stock of Pledgee pledged to secure such
obligations;
NOW, THEREFORE, for good and valuable consideration, receipt of which is
acknowledged, the Pledgor and Pledgee agree, with the intent to be bound hereby,
as follows:
1. Section 1 of the Pledge Agreement is amended to reduce the number
of shares of common stock of Pledgee pledged to Pledgee to 32,307.
In all other respects, the Pledge Agreement hereby is ratified and
confirmed and shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 to Pledge Agreement as of the date first written above.
WANG LABORATORIES, INC.
By: /s/ Franklyn A. Caine
----------------------------
Executive Vice President and
Chief Financial Officer
----------------------------
(print name and title)
/s/ Donald P. Casey
--------------------------
DONALD P. CASEY
<PAGE> 1
Exhibit 10.37
WANG LABORATORIES, INC.
(A Delaware Corporation)
AMENDMENT NO. 1 TO
EMPLOYEES' STOCK INCENTIVE PLAN ("Plan")
Pursuant to a vote of the Board of Directors of Wang Laboratories, Inc.
(the "Company") on September 27, 1995 and approved by the Stockholders on
November 21, 1995 and pursuant to a vote of the Organization, Compensation and
Nominating Committee of the Board of Directors dated December 20, 1995, the Plan
has been amended as follows:
1. ARTICLE II, DEFINITIONS
Article 2.16 "Retirement" is amended and restated in its entirety as
follows:
"2.16 "Retirement" shall mean an Employees' cessation employment by
reason of retirement, provided that the Employee has reached the age of 65
years, or the Employee has reached as 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 it sole and absolute discretion, deems the Employee to have
retired."
2. ARTICLE III, ADMINISTRATION OF THE PLAN
Article 3.2 is amended by adding the following to the end of
subparagraph (b):
"The Committee shall endeavor to ensure that the total number of Awards
issued at a price which is below the fair market price of the Stock at the time
of grant, as determined by the Committee or, with a vesting period of less than
three years, will not exceed five percent of the total number of shares of stock
authorized for Awards under the Plan."
3. ARTICLE IV, ELIGIBILITY AND SHARES SUBJECT TO THE PLAN
The first sentence of Article 4.3 is amended and restated in its
entirety as follows:
"Subject to the provisions of Article X of this Plan and any
authorization of additional shares of Stock for the purposes hereof, the
aggregate number of shares of Stock for which Awards may be granted under this
Plan shall not exceed 4,817,153 shares, plus those shares of Stock which were
covered by Awards granted under the Company's 1993 Stock Incentive Plan which
have expired, been forfeited, or terminated unexercised since October 26, 1994
or which may expire or terminate unexercised in the future (up to a maximum of
1,908,284 shares)."
<PAGE> 1
Exhibit 10.38
October 16, 1995
Robert Weiler
35 Sears Road
Wayland, MA 01778
Dear Bob:
It is my pleasure to offer you the position of Senior Vice President of
Wang Laboratories, Inc. ("Wang" or the "Company") and President of Wang's
Software Business Unit. This letter will set forth the details of our offer of
your employment with Wang. The Company agrees to employ you, and you agree to
remain in the employ of the Company, upon the following terms and conditions.
1. POSITION
You are to be employed as a Senior Vice President of Wang and President
of Wang's Software Business Unit effective December 4, 1995 (the "Hire Date").
You will report directly to me in my capacity as the Chairman of the Board and
Chief Executive Officer of Wang. You will also be a member of the Senior
Operations Committee of the Company.
2. TERM
The terms and conditions of this offer letter will cover a three
(3)-year period beginning as of the Hire Date, unless otherwise terminated as
provided in paragraph 4, below.
3. COMPENSATION AND BENEFITS; EMPLOYMENT STATUS
(A) YEARLY PAYMENTS
Your initial yearly base salary will be $400,000 (payable
semi-monthly) and you will be eligible to participate in a yearly bonus plan
targeted at 60% of your base salary, tied to your performance against the goals
specified in the plan, with a maximum of 80% of your base salary for 120%
performance against plan. Your salary and bonus will be reviewed yearly for
possible upward adjustments at the discretion of the Company.
<PAGE> 2
(B) STOCK INCENTIVES
(i) Grants. You will be eligible to participate in the
Company Employee Stock Incentive Plan ("Plan") and pursuant to this agreement
and that Plan, you will be granted 200,000 options to purchase Wang Common Stock
at $15 7/8 per share. These options to purchase Wang Common Stock (the "FY 96
Wang Options") will vest over a four (4) year period with 25% of the options
vesting on each of the first, second, third and fourth anniversary of the Hire
Date. Your eligibility for future stock grants shall be pursuant to the same
terms and conditions as those applied to other similarly situated officers of
the Company.
(ii) Conversion. The parties agree to negotiate in good faith
the terms and conditions of an agreement which would provide certain rights to
substitute or exchange the options to purchase Wang Common Stock granted to you.
(iii) Eligibility. You will be entitled to receive the benefits
and/or elect to exercise the rights set forth in subsections (3)(B)(i) and
3(B)(ii) only if you are an employee of the Company at the time such benefits
accrue.
(C) OTHER PROVISIONS
(i) The Company will provide health and dental coverage to
you in accordance with existing Company plans available to all employees
generally. The Company will also provide term life insurance to you based on
your insurability in the amount of Two Million Five Hundred Sixty Thousand
Dollars ($2,560,000). You will also receive three (3) weeks of vacation per year
and the Company's standard sick time and personal holiday benefits.
(ii) Your eligibility for on-going salary increases and
bonuses, and other initial benefits shall be pursuant to the same terms and
conditions as those applicable to other similarly situated officers of the
Company. You will also be eligible for all other perquisites that are or may be
made available to other similarly situated officers of the Company from time to
time.
(iii) During your employment, the Company will pay you a
monthly automobile allowance of $585.00, or pay the monthly lease of an equal
amount for one automobile leased through the company. Additionally,
<PAGE> 3
the company will pay the automobile insurance premium expense for one automobile
leased through the company. During your employment, the Company will also
reimburse you, at regular intervals and in accordance with Company policy, for
all business travel, telephone and out-of-pocket expenses incurred by you in the
performance of your duties as an officer of the Company.
(iv) At the end of the three (3)-year period described in this
offer letter, your employment status will be at-will, meaning that your
employment at Wang will be for an indefinite period of time and will be
terminable at any time, with or without cause being shown, by either your or the
Company. Therefore, the terms and conditions contained in paragraph 4 of this
offer letter will expire at the end of this three (3)-year period and the
original, unmodified terms of paragraph 6 of the enclosed, presently modified
standard Wang Employment Agreement, will thereafter be in full force and effect.
All other terms and conditions of this offer letter will remain in effect after
the three (3)-year period, subject to Wang's right to review them and make
adjustments as appropriate.
(v) Commencing upon the Hire Date you will be eligible to
participate in the Company' Supplemental Executive Retirement Plan (SERP).
(vi) The Company and you will enter into a change-in-control
agreement in a form substantially similar to that made available to other
similarly situated officers of the Company.
4. TERMINATION/SEVERANCE COMPENSATION AND BENEFITS
In the event that your employment with the Company is involuntarily
terminated other than "for cause" or because of your death or substantial
inability to work, Wang will pay you, semi-monthly, an eighteen (18)-month
salary continuance equal to your then base salary plus the target contained in
your bonus plan. During this salary continuance period, Wang will also continue
to make available through COBRA health and dental (but no other) benefits to you
at no cost.
In the event you become employed (including consulting) at any time
during the eighteen (18)-month salary continuance period, all remaining salary
continuance payments (and health and dental insurance coverage premium payments)
shall terminate as of your date of hire by your new employer, except to the
extent that the total annual compensation for your new employment is
<PAGE> 4
less than the total of your remaining salary continuance payments and, in such
event, the Company shall only pay that amount equal to the difference.
5. NO CONFLICTS OF INTEREST
By signing this offer letter, you represent that you are not subject to
any restrictions, particularly, but without limitation, in connection with any
previous employment, which prevent you from entering into and performing your
obligations under this offer letter or which materially and adversely affect (or
may in the future, so far as you can reasonably foresee, materially and
adversely affect), your right to participate in the affairs of the Company.
6. PROOF OF CITIZENSHIP AND ABILITY TO WORK
This offer is contingent on your providing Wang with proof of U.S.
citizenship or alien work permission, as required by federal law, within the
first three days of the Hire Date. This offer is also contingent on your signing
and returning to Wang the enclosed Department of Defense forms.
7. STANDARDS OF ETHICS AND BUSINESS CONDUCT AND STANDARD EMPLOYMENT
AGREEMENT
Upon joining Wang, you will be required to comply with Wang's Standards
of Ethics and Business Conduct and sign Wang's Employment Agreement as presently
modified (copy enclosed).
8. NON-COMPETITION
For a period of 18 months following the termination of your employment
with the Company you agree not to work with or for a workflow, imaging or HSM
business or to seek to recruit employees of the Company for positions elsewhere.
9. CONFIDENTIALITY
By our signatures below, we agree to treat the details of this offer
letter with utmost confidentiality and that we will not disclose them to any
third parties except your immediate family, our respective financial and/or
legal advisors, such Wang personnel and/or agents as have a need to know this
information for business purposes and as may be required to comply with
applicable law or governmental regulations.
<PAGE> 5
On a more personal note, I and the whole management team are excited to have you
join Wang and look forward to your active participation in our future success
Sincerely,
/s/ Joseph M. Tucci
-------------------
Joseph M. Tucci
Chairman of the Board
and Chief Executive Officer
Enclosures: Standard Employment Agreement (as presently modified) Department of
Defense Forms
Accepted and Agreed to:
Robert K. Weiler November 27, 1995
- -------------------- ---------------------
Name: Date
<PAGE> 1
Exhibit 10.39
AGREEMENT
THIS AGREEMENT dated as of December 4, 1995, is made by and
between Wang Laboratories, Inc., a Delaware corporation (the "Company"), and
Robert K. Weiler (the "Executive").
WHEREAS the Company considers it essential to the best interests
of its shareholders to foster the continuous employment of key management
personnel; and
WHEREAS the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly-held corporations, the
possibility of a Change in Control (as defined in the last Section hereof)
exists and that such possibility, and the uncertainty and questions which it may
raise among management, may result in the departure or distraction of management
personnel to the detriment of the Company and its shareholders; and
WHEREAS the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the Company's management, including the Executive, to their assigned
duties without distraction in the face of potentially disturbing circumstances
arising from the possibility of a Change in Control;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Defined Terms. The definition of capitalized terms used in
this Agreement is provided in the last Section hereof.
2. Terms of Agreement. This Agreement shall commence as of
December 4, 1995 and shall continue in effect while the Executive is employed by
the Company for a period of three years, provided, however, that commencing on
the third anniversary of the commencement of the term of this Agreement and on
each anniversary thereafter, the term of this Agreement shall automatically be
extended for one additional year unless, not later than ninety days prior to any
such anniversary date either party shall have given notice that it does not wish
to extend this Agreement (provided that no such notice may be given by the
Company during the pendency of or within one year following a Potential Change
in Control); provided, further, if a Change in Control shall have occurred
during the original or extended term of this Agreement, this Agreement shall
continue in effect for a period of thirty-six months beyond the month in which
such Change in Control occurred. It is
<PAGE> 2
intended, and the parties hereto agree, that (i) the benefit, if any, payable to
the Executive under any other severance or termination pay plan, arrangement or
agreement of or with the Company shall be reduced by the amount of any payment
actually provided under Section 6.1 hereof and (ii) any option to acquire shares
of the Company's common stock awarded to the Executive under any stock option or
other long-term incentive plan of the Company shall become fully exercisable
upon the occurrence of a Change in Control during the term of this Agreement,
provided that nothing herein shall otherwise affect or modify the terms of any
such option or the Executive's rights or obligations with respect thereto.
3. Company's Covenants Summarized. In order to induce the
Executive to become employed by or remain in the employ of the Company as the
case may be, and in consideration of the Executive's covenant set forth in
Section 4 hereof, the Company agrees, under the conditions described herein, to
pay the Executive the "Severance Payment" described herein in the event the
Executive's employment with the Company is terminated under the circumstances
described below following a Change in Control and during the term of this
Agreement. No amount or benefit shall be payable under this Agreement unless
there shall have been (or under the terms hereof, there shall be deemed to have
been) a termination of the Executive's employment with the Company following a
Change in Control.
4. The Executive's Covenants. The Executive agrees that, subject
to the terms and conditions of this Agreement, in the event of a Potential
Change in Control during the term of this Agreement, the Executive will remain
in the employ of the Company until the earliest of (i) a date which is six (6)
months from the date of such Potential Change in Control, (ii) the date of a
Change in Control, (iii) the date of termination by the Executive of the
Executive's employment for Good Reason (determined by treating the Potential
Change in Control as a Change in Control in applying the definition of Good
Reason), or by reason of Death, Disability or Retirement, or (iv) the
termination by the Company of the Executive's employment for any reason.
5. Compensation Other Than Severance Payment.
5.1 Following a Change in Control during the term of this
Agreement, during any period that the Executive fails to perform the Executive's
full-time duties with the Company as a result of incapacity due to physical or
mental illness, the Company shall continue to pay the Executive's full salary to
the Executive at the rate in effect at the commencement of any such period,
together with all compensation and benefits payable to the Executive under the
terms of any compensation or benefit plan, program or arrangement maintained by
the Company during such period, until the Executive's employment is terminated
by the Company for Disability.
2
<PAGE> 3
5.2 If the Executive's employment shall be terminated for any
reason following a Change in Control and during the term of this Agreement, the
Company shall pay the Executive's full salary to the Executive through the Date
of Termination at the rate in effect at the time the Notice of Termination is
given, together with all compensation and benefits payable to the Executive
through the Date of Termination under the terms of any compensation or benefit
plan, program or arrangement maintained by the Company during such period.
5.3 If the Executive's employment shall be terminated for any
reason following a Change in Control and during the term of this Agreement, the
Company shall, except as provided in Section 2 above, pay the Executive's normal
post-termination compensation and benefits to the Executive as such payments
become due. Such post-termination compensation and benefits shall be determined
under, and paid in accordance with, the Company's retirement, insurance and
other compensation or benefit plans, programs, agreements or arrangements.
6. Severance Payment.
6.1 Subject to Section 6.2 hereof, the Company shall pay the
Executive the payment described in this Section 6.1 (the "Severance Payment")
upon the termination of the Executive's employment following a Change in Control
during the term of this Agreement, in addition to the payments and benefits
described in Section 5 hereof, unless such termination is (i) by the Company for
Cause, (ii) by reason of the Executive's Death or Disability or (iii) by the
Executive without Good Reason. Moreover, the Executive's employment shall be
deemed to have been terminated following a Change in Control by the Company
without Cause or by the Executive with Good Reason if the Executive's employment
is terminated without Cause prior to a Change in Control at the direction of a
Person who has entered into an agreement with the Company the consummation of
which will constitute a Change in Control or if the Executive terminates his
employment with Good Reason prior to a Change in Control (determined by treating
a Potential Change in Control as a Change in Control in applying the definition
in Good Reason) if the circumstance or event which constitutes Good Reason
occurs at the direction of such Person. In lieu of any further salary payments
to the Executive for periods subsequent to the Date of Termination and in lieu
of any severance benefit otherwise payable to the Executive, the Company shall
pay to the Executive a lump sum severance payment, in cash, equal to 2.99 times
the average of the Executive's base salary and annual bonus received in (i) each
of the 2 calendar years preceding the calendar year in which occurs the Date of
Termination or, (ii) in the event the Executive has been employed by the Company
for less than 2 full calendar years, such lesser number of calendar years during
any
3
<PAGE> 4
part of which the Executive has been so employed, with his base salary taken
into account at its full annual rate for any partial year or years.
6.2.(a) In the event that the Executive's Total Payments (not
including the Gross-Up Payment), as hereinafter defined, are subject in whole or
in part to the excise tax imposed under Section 4999 of the Code (the "Excise
Tax"), then the Company shall pay to the Executive an additional amount (the
"Gross-Up Payment") such that the net amount retained by the Executive after
payment of any Excise Tax on the Total Payments and any federal, state and local
income taxes on the Gross-Up Payment equals the Total Payments, (not including
the Gross-Up Payment). Exhibit 6.2 attached hereto is an example of the
calculation of a Gross-Up Payment.
(b) For purposes of determining whether and the extent to which
the Total Payments will be subject to the Excise Tax, (i) no portion of the
Total Payments the receipt or enjoyment of which the Executive shall have
effectively waived in writing prior to the Date of Termination shall be taken
into account, (ii) no portion of the Total Payments shall be taken into account
which in the opinion of tax counsel selected by the Company does not constitute
a "parachute payment" within the meaning of Section 280G(b)(2) of the Code,
(including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating
the Excise Tax, no portion of such Total Payments shall be taken into account
which constitutes reasonable compensation for services actually rendered, within
the meaning of Section 280G(b)(4)(B) of the Code, in excess of the Base Amount
allocable to such reasonable compensation, and (iii) the value of any non-cash
benefit or any deferred payment or benefit included in the Total Payments shall
be determined by the Company in accordance with the principles of Sections
280G(d)(3) and (4) of the Code.
(c) For purposes of determining the amount of the Gross-Up
Payment, the Executive shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation in the calendar year in which
the Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the Executive's
residence on the Date of Termination, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local
taxes.
(d) For purposes of this Agreement, "Total Payments" means any
payment or benefit received or to be received by the Executive in connection
with a Change in Control or the termination of the Executive's employment,
whether pursuant to the terms of this Agreement or any other plan, arrangement,
or agreement
4
<PAGE> 5
with (i) the Company, (ii) any Person whose actions result in a Change in
Control, or (iii) any Person affiliated with the Company or the Person whose
actions resulted in a Change in Control. Total Payments includes, but is not
limited to Severance Payments and Gross-Up Payments.
6.3 (a) The Severance Payment and the Gross-Up Payment, if any,
shall be made not later than the fifth day following the Date of Termination,
provided, however, that if the amount of such payments cannot be finally
determined on or before such day, the Company shall pay to the Executive on such
day an estimate, as determined in good faith by the Company, of the minimum
amount of such payments to which the Executive is clearly entitled. In the event
that the Excise Tax is subsequently determined to be less than the amount taken
into account in originally computing the Gross-Up Payment, the Executive shall
repay to the Company at the time that the amount of such reduction in Excise Tax
is finally determined the portion of the Gross-Up Payment attributable to such
reduction (plus the portion of the Gross-Up Payment attributable to the Excise
Tax imposed on the Gross-Up Payment being repaid by the Executive if such
repayment results in a reduction in Excise Tax) plus interest on the amount of
such repayment at the rate provided in Section 7872(f)(2) of the Code. In the
event that the Excise Tax is determined to exceed the amount taken into account
in originally computing the Gross-Up Payment (including any increase as the
result of any payment which cannot be determined, or did not exist, at the time
of the originally computation), the Company shall recalculate the Gross-Up
Payment and pay the additional amount to the Executive (plus any interest
payable by the Executive on such additional Excise Tax or on any additional
federal, state and local income taxes) at the time that such additional amount
is finally determined.
(b) Prior to the payment date set forth in this Section 6.3, the
Company shall provide the Executive with the Company's calculation of the Total
Payments and the Gross-Up Payments, if any, and such supporting materials as are
reasonably necessary for the Executive to evaluate the Company's calculations,
including, without limitation, any opinions or other advice the Company has
received from outside counsel, auditors or consultants (and any such opinions or
advice which are in writing shall be attached to the statement).
6.4 The Company also shall pay to the Executive all legal fees
and expenses incurred by the Executive as a result of or in connection with a
termination of employment following a Change in Control and during the term of
this Agreement (including all such fees and expenses, if any, incurred in good
faith in disputing any such termination or in seeking in good faith to obtain or
enforce any benefit or right provided by this Agreement or in connection with
any tax audit or proceeding to the
5
<PAGE> 6
extent attributable to the application of section 4999 of the Code to any
payment or benefit provided hereunder). Such payments shall be made within five
(5) business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.
7. Termination Procedures and Compensation During Dispute.
7.1 Notice of Termination. After a Change in Control and during
the term of this Agreement, any purported termination of the Executive's
employment (other than by reason of death) shall be communicated by written
Notice of Termination from one party hereto to other party hereto in accordance
with Section 10 hereof. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated. Further, a Notice of
Termination for Cause is required to include a copy of a resolution duly adopted
by the affirmative vote of not less than three-quarters (3/4) of the entire
membership of the Board at a meeting of the Board which was called and held for
the purpose of considering such termination (after reasonable notice to the
Executive and an opportunity for the Executive, together with his counsel, to be
heard before the Board) finding that, in the good faith opinion of the Board,
the Executive was guilty of conduct set forth in the definition of Cause herein,
and specifying the particulars thereof in detail.
7.2 Date of Termination. "Date of Termination", with respect to
any termination of the Executive's employment after a Change in Control and
during the term of this Agreement, shall mean (i) if the Executive's employment
is terminated for Disability, thirty (30) days after Notice of Termination is
given (provided that the Executive shall not have returned to the full-time
performance of the Executive's duties during such thirty (30) day period), and
(ii) if the Executive's employment is terminated for any other reason, the date
specified in the Notice of Termination (which, in the case of a termination by
the Company, shall not be less than thirty (30) days (except in the case of a
termination for Cause) and, in the case of a termination by the Executive, shall
not be less than fifteen (15) days nor more than sixty (60) days, respectively,
from the date such Notice of Termination is given).
7.3 Dispute Concerning Termination. Notwithstanding any provision
of Section 7.2 hereof to the contrary, if within fifteen (15) days after any
Notice of Termination is received, or, if later, prior to the Date of
Termination (as determined without regard to this Section 7.3), the party
receiving such Notice of Termination notifies the other party in writing that a
dispute exists concerning the termination, the
6
<PAGE> 7
Date of Termination shall be the date on which the dispute is finally resolved,
either by mutual written agreement of the parties or by a final judgment, order
or decree of a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); provided that the Date of Termination shall be extended by a
notice of dispute only if such notice is given in good faith and the party
giving such notice pursues the resolution of such dispute with reasonable
diligence. For the purposes of the preceding sentence, a dispute concerning
termination shall be deemed finally resolved if neither party commences an
action in any court within thirty (30) days of an arbitration award concerning
such dispute seeking the modification of or other relief from such award.
7.4 Compensation During Dispute. If a purported termination
occurs following a Change in Control and during the term of this Agreement, and
such termination is disputed in accordance with Section 7.3 hereof, the Company
shall continue to pay the Executive the full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to,
salary) and continue the Executive as a participant in all compensation, benefit
and insurance plans in which the Executive was participating when the notice
giving rise to the dispute was given, until the dispute is finally resolved in
accordance with Section 7.3 hereof. Amounts paid under this Section 7.4 are in
addition to all other amounts due under this Agreement (other than those due
under Section 5.2 hereof) and shall not be offset against or reduce any other
amounts due under this Agreement.
8. No Mitigation. The Company agrees that, if the Executive's
employment by the Company is terminated during the term of this Agreement, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by the Company pursuant to this
Agreement. Further, the amount of any payment or benefit provided for in this
Agreement shall not be reduced by any compensation earned by the Executive as
the result of employment by another employer, by retirement benefits, by offset
against any amount claimed to be owed by the Executive to the Company, or
otherwise.
9. Successors.
9.1 In addition to any obligations imposed by law upon any
successor to the Company, the Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such
7
<PAGE> 8
succession shall be a breach of this Agreement and shall entitle the Executive
to compensation from the Company in the same amount and on the same terms as the
Executive would be entitled to hereunder if the Executive were to terminate the
Executive's employment for Good Reason after a Change in Control, except that,
for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination.
10. Notices. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United Stated
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon actual receipt:
To the Company:
Wang Laboratories, Inc.
One Industrial Avenue
Lowell, Massachusetts 01851
Attention: Chief Executive Officer
Copy to: General Counsel
To the Executive:
Robert K. Weiler
35 Sears Road
Wayland, MA 01778
11. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such officer as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or any prior or subsequent time. No agreements or representations, oral
or otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the Commonwealth of Massachusetts. Any payments
provided for hereunder shall be paid net of any applicable withholding required
under federal, state or local law and any additional withholding to which the
8
<PAGE> 9
Executive has agreed. The obligations of the Company and the Executive under
Sections 5, 6 and 7 shall survive the expiration of the term of this Agreement.
12. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
14. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
conducted before a panel of three arbitrators in Boston, Massachusetts in
accordance with the commercial rules of the American Arbitration Association
("AAA") then in effect. Unless the panel of arbitrators shall have been selected
by agreement of the parties within thirty (30) days of the initiation of
arbitration proceedings, each party shall be entitled to select one arbitrator
within ten (10) business days of the lapse of such thirty (30) day period and
the third arbitrator shall be selected by agreement of the two arbitrators so
selected within seven (7) business days after the selection of the two
arbitrators. In the event that either party does not timely designate an
arbitrator or that the two arbitrators do not timely select a third arbitrator
in accordance with the preceding sentence, then upon application of either party
to the Boston office of the AAA, the AAA shall designate such arbitrator.
Judgment may be entered on the arbitrators' award in any court having
jurisdiction, provided, however, that the Executive shall be entitled to seek
specific performance of his right to be paid until the Date of Termination
during the pendency of any dispute or controversy arising under or in connection
with this Agreement.
15. Nondisclosure of Confidential Information. The Executive
shall keep secret and confidential and shall not disclose to any third party in
any fashion or for any purpose whatsoever, any information regarding this
Agreement, or any other information regarding the Company which is (i) not
available to the general public, and/or (ii) not generally known outside the
Company, to which he has or will have had access at any time during the course
of his employment by the Company, including, without limitation, any information
relating to: the Company's business or operations; its plans, strategies,
prospects or objectives; its products, technology, processes or specifications;
its research and development operations or plans; its customers and customer
lists; its manufacturing, distribution, sales, service, support and marketing
practices and operations; its financial condition and results of operations; its
operational strengths and weaknesses; and, its personnel and compen-
9
<PAGE> 10
sation policies and procedures. Notwithstanding the foregoing provisions of this
Section 15, the Executive may discuss this Agreement with the members of his
immediate family and with his personal legal and tax advisors, provided that,
prior to disclosing any term or condition of this Agreement to any person, the
Executive shall obtain from such person for the benefit of the Company his or
her agreement to observe the foregoing provisions.
16. Definitions. For purposes of this Agreement, the following
shall have the meanings indicated below:
(A) "Base Amount" shall have the meaning defined in section
280G(b)(3) of the Code.
(B) "Beneficial Owner" and "Beneficial Ownership" shall have the
meaning defined in, and shall be determined pursuant to, Rule 13d-3 under the
Securities Exchange Act of 1934, as amended.
(C) "Board" shall mean the Board of Directors of the Company.
(D) "Cause" for termination by the Company of the Executive's
employment, after any Change in Control, shall mean the willful and continued
failure by the Executive to substantially perform the Executive's duties with
the Company, a substantial, and not de minimis, violation of the Company's
Standards of Ethics and Business Conduct or its Rules of Employee Conduct (and
any successor documents, however titled), as the same are in effect from time to
time, the Executive's conviction of a felony or engaging in conduct that
constitutes a violation of Section 15 hereof.
(E) A "Change in Control" shall be deemed to have occurred if any
one of the conditions set forth in any one of the following paragraphs shall
have been satisfied:
(i) any Person (other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company) is or
becomes the Beneficial Owner, directly or indirectly, of securities of
the Company (not including in the securities beneficially owned by such
Person any securities acquired directly from the Company or its
affiliates) representing 20% or more of the combined voting power of the
Company's then outstanding securities; or
(ii) during any period of twenty-four consecutive months
(not including any period prior to the execution of this Agree-
10
<PAGE> 11
ment), individuals who at the beginning of such period constitute the
Board and any new director (other than a director designated by a Person
who has entered into an agreement with the Company to effect a
transaction constituting a Change in Control as described in clause (I),
(III) or (IV) of this paragraph) whose election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease
for any reason to constitute a majority thereof; or
(iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (i)
a merger or consolidations which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity), in combination with the
ownership of any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, at least 75% of the combined
voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation, or
(ii) a merger or consolidation effected to implement a recapitalization
of the Company (or similar transaction) in which no Person acquires more
than 20% of the combined voting power of the Company's then outstanding
securities; or
(iv) the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the Company's
assets or the Company is dissolved and its assets distributed in a
judicial proceeding.
(F) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time. All references to the Code shall be deemed also to
refer to any successor provisions to such sections.
(G) "Company" shall mean Wang Laboratories, Inc., and any
successor to its business and/or assets which assumes and agrees to perform this
Agreement by operation of law, or otherwise (except in determining, under
Section 16(E) hereof, whether or not any Change in Control of the Company has
occurred in connection with such succession).
11
<PAGE> 12
(H) "Date of Termination" shall have the meaning stated in
Sections 7.2 and 7.3 hereof.
(I) "Disability" shall be deemed the reason for the termination
by the Company of the Executive's employment, if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive's duties with the Company
for a period of six (6) consecutive months, the Company shall have given the
Executive a Notice of Termination for Disability, and, within thirty (30) days
after such Notice of Termination is given, the Executive shall not have returned
to the full-time performance of the Executive's duties.
(J) "Executive" shall mean the individual named in the first
paragraph of this Agreement.
(K) "Good Reason" for termination by the Executive of the
Executive's employment shall mean the occurrence (without the Executive's
express written consent) of any one of the following acts by the Company, or
failures by the Company to act, unless, in the case of any act or failure to act
described in paragraph (i), (v), (vi), (vii), or (viii) below, such act or
failure to act is corrected prior to the Date of Termination specified in the
Notice of Termination given in respect thereof:
(i) the assignment to the Executive of any duties
inconsistent with the Executive's status as a senior office of the
Company or a substantial adverse alteration in the nature or status of
the Executive's position or responsibilities from those in effect
immediately prior to the Change in Control;
(ii) a reduction by the Company in the Executive's annual
base salary as in effect on the date hereof or as the same may be
increased from time to time except for across-the-board salary
reductions similarly affecting all senior executives of the Company and
all senior executives of any Person in control of the Company;
(iv) the failure by the Company to pay to the Executive
any portion of the Executive's current compensation except pursuant to
an across-the-board compensation deferral similarly affecting all senior
executives of the Company and all senior executives of any Person in
control of the Company, or to pay to the Executive any portion of an
installment of deferred compensation under any deferred
12
<PAGE> 13
compensation program of the Company, within fourteen (14) days of the
date such compensation is due;
(v) the failure by the Company to continue in effect any
compensation plan in which the Executive participates immediately prior
to the Change in Control which is material to the Executive's total
compensation, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such plan,
or the failure by the Company to continue the Executive's participation
therein (or in a substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits
provided and the level of the Executive's participation relative to
other participants, as existed at the time of the Change in Control;
(vi) the failure by the Company to continue to provide the
Executive with benefits substantially similar to those enjoyed by the
Executive under any of the Company's pension, life insurance, medical,
health and accident, or disability plans in which the Executive was
participating at the time of the Change in Control, the taking of any
action by the Company which would directly or indirectly materially
reduce any of such benefits or deprive the Executive of any material
fringe benefit enjoyed by the Executive at the time of the Change in
Control, or the failure by the Company to provide the Executive with the
number of paid vacation days to which the Executive is entitled on the
basis of years of service with the Company in accordance with the
Company's normal vacation policy in effect at the time of the Change in
Control;
(vii) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 7.1; for purposes of this
Agreement, no such purported termination shall be effective; or
(viii) the failure by the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Section 9 hereof.
The Executive's right to terminate the Executive's employment for
Good Reason shall not be affected by the Executive's incapacity due to physical
or mental illness. The Executive's continued employment shall not constitute
consent to,
13
<PAGE> 14
or a waiver of rights with respect to, any act or failure to act constituting
Good Reason hereunder.
(L) "Notice of Termination" shall have the meaning stated in
Section 7.1 hereof.
(M) "Person" shall have the meaning defined in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended.
(N) "Potential Change in Control" shall be deemed to have
occurred if any one of the conditions set forth in any one of the following
paragraphs shall have been satisfied:
(i) the Company enters into an agreement, the consummation
of which would result in the occurrence of a Change in Control;
(ii) the Company or any other Person publicly announces an
intention to take or to consider taking actions which, if consummated,
would constitute a Change in Control;
(iii) any Person (other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company) who is
or becomes the Beneficial Owner, directly or indirectly, of securities
of the Company representing 10% or more of the combined voting power of
the Company's then outstanding securities, increases such Person's
Beneficial Ownership of such securities by 5% or more over the
percentage so owned by such Person on the date hereof; or
(iv) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
(O) "Retirement" shall mean retirement after attaining "normal
retirement age" under any pension or retirement plan maintained by the Company
in which the Executive participates.
(P) "Severance Payment" shall mean the payment described in
Section 6.1 hereof.
14
<PAGE> 15
(Q) "Total Payment" shall mean those payments described in
Section 6.2 hereof.
WANG LABORATORIES, INC.
By: /s/ Joseph M. Tucci
-------------------------
Joseph M. Tucci
Chairman of the Board and
Chief Executive Officer
AGREED:
/s/ Robert K. Weiler
- ------------------------
Robert K. Weiler
15
<PAGE> 1
Exhibit 10.40
NON-QUALIFIED OPTION TO PURCHASE SHARES OF COMMON STOCK
IN WITNESS OF the following stock option grant, the undersigned duly
authorized officer of Wang Laboratories, Inc. has hereunto set his hand in the
name and on behalf of said Corporation as of the date specified below.
WANG LABORATORIES, INC. DATE OF GRANT: December 4, 1995
(a Delaware Corporation) INSTRUMENT NUMBER:
EMPLOYEE NAME: Robert K. Weiler
EMPLOYEE NUMBER:
BY: DATE SIGNED:
------------------------------- -------------------
Franklyn A. Caine
Executive Vice President and CFO
Wang Laboratories, Inc. (the "Corporation") hereby grants to you (the
"Employee"), an option (the "Option") to purchase all or any exercisable part of
200,000 shares of Common Stock, par value $.01 per share, of the Corporation
("Common Stock") at a price of $15.875 per share, on and after the dates in
Section 1 below, subject to the terms and conditions herein. Unless this Option
is terminated earlier pursuant to the provisions of this instrument, this Option
will expire on December 4, 2005 (the "Expiration Date"), and anything to the
contrary herein notwithstanding, this Option shall not be exercisable in any
part after such date (or, if such date is not a business day at the headquarters
of the Corporation, after the first such business day thereafter). This Option
is not intended to qualify as an "Incentive Stock Option" under applicable tax
laws. By the Employee's acceptance hereof, the Employee irrevocably and
unconditionally agrees that all the Employee's rights in connection with this
Option shall be governed in accordance with the terms of this Option instrument.
This Option is granted under the Employees' Stock Incentive Plan (the "Plan") of
the Corporation as approved by the stockholders of the Corporation on January
25, 1995 and as subsequently amended. In the event of any inconsistency between
the provisions of the Plan and this instrument, the terms of the Plan shall
prevail. Notices and communications hereunder shall be delivered by the Employee
to the Corporation at its principal place of business, and shall be mailed by
the Corporation to the Employee at the address in its records as the most recent
home address of the Employee. Notwithstanding anything to the contrary herein,
neither this Option nor the SWCO Exchange Right nor the SWBU Exchange Right
(both as defined below) (collectively the "Exchange Rights") may be exercised at
any time that the Employee would be barred from acquiring the Common Stock or
other Exchange Rights subject hereto under the provisions of the Corporation's
Certificate of Incorporation, or otherwise by law.
1. EXERCISE SCHEDULE: This Option is exercisable as to the percentages
of the total number of shares or Exchange Rights, as the case may be, covered
hereby on and after the dates respectively indicated below until the Expiration
Date. No fractional shares may be provided.
<TABLE>
<CAPTION>
PERCENTAGE OF
TOTAL SHARES EXERCISABLE DATES
------------ -----------------
<S> <C>
25% December 4, 1996
25% December 4, 1997
25% December 4, 1998
25% December 4, 1999
</TABLE>
<PAGE> 2
2. METHOD OF EXERCISE: This Option may be exercised by the Employee only
as specified herein. From time to time while this Option is exercisable, the
Employee may deliver to the Corporation a written subscription, signed by the
Employee, stating the number of shares being purchased. This shall be
accompanied by (a) payment for such shares in certified check, money order or
other payment acceptable to the Corporation and permitted under the Plan at such
time, (b) payment for all taxes, charges and all withholding amounts payable in
connection with the exercise and issuance and (c) such statement or other
evidence as the Corporation may require to ensure that the shares will not be
transferred by the Employee in violation of federal securities laws.
Certificates for the shares so purchased will be issued to the Employee upon the
completion by the Corporation of any steps required in connection therewith.
3. TERMS AND CONDITIONS:
(A) Unless otherwise terminated as provided herein, this Option will
terminate at the close of business on the 30th day (or, if such date is not a
business day at the headquarters of the Corporation, on the first such business
day thereafter) after the date the Employee ceases to be an employee of the
Corporation or one of its subsidiaries for any reason other than death,
retirement or permanent disability within the meaning of the Plan. In case of
dismissal for "cause," the Corporation may revoke all rights of the Employee to
purchase all shares or to exercise Exchange Rights subject hereto as have not
been issued or, in the case of Exchange Rights, which have not been exercised by
the Employee prior to the time of such revocation.
For the purpose of this Option, the term "cause" shall mean willful
misconduct by the Employee or willful failure to perform his or her
responsibilities in the best interests of the Company (including, without
limitation the material breach of any provision of the Company's Standards of
Ethics and Business Conduct Guide or the material breach by the Employee of any
provision of any employment, consulting, advisory, nondisclosure,
non-competition or other similar agreement between the Employee and the
Company), as determined by the Company, which determination shall be conclusive.
(B) During the lifetime of the Employee, this Option may be exercised
only by the Employee. Except by will or by the laws of descent and distribution,
this Option and all rights granted hereunder may not be transferred, assigned,
pledged or hypothecated (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or other process. Upon the retirement of the
Employee within the meaning of the Plan, there will be no change in the exercise
schedule or other terms hereof. If the Employee should die or become permanently
disabled within the meaning of the Plan at a time when the Employee has the
right to purchase shares under this option instrument, the Exercise Schedule set
out above will be accelerated such that the full number of shares subject to
this Option not theretofore subscribed for will forthwith become available for
purchase, and the Employee (in case of disability) or his or her legal
representative (in either case) may exercise such purchase rights at any time
within one year from the date of the Employee's death or the Corporation's
determination of the Employee's permanent disability, as the case may be, but in
no event later than the Expiration Date. Nothing with respect to the terms of
this instrument guarantees continued employment for any specific period of time.
(C) Any provision herein to the contrary notwithstanding, in the case of
(i) a merger or consolidation to which the Corporation is a party and following
which the stockholders of the Corporation 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 resulting from such merger or consolidation;
(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
<PAGE> 3
class of common stock of the Corporation, or of shares having more than 50% of
the aggregate voting power of the Corporation's capital stock; (iii) a sale or
transfer of substantially all of the assets of the Corporation; (iv) a
liquidation or reorganization of the Corporation or (v) during any period of two
consecutive years or less beginning after December 1993, individuals who at the
beginning of such period are members of the Board of Directors and any new
director(s) (other than directors designated by a person who has entered into an
agreement with the Corporation to effect a transaction of the type described in
clauses (i) through (iv) above) whose election by the Board of Directors 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 of Directors, the Corporation shall
give written notice of such event, mailed to the Employee at least twenty days
prior to the event (except in the event of subsection (ii), in which case the
Company will notify the Employee as soon as possible thereafter), and the
Exercise schedule set out above will be accelerated such that the full number of
shares subject to this Option not theretofore subscribed for shall forthwith
become available for purchase. The Employee shall then be entitled to purchase,
subject to the consummation of such transaction, all or any part of such shares
by subscription in accordance with Paragraph 2 above, delivered to the
Corporation within fifteen days of the date of such notice. This Option will
terminate as to any shares not subscribed for at the expiration of such
fifteen-day period. Immediately prior to the consummation of such transaction,
certificates for the shares so subscribed for will be issued. If such
transaction is not consummated, the Corporation shall forthwith return to the
Employee all funds and other documents provided by the Employee in connection
with the exercise of this Option under this paragraph, and this Option shall be
reinstated as to all of the terms hereof as if the proposed transaction had not
been contemplated.
(D) Any claim or dispute that may arise under or as a result of, or
pursuant to, this Option shall be submitted to and determined by the
Corporation, in its sole judgment, and any decision made by it shall be final
and conclusive for all purposes, and binding on the Employee and any other
parties claiming an interest herein.
4. ADJUSTMENT OF NUMBER OF SHARES COVERED BY OPTION: If the Corporation
shall effect a consolidation of shares or a stock dividend and the Corporation
shall determine that an equitable adjustment is required hereto as a result,
then the Corporation shall make such equitable adjustment in the terms of this
Option (for example a proportionate increase or decrease in the number of shares
remaining subject to this Option and a corresponding decrease or increase in the
exercise price) as the Corporation determines to be appropriate. The Corporation
shall determine when and in what measures such adjustments will be made, and may
exclude adjustments it determines to be de minimus.
5. SWCO EXCHANGE RIGHT: In the event that the Corporation successfully
completes a sale to the public of the common stock of the subsidiary, whether
currently owned or subsequently acquired or incorporated, that the Company
designates to hold and operate the Company's open image and workflow software
business ("SWCO"), which sale is incident to a registration statement under the
Securities Act of 1933, as amended, for a firm underwritten public offering
(other than a registration on Form S-8 or registration related solely to
employee shares) (a "Qualifying IPO"), you may elect to exchange some or all of
unvested Option, if any, and/or any other unvested grants of or rights to
purchase Common Stock (collectively, "Your Unvested Wang Options") for an option
to purchase SWCO common stock (the "SWCO Option") as follows:
(A) At least ten (10) days before filing of a Registration Statement on
Form S-1 for the purposes of a Qualifying IPO, you may make a one time election
to exchange some or all of Your Unvested Wang Options for a SWCO Option to
purchase, at an exercise price equal to the Qualifying IPO per share offering
price, a number of shares of the common stock of SWCO up to a maximum of
<PAGE> 4
two (2%) percent of the total number of shares of common stock of SWCO expected
to be outstanding immediately following the completion of the Qualifying IPO. If
the Qualifying IPO does not close within three (3) months of your election,
then, at your option, the election to receive a SWCO Option will revert to Your
Unvested Wang Options.
(B) If you elect to exchange only a portion of Your Unvested Wang
Options, you will receive that percentage of the SWCO Option as is equal to the
percentage of Your Unvested Wang Options which are exchanged. For example, if
you elect to exchange 50% of Your Unvested Wang Options, you will receive a SWCO
Option equal to 1% of the number of shares of SWCO outstanding immediately after
the Qualifying IPO.
(C) The SWCO Option, which will be subject to the terms of a SWCO grant
instrument to be adopted and approved by SWCO, shall vest and may be exercised
on the same dates and be subject to the same terms and conditions set forth in
Sections 3 above, as Your Unvested Wang Options for which they are exchanged.
(D) This SWCO Option will expire on December 4, 1999.
6. SWBU EXCHANGE RIGHT: In the event that the Company does not complete
a Qualifying IPO, you may, by written notification to the Company, make a one
time election, no sooner than eighteen (18) months after the Hire Date (as such
is defined in your offer of employment), but no later than December 4, 1999
("Exchange Period"), to exchange some or all Your Unvested Wang Options for the
right to receive cash payments over time reflecting the increase in the value of
Wang's Software Business Unit (the "SWBU Rights") as follows:
(A) You may elect to exchange all of Your Unvested Wang Options for SWBU
Rights in an aggregate amount equal to two (2%) percent of the Value Increase,
as defined below, of Wang's Software Business Unit.
(B) If you elect to exchange only a portion of Your Unvested Wang
Options for SWBU Rights, you will obtain a right to receive that percentage of
the Value Increase which is equal to the percentage of your Unvested Wang
Options which are exchanged. For example, if you elect to exchange 50% of Your
Unvested Wang Options, you will receive a SWBU Right equal to 1% of the Value
Increase.
(C) The SWBU Rights shall vest and be exerciseable over the same period
as Your Unvested Wang Options for which they were exchanged and shall be subject
to the same terms and conditions set forth in Section 3 above as Your Unvested
Wang Options. Notwithstanding the foregoing, you shall not have the right to
elect to exchange Your Unvested Wang Options or receive payment of any SWBU
Rights in any fiscal year in which the operating profit for the Software
Business Unit, as determined by the Company, is less than ten (10%) percent of
the Revenue, as defined in Section 6(D) below, ("Operating Profit Condition").
In the event that a SWBU Right payment is not made for any fiscal year due to
the Operating Profit Condition, then such SWBU Right payment will be deferred
until the first fiscal year thereafter when the Operating Profit Condition is
satisfied.
(D) "Value Increase" means (i) (X) the amount by which the actual open
software license and related maintenance revenue, as determined by the Company,
("Revenue") for the Software Business Unit exceeds Forty Million Dollars
($40,000,000) for the fiscal year in which the right to exchange Your Unvested
Wang Options for SWBU Rights is elected; (Y) multiplied by three (3), (ii) less
the total purchase price paid for business(es) to be included in the Software
Business Unit acquired by the Company after the Hire Date.
<PAGE> 5
(E) Payment pursuant to the SWBU Rights shall be made in accordance with
the vesting schedule attributable to the SWBU Rights, but in no event earlier
than ninety (90) days after the end of the Fiscal Year in which the election
takes place.
Accepted pursuant to the terms set forth above,
- -------------------------
Robert K. Weiler
<PAGE> 1
Exhibit 10.41
November 20, 1995
[Executive Officer]
Dear [Executive Officer]:
This letter amends that certain Letter Agreement dated [date] between
you and Wang Laboratories, Inc. ("WLI") pursuant to which you are employed by
WLI (the "Employment Letter"). WLI has agreed with you that the Employment
Letter is hereby amended as follows:
1. Paragraph 2 of the Employment Letter is deleted in its entirety and the
following paragraph is added in substitution thereof:
The terms and conditions of this letter will be in full force and
effect and continue until December 31, 1998 (the "End Date"), unless
otherwise terminated as provided in paragraph 4 below, and will provide
you with one (1)-year of severance benefits if your employment with the
Company is terminated at any time, as described in paragraph 4 below,
prior to the End Date. Upon the occurrence of the End Date, your
employment status will be at-will. All other terms and conditions of
this letter will remain in effect after the End Date, subject to Wang's
right to review them and make adjustments as appropriate.
2. Paragraph 3(a) of the Employment Letter is deleted in its entirety and
the following paragraph is added in substitution thereof:
Your annual base salary will be $[ ] (payable semi-monthly) for
Fiscal Year 1996 and you will be eligible to participate in a yearly
bonus plan targeted at [ ]% of your base salary, depending on your
performance plan against the goals specified in the plan. Your salary
and bonus will be reviewed yearly for possible upward adjustments at the
discretion of the Company.
The Employment Letter is hereby ratified and confirmed, except as
expressly modified herein.
WANG LABORATORIES, INC.
- ------------------------------ ---------------------------
[Executive Officer] Joseph M. Tucci
<PAGE> 1
Exhibit 10.42
November 14, 1995
Mr. Joseph M. Tucci
10 Mountain Laurel Drive
Unit No. 604
Nashua, NH 03060
RE: Amendment to March 9, 1993 Agreement, as amended
Dear Joe:
This letter constitutes a third amendment to the March 9, 1993 letter
agreement between Wang Laboratories, Inc. ("WLI") and you relative to your
employment by WLI as its Chief Executive Officer and Chairman of the Board of
Directors (the "Employment Letter"), as amended on June 22, 1994 and April 26,
1995. WLI has agreed with you that the Employment Letter is amended as follows:
1. Paragraph 2(c), added to the Employment Letter through Paragraph 3 of
the June 23, 1994 amendment, is modified to delete the words "and the
fiscal years thereafter" from its introductory provisions.
2. A new Paragraph 2(d) is hereby added to the Employment Letter that
provides as follows:
Your cash compensation for Fiscal Year 1996 and the fiscal years
thereafter shall consist of: (i) a $555,000 annual base salary;
and (ii) a bonus to be determined by the Board of Directors based
upon your performance, to be targeted at 60% of your annual base
salary at 100% performance and 80% of the annual base salary at
120% performance.
You shall be targeted to draw $25,000 per quarter against the targeted
bonus but such draw shall be for your convenience only.
3. The provisions of Paragraph 6 of the Employment Letter, as amended by
the amendment of June 22, 1994, shall be modified to provide that your
Anticipated Annual Compensation, as defined therein, shall be $888,000.
<PAGE> 1
Exhibit 10.43
NON-QUALIFIED LONG TERM INCENTIVE OPTION TO PURCHASE SHARES OF
COMMON STOCK
IN WITNESS OF the following stock option grant, the undersigned duly
authorized officer of Wang Laboratories, Inc. has hereunto set his hand in the
name and on behalf of said Corporation as of the date specified below.
WANG LABORATORIES, INC. DATE OF GRANT: September 27, 1995
(a Delaware Corporation) INSTRUMENT NUMBER:
EMPLOYEE NAME:
EMPLOYEE NUMBER:
BY: DATE SIGNED:
-------------------------------- ---------------------
Franklyn A. Caine
Executive Vice President and CFO
Wang Laboratories, Inc. (the "Corporation") hereby grants to you (the
"Employee"), an Option to purchase all or any exercisable part of XXXXX shares
of Common Stock, par value $.01 per share, of the Corporation ("Common Stock")
at a price of $15.00 per share, on and after the dates in Section 1 below,
subject to the terms and conditions herein. Unless this Option is terminated
earlier pursuant to the provisions of this instrument, this Option will expire
on September 27, 2005 (the "Expiration Date"), and anything to the contrary
herein notwithstanding, this Option shall not be exercisable in any part after
such date (or, if such date is not a business day at the headquarters of the
Corporation, after the first such business day thereafter). This Option is not
intended to qualify as an "Incentive Stock Option" under applicable tax laws. By
the Employee's acceptance hereof, the Employee irrevocably and unconditionally
agrees that all the Employee's rights in connection with this Option shall be
governed in accordance with the terms of this Option instrument. This Option is
granted under the Employees' Stock Incentive Plan (the "Plan") of the
Corporation as approved by the stockholders of the corporation on January 25,
1995 and as subsequently amended. In the event of any inconsistency between the
provisions of the Plan and this instrument, the terms of the Plan shall prevail
except that acceleration of the Option for any reason is subject to the Vesting
Condition in Section 1(A), below first being satisfied. Notices and
communications hereunder shall be delivered by the Employee to the Corporation
at its principal place of business, and shall be mailed by the Corporation to
the Employee at the address in its records as the most recent home address of
the Employee. Notwithstanding anything to the contrary herein, this Option may
not be exercised at any time that the Employee would be barred from acquiring
the shares subject hereto under the provisions of the Corporation's Certificate
of Incorporation, or otherwise by law.
1. EXERCISE SCHEDULE: This Option is exercisable as to the percentages of
the total number of shares covered hereby on and after the satisfaction of the
conditions indicated below until the Expiration Date.
<PAGE> 2
(A) The vesting condition is deemed to be satisfied as to 100% of the
Option on the first date following the Grant Date that the average daily closing
price of the Common Stock on the NASDAQ or any other national exchange on which
the Common Stock is listed as reported in the Wall Street Journal over the
immediately preceding twenty (20) trading days is at least $25.00 per share (the
"Vesting Condition").
(B) Except as set forth in Section 1(C), below and as otherwise provided in
the Plan, the Option is exercisable from and after September 27, 1997 which is
two years from the Grant Date (the two year period hereinafter referred to as
the "Restricted Period") until the Expiration Date provided that the Vesting
Condition has first been satisfied.
(C) In the event that the Employee's employment with the Company is
terminated by the Company more than 180 days after the Grant Date other than for
cause, the Employee may, subject to Section 3, below exercise that percentage of
the Option which is equal to the percentage of the Restricted Period that has
elapsed since the Grant Date, provided that the Vesting Condition has first been
satisfied prior to such termination of employment.
2. METHOD OF EXERCISE: This Option may be exercised by the Employee only as
specified herein. From time to time while this Option is exercisable, the
Employee may deliver to the Corporation a written subscription, signed by the
Employee, stating the number of shares being purchased. This shall be
accompanied by (a) payment for such shares in certified check, money order or
other payment acceptable to the Corporation at such time, (b) payment for all
taxes, charges and all withholding amounts payable in connection with the
exercise and issuance and (c) such statement or other evidence as the
Corporation may require to ensure that the shares will not be transferred by the
Employee in violation of federal securities laws. Certificates for the shares so
purchased will be issued to the Employee upon the completion by the Corporation
of any steps required in connection therewith.
3. TERMS AND CONDITIONS:
(A) Unless otherwise terminated as provided herein, this Option will
terminate at the close of business on the 30th day (or, if such date is not a
business day at the headquarters of the Corporation, on the first such business
day thereafter) after the date the Employee ceases to be an employee of the
Corporation or one of its subsidiaries for any reason other than death,
retirement or permanent disability within the meaning of the Plan. In case of
dismissal for "cause," the Corporation may revoke all rights of the Employee to
purchase all shares subject hereto as have not been issued to the Employee prior
to the time of such revocation.
For the purpose of this Option, the term "cause" shall mean willful
misconduct by the Employee or willful failure to perform his or her
responsibilities in the best interests of the Company (including, without
limitation the material breach of any provision of the Company's Standards of
Ethics and Business Conduct Guide, or material breach by the Employee of any
provision of any employment, consulting, advisory, nondisclosure,
non-competition or other similar agreement between the Employee and the
Company), as determined by the Company, which determination shall be conclusive.
(B) During the lifetime of the Employee, this Option may be exercised only
by the Employee. Except by will or by the laws of descent and distribution, this
Option and all rights granted hereunder may not be transferred, assigned,
pledged or hypothecated (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or other process. Upon the retirement of the
Employee within the meaning of the Plan, there will be no change in the exercise
schedule or other terms hereof. If the Employee should die or become permanently
disabled within the meaning of the Plan at a time when the Vesting Condition has
been satisfied, the Restricted Period set forth in Section 1(B) above will be
<PAGE> 3
accelerated such that the Option will become available for purchase, and the
Employee (in case of disability) or his or her legal representative (in either
case) may exercise such purchase rights at any time within one year from the
date of the Employee's death or the Corporation's determination of the
Employee's permanent disability, as the case may be, but in no event later than
the Expiration Date. Nothing with respect to the terms of this instrument
guarantees continued employment for any specific period of time.
(C) Any provision herein to the contrary notwithstanding, in the case of
(i) a merger or consolidation to which the Corporation is a party and following
which the stockholders of the Corporation 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 resulting from such merger or consolidation;
(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 Corporation, or
of shares having more than 50% of the aggregate voting power of the
Corporation's capital stock; (iii) a sale or transfer of substantially all of
the assets of the Corporation; (iv) a liquidation or reorganization of the
Corporation or (v) during any period of two consecutive years or less beginning
after December 1993, individuals who at the beginning of such period are members
of the Board of Directors and any new director(s) (other than directors
designated by a person who has entered into an agreement with the Corporation to
effect a transaction of the type described in clauses (i) through (iv) above)
whose election by the Board of Directors 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 of Directors, the Corporation shall give written notice of
such event, mailed to the Employee at least twenty days prior to the event
(except in the event of subsection (ii), in which case the Company will notify
the Employee as soon as possible thereafter), and provided that the Vesting
Condition has been satisfied, the Restricted Period will be accelerated such
that the full number of shares subject to this Option shall forthwith become
available for purchase. The Employee shall then be entitled to purchase, subject
to the consummation of such transaction, all or any part of such shares by
subscription in accordance with paragraph 2 above, delivered to the Corporation
within fifteen days of the date of such notice. This Option will terminate as to
any shares not subscribed for at the expiration of such fifteen-day period.
Immediately prior to the consummation of such transaction, certificates for the
shares so subscribed for will be issued. If such transaction is not consummated,
the Corporation shall forthwith return to the Employee all funds and other
documents provided by the Employee in connection with the exercise of this
Option under this paragraph, and this Option shall be reinstated as to all of
the terms hereof as if the proposed transaction had not been contemplated.
(D) Any claim or dispute that may arise under or as a result of, or
pursuant to, this Option shall be submitted to and determined by the
Corporation, in its sole judgment, and any decision made by it shall be final
and conclusive for all purposes, and binding on the Employee and any other
parties claiming an interest herein.
4. ADJUSTMENT OF NUMBER OF SHARES COVERED BY OPTION: If the Corporation
shall effect a consolidation of shares or a stock dividend and the Corporation
shall determine that an equitable adjustment is required hereto as a result,
then the Corporation shall make such equitable adjustment in the terms of this
Option (for example a proportionate increase or decrease in the number of shares
remaining subject to this Option and a corresponding decrease or increase in the
exercise price) as the Corporation determines to be appropriate. The Corporation
shall determine when and in what measures such adjustments will be made, and may
exclude adjustments it determines to be de minimus.
<PAGE> 1
WANG LABORATORIES, INC. AND SUBSIDIARIES
EXHIBIT 11.1 - COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
(In millions except per share data)
Three Months Ended Three Months Ended
December 31, 1995 December 31, 1994 (2)
------------------------ ------------------------
Primary Fully Diluted Primary Fully Diluted
------- ------------- ------- -------------
<S> <C> <C> <C> <C>
Average shares of common
stock outstanding 35.9(1) 35.9(1) 33.5(1) 33.5(1)
Common equivalent shares for
stock options 1.7 1.7 0.8 0.8
------ ------ ------ ------
37.6 37.6 34.3 34.3
====== ====== ====== ======
Net income $ 6.9 $ 6.9 $ 4.3 $ 4.3
Accretion and dividends on
preferred stock (3.4) (3.4) (2.1) (2.1)
------ ------ ------ ------
Net income applicable
to common stockholders $ 3.5 $ 3.5 $ 2.2 $ 2.2
====== ====== ====== ======
Net income per share $ 0.09 $ 0.09 $ 0.06 $ 0.06
====== ====== ====== ======
<CAPTION>
Six Months Ended Six Months Ended
December 31, 1995 December 31, 1994 (2)
------------------------ ------------------------
Primary Fully Diluted Primary Fully Diluted
------- ------------- ------- -------------
<S> <C> <C> <C> <C>
Average shares of common
stock outstanding 35.8(1) 35.8(1) 33.5(1) 33.5(1)
Common equivalent shares for
stock options -- -- 0.8 0.8
------ ------ ------ ------
35.8 35.8 34.3 34.3
====== ====== ====== ======
Net income (loss) $(13.8) $(13.8) $ 6.3 $ 6.3
Accretion and dividends on
preferred stock (6.8) (6.8) (4.1) (4.1)
------ ------ ------ ------
Net income (loss) applicable
to common stockholders $(20.6) $(20.6) $ 2.2 $ 2.2
====== ====== ====== ======
Net income (loss) per share $(0.58) $(0.58) $ 0.06 $ 0.06
====== ====== ====== ======
</TABLE>
(1) Includes shares distributed as well as those held in a disputed claim
reserve to be distributed when claims are resolved and shares issued and
held in escrow in connection with the Avail Systems Corporation
acquisition.
(2) Restated to include Avail Systems Corporation, which was acquired on
December 18, 1995, and accounted for using the pooling of interests
method.
<PAGE> 1
WANG LABORATORIES, INC. AND SUBSIDIARIES
EXHIBIT 12.1 -- CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS EXCEPT RATIOS)
<TABLE>
<CAPTION>
REORGANIZED COMPANY
----------------------------------------------------------
SIX MONTHS YEAR NINE MONTHS
ENDED DECEMBER 31, ENDED JUNE 30, ENDED JUNE 30,
1995 1995 1994
------------------ -------------- --------------
<S> <C> <C> <C>
FIXED CHARGES
Interest expense $2.2 $3.7 $3.5
Portion of rent expense
representative of interest 3.9 5.9 5.6
------------------ -------------- --------------
6.1 9.6 9.1
Preferred dividend requirement 11.3 14.5 8.7
------------------ -------------- --------------
Combined fixed charges and
preferred dividend $17.4 $24.1 $17.8
================== ============== ==============
EARNINGS
Income (loss) from continuing
operations before income
taxes, discontinued operations,
fresh-start reporting adjustment
and extraordinary item ($6.6)(1) ($57.7)(2) $20.4
Fixed charges per above 6.1 9.6 9.1
------------------ -------------- --------------
($0.5) ($48.1) $29.5
================== ============== ==============
Ratio of earnings to combined
fixed charges and preferred dividends -- -- 1.7
================== ============== ==============
Coverage deficiency ($0.5)(1) ($48.1)(2) --
================== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
------------------------------------------------------------------------------
THREE MONTHS FOR THE YEAR ENDED JUNE 30,
ENDED SEPTEMBER 30, ------------------------------------------------------
1993 1993 1992 1991
------------------ -------------- -------------- --------------
<S> <C> <C> <C>
FIXED CHARGES
Interest expense $1.2 $15.0 $44.6 $44.0
Portion of rent expense
representative of interest 2.7 9.7 19.1 33.5
------------------ -------------- -------------- --------------
3.9 24.7 63.7 77.5
Preferred dividend requirement -- -- -- --
------------------ -------------- -------------- --------------
Combined fixed charges and
preferred dividend $3.9 $24.7 $63.7 $77.5
================== ============== ============== ==============
EARNINGS
Income (loss) from continuing
operations before income
taxes, discontinued operations,
fresh-start reporting adjustment
and extraordinary item ($22.6) ($197.2) ($346.5) ($368.8)
Fixed charges per above 3.9 24.7 63.7 77.5
------------------ -------------- -------------- --------------
($18.7) ($172.5) ($282.8) ($291.3)
================== ============== ============== ==============
Ratio of earnings to combined
fixed charges and preferred dividends -- -- -- --
================== ============== ============== ==============
Coverage deficiency ($18.7) ($172.5) ($282.8) ($291.3)
================== ============== ============== ==============
</TABLE>
- ---------------
(1) Includes $27.2 million of acquisition-related charges.
(2) Includes $64.2 million provision for integration-related costs and other
charges. Restated to include Avail Systems Corporation which was acquired
December 18, 1995 and accounted for using the pooling of interests method.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET; CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS AND EXHIBIT 11.1-COMPUTATION OF EARNINGS PER SHARE AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FOR THE PERIOD ENDED DECEMBER 31,
1995.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 130,000
<SECURITIES> 0
<RECEIVABLES> 243,900
<ALLOWANCES> 13,500
<INVENTORY> 26,000
<CURRENT-ASSETS> 424,400
<PP&E> 211,500
<DEPRECIATION> 89,300
<TOTAL-ASSETS> 841,800
<CURRENT-LIABILITIES> 374,700
<BONDS> 27,000
148,300
0
<COMMON> 300
<OTHER-SE> 200,300
<TOTAL-LIABILITY-AND-EQUITY> 841,800
<SALES> 192,600
<TOTAL-REVENUES> 556,700
<CGS> 127,300
<TOTAL-COSTS> 373,600
<OTHER-EXPENSES> 193,400
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,200
<INCOME-PRETAX> (6,600)
<INCOME-TAX> 7,200
<INCOME-CONTINUING> (13,800)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,800)
<EPS-PRIMARY> (0.58)
<EPS-DILUTED> (0.58)
<FN>
PP&E Cost and Accumulated Depreciation include capitalized non-consumable
spares inventory. Bonds, mortgages and similar debt is comprised of borrowings
due within one year and long-term debt. Other costs and expenses includes $27.2
million of acquisition-related charges related to the July 21, 1995 acquisition
of Sigma Imaging Systems, Inc.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS OF THE FORM 10-Q FOR THE PERIOD
ENDED DECEMBER 31, 1995 AND THE CONDENSED CONSOLIDATED BALANCE SHEET AND EXHIBIT
11.1-COMPUTATIONS OF EARNINGS PER SHARE OF THE FORM 10-Q FOR THE PERIOD ENDED
SEPTEMBER 30, 1995 RESTATED FOR THE AVAIL SYSTEMS CORP. PURCHASE, ACCOUNTED FOR
USING THE POOLING OF INTERESTS METHOD AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 1995, RESTATED TO
INCLUDE THE PURCHASE OF AVAIL SYSTEMS CORP., ACCOUNTED FOR USING THE POOLING OF
INTERESTS METHOD.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<CASH> 154,000
<SECURITIES> 0
<RECEIVABLES> 210,600
<ALLOWANCES> 12,100
<INVENTORY> 28,100
<CURRENT-ASSETS> 416,800
<PP&E> 198,800
<DEPRECIATION> 74,100
<TOTAL-ASSETS> 828,800
<CURRENT-LIABILITIES> 368,100
<BONDS> 26,000
147,900
0
<COMMON> 300
<OTHER-SE> 196,500
<TOTAL-LIABILITY-AND-EQUITY> 828,800
<SALES> 82,900
<TOTAL-REVENUES> 264,200
<CGS> 54,700
<TOTAL-COSTS> 178,800
<OTHER-EXPENSES> 106,100
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,000
<INCOME-PRETAX> (18,700)
<INCOME-TAX> 2,000
<INCOME-CONTINUING> (20,700)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,700)
<EPS-PRIMARY> (0.68)
<EPS-DILUTED> (0.68)
<FN>
PP&E Cost and Accumulated Depreciation include capitalized non-consumable
spares inventory. Bonds, mortgages and similar debt is comprised of borrowings
due within one year and long-term debt. Other costs and expenses includes $27.2
million of acquisition-related charges related to the July 21, 1995 acquisition
of Sigma Imaging Systems, Inc.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET OF THE FORM 10-Q FOR THE PERIOD ENDED
DECEMBER 31, 1995, AND FROM THE CONSOLIDATED STATEMENT OF OPERATIONS AND EXHIBIT
11.1-COMPUTATION OF EARNINGS PER SHARE OF THE FORM 10-K FOR THE PERIOD ENDED
JUNE 30, 1995, RESTATED FOR THE AVAIL SYSTEMS CORP. PURCHASE, ACCOUNTED FOR
USING THE POOLING OF INTERESTS METHOD AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FORM 10-Q FOR THE PERIOD ENDED DECEMBER 31, 1995 AND FORM 10-K
FOR THE PERIOD ENDED JUNE 30, 1995, RESTATED TO INCLUDE THE PURCHASE OF AVAIL
SYSTEMS CORP., ACCOUNTED FOR USING THE POOLING OF INTERESTS METHOD.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<CASH> 182,400
<SECURITIES> 0
<RECEIVABLES> 193,300
<ALLOWANCES> 10,800
<INVENTORY> 24,400
<CURRENT-ASSETS> 426,500
<PP&E> 195,700
<DEPRECIATION> 61,300
<TOTAL-ASSETS> 860,700
<CURRENT-LIABILITIES> 382,800
<BONDS> 26,000
145,600
0
<COMMON> 300
<OTHER-SE> 219,200
<TOTAL-LIABILITY-AND-EQUITY> 860,700
<SALES> 365,700
<TOTAL-REVENUES> 947,200
<CGS> 254,400
<TOTAL-COSTS> 656,200
<OTHER-EXPENSES> 357,700
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,700
<INCOME-PRETAX> (57,700)
<INCOME-TAX> 3,600
<INCOME-CONTINUING> (61,300)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (61,300)
<EPS-PRIMARY> (2.04)
<EPS-DILUTED> (2.04)
<FN>
PP&E Cost and Accumulated Depreciation include capitalized non-consumable
spares inventory. Bonds, mortgages and similar debt is comprised of borrowings
due within one year and long-term debt.
</FN>
</TABLE>
